oversight

Regulatory Takings: Agency Compliance with Executive Order on Government Actions Affecting Private Property Use

Published by the Government Accountability Office on 2003-10-16.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             United States General Accounting Office

GAO                          Testimony
                             Before the Subcommittee on the
                             Constitution, Committee on the Judiciary,
                             House of Representatives

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 

                                                 October 16, 2003


                                                 REGULATORY TAKINGS

                                                 Agency Compliance with Executive Order
Highlights of GAO-04-120T, a testimony
before the Subcommittee on the
                                                 on Government Actions Affecting Private
Constitution, Committee on the Judiciary,
House of Representatives                         Property Use


Each year federal agencies issue                 Justice has not updated the guidelines that it issued in 1988 pursuant to the
numerous proposed or final rules                 executive order, but has issued supplemental guidelines for three of the four
or take other regulatory actions                 agencies. The executive order provides that Justice should update the
that may potentially affect the use              guidelines, as necessary, to reflect fundamental changes in takings case law
of private property. Some of these               resulting from Supreme Court decisions. While Justice and some other
actions may result in the property
owner being owed just
                                                 agency officials said that the changes in the case law since 1988 have not
compensation under the Fifth                     been significant enough to warrant a revision, other agency officials and
Amendment. In 1988 the President                 some legal experts said that significant changes have occurred and that it
issued Executive Order 12630 on                  would be helpful if a case law summary in an appendix to the guidelines was
property rights to ensure that                   updated. Justice issued supplemental guidelines for three agencies, but not
government actions affecting the                 for Agriculture because the two agencies were unable to resolve issues such
use of private property are                      as how to assess the takings implications of denying or limiting permits that
undertaken on a well-reasoned                    allow ranchers to graze livestock on federal lands managed by Agriculture.
basis with due regard for the
potential financial impacts imposed              Although the executive order’s requirements have not been amended or
on the government.                               revoked since 1988, the four agencies’ implementation of some of these
This testimony is based on our
                                                 requirements has changed over time as a result of subsequent guidance
recent report on the compliance of               provided by the Office of Management and Budget (OMB). For example, the
the Department of Justice and four               agencies no longer prepare annual compilations of just compensation
agencies—the Department of                       awards or account for these awards in their budget documents because OMB
Agriculture, the Army Corps of                   issued guidance in 1994 advising agencies that this information was no
Engineers, the Environmental                     longer required. According to OMB, this information is not needed because
Protection Agency, and the                       the number and amount of these awards are small and the awards are paid
Department of the Interior—with                  from the Department of the Treasury’s Judgment Fund, rather than from the
the executive order. (Regulatory                 agencies’ appropriations. Regarding other requirements, agency officials said
Takings: Implementation of                       that they fully consider the potential takings implications of their regulatory
Executive Order on Government                    actions, but provided us with limited documentary evidence to support this
Actions Affecting Private Property
Use, GAO-03-1015, Sept. 19, 2003).
                                                 claim. The agencies provided us with a few examples of takings implications
                                                 assessments stating that such assessments were not always documented in
Specifically, GAO examined the                   writing or retained on file. In addition, our review of the agencies’
extent to which (1) Justice has                  rulemakings for selected years that made reference to the executive order
updated its guidelines for the order             revealed that relatively few specified that an assessment was done and few
to reflect changes in case law and               anticipated significant takings implications.
issued supplemental guidelines for
the four agencies, (2) the four                  According to Justice, property owners or others brought 44 regulatory
agencies have complied with the                  takings lawsuits against the four agencies that were concluded during fiscal
specific provisions of the executive             years 2000 through 2002, and of these, 14 cases resulted in just
order, and (3) just compensation                 compensation awards or settlement payments totaling about $36.5 million.
awards have been assessed against
the four agencies in recent years.               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
www.gao.gov/cgi-bin/getrpt?GAO-04-120T.
                                                 assessed the takings potential of its action in only one of the three cases
To view the full product, including the scope    subject to the order’s requirements. According to Justice, at the end of fiscal
and methodology, click on the link above.        year 2002, 54 additional lawsuits involving the four agencies were pending
For more information, contact Anu K. Mittal at
(202) 512-3841 or mittala@gao.gov.
                                                 resolution.
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
Interior1—to comply with the EO’s requirements. Our testimony is based
on work included in a report recently released by this subcommittee. 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 12630,3 “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


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).



Page 1                                                  GAO-04-120T Regulatory Takings
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


Page 2                                           GAO-04-120T Regulatory Takings
                    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.

               The just compensation clause of the Fifth Amendment provides that the
Background 	   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


               Page 3                                          GAO-04-120T Regulatory Takings
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.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.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.


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.



Page 4                                                    GAO-04-120T Regulatory Takings
                       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
                       York6 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.

                       Agency officials and other experts differ on the need to update the
Justice Has Not        Attorney General’s guidelines to reflect changes in regulatory takings case
Updated Its 1988       law since 1988. Justice officials said that the guidelines had not been
                       updated since 1988 because there had been no fundamental changes in
Guidelines, but Has    regulatory takings case law, which is the EO’s criterion for an update.
Issued Supplemental    They said that the guidelines, as written, are still sufficient to determine
                       the risk of a regulatory taking and that subsequent Supreme Court
Guidelines for Three   decisions have not substantially changed this analysis. For example,
of Four Agencies       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


                       6
                       438 U.S. 104 (1978).



                       Page 5                                         GAO-04-120T Regulatory Takings
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.7 The EO



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.



Page 6                                                  GAO-04-120T Regulatory Takings
                        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.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.

                        Although the EO’s requirements have not been amended or revoked since
Implementation of       1988, the four agencies’ implementation of some of its key provisions has
Key Provisions by the   changed over time in response to subsequent OMB guidance. For example,
                        the agencies no longer prepare annual compilations of just compensation
Four Agencies Has       awards or account for these awards in their budget documents because
Changed Over the Life   OMB guidance issued in 1994 advised agencies that such information was
                        no longer required.9 According to OMB, this information is not needed
of the Executive        because the number and amount of these awards are small and the awards
Order                   were not paid from the agencies’ appropriations but are paid from the
                        Department of the Treasury’s Judgment Fund. In addition, because the


                        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.



                        Page 7                                                  GAO-04-120T Regulatory Takings
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.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



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.



Page 8                                                   GAO-04-120T Regulatory Takings
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.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.




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.




Page 9                                                  GAO-04-120T Regulatory Takings
                     According to Justice data, 44 regulatory takings cases against the four
Few Awards of Just   agencies were concluded during fiscal years 2000 through 2002.12 Fourteen
Compensation Were    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
Made Against the     in awards of just compensation totaling about $4.2 million. The Justice
Four Agencies for    Department settled in 12 other cases providing total payments of about
                     $32.3 million.13 Of these combined 14 cases with awards or settlement
Takings Cases        payments, 10 related to actions of Interior, 3 to actions of the Corps , and 1
Concluded during     to an action of Agriculture.
Fiscal Years 2000    In general, the settled cases were concluded with compromise
through 2002         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,



                     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.



                     Page 10                                                   GAO-04-120T Regulatory Takings
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.14




14
 James Koconis & Ted G. Koconis v. United States.



Page 11                                             GAO-04-120T Regulatory Takings
                     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.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.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.


                     For further information about this testimony, please contact me at (202)
GAO Contacts and 
   512-3841. Doreen Feldman, Jim Jones, Ken McDowell, Jonathan
Staff                McMurray, and John Scott, made key contributions to this statement.
Acknowledgment




                     15
                      Devon Energy Corporation, et al. v. United States.
                     16
                      W.A. Moncrief, Jr. et al. v. United States.




                     Page 12                                               GAO-04-120T Regulatory Takings
Appendix I: Awards of Just Compensation or
Settlement Payments for Concluded
Regulatory Takings Cases, for Four Agencies,
Fiscal years 2000 through 2002
               (Dollars in thousands)
                                                    Number
                                        Number of of Cases         Just
                                        Concluded     with Compensation
               Agency                       Cases Payments      Awards Settlements                          Total
               Agriculture                         1             1              $353              $0        $353
               Corps                              15             3                  0        22,085        22,085
               EPA                                 2             0                  0              0           0
               Interior                           26           10              3,851         10,216        14,067
               Total                              44           14              4,204        $32,301 $36,505
              Source: GAO.

              Note: GAO analysis of data provided by the Department of Justice’s Environment and Natural
              Resources Division




(360403)
              Page 13                                                     GAO-04-120T Regulatory Takings
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