Regulatory Takings
Agency Compliance with Executive Order on Government Actions Affecting Private Property Use Gao ID: GAO-04-120T October 16, 2003Each year federal agencies issue numerous proposed or final rules or take other regulatory actions that may potentially affect the use of private property. Some of these actions may result in the property owner being owed just compensation under the Fifth Amendment. In 1988 the President issued Executive Order 12630 on property rights to ensure that government actions affecting the use of private property are undertaken on a well-reasoned basis with due regard for the potential financial impacts imposed on the government. This testimony is based on our recent report on the compliance of the Department of Justice and four agencies--the Department of Agriculture, the Army Corps of Engineers, the Environmental Protection Agency, and the Department of the Interior--with the executive order. (Regulatory Takings: Implementation of Executive Order on Government Actions Affecting Private Property Use, GAO-03-1015, Sept.19,2003). Specifically, GAO examined the extent to which (1)Justice has updated its guidelines for the order to reflect changes in case law and issued supplemental guidelines for the four agencies, (2) the four agencies have complied with the specific provisions of the executive order, and (3) just compensation awards have been assessed against the four agencies in recent years.
Justice has not updated the guidelines that it issued in 1988 pursuant to the executive order, but has issued supplemental guidelines for three of the four agencies. The executive order provides that Justice should update the guidelines, as necessary, to reflect fundamental changes in takings case law resulting from Supreme Court decisions. While Justice and some other agency officials said that the changes in the case law since 1988 have not been significant enough to warrant a revision, other agency officials and some legal experts said that significant changes have occurred and that it would be helpful if a case law summary in an appendix to the guidelines was updated. Justice issued supplemental guidelines for three agencies, but not for Agriculture because the two agencies were unable to resolve issues such as how to assess the takings implications of denying or limiting permits that allow ranchers to graze livestock on federal lands managed by Agriculture. Although the executive order's requirements have not been amended or revoked since 1988, the four agencies' implementation of some of these requirements has changed over time as a result of subsequent guidance provided by the Office of Management and Budget (OMB). For example, the agencies no longer prepare annual compilations of just compensation awards or account for these awards in their budget documents because OMB issued guidance in 1994 advising agencies that this information was no longer required. According to OMB, this information is not needed because the number and amount of these awards are small and the awards are paid from the Department of the Treasury's Judgment Fund, rather than from the agencies' appropriations. Regarding other requirements, agency officials said that they fully consider the potential takings implications of their regulatory actions, but provided us with limited documentary evidence to support this claim. The agencies provided us with a few examples of takings implications assessments stating that such assessments were not always documented in writing or retained on file. In addition, our review of the agencies' rulemakings for selected years that made reference to the executive order revealed that relatively few specified that an assessment was done and few anticipated significant takings implications. According to Justice, property owners or others brought 44 regulatory takings lawsuits against the four agencies that were concluded during fiscal years 2000 through 2002, and of these, 14 cases resulted in just compensation awards or settlement payments totaling about $36.5 million. The executive order's requirement for assessing the takings implications of planned actions applied to only three of these cases. The actions associated with the other 11 cases either predated the order's issuance or were otherwise excluded from the order's provisions. The relevant agency assessed the takings potential of its action in only one of the three cases subject to the order's requirements. According to Justice, at the end of fiscal year 2002, 54 additional lawsuits involving the four agencies were pending resolution.
GAO-04-120T, Regulatory Takings: Agency Compliance with Executive Order on Government Actions Affecting Private Property Use
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Testimony:
Before the Subcommittee on the Constitution, Committee on the
Judiciary, House of Representatives:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EDT:
Thursday, October 16, 2003:
Regulatory Takings:
Agency Compliance with Executive Order on Government Actions Affecting
Private Property Use:
Statement of Anu K. Mittal, Director, Natural Resources and
Environment:
GAO-04-120T:
GAO Highlights:
Highlights of GAO-04-120T, a testimony before the Subcommittee on the
Constitution, Committee on the Judiciary, House of Representatives
Why GAO Did This Study:
Each year federal agencies issue numerous proposed or final rules or
take other regulatory actions that may potentially affect the use of
private property. Some of these actions may result in the property
owner being owed just compensation under the Fifth Amendment. In 1988
the President issued Executive Order 12630 on property rights to
ensure that government actions affecting the use of private property
are undertaken on a well-reasoned basis with due regard for the
potential financial impacts imposed on the government.
This testimony is based on our recent report on the compliance of the
Department of Justice and four agencies”the Department of Agriculture,
the Army Corps of Engineers, the Environmental Protection Agency, and
the Department of the Interior”with the executive order. (Regulatory
Takings: Implementation of Executive Order on Government Actions
Affecting Private Property Use, GAO-03-1015, Sept. 19, 2003).
Specifically, GAO examined the extent to which (1) Justice has updated
its guidelines for the order to reflect changes in case law and issued
supplemental guidelines for the four agencies, (2) the four agencies
have complied with the specific provisions of the executive order, and
(3) just compensation awards have been assessed against the four
agencies in recent years.
What GAO Found:
Justice has not updated the guidelines that it issued in 1988 pursuant
to the executive order, but has issued supplemental guidelines for
three of the four agencies. The executive order provides that Justice
should update the guidelines, as necessary, to reflect fundamental
changes in takings case law resulting from Supreme Court decisions.
While Justice and some other agency officials said that the changes in
the case law since 1988 have not been significant enough to warrant a
revision, other agency officials and some legal experts said that
significant changes have occurred and that it would be helpful if a
case law summary in an appendix to the guidelines was updated. Justice
issued supplemental guidelines for three agencies, but not for
Agriculture because the two agencies were unable toof unresolved
issues such as how to assess the takings implications of denying or
limiting permits that allow ranchers to graze livestock on federal
lands managed by Agriculture.
Although the executive order‘s requirements have not been amended or
revoked since 1988, the four agencies‘ implementation of some of these
requirements has changed over time as a result of subsequent guidance
provided by the Office of Management and Budget (OMB). For example,
the agencies no longer prepare annual compilations of just
compensation awards or account for these awards in their budget
documents because OMB issued guidance in 1994 advising agencies that
this information was no longer required. According to OMB, this
information is not needed because the number and amount of these
awards are small and the awards are paid from the Department of the
Treasury‘s Judgment Fund, rather than from the agencies‘
appropriations. Regarding other requirements, agency officials said
that they fully consider the potential takings implications of their
regulatory actions, but provided us with limited documentary evidence
to support this claim. For example, tThe agencies provided us with a
few examples of takings implications assessments stating that such
assessments were not always documented in writing or retained on file.
In addition, our review of the agencies‘ rulemakings for selected
years that made reference to the executive order revealed that
relatively few specified that an assessment was done and few
anticipated significant takings implications.
According to Justice, property owners or others brought 44 regulatory
takings lawsuits against the four agencies that were concluded during
fiscal years 2000 through 2002, and of these, 14 cases resulted in
just compensation awards or settlement payments totaling about $36.5
million. The executive order‘s requirement for assessing the takings
implications of planned actions applied to only three of these cases.
The actions associated with the other 11 cases either predated the
order‘s issuance or were otherwise excluded from the order‘s
provisions. The relevant agency assessed the takings potential of its
action in only one of the three cases subject to the order‘s
requirements. According to Justice, at the end of fiscal year 2002, 54
additional lawsuits involving the four agencies were pending
resolution.
What GAO Recommends:
www.gao.gov/cgi-bin/getrpt?GAO-04-120T.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Anu K. Mittal at
(202) 512-3841 or mittala@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here today to discuss the measures taken by the
Department of Justice (Justice) to implement certain provisions of
Executive Order 12630 (EO) and the efforts of four agencies--the
Department of Agriculture, the U.S. Army Corps of Engineers (Corps),
the Environmental Protection Agency (EPA), and the Department of the
Interior[Footnote 1]--to comply with the EO's requirements. Our
testimony is based on work included in a report recently released by
this subcommittee. [Footnote 2]
Each year federal agencies issue numerous proposed or final rules or
take other regulatory actions that may potentially affect the use of
private property. Agencies take these actions to meet a variety of
societal goals, such as protecting the environment, promoting public
health and safety, conserving natural resources, and preserving
historic sites. At the same time, these actions may place restrictions
on the use of private property, such as limiting the development of
land that includes critical wildlife habitat or wetlands needed for
flood control, thereby potentially depriving the landowner of the use
or economic value of the property.
Any landowner believing that a government regulatory action has
resulted in a taking of his or her private property may file a lawsuit
seeking just compensation under the Fifth Amendment to the U.S.
Constitution. In general, these suits must be brought in the United
States Court of Federal Claims; Justice is responsible for litigating
these cases on behalf of the government. Such cases, many of which may
take years to resolve, may result in a dismissal, a decision in favor
of the government, a settlement payment made to the landowner, or an
award of just compensation. In general, such awards and settlements are
paid from the Department of the Treasury's Judgment Fund.
In 1988 the President issued Executive Order 12630,[Footnote 3]
"Governmental Actions and Interference with Constitutionally Protected
Property Rights," to ensure that government actions are undertaken on a
well reasoned basis with due regard for the potential financial impacts
imposed on the government by the Just Compensation Clause of the Fifth
Amendment. Specifically, the EO requires executive branch agencies,
among other things, to (1) prepare annual compilations of awards of
just compensation resulting from landowner lawsuits alleging takings,
(2) account for takings awards levied against them in their annual
budget submissions, (3) designate an agency official responsible for
implementing the order, and (4) consider the potential takings
implications of their proposed actions and document significant takings
implications in notices of proposed rulemaking. The EO also requires
Justice, specifically the U.S. Attorney General, to issue general
guidelines to provide agencies with a uniform framework for
implementing the EO and to issue supplemental guidelines for each
agency, as appropriate, that reflect that agency's unique
responsibilities. In addition, the EO requires the Attorney General to
update the general guidelines, as necessary, to reflect fundamental
changes in takings case law resulting from U.S. Supreme Court
decisions. Furthermore, the EO requires the Office of Management and
Budget (OMB) to ensure that the policies of executive branch agencies
are consistent with the EO's requirements and that just compensation
awards made against the agencies are included in agencies' budget
submissions.
Our testimony discusses the extent to which (1) Justice has updated its
guidelines to reflect changes in case law and issued supplemental
guidelines for the four agencies, (2) the four agencies have complied
with the specific provisions of the EO, and (3) awards of just
compensation have been assessed by the courts against the four agencies
in recent years and whether in these cases, the agencies had assessed
the potential takings implications of their actions before implementing
them.
In summary, we found the following:
* Justice has not updated the general guidelines that it issued
pursuant to the EO in June 1988, but has issued supplemental guidelines
for three of the four agencies. Officials at Justice, the Corps and EPA
expressed the general view that changes in takings case law related to
Supreme Court decisions since 1988 had not been significant enough to
warrant a revision of the guidelines. Justice officials also noted that
the guidelines were intended to provide a general framework for
agencies to follow in implementing the EO, and thus did not require
frequent revision. However, Interior and Agriculture officials said
that it would be helpful if Justice updated a summary of the key
aspects of relevant case law contained in an appendix to the guidelines
to reflect significant developments over the past 15 years. Similarly,
representatives of property rights groups and law professors stated
that the guidelines should be updated, noting that the body of relevant
case law has evolved significantly over the past 15 years. Justice has
issued supplemental guidelines for all of the individual agencies
except Agriculture.
* The four agencies' implementation of some of the EO's key provisions
has changed over time in response to subsequent OMB guidance. The
agencies have not prepared annual compilations of just compensation
awards or accounted for these awards in their budget documents since
OMB issued guidance in 1994 advising agencies that this information is
no longer required. Regarding the EO requirement for designating an
official responsible for ensuring the agency's compliance with the EO,
the four agencies have each designated such an official--typically the
chief counsel, general counsel, or solicitor. Finally, the four
agencies told us that they fully consider the potential takings
implications of their planned regulatory actions, but they provided us
with limited documentary evidence to support this claim. Specifically,
agency officials told us that takings implication assessments are not
always documented in writing, and with the passage of time any
assessments that were documented may no longer be on file with the
agency.
* According to Justice data, property owners or other parties brought
44 regulatory takings cases against the four agencies that were
concluded during fiscal years 2000 through 2002. Of these, the courts
decided in favor of the plaintiff in 2 cases, resulting in awards of
just compensation totaling about $4.2 million. The Justice Department
settled in 12 other cases, providing total payments of about $32.3
million. The EO's requirements for assessing the takings implications
of planned regulatory actions applied to only 3 of these 14 cases. For
the other 11 cases, the associated regulatory action either predated
the EO's issuance or the matter at hand was otherwise excluded from the
EO's provisions. Based on the evidence made available to us, the
relevant agency assessed the takings potential of its action in only
one of the three cases subject to the EO's requirements. As of the end
of fiscal year 2002, Justice reported that 54 additional regulatory
takings cases involving the four agencies were pending resolution.
Background:
The just compensation clause of the Fifth Amendment provides that the
government may not take private property for public use without just
compensation. Initially, this clause applied to the government's
exercise of its power of eminent domain. In eminent domain cases, the
government invokes its eminent domain power by filing a condemnation
action in court against a property owner to establish that the taking
is for a public use or purpose, such as the construction of a road or
school, and to allow the court to determine the amount of just
compensation due the property owner. In such cases, the government
takes title to the property, providing the owner just compensation
based on the fair market value of the property at the time of the
taking. Supreme Court decisions later established that regulatory
takings are also subject to the just compensation clause. In contrast
to the direct taking associated with eminent domain, regulatory takings
arise from the consequences of government regulatory actions that
affect private property. In these cases, the government does not take
action to condemn the property or offer compensation, but rather
effectively takes the property by denying or limiting the owner's
planned use of the property, referred to as an inverse taking.[Footnote
4] An owner claiming that a government action has effected a taking and
that compensation is owed must initiate suit against the government to
obtain any compensation due.[Footnote 5] The court awards just
compensation to the owner upon concluding that a taking has occurred.
In 1987, concerned with the number of pending regulatory takings
lawsuits and with court decisions seen as increasing the exposure of
the federal government to liability for such takings, the President's
Task Force on Regulatory Relief began drafting an executive order to
direct executive branch agencies to more carefully consider the takings
implications of their proposed regulations or other actions. The
President issued this EO on March 15, 1988.
According to the EO, actions subject to its provisions include
regulations, proposed regulations, proposed legislation, comments on
proposed legislation, or other policy statements that, if implemented
or enacted, could cause a taking of private property. Such actions may
include rules and regulations that propose or implement licensing,
permitting, or other conditions, requirements or limitations on private
property use. The EO also enumerates agency actions that are not
subject to the order, including the exercise of the power of eminent
domain and law enforcement actions involving seizure, for violations of
law, of property for forfeiture, or as evidence in criminal
proceedings.
The EO also requires the U.S. Attorney General to issue general
guidelines to help agencies evaluate the takings implications of their
proposed actions, and, as necessary, update these guidelines to reflect
fundamental changes in takings case law resulting from Supreme Court
decisions.
The guidelines provide that agencies should assess takings implications
of their proposed actions to determine their potential for a
compensable taking and that decision makers should consider other
viable alternatives, when available, to meet statutorily required
objectives while minimizing the potential impact on the public
treasury. In cases where alternatives are not available, the potential
takings implications are to be noted, such as in a notice of proposed
rulemaking. The guidelines also include an appendix that provides
detailed information regarding some of the case law surrounding
considerations of whether a taking has occurred and the extent of any
potential just compensation claim. For example, the appendix discusses
the Penn Central Transportation Co. v. City of New York[Footnote 6]
case in which the Supreme Court set out a list of three "influential
factors" for determining whether an alleged regulatory taking should be
compensated: (1) the economic impact of the government action, (2) the
extent to which the government action interfered with reasonable
investment-backed expectations, and (3) the "character" of the
government action. However, the appendix provides a caveat that it is
not intended to be an exhaustive account of relevant case law, adding
that the consideration of the potential takings of an action as well as
the applicable case law will normally require close consultation
between agency program personnel and agency counsel.
Justice Has Not Updated Its 1988 Guidelines, but Has Issued
Supplemental Guidelines for Three of Four Agencies:
Agency officials and other experts differ on the need to update the
Attorney General's guidelines to reflect changes in regulatory takings
case law since 1988. Justice officials said that the guidelines had not
been updated since 1988 because there had been no fundamental changes
in regulatory takings case law, which is the EO's criterion for an
update. They said that the guidelines, as written, are still sufficient
to determine the risk of a regulatory taking and that subsequent
Supreme Court decisions have not substantially changed this analysis.
For example, officials said the three-factor test outlined in the 1978
Penn Central case remains the most important guidance for analyzing the
potential for a taking that is subject to just compensation. Justice
officials also emphasized that the guidelines address only a general
framework for agencies' evaluations of the takings implications of
their proposed actions and thus are not intended to be an up-to-date,
comprehensive primer on all possible considerations. The guidelines
state that the individual agencies must still conduct their own
evaluations, including necessary legal research, when assessing the
takings potential of a proposed regulation or action.
The four agencies were divided on the need to update the guidelines.
Corps and EPA officials supported Justice's position that the
guidelines do not need to be updated. Corps staff indicated that, based
on their review of relevant Supreme Court decisions since 1988, no
fundamental change in the criteria for assessing potential takings had
occurred and thus no update to the Attorney General's guidelines was
necessary. Similarly, EPA staff said that some of the takings cases
decided since 1988 gave the appearance that the Court was changing the
three-pronged test set out in the Penn Central decision. However, these
officials noted that more recent cases have returned to the Penn
Central test, thereby removing the need for updating the Attorney
General's guidelines. In contrast, officials at Interior and
Agriculture said that it would be helpful if Justice updated the
summary of key takings cases contained in an appendix to the guidelines
to reflect significant developments in this case law over the past 15
years.
Other legal experts said that the Attorney General's guidelines should
be updated, noting that regulatory takings case law had not remained
static over the past 15 years. For example, legal experts concerned
with the protection of private property rights said that there had been
significant developments in regulatory takings case law since 1988.
These experts said that the mere passage of time and the sheer number
of regulatory takings cases concluded since 1988 argued for updating
the guidelines. In another case, a law professor, who has written and
lectured on the issue of regulatory takings, said that the level of
specificity with which Justice prepared the original guidelines sets a
precedent that calls for updating these guidelines to reflect the many
important changes in regulatory takings case law since 1988.
The Attorney General has issued supplemental guidelines required by the
EO for three of the four agencies--the Corps, EPA, and
Interior.[Footnote 7] The EO directed the Attorney General, in
consultation with each executive branch agency, to issue supplemental
guidelines for each agency as appropriate to the specific obligations
of that agency. The Attorney General's guidelines state that the
supplement should prescribe implementing procedures that will aid the
agency in administering its specific programs under the analytical and
procedural framework presented in the EO and the Attorney General's
guidelines, including the preparation of takings implication
assessments. In general, the three agencies' supplemental guidelines
include specific categorical exclusions from the EO's provisions for
certain agency actions.
The Attorney General has not issued supplemental guidelines for
Agriculture because Justice and Agriculture could not agree on how to
assess the potential takings implications of the latter agency's
actions related to grazing and special use permits covering applicants'
use of public lands.[Footnote 8] Agriculture argued that such permit
actions should be exempt from the EO's requirements or, if not, that
the agency should be allowed to do a generic takings implication
assessment that would apply to multiple permits. Agriculture officials
indicated that Justice officials did not agree with these suggestions,
and the matter was never resolved. While lacking supplemental
guidelines, Agriculture officials said that their implementation of the
EO and the Attorney General's guidelines has not been encumbered.
Justice officials agreed with this assessment.
Implementation of Key Provisions by the Four Agencies Has Changed Over
the Life of the Executive Order:
Although the EO's requirements have not been amended or revoked since
1988, the four agencies' implementation of some of its key provisions
has changed over time in response to subsequent OMB guidance. For
example, the agencies no longer prepare annual compilations of just
compensation awards or account for these awards in their budget
documents because OMB guidance issued in 1994 advised agencies that
such information was no longer required.[Footnote 9] According to OMB,
this information is not needed because the number and amount of these
awards are small and the awards were not paid from the agencies'
appropriations but are paid from the Department of the Treasury's
Judgment Fund. In addition, because the number and dollar amounts of
just compensation awards and settlements paid by the federal government
annually are relatively small, OMB officials said the overall budget
implications for the government are small. Hence, in their view,
information on just compensation awards in agency annual budget
submissions was also unnecessary.
OMB and Justice officials said that the relative lack of regulatory
takings cases and associated just compensation awards each year is an
indication that the EO has succeeded in raising agencies' awareness of
the need to carefully consider the potential takings implications of
their actions.
Although OMB no longer requires agencies to comply with these EO
provisions, the provisions remain in the EO. However, OMB and Justice
officials noted that because executive orders are not the equivalent of
statutory requirements, non-compliance with these provisions does not
have the same implications. Instead, executive orders are policy tools
for the executive branch and are subject to changing interpretation and
emphasis with each new administration.
Other provisions of the EO have been implemented. For example, each of
the four agencies has designated an official to be responsible for
ensuring that the agency's actions comply with the EO's requirements.
In general, the responsible official at each agency is the agency's
senior legal official.[Footnote 10] EPA's and Interior's supplemental
guidelines specifically identify the designated official by title.
Agency officials could not provide us with any documentary evidence of
this designation for Agriculture and the Corps, but agency officials
assured us that their senior legal official fulfilled this role.
Officials at each of the four agencies said that they fully consider
the potential takings implications of their planned regulatory actions,
but again provided us with limited documentary evidence to support this
claim. Agencies provided us a few written examples of takings
implication assessments. Agency officials said that these assessments
are not always documented in writing, and, with the passage of time,
any assessments that were put in writing may no longer be on file. They
also noted that these assessments are internal, predecisional documents
that generally are not subject to the Freedom of Information Act or
judicial review. As a result, they said, the assessments are not
typically retained in a central file for a rulemaking or other
decision, and therefore difficult to locate. For example, the Corps
internal guidance states that takings implication assessments should be
removed from the related administrative file once the agency has
concluded a decision on a permit. In addition, agency officials also
noted that they do not maintain a master file of all takings
implication assessments. In many cases, attorneys assigned to field
offices conduct these assessments. In these cases, agency officials
said that headquarters staff might not have copies. Nevertheless, with
the exception of EPA, each agency provided us with some examples of
written takings implication assessments.[Footnote 11] These
assessments varied in form and the level of detail included.
To determine if and how the four agencies documented their compliance
with the EO when issuing regulatory actions, we reviewed information
contained in Federal Register notices on takings implication
assessments related to their proposed and final rulemakings, but had
limited success. Specifically, 375 notices mentioned the EO in 1989,
1997, and 2002, but relatively few provided an indication as to whether
a takings implication assessment was done. Most of these rules included
only a simple statement that the EO was considered and, in general,
that there were no significant takings implications. In contrast, 50
specified that an assessment of the rule's potential for takings
implications was prepared, and of these, 10 noted that the rule had the
potential for "significant" takings implications. Given the limited
amount of information available from the agencies or available in the
Federal Register notices that we reviewed, we could not fully assess
the extent to which agencies considered the EO's requirements.
Few Awards of Just Compensation Were Made Against the Four Agencies for
Takings Cases Concluded during Fiscal Years 2000 through 2002:
According to Justice data, 44 regulatory takings cases against the four
agencies were concluded during fiscal years 2000 through 2002.[Footnote
12] Fourteen of these 44 cases resulted in government payments. In 2 of
these 14 cases, the U.S. Court of Federal Claims decided in favor of
the plaintiff, resulting in awards of just compensation totaling about
$4.2 million. The Justice Department settled in 12 other cases
providing total payments of about $32.3 million.[Footnote 13] Of these
combined 14 cases with awards or settlement payments, 10 related to
actions of Interior, 3 to actions of the Corps , and 1 to an action of
Agriculture.
In general, the settled cases were concluded with compromise
agreements, including stipulated dismissals or settlement agreements,
reached among the litigants and approved by the applicable court. In
these cases, the document usually stated that the parties had agreed to
end the case with a payment to the plaintiff, but no finding that a
taking occurred. For example, in one case concluded in 2001 that
alleged a taking of an oil and gas lease on federal land managed by
Interior's Bureau of Land Management, the litigants negotiated a
stipulated dismissal that provided that a payment of $3 million be made
to the plaintiffs to cover all claims. However, the stipulated
dismissal also provided that the final outcome should not be construed
as an admission of liability by the United States government for a
regulatory taking. In addition, the dismissal required that the
plaintiffs surrender their interests in a portion of the lease. In the
two cases with award payments, the court concluded that a taking had
occurred and thus it awarded just compensation.
Of the 14 cases with awards or settlement payments, the 10 Interior
cases generally dealt with permits related to mining claims on federal
lands managed by that agency or matters related to granting access on
public lands. For example, one case involving mining claims resulted in
the plaintiff receiving a settlement of almost $4 million. In another
case, involving the denial of preferred access to a lake on land
managed by the agency, the plaintiff received a settlement of $100,000.
The Corps' three cases generally related to a denial or issuance, with
conditions, of wetlands permits for private property. One of these
cases, concerning the filling of a wetland in Florida, resulted in a
settlement payment of $21 million, accounting for more than half of the
total compensation awards and settlement payments related to the 14
cases. The Agriculture case concerned the title to mineral rights in a
national forest managed by the agency. The plaintiff received an award
of $353,000 in this case. (Appendix I provides further information on
just compensation awards or settlement payments, by agency, for cases
concluded during fiscal years 2000 through 2002.):
In addition to the cases concluded during fiscal years 2000 through
2002, Justice reported that an additional 54 regulatory takings cases
involving the four agencies were still pending resolution at the end of
fiscal year 2002. Of the 54 pending cases, 30 involved Interior, 14
involved the Corps, 7 involved Agriculture, and 3 involved EPA.
The EO's requirements for assessing the takings implications of planned
regulatory actions applied to only 3 of these 14 cases. For the other
11 cases, the associated regulatory action either predated the EO's
issuance or the matter at hand was otherwise excluded from the EO's
provisions.
Based on evidence made available to us, the relevant agency assessed
the takings potential of its action in only one of the three cases
subject to the EO's requirements. In that case, the Corps denied a
wetlands permit sought by the plaintiff to fill wetlands on the
plaintiff's property in order to develop a commercial medical center.
The plaintiff brought suit against the agency alleging a compensable
taking had occurred. In its takings implication assessment, the Corps
had concluded that the permit denial did not constitute a taking
because the applicant was still free to use the property for other
purposes that did not involve filling the wetland. Therefore, the Corps
concluded that the permit denial did not deprive the plaintiff of all
viable economic use of the property. However, the case ended with a
stipulated dismissal and a payment of $880,000 to the
plaintiff.[Footnote 14]
In the two other cases, based on information Interior provided to us,
it appears that the EO would apply. Interior stated that, in hindsight,
it appears that the EO may have applied in the first case involving a
denial of applications to drill for oil and gas on federal land.
Although a formal takings implication assessment was not prepared in
this case, Interior stated there was a "good faith" discussion of its
takings implications within the department. The case concluded with
settlement of $380,000 to the plaintiff for attorney fees.[Footnote 15]
In the second case, concerning anticipated and actual denial of oil and
gas drilling permits for federal land, Interior was not certain whether
the EO actually applied to the case in the first place, but believed
that a takings assessment had been done and documented in a related
environmental impact statement. However, Interior was unable to provide
us a copy of this document. We believe that the EO applied and, lacking
documentation, that no formal assessment was done. This case concluded
with a settlement of $3 million for the plaintiff.[Footnote 16]
Mr. Chairman, this completes my prepared statement. I would be pleased
to respond to any questions that you or other Members of the
Subcommittee may have at this time.
GAO Contacts and Staff Acknowledgment:
For further information about this testimony, please contact me at
(202) 512-3841. Doreen Feldman, Jim Jones, Ken McDowell, Jonathan
McMurray, and John Scott, made key contributions to this statement.
[End of section]
Appendix I: Awards of Just Compensation or Settlement Payments for
Concluded Regulatory Takings Cases, for Four Agencies, Fiscal years
2000 through 2002:
[End of section]
(Dollars in thousands).
Agriculture: Number of Concluded Cases: 1; Number of Cases with
Payments: 1; Just Compensation Awards: $353; Settlements: $0; Total:
$353.
Corps: Number of Concluded Cases: 15; Number of Cases with Payments: 3; Just Compensation Awards: 0;
Settlements: 22,085; Total: 22,085.
EPA: Number of Concluded Cases: 2; Number of Cases with Payments: 0;
Just Compensation Awards: 0; Settlements: 0;
(Dollars in thousands): Total: 0.
Interior: Number of Concluded Cases: 26;
(Dollars in thousands): Number of Cases with Payments: 10; Just
Compensation Awards: 3,851; Settlements: 10,216; Total: 14,067.
Total: Number of Concluded Cases: 44; Number of Cases with Payments:
14; Just Compensation Awards: 4,204; Settlements: $32,301; Total:
$36,505.
Source: GAO.
Note: GAO analysis of data provided by the Department of Justice's
Environment and Natural Resources Division:
[End of table]
FOOTNOTES
[1] We refer to these agencies as the "four agencies" in subsequent
references.
[2] See U.S. General Accounting Office, Regulatory Takings:
Implementation of Executive Order on Government Actions Affecting
Private Property Use, GAO-03-1015 (Washington, D.C., Sept. 19, 2003).
[3] 53 Fed. Reg. 8859 (Mar. 18, 1988).
[4] In general, an inverse taking has the effect of an affirmative
exercise of the power of eminent domain. An inverse taking is also
referred to as inverse condemnation.
[5] Takings of property effected by government actions may occur in a
number of ways, including: (1) a government regulation restricting
development, (2) a government requirement that a landowner provide the
public access to private property (such as by providing access to a
private beachfront), and (3) an agency's denial of a mineral drilling
permit.
[6] 438 U.S. 104 (1978).
[7] Justice issued supplemental guidelines for the Corps on January 23,
1989; for Interior on March 29, 1989; and for EPA on January 14, 1993.
According to Justice and agency officials, these guidelines have not
been updated since their original issuance.
[8] A grazing permit provides official written permission to a rancher
to graze a specific number, kind, and class of livestock for a
specified time period on defined federal rangeland. A special use
permit is a written instrument that grants rights or privileges of
occupancy and use, such as for recreational and commercial purposes,
subject to specified terms and conditions.
[9] The agencies had difficulty documenting their submission of
compilations reports for the period 1989 through 1993 because the
passage of time made documents less accessible.
[10] At Agriculture and EPA, the designated official is the General
Counsel. At the Corps, this official is the Chief Counsel. At Interior,
the designated official is the Solicitor.
[11] EPA officials indicated that they did not have any written
examples of takings implication assessments prepared by the agency
largely because the agency's actions are generally excluded from the
EO's requirements.
[12] The data provided by Justice referred to these 44 cases as
regulatory takings cases. According to information provided by
Interior, at least 9 of the 44 cases, including 4 with award or
settlement payments, were alleged by the property owner to be
"legislative" takings. In legislative takings cases, the potential
taking results directly from an act of Congress. One of these nine
cases (Board of County Supervisors of Prince William County, Virginia
v. United States) involved the government's taking title to property by
exercising its power of eminent domain.
[13] In addition to the financial remuneration made to the plaintiff,
the award and settlement payment totals may include compensation for
attorney fees, interest, and other litigation costs.
[14] James Koconis & Ted G. Koconis v. United States.
[15] Devon Energy Corporation, et al. v. United States.
[16] W.A. Moncrief, Jr. et al. v. United States.
