Obviously, then, only the most tenacious and well-heeled of property owners is able to bring those cases in the first instance to the Claims Court and see them through.

Thus, property rights legislation is needed to address the requirements of the ordinary American who lack fairness and certainty in their dealings with their Federal Government with respect to their property rights. That legislation must, first of all, address the certainty question. It must provide a bright line definition of what constitutes a taking.

There are various ways you can approach that. One is to speak in terms of reduction in value of the property. Another is to speak in terms of the taking of a cognizable property interest, but there must be a definition better than saying that it is an ad hoc, factual inquiry.

Second, there must be procedural fairness. It just can't continue to take a decade or more to try the ordinary takings case, and it can't cost the kind of money that it has-has been expended by litigants in past years.

And, finally, there must be full compensation. There must be compensation not only for that which was taken but reimbursement for attorneys' fees, treasurers' fees, expert witness costs and all the other expenses inherent in the property rights prosecution. It is only by the passage of this kind of property rights legislation that we will put the justice back in the just clause. Mr. CANADY. Thank you, Mr. Marzulla.

[The prepared statement of Mr. Marzulla follows:]

PREPARED STATEMENT OF ROGER J. MARZULLA, CHAIRMAN, BOArd of Directors,

DEFENDERS OF PROPERTY RIGHTS

Mr. Chairman and Members of the Subcommittee, thank you for inviting me to appear before this Subcommittee today to discuss the vital need for private property rights legislation. The need for property rights legislation was well described in a recent decision by Chief Judge Lorin Smith of the Court of Federal Claims:

This case presents in sharp relief the difficulty that current takings law forces upon both the federal government and the private citizen. The government here had little guidance from the law as to whether its action was a taking in advance of a long and expensive course of litigation. The citizen likewise had little more presidential guidance than faith in the justice of his cause to sustain a long and costly suit in several courts. There must be a better way to balance legitimate public goals with fundamental individual rights. Courts, however, cannot produce comprehensive solutions. They can only interpret the rather precise language of the fifth amendment to our constitution in very specific factual circumstances. To the extent that the constitutional protections of the fifth amendment are a bulwark of liberty, they should also be understood to be a social mechanism of last, not first resort. Judicial decisions are far less sensitive to societal problems than the law and policy made by the political branches of our great constitutional system. At best courts sketch the outlines of individual rights, they cannot hope to fill in the portrait of wise and just social and economic policy. Bowles v. United States 31 Fed.Cl. 37 (1994).

I serve as chairman of the Board of Directors of Defenders of Property Rights, the nation's only nonprofit legal defense foundation dedicated exclusively to the protection of constitutionally-guaranteed property rights. Through a program of litigation, education and legislative support, Defenders seeks to realize the promise of the Bill of Rights of the U.S. Constitution that private property shall not be "taken for public use without just compensation." Defenders has a large national membership who are property owners, users and beneficiaries of the rights protected by the Constitution and traditional Anglo-American property law. Defenders has participated in many of the most important property right cases in recent years, including Lucas v. South Carolina Coastal Commission, Dolan v. City of Tigard and Reahard v. Lee

County Florida (for which we will seek Supreme Court review in a petition to be filed next week). Defenders has also devoted a significant amount of resources to analyzing legislative proposals concerning property rights at both the state and federal levels.

Despite the fact that the United States Constitution imposes a duty on the government to protect private property rights, in reality property rights are often left unprotected. As reflected in various provisions in the Constitution, the framers of our Constitution clearly recognized the need for vigorously protected property rights. They also understood the vital relationship between private property rights, individual rights and economic liberty. Property rights is the line drawn in the sand protecting against tyranny of the majority over the rights of the minority.

Today, environmental regulations destroy property rights on an unprecedented scale. Regulations designed to protect coastal zone areas, wetlands and endangered species habitants, among others, leave many owners stripped of all but bare title to their property. In recent years, courts have done much to restore vigor to the Fifth Amendment. For instance, in Nollan v. California Coastal Commission, the Supreme Court ruled that a land use regulation will be upheld only when it (1) serves a legitimate state interest; and (2) does not deny an owner "economically viable use of his land.” Similarly, in Lucas v. South Carolina Coastal Council, the Supreme Court held that denying an owner all economically beneficial and productive use of land requires payment of compensation unless the prohibited use constitutes a nuisance as defined and understood by background principles of common law.

Nevertheless, cases in which landowners possess the resources and preserverence to prevail against a massive federal government are few and far between. Landowners are increasingly being deprived of most, if not all, economically beneficial uses of their land by government action and regulation. The Founding Fathers' intent for private property to be protected was clear. They could never have envisioned, however, the growth of a leviathan government which has occurred in recent years. If the Fifth Amendment is going to be worth more than the paper it is written on, private property protection must be strengthened. Adopting legislation to protect property owners will help fulfill the promise of those who wrote the Bill of Rights.

I. THE UNITED STATES CONSTITUTION IMPOSES A DUTY ON GOVERNMENT TO PROTECT PRIVATE PROPERTY RIGHTS BECAUSE PROPERTY RIGHTS ARE AN ESSENTIAL ELEMENT OF A FREE SOCIETY

Within the Constitution numerous provisions directly or indirectly protect private property rights. The Fourth Amendment guarantees that people are to be "secure in their persons, houses, papers, and effects. ." The Fifth Amendment states that no person shall "be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation." The Fourteenth Amendment echoes the Due Process Clause, stating that no "State shall deprive any person of life, liberty, or property without due process of law. Indirectly, the Contracts Clause protects property by forbidding any state from passing any "Law impairing the Obligation of Contracts." U.S. CONST. art. 1, § 10.

The reason why the Constitution places such strong emphasis on protecting private property rights is because the right to own and use property is critical to the maintenance of a free society. Properly understood, property is more than land. Property is buildings, machines, retirement funds, savings accounts, and even ideas. In short, property is the fruits of one's labors. The ability to use, enjoy, and exclusively possess the fruits of one's own labors is the basis for a society in which individuals are free from oppression. Indeed, there can be no true freedom for anyone if people are dependent upon the state (or an overreaching bureaucracy) for food, shelter, and other basic needs. Where the fruits of your labors are owned by the state and not you, nothing is safe from being taken by a majority or a tyrant. As a government dependent, the individual is ultimately powerless to oppose any infringement of his rights (much less degradation of the environment) because the government has total control over them. People's livelihoods, possibly even their lives, can be destroyed at the whim of the state.

One of the most eloquent commentators on the relationship between freedom and property rights was Noah Webster. The noted American educator and linguist said: "Let the people have property and they will have power-a power that will forever be exerted to prevent the restriction of the press, the abolition of trial by jury, or the abridgment of many other privileges." Not surprisingly, the world's greatest oppressors have also understood the intrinsic link between property rights and freedom. As Karl Marx explained in the Communist Manifesto: "You reproach us with

planning to do away with your property. Precisely, that is just what we propose. The theory of the Communists may be summed up in a single sentence: Abo

lition of private property."

II. PROPERTY RIGHTS TODAY ARE UNDER SIEGE AND COURTS HAVE NOT GONE FAR ENOUGH IN PROVIDING FOR THEIR PROTECTION

Never before have government regulations threatened to destroy property rights on so large a scale and in so many different contexts as they do today.

In just two short decades, the United States has developed from scratch the most extensive governmental environmental protection programs in history. Environmental regulations have become an elaborate web of intricate laws and regulations covering every conceivable aspect of property use. For example, we have regulatory programs dealing with marine protection, safe drinking water and toxic substances control. We have regulatory schemes dealing with coastal zone management, ocean dumping, global climate protection and clean water (including the wetlands program); we have federal programs regulating air emissions, automobiles, endangered species, wild horses and burros, new chemicals, chlorofluorocarbons, waste disposal and the cleanup of soils and groundwater; we regulate surface mining, underground mining, forestry, energy production, transportation of all kinds and every conceivable aspect of the use and development of land, water, minerals and other resources. But we do not have a single statute dealing with the protection of private property rights.

A. Courts cannot adequately protect private property rights

In 1922, Justice Holmes declared that a regulation that went too far would be recognized as an unconstitutional taking of private property. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922). Since that time, courts have struggled with the question of when a regulation does, in fact, go too far. There has been no clear articulation of when the exercise of regulatory authority will violate the Just Compensation Clause. In 1978, after surveying fifty years of takings jurisprudence, Justice Brennan threw up his hands in dismay and declared that "This Court, quite simply, has been unable to develop any 'set formula' for determining when justice and fairness' require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons." Penn Central Transp. Co. v. New York City, 438 U.S. 124 (1978). Justice Brennan then identified three factors which still guide courts in determining whether the Fifth Amendment has been violated: (1) the character of the government's action; (2) the reasonableness of the owner's investment-backed expectations; and, (3) the economic impact of the regulation.

Since 1978, the Court has identified at least three areas which also constitute per se violations of the Fifth Amendment. In Hodel v. Irving, 481 U.S. 704 (1987), the Court held that destruction of the right to devise private property violates the Fifth Amendment. In Nollan v. California Coastal Commission, 483 U.S. 825 (1987), the Court determined that a property regulation which does not substantially advance its avowed governmental purpose also constitutes a taking. Most recently, in Lucas v. South Carolina Coastal Council, 112 S. Ct. 2866 (1992), the Court held that destruction of all productive and beneficial uses of private property violated the Fifth Amendment. Despite these efforts by courts to flesh out Fifth Amendment guarantees, there are still many open questions in takings jurisprudence. Indeed, the most troublesome question is determining when a regulation goes too far.

B. Takings litigation today is a long, expensive and arduous process which only the most well-financed and dedicated property owner can endure

The scales of justice are unfairly tipped in favor of the government when citizens are faced with the threat of losing their property because of regulatory burdens. Not only are the laws drafted to ease the litigation burden of the government, but the costs of takings litigation can range in the hundreds of thousands or even millions of dollars, too high for the average citizen to bear. Consequently, many citizens, when faced with a government takings claim, cannot pursue their rights under the Fifth Amendment. The government, on the other hand, does not face a similar shortage of resources (at least in comparison to the individual property owner) and can often pursue a vigorous defense of the case without constraint. Adding to the hardship, procedural hurdles often bar litigation on the merits of takings claims for anywhere from five to ten years.

A few examples of reported cases demonstrate how arduous and interminable the litigation of takings claims against the federal government can be:

On October 2, 1980 the Florida Rock Industries was denied a wetlands permit to mine limestone on its property in Southern Florida. In 1982 the company filed suit

against the federal government alleging an unconstitutional taking. Following a 1985 judgment in the company's favor, the government appealed and the case was reversed. In 1990, following another trial, the plaintiff again won, and the government appealed. Again, the case was reversed in 1994, and is now pending yet a third trial. More than 14 years after the original permit denial, the company is still waiting to be paid for the taking.

In 1983 the federal government placed groundwater monitoring wells on land owned by Mr. Hendler in Southern California, and issued various orders forbidding certain uses of the property. In September of 1984 Hendler filed suit against the federal government alleging a taking and, after five years of bitter litigation, the case was dismissed in December 1989. Hendler appealed, and the case was reversed by the Court of Federal Appeals in the Summer of 1991. The matter is now set for trial in 1995, more than twelve years after the government first physically invaded Hendler's property.

In January 1979 Whitney Benefits Corporation was denied a permit to mine coal on its land located in Wyoming. The company filed suit in the claims court in August 1983, and the case was dismissed the next year. In January 1985 the Court of Appeals reversed the dismissal and, following several years of litigation, the trial court entered judgment in favor of the plaintiff in October 1989. That judgment was affirmed in 1991, but has been followed by four more years of motions. Thus, more than 16 years after the permit denial, Whitney Benefits has not yet received payment for the taking.

In May 1982 Love ladies Harbor Inc. was denied a wetlands permit to develop property it owned in New Jersey, and filed suit in the Claims Court in April 1983. After extensive litigation in both the Federal District Court and the Claims Court, plaintiff was awarded judgment in 1990. The government appealed, then moved to dismiss the appeal. Finally, in 1994, the Court of Appeals for the Federal Circuit affirmed the judgment for plaintiff more than twelve years after the original permit denial.

III. PROTECTION OF PRIVATE PROPERTY RIGHTS NEED NOT BE THE ENEMY OF ACHIEVING IMPORTANT SOCIAL OBJECTIVES

Legal and economic scholars have long argued that private property owners protect their property from environmental harm with greater vigor than the government. After all, it is the value of their property that will be diminished if the property is damaged. Nevertheless, there are instances in which the government will act to protect the environment by regulating private property. The purpose of the Just Compensation Clause is not to stop government from acting, but rather to avoid individual property owners from being singled out to pay the costs of achieving social good.

We have heard the government regulators argue that requiring compensation for takings will prohibit the government from protecting enough land. Economically speaking, the Just Compensation Clause ensures that only property worth the cost of protecting will be regulated. By requiring compensation for takings, the government is forced to weigh the costs and benefits of its regulatory schemes. The Just Compensation Clause thus protects property owners, government, and the environment. Property owners are protected from arbitrary government regulations that destroy the economic viability of their land. Government is protected because the Clause will slow the government from taking too much land, thus destroying the productive forces of the economy that finance government. The best stewards of land, the owners, will have the proper incentives to guard and defend their land from environmental destruction with more intensity than any government bureaucrat or agency. Since no one has the right to use his property in a manner which would injure the public, those uses of private property which are public nuisances can be freely prohibited by the government. Finally, those areas deemed by society worthy of investment of resources to protect, or which private incentives fail to protect, can be preserved with limited and targeted regulation.

Critics of property rights proposals assert that such legislation is unfair because it only allows for the payment of compensation if property is taken. To be equitable, they assert, property owners should pay government for the benefits bestowed on them by regulation. The straight forward legal response to this position is that the Constitution does not speak to this issue. The Fifth Amendment, which contains the only express money guarantee in the Constitution, states simply that "[N]or shall private property be taken for public use without just compensation." The obligation to pay property owners for property which has been taken simply attaches whenever government action works a taking. Armstrong v. United States, 364 U.S. 40, 49 (1960). Federal property rights legislation would merely enforce this constitutional

right because courts have such difficulty in applying it in situations where property is taken due to confiscation regulations.

IV. A SOUND PROPERTY RIGHTS BILL MUST CONTAIN AN ADEQUATE DEFINITION OF "TAKING" AND PROMPT COMPENSATION TO THE PROPERTY OWNER

Thus, the central problems of current takings law are dual: First, the ambiguity inherent in a case-by-case ad hoc definition of what constitutes a taking, and second, interminable litigation prior to payment of just compensation for the property taken. Legislation must address both of these issues if it is to ameliorate the burden placed on the property owner and to have the salutary effect of providing greater certainty for the guidance of the government and its citizens alike. I wish to underscore the point that sound property rights legislation will not only cure the injustice when a single property owner is forced to bear a burden which, in fairness, should be borne by the public as a whole; it will also provide guidance for government agencies in implementing their regulatory programs so as to avoid unnecessary government interference with private property rights.

As Assistant Attorney General in charge of the Justice Department's Land and Natural Resources Division, I was responsible for the drafting of Executive Order 12630 signed by President Reagan on March 15, 1988. That Executive Order, titled "Governmental Actions and Interference with Constitutionally Protected Property Rights," had the same dual purposes which should be served by property rights legislation. Section 1(b) of that Order provides:

Responsible fiscal management and fundamental principles of good government require that government decision-makers evaluate carefully the effect of their administrative, regulatory, and legislative actions on constitutionally protected property rights. Executive departments and agencies should review their actions carefully to prevent unnecessary takings and should account in decision-making for those takings that are necessitated by statutory mandate.

Regrettably, however, executive agencies have utterly ignored the Executive Order, requiring that Congress act to provide the discipline which those agencies have refused to impose upon themselves.

Thus, private property rights legislation should define a taking in terms which can readily be applied by the Courts to specific factual settings. The federal courts have provided at least two approaches to defining what constitutes a taking. The first approach analyzes the issue in terms of the diminution in value caused by the regulatory action. [See e.g. Keystone Bituminous Coal Association v. DeBenedictis 107 S. Ct. 1232 (1987) and Florida Rock Indus. v. United States 18 F.3d 1560 (1994)]. The second approach analyzes the issue by ascertaining whether a recognizable property interest, deed able to the government, has been taken. [See e.g. Loveladies Harbor Inc. v. United States 28 F.3d 1171 (1994) and Nollan v. California Coastal Commission 107 S. Ct. 3141 (1987)]. Either of these approaches would provide far greater certainty than the case-by-case, ad hoc approach described so despairingly by Justice Brennan in the Penn Central Railroad Decision. By providing to the government a bright line definition of what constitutes a taking, Congress will not only foreshorten much useless litigation but, more importantly, will allow agencies to craft their own regulatory actions so as to avoid unnecessary takings of private property.

Second, private property legislation should provide prompt and fair compensation when a taking does occur. Current takings litigation is fraught with pitfalls for the property owner. The government routinely asserts defenses such as lack of ripeness, mootness, statute of limitations, filing in the wrong court (i.e., District Court versus Court of Federal Claims, lack of jurisdiction, lack of case or controversy-to name just a few. Eliminating this procedural nightmare would do much to put the "justice" back in "just compensation." Providing an arbitration remedy might also serve to minimize the time and expense invested by both sides in litigating these complex and frustrating cases.

Finally, Congress must be careful to provide in any such legislation the full measure of just compensation. This should include, in addition to the value of the property taken, interest representing the reasonable use value of the money denied the property owner from the date of taking. The successful property owner should also be entitled to recover attorneys fees and costs of the litigation, including expert witness fees (such as appraisers); for in many cases these expenses exceed the value of the property taken, at least when the litigation extends over many years. I would be pleased to answer any questions that you may have.

Mr. CANADY. Next, Ms. Belin.