[House Report 106-1011]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-1011
======================================================================
LANDOWNERS EQUAL TREATMENT ACT OF 1999
_______
October 26, 2000.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Young of Alaska, from the Committee on Resources, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 1142]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred the bill
(H.R. 1142) to ensure that landowners receive treatment equal
to that provided to the Federal Government when property must
be used, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
Purpose of the Bill
The purpose of H.R. 1142 is to ensure that landowners
receive treatment equal to that provided to the Federal
Government when property must be used.
Background and Need for Legislation
In September 1998, the U.S. Fish and Wildlife Service
(FWS) and the Minneapolis-St. Paul Airport Commission signed an
agreement under which FWS would receive $26 million in
compensation for the use of National Wildlife Refuge lands by
the Airport Commission. The Minneapolis-St. Paul Airport
proposed to expand a runway very near the Minnesota Valley
National Wildlife Refuge, which is administered by the FWS. The
new runway was expected to result in 5,620 monthly overflights
over a portion of the Refuge between 500 and 2,000 feet above
ground level. The FWS concluded that these overflights were a
``use'' of Refuge lands and therefore, triggered the provisions
of Section 4(f) of the Department of Transportation Act of 1966
(49 U.S.C. 303). This law provides that the Secretary of
Transportation may not approve a project that requires the use
of any publicly owned land (such as a public park, recreation
area, wildlife and waterfowl refuge or historic site of
national, state, or local significance) unless there are no
feasible and prudent alternatives to the use of such land and
unless the project includes all possible planning to minimize
harm resulting from the use.
After conducting a Section 4(f) evaluation, as well as an
environmental impact analysis under National Environmental
Policy Act (NEPA), the Federal Aviation Administration (FAA)
determined that ``the MSP (Minneapolis-St. Paul) Airport
expansion will require the . . . constructive use of land from
a wildlife refuge''. According to the FAA, ``A `constructive
use' can occur when proximity effects, such as noise, adversely
affect the normal activity or aesthetic value of an eligible
Section 4(f) property even though there may be no direct
physical effect involving construction of transportation
facilities.'' According to FAA regulations, ``Substantial
impairment would occur only when the protected activities,
features or attributes of the resource are substantially
diminished.'' 23 CFR 771.135 (p)(2), 56 Federal Register 13273.
Apparently, the FAA's finding of a ``constructive use'' led to
the conclusion that the FWS was entitled to compensation or
mitigation for that use although there was never any physical
invasion of the property.
Section 4(f) is a statement of policy to avoid unnecessary
impacts on important public lands providing wildlife,
recreation, and historic benefits. As noted earlier, the
Secretary of Transportation shall only authorize such projects
if ``(1) there is no prudent and feasible alternative to using
that land and (2) the program or project includes all possible
planning to minimize harm to the park, recreation area,
wildlife and waterfowl refuge, or historic site resulting from
the use.'' The statute does not require payment of
compensation.
However, the requirement for compensation for private
property taken for a public use is enshrined in the U.S.
Constitution in the Fifth Amendment, and according to the
United States Supreme Court is a fundamental constitutional and
civil right that protects each and every American citizen.
Therefore, unlike the guarantee to private landowners, the
compensation provided for the ``use'' of the Minnesota Valley
National Wildlife Refuge was the result of negotiation and
agreement, and not based on the Constitution, a statutory
mandate, a regulation, or case law.
The Fifth Amendment of the United States Constitution,
often referred to as the ``takings'' clause, provides ``Nor
shall private property be taken for public use, without just
compensation''. This constitutional protection for the private
property rights of citizens has been made applicable to the
states through the Fourteenth Amendment to the Constitution. In
addition, many states have an identical or similar state
``takings'' clause in their state constitutions. The Fifth
Amendment is a floor, not a ceiling, in its protection of
property rights.
Not every action by government affecting private property
results in a ``taking'' under the Fifth Amendment. However,
Congress may and has provided by statute for compensation when
property must be used by the government, even in some areas
that might not rise to the level of a Constitutionally defined
``taking''.
One of the principal purposes of the Fifth Amendment is
``to bar Government from forcing some people alone to bear
public burdens which, in all fairness and justice, should be
borne by the public as a whole.'' Armstrong v. United States,
364 U.S. 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (1960).
However, some legal scholars have noted the confused and
paradoxical condition of current takings'' case law. Law
Professor Jeb Rubenfeld stated at the outset in his 1993 Yale
Law Review Article entitled ``Usings'' (102Yale L.J. 1077),
``For a long time, there has been no Just Compensation Clause
in constitutional law. Three words, `for public use', have been
cut away from it, treated as if they prescribed a distinct
command of their own. Instead of the Just Compensation Clause
as written, we have a Taking Clause engulfed in confusion and a
Public Use Clause of nearly complete insignificance.''
Professor Rubenfeld's solution to the lack of coherent case law
is a Fifth Amendment jurisprudence based on whether there is a
``using'' rather than a taking.
This legislation would provide for a statutory right of
compensation under the Endangered Species Act (ESA) when
property is used by the public for the protection of publicly-
owned wildlife. The Endangered Species Act is a federal law
that has frequently resulted in the use of privately-owned
property for the purpose of providing habitat for publicly-
owned wildlife. This is a concept propounded by the government
itself when its property is used, and therefore, is an
appropriate concept for application to Constitutionally-
protected rights guaranteed to private citizens.
The ESA uses private property to ``protect'' the habitat of
endangered or threatened species. Most of this habitat is
privately-owned property. The ESA prohibits the ``take'' of a
member of any species which is listed under the ESA as
endangered or threatened. The word ``take'' is further defined
in Section 9 of the ESA to mean ``to harass, harm, pursue,
hunt, shoot, wound, kill, trap, capture, or collect, or to
attempt to engage in any such conduct.'' FWS regulations
further interpret the term ``harm'' to include the modification
of ``habitat'' (land or water) that impairs breeding, feeding,
and sheltering. It should be noted that the ESA does not define
the term ``habitat'' and therefore, this applies to any area
where the species might be found, including privately-owned
property. The Supreme Court in Sweethome v. Babbitt, 115 S.Ct.
2407 (1995), upheld the FWS interpretation of the term ``take''
to include the authority to control the use of private land
that might provide habitat for endangered or threatened
species.
Violation of the ESA, including the ``take'' prohibition,
may result in both civil and criminal penalties. Section 11 of
the ESA establishes penalties and enforcement procedures. Civil
penalties can range from $500 to $25,000. Criminal fines can
range from $25,000 to $50,000 and prison sentences can range
between six months to one year. In addition, any equipment,
tools, or property used in violating the ESA may be seized by
the federal government and forfeited.
Ordinarily the federal government brings suit or presses
charges against citizens who violate the ESA. However, the ESA
also authorizes private citizens to sue to enforce the
provisions of the ESA through the use of citizen suits. ``Any
citizen'' may sue the government and other private citizens,
including private property owners, whom they believe to be in
violation of the ESA. The court may award the citizen bringing
the suit the costs of litigation, including reasonable attorney
and expert witness fees, when the judge determines the award to
be appropriate. If the suit is against a private property
owner, the private owner must pay for attorneys fees and court
costs of the suing party.
Congress may enact laws to require the further protection
of private property over and above the minimal standards
created in the U.S. Constitution. H.R. 1142 does not purport to
define the term ``take'' as provided in the Fifth Amendment. It
does, however, require the same standard of care that the FWS
requires when its property is impacted by decisions of other
federal agencies. It first requires the effort to avoid impacts
and minimize impacts on private property, and then to
compensate for impacts created pursuant to implementing the
ESA. It is unfortunate that the courts have not thus far been
able to devise adequate remedies for the protection of private
property rights. However, that is the appropriate role of
Congress.
H.R. 1142 will insure that the basic Constitutional rights
of private property owners are protected, while encouraging the
federal government to continue efforts to work cooperatively
with landowners to provide habitat for wildlife. It will give
private landowners the same protections as were enjoyed by the
federal government in the case involving the Minnesota Valley
National Wildlife Refuge.
Committee Action
H.R. 1142 was introduced on March 17, 1999, by Congressman
Don Young (R-AK). The bill was referred to the Committee on
Resources. On April 14, 1999, the Committee held a hearing on
the bill. On June 21, 2000, the Full Committee met to mark up
the bill. No amendments were offered and the bill was then
ordered favorably reported to the House of Representatives by a
vote of 27 to 11, as follows:
Section-by-Section Analysis
Section 1. Short title
Section 1 sets forth the short title of the bill as the
``Landowners Equal Treatment Act of 1999''.
Section 2. Findings and purpose
Section 2 sets forth the findings and purposes of the bill,
explaining that it is patterned after the proposal by the FWS
for compensation for the loss of use of FWS property resulting
from ``constructive use'' of the property. The definition of
``use'', developed by the U.S. Department of Transportation, is
applied to use of private property, as are the examples of what
would constitute a constructive use.
Section 3. Minimizing impacts on private property
This section adds a new section 19 to the ESA, but makes no
other amendments to the existing law.
Section 3 sets forth the general principle that in
implementing the ESA, agencies shall make every effort to
avoid, minimize, or mitigate impacts on private property that
result in federal use of the property as a result of the agency
action. An agency shall not take action that results in a
federal use of private property under the ESA unless the
agency: (1) obtains the written permission of the private
property owner; (2) negotiates a voluntary agreement
authorizing the proposed use; or (3) pays compensation in
accordance with this new section. Thereafter, if the use cannot
be avoided and the owner does not consent, the owner is to be
paid the fair market value of the portion of the property
affected by the use for the duration of the use. A property
owner is required to make a written request for compensation to
the agency implementing the agency action. An agreement may be
negotiated which may be for transfer of title or an agreement
to limit the time of the federal use. If an agreement cannot be
reached, the property owner may elect binding arbitration
(under the Federal Arbitration Act) or seek compensation
through a lawsuit. A lawsuit could be brought under the ESA
citizen suit section, which allows for attorneys fees and
costs. Payment of compensation would come from federal
appropriation for the agency which took the action resulting in
the use of the private property.
Agencies are required to give notice to property owners of
their rights under this section to seek compensation. This new
section is not intended to preclude any other cause of action a
property owner might have under any other applicable law nor
would it allow an activity that is prohibited by some other
law.
The section contains the following definitions:
``Federal use'' of private property means any action under
the ESA to (1) permanently incorporate private property into a
federal facility; (2) place private property under the control
of the Secretary of the Interior or the Secretary of Commerce
(who implement the ESA); or (3) temporarily occupy private
property in a manner that is adverse to the constitutional
right of the owner of the property against taking of the
property by the federal government;
In addition, ``Federal use'' includes any ``constructive
use'' of non-Federal property. The term ``constructive use''
means any action under the ESA that results in: (1) substantial
diminution in the normal or reasonably expected uses of private
property; (2) a reduction in the fair market value of private
property of 25 percent or more; or (3) in the case of the right
to receive water, any diminution in the quantity of water
received or available for use.
Certain actions taken under the ESA meet the criteria for a
``federal use'', including: (1) prohibiting private property
owners from using their property in order to use the property
as habitat for an endangered species or threatened species; (2)
a designation of non-federal property as critical habitat
without the permission of the private property owner; (3) the
denial of a permit that results in the loss of the ability to
use private property in order to provide habitat for listed
wildlife or plants; (4) an ESA section 7 consultation that
would result in restriction on the use of private property; and
(5) the imposition by a third party governmental entity of a
restriction as a condition of some benefit that, if taken
directly by the federal agency, would constitute a federal use
of private property, unless the governmental entity has some
other legal basis for imposing the limitation or restriction.
This last action could include, for example, forcing states and
local governments to restrict property as a condition of a
state grant or other authorization.
``Fair market value'' is the most probable price at which
property would change hands, in a competitive and open market
under all conditions requisite to fair sale.
Committee Oversight Findings and Recommendations
Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of
rule XIII of the Rules of the House of Representatives, the
Committee on Resources' oversight findings and recommendations
are reflected in the body of this report.
Constitutional Authority Statement
Article I, section 8 of the Constitution of the United
States grants Congress the authority to enact this bill.
Compliance With House Rule XIII
1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the
Rules of the House of Representatives requires an estimate and
a comparison by the Committee of the costs which would be
incurred in carrying out this bill. However, clause 3(d)(3)(B)
of that Rule provides that this requirement does not apply when
the Committee has included in its report a timely submitted
cost estimate of the bill prepared by the Director of the
Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974.
2. Congressional Budget Act. As required by clause 3(c)(2)
of Rule XIII of the Rules of the House of Representatives and
section 308(a) of the Congressional Budget Act of 1974, this
bill does not contain any new budget authority, spending
authority, credit authority, or an increase or decrease in
revenues or tax expenditures.
3. Government Reform Oversight Findings. Under clause
3(c)(4) of Rule XIII of the Rules of the House of
Representatives, the Committee has received no report of
oversight findings and recommendations from the Committee on
Government Reform on this bill.
4. Congressional Budget Office Cost Estimate. Under clause
3(c)(3) of Rule XIII of the Rules of the House of
Representatives and section 403 of the Congressional Budget Act
of 1974, the Committee has received the following cost estimate
for this bill from the Director of the Congressional Budget
Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 12, 2000.
Hon. Don Young,
Chairman, Committee on Resources,
U.S. House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1142, the
Landowners Equal Treatment Act of 1999.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Deborah Reis.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.R. 1142--Landowners Equal Treatment Act of 1999
Summary: H.R. 1142 would address the protection of property
rights that may be affected by federal actions taken under the
Endangered Species Act (ESA). Specifically, the bill would
require the government to compensate property owners whose use
of any portion of their land or water rights has been limited
by regulatory actions to implement the ESA. The bill would
require that any compensation owed to a property owner as a
result of enacting this legislation must be paid from funds
appropriated to the agency that caused the limitation to
property owners.
Implementing H.R. 1142 would involve both administrative
expenses and compensation payments, both of which would be
spent primarily by the U.S. Fish and Wildlife Service (USFWS),
which is the primary agency charged with carrying out the ESA.
CBO estimates that in the first few years following
enactment, the USFWS would spend $5 million to $10 million
annually to develop and implement the administrative procedures
necessary to carry out the bill's compensation provisions. We
expect that administrative costs would fall to $2 million or $3
million a year thereafter.
We estimate that the USFWS also would make some payments of
compensation, but this cost is highly uncertain and would
depend on how property owners and the agency would react to the
legislation and how the legislation would be interpreted by the
Administration and the courts. While CBO is not able to provide
any precise estimate of compensation costs, we expect that
aggregate payments of compensation would be less than the
administrative costs in the first few years after enactment,
because (1) The bill's requirement that the USFWS pay
compensation from its own appropriations would probably reduce
the number of agency actions that affect property values, (2)
many initial claims would probably be ineligible for
compensation, and (3) those initial claims that are paid are
likely to be small.
In any case, both administrative expenses and compensation
costs to implement this legislation would depend on the
appropriation of the necessary amount. Enactment of the bill
would not affect direct spending or receipts; therefore, pay-
as-you-go procedures would not apply.
H.R. 1142 contains no private-sector or intergovernmental
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Major Provisions: H.R. 1142 would direct federal agencies
that carry out the ESA to avoid, minimize, or mitigate the
impacts that their actions have on nonfederal property (that
is, any property not owned by the federal government, which
would include state and local holdings). Under H.R. 1142, an
agency could not implement the ESA in such a way that would
result in a federal use of nonfederal property unless the
agency obtains written permission from the landowner,
negotiates an agreement authorizing the use, or pays
compensation.
The bill defines federal use of property to include both
direct actions (such as incorporating nonfederal property into
a federal facility) and indirect actions (such as declaring
private property to be critical habitat for a species or
denying a federal permit necessary for certain uses of private
land). Indirect use, which is referred to by the bill as
``constructive use,'' would have to be paid for by the federal
government if it would result in a substantial diminution in
the normal use of property, a loss in property value of 25
percent or more, or any reduction in the quantity of water
available (in cases involving water rights).
The procedure for requesting compensation for the federal
use of private property under the ESA is set out generally in
section 3 of the legislation. A property owner seeking
compensation would first make a written request to the agency.
If the agency and the property owner can agree on compensation,
the agency would pay the negotiated amount. If, after 180 days,
the parties cannot agree on compensation, the owner may seek
resolution through binding arbitration or a civil suit. Awards
resulting from arbitration or litigation would include
attorneys' fees and related costs such as appraisal expenses.
Court awards would include interest calculated from the
beginning of the federal action.
Estimated Cost to the Federal Government: CBO estimates
that the USFWS would spend $5 million to $10 million annually
to develop and implement the administrative procedures
necessary to carry out the bill's compensation provisions. We
expect that administrative costs would fall to $2 million or $3
million a year thereafter. CBO cannot estimate the amount of
compensation that the agency may have to pay to property owners
under this bill, but we expect that such payments would be less
than the administrative costs in the first few years after
enactment. Both administrative expenses and the payment of
compensation to property owners would be subject to the
appropriation of the necessary amounts.
Basis of Estimate: CBO expects that enacting H.R. 1142
would result in a great number of requests for compensation by
property owners, particularly those affected by previous USFWS
regulatory actions. CBO believes that the majority of such
claims would stem from the creation of an administrative forum,
which would provide most property owners with a cost-effective
way to seek compensation. We expect that the vast majority of
claims made under H.R. 1142 would begin and end
administratively, and that relatively few claims would be
pursued further.
Civil court suits for compensation brought against the
United States might also increase--especially since so few are
made under existing law--but we expect that any increase in
litigation would be small and would involve large monetary
claims that might have been brought anyway under existing law.
Responding to the new requests for compensation would
involve two types of federal expenditures: administrative
expenses incurred by the USFWS to process claims and permit
requests, and the payments themselves.
Administrative Expenses: Assuming appropriation of the
necessary amounts, CBO estimates that the USFWS would spend $5
million to $10 million a year over the next two or three years
to implement an administrative program to process compensation
requests related to previous agency actions. After this period,
ongoing administrative expenses would probably fall to $2
million or $3 million a year to consider compensation related
to new agency actions.
Previous Agency Actions: CBO expects that property owners
affected by past USFWS actions including previous designations
of critical habitat, would apply for compensation even though
they would probably not receive notification of the bill's
compensation provisions from the agency (the notifications
required under the bill would apparently not apply to past
agency actions, but we expect that would stop landowners from
seeking compensation). What would happen after such
applications are made is uncertain. Although we expect the
USFWS to reject such claims (because they involve actions taken
before enactment), each would still require some minimal
expense to process.
Once the claims relating to previous USFWS actions have
been processed and rejected, we expect some landowners would
probably apply for incidental take permits (which are permits
to develop any land subject to ESA regulations) to receive a
rejection that could then form the basis of another request for
compensation. CBO expects that relatively few landowners would
employ this strategy, however, because incidental take permits
are expensive and time consuming for the average small
landowner to pursue.
Depending on how quickly claims and permit applications
arrive and what priority the USFWS gives them, processing
requests related to previous actions under the ESA would add $3
million to $7 million annually to the cost of the endangered
species program over the next few years.
New Agency Actions: CBO expects that the USFWS would take
steps to mitigate the effects of its actions to implement the
ESA on property owners, as mandated by the bill. Nevertheless,
we expect that the agency would continue to receive a number of
claims each year, particularly claims involving losses due to
designation of critical habitat. Whether those claims result in
the payment of compensation or not, we estimate that processing
such requests would cost $2 million or $3 million annually.
Payments of Compensation: H.R. 1142 would establish a new
cause of action in the ESA for property owners whose property
is affected by federal regulatory actions. Instead of asserting
that their property has been taken in violation of the fifth
amendment of the Constitution (as they must under current law),
property owners could seek compensation for federal use of
their property under this new statutory process.
In addition to this fundamental change, the provisions of
the bill would change current law in two important ways that
could affect how property owners seek, and how federal agencies
pay, compensation. First, the bill would provide an
administrative forum for seeking compensation as an alternative
to litigation. Second, the bill would delineate specific
standards and definitions to be used in determining when and
what the government owes when its actions affect the use of
nonfederal property.
Compensation under Current Law: Under existing law,
persons who wish to seek compensation for property that they
believe has been adversely affected by a government action
usually must do so through litigation--generally in the United
States Court of Claims.
The process is time-consuming and expensive. Property
owners who bring suit in the Claims Court typically wait at
least two years before their cases are heard. Decisions
unfavorable to the government have been rare in the past
because of the high loss thresholds required before the courts
will award compensation. Property owners who pursue such cases
can expect the government to appeal unfavorable decisions,
which often adds years to the process. Because the costs of
waging a protracted court battle are greater than most property
owners can afford, relatively few compensation claims are
brought against the United States (although there has been a
steady increase in the last decade). Those cases that are
brought typically involve relatively large claims ($100,000 to
more than $100 million) and are usually brought by corporations
or other large property owners. Such claims can require more
than a decade to resolve. As a result, the few awards that are
paid often include more for interest and the reimbursement of
litigation costs than for compensation.
Compensation under H.R. 1142: The most immediate effects
of the legislation would stem from the creation of an
administrative forum for property owners to seek compensation.
This provision would make it much easier for private property
owners to seek compensation. Typically, persons affected by
endangered species regulations are small landowners who often
cannot afford to sue the federal government or who would not
expect to receive enough compensation to justify the
substantial expense of attorneys and experts. Thus, without the
administrative claims process created by the bill, most of
these people would not be able to take advantage of the 25-
percent loss threshold or other standards established by the
bill that might increase a landowner's chance of prevailing
against the government.
Creating an administrative forum would affect primarily
small claims. Although the number of administrative claims
could be quite large at first, CBO expects that relatively few
would result in payment because:
The USFWS would probably reject a large
portion of early claims (such as those involving agency
actions prior to the bill's enactment) by deeming them
to be outside the scope of the bill;
The agency would probably argue that some
actions, such as designations of critical habitat, are
not imposed on specific properties and therefore do not
cause any real restrictions on the ability to use
individual parcels. To seek compensation for such
actions, a property owner would then either have to
file for an incidental take permit and receive a
rejection or sue the USFWS for compensation;
Many typical USFWS actions, such as
regulating the use of pesticides, might not
substantially diminish the normal or reasonably
expected uses of the property or reduce its value by 25
percent or more, or
The requirements that compensation payments
be made from agency appropriations would cause the
USFWS to try to resolve as many claims as possible
without having to pay any compensation--for example, by
reversing or modifying permit decisions or enforcement
actions, by processing permit applications more
quickly, and by working more closely with landowners to
negotiate permit conditions.
Further, we estimate that any compensation payments
eventually made through the administrative process would
involve relatively small amounts (often as little as a few
thousand dollars), largely because the vast majority of claims
would likely involve small parcels of land or some minor
fraction (``affected portion'') of larger tracts. In addition,
under the bill the government would only be responsible for
paying the diminution of value, which would most often involve
very minor amounts, rather than the value of the entire
affected property (as is usually the case under current law).
CBO expects that enacting H.R. 1142 also would result in an
increase in civil litigation, at least in the short run,
because the new 25-percent loss threshold and other provisions
would almost certainly induce more property owners to seek
compensation. Because property owners would first have to
overcome the costly administrative hurdle of seeking and being
denied an incidental take permit, most such lawsuits would
involve larger, more complicated claims (those over $1
million). Even if the government would ultimately lose more
lawsuits as a result of the legislation, additional
compensation costs would probably be minimal in the 2001-2005
period because claims would take several years to resolve.
Large claims brought under the bill would still involve many of
the same factors that prolong litigation under existing law,
including a lengthy discovery period, court delays, and
valuation disputes. Moreover, in the early years many new
claims would likely involve conflicting interpretations of the
statute that could take a number of years to resolve through
the judicial process.
The effect of H.R. 1142 on federal compensation costs in
later years would depend on the outcome of this process and is
very difficult to predict. On the one hand, it is likely that
the legislation would cause property owners to bring--and
possibly win--more suits than in the past. On the other hand,
while we expect the USFWS to deny most claims, we cannot
predict the response of property owners or the courts. Neither
can we predict how the courts will resolve some of the more
complicated issues such as those related to the determination
of critical habitat, diminution in ``normal use,'' or
valuation. Moreover, the requirement that agencies pay all
compensation awards, including interest and reimbursement of
costs, from their operating budgets could have the effect of
limiting potential costs under this legislation because this
requirement would encourage the USFWS to avoid actions that
would cause property owners to seek compensation.
Pay-as-You-Go Considerations: None.
Intergovernmental and Private-Sector Impact: H.R. 1142
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Estimate Prepared by: Federal Costs: Deborah Reis. Impact
on State, Local, and Tribal Governments: Marjorie Miller.
Impact on the Private Sector: Natalie Tawil.
Estimate Approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Compliance With Public Law 104-4
This bill contains no unfunded mandates.
Preemption of State, Local or Tribal Law
This bill is not intended to preempt any State, local or
tribal law.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
SECTION 19 OF THE ENDANGERED SPECIES ACT OF 1973
minimizing impacts on private property
Sec. 19. (a) In General.--In implementing this Act, the head
of an agency shall make every possible effort to avoid,
minimize, or mitigate impacts on non-Federal property that
result in Federal use of the property as a direct result of the
action of the agency head under this Act or in furtherance of
the purposes of this Act. An agency shall not take action that
results in a Federal use of non-Federal property under this Act
unless the agency--
(1) obtains the written permission of its owner;
(2) negotiates a voluntary agreement authorizing that
use; or
(3) pays compensation in accordance with this
section.
(b) Compensation for Federal Use of Non-Federal Property.--An
agency that takes action under this Act or in furtherance of
the purposes of this Act that results in a Federal use of non-
Federal property or any portion of non-Federal property without
the written consent of the owner of the property shall
compensate the owner for the fair market value of the Federal
use of the property or portion. Compensation paid shall reflect
the duration of the Federal use as necessary to achieve the
purposes of this Act.
(c) Request of Owner.--An owner of non-Federal property
seeking compensation under this section shall make a written
request for compensation to the agency implementing the agency
action resulting in the Federal use of property. The request
shall, at a minimum, identify the affected portion of the
property, the nature of the Federal use of non-Federal property
for which the compensation is sought, and the amount of
compensation sought.
(d) Negotiations.--The agency may negotiate with the owner to
reach agreement on the amount of the compensation under this
section, the terms of any agreement for payment, and the terms
of any Federal use of non-Federal property for which
compensation is paid. If such an agreement is reached, the
agency shall within 6 months pay the owner the amount agreed
upon. An agreement under this section may include a transfer of
title or an agreement to limit the period of time of the
Federal use of non-Federal property.
(e) Choice of Remedies.--If, not later than 180 days after
the written request is made, the parties have not reached an
agreement on compensation, the owner of the property may elect
binding arbitration or seek compensation due under this section
in a civil action.
(f) Arbitration.--The procedures that govern the arbitration
shall, as nearly as practicable, be those established under
title 9, United States Code, for arbitration proceedings to
which that title applies. An award made in such arbitration
shall include a reasonable attorney's fee and other arbitration
costs, including appraisal fees. The agency shall promptly pay
any award made to the owner.
(g) Civil Actions.--A civil action to enforce this section
may be filed under section 11(g). An owner who prevails in a
civil action against the agency pursuant to this section shall
be entitled to, and the agency shall be liable for, the amount
of compensation awarded plus reasonable attorney's fees and
other litigation costs, including appraisal fees. The court
shall award interest on the amount of any compensation from the
time of the Federal use of non-Federal property.
(h) Source of Payments.--Any payment made under this section
to an owner of property and any judgment obtained by an owner
of property in a civil action under this section shall,
notwithstanding any other provision of law, be made from the
annual appropriation of the agency that took the agency action
giving rise to the payment or civil action. If the agency
action resulted from a requirement imposed by another agency,
then the agency making the payment or satisfying the judgment
may seek partial or complete reimbursement from the
appropriated funds of the other agency. For this purpose, the
head of the agency concerned may transfer or reprogram any
appropriated funds available to the agency. If insufficient
funds exist for the payment or to satisfy the judgment, it
shall be the duty of the head of the agency to seek the
appropriation of such funds for the next fiscal year.
(i) Availability of Appropriations.--Notwithstanding any
other provision of law, any obligation of the United States to
make any payment under this section shall be subject to the
availability of appropriations.
(j) Duty of Notice to Owners.--An agency may not take any
action that is a Federal use of non-Federal property unless the
agency has given 30 days notice to each owner of the property
directly affected explaining their rights under this section
and either obtaining their permission for the Federal use or
providing the procedures for obtaining any compensation that
may be available under this section.
(k) Rules of Construction.--The following rules of
construction shall apply to this Act:
(1) Other rights preserved.--Nothing in this Act
shall be construed to limit any right to compensation
that exists under the Constitution or under other laws.
(2) Extent of federal authority.--Payment of
compensation under this section (other than when
property is bought by the Federal Government at the
option of the owner) shall not confer any rights on the
Federal Government other than the Federal use of non-
Federal property agreed to so that the agency action
may achieve the species conservation purposes of this
Act.
(l) Definitions.--For the purposes of this section:
(1) Agency.--The term ``agency'' has the meaning
given that term in section 551 of title 5, United
States Code.
(2) Federal use.--(A) The term ``Federal use''
means--
(i) any action under this Act to--
(I) permanently incorporate non-
Federal property into a Federal
facility;
(II) place non-Federal property under
the control of the Secretary; or
(III) temporarily occupy non-Federal
property in a manner that is adverse to
the constitutional right of the owner
of the property against taking of the
property by the Federal Government; and
(ii) any constructive use of non-Federal
property.
(B) In this paragraph the term ``constructive use''
means any action described in subparagraph (C) taken
under this Act that results in--
(i) substantial diminution in the normal or
reasonably expected uses of non-Federal
property;
(ii) a reduction in the fair market value of
non-Federal property of 25 percent or more; or
(iii) in the case of the right to receive
water, any diminution in the quantity of water
received or available for use.
(C) The actions referred to in subparagraph (B) are
the following:
(i) The imposition or enforcement of a
prohibition of use of non-Federal property the
purpose of which is to provide or retain
habitat for any species of wildlife or plant
determined to be an endangered species or
threatened species.
(ii) A designation of non-Federal property as
critical habitat under this Act.
(iii) The denial of a permit under section 10
that results in the loss of the ability to use
non-Federal property in order to provide
habitat for wildlife or plants.
(iv) An agency action pursuant to a
reasonable and prudent alternative suggested by
the Secretary under section 7, that would cause
an agency to restrict the use of non-Federal
property.
(v) The imposition by any governmental entity
of a limitation or restriction on an otherwise
permissible use of non-Federal property by the
owner of the property, as a condition of a
Federal agency providing any land, money,
permit, or other benefit to the governmental
entity, if imposition of the limitation or
restriction by the agency directly would
constitute a Federal use of non-Federal
property under the other provisions of this
paragraph, unless the governmental entity has
some other legal basis for imposing the
limitation or restriction.
(3) Fair market value.--The term ``fair market
value'' means the most probable price at which property
or a right to use property would change hands, in a
competitive and open market under all conditions
requisite to fair sale, between a willing buyer and
willing seller, neither being under any compulsion to
buy or sell and both having reasonable knowledge of
relevant facts, and without regard to the presence of
any species protected under this Act. With respect to a
right to use property, fair market value shall be
determined on or immediately before the exercise of the
right.
(4) Law of the state.--The term ``law of the State''
includes the law of a political subdivision of a State.
(5) Non-federal property.--The term ``non-Federal
property'' means property which is owned by a person
other than any Federal entity of government.
(6) Property.--The term ``property'' means land, an
interest in land, the right to use or receive water,
and any personal property, as defined under the law of
the State.
DISSENTING VIEWS
This is a bill promoted by special interests engaged in a
backdoor attack on the Endangered Species Act (ESA), and who
want to rewrite the 5th Amendment to the Constitution to
require that government pay people to comply with environmental
laws.
The bill amends the ESA to require compensation for the
``federal or constructive use'' of non-federal property in
furtherance of the requirements of the Act. The legislation
claims to establish a requirement to compensate private
property owners when the use of their land is restricted by the
Endangered Species Act that is as ``equitable as the
compensation afforded to Federal agencies'' when their land is
subject to constructive use under Section 4(f) of the
Department of Transportation Act (DOT) of 1966. In reality,
this is not the case, as Section 4(f) is not a compensation
law. Moreover, according to the Department of Justice, while
this legislation is characterized as a protection of basic
constitutional property rights under the 5th Amendment, it
actually establishes a new entitlement program for property
owners that ignores long-established jurisprudence under the
5th Amendment and replaces it with an inflexible compensation
scheme (see attached letter from the Department of Justice for
more details).
H.R. 1142: In an effort to appear similar to Section 4(f),
the bill requires any federal agency that is implementing
provisions of the ESA to avoid, minimize, or mitigate impacts
on non-federal property that result in Federal use of the
property as a direct result of the ``action'' of the agency
under the ESA or in furtherance of the purposes of the ESA.
This is where the similarity ends, however, as the bill then
mandates that an agency shall ``not take an action that results
in a Federal use of non-Federal property'' under the ESA
without the voluntary agreement and written permission of the
property owner or unless the agency pays compensation for the
fair market value of the ``Federal use of the property or
portion''. Section 4(f) contains no such mandate.
Federal use of property is defined as any action to
permanently incorporate non-Federal property into a Federal
facility; place non-Federal property under the control of the
Secretary; or temporarily occupy non-Federal property in a
manner that is adverse to the constitutional right of the owner
against taking of property by the federal government; and
finally any ``constructive use'' of non-Federal property.
Constructive use is defined as ``actions'' taken by a
Federal agency on non-Federal property under the ESA to protect
species, including the imposition or enforcement of a
prohibition of use of property, the designation of property as
critical habitat, the denial of an incidental take permit
(Section 10 permit) to that results in the loss of use of
property, any agency action under Section 7 (interagency
consultation section) that causes the agency to restrict the
use of property, when the action results in substantial
diminution in the normal or reasonably expected uses of non-
Federal property; a reduction in the fair market values of non-
Federal property of 25% or more; or in the case of the right to
receive water, any diminution in the quantity of water received
or available for use.
Section 4(f) vs. 1142: Section 4(f) of the DOT Act of 1966
(49 U.S.C. Sec. 303) provides special protection for publicly
owned parks, recreations areas, wildlife and waterfowl refuges,
and significant historic sites from the development of
transportation projects. Under Section 4(f), DOT may approve
the use of the protected resources for a transportation project
only if there is no feasible and prudent alternative available
to the use of the land, and the transportation project includes
all possible planning to minimize harm resulting from the use.
Implementation of 4(f) has been interpreted in their
regulations to apply not only to the acquisition of an interest
in land, but also to situations where serious impacts result in
``constructive use'' of land when a transportation project is
constructed near, but not actually on Section 4(f) lands and
the proximity of the project may impact the land sufficiently
to constitute a substantial impairment of the activities,
features, or attributes of the resource.
In the case of the Minneapolis-St. Paul airport expansion,
which the majority uses as an example of why this bill is
warranted, it was found that the expansion of a runway would
constitute a ``constructive use'' of an adjoining National
Wildlife Refuge and that some form of mitigation was required
pursuant to Section 4(f). However, while a monetary
compensation agreement was reached in the airport case to fund
the required mitigation, Section 4(f) does not require, nor
does it generally provide, monetary compensation in case where
constructive or other uses are found. H.R. 1142, on the other
hand, mandates the compensation of private property owners for
any requirements to protect species under the ESA. In addition,
the statutory threshold for compensation established in the
bill is independent of, and contradictory to, the Constitution.
Constitutional Rights vs. H.R. 1142: H.R. 1142 asserts,
correctly, that the Federal Government enjoys no right under
the Constitution, as private property owners do, to
compensation for use of Federal agency property for other
federal purposes. In fact, Congress may have afforded some
measure of protection to certain federal lands under Section
4(f) because they are not protected by the 5th Amendment, and
this is the point. The Fifth Amendment of the Constitution
prohibits the government from taking private property for
public use without compensation.
In the 25 year history of the ESA, however, courts have
decided only four Fifth Amendment ``takings'' cases on the
merits, all of which found that the ESA did not take private
property. Moreover, recent Supreme Court decisions have
established that mere diminution in the value of property (such
as the 25% threshold set in the bill) resulting from
regulation, however serious, is insufficient to demonstrate a
taking. (Concrete Pipe, 508 U.S. at 645). In another unanimous
ruling, the Court held that ``the requirement of a permit
before engaging in certain uses of his or her property does not
itself ``take'' the property in any sense. * * * Moreover, even
if the permit is denied, there may be other viable uses.''
(U.S. v. Riverside Bayview Homes, 474 U.S. 121, 126-127
(1985)). H.R. 1142, however, would mandate compensation for
landowners who are denied a Section 10 incidental take permit
for a specific use of property under the ESA regardless of the
reason that the permit is denied and despite the fact that
other uses of the property may be available.
In addition, recent Supreme Court rulings that have found,
for the purposes of analyzing whether a taking has occurred,
the property must be viewed as a whole. Moreover, the Supreme
Court has not said that the 25% diminution in value (as
specified in the bill) is the threshold limit to establish a
taking.
In fact, rulings such as Lucas v. South Carolina Coastal
Council (112 S. Ct. 2886 (1992)) would seem to indicate that
the threshold is much higher (The Court found that ``where
regulation denies all economically beneficial or productive use
of land'' a taking has occurred.) Yet, the bill does not
establish that the whole property must be looked at to
determine if a diminution in value has occurred. Nor does it
specify who determines what the loss of value actually is.
Impacts on agency activities: H.R. 1142 requires that the
compensation required to be paid to private property owners
must come from the funds appropriated to the agency.
Compensation must also be paid before any agency action can go
forward which contradicts the Supreme Court ruling which found
that the 5th Amendment does not require compensation be paid in
advance or even contemporaneously with a taking (Presault v.
I.C.C., 110 S. Ct. 914 (1990)).
Given that the Fish and Wildlife Service (FWS) and the
National Marine Fisheries Service (NMFS) are the agencies with
primary responsibility for implementing the Act, and given that
this legislation is so broad in scope that virtually any
regulation they impose with respect to the ESA would require
compensation, the majority of payments would come from, and
cripple, their appropriated budgets.
Two outcomes are possible. One, the FWS and NMFS will spend
so much of their appropriated funds compensating property
owners that they will not have sufficient funds to implement
the ESA or any of their other mandated responsibilities. While
this may be the intent of the bill, it could have the
unintended consequence of penalizing property owners that wish
to move forward with projects on their land in compliance with
the law. If no monies are available for consultations or
granting of Section 10 permits, but they are still required by
the law, then activities that are conducted without them will
be in violation of the ESA and subject to civil or criminal
penalties. Moreover,the Agencies will be unable to fulfill
their responsibilities related to refuge and fisheries
management as well as a whole host of other responsibilities.
The other possibility that was proposed by compensation
proponents during the debate over S. 605 and other similar
taking compensation bills in the 104th Congress, is that the
agencies will simply limit the number of regulations and
requirements that they promulgate and enforce that would
necessitate compensation, thereby limiting the amount of
appropriated funds that will have to be spent for this purpose.
In other words, the threat of requiring compensation will cause
agencies to change their behavior. The ability to alter agency
behavior, however, is dependent upon the flexibility of the
law, in this case the ESA and the interpretation of that law by
the courts.
With respect to the ESA, the requirements for listings,
consultations, permits, habitat designations, and other
restrictions are fairly detailed in the law itself, however, so
the agencies will be required to carry out these measures
despite the potential for compensation claims that will occur
as a result of this legislation. In fact, in many cases where
the FWS has delayed listings, or the designation of critical
habitat for example, Courts have ruled that the listings and
designations must go forward when the science dictates their
necessity. It is unlikely a new requirement for compensation is
going to alter the Court's interpretation of the requirement of
the law, or that agencies will be able to significantly alter
their implementation of the law in such a way as to minimize
compensation claims.
Compensation Formula: Finally, the requirement that the
bill compensate private property owners regardless of their
investment backed expectations and based on a fair market value
price that cannot take into account the existence of endangered
species on the property, contradicts Supreme Court Rulings
(Penn Central Transportation Co. v. NYC, 438 US 104 (1978)) and
could likely result in windfall profits at the expense of the
taxpayer. Under this bill, an individual could purchase
property, knowing it had endangered species on it and that it
may have restrictions on development, and pay the price set by
the market that took into consideration the existence of such
species. Then, the property owner could seek a permit to
develop the property, and when such permit was denied, exact
compensation despite his investment backed expectation.
Moreover, the ``fair market'' value price that the government
would be required to pay would be calculated as if no species
occurred on the property, despite the fact that the price paid
took this into consideration.
In short, this legislation, is not intended to protecting
property owners' constitutional rights, nor is it about
providing compensation that is ``as equitable as the
compensation afforded to Federal agencies'' under Section 4(f)
as the bill claims. Instead, the bill establishes new rights
and a new basis for compensation that have no relationship to
the requirements of Section 4(f); rights and compensation that
are above and beyond what the Supreme Court has ruled are
warranted under the Constitution; and rights that are not
enjoyed by private property owners regulated under any other
law.
Clearly, the goal of this bill is to tie the hands of the
Fish and Wildlife Service and other agencies responsible for
implementing the ESA and ensure they will be unable to do so.
While responsible ESA reform legislation could and should be
brought before the House, the Majority has chosen not to do so.
Instead of developing ESA amendments on which a bipartisan
consensus could be formed, they have insisted on moving
divisive, expensive, and controversial bills, such as this one,
which may score ideological points with a handful of extreme
constituencies, but will not become law.
George Miller.