SPEAKERS CONTENTS INSERTS
Page 1 TOP OF DOCTHE TUCKER ACT SHUFFLE RELIEF ACT OF 1997; H.R. 992
WEDNESDAY, SEPTEMBER 10, 1997
House of Representatives,
Subcommittee on Immigration
Committee on the Judiciary,
The subcommittee met, pursuant to call, at 10:08 a.m., in room 2237, Rayburn House Office Building, Hon. Lamar S. Smith (chairman of the subcommittee) presiding.
Present: Representatives Lamar S. Smith, Bill Jenkins, Chris Cannon, Ed Bryant, Melvin L. Watt and Zoe Lofgren.
Staff Present: Cindy Blackston, clerk; George Fishman, counsel; Judy Knott, staff assistant; Samara Ryder, minority counsel; and Brian Woolfolk, minority counsel.
OPENING STATEMENT OF CHAIRMAN SMITH
Mr. SMITH OF TEXAS. The Subcommittee on Immigration and Claims will come to order. We will wait for everyone who is standing to be seated.
Before we invite the first panel to come forward, I would like to make my opening remarks, and then if anyone else has opening remarks, we will go to them.
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We are going to try to expedite the process this morning, for a couple reasons. One, there are conflicts for many of us beginning at 11:30 this morning. And we also have several panelists, including one on the first panel, who has to be back in class teaching at 11 o'clock. So we are going to try to go forward as quickly as possible.
Our hearing today is on H.R. 992, the Tucker Act Shuffle Relief Act. This bill seeks to provide a solution to an unfair judicial maze that often prevents private property owners from having their day in court.
In our judicial system, an individual who seeks to contest a government taking or infringement of his or her property faces unreasonable confusion and costs in negotiating their way through the legal process. Private property owners whose rights have been trampled must choose between suing for injunctive relief in the Federal district courts or monetary relief in the U.S. Court of Federal Claims. Many times the government argues that one court cannot decide on the relief sought until the other court has made a determination on the relief within that court's jurisdiction. As a result, citizens with limited resources are shuffled back and forth.
The fifth amendment of the Constitution states that ''No person shall be deprived of property without due process of law; nor shall private property be taken for public use without just compensation.'' However, due to the current jurisdictional structure of our judicial system for the litigation of private property takings cases, that constitutional right is being threatened.
Page 3 PREV PAGE TOP OF DOC In the last few years, both the Federal Circuit Court and the Supreme Court have acknowledged this problem. This year, in the National Center for Manufacturing v. United States, the Federal Circuit Court stated, ''this appeal requires us to engage in the wasteful exercise of deciding not how a dispute should be resolved, but what court should be responsible for resolving it.'' As Justice Scalia has pointed out in a similar setting, ''nothing is more wasteful than litigation about where to litigate, especially when all the options are courts within the same legal system that will apply the same law.''
H.R. 992 would simplify the process for private property owners. First, it would amend the Tucker Act to allow private property owners to seek and obtain both monetary and injunctive relief in either the U.S. District Court or the Court of Federal Claims. Second, it would repeal section 1500 of the Tucker Act to resolve any further jurisdictional ambiguity. And third, it would provide the Court of Federal Claims with jurisdiction to render judgment in any case within its jurisdiction upon any related tort claim authorized under the Federal Tort Claims Act.
Today we will hear testimony from a variety of witnesses who will speak to different areas of this debate. Before I introduce our first panel, I would like to thank the Justice Department for testifying in the second panel so as to accommodate one of our witnesses who needs to leave early this morning.
And I want to say to the Justice Departmentare they here yet? The Justice Department is not here yet. Well, then, I don't have to publicly thank them any more than I already have. But we appreciate their willingness to come second, which is not the usual order.
Page 4 PREV PAGE TOP OF DOC I would also like to thank Cindy Blackston, to my immediate right, and George Fishman, who is behind Cindy. Many people don't realize how hard staff work. They were here until, I think, close to midnight last night, and late the last two or three nights. They were up early this morning, and their help in putting this hearing together was absolutely crucial.
[The prepared statement of Mr. Smith follows:]
PREPARED STATEMENT OF LAMAR S. SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Our hearing today is on H.R. 992the ''Tucker Act Shuffle Relief Act''. This bill seeks to provide a solution to an unfair judicial maze which that often prevents private property owners from having their day in court.
In our judicial system, an individual who seeks to contest a ''government taking'' or an infringement on his or her property faces unreasonable confusion and costs in negotiating their way through the legal process. Private property owners whose rights have been trampled must choose between suing for injunctive relief in the federal district courts or monetary relief in the U.S. Court of Federal Claims. Many times the government argues that one court cannot decide on the relief sought until the other court has made a determination on the relief within that court's jurisdiction. As a result, citizens with limited resources are ''shuffled'' back and forth.
The Fifth Amendment of the Constitution states that ''No person shall be deprived of . . . property without due process of law . . . nor shall private property be taken for public use, without just compensation.'' However, due to the current jurisdictional structure of our judicial system for the litigation of private property takings cases, that constitutional right is being threatened.
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In the last few years, both the Federal Circuit Court and the Supreme Court have acknowledged this problem. This year, in The National Center for Manufacturing v. United States, the Federal Circuit Court stated ''This appeal requires us to engage in the wasteful exercise of deciding not how a dispute should be resolved, but what court should be responsible for resolving it. As Justice Scalia has pointed out in a similar setting, '[n]othing is more wasteful then litigation about where to litigate, especially when all the options are courts within the same legal system that will apply the same law.' ''
H.R. 992 would simplify the process for private property owners. First, it would amend the Tucker Act to allow private property owners to seek and obtain both monetary and injunctive relief in either the U.S. district court or the Court of Federal Claims. Second, it would repeal section 1500 of the Tucker Act to resolve any further jurisdictional ambiguity. And third, it would provide the Court of Federal Claims with jurisdiction to render judgment in any case within its jurisdiction upon any related tort claim authorized under the Federal Tort Claims Act.
Today we will hear testimony from a variety of witnesses who will speak to different areas of this debate. Before I introduce our first panel, I would like to thank the Justice Department for testifying in the second panel so as to accommodate one of our witnesses who needs to leave early this morning.
Mr. SMITH OF TEXAS. With that, is there anyone else who would like to make an opening statement, any other Member of the Subcommittee?
Page 6 PREV PAGE TOP OF DOC If not, we would invite the first panel to come forward. They will consist of Professor Michael Noone, Catholic University of America, Columbus School of Law; Stephen D. Kinnard, Esquire, Skadden, Arps, Slate, Meagher & Flom; and Professor John D. Echeverria, Georgetown University Law Center.
Professor Noone, since you are the one I mentioned a while ago as having to be ready to teach at 11 o'clock, we are going to ask you to go first. If we run into time constraints, which is to say if we are not finished by 10:30, then we will excuse you to get back to school if that is all right.
STATEMENTS OF MICHAEL F. NOONE, CATHOLIC UNIVERSITY OF AMERICA, COLUMBUS SCHOOL OF LAW
Mr. NOONE. Thank you very much, sir. And my students said that I could stay and be cross-examined. They prefer that you did it rather than me doing it to them.
Mr. Chairman, thank you for the opportunity to comment on H.R. 922. I am going to give you sort of a summarized statement of my formal statement, which has been submitted for the record. The bill apparently has three purposes: To harmonize the jurisdiction of the U.S. Court of Federal Claims granted by the Tucker Act and the jurisdiction of U.S. district courts when the Administrative Procedure Act is invoked; to eliminate a law which penalizes litigants who mistakenly select the district court; and to resolve legal issues that arise when Federal regulation affects private property.
Page 7 PREV PAGE TOP OF DOC I will comment on each of the bill's goals, hitting the high points. My written statement comments on the other aspects of the bill as well and supplements my oral comments.
As to harmonizing jurisdiction, traditionally the Claims Court made monetary awards in cases involving suits against the government for breach of contract, for entitlement under a statute or regulation, or for a taking in violation of the Fifth Amendment. The court's jurisdiction to enter in personam orders is extremely limited. In personnel cases, it can issue appropriate orders, for example reinstatement, as part of a monetary judgment. In contract cases, it can grant preaward injunctive relief. It is a money court.
The district courts are money courts when they hear tort claims against the United States, but Congress assumed that, in passing the Administrative Procedure Act in 1946, district court orders reversing agency actions would be in personam and not extend to monetary awards.
A 1988 Supreme Court opinion, the Bowen case, changed all that. Claimants seeking millions go to the district court saying they really are just seeking an in personam order against the administrator. H.R. 922 authorizes the Claims Court to issue in personam orders. But, in my opinion, it doesn't solve the underlying problem.
H.R. 922 also proposes to repeal the Reconstruction era statute which provides that the Claims Court loses jurisdiction over cases brought by claimants who mistakenly brought their case in district or State court. I agree wholeheartedly. It is a bad law that should have been taken off the book years ago.
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Finally, H.R. 922 seeks to solve the problems raised by regulatory takings by first giving the Claims Court authority to invalidate agency action involving property. I suggest that the Committee use the language in the Administrative Procedure Act so that APA precedent, for example, the concept of arbitrary and capricious behavior, would apply.
Secondly, it is not clear from the statute whether appeals from the district court involving takings cases would go to regional circuit courts of appeals or to the Court of Appeals for the Federal Circuit. That is a judgment call on the Committee's part. Personally, I think it might be more useful for it to go to the Court of Appeals for the Federal Circuit.
Third, the legislation eliminates the present $10,000 limitation on Tucker Act cases in the district court. I suggest that the committee raise the limit. But a proposal to eliminate it is impossible, or at least difficult, to justify and, in my judgment, guarantees a veto.
Fourth, and this is my final observation, there are more in my submission, the bill grants the Court of Claims jurisdiction to grant injunctive relief in ''any case within its jurisdiction.'' Any case? The Court of Claims has jurisdiction over suits involving damage to oyster beds, over jurisdiction to patent and copyright cases, over Indian tribal claims. Again, I don't think this broad grant can be justified.
In conclusion, I applaud the Committee's efforts to minimize what an exasperated Court of Appeals for the Federal Circuit recently described, and I won't repeat the language, sir, that you identified, but I fear that the proposed legislation simultaneously seeks to do too little by limiting its scope to taking cases and too much by extending the Claims Court's jurisdiction to new subject matter, torts, and new remedies. The latter changes need to be considered in their own right and after hearing from private practitioners who appear before the court. And I am delighted, in fact, that I see a practitioner to my right representing the Claims Court bar.
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Thank you again for the opportunity to address the committee, sir.
[The prepared statement of Mr. Noone follows:]
PREPARED STATEMENT OF MICHAEL F. NOONE, CATHOLIC UNIVERSITY OF AMERICA, COLUMBUS SCHOOL OF LAW
Mr. Chairman: Thank you for the opportunity to comment on H.R. 992, which apparently has three purposes: to harmonize the jurisdiction of the U.S. Court of Federal Claims granted by the Tucker Act and the jurisdiction of U.S. district courts when the Administrative Procedure Act is invoked, to eliminate a law which penalizes litigants who mistakenly select the district court, and to resolve legal issues that arise when federal regulation affects private property. I will begin by putting each of the issues in an historical context, and then give a brief sectional analysis of the Bill.
In 1855 Congress passed the Claims Court Act, waiving the United States' sovereign immunity from claims brought in contract or relying on a statute of regulation. The Claims Court, the predecessor of the U.S. Court of Federal Claims, so ably represented by Chief Judge Smith, could only grant substantive relief, i.e. money awards. It was not granted jurisdiction to direct a government officer to act or not to act. When the Tucker Act was passed in 1887, the jurisdiction of the court was extended to ''claims under the Constitution,''what are now known as ''Vth Amendment Taking'' or ''inverse condemnation'' claimsand district courts were granted parallel jurisdiction to decide ''Little Tucker Act'' claims of up to $10,000. Jurisdiction remained limited to substantive relief and the taking had to be authorized, otherwise it would constitute a tort by a government agent. Until passage of the Federal Tort Claims Act in 1946, Congress had waived the government's sovereign immunity from suit in tort in very few instances. If some form of specific relief were sought the plaintiff would have to bring suit in district court. See, e.g. United States v. Lee, 106 U.S. 196 (1882) (action in ejectment), Miguel v. McCarl, 291 U.S. 442 (1933) (mandamus action seeking payment of a pension). Subsequently the Tucker Act was amended to give the Claims Court jurisdiction to grant specific relief in very limited circumstances: in personnel actions (28 U.S.C. 1491 (a)(2)) in order to ''complete the relief afforded by the judgement,'' the court can issue appropriate orders; in contract actions, the court can grant pre-award injunctive relief or issue declaratory judgements (28 U.S.C. 1491 (a)(3).
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This was the regime in place when the Administrative Procedure Act (APA), 5 U.S.C. 702 was passed in 1946: suits for substantive relief in the Claims Court; suits for specific relief in the district court. Congress responded to the Government's routine sovereign immunity defense to suits for specific relief under the APA by amending the Act to remove the defense, while purporting to have no other consequences. The first of the three amending sentences contained what was to be a controversial phrase: ''An action in a court of the United States seeking relief other than money damages [. . . shall not be dismissed . . . on the ground that it is against the United States . . .]. The term ''money damages'' is not used in the Tucker Act; it is used in the Federal Tort Claims Act, 28 U.S.C. 1346 (b). The phrase came to be controversial as Congress expanded categories of entitlements. If a claimant sought to be included within the category of persons entitled, she could seek declaratory or injunctive relief under the A.P.A. in a district court and, if she sought back entitlements for up to $10,000 she could include a Little Tucker Act count. What if her claim were for more than $10,000 past due? Or her claim, once adjudicated, would result in payments of more than $10,000? The government argued that claims in excess of $10,000 had to be litigated in the Claims Court under the Tucker Act. In Bowen v. Massachusetts, 487 U.S. 879 (1988) five members of the Supreme Court concluded that, in determining entitlements via issuance of injunctions or declaratory judgements, district courts are exercising their equitable jurisdiction which includes the right to award ancillary substantive (i.e. money) relief. Unfortunately, the Bowen majority's reasoning is so opaque that Federal Courts are still making case-by-case decisions whether a given claim should be in the Claims Court or a district court. See, e.g. National Center for Mfg. Sciences v. U.S., 114 F.3d 196 (Fed.Cir. 1997). The Bowen controversy underlies any proposal, such as H.R. 992, to amend the Claims Court's Tucker Act jurisdiction by harmonizing it with the district courts'.
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A second underlying factor is the consequence for the plaintiff who mistakenly brings a suit in district court which should have been brought in the Claims Court. A Reconstruction Era statute, now found at 28 U.S.C. 1500, was passed to discourage Southerners who brought suit against the United States in the Claims Court under the Captured and Abandoned Property Act, Act of March 12, 1863, ch. 120, 12 Stat. 820 and also brought a tort action in state court against the government officer who seized the property. The statute provides that the Claims Court will not have jurisdiction over any claim asserted in any other court. This harsh consequence was recently affirmed by the Supreme Court in Keene Corp. v. United States, 113 S.Ct. 2035 (1993). H.R. 992 addresses that problem directly.
The third, and final, underlying factor which shapes my evaluation of the Bill is its approach to property rights. The Tucker Act's waiver of sovereign immunity for suits ''founded . . . upon the Constitution . . .'' (28 U.S.C. 1491(a)(1) was intended to provide a means for compensating persons who sought to vindicate their Constitutional right to just compensation. (''. . . nor shall private property be taken for public use, without just compensation.'' U.S. Constitution, Amdt.V. As Professor Lester and I point out in our book LITIGATION WITH THE FEDERAL GOVERNMENT 3d. ed. 1994, Chapter XI, Tucker Act ''Fifth Amendment Taking'' jurisprudence has always had to distinguish between Takings over which the Claims Court has Tucker Act jurisdiction, and Torts, which, by virtue of the Federal Tort Claims Act (FTCA), are the province of the district courts. Before passage of the FTCA, a tort claimant could seek injunctive relief, see e.g. Crozier v. Krupp, 224 U.S. 290 (1912) (injunctive relief for patent infringement claims voided by 28 U.S.C.1498 giving exclusive jurisdiction to the Claims Court in a suit for damages.)
Page 12 PREV PAGE TOP OF DOC Takings jurisprudence can be divided into two categories: those claims involving the government's effective acquisition of ownership of the property (so called inverse condemnation cases) and those which involve claims for economic loss incidental to statute or regulation. In our book Prof. Lester and I make the following points: ''If the property owner claims that the regulation is unlawful, the suit would fall under the Administrative Procedure Act, not the Tucker Act. . .The governmental action must be final . . . and the interest affected must constitute property . . . in which the claimant has an interest . . . which would give rise to 'a[n] historically rooted expectation of compensation for . . . seizure'. . . The regulation must deprive the owner on any economic use of the land.'' LITIGATION WITH THE FEDERAL GOVERNMENT, pp. 34546 (citations removed). H.R. 992 seeks to extend the Claims Courts jurisdiction in property cases by granting it the same authority given to the district courts.
With these doctrinal concepts in mind, I will now comment on the various sections of H.R. 992.
How the Bill is denominated is not a legal question.
(a) the Bill permits property owners to challenge ''the validity'' of agency action; I recommend that the language in the first and second sentences be changed to conform with that in 5 U.S.C. 702 which grants the right to judicial review under specified circumstances.
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The third and fourth sentences of the Bill waive the ''Little Tucker Act'' $10,000 limit on district court jurisdiction. While I have urged that the limit be increased to realistic levels, Noone & Lester, ''Defining Tucker Act Jurisdiction after Bowen v. Massachusetts,'' 40 Cath.U.L.Rev. 571, 575576, n.29 (1991), I question the policy of granting unlimited Tucker Act jurisdiction to district courts in only one class of case, Vth Amendment Takings. If truly parallel jurisdiction is sought, the jurisdictional waiver should extend as well to suits on contracts, and on statutes and regulations.
(b.) If my recommendation that section 2 (a) be rewritten to conform with the Administrative Procedure Act, then this paragraph will not be needed. Standing issues will be resolved by referring to APA precedent.
(A) line 20 refers to ''monetary relief,'' which is not in the present statute and seems inconsistent with the proposed grant of jurisdiction in section 1491(b) which envisions nonmonetary relief.
line 23 eliminates (by not including) the historic modifier ''or for liquidated or unliquidated damages'' [in cases not sounding in tort]. In one of its most important opinions the Claims Court described the clause as ''that still-amorphous and unfamiliar part of our jurisdiction,'' Eastport Steamship Co. v. United States, 372 F.2d 1002, 1013 (1967). In our book, LITIGATION WITH THE FEDERAL GOVERNMENT, at pp.35051 we discuss the application of the clause and, while I agree that the deleted language would not seem to have any effect on the Court's jurisdiction, I can't see why its elimination enhances the grant of jurisdiction.
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line 24 refers to ''invalidation,'' without offering criteria. I recommend that the clause be eliminated and that the language in 5 U.S.C. 702 be used to replace it.
(B) grants the Court of Claims power to grant injunctive relief ''in any case within its jurisdiction,'' (lines 6 and 7). This grant of general power effectively derogates the very limited powers the Court presently exercises in Tucker Act personnel and pre-award contract cases and, for the first time, grants it the power to grant specific relief in other kinds of cases heard by the Court, e.g. claims by Indian Tribes, Patent and Copyright infringement, and many others (see LITIGATION WITH THE FEDERAL GOVERNMENT, pp. 190192. If the committee intends to give this unprecedented power to Article I judges, it should repeal the present provisions of 28 U.S.C. 1491 (B) and replace them with the proposed language. However I predict that this provision alone will cause the Department of Justice to recommend a veto of any legislation which contains such a provision. If the language is retained, I believe the committee should also amend 28 U.S.C. 1346(f) and 2409a, which grant district courts exclusive jurisdiction over quiet title actions and 28 U.S.C. 1292 which assumes that only district courts can issue interlocutory orders.
(C)(4) grants ''ancillary'' jurisdiction to the Court of Claims. The proper term now used in Federal legislation is ''supplemental'' jurisdiction, see e.g. 28 U.S.C. 1367. I read the provision as permitting a Tucker Act claimant to include a ''related'' tort claim count under the FTCA. Presumably the administrative claims requirements of 28 U.S.C. 2672 would apply as would the fee provisions of section 2678. If this provision is accepted by the committee, you should also change the language in, e.g. 28 U.S.C. 1346(b), 2672 and 2679 which grant district courts exclusive jurisdiction over tort claims. Regional Circuit Courts of Appeals hear FTCA appeals; other classes of appeals are governed by 28 U.S.C. 1295 (a)(2) sets the jurisdiction of the United States Court of Appeals for the Federal Circuit. I recommend that the committee amend section 1295 to explicitly recognize the Federal Circuit's jurisdiction over FTCA cases brought in the Claims Court.
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(C)(5) is consistent with my recommendations supra. (2)(A): I concur wholeheartedly.
Due to the press of time I did not closely scrutinize the definitions: ''agency'' and ''agency action'' seem to conform with standard practice. I am not prepared to give an opinion on the definition of ''owner,'' nor on the definition of ''private property'' and ''property.'' As written, the property definition would seemingly require the Court of Claims (and presumably district courts, applying to those courts statutes regulating the former's jurisdiction under United States v. Sherwood, 312 U.S. 584 (1941)) to enforce against the federal government state rights protecting property. This would, of course, raise grave Constitutional questions. The term ''state agency'' is defined but is not used in the statute.
In conclusion, I applaud the Committee's efforts to minimize what an exasperated Court of Appeals for the Federal Circuit recently described as ''the wasteful exercise of deciding not how a dispute should be resolved but what court should be responsible for resolving it.'' National Center for Mfg. Sciences v. U.S., 114 F.3d 196,197 (Fed. Cir. 1997) but I fear that the proposed legislation simultaneously seeks to do too little (by seeking to limit its scope to Taking cases) and too much, by extending the Claims Court's jurisdiction to new subject matter (torts) and new remedies. The latter changes need to be considered in their own right and after hearing from private practitioners who appear before the court.
Page 16 PREV PAGE TOP OF DOC Mr. SMITH OF TEXAS. Thank you, Professor Noone.
I am going to ask the other panelists if they wouldn't mind if we go on and ask you our questions now, Professor Noone, so that we will be finished for you to get to Catholic University. Let me begin, and then I will recognize the other Members of the Subcommittee. And, by the way, I appreciate you having said regarding the Tucker Act, and section 1500 particularly, that it was bad law that should have been taken off the books long ago. That is about as direct as you can have it. And that answered my first question, that you obviously think we ought to repeal section 1500.
Do you believe it remains good public policy for the availability of equitable and monetary remedies to be split between the two Federal courts? I know you have answered that indirectly, but I just want to get it on the record.
Mr. NOONE. No, I do not think it is good policy, sir, but I think it calls for a fundamental reorganization of the jurisdiction of the two courts. The bill before you attempts to do that, but only in taking cases. And it seems to me that there are some more fundamental changes that are required.
Mr. SMITH OF TEXAS. In a few minutes we will hear from the Administration, from the Assistant Attorney General, who will say that H.R. 992's assignment of broad equitable powers to the Article I Court of Federal Claims would raise serious constitutional difficulties. The only criticism I hear of H.R. 992 are the constitutional questions.
Do you agree that it does raise constitutional questions?
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Mr. NOONE. In a sense, I do. And, in fact, I say that in my formal statement in the sense that giving Article I judges broad power to grant injunctive relief in all classes of cases isn't unconstitutional, but it substantially changes the role of this class of Article I judge, and it is something that should be discussed thoroughly.
By the way, sir, I am familiar with the Court of Claims jurisprudence, and it is not that I distrust their judges, it is that I question the conceptthe way it is being brought up.
Mr. SMITH OF TEXAS. If we were to change the law, the way to find out whether there is constitutional difficulty or not is simply to pass the law and find out.
Mr. NOONE. Yes, that is true.
Mr. SMITH OF TEXAS. My last question is in granting U.S. district courts and Court of Federal Claims concurrent jurisdiction, will that result, in any forum shopping or not? And I guess I say there is always going to be some forum shopping regardless, but does the overall benefit outweigh any slight chance of forum shopping?
Mr. NOONE. I am going to go back to history, sir. It is up to the Congress to decide whether or not the fundamental philosophy of Congress when it first passed the Little Tucker Act in 1887 should be changed. Clearly I think in 1887, when Congress passed the little Tucker Act, the idea that a claimant could go into district court assumed that there were monetary claims which were just too large, that they shouldn't be put in the hands of a district court judge either because the district court judge didn't have the experience to handle those large claims, or because the district court judge probably from the district or the geographic area in which he was appointed would be biased in favor of a local plaintiff. And I think it was those reasons that caused Congress to say to plaintiffs, ''you can come to your district court with small claims; big ones, we want you to come to the Court of Claims and the Federal Circuit.''
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That is a judgment call on the part of the Committee. I think there will be forum shopping. I think many, particularly property owners, probably think they are going to get more sympathy from a local district court judge who appreciates the context in which their claim arose. That is certainly proper for them.
I do not think ''forum shopping'' is a pejorative term. It is what lawyers should do to do the best they can for their client. But it does raise policy questions as to whether or not Congress wants to give relatively inexperienced District Court judges that kind of jurisdiction.
Does that respond to your question, sir?
Mr. SMITH OF TEXAS. It does, Professor Noone. Thank you very much.
Let me see if there other questioners from the Subcommittee. The gentleman from Tennessee, Mr. Bryant.
Mr. BRYANT. Professor, let me ask you just a couple questions if I could, one in follow-up to Mr. Smith and one in anticipation of perhaps Mr. Kinnard's testimony. And again, I am not an expert. I come from a practice of law where we just didn't get into this area at all.
But, in follow-up to Mr. Smith, what about the issue of possibility of inconsistent lines of precedent being established with the two courts; do you see that as a major problem?
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Mr. NOONE. Well, that is why I would be inclined, as a law professor, to say consider sending appeals, whether they come from the District Court or from the Claims CourtClaims Court appeals routinely are taken to the Court of Appeals for the Federal Circuit. As you know, District Court appeals in most cases would go to the regional District Court. You can avoid serious splits in precedent by simply saying that these taking act cases would go to the Circuit Court of Appeals for the Federal Circuit. So I don't think it would be a major problem in that context.
And to revert back to the forum shopping situation, obviously, with section 1500 repealed, anyone who tries to file parallel, similar suits, the Department of Justice, one would assume, is going to catch them and say, ''you're got to elect your forum, either the Claims Court or the District Court.
Mr. BRYANT. Again, and an area I am not familiar with at all, apparently Mr. Kinnard was an attorney in a case, Loveladies Harbor case, that effectively repealed section 1500 as far as that circuit goes.
Do you think this bill is still necessary to repeal that?
Mr. NOONE. Yes, sir, I do. I think that Loveladies did an excellent job of ameliorating the Keene Corporation and its interpretation of 1500. But as long as the statute is still on the books, very appropriately and ethically, the Department of Justice is going to try to take advantage of it. And they don't need it anymore. They shouldn't need it anymore. We are past the Reconstruction. And to that extent, I think it should be taken off the book.
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Mr. BRYANT. Thank you, Professor.
Mr. SMITH OF TEXAS. Thank you, Mr. Bryant.
The gentlewoman from California Ms. Lofgren is recognized.
Ms. LOFGREN. Thank you, Mr. Chairman.
Thinking about this, Professor, you mentioned earlier, I think, the issue of takings is really beyond what we thought of traditionally in terms of, say, a zoning issue or something of that nature. I am trying to think back to the origins of our constitutional system and the way the law has developed and to explore the constitutionality issue a bit more.
If, for example, welfare recipients were to go and challenge the procedures enacted by the Congress in welfare reform as a takings issue, do you believe there are constitutional issues posed with the Federal Claims Court as opposed to an Article III court potentially overturning Congressional action in such a case? I mean, I realize it is kind of a stretch of a hypothetical perhaps, but you understand the types of issues I am concerned about.
Mr. NOONE. Yes. First of all, as you know, historically the Claims Court has been involved with inverse condemnation cases, the government occupying property for an easement and not taking it. Secondly, the controversy now is regulatory takings. I think your hypothetical pushes it so the third level, where a welfare recipient would claim a property right that had been taken from her. And I would say probably the better statement of facts would be where the Executive Branch, some agency, had taken her property right from her.
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Ms. LOFGREN. Well, let's take a different example. If, for example, we were to eliminate certain civil service protections for Federal employees who arguably have some property right in their employment.
Mr. NOONE. Right. And there is at least one case, Richardson v. Morris, 409 U.S. 464 (1973), which involved aid for dependent children back in the 1970s where the Supreme Court looked at a regional D.C. Circuit Court of Appeals case and said, whatever this is, this isn't a Tucker Act case.
I haven't done my homework. Thinking about it in those terms, I haven't gone any further. It is obvious that there is a potential there, but it is so far outside the traditional Tucker Act Fifth Amendment jurisprudence, I do not think initially the courts would treat it with any respect.
Ms. LOFGREN. But, in looking at the draft, it seems to me that we, at least arguably, have expanded the definition of ''takings'' so that really this could, by the plain reading here, be expanded beyond the traditional inverse condemnation types of issues.
Mr. NOONE. Yes. And certainly, when Congress passed the statute in 1887, they had no idea of the concept of regulatory takings. The French got around to it about 1910, but the Americans, as you know, have been very slow to recognize regulatory taking. And our jurisprudence is still undeveloped in that regard.
Ms. LOFGREN. I guess the thing I am trying to address, and maybe the other professor has a comment as well, we had a lot of discussion in the 104th and somewhat less in the 105th on regulatory takings from the point of view, for example, of a business that doesn't like an environmental regulation, something of that nature. But if you look at where property rights attach under law, I mean, clearly there are many others from maybe the opposite political spectrum where individuals might claim to have a property right that would be trampled. And the issue is not really a decision on the merits, but constitutionally who should be making that decision in overturning what the Congress might do.
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Mr. ECHEVERRIA. On my part, I think there is a very substantial constitutional issue. Article III of the Constitution establishes very clear standards for an independent judiciary and they are as fundamental to our system of government and the division of powers that is central to our representative democracy. And the Supreme Court and Congress have clearly expressed concern about efforts that would erode the principle of an independent judiciary. And, therefore, I think assigning general authority to the Court of Federal Claims to issue injunctive and declaratory relief in a wide variety of broadly defined property matters would raise very serious issues.
As articulated in some detail in the Department of Justice testimony, there are two types of issues. One is the question of whether or not the court is properly constituted and whether or not it could issue valid judgments. A couple of years ago, the bankruptcy court was declared unconstitutional, and all sorts of cases were thrown into chaos because decisions had been issued by invalid judges.
The other problem is that, through the procedures of involuntary joinder, third parties may be brought before the court. So it is one thing for a litigant, a claimant under the takings clause, for example, to go to the Article I court. But it is another matter for other third parties to be involuntarily brought before an Article I court.
Ms. LOFGREN. Thank you, Mr. Chairman.
Mr. SMITH OF TEXAS. Thank you, Ms. Lofgren.
Page 23 PREV PAGE TOP OF DOC Gentleman from Utah, Mr. Cannon, do you have any questions?
Mr. CANNON. No.
Mr. SMITH OF TEXAS. Mr. Watt, do you have any questions?
Mr. WATT. No.
Mr. SMITH OF TEXAS. Professor Noone, thank you for being with us. We appreciate your being able to testify and still work in your classes as well.
Mr. NOONE. Thank you very much, Mr. Chairman. It was a pleasure to be here.
Mr. SMITH OF TEXAS. We will proceed with the other two panelists and then ask our questions of them as well.
STATEMENT OF STEPHEN D. KINNARD, ESQ., SKADDEN, ARPS, SLATE, MEAGHER & FLOM
Mr. KINNARD. Thank you very much, Mr. Chairman. It is a great pleasure to be here. Your staff has been very courteous, and I am just delighted for the opportunity to talk to you from personal experience about the Tucker Act Shuffle, coming from somebody who has been shuffled.
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Now, Professor Noone talked about not using forum shopping in the pejorative sense. But I think the word ''developer'' is always used in the pejorative sense when talking about land use. And that term just doesn't apply to Mr. Lud Ullman.
When I was about 12 years old, Lud Ullman began his quest to get the property he owned on Long Beach Island in New Jersey finished. He built a beach-front community, very nice piece of property that he bought after leaving government in the early 1950s, having been ushered out of this town, having been accused of being a Communist sympathizer. He was out of work, out of a job, had to live somewhere. So he was able to buy a piece of property on Long Beach Island in New Jersey in a tax foreclosure sale, and he built himself a house.
It is a nice little bungalow. A neighbor saw that and said, can you build me one? And he did. Pretty soon he had a small company called Loveladies Harbor, Incorporated. And he started building little bungalows along the beach.
So it went throughout the 1950s and the 1960s. It got a little bigger in the 1960s when he started to dredge some of the canals and got some permits from the Army Corps of Engineers to do it. And then, in the passage of the Clean Water Act, or the pending passage of the Clean Water Act, the Federal marshals came in and literally shut down his machines and said, you can't build this anymore. You need a permit from the Army Corps of Engineers.
Nobody seemed to know what that was or how you get one, so Mr. Ullman hired some lawyers to help him look, and they could not find out how to do it. Eventually he hired the firm of Connell, Foley & Geisser in New Jersey, a small local firm, not a Washington firm, not a firm that has any relationship or had any relationship with the United States Court of Federal Claims, to try to figure out how to get this property developed, how to get the permits.
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Well, Mr. Ullman, Lud Ullman, was told by the Army Corps of Engineers, we can't issue you a permit until you get a State permit. You need a construction permit from the State. So, in about 1974, Lud did what he could, working with my former partner Kevin Coakley and later on with me, to get State permits.
Eventually, after several trials and several appeals, a State construction permit was granted, and Mr. Ullman was allowed to continue to develop his beach-front community. But the State of New Jersey did a funny thing. In a letter to the Army Corps of Engineers, the State said, well, we granted the construction permit to Loveladies Harbor, but we think you, the Army Corps of Engineers, ought to deny it.
And so they did. They denied the section 404 permit in 1981. And at that point, Mr. Ullman did not have his permit, could not build on his property, was left with some substantial legal bills, tax bills, and nothing to show for it.
Now, when I was still in law school, two complaints were filed. One was filed in the district of New Jersey that says, Army Corps of Engineers, you cannot stop me from building my property. You have to give me a permit. What you are doing is wrong. Then another complaint was filed in the court, what was then known as the Court of Claims. And the court has gone through three different name changes during the course of the litigation. And the Court of Claims said, well, if you can do this, Army Corps of Engineers, then we think you have taken our property without just compensation. We ought to be compensated for it. The two were pending at the same time. And so it went.
Page 26 PREV PAGE TOP OF DOC The district court eventually determined that the Army Corps of Engineers did have the regulatory authority to prevent or to regulate the development on the property and to deny the permits to build. And the litigation proceeded apace, albeit at a relatively and, I would say, very slow pace, before the United States Court of Claims, which became the United States Claims Court, which later became the United States Court of Federal Claims.
Eventually, however, there was a trial before Chief Judge Smith and a verdict in favor of Loveladies Harbor, finding that the government had reduced the value of the property to such a great extent, there was no economically viable use left for the property, and a judgment was awarded.
The Department of Justice, however, had one last arrow in their quiver. They came out with section 1500, and a brief was filed. And I talked to my partner Kevin Coakley, and I said, what? I had never heard of it before. But I think the Department of Justice was lying in wait. They pulled that one out and they said, okay, you have got your judgment. We are going to undo 10 years of litigation because you went to the wrong court in the first place. You were not sharp enough to figure out at the time that you had to so carefully craft these two different complaints to make them just different enough to get around section 1500.
Well, we litigated the section 1500 case. And I spent a lot of time writing this brief with the red cover convincing the United States Court of Appeals for the Federal Circuit that, while there is a section 1500, and it is a wonderful law, and it probably applies there, give us a break. We did everything we were supposed to do. We crossed every T. We dotted every I. But it looks like we had two claims pending at the same time, and we can have the rug pulled right out from underneath us.
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I have heard and I have read that the Loveladies Harbor decision by the Court of Federal Claims supposedly overturns or ameliorates the effect of section 1500. I do not think so, Mr. Chairman. I think that case is one of a kind. Loveladies happened because it was Loveladies, because it was Lud Ullman, because it was such a unique case, because the facts and circumstances in that case were so unique that you would never be able repeat them. One in a hundred cases, would never happen again.
Unfortunately, Lud never saw the end of this case. He never lived to see the judgment awarded. He never lived to see the section 1500 award. But fortunately, since ''developers'' cannot be used in the pejorative sense as to him, all the money he received as a result of the judgment in this case was given to his favorite charitable hospital, and his name is held in high regard in the community he lived in.
I would implore upon this tribunal to make it palatable, at least, for a local practitioner to be able to bring a takings claim before the United States District Court for the District of New Jersey, which is certainly well-equipped to handle the types of issues that are presented to it.
[The prepared statement of Mr. Kinnard follows:]
PREPARED STATEMENT OF STEPHEN D. KINNARD, ESQ., SKADDEN, ARPS, SLATE, MEAGHER & FLOM
When William ''Lud'' Ullmann bought some land on Long Beach Island, New Jersey in 1958, the policies of ''shore stabilization'' and ''land reclamation'' were the order of the day. The property included a riparian grant to submerged lands from the State of New Jersey extending to the established pierhead lines. At the time of purchase (and until at least 1970), the Army Corps of Engineers' policy was not to require §10 permits shoreward of established harbor lines (even though §10 governed ''navigable waters of the United States'' up to the ordinary mean high water mark). Riparian title such as that granted to Loveladies, within those boundaries, was derived from the State and not the federal government.
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On May 27, 1970 the Army Corps of Engineers announced that it would begin a new policy of requiring permits for the commencement of construction or placement of fill within harbor lines. When the Clean Water Act was passed in 1972, Congress asserted federal jurisdiction over the nation's waters to the maximum extent possible under the Commerce Clause. The Army Corps of Engineers, which was given the responsibility for administering the Act, defined ''waters of the United States'' to include ''adjacent wetlands.''
Such was the beginning of a twenty-two year legal battle between Lud Ullmann and the United States over the property he bought at a tax foreclosure sale in the early 1950's. Lud was not a ''land developer'' in what seems to have become a distinctly pejorative sense. Rather, Mr. Ullmann, who had worked here for the Treasury Department, found himself without a job after being suspected of ''communist activity.'' He left Washington for New Jersey where he was able to purchase a parcel of land at a tax foreclosure sale from Long Beach Township. The parcel was mostly swamp land, but portions of the sandy turf were adaptable for houses.
So, Lud built himself a beach house in what was at the time a sparsely populated fishing area. One of the local residents admired the job Lud did and asked if Lud would help build another house. Lud agreed, and soon the small vacation community of Loveladies Harbor was started. Throughout the 1950's and 1960's, development of the area proceeded apace and soon a fine community of small summer-time bungalows was in place.
When, after the passage of the Clean Water Act, United States marshals ordered Lud to stop developing his property, he dutifully complied and began the task of seeking and obtaining various state and federal permits. Because the Army Corps of Engineers would issue no permit unless all state permits were in place, Mr. Ullmann sought to obtain the appropriate state development permits. Eventually, by 1992 (after much state-court litigation) the State of New Jersey granted Mr. Ullmann the construction permits he needed to develop the remaining area of ''Loveladies Harbor.'' However, the New Jersey State Department of Environmental Protection implored upon the Army Corps of Engineers not to grant Mr. Ullmann a Army Corps of Engineers fill permit even though the state had granted the construction permit. Consequently, on May 5, 1982, the Army Corps of Engineers denied Mr. Ullmann's third and final permit application.
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Through his company, Loveladies Harbor, Inc., Mr. Ullmann filed a complaint in the United States District Court for the District of New Jersey on June 15, 1982. This complaint sought a declaration of the invalidity of the Army Corps of Engineers action in denying Loveladies Section 404 permit application and awarding injunctive relief including the direction that the government immediately issue a permit. The complaint before the New Jersey District Court also included a count seeking a declaration of the invalidity of the denial of the Section 404 permit application as an unconstitutional interference with Loveladies' property rights under the Fifth Amendment.
The government's answer to the complaint included a defense that the District Court lacked subject matter jurisdiction over the Fifth Amendment claim. Against that defense, Loveladies agreed to dismiss its Fifth Amendment claim in the District Court and proceed only with the other claims for injunctive relief.
Loveladies filed a separate action in the United States Court of Federal Claims on April 14, 1983. Unlike the District Court action, which challenged the validity of the Section 404 permit denial, the Court of Federal Claims assumed that the validity of the 404 permit denial and thus recognized the government's right to take the property for public use consistent with the Fifth Amendment. The Court of Federal Claims action sought money damages as the ''just compensation'' required by the Constitution when property is taken. Loveladies claim for damages in the Court of Federal Claims was filed while its action for injunctive relief was still pending in the District Court.
Six weeks after the filing of the complaint in the Court of Federal Claims, Loveladies, at the government's request, agreed to join in the government's motion for a temporary stay of the proceedings. This motion was granted by the Court of Federal Claims on July 20, 1983. The articulated purpose for seeking the stay was judicial economy:
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If the District Court holds that the permit denial was invalid for any reason, there can be no taking as alleged herein . . . In the
interests of judicial economy, the case should be stayed pending the District Court's decision . . .
The ''Joint Motion'' contained a reference to 28 U.S.C. §1500, noting, ''concurrent jurisdiction in the [Court of Federal Claims] and the Federal District Courts is disfavored.''
When it entertained the Joint Motion, the Court of Federal Claims had the opportunity to examine the complaints in both the Court of Federal Claims action and the District Court action in light of 28 U.S.C. §1500. The Court of Federal Claims did not dismiss the action before it on jurisdictional grounds under §1500. Rather, it entertained a stay, ''until a decision of the District Court for the District of New Jersey.'' The stay was later extended to abide an appeal to the Third Circuit.
Four months after filing in the Court of Federal Claims, Loveladies sought the consent of the government to take a voluntary dismissal without prejudice of the action, even in spite of the stay. But the government refused: ''The defendant will not agree to a dismissal without prejudice in the above captioned case'' (Letter of October 11, 1983). Remarkably, the government later argued that it was ''compelled'' to simultaneously litigate the same claim in two courts despite its own prior insistence upon continued litigation in both.
After recommencement of the proceedings in the Court of Federal Claims in 1985, the parties filed cross motions for summary either side, had the judgment which, while not granted on effect of substantially narrowing the issues for trial. At a subsequent trial of the action, the Court of Federal Claims ruled that the Army Corps of Engineers' denial of Loveladies Section 404 permit constituted a taking for which the government is obligated to pay just compensation pursuant to the Fifth Amendment.
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The government's subsequent appeal was briefed and argued before a three judge panel of the United States Court of Appeals for the Federal Circuit on October 9, 1991. The Court of Appeals decision in UNR Industries, Inc. v. United States, 962 F.2d 1013 (Fed. Cir. 1993), aff'd sub nom. Keene Corp. v. U.S., 113 S. Ct. 2035 (1993) prompted the government to seek a dismissal based on the District Court proceedings which had been considered by the Court of Federal Claims ten years earlier in the Joint Motion. The Court of Appeals then indicated its intention to consider the government's jurisdictional motion under §1500 en bane. In its May 24, 1994 decision, the Federal Circuit determined that, despite the government's attempt, ten years after filing and with a substantial monetary judgment against it, to divest the Court of Federal Claims of jurisdiction, the claim would survive because the actions as originally filed in the District Court and the Court of Federal Claims are not ''the same claim.'' Yet it was necessary for the Federal Circuit to undertake an exhaustive inquiry into Loveladies' very specific history in order to come to its conclusion. A strong dissent by three judges would have thrown Mr. Ullmann's claim out on §1500's hypertechnicality even after decades of his dogged pursuit of his singular goal.
Loveladies was presented with a version of the ''Tucker Act shuffle.'' While the Tucker Act waives sovereign immunity and allows suits against the government for compensation for taking of private property for public use, a property owner cannot get complete relief in the Court of Federal Claims. Rather, the property owner must seek injunctive relief (to attempt to prevent the threatened government action) in the District Court and must seek monetary relief (to obtain compensation for the government action) in the Court of Federal Claims. Under 28 U.S.C. §1500, a property owner may not have these two suits pending at the same time when they arrive from the same operative facts. Fortunately for Loveladies, the Federal Circuit very carefully combed the facts of its case and determined that the two complaints filed in the early 1980's by Loveladies did not arise from the same operative facts.
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Other cases, such as the one involving UNR Industries, have found that §1500 can divest the Court of Federal Claims of jurisdiction and leave a claimant without a remedy. There are so many facts unique to the Loveladies case that it can hardly be said that the case presents precedent broad enough to quell the harsh, inappropriate and inequitable bite of §1500.
The lineage of §1500 runs back more than a century to the aftermath of the civil war when the residents of the Confederacy who had involuntarily parted with their property (usually cotton) during the war sued the United States for compensation in the Court of Claims, under the Abandoned Property Collection Act. When these cotton claimants had difficulty in meeting the statutory condition that they must have given no aid or comfort to the participants in the rebellion, they resorted to separate suits in other courts seeking compensation not from the government as such but from federal officials, and not under the statutory cause of action but on tort theories such as conversion. It was these duplicative lawsuits that induced Congress to prohibit anyone from filing or prosecuting in the Court of Claims, ''any claim . . . for or in respect to which he . . . shall have commenced and has pending'' and action in any other court against an officer or agent of the United States.
This civil war statute has long outlived the cotton claimants and exists today in the form of 28 U.S.C. §1500. When the original act was passed, there was no common-law doctrine of ''res judicata'' that would protect the government from having to defend itself against duplicative or successful claims. The statute is a relic of a set of circumstances that no longer exists and now is used as a tool by the large and savvy Justice Department not because it fears or does not have the resources to defend multiple lawsuits on several fronts, but as a litigation tacticone more device to deprive a deserving landowner of his or her constitutional right to enjoy property without ever allowing the landowner his or her day in court.
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Lud Ullmann devoted the last two decades of his life to trying to right the wrong that had been done him. It was my distinct pleasure to know and work with Lud, whose devotion to Loveladies and Long Beach Island was legendary. Sadly, the justice department's every-trickin-the-book, drag-it-on for-eternity litigation style outlived Mr. Ullmann, and he died before he could savor his hard-fought victory. Knowing Lud as I did, it came as no surprise to me that all of the money he was awarded from his case was left in his will to his favorite charitable hospital in New Jersey. I know that it would please him to see that his legacy has been such a source of inspiration, and that his dedication has lead to a desire by this Congress to correct the great injustice that was done him.
Mr. SMITH OF TEXAS. Thank you, Mr. Kinnard.
Mr. ECHEVERRIA. Thank you very much.
My name is John Echeverria. I am a visiting professor at Georgetown University Law Center. I have served in recent years as counsel for various conservation and other public interest organizations participating as amici curiae in different taking cases around the country. In addition, I have written and commented extensively on various legislative proposals at the Federal and State level which address property issues. The views I express today represent solely my personal opinions.
H.R. 992 ostensibly seeks to pursue a valuable objective: To simplify the litigation process by allowing litigants with property and other related claims to advance all their claims in a consolidated proceeding before one court. However, this bill pursues this goal in a fashion which raises serious constitutional as well as policy problems, and creates brand new obstacles to the fair and efficient administration of justice. I believe the serious constitutional and policy problems with H.R. 992 significantly outweigh any potential advantages and urge the committee not to proceed with this proposed legislation.
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The arguments presented so far appear to me to be largely beside the point of the merits of this legislation and, more importantly, ignore the fact that the Federal Circuit, sitting en banc in Loveladies Harbor, has largely, if not completely, resolved the problem which originally gave rise to this legislative proposal several years ago.
In my written testimony, I have discussed a number of the serious constitutional policy objections to H.R. 992. I see that those comments largely track the testimony of Assistant Attorney General Acheson, who I am sure can present them more authoritatively and persuasively than I can. Rather than cover that same ground, I will focus in my oral testimony on three points which may assist the committee in evaluating whether or not this proposal is worth proceeding with.
First, I wish to respond to the common suggestion that this type of legislation is justified in part by the supposed inconvenience of conducting litigation before the Court of Federal Claims. The Court of Federal Claims is a court of national jurisdiction headquartered in Washington, D.C. However, there is little, if any, basis for complaint that the Court of Federal Claims represents a less convenient forum for litigation of claims than, for example, the Federal District Court.
Congress provided in 28 U.S.C., section 173, that the Court of Federal Claims shall establish times and places for proceedings with a view to securing reasonable opportunity for citizens to appear before the court with as little inconvenience and expense to citizens as possible. The court implements this mandate by routinely conducting trials at different locations across the country most convenient to the property at issue and the claimants.
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In addition, under the leadership of Chief Judge Loren Smith, the Court of Claims has been a pioneer in telephonic conferencing and alternative dispute resolution techniques in an effort to expedite the convenient resolution of cases before the court. The Court of Federal Claims has frequently been described as a user-friendly court, and, to my understanding, that is an entirely apt description.
Second, as I emphasized at the beginning, it appears to me that H.R. 992 and prior legislative proposals along the same lines in prior Congresses represent, in large part, a proposed solution to a problem which, though arguably significant several years ago, no longer exists today.
In 1992, the United States Court of Appeals for the Federal Circuit concluded that under 28 U.S.C. section 1500, a suit filed in Federal District Court would divest the Court of Federal Claims of jurisdiction over a related claim even if the plaintiff were seeking distinctly different relief in each court. The case in which that case reached that conclusion was UNR Industries, subsequently affirmed on narrow grounds by the Supreme Court in Keene Corporation v. United States.
The Court's conclusion in UNR apparently created a complete bar to the simultaneous filing of a taking claim in the Court of Federal Claims and a claim under the Administrative Procedure Act in the Federal District Court. Even worse, it raised the possibility that a taking claim could become time-barred while a litigant awaited a resolution of his or her APA claim in the district court.
Page 36 PREV PAGE TOP OF DOC That possibility did, in fact, raise the prospect of a generally unfair shuffle in which the government could vigorously defend against the APA claim while maintaining that the filing of the taking claim had to await the resolution of the APA claim; and then, after the APA claim was resolved, the government could argue that the taking claim had become time-barred during the course of the district court proceedings.
However, 2 years later in Loveladies Harbor, in light of the Supreme Court discussion on Keene, and sitting en banc, the Court of Appeals for the Federal Circuit rejected its conclusion 2 years earlier in UNR and eliminated this problem. The court concluded that, in fact, 28 U.S.C., section 1500 does not bar the simultaneous filing of claims in the district court and the Court of Federal Claims, so long as each suit seeks different relief.
Accordingly, the court held that because a suit under the taking clause seeks monetary relief, while an APA suit seeks injunctive and/or declaratory relief, a litigant can simultaneously pursue both types of claims in a timely fashion. This ruling eliminated the possibility that a valid taking claim could become unfairly time-barred as a result of the need to await the resolution of the APA claim.
My third observation is that apart from the serious constitutional and policy problems raised by this proposal, it is questionable whether a redesign of Federal court jurisdiction to authorize the simultaneous prosecution of takings and APA claims in a single court would provide significant practical benefit for litigants.
APA claims and taking claims involve very different legal standards, requiring the presentation of various different types of proof. More importantly, it is an established principle of Federal takings jurisprudence that a successful taking claim can only be pursued if it has first been determined, or it is at least presumed for the sake of argument, that the agency action being challenged in the taking action is a valid and properly authorized government action. Thus, if the existing jurisdictional arrangement were changed so that the APA claims and the taking claims could be pursued in one court, there would presumably still be a need to bifurcate consideration of these two types of claims, if not between two separate courts, as under the current system, then at least temporally.
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If bifurcated consideration of taking and APA claims is mandated in any event by the fundamental nature of these two claims, it is not at all clear that any significant added convenience or efficiency could be achieved by authorizing the prosecution of these two types of claims in one court.
If I may make one closing observation. Congress, in a variety of different contexts, has established courts with specialized jurisdiction to serve various purposes. The theory underlying that approach is to have a court with developed expertise consistently interpreting a particular body of law furthers the fair administration of justice. The Congress has pursued that approach in the bankruptcy field and the tax field and for administrative review of a variety of agency orders and so, too, in establishing the Court of Claims.
Often, the establishment of courts of specialized jurisdiction raises problems of drawing lines in jurisdiction, and the imagination of lawyers creates problems in defining where those lines are. I would say that in this arena, with respect to Court of Claims and with respect to takings, the lines following Loveladies are clear, and there is not a problem to be addressed.
[The prepared statement of Mr. Echeverria follows:]
PREPARED STATEMENT OF JOHN D. ECHEVERRIA, PROFESSOR, GEORGETOWN UNIVERSITY LAW CENTER
My name is John D. Echeverria. I am a visiting professor at Georgetown University Law Center. I have served as counsel for various conservation and other public interest organizations participating as amici curiae in different takings cases across the country, and I have written and commented extensively on various legislative proposals at the federal and state level which address property issues. The views I express today represent solely my personal opinions.
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H.R. 992 ostensibly seeks to pursue a valuable objectiveto simplify the litigation process by allowing litigants with property and other related claims to advance all their claims in a consolidated proceeding before one court. However, H.R. 992 pursues this goal in a fashion which raises serious constitutional problems and creates new obstacles to the fair and efficient administration of justice. On balance, I believe the disadvantages of H.R. 992 significantly outweigh any potential advantages, and urge the Committee not to proceed with this proposed legislation.
Before enumerating my concerns with H.R. 992, I believe it would be useful to make three preliminary observations. First, while the Court of Federal Claims is a court of national jurisdiction headquartered in Washington, D.C., there is little if any basis for complaint that the Court of Federal Claims represents a less convenient forum for the litigation of claims than, for example, the Federal District Court. In 28 U.S.C. 173 Congress directed that ''[t]he times and places of the sessions of the Court of Federal Claims shall be prescribed with a view to securing reasonable opportunity for citizens to appear before the Court of Federal Claims with as little inconvenience and expense to citizens as possible.'' The Court implements this mandate by routinely conducting trials at different locations across the country most convenient to the property at issue and the claimants. In addition, under the leadership of Chief Judge Loren Smith, the Court of Federal Claims has been a pioneer in the use of telephonic conferencing and alternative dispute resolution techniques in an effort to expedite the convenient resolution of cases before the Court. The Court of Federal Claims is frequently described as a user-friendly court and, to my understanding, that is an entirely apt description.
Second, it appears that H.R. 992 and prior legislative proposals along the same lines may represent, at least in part, a proposed solution to a problem which, though arguably significant several years ago, no longer exists today. In 1992, the U.S. Court of Appeals for the Federal Circuit concluded that, under 28 U.S.C. 1500, a suit filed in Federal District Court would divest the Court of Federal Claims of jurisdiction over a related claim, even if the plaintiff were seeking distinctly different relief in each court. UNR Industries, Inc. v. United States, 962 F.2d 1013 (Fed.Cir. 1992), aff'd on other grounds sub nom. Keene Corp. v. United States, 113 S.Ct. 2035 (1993). That conclusion apparently created a complete bar to the simultaneous filing of a taking claim in the Court of Federal Claims and a claim under the Administrative Procedure Act in the Federal District Court, and even raised the possibility that a taking claim would become time-barred while a litigant awaited a resolution of his or her APA claim by the District Court. That possibility did in fact raise the prospect of a genuinely unfair ''shuffle,'' in which the government could vigorously defend against the APA claim while maintaining that the filing of the taking claim had to await the resolution of the APA claim, and the government could later claim that the taking claim had become time-barred during the course of the resolution of the APA claim.
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However, two years later, in Loveladies Harbor, Inc. v. United States, 27 F.3d 1545 (Fed. Cir. 1994), the Court of Appeals for the Federal Circuit, sitting en banc, eliminated this problem. The Court concluded that in fact 28 U.S.C. 1500 does not bar the simultaneous filing of claims in the District Court and the Court of Federal Claims, so long as each suit seeks different relief. Accordingly, the Court held that because a suit under the taking clause seeks monetary relief, while an APA suit seeks injunctive and/or declaratory relief, a litigant can simultaneously pursue both types of claims in a timely fashion. This ruling eliminated the possibility that a valid taking claim could become unfairly time-barred as a result of the need to await the resolution of the APA claim.
My third preliminary observation is that it is questionable whether a redesign of federal court jurisdiction to authorize the simultaneous prosecution of takings and APA claims in a single court would provide significant practical benefit for litigants. APA claims and taking claims involve very different legal standards requiring the presentation of very different types of proof. More importantly, it is an established principle of federal takings jurisprudence that a successful taking claim can only be pursued if it has first been established, or it is at least presumed for the sake of argument, that the agency action being challenged as a taking is a valid and properly authorized government action. Thus, if the existing jurisdictional arrangement were changed so that APA claims and taking claims could be pursued in one court, there would presumably still be a need to bifurcate consideration of these two types of claims, if not between two separate courts then at least temporally. If bifurcated consideration of taking and APA claims is mandated in any event by the nature of these different claims, it is not at all clear that any significant added convenience or efficiency could be achieved by authorizing the prosecution of these two types of claims in one court.
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With these preliminary observations in mind, I will now turn to six major concerns raised by this proposed legislation.
First, while the proposed legislative language is somewhat ambiguous, there is substantial basis for concern that H.R. 992 represents an effort, not merely to address the procedure through which claims under the taking clause would be adjudicated, but to fundamentally change the scope of the constitutional right itself. It is black letter Supreme Court law that equitable relief is not available to enjoin an alleged taking of private property, when the remedy of just compensation is available. The U.S. Supreme Court has repeatedly reaffirmed this principle in recent years, for example in Ruckleshaus v. Monsanto Co., 467 U.S. 986 (1984); United States v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985); and Preseault v. ICC, 494 U.S. 1 (1990).
The type of relief traditionally available under the taking clause is not a mere matter of process, but goes to the very heart of the issue of the scope of the taking clause. As the Supreme Court stated in 1987 in First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 314 (1987), the taking clause ''does not prohibit the taking of private property, but instead places a condition on the exercise of that power.'' Stated differently, the clause is designed ''not to limit the governmental interference with property rights per se, but rather to secure compensation in the event of otherwise proper interference amounting to a taking.'' Id. at 315. See also Riverside Bayview, 474 U.S. at 128 (''[s]o long as compensation is available for those whose property is in fact taken, the government action is not unconstitutional.'')
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Again, the bill language is not perfectly clear, but one plausible reading of the bill, based specifically on the language in sections 2(a) and 2(c), is that it seeks to empower the federal courts to routinely grant injunctive relief based on a finding of a taking. This change would significantly expand the scope of the taking clause, would expand the opportunities for interference with the judgments of our elected representatives at the behest of private parties, and would expand the volume of litigation in federal court under the taking clause. More fundamentally, it would appear to represent an effort to redefine legislatively the substantive content of one of the provisions of the Bill of Rights. If so, this would raise serious questions of constitutional validity, particularly in light of the Supreme Court's decision just three months ago in City of Boerne v. Flores, 65 U.S.L.W. 4612 (June 25, 1997), striking down the Religious Freedom Restoration Act as an illegitimate effort to legislatively redefine the substantive content of the free exercise clause of the First Amendment.
Second, H.R. 992 raises another substantial constitutional issue because it seeks to assign to the Court of Federal Claims broad authority to invalidate and enjoin agency actions and Acts of Congress. Article III of the Constitution, including the various standards and safeguards for an independent judiciary, is central to the separation of powers which provides the foundation for our nation's system of government. The Court of Federal Claims is not, of course, an Article III court, and the Court's jurisdiction has therefore been appropriately limited to specific subjects and specific types of relief. H.R. 992 would expand enormously upon the Court's present powers by granting the Court broad discretion to enter injunctive and/or declaratory relief in any action affecting an owner's ''interest in private property.'' The term ''private property'' is broadly defined in the bill to include not only traditionally recognized property interests, but also ''contract rights,'' as well as ''any interest understood to be property based on custom, usage, common law, or mutually reinforcing understandings sufficiently well-grounded in law to back a claim of interest.'' Thus, this bill would apply not merely to disputes over real estate, but to a wide variety of legislation affecting public health and safety as well as various social programs. Furthermore, the bill would grant the Court of Federal Claims broad new authority with respect to all types of challenges to ''the validity of any agency action that adversely affects the owner's interest in private property,'' which encompasses not only claims under the takings clause but an enormous number of other constitutional and statutory claims relating to property Because this proposed grant of jurisdiction is so expansive, there is, at a minimum, a very substantial question whether this authority can properly be assigned to an Article I Court.
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This comment is not intended to suggest any disrespect for the Court of Federal Claims or its members. The distinguished jurists who sit on the Court of Federal Claims are certainly eligible for consideration to appointment to Article III courts. Congress might conceivably wish to consider fundamentally changing the historically limited function of the Court of Federal Claims (and its predecessor courts), and grant the Court of Federal Claims Article III status. However, what the Congress should certainly avoid, I would respectfully suggest, is incrementally assigning to the Court of Federal Claims powers comparable to those exercised by Article III courts without first directly addressing the question of the need and appropriateness of expanding the Article III judiciary.
Third, section 2(a) of the bill can be read to create a broad new cause of action for monetary as well as injunctive relief based on injury to property interests as a result of federal law or regulation, even if such injury does not represent a taking under the Fifth Amendment. If so, this provision would impose an enormous new financial burden on taxpayers and generate a massive number of new lawsuits against the federal government. Furthermore, this provision could result in a systematic bias in agency decision-makers in favor of certain property owners and to the detriment of neighboring property owners, the community, and the public as a whole.
Fourth, the proposal to assign concurrent jurisdiction to the District Courts and to the Court of Federal Claims to hear cases regarding agency action ''that adversely affects [an] owner's interest in private property,'' and to grant each court broad authority to grant declaratory, injunctive, and monetary relief, would encourage strategic forum shopping and the formation of inconsistent lines of precedent within the federal court system. In other arenas, Congress has rarely, if ever, granted concurrent jurisdiction to two federal trial courts to hear the same claims.
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The legislative history of the Federal Courts Improvement Act of 1982 suggests that Congress assigned the Court of Federal Claims exclusive jurisdiction to hear takings claims at least in part to foster consistent interpretation of this constitutional provision as applied to the United States, see Senate Report, No. 97275 (November 18, 1981). It would be contradictory for Congress now to balkanize judicial application of the takings clause to the United States by assigning the approximately 100 Federal District Courts, as well as the Court of Federal Claims, jurisdiction to hear suits under the taking clause.
Fifth, by making its provisions apply ''[n]otwithstanding any other provision of law,'' H.R. 992 would appear to supersede the ''preclusive review'' provisions contained in many federal regulatory statutes. In a variety of different contexts, see, e.g. Clean Air Act, 42 U.S.C. 7607(b); Occupational Health and Safety Act, 29 U.S.C. 660; Consumer Product Safety Act, 15 U.S.C. 2060; and Surface Mining Control and Reclamation Act, 30 U.S.C. 1276, Congress has provided for prompt review of certain agency rules and orders on an expedited basis in a specific forum, such as the Court of Appeals for the District of Columbia Circuit. These preclusive review provisions help ensure that the regulated community can receive prompt, definitive guidance on the validity of agency rules and other actions before investing massive sums on compliance. Under H.R. 992, all agency actions that ''adversely affect'' private property (a very broad class of cases) could apparently be challenged in Federal District Court or the Court of Federal Claims, notwithstanding Congress' intent to channel various regulatory challenges into specific courts within specific time limits. As a result, H.R. 992 would appear to completely defeat the intended function of the preclusive review provisions by opening nationwide regulations to years of uncertainty, to the detriment not only of the regulated community but to the detriment of government officials and the public.
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Finally, the proposal in H.R. 992 to completely repeal 28 U.S.C. 1500 appears, at a minimum, to be over broad. As discussed, the Loveladies Harbor decision resolved the most significant perceived problem caused by this provision. Furthermore, it would seem entirely reasonable, at a minimum, to have a clear mechanism to block litigants from simultaneously pursuing precisely the same lawsuit in two different federal courts. Weber v. United States, 1995 WL 679656 (unpublished opinion) (Fed. Cir. 1995) (applying 28 U.S.C. 1500 to bar prosecution of ''identical factual claim'' in Court of federal Claims); cf. Dico, Inc. v. United States, 48 F.3d 1199 (Fed. Cir. 1995) (applying 28 U.S.C. 1500 to bar prosecution of a claim for monetary relief in the Court of Federal Claims when a suit seeking the exact same monetary relief was already pending in the District Court). I urge that the proposal to repeal 28 U.S.C. 1500 be carefully examined in light of Loveladies Harbor and recommend that the Committee consider more finely tailored mechanisms to improve coordination between the District Court and the Court of Federal Claims.
Thank you for the opportunity to testify. I would be happy to answer any questions you may have.
Mr. SMITH OF TEXAS. Mr. Echeverria, we would like to proceed because I am going to try to finish this panel before we go vote, and if we can each ask one question, maybe we can do it.
Mr. Kinnard, obviously, you see a need to repeal section 1500. Is that going to allow individuals to manipulate the court system and forum shop or not? If you will give a real quick answer, then I will recognize Mr. Watt.
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Mr. KINNARD. It will give a choice, sir, but it is not going to allow manipulation of the court system, because there can be protocols established for transferring a particular type of claim from one court to the other.
Certainly, Chief Judge Smith and the Claims Court itself is well-equipped to hear these types of claims, but the State courts hear these types of claims all the time as well.
Mr. SMITH OF TEXAS. And it is better than the shuffle and reshuffle in any case?
The gentleman from North Carolina, Mr. Watt.
Mr. WATT. Mr. Chairman, I pass.
Mr. SMITH OF TEXAS. Mr. Jenkins.
Mr. JENKINS. I do not have any questions, Mr. Chairman.
Mr. SMITH OF TEXAS. The gentleman from Tennessee, Mr. Bryant.
Mr. BRYANT. I have no questions, Mr. Chairman.
Mr. SMITH OF TEXAS. Gentleman from Utah, Mr. Cannon.
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Mr. CANNON. Mr. Kinnard, you were saying that the Loveladies case was unique. Do you think the precedent is sufficient to do what Mr. Echeverria was suggesting, which is to solve the problem of 1500, or do you think that we need to enact this law?
Mr. KINNARD. I would respectfully direct you to the opinion of the United States Court of Appeals for the Federal Circuit. It saw this as a case unique to its own facts. It carefully, very carefully, reviewed the two complaints that were drafted and determined that, under these circumstances, this claim is going to be able to proceed. But I lived with this. I was there for the argument. I wrote the papers. This was a unique claim. Section 1500 still looms over any litigant who tries to get into this area.
Mr. SMITH OF TEXAS. Any other question by any other Member? If not, we thank you both for being here. We are sorry we have to go vote.
The subcommittee will be in recess for about 15 minutes until we return.
Mr. SMITH OF TEXAS. The Subcommittee on Immigration and Claims will reconvene, and let me explain to those here that we are likely to have a series of votes, so we are just going to need to squeeze in panels as we can. I just spoke to our ranking member, Mr. Watt, who will be here momentarily, but he asked me to proceed even if he was not here.
Page 47 PREV PAGE TOP OF DOC Our second panel consists of Eleanor Acheson, Assistant Attorney General, Office of Policy Development.
We welcome you and look forward to your testimony, and if you will please proceed.
STATEMENT OF ELEANOR D. ACHESON, ASSISTANT ATTORNEY GENERAL, OFFICE OF POLICY DEVELOPMENT
Ms. ACHESON. Thank you, Mr. Chairman, and I will be as brief as I can.
We very much appreciate the opportunity to provide the Department's views on H.R. 992. As you know, we have serious constitutional and policy concerns with the bill, and we oppose the bill. I want to say, however, that we are prepared to do anything we can with you, with your staff, with the court, and with the staff of the Court of Federal Claims to address any problems that there may be which are the motivation for the various provisions of this bill. We are concerned, as you are, about simplifying and expediting the resolution of judicial challenges to Federal regulatory actions.
One of the Attorney General's top priorities has been to achieve a just resolution of Federal court cases as quickly as possible. The Department has been very active in promoting the use of alternative dispute resolution and other methods of streamlining Federal litigation, including cases involving property rights. In fact, the Department has worked closely with the U.S. Court of Federal Claims to develop that court's ADR rule which allows for the use of settlement judges, mini trials, and other ADR techniques, and we are well on our way to working through a large body of cases pursuant to that rule.
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H.R. 992, however, would not reduce litigation costs and delay in our view. In fact, the bill would have precisely the opposite effect, resulting in greater cost and delay as well as uncertainty and instability in the law. The bill would have several adverse impacts. I will briefly mention a number of them.
First, H.R. 992 would raise serious constitutional concerns by empowering the Court of Federal Claims, a non-Article III tribunal, to invalidate Federal statutes and regulations.
Second, the bill would give the CFC broad authority to grant injunctive relief. This provision would not only raise some constitutional concerns, but would contravene Federal legal principles that generally preclude the issuance of an injunction in takings or contract claims against the United States.
Third, the bill could override provisions found in many Federal statutes that allow for the swift and orderly resolution of challenges to Federal actions. These provisions give specific courts exclusive jurisdiction to adjudicate those challenges, thereby promoting stability and certainty once the court has addressed the validity of a regulation. By nullifying these provisions across the board in cases affecting property rights, the bill would deprive the regulated community and public of stability and certainty in the law.
The bill would allow Federal district courts across the Nation to resolve any claim under the just compensation clause and other claims affecting property rights, regardless of the amount in controversy. It would thereby undermine the very purpose of establishing the CFC. By disregarding the CFC's experience and efficiency in resolving these cases, the bill would result in greater delay and higher litigation costs in many of them.
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Fifth, the bill would repeal 28 U.S.C. 1500, which prevents the United States from being sued in the same claim for the same relief in two different courts at the same time. Repeal of this commonsensical provision would allow claimants to manipulate Federal court jurisdiction in a way that would waste scarce Federal judicial resources.
Sixth, H.R. 992 would inappropriately authorize the CFC, a specialized tribunal with national jurisdiction, to entertain State-law-based tort claims.
And, finally, the bill's ambiguous provisions might well be misread to create a budget-busting cause of action that would radically alter the balance between property rights and public protections under the Constitution.
The bill contains a number of other problematic provisions that are identified in the written statement we have submitted. In short, we believe the bill is misdirected. The Department stands ready to work with the subcommittee and the court to find other ways to streamline and expedite Federal claims involving property rights, but we do oppose the bill.
Thank you very much.
[The prepared statement of Ms. Acheson follows:]
PREPARED STATEMENT OF ELEANOR D. ACHESON, ASSISTANT ATTORNEY GENERAL, OFFICE OF POLICY DEVELOPMENT
Page 50 PREV PAGE TOP OF DOC Mr. Chairman and Members of the Subcommittee: Thank you for the opportunity to provide the Department's views on H.R. 992, the ''Tucker Act Shuffle Relief Act of 1997.'' We have serious constitutional and policy concerns with the bill, and we strongly oppose it.
Mr. Chairman, no one could disagree with the apparent motivation of this bill, which is to simplify and expedite the resolution of judicial challenges to federal regulatory actions, including challenges under the Administrative Procedure Act and the Just Compensation Clause of the Fifth Amendment. One of Attorney General Janet Reno's top priorities is to achieve a just resolution of federal court cases as quickly as possible. The Department has been very active in promoting the use of Alternative Dispute Resolution (''ADR'') and other ways to streamline federal litigation, including cases involving property rights under the Fifth Amendment. In fact, the Department worked closely with the U.S. Court of Federal Claims (''CFC'') to develop that court's ADR rule, referred to as General Order No. 13, which allows for the use of settlement judges, mini-trials, and other ADR techniques. We have also worked with the court to create an awareness of the special need for ADR in takings cases. For example, by agreement with the opposing parties and our client agencies, the Department has initiated an ADR process that we hope will resolve about 150 related land claims recently filed in the CFC (unless a settlement is achieved first). We have aggressively pursued ADR in other cases involving property interests, and we have been successful in resolving a number of these cases through ADR, thereby reducing litigation costs and delay and conserving judicial resources.
H.R. 992, however, would not promote these goals. In fact, the bill would have precisely the opposite effect, resulting in greater cost and delay in the resolution of cases, as well as uncertainty and instability in the law. The bill's potential adverse impacts include the following:
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H.R. 992 would raise serious constitutional concerns by empowering the CFC, a non-Article III tribunal, to invalidate federal statutes and regulations.
H.R. 992's broad grant of authority to the CFC to confer injunctive relief would contravene bedrock legal principles that generally preclude an injunction where a claimant prevails on a takings or contract claim against the United States.
H.R. 992 could override provisions found in many federal statutes that allow for the swift and orderly resolution of challenges to federal actions. These provisions promote stability and certainty in the law by providing specific courts with exclusive jurisdiction to adjudicate those challenges. By nullifying these provisions across the board in cases affecting property rights, the bill would deprive the regulated community and the public of stability and certainty in the law.
H.R. 992 would allow federal district courts across the nation to resolve any claim under the Just Compensation Clause and other claims affecting property rights, regardless of the amount in controversy, thereby undermining the very purpose and central benefits of establishing the CFC. By disregarding the CFC's experience and efficiency in resolving these complex claims, the bill would result in greater delay and higher litigation costs in many cases.
By repealing 28 U.S.C. §1500which prevents the United States from being sued on the same claim in two different courts at the same timeH.R. 992 would allow claimants to manipulate federal court jurisdiction in a way that wastes scarce federal judicial resources.
Page 52 PREV PAGE TOP OF DOC H.R. 992 would inappropriately authorize the CFC, a specialized tribunal with national jurisdiction, to entertain state-law based tort claims.
H.R. 992's ambiguous provisions might well be misread to create a budget-busting cause of action that would radically alter the balance between property rights and public protections under the Constitution.
In short, we believe this bill is seriously misdirected and would undo the efforts made by the Congress, the Department, and others to reduce burdens associated with litigating in federal court. The Department stands ready to work with the Subcommittee to find additional ways to streamline and expedite federal court claims involving property rights. But we strongly oppose H.R. 992.
Summary of the Bill
H.R. 992 is similar to section 205 of S. 605, the ''Omnibus Property Rights Act of 1995,'' introduced in the 104th Congress, as well as section 5(b) of S. 343, ''The Comprehensive Regulatory Reform Act of 1995,'' also introduced in the 104th Congress. The Department expressed serious concerns with these proposals in previous testimony and correspondence.
H.R. 992 would greatly change the orderly division of responsibility between federal district courts and the CFC. Under existing law, the CFC has jurisdiction to hear takings claims and other civil claims against the United States founded upon the Constitution, a federal statute or regulation, or a contract with the United States, or for damages not sounding in tort. 28 U.S.C. §1491. Since its creation in 1855, the CFC has primarily addressed money claims against the United States, and its authority to grant injunctive relief has been severely limited. Federal district courts have concurrent jurisdiction to hear, among other things, takings claims and other civil claims against the United States, but this jurisdiction is generally limited to claims up to $10,000. 28 U.S.C. §1346. Federal district courts and courts of appeals also have primary responsibility for reviewing federal agency action under the Administrative Procedure Act.
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The existing regime has allowed the CFC to develop experience in resolving and streamlining takings litigation and the other complex cases within its specialized docket. Existing law also ensures that the authority to invalidate federal statutes and regulations is generally exercised by Article III courts who are truly independent from the other branches of government by virtue of salary and tenure protections in the Constitution.
H.R. 992 would greatly alter this longstanding regime. Section 2(a) of the bill would give the CFC and federal district courts concurrent jurisdiction over ''claims for monetary relief and claims seeking invalidation of any Act of Congress or any regulation of an agency as defined under this Act affecting property rights.'' Section 2(c)(1)(A) would authorize the CFC to invalidate ''any Act of Congress or any regulation of an executive department that adversely affects private property rights in violation of the fifth amendment of the United States Constitution.'' Section 2(c)(1)(B) would further authorize the CFC ''to grant injunctive and declaratory relief when appropriate.'' The bill also would give the CFC new powers to hear tort claims against the United States, and it would repeal 28 U.S.C. §1500, which prevents the Government from being sued on the same claim in two different courts at the same time.
Serious Constitutional Concerns
H.R. 992 would dramatically expand the jurisdiction and remedial powers of the CFC by giving the CFC, among other things, broad authority to invalidate federal statutes and federal agency actions that affect property rights. The CFC is ''established under Article I of the Constitution'' (28 U.S.C. §171(a)), and CFC judges do not enjoy the tenure and salary protections that the Constitution requires for Article III courts. The bill thus raises serious, fundamental issues under Article III. These concerns are set forth at greater length in the Department's recent letter to the Chairman on H.R. 992, and I will briefly summarized them here.
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Several recent Supreme Court decisions have emphasized Article III's value in preserving the tripartite federal scheme. In Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), the Court invalidated a broad grant of jurisdiction to the Article I bankruptcy courts. The plurality found a danger of '' 'encroachment or aggrandizement' by Congress at the expense of the other branches of government.'' Id. at 83 (citation omitted). In Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568 (1985), and again in Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833, 847 (1986), the Court upheld grants of adjudicatory authority to administrative tribunals established under Congress's Article I powers. However, those decisions relied largely on the limited jurisdiction and powers that were accorded those tribunals. In each instance, the Court considered ''the extent to which the 'essential attributes of judicial power' [were] reserved to Article III courts, and, conversely, the extent to which the non-Article III forum exercise[d] the range of jurisdiction and powers normally vested only in Article III courts.'' Schor, 478 U.S. at 851 (quoting Thomas, 473 U.S. at 585).
H.R. 992 would dramatically expand both the jurisdiction and remedial power of the Article I CFC far beyond its historical primary role as a tribunal for resolving specified money claims against the United States. The CFC would be empowered to decide statutory challenges to agency action affecting property rights and Fifth Amendment challenges to federal statutes and regulations affecting those rights. The remedial powers of the CFC, to be exercised across this broad range of cases, would be essentially identical to the remedial powers of the Article III district courts. Assignment of these broad powers to the Article I CFC would raise serious constitutional difficulties under Northern Pipeline and the Court's subsequent elaboration of the limits on non-Article III adjudications in Thomas and Schor.
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In addition to these separation of powers concerns, H.R. 992 would raise serious concerns involving the constitutional rights of certain litigants to adjudications by Article III judges. The bill would allow most plaintiffs with potential CFC claims to choose between Article I and Article III tribunals. Plaintiffs who elect to proceed in the CFC rather than in district court would effectively waive any rights to have their claims heard by Article III trial judges. But the initial plaintiffs, in many cases, would not be the only non-federal parties with a cognizable stake in the choice of forum. Statutory provisions and rules governing CFC practice permit involuntary joinder of third parties, both as defendants and plaintiffs. But Article III limits the application of these provisions. Indeed, in Bank of America National Trust & Savings Association v. United States, 23 F.3d 380 (Fed. Cir. 1994), Judge Mayer argued that the CFC, in exercising its statutory power of involuntary joinder, had violated rights that Article III guaranteed to the involuntarily joined litigant (id. at 38588). By sharply expanding the CFC's jurisdiction and remedial power, the bill would increase both the frequency with which involuntary joinder under these provisions could present Article III problems and the force of the constitutional objections that involuntarily joined parties would raise.
Inappropriate Injunctive Relief in Takings and Contract Cases
In addition to these constitutional difficulties, the bill's proposed expansion of the powers of the CFC to include broad injunctive relief is problematic on policy grounds. Traditionally, the relief available in suits before the CFC has been limited to money damages. That traditional limitation has been modified very sparingly. Specifically, the court's power extends beyond monetary relief in certain personnel actions, 28 U.S.C. §1491(a)(2), and in cases involving the award of government contracts, 28 U.S.C. §1491(b). Any further expansion of the court's authority to grant injunctive relief would effectively give the court power to alter government policy decisions, rather than simply providing full compensation for the consequences of governmental decisions.
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Injunctive relief in response to a takings claim against the United States is generally inappropriate. Under longstanding constitutional doctrine, equitable relief is not available to enjoin an alleged taking where a suit for compensation can be brought against the sovereign subsequent to the taking. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1016 (1984) (citing cases). The Tucker Act generally provides a remedy of monetary relief where federal action takes private property. Id. The bill's broad grant of injunctive authority to the CFC could be read to authorize injunctive relief in all takings cases against the United States, thereby conflicting with these basic constitutional principles.
The bill also could have the practical effect of denying the government the rights that commercial parties routinely possess when they enter into contracts. In traditional contract law, a party who does not wish to perform a contract has the option of not performing, which might constitute a breach of the contract. In that circumstance, the breaching party will be expected to pay money damages to make the non-breaching party whole. However, the non-breaching party does not ordinarily have the right to demand contract performance. Instead, the law has customarily recognized that money damages are a sufficient remedy in the commercial world. If the CFC is given the power to grant a non-breaching party injunctive relief, the court will be empowered to deny the government the contractual options to which any other contracting party would be entitled.
To be sure, section 2(c)(1)(B) qualifies its grant of injunctive relief to the CFC to cases where such relief would be ''appropriate.'' This vague qualifier, however, does not clarify whether H.R. 992 affords the CFC authority to grant injunctive relief against the United States in takings and contract cases. For this very practical reason, we oppose the provision that would expand the Court's power to grant injunctive relief as unnecessary and unwise.
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Override of ''Preclusive Review'' Provisions
H.R. 992 appears to override provisions included in many federal statutes that vest exclusive jurisdiction in particular courts to review specified regulations. These provisions, sometimes referred to as ''preclusive review'' provisions, often specify a fixed time period within which such challenges must be brought. Preclusive review provisions allow the agency, the regulated community, other interested persons, and the general public to know that there is stability in the regulatory regime, so that they may plan their future actions accordingly. Once the specified court has spoken on the issue of a regulation's validity, affected industries can adopt compliance strategies, which might require substantial capital investments, secure in the knowledge that a competitor will not subsequently persuade another court to invalidate the rule, thereby rendering the investment worthless.
Section 2(a) of the bill provides that ''[n]otwithstanding any other provision of law,'' all federal district courts and the CFC shall have jurisdiction over claims seeking invalidation of agency actions affecting property rights. While perhaps not intended by the bill's drafters, this language appears to wipe out, in one fell swoop, every preclusive review provision in the U.S. Code. Because this provision applies ''[n]otwithstanding any other provision of law,'' it appears to trump every existing statutory provision that limits challenges to federal action to a particular court. Because it applies to any federal action ''affecting property rights,'' its potential effect is extremely broad. For example, claimants could argue that any federal statute or rule that imposes compliance costs affects property rights. If read to override preclusive review provisions, H.R. 992 would lead to significant uncertainty and instability in the law caused by the possibility of multiple, inconsistent rulings. A ruling by a federal appeals court upholding the validity of a regulation, for example, could be contradicted by a future ruling by the CFC or any federal district court, most of which would not be bound by the original ruling.
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Preclusive review provisions requiring direct review of agency action by a Court of Appeals also avoid duplication of judicial effort. As the Supreme Court explained in Florida Power & Light Co. v. Lorian, 470 U.S. 729 (1985), a court reviewing agency action generally is not authorized to conduct a de novo inquiry into the decision under challenge, and thus the factfinding capacity of a district court is typically unnecessary for the review. Id. at 744. Placing initial review of agency action in a district court has the detrimental effect of requiring both the district court and the court of appeals to duplicate efforts; both must decide, based on the record the agency provides, whether the action was proper. Id. ''One crucial purpose of * * * jurisdictional provisions that place initial review in the courts of appeals is to avoid the waste attendant upon this duplication of effort.'' Id. H.R. 992 would appear to eviscerate this commonsensical approach to judicial review.
The Congress has seen fit to include preclusive review provisions in a host of federal statutes. Potentially affected provisions that limit review to the District of Columbia Circuit include 15 U.S.C. §766(c) (Federal Energy Administration rules of general and national applicability) and 49 U.S.C. §32904(b)(7)(A) (certain calculations of average fuel economies). The following statutes contain other preclusive review provisions that might be affected by the bill: the Food Quality Protection Act of 1996 (21 U.S.C. §333(f)(4)); the Consumer Product Safety Act (15 U.S.C. §2060); the Controlled Substances Act (21 U.S.C. §877); the National Labor Relations Act (29 U.S.C. §160 (f)); the Federal Power Act (16 U.S.C. §825l(b)); the Federal Mine Safety and Health Amendments Act of 1977 (30 U.S.C. §816); the Hobbs Administrative Orders Review Act, which authorizes review of a broad range of final agency actions, including final actions by the Federal Communications Commission, the Department of Agriculture, the Department of Transportation, the Federal Maritime Commission, and the Nuclear Regulatory Commission (28 U.S.C. §2342); as well as laws governing automobile bumper standards (49 U.S.C. §32503(a)); air safety enforcement actions (49 U.S.C. §46110(a)); and pipeline safety standards (49 U.S.C. §60119).
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Affected environmental provisions include those governing pesticides (7 U.S.C. §136n(b)), toxic substances (15 U.S.C. §2618), surface mining (30 U.S.C. §1276), clean water (33 U.S.C. §1369(b)), safe drinking water (42 U.S.C. §300j7), hazardous waste (42 U.S.C. §6976), clean air (42 U.S.C. §7607(b)), and Superfund cleanups (42 U.S.C. §9613(a)).
Allowing each federal district court and the CFC to hear challenges to agency actions that allegedly affect property rights would nullify the benefits of these carefully crafted provisions. H.R. 992 might also allow claimants to sidestep administrative processes for reviewing agency action by going directly to federal court anytime the claimant alleges that agency action adversely affects its property rights.
Disregard of the Experience and Efficiency of the CFC
Existing law vests exclusive jurisdiction for all takings claims against the United States for more than $10,000 in the CFC. Over the years, the CFC has developed experience in resolving and streamlining cases under the Just Compensation Clause and other claims within its jurisdiction. Through ''Bench-Bar'' task forces and other initiatives, the CFC has worked closely with the Department and private sector litigators to develop issue-narrowing techniques and streamlining mechanisms for these complex cases. These efforts include the establishment of the Alternative Dispute Resolution program mentioned earlier. And because the CFC rules of practice allow CFC judges to hold trials in locations convenient to the parties and witnesses, the claimant can be spared the time and expense of traveling to the CFC for trial.
Page 60 PREV PAGE TOP OF DOC By authorizing federal district courts across the country to hear takings claims and other property-related claims against the United States, regardless of the amount in controversy, H.R. 992 would undermine the benefits and economies that have resulted from placing most of these cases within the exclusive jurisdiction of the CFC. Unlike claims brought under the Administrative Procedure Act, which are generally based on the record established by the agency, takings claims may involve extensive discovery and trial on significant issues with which a federal district court has little experience. By allowing for the resolution of these claims by courts with less experience than the CFC, the bill would cause additional delay in many cases, as well as a lack of uniformity in the law.
By providing concurrent jurisdiction, the bill would also encourage inappropriate forum shopping. Indeed, just last year the Congress enacted a sunset provision to eliminate federal district court jurisdiction (concurrent with the CFC) over bid protests. The sunset provision was enacted because ''having multiple judicial bodies review bid protests of Federal contracts has resulted in forum shopping as litigants search for the most favorable forum,'' as well as lack of national uniformity in resolving these disputes. 142 Cong. Rec. S11848 (Sept. 30, 1996) (remarks of Senator Cohen) (discussing section 12 of the Administrative Dispute Resolution Act of 1996, Pub. L. No. 104320). The same concerns apply all the more to H.R. 992's sweeping grant of concurrent jurisdiction over claims affecting property rights.
Waste of Judicial Resources
The Department also opposes the proposed repeal of 28 U.S.C. §1500, which spares the Government the need to defend against the same claim in two different courts at the same time. Supporters of similar repeal proposals have argued that repeal is necessary because current law forces a property owner to bring consecutive claims for equitable relief in the district court and monetary relief in the CFC, and to exhaust all appeals in the district court action prior to seeking monetary relief. This contention is simply incorrect. In Loveladies Harbor, Inc. v. United States, 27 F.3d 1545 (Fed. Cir. 1994) (in banc), the Federal Circuit sitting in banc authoritatively determined that section 1500 does not preclude property owners from seeking equitable relief in the district court and monetary relief in the CFC at the same time. The Loveladies court held that section 1500 deprives the CFC of jurisdiction only where the claimant has a claim pending in another court that arises from the same operative facts and seeks the same relief.
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Repeal of section 1500 would allow litigators to manipulate the courts and forum shop, thereby wasting scarce judicial and Government litigating resources. For example, if section 1500 were repealed, a plaintiff would be able to begin litigating aspects of a contract claim in district court and subsequently initiate a suit before the CFC in an effort to find the most sympathetic forum. Even if the bill made clear that the Government could transfer the cases and consolidate them in one forum, due to the minimal requirements of notice pleading, the Government might not learn until well into the litigation that a complaint filed in the district court involved the same dispute as a complaint filed in the CFC. The Government's ability to identify related actions would be further limited by the sheer volume of civil litigation involving the United States. The potential for abuse caused by repeal of section 1500 would further waste scarce judicial resources.
Unwise Grant of Jurisdiction over Tort Claims to the CFC
We also oppose section 2(c)(1)(C) of the bill, which would grant the CFC authority to entertain tort claims that currently may only be heard by the federal district courts. The provision would effectively repeal that portion of the Tucker Act that precludes the CFC from entertaining claims ''sounding in tort.'' 28 U.S.C. §1491.
We oppose this provision for two reasons. First, it is unnecessary. The CFC already exercises jurisdiction over claims based on tortious breach of a government contract. L'Enfant Plaza Properties, Inc. v. United States, 645 F.2d 886, 892 (Ct. Cl. 1981); Morris v. United States, 33 Fed. Cl. 733, 742 (1995). Thus, the Court may already hear all contract claims that a litigant may desire to assert, whether or not they allege the existence of tortious conduct. The only tort claims that the Court may not entertain are tort claims that, by definition, are independent of any contract, and thus truly ''sound in tort.''
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Second, tort claims generally are unlike the types of claims that are at the heart of the CFC's mission and purpose. Historically, the CFC has addressed non-tort claims for money against the United States arising under the Constitution, a federal statute, a regulation, or a contract. The benefit of having such claims addressed in a specialized forum with a national, rather than a regional, jurisdiction, is that one court can promote uniformity in the resolution of these issues. Unlike the types of claims that the Court has traditionally entertained, tort claims have their source in state common law, which is subject to modification state-by-state by various state courts and legislatures. As such, governing principles in tort law can vary from state to state. As a single court, located in Washington, D.C., the Court of Federal Claims is not a proper forum to administer the varied law emanating from 50 states.
The variations in state law are already accommodated by the United States district courts in their handling of tort claims against the United States. The existence of the potential for redress of tort claims against the United States in the district courts insures that citizens may have a forum in which to pursue these claims. The extension of such jurisdiction to the CFC would place before the CFC a set of claims that, by their nature, are different from the claims that the Court was established to address, and has addressed for more than 100 years.
Potential New Cause of Action that Could Bust the Budget
The bill's title and other provisions suggest that the bill is designed to effect only jurisdictional and procedural changes, not to create a new cause of action. Section 2(a) of the bill, however, could be misread to create new federal liability. This section provides: ''A property owner may file a civil action under this Act to challenge the validity of any agency action that adversely affects the owner's interest in private property in either the United States District Court or the United States Court of Federal Claims.''
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While this language might be intended merely to define jurisdiction, it could be misconstrued by a court to create a new cause of action and federal liability any time agency action ''adversely affects'' private property. This risk is exacerbated by the bill's definition of ''private property,'' which refers to ''property protected under * * * this Act,'' and the definition of ''State agency,'' which refers to ''taking[s] of private property seeking to be vindicated under this Act.'' If read to create federal liability for any government action that adversely affects property rights, the bill would establish a compensation requirement that extends far beyond that currently imposed by the Fifth Amendment. As recognized in the seminal regulatory takings case of Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413 (1922), ''[g]overnment hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law.'' The Department strongly opposes statutory compensation mandates that would alter the longstanding balance between property rights and public protections that has developed under the Constitution. As we have explained at length in previous testimony and correspondence, such statutory compensation mandates could bust the budget, create huge new bureaucracies, result in a litigation explosion, and undermine our ability to provide vital protections for the American people. Because H.R. 992 would confer broad invalidation authority, the bill also creates the risk of being read to allow for invalidation of any federal action that adversely affects property rights, which could mean the end of any federal protection that involves a restriction on the use of private property.
The bill contains a number of other troublesome provisions and drafting flaws that are sure to result in more, not less, litigation.
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For example, section 2(c)(1)(A) of the bill would give the CFC jurisdiction over claims ''for invalidation of any Act of Congress or any regulation of an executive department that adversely affects private property rights in violation of the fifth amendment of the United States Constitution'' [emphasis added]. The meaning of this provision is not at all clear. The Fifth Amendment does not prohibit takings, but merely conditions a taking on the payment of just compensation. There is no constitutional ''violation'' (under the language of the bill) where a money remedy for the taking exists. As previously noted, the Tucker Act generally provides a remedy of monetary relief where federal action takes private property. The best reading of the bill language in question would be to give it no effect where a Tucker Act remedy of monetary relief is available because in these cases the federal action would not constitute a ''violation of the fifth amendment.'' To avoid rendering this language a nullity, however, a court might misconstrue it to allow for invalidation of federal action even where a monetary remedy is available, a result that would contravene fundamental precepts of takings jurisprudence.
Another example of problematic drafting that might well spawn new litigation appears in the bill's definition of ''State agency.'' This term does not appear anywhere in the operative portion of the bill, but its appearance in the definition section might lead a court to conclude that the bill applies not only to federal actions, but to myriad State actions as well.
The extensive definition of ''private property''a lengthy list of interests, including any interest understood to be property based on ''mutually reinforcing understandings sufficiently well grounded in law to back a claim of interest''is convoluted, vague, and likely to result in additional litigation.
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Section 2(b) of the bill grants standing to persons adversely affected by ''an agency action taken under this Act,'' but there is no agency action authorized or required to be taken under the bill.
These and other ambiguous provisions would likely result in additional delay, expense, and litigation as the courts and parties struggle to discern their meaning.
The Department would like to work closely with the Subcommittee and others to expedite the just resolution of claims against the United States. Alternative Dispute Resolution and other ways of streamlining litigation hold much promise.
H.R. 992, however, would undermine these efforts, and we strongly oppose it.
Mr. SMITH OF TEXAS. Thank you, Ms. Acheson, and I appreciate your first words, which were your offer of help in trying to perhaps redraft some of the provisions in the bill to make them more acceptable to the Department of Justice, and perhaps those are some areas that we can explore as well.
The Supreme Court said, ''that Section 1500 operates in some circumstances to deprive plaintiffs of an opportunity to assert rights that Congress has generally made available to them.'' And even the dissenting justices in the Loveladies Harbor case said, ''that Section 1500 had become a judicial embarrassment, a monument to cynicism.''
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Do you think that the Supreme Court is wrong, or do they have a legitimate complaint about Section 1500?
Ms. ACHESON. Well, I certainly would hesitate to say that the Supreme Court is wrong, and I must say I don't entirelyI am not sure of when they said that.
Mr. SMITH OF TEXAS. This was 1993.
Ms. ACHESON. It seems to me, though, that to whatever extent there were confusions about what kinds of claims could be brought in what court, when, and how the filing of claims and of the APA in a Federal district court and that action might relate to the filing of a takings and just compensation action in the CFC have been largely cleared up by Loveladies.
I understand and I heard the end of the testimony of the prior witness, who made it clear that he had litigated this case, and he lived through it, and he thought it was a case that was very sui generis and, on its facts, I think litigated cases for 20 years. I think we all feel that way about the cases that we litigate.
Reading Loveladies, however, as I have now done several times, it seems to me that it addresses the background of confusion that has arisen in this area and straightens out the rule which has now been applied on a going forward basis and is holding, making very clear that there really is only one set of circumstances that will cause a case to be dismissed from the CFC, and that is if a case is filed there while a district court case is pending, that it is the same body of operative facts and is seeking the same relief.
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I would also say that in Loveladies, the Court of the Federal Circuit itself expressed the view that its holding in this case, its analysis of the background law and cases, it had caused confusion of the area, and its holding in the case, in its view, would clear up any confusions and problems in this area, when to file, where and how these actions relate.
Mr. SMITH OF TEXAS. Ms. Acheson, just one more point, I guess, is really to emphasize the issue that I was mentioning a while ago when I quoted the Supreme Court. Let me quote the Federal Circuit Court from just this last spring when itand I used this in my opening statementwhen it bemoaned having to ''engage in the wasteful exercise of deciding not how a dispute should be resolved but what court should be responsible for resolving it.'' At least to me, by giving conditional current jurisdiction to both courts, that is how we solve the problem and that is how we respond to what I think is a legitimate criticism from the Supreme Court and the Federal Circuit Court as well.
I don't have any other questions. I appreciate your testimony. And I recognize the gentleman from North Carolina, Mr. Watt.
Mr. WATT. Mr. Chairman, I think I am going to pass again. I haven't been taking an activist role in this because I think this is another one of those circumstances where we are considering a bill that seemed to me to be almost totally inconsistent with everything the Republicans stand for.
Mr. SMITH OF TEXAS. Are you trying to be bipartisan?
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Mr. WATT. Well, with all of the talk I have heard about judicial efficiency and judicial economy, I don't see how this bill fits in any measure into that philosophy. But I am going to keep listening, and maybe something will jump out and attack me as to how that fits into your stated philosophy. These hearings are to educate, and I keep trying to be educated. I will try to stay with you as long as I can.
Mr. SMITH OF TEXAS. Thank you, Mr. Watt.
Ms. ACHESON. Mr. Chairman, could I just make one response to your opening statement, and I apologize again that I wasn't here. I had to get something done this morning, and I appreciate actually being on the second panel.
I would just reiterate the point that I made at the outsetthat I think it would be very useful to really understand what is the nature of the problems that have come up to raise the question now, not only about 1500, but about the broad bifurcation of jurisdiction here.
I understand the perspective that you suggested in your thought of opening up this jurisdiction to the district courts and giving the CFC the powers that the district courts have. I would just offer for your considerationand it is laid out in our testimonythat, leaving the constitutional issues aside, which we do think are very serious, it is good, it seems to me, to ask oneself the question.
We have difficulties now of questions about jurisdiction, questions about who goes first where, questions about what types of claims belong in what court. It may be the case, particularly if we think back on the experience of 1500 before Loveladies, that what this bill might well do is simply to elevate that body of confusions not only to questions of jurisdiction in the District Court, but to raise a huge number of questions of confusion and jurisdiction and provide opportunities for forum shopping both at the District Court level and at the Court of Appeals level.
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It is a very broad and structurally ambitious undertaking to do this, and I would just offer again that we would be willing to work with the Committee and the court, about whatever the difficulties are that need to be addressed.
Thank you so much.
Mr. SMITH OF TEXAS. Thank you, Ms. Acheson, and we will get back to you and see if there is any language we can agree on as well.
We will now go to our third panel, which consists of the Honorable Loren A. Smith, Chief Judge, U.S. Court of Federal Claims.
Judge Smith, we welcome you, and let me apologize to you a little bit in advance, one, because of a possible vote that you just heard, and so what we will do is get your testimony in now, and if you can quickly go through that, maybe we will have time to ask you questions, and if not, we will come back.
STATEMENT OF HON. LOREN A. SMITH, CHIEF JUDGE, U.S. COURT OF FEDERAL CLAIMS
Judge SMITH. Mr. Chairman, I want to thank you and the other members of the committee for giving the court this opportunity to express its views on these subjects, and I also want to thank your excellent staff for the very courteous and helpful way we have been treated.
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And, as I said, we understand the constraints of the time here, and that doesn't present a problem.
Also just as a personal matter, I want to thank Mr. Echeverria for his nice comments about the court and also note that the assistant to Penny Acheson was correct in that we have worked with both the private bar and the Department of Justice to improve the administration of justice at the court, and that has resulted in an ADR task force which I think has improved the system of ADR at the court.
Let me just briefly summarize. I hope my statement will be inserted in the record, so I won't take
Mr. SMITH OF TEXAS. Without objection, your complete statement will be made a part of the record.
Judge SMITH. Thank you very much.
Let me just say a couple of the things about the problems that have been raised.
First, I would note that this is not a jurisdictional statute with respect to the Court of Federal Claims, and I am only really commenting on the elements that deal with the court's structure and the jurisdiction, not with any of the substantive elements of the bill.
Page 71 PREV PAGE TOP OF DOC But this really is a remedial statute. It expands the remedies available to citizens. It doesn't change our jurisdiction one single bit. Every single case that could be brought today could also be brought tomorrow, and there are no new cases that this bill would allow to be filed in the court, not a single new case. What it does is give the citizens of the United States complete remedial relief either at the Court of Federal Claims or at the district court, whereas now in many cases citizens have to go to two courts to get the full relief they need.
Carved on the wall of our court are the words of Abraham Lincoln who sent a message to the Congress in 1861 saying, ''It's as much the duty of the government of the United States to do justice against itself as it is among its citizens.'' And that really, it seems to me, is the purpose of our court since 1855, when we were created, and when, under President Lincoln, the court gained final decisional authority.
That is why I came here to testify, something that judges don't generally do. Judges ought generally to sit and ask questions rather than make statements. But I think we have a moral obligation when we see something that could improve the administration of justice for the citizens of the United States, and this bill seems to me to do that in several important respects.
The first and most important respect is, it allows the citizen to come to one court, not to have to find their day in court in pieces, getting part of that day in the district court for injunctive relief, part in the Court of Federal Claims for money. And that is a very real problem, and making equitable relief in our court available would solve that problem.
Page 72 PREV PAGE TOP OF DOC Just last December, the Congress passed another very useful reform which did that in another area. So this isn't a novel concept that this bill embodies. In the bid protest area, bid protest jurisdiction was split between our court and the district court. If you wanted to protest an award after the contract had been awarded, you had to go to a United States District Court. If you were quick enough to get there before the contract was awarded, you came to the Court of Federal Claims.
That was a nonsensical system. Congress acted to correct that. The bill became effective December 31, 1996. We have had about 15 cases, and the result has been that the system is working well. We have created a large volunteer task force to monitor it.
And so the idea of equitable relief at the court is not a new one, and it is one that has been working effectively and the Congress has just improved the process. I mean, we do our cases and we do our work, and, as Congress does, we have all got more than we can do. And we do as much as we can, but citizens shouldn't have to litigate something twice. This I think, ultimately will also save the United States money, because the Government now has to defend these cases twice.
Let me just say one other thing, one other problem that has been raised, is the constitutionality of the bill. I have reviewed this and run across this issue now for a couple of years. I have not been able to detect any significant constitutional problem, and the reason is, this is giving us remedies in property cases that we already have in 40 percent of our cases. So if it is unconstitutional, it is unconstitutional in 40 percent of our docket and has been so for many years. The Supreme Court affirmed one such case 2 years ago. One of our judges ruled a provision of the Tax Code unconstitutional as imposing an export tax. In IBM v. United States, the Supreme Court affirmed that decision of the Court of Federal Claims.
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So I think there is little question that a Court of Federal Claims judge can declare a statute unconstitutional, and in fact citizens are and have been doing that and raising constitutional issues before our court for over a hundred years. The question that is raised now is, we do not have the remedy of injunction. You have to give the party money instead of injunctive relief, and in fact that is not a question in reality either because we have been giving injunctive relief for well over 50 years. So the objection is difficult to understand.
Finally, in 1990 the Congress changed the tenure of the court. So that if there were any concerns about independence a judge of the court now has the functional equivalent of life tenure. We serve a 15-year term, and at the end of that 15-year term, if not reappointed, the judge becomes a senior judge for life under the same conditions as an Article III judge. So I don't think these are real problems.
And let me add one other point. One of the concerns that was expressed was that our jurisdiction might be broadened by this to include welfare, civil service or other types of claims under this new remedy. Today, any claim on any subject can be brought to our court. If a citizen alleges that some action of the Government has taken property unconstitutionally, they could come today; they could have come 30 years ago. What limits that is not this, the remedial structure, but the substantive law of takings. That wouldn't be changed at all by this bill, and I think the bill makes a good correction to our system.
I see my red light is on, so I apologize for going on too long.
[The prepared statement of Judge Smith follows:]
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PREPARED STATEMENT OF HON. LOREN A. SMITH, CHIEF JUDGE, U.S. COURT OF FEDERAL CLAIMS
Mr. Chairman, on behalf of the United States Court of Federal Claims, I thank you and Chairman Hyde for giving the court an opportunity to present its views on H.R. 992, The Tucker Act Shuffle Relief Act of 1997. I also wish to thank the fine committee staff for the courteous and efficient treatment I and the court have received.
In addition to the duty to decide cases it is the judge's duty to provide assistance to the Congress where the court's experience can aid in making the administration of justice more fair and efficient. With respect to today's testimony the court hopes to provide some information drawn from our day-to-day experience with taking and other litigation. We hope that the information on this type of litigation may contribute to the improvement of the process. I should also note, that with respect to the policy goals of this legislation, I and the court take no position as this is a matter within the discretion of the political branches of our great constitutional system.
The United States Court of Federal Claims is an Article I court whose jurisdiction was established in 1855 to do justice between the citizen and his or her government. As such we are a court uniquely related to the Congress as our first cases were direct congressional referrals. This was at a time when the only monetary relief a citizen could obtain from a federal violation of rights was a private bill. Since 1887 the Tucker Act has provided the citizen with formal legal redress from a variety of violations of rights as a matter of right. We still, however, receive several congressional referrals along with the general and special jurisdiction cases filed each year. While the court's jurisdiction is predominantly over monetary claims in the contract, tax, and military personnel areas, we may give equitable and non-monetary relief as well.
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With respect to H.R. 992, specifically the sections addressed to judicial review, they appear to the court to address a long-standing problem whose alleviation should help both the citizen and the government more effectively resolve disputes in the courts. In the balance of my testimony, I will focus on the individual provisions of the bill, but first let me provide some general comments on the problem which the legislation addresses.
The Fifth Amendment protects some of the most vital interests of any free society. While it guarantees the fundamental integrity of the human person in both its due process and taking clauses, it is also a recognition of the need for government to undertake policies that sometimes infringe on vital and fundamental personal liberties. The decision on where to draw the lines on what is an impermissible taking and what requires just compensation has largely been given to the courts with the Fifth Amendment as their only real guide. This often creates an apparent dilemma for judges, who know they are not elected. This dilemma requires the judges to risk the appearance of anti-democratic judicial law-making in order to honor their oath and decide the taking claim. Of course, a judge must decide a claim. However, perhaps in a partial bow to the other side of the dilemma, unique jurisdictional, ripeness, and remedial barriers have been created in this body of law. This makes taking cases expensive, unpredictable in their rules, and often not very just in their results to either the public or the private citizen. While it is the judge's duty to make such decisions with the best available understanding of the Constitution's command, it is not the best way for the body politic to make these decisions for several reasons.
First, courts operate on a case-by-case basis without any general prescriptive rules. This means that neither government nor citizen has much guidance as to what will or will not be a taking. The last 73 years of taking jurisprudence since Pennsylvania Coal Co. v. Mahon, 260 U.S. 393(1922), have failed to clarify the rules very much further than Justice Holmes' famous line which noted: ''The general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.'' 260 U. S. 393, 415. This is a clear indication that the legislative and executive powers of general statutory law may be needed to set general policies.
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A second reason why courts alone are not the best way of dealing with this problem is that they do not have the general expertise and responsibility for government that is held by both the Congress and the President. Courts only resolve narrow disputes; after the fact. The law-making branches can create a system that minimizes and simplifies disputes as well as preventing some of them from occurring. Finally, the history of most of the branches of law we apply has showed a beneficial interrelationship of statutory law and judicial decision-making. For example, the enforcement of various provisions of the Fourteenth Amendment's due process and equal protection clauses has depended upon the combination of judicial decisions informed and directed by various civil rights acts. Neither pure judicial decision-making nor the simple enactment of statutes has ever fully achieved the protection of individual rights or any other major governmental policy.
The proposed legislation also addresses a jurisdictional problem that tends to bring discredit upon the courts and make litigation in this area far more expensive. I refer to the current split in remedial jurisdiction between the Court of Federal Claims (generally monetary) and the district courts (generally nonmonetary). Since at least the 19th century the traditional split between the powers to give legal and equitable remedies has been the subject of criticism. Modern practice has tended toward unifying these remedies. Under the historical system that was established to give the citizen the right to legal redress against the government the split of legal and equitable remedies still exists. It causes the citizen-litigant, and in the long-run the government, serious problems. As the late Senior Circuit Judge Philip Nichols, Jr. noted in a contract case:
While damages are supposed or imagined to provide a disincentive to violating the legal rights of others, the government here may even enjoy incentives to commit such violation in some circumstances, when equitable relief and tort liability are both unavailable. I am not advocating judicial lawmaking, however. The matter would appear to call for congressional attention as it involves the waiver of sovereign immunity.'' Prudential Insurance Co. of America v. United States, 801 F.2d 1295, 1303 (Fed. Cir. 1986) (Nichols, J., concurring).
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The split between legal and equitable remedies often has the effect of requiring the citizen to sue in two separate courts to obtain full relief in what is really one case. It may require a citizen to consecutively bring a suit in a district court challenging the propriety of an administrative decision or regulation and after all appeals have been exhausted to start all over again seeking monetary relief.
Further, the effect of 28 U.S.C. §1500(see footnote 1) may even require the plaintiff to make a risky decision that could result in a dismissal of his or her monetary claim because the plaintiff had to challenge both the financial loss and the administrative decision at the same time. For this reason the court believes that the section of the bill repealing 28 U.S.C. §1500, will significantly improve the administration of justice at the court. Section 1500 today serves no useful purpose and is a serious trap for the unsophisticated lawyer or plaintiff. This is true despite the Federal Circuit's valiant efforts to limit the section's potential for harm. In addition, since the doctrinal lines between a taking and a tort are anything but clear, even a sophisticated lawyer may not be able to figure out which court has jurisdiction today. And the risk of a wrong decision may destroy the plaintiff's claim because of the expiration of the statute of limitations.
This problem has been characterized as the Tucker Act Shuffle, where it seems to some plaintiffs that the government is telling the district court there is no jurisdiction because this is a taking, and is telling the Court of Federal Claims there is no jurisdiction because it is a tort. It should be noted that in an area of our jurisdiction that has complete concurrent remedies, (the tax area which accounts for between a quarter and a third of the total docket), the concurrent jurisdiction has been working very well in the view of all parties; the government, the private bar and the tax community generally.
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Section 2 of the bill confers concurrent jurisdiction upon the district courts and the Court of Federal Claims to address cases asserting claims under the substantive provisions of the Tucker Act Shuffle Relief Act. The subsection provides that, notwithstanding any other provision of law and notwithstanding the issues involved, the relief sought, or the amount in controversy, each court shall have concurrent jurisdiction over both claims for monetary relief and claims seeking invalidation of any Act of Congress or any regulation of an agency as defined in the Act adversely affecting private property rights. This provision of the bill is consistent with the goal of increasing the fairness and efficiency of the administration of justice in the taking area. It eliminates much of the current remedial split between the courts that has contributed to increased cost and perhaps the related uncertainty of where and when to litigate what is in reality one cause of action. Further, Section 2 is fully consistent with our earlier comments concerning the desirability of the repeal of 28 U.S.C. §1500.
In the taking and contract areas the current jurisdictional and remedial split hurts government, citizens, and the integrity of the rule of law. The government often has to guess what is and what is not a taking. This hurts its ability to plan, budget, and make rational choices to protect the environment. Likewise, for the citizen, the current state of taking law gives little guidance as to when a suit has little chance of success and when it should be undertaken. Finally, the current state of the remedial split creates the appearance of a legal system designed to frustrate rather than fulfill the promise of the Fifth Amendment. This is a significant danger to a Nation founded upon a legal document and based upon a deep commitment to the rule of law.
Several jurisdictional provisions have, over the years, consumed inordinate amounts of resources of the private bar, government counsel, and the courts to resolve matters that can be solved by simple clarifications. Four such items are addressed below. Enactment of these provisions will permit litigants and the court to more often move directly to the merits of a case instead of diverting resources to the resolution of threshold jurisdictional issues.
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(a) Section 2(c)(A) amends 28 U.S.C. §1491(a)(1) to provide that the Court of Federal Claims has jurisdiction over all non-tort claims against the government for monetary relief (and then deletes certain superfluous and confusing wording).
Prior to the Supreme Court's decision in Bowen v. Massachusetts, 487 U.S. 879(1988), there was general agreement and a common assumption that the Court of Claims (and its successor court) had jurisdiction over virtually all non-tort claims against the federal government, founded on federal statutes or regulations, seeking money judgements, including those asserted in cases seeking review of final agency action (unless Congress had precluded any judicial review or had specifically designated another court for review of a particular type of agency action). Thus, prior to Bowen, it was generally assumed that the court had jurisdiction under the Tucker Act of agency-review claims of the type asserted by the plaintiff in Bowen. Indeed, the position of the Department of Justice and the Department of Health and Human Services (and the understanding of three dissenting justices, including the Chief Justice) in that case was that the Court of Federal Claims (then designated United States Claims Court) had exclusive court jurisdiction over the monetary reimbursement claims asserted by Massachusetts. Bowen, 487 U.S. at 89091. This clear understanding of the Court of Claims (and successor court) jurisdiction existed even though the Court of Claims' general jurisdiction was typically deemed limited to suits for ''damages'' or ''money damages.'' See 487 U.S. at 91416, 919.
The decision in Bowen narrowly construed the term ''money damages'' as used in the Administrative Procedure Act, 5 U.S.C. §702, and concluded that the monetary relief to which Massachusetts was entitled under a federal statute was ''specific'' or equitable relief, not money damages.(see footnote 2) The decision and rationale in Bowen have resulted in two areas of confusion and potential disruption concerning the jurisdiction of the Court of Federal Claims. First, because the Supreme Court characterized the monetary relief sought in that case, although founded upon a federal statute or regulation, as equitable relief, it may plausibly be argued that the Court of Federal Claims, under current law, no longer has jurisdiction to address similar kinds of cases constituting judicial review of agency action. Second, given the Supreme Court's narrow definition of ''damages'' and its broad definition of ''specific'' relief, see 487 U.S. at 893901, it could also plausibly be contended that the Court of Federal Claims now lacks jurisdiction to address many other claims long considered as damages claims within its Tucker Act jurisdiction, e.g., military and civilian pay claims, see 487 U.S. at 893, 919. ''[I]f actions seeking past due sums are actions for specific relief . . . then the Claims Court is out of business. Almost its entire docket fits this description.'' Bowen, 487 U.S. at 919 (Scalia, J., dissenting). While this has not happened, and seems not likely to happen, the Bowen decision's language has certainly confused the law in this area.
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Enactment of the jurisdictional provisions of this bill will clarify the court's jurisdiction so that the common understandings which existed prior to Bowen will be plainly stated. The litigating public will know precisely where to bring claims for judicial review of agency action and other federal claims for monetary relief and have the assurance that the court with jurisdiction can address the claims completely. The bill will further clarify §1491(a)(1) by deleting the potentially confusing and superfluous words ''or for liquidated or unliquidated damages.'' See Eastport Steamship Corp. v. United States, 178 Ct. Cl. 599, 614, 372 F.2d 1002, 1013 (1967) (referring to the deleted wording as ''that still-amorphous and unfamiliar part of our jurisdiction'').
(b) Section 2(c)(C) will extend ancillary jurisdiction under the Federal Tort Claims Act, 28 U.S.C. §2674 & 2675, when a claim is related to one otherwise plainly within the subject-matter jurisdiction of the Court of Federal Claims. This will avoid wasteful and duplicative litigation by authorizing the Court of Federal Claims to grant complete relief or otherwise address and dispose of the entire controversy in cases within its jurisdiction when a related claim, although sounding in tort, may fairly be deemed to arise from the same operative facts as the primary claim within the court's jurisdiction. This provision will most frequently find application in contract and takings claims when the factual context giving rise to such claims may also be deemed to give rise to claims which courts may construe as tort claims. (The Court of Federal Claims already has jurisdiction over tort claims asserted by the government as counterclaims under 28 U.S.C. §1503, see, e.g., Cherry Cotton Mills, Inc. v. United States, 327 U.S. 536 (1946); Martin J. Simko Constr. Co. v. United States, 852 F.2d 540, 542 (Fed. Cir. 1988), and referred by Congress pursuant to 28 U.S.C. §1492, see, e.g., Innocent Victims of the Occupation of Wounded Knee v. United States, 229 Ct. Cl. 465 (1981); Burt v. United States, 199 Ct. Cl. 897 (1972).)
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This provision cannot be interpreted or construed as providing general Tort Claims Act jurisdiction such as is exercised by the district courts, but only that which is ancillary to and directly related to cases and claims over which the court otherwise has jurisdiction, most likely those involving contracts and takings.
Other needed changes which will be accomplished by this section of the bill concern the power of the court to grant appropriate relief in all cases and clarify the applicability of the Administrative Procedure Act (APA) standard of review in appeals of matters from administrative agencies.
(c) Section 2(c)(B) amends 28 U.S.C. §1491(a)(2) by inserting a new first sentence providing that in any case within its jurisdiction, the court shall have the power to grant injunctive and declaratory relief when appropriate. The court already has broad equity powers to fashion relief in military and civilian pay cases, 28 U.S.C. §1491(a)(2), and in certain contract cases (pre-award bid protests), 28 U.S.C. §1491(a)(3), and has additional declaratory judgment jurisdiction in certain tax cases, 28 U.S.C. §1507. This amendment will extend similar power to fashion relief to other monetary claims within the court's jurisdiction.(see footnote 3)
This provision is a corollary to the amendment clarifying jurisdiction over claims for ''monetary relief,'' since, as explicated by the Supreme Court in Bowen v. Massachusetts, 487 U.S. at 893901, many judgments for a sum of money constitute awards of ''specific relief'' deemed equitable in nature, especially in contract cases and in most review-of-agency-action cases, including military and civilian pay and price support cases. Enactment of this provision will remove all doubt concerning the authority of the court to award complete relief and otherwise render appropriate judgments in cases within its jurisdiction.
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(d) Section 2(c)(C) adds a new paragraph (5) to 28 U.S.C. §1491(a) making it clear that in cases which constitute judicial review of administrative agency action, the APA standards of review set forth in 5 U.S.C. §706 shall apply.(see footnote 4) One would assume, from the face of §706 (''To the extent necessary to decision and when presented, the reviewing court shall . . . [duties of court reviewing agency action and scope of review defined]'' (emphasis added)), that it is already plainly applicable to the ''reviewing court'' in every case which constitutes judicial review of agency action.
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence in a case . . . reviewed on the record of an agency hearing provided by statute; or
(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.
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The former Court of Claims, in a number of opinions, referred to the Administrative Procedure Act, 5 U.S.C. §702, as the legislative basis for a plaintiff's right to seek judicial review of final agency action of various kinds by a suit under the Tucker Act. Sanders v. United States, 219 Ct. Cl. 285, 300, 594 F.2d 804, 812 (1979) (military pay case; review of a decision of the board for correction of military records); Jarett v. United States, 195 Ct. Cl. 320, 32629, 451 F.2d 623, 62628 (1971) (civilian pay case; review of decision of Maritime Administration; ''one need not burn the midnight oil to discover the relevance of the Administrative Procedure Act . . . 5 U.S.C. §701706''; ''we must conclude that . . . [the suit] is a case coming within section 702, thereby giving plaintiff a right of review''); Keco Industries, Inc. v. United States, 192 Ct. Cl. 773, 781, 428 F.2d 1233, 1238 (1970) (bid protest case; pursuant to 5 U.S.C. §702, ''judicial review of agency action will not be denied unless there is clear and convincing evidence of a contrary legislative intent''); Hertzog v. United States, 167 Ct. Cl. 377, 384 (1964) (military pay case; review of decision of board for correction of military records).
Likewise, decisions of the Court of Federal Claims have found the APA controlling in cases constituting judicial review of agency action. Bradley v. United States, 26 Cl.Ct. 699, 70103 (1992), aff'd per curiam, 1 F.3d 1252 (Fed. Cir. 1993) (prevailing wage rate case; review of rulemaking decision of Treasury Department; review standards in 5 U.S.C. §706 apply); Simons v. United States, 25 Cl.Ct. 685, 694695 & n.18 (1992) (dairy termination program case; review of decision of USDA, review standards in 5 U.S.C. §706 apply); Doty v. United States, 24 Cl.Ct. 615, 62426 (1991) (dairy termination program case; review of decision of USDA, review standards in 5 U.S.C. §706 apply); Pender Peanut Corp. v. United States, 20 Cl.Ct. 447, 45152 & n.3 (1990) (farm price support case; review of decision of USDA; review standards of 5 U.S.C. §706 apply); Stegall v. United States, 19 Cl. Ct. 765, 76970 (1990) (farm subsidy program case; review of decision of USDA; ''The Administrative Procedure Act [5 U.S.C. §701706] . . . provides the framework for determining when a court may review an agency's determination. . . . The APA is not a jurisdictional statute.'').
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Despite this history of invocation and application of the judicial review provisions of the Administrative Procedure Act, 5 U.S.C. §701706, in cases before the old Court of Claims and the Court of Federal Claims, two recent decisions of the Court of Appeals for the Federal Circuit have clouded the issue concerning applicability of the APA in agency review cases before the Court of Federal Claims. Mitchell v. United States, 1 F.3d 1252 (Fed. Cir. 1993 (unpublished)(military pay case; review of decision of board for correction of military records) (asserting without explanation that Claims Court has no authority to invoke the APA); Murphy v. United States, 993 F.2d 871, 874 (Fed. Cir. 1993) (military pay case; review of decision of board for correction of military records) (asserting without explanation that ''the Claims Court has no authority to invoke the APA'').(see footnote 5)
The addition of the proposed new paragraph (5) to 28 U.S.C. §1491(a) will end all doubt and confusion concerning the applicability of the Administrative Procedure Act, and especially the judicial review standards of 5 U.S.C. §706, to agency review cases litigated in the Court of Federal Claims. This provision will be of obvious assistance to litigants in such cases and promote the court's efficiency in handling such cases. This clarification will make plain, whenever there is occasion to construe 5 U.S.C. §701706, that with respect to a permitted appeal from agency action to any court with jurisdiction over the appeal, be it district, circuit or Federal Claims, the standards of review set forth in 5 U.S.C. §706 apply and control.(see footnote 6)
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The United States Court of Federal Claims is uniquely ''The Citizens' Court,'' and it is the principal forum for monetary claims against the United States. The court's jurisdiction originated in 1855, when Congress acted to resolve a problem of tremendous proportion. Because sovereign immunity barred legal redress of wrongs committed by the United States government, the only option for a citizen with a claim against the government was private bill before the Congress. Thus, in each session of Congress, numerous citizens and groups sought private bills. As this system of private bills proved too burdensome, inefficient, and likely to spawn corrupt practices, Congress created the Court of Claims.
The creation of a court to do justice responded to a basic democratic imperative: fair dealing by the government in disputes between the government and the private citizen. Indeed, as Abraham Lincoln noted: ''It is as much the duty of Government to render prompt justice against itself, in favor of citizens, as it is to administer the same between private individuals.'' Throughout its history, the Court of Claims strove to give vitality to the spirit of Abraham Lincoln's admonition.
Through various changes in the structure and names of the court, the basic jurisdiction of the present United States Court of Federal Claims has remained remarkably stable for well over a century. It is a jurisdiction where the federal government may be sued for its alleged violations of the rights of citizens. It is both a tribute to our Congresses and Presidents, as well as to our Nations' deeply ingrained respect for legal rights, that since 1855, the notion that government must deal with its citizens on the basis of legal equality has never been seriously questioned. The judicial review sections of the legislation before this committee would further the mission of the court, by correcting procedural and structural problems faced by litigants before the district courts and the Court of Federal Claims.
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Mr. SMITH OF TEXAS. Judge Smith, again, we appreciate your being here. As you pointed out, it is not very often that judges testify, but you are an natural expert, and that is why we appreciate your willingness to do so.
Let me recognize Mr. Watt for his questions, and then we will come back for mine.
Mr. WATT. I will just make one brief comment, and maybe you want to respond to it or maybe you don't want to respond to it.
It seems to me that the arguments that you have just outlined, the three arguments, could just as well be made in favor of abolishing the Court of Federal Claims and putting all of this jurisdiction in the district courts. Would you favor that as a means of being more efficient and serving the interests of the people also?
Judge SMITH. Well, if it served the interest of justice of the people, I would be definitely in favor of doing it. But
Mr. WATT. My question is, is it your opinion that that would serve the interests of justice?
Judge SMITH. No, and the reason
Mr. WATT. Why not?
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Judge SMITH. And the reason is that I think our court has developed an expertise in these areas and has an advantage that in many cases, not all cases, is an advantage over the District Court, and that is that it is a national forum.
A lot of problems cross State lines. Citizens of the United States are in every State. We are all both citizens of our State and citizens of the United States. And the area of taxes gives really a working example of why that is so. Today you can bring a tax claim on the same terms in any district court or in the Court of Federal Claims for a tax refund covering the whole range of tax issues. Both courts have a constituency.
In a lot of cases where it makes sense to litigate in a local area where it is a relatively small case, people go to district courts. About 2,000 tax refund cases are in the district courts in any 1 year. We get about 500, about a quarter of the number, or a fifth of the number, and those cases tend to often be large companies that are spread out across the country or taxpayers who are in 2 or 3 States. And the tax community, including the IRS, the Department of Justice Tax Division, and the tax bar all strongly opposed any change about 5 years ago before a Federal court study commission because they said this system is working very well. You do have multiple forums, but each forum has developed its own area where people can conveniently use it.
I don't think there is a real problem with that, and in fact I think this is likely to happen in the takings area.
Mr. WATT. So you are saying that the judges on the Court of Federal Claims have the capacity to learn new areas and do new things but the Federal District Court judges don't have the capacity.
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Judge SMITH. Well, I think both courts do. In fact, there is more than enough to learn for all of us.
That is one of the things I have learnedI don't think I have stopped learning since I have been on the court, and I think district court judges know that too. But functionally, our institution has certain advantages over district courts and district courts have certain advantages over the court of claims. And those two courts both serve useful functions. That is, I think, the reason I would advocate this bill. It is not that one court needs to be replaced, but they both need to be put on the same level playing field, or, more importantly, the litigants do.
Mr. WATT. I won't pursue this, but it seems to me that one way to put them on the level playing field is put them all in the same court, and I don't know how you get where you are, but I mean, I will accept it.
Mr. SMITH OF TEXAS. Well, thank you Mr. Watt.
Mr. Watt, let me say to you, and I will pass, I think I am going to go on and miss this next vote in order to try and finish up. So don't let me keep you on that score.
Judge Smith, let me make my questions quickly, and then I will try to get to the next panel.
If you all will stay with us, we will see how quickly we can finish up.
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Judge Smith, do you share the concerns expressed by previous panelists that there are constitutional problems that are insurmountable with this bill?
Judge SMITH. No, I don't really. In fact, having reviewed the bill, I haven't been able to detect any significant constitutional problems since we already have injunctive relief. So it isn't giving injunctions.
Article I courts can give injunctions, and Article I courts can sentence people to death. Article I courts can confine people to life imprisonment and hear criminal cases.
The concern about Article I courts having limitationsand as I think I have indicated, about 2 years ago the Supreme Court affirmed one of my colleagues' decisions finding that a provision of the Tax Code was unconstitutional. So I don't think there is any limit in that sense on Article I courts. In that sense and in terms of tenure, I don't see how that relates to the remedies.
Mr. SMITH OF TEXAS. Do you see any significant problem with forum shopping as a result of this bill?
Judge SMITH. No, I don't. And, again, my experience in the tax area, which makes up about a quarter of the court's docket, leads me to believe that that isn't a problem and, in fact, is a benefit.
Page 90 PREV PAGE TOP OF DOC Right now, a citizen has a choice of three courts to go to in any tax case. They can either not pay the tax and go to the Tax Court from anywhere in the country. The Tax Court has a deficiency jurisdiction where they don't have to pay the tax unless they lose. Or the citizen can pay the tax and choose between the district court of the district they are resident in; or they can go to the Court of Federal Claims on exactly the equal basis and seek a refund. All three of these fora have developed their own particular abilities, and taxpayers have chosen those, and it has provided, in the view of really all the tax bari.e., even the IRS and the Justice Departmenta better system for the United States.
Mr. SMITH OF TEXAS. And finally, Judge Smith, do you think that the legislation will reduce the time it takes for a private property owner to seek relief and receive relief?
Judge SMITH. I believe it will. One of the things that I strongly agreed with in Justice Scalia's dissent in the Bowen case was, that there is nothing more fruitless than litigation about litigation, and on our court I have seen way too much litigation about where to litigate. It seems to me that is not good.
One of the great visions of President Lincoln when the court was createdthe U.S. Court of Claims, with full jurisdiction, that is with the power to grant final decisions (up until that time it was just an advisory body) was that in a free society the government must do justice to its citizens. That is really what is meant by the rule of law.
It seems to me this bill furthers that ability and that is not likely to slow things down, because citizens then develop confidence in dealing with the Government.
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In the two areas that make up maybe 70 percent of our jurisdiction, the Government has said in the contract area our ability to grant relief ensures the contractor a fair deal, and therefore the contractor is more willing to negotiate, more willing to settle, because they know they can get fair relief, and the tax area ensures a much less prolonged effort to avoid taxes and evade the system by giving the citizen the guarantee they are going to get a fair hearing in any one of the forum choices without a kind of jurisdictional land mine.
Mr. SMITH OF TEXAS. Judge Smith, I don't have any other questions. Thank you again for being here. And, again, we appreciate your expertise.
Judge SMITH. Mr. Chairman, thank you very much for inviting me, and I again thank the staff for its courteous treatment.
Mr. SMITH OF TEXAS. We will stand in recess until approximately 5 minutes after 12:00.
Mr. SMITH OF TEXAS. The subcommittee will reconvene. Let me thank all three of you for waiting. We now are not under any time constraints. Hopefully, there will not be another vote in the next 5 minutes, and we will be able to hear your complete testimony.
With that, we will begin with Nancie Marzulla. I forgot in reading your names a while ago to give everybody's title. So, Nancie Marzulla, President and Chief Legal Counsel, Defenders of Private Property Rights.
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STATEMENT OF NANCIE G. MARZULLA, PRESIDENT AND CHIEF LEGAL COUNSEL, DEFENDERS OF PROPERTY RIGHTS
Ms. MARZULLA. Thank you, Mr. Chairman. It is my pleasure to have the opportunity to testify before you here today.
As you mentioned, my name is Nancie Marzulla. I am President of Defenders of Property Rights. Defenders is the only national public interest legal foundation devoted exclusively to protecting property rights.
Since the ratification of the Bill of Rights in 1791, this country has required that the Federal Government pay just compensation whenever private property is confiscated or taken. Before the explosion of laws affecting property rights beginning in the 1970s, Federal courts had little difficulty administering justice under the Just Compensation Clause. Most government takings were bold and obvious, such as the flooding of land. In these straightforward circumstances, Federal courts readily ordered the payment of compensation to injured landowners.
Today the contours of an inverse condemnation due to the application of a regulation barring the use of property are more difficult to discern. More often than not, a property owner today, faced with the regulatory taking of his property, cannot expect such ready payment of compensation, as the Constitution requires. Worse yet, because of the procedural requirements that pertain only to property rights litigants, the road to obtaining relief for regulatory taking is a long, expensive and arduous process.
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A brief review of just three well-known takings cases illustrate this point. In the 1983 case, Handler v. United States the Federal Government physically invaded the Handler plaintiffs' property. Although the Federal Circuit Court of Appeals held several years ago that unlawful physical invasion on the property had occurred, after 14 years of litigation and the death of one of the elderly plaintiffs, they have still not been paid just compensation.
In Presault v. United States, Paul Presault sued the government over the taking of his reversionary property interests back in 1981. Today, 16 years later, he has yet to be paid for the taking of his property rights.
And, in 1980 case Florida Rock v. United States, Florida Rock was denied a permit to mine limestone on its property in southern Florida. Now in its third trial, and 17 years later, Florida Rock has yet to obtain just compensation. One of the chief causes of this delay is the split of jurisdiction in the Federal court system.
For starters, the system is very complex. The Federal District Court may only grant equitable relief for the unconstitutional taking of private property claims valued under $10,000. That is a Little Tucker Act claim, and the District Court may grant both equitable and monetary relief. Otherwise, all money damages claims or claims for just compensation over $10,000 must be filed in the U.S. Court of Federal Claims.
To add to this confusion, all equitable appeals go to the numbered circuits, and all appeals of monetary awards go to the Federal Court of Circuit Appeals. And finally, for all Little Tucker Act claims on appeal, they also go to the Federal Circuit Court of Appeals. No Federal trial court, except for the District Court when hearing Little Tucker Act claims, has broad enough jurisdiction to afford both equitable and monetary relief in takings claims.
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In short, this glut of jurisdiction, besides being confusing, means that the property owner must file two lawsuits to obtain full relief for the taking or infringement of his constitutional rights. And regardless of where he decides to file his suit, he can be sure that he will face a motion to dismiss for lack of jurisdiction.
The best way to put an end to this needless complexity, wasteful delay, and to reduce the cost to both the property owner and the taxpayer of this litigation is to combine jurisdiction for both the District Courts and the U.S. Court of Federal Claims. Both courts should be afforded the full jurisdiction to provide both the equitable and monetary relief for individuals deprived of their Fifth Amendment rights. Without reform, such as being proposed in H.R. 992, property owners will continue to be denied the ability to obtain full access to justice provided every other civil rights litigant.
Finally, the current system stands in sharp contrast to the judicial reform that has been occurring in this country over the past decade. While other courts are taking steps to consolidate litigation, streamline the litigation process, and expedite judicial resolution of claims, the litigation procedure under the Tucker Act/district court split of jurisdiction remains a curious anachronism. Reform is clearly long overdue.
I would be happy to answer any further questions you may have.
Mr. SMITH OF TEXAS. Thank you, Ms. Marzulla.
[The prepared statement of Ms. Marzulla follows:]
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PREPARED STATEMENT OF NANCIE G. MARZULLA, PRESIDENT AND CHIEF LEGAL COUNSEL, DEFENDERS OF PROPERTY RIGHTS
Mr. Chairman and Members of the Subcommittee: I am pleased to be here today on behalf of Defenders of Property Rights, the only national public interest legal defense foundation devoted exclusively to protecting private property rights. Defenders, which is based in Washington, D.C., has a large national membership which is comprised of property owners, users and beneficiaries of the rights protected by the Constitution and traditional AngloAmerican property law. Defenders participates in litigation when it is in the public interest and when the property rights of its members are affected. Defenders has been actively involved in recent court cases involving significant decisions on property rights including:
Lucas v. South Carolina, 505 U.S. 1003 (1992)(government regulation which deprived property owner of all beneficial and productive use of property had effected a taking);
Keene v. United States, 508 U.S. 200 (1993)(U.S. Court of Federal Claims lacked jurisdiction over case based on same facts as another case dismissed earlier from U.S. District Court);
Suitum v. Tahoe Regional Planning Association, 117 S.Ct. 1659 (1997)(property owner's claim was ripe for adjudication even though she had a qualified transferable development right); and,
Page 96 PREV PAGE TOP OF DOC Dolan v. City of Tigard, 512 U.S. 374 (1994)(government exaction of property as a permit condition must bear a ''rough proportionality'' to the impact of proposed development).
Defenders has also devoted a significant amount of resources to analyzing legislative proposals concerning property rights at both the state and federal levels.
Property owners who believe their property has been taken without compensation in violation of the Fifth Amendment to the U.S. Constitution(see footnote 7) immediately have a very difficult choice to make. Under current law, they may not seek to invalidate the government's action, regardless of how clearly mistaken or illegal, without first seeking compensation in the U.S. Court of Federal Claims. If he chooses to file in the Court of Federal Claims, the property owner will first have to defeat the government's favorite argument: that the landowner's real claim is for invalidation, not money, and therefore should be dismissed as outside the Court of Federal Claims' jurisdiction. If he tries to hedge his bets by filing a claim for invalidation in the district court and a compensation claim in the Court of Federal Claims, both suits are subject to dismissalthe first as ''premature or ''unripe'' and the second because the Court of Federal Claims, under 28 U.S.C. 1500, '' 'shall not have jurisdiction' over a claim, 'for or in respect to which' the plaintiff has [a suit or process] pending' in any other court.'' Keene Corporation v. United States, 500 U.S. 200, 207 (1993)(U.S. Court of Federal Claims lacks jurisdiction to hear any case which has been filed in another court). But see Loveladies Harbor v. United States, 28 F.3d 1171 (Fed.Cir. 1994)(''This procedural quagmire is the U.S. Supreme Court's decision in Presault v. U.S. in which the Court opines that claims for compensation should always be filed before claims of invalidation because the Court believes this is always Congress' preference.'')
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In comparison, nothing like this procedural nightmare exists for claimants seeking to enforce any other constitutional right. If a citizen's suit to defend his right to freedom of speech was dismissed because he had filed in the wrong court, or if a victim of racial discrimination had lost his case because he asked the court for the wrong type of reliefimagine how outraged we would be. When the claim is for property rights, however, the courts too often turn a deaf ear. The unequal access to justice for Fifth Amendment plaintiffs calls to mind the Supreme Court's admonishment in Dolan v. City of Tigard:
We see no reason why the Takings Clause of the Fifth Amendment, as much a part of the Bill of Rights as the First Amendment or Fourth Amendment, should be relegated to the status of a poor relation in these comparable circumstances. Dolan, 512 U.S. 374, 392 (1993).
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 protects against unreasonable searches and seizures. 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.
Page 98 PREV PAGE TOP OF DOC 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 fruit of one's labors. The ability to use, enjoy and exclusively possess that fruit is the basis for a society 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 labor are owned by the state and not by you, nothing is safe from being taken by a narrow 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 powera 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: Abolition of private property.''
II. Despite the importance of property rights in a free society, litigation to vindicate Fifth Amendment property rights is a long, expensive and arduous process
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The scales of justice are unfairly tipped in favor of the government when citizens are faced with the threat of losing their property rights due to government infringement. 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 faced with a property rights claim cannot pursue a legal remedy 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 for the individual, procedural hurdles often bar litigation on the merits of a property rights claim for anywhere from five to ten years, or longer!
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, 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 remanded. In 1990, following another trial, the plaintiff won again, and the government appealed. In 1994, the case was remanded again, and the Supreme Court declined to hear the government's appeal in 1995. Now in its third trial, the case is awaiting a decision from the Court of Federal Claims. The company still has not been paid for a taking that occurred over seventeen years ago.
Paul Presault's ''Tucker Act odyssey'' began in 1981, when he sued the State of Vermont to reclaim a strip of land the state had used to run a government-operated railroad through his front yard. In 1989, the Supreme Court sent him back to ''square one'' under the strictures of the Tucker Act. After sixteen years and two trips to the Supreme Court, Paul Presault still has not collected a dime of the money owed him by the government and he is now back in the U.S. Court of Federal Claims awaiting another legal hearing.
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In 1986, a large group of Texas ranchers, led by Alta Verde Industries, sued the United States to overturn the Dairy Termination Program, which they claimed were in violation of agriculture price regulatory statutes. Although that suit ended in a partial settlement, the ranchers later filed another suit in the Court of Federal Claims for money that was not included in the settlement. The government moved to dismiss, on the grounds that the ranchers' ''unjust enrichment'' theory was outside the jurisdiction of the Courteven though the plaintiffs were clearly seeking monetary damages.
Between 1978 and 1980, property belonging to W.O. and Eliza Narramore was flooded due to government operation of the Painted Rock Dam. The couple filed suit in 1980, seeking to enjoin the United States from flooding their land. By 1988, the case had been to the appellate court once already and remanded. At the new trial, the government moved to dismiss the suit on the grounds that the Narramores' claim should have been for compensation through the Court of Federal Claims. In 1992, the Federal Circuit agreed with the governmenttransferring the case to the Court of Federal Claims and sending the Narramores back to the beginning for a third time. Their case is still pending.
In 1983, the federal government placed, without his permission or knowledge, groundwater monitoring wells on land owned by Mr. Hendler in Riverside, California, and issued various orders forbidding certain uses of the property. In September of 1984, Mr. Hendler and other joint owners of the property filed suit against the federal government, alleging an unconstitutional taking of their property rights. After five years of bitter litigation, the case was dismissed in December 1989. The Hendler plaintiffs appealed, and the U.S. Court of Appeals for the Federal Circuit reversed the case in the summer of 1991. The case was tried again in 1995, more than twelve years after the government first physically invaded Hendler's property and is now headed for appeal again in the U.S. Court of Appeals for the Federal Circuit.
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Yuba Natural Resources Co. had acquired mineral rights to a parcel of federal land in 1905. Seventy years later, the government tried to renege on the transfer. Yuba sued for title to the mineral rights, and finally won in 1982. That seven-year struggle cleared the way for Yuba to file suit for just compensation in the Court of Federal Claims. Not until 1990a full fifteen years after the government backed out on its seventy-year-old dealdid Yuba finally prevail, when the Federal Circuit affirmed the award of damages.
In May of 1982, Loveladies Harbor Inc. was denied a wetlands permit to develop property it owned in New Jersey, and filed suit in the U.S. Court of Federal Claims in April 1983. After extensive litigation in both the Federal District Court and the Court of Federal Claims, the plaintiff was awarded judgment in 1990. The government appealed, then moved to dismiss that appeal. Finally, in 1994, the Court of Appeals for the Federal Circuit affirmed the judgment for plaintiffmore than twelve years after the original permit denial.
III. Property owners cannot obtain redress in courts in for the infringement of their property rights because those rights are under siege
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. From 1970 until the present, 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:
Page 102 PREV PAGE TOP OF DOC We have regulatory programs dealing with marine protection, safe drinking water and toxic substance 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, nor do we, it seems, have hope of redress for infringement of private property rights in the courts.
IV. There must be legislation adopted to solve the procedural problems created by the split of jurisdiction between the U.S. Federal Court of Claims and the federal district courts
The Fifth Amendment of the Constitution guarantees property owners the right to be paid for their land if the government takes it from them. In 1922, the Supreme Court adopted the common-sense rule that government regulation which ''goes too far'' is no different from the government taking the land outright, and the property owner suffering from an excessive regulation must be compensated. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922). The government, however, rarely volunteers to pay for taken landthe property owner almost always must go to court to demand that right.
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The U.S. Court of Federal Claims has jurisdiction to hear cases involving ''claims against the United States founded'' upon the U.S. Constitution,' as provided in 28 U.S.C. §1491. The district courts have jurisdiction over actions ''to compel an officer or employee of the United States or any agency thereof to perform any duty owed the plaintiff'' as provided in 28 U.S.C. §1367. The Court of Federal Claims does not have jurisdiction to issue injunctive relief or to invalidate actions of Congress or executive agencies, while the district court lacks the jurisdiction to award just compensation due under the Fifth Amendment.
Regardless of which claim a property owner pursues, and no matter which court he pursues that claim in, the government will defend itself by arguing that the petitioner should instead be in a different court. If the case is dismissed and re-filed in any other court, the government's first defense will be the samethat the original court has the proper jurisdiction.
The complex jurisdictional procedures facing a property rights plaintiff cause delay which, in itself, can violate the due process clause of the Fifth Amendment. The Supreme Court recognized as early as 1926 that ''long-continued and unreasonable delay'' by an agency may quite effectively take property in violation of due process. Smith v. Illinois Bell Telephone Co., 270 U.S. 587, 591 (1926). Justice Souter recently observed that the best hope for property rights claimants lies in ''the halls of Congress, for that branch of the government has limited the jurisdiction of the Court of Claims.'' Keene Corp. v. United States, 500 U.S. 200, 217, 113 S.Ct. 2035, 2045 (1993).
The idea that the Court of Federal Claims should have ancillary jurisdiction to award injunctive relief has been criticized by some as a possible ''blurring'' of the historical role of the Court of Federal Claims. These critics suggest that granting ancillary injunctive jurisdiction would vest judicial powers in an organ of the legislative branch. Judicial powers, however, are far broader than anything which is proposed for the Court of Federal Claims. Whereas the Supreme Court and inferior courts have the judicial power to undo Acts of Congress, or to strike down policies and regulations of the executive branch, the Court of Federal Claims would only have the authority to grant limited relief on claims directly related to those within its primary jurisdiction. This is complementary to the current jurisdiction of the district courts, which already have ''Little Tucker'' power to hear compensation claims under $10,000. The Court of Federal Claims would have limited injunctive powers as the district courts currently have limited compensation authority.
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Finally, it is important to note that the current state of affairs, the maze-like procedures and hurdles a property owner must overcome before having his day in court in defense of his property rights, imposes a heavy burden on those constitutional rights. Indeed, Justice Brennan observed that the procedural difficulty in pressing a takings claim ''exacts a severe penalty from citizens for their attempt to exercise rights of access to the federal courts granted them by Congress to deny them 'that promptness of decision which in all judicial actions is one of the elements of justice.'' County of Allegheny v. Frank Mashuda Co., 360 U.S. 185 (1959). Congress should not tolerate any longer this denial of justice wrought by the confusion in our courts.
I would be happy to answer any questions you might have.
Mr. SMITH OF TEXAS. Dr. Klussman, let me try to embarrass you before you begin by saying that I appreciate your being here as well. You came in from the 21st District of Texas to be here. You are obviously a constituent of mine. We have known each other and have been friends for many, many years, and I appreciate your good work on this subject.
You mentioned that you did not get in until 1 o'clock last night, and your plane is at 2:30 today. We will try to finish up so you will have plenty of time to reach the airport. If you will proceed.
STATEMENT OF WALLACE KLUSSMANN, LLANO COUNTY, TX
Page 105 PREV PAGE TOP OF DOC Mr. KLUSSMAN. No problem, I can do that. Thank you, Mr. Chairman, Members of the committee. My name is Wallace Klussman. I reside in Llano County on a ranch in central Texas. Central Texas is the well-known home of a couple endangered species called the golden cheeked warbler and the black-capped vireo that have been getting a lot of attention lately.
I am here today representing myself and other landowners across this country who are dealing with very serious threats to our ability and right to own and use private property, private property that produces the food and fiber that clothes our Nation and feeds the people of our Nation.
I want to publicly thank you, Lamar, for your continuous and consistent defense of private property and for the opportunity to be with you here today to support H.R. 992, a piece of legislation which I believe to be very important and certainly much needed.
Presently, I am a landowner and a rancher. I am a wildlife scientist by profession, and I am a retired professor emeritus from Texas A&M University. I have been involved with environmental and land use issues for the past 35 years. Since 1992, we have witnessed the greatest assault on private property, usually under the guise of protecting the environment.
Ordinary, law-abiding citizens today have found themselves at odds with their government, a position that they do not really like. Historically, in America major obstacles facing a landowner or farmer or rancher and his ability to make a living off the land came from weather, or it came from the markets. Today, however, landowners are much more vulnerable because government has become all-powerful, regulating just about every facet of our lives and determining all of our land management practices from thousands of miles away.
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I believe the old saying that absolute power corrupts absolutely was never more true than today. Innocent people are being trampled on by seemingly out of control bureaucrats who are accountable to no one. We have a serious problem in this country that is much broader than what the bill addresses today.
However, H.R. 992 is a major step in the right direction. It will assist thousands of landowners nationwide by rectifying a serious flaw in our judicial system. In Texas, we are staunch defenders of the Fifth Amendment, and we believe that if government regulates your property to the point of no or little value, then government should be held accountable and pay for the taking of the property.
John Adams once said, ''Property must be secured or liberty cannot exist.'' Our liberty in this country today rests in the hands of our legislators, in your hands, and if we are to be a free Nation, under just laws, our government must be held to the same, if not higher, standards than required of us, the lay landowner.
The ability of Federal agencies to drag people through the judicial system, to break them mentally, physically and monetarily, is not right. And I would suggest and respectfully disagree with the lady from the Justice Department that on a comparative basis there is no scarcity of Federal funds for the Federal judicial system when compared to that of the private landowner.
H.R. 992 goes a long way in rectifying the problem. It would provide a fix for the landowner, preventing arduous delays and increased costs of litigating a Fifth Amendment taking claim. So many people have gone through the administrative process only to be thrown out on technicalities and end up not only losing their case, but their land as well.
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We all know it is expensive to litigate. The government, using our tax dollars, has the ability to outwait, outspend and outlitigate any one individual. The government can and does hold the cards when it comes to power over the people.
Under the Tucker Act today, landowners are forced to make a choice to seek either monetary relief in the U.S. Court of Federal Claims or injunctive relief in a Federal district court. Because of this split jurisdiction, no one court can provide full relief to a property owner whose property has been taken. The landowner has no choice but to go through lengthy and expensive administrative proceedings and trials.
Property owners are denied their day in court because of the intimidation and expense of facing the government. Your amendment, Congressman Smith, would resolve the judicial quandary by eliminating the Tucker Act Shuffle and permit landowners to fully recover for a taking in one court and by giving concurrent jurisdiction to hear all claims relating to property rights.
This act provides much needed relief to individual landowners and deserves everyone's support. I encourage you and your colleagues to support H.R. 992 and proceed to its passage as soon as possible.
I might add one thing here, finally, that it seems obvious to me that your amendment has attracted the attention of a lot of lawyers. And I feel a little bit intimidated here today, but the fact is that lawyers disagree on what the law says. I think that is ample evidence that it needs to be addressed. And certainly, when we are trying to simplify the judicial system, we are dealing with less litigation and maybe less retainers for lawyers. So I think all is ample evidence of why this is good legislation and should be pursued. I am happy to be here to support it.
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Mr. SMITH OF TEXAS. Thank you, Mr. Klussman. I appreciate your being here. Do not be intimidated by all those lawyers. Most of them, I think, agree with us. I think the ones on either side of you do as well. Thank you again for your testimony.
[The prepared statement of Mr. Klussman follows:]
PREPARED STATEMENT OF WALLACE KLUSSMANN, LLANO COUNTY, TX
Mr. Chairman, members of the Committee, my name is Wallace Klussmann. I reside in Llano County on a ranch in Central Texas, home of the well-known Golden Cheeked Warbler and the Black-Capped Vireo. I'm here today representing myself and other landowners across this country who are today dealing with very serious threats to our ability and right to own and to use our private property to produce the food and fiber that feeds and clothes the people of our nation.
I want to thank Congressman Lamar Smith for his continuous and consistent defense of private property and for the opportunity to be with you today to support H.R. 992, the Tucker Act Shuffle Relief Act of 1997, a very important and much needed piece of legislation.
Presently, I am a landowner and rancher. I am a wildlife scientist by profession. I am a retired Professor Emeritus from Texas A&M University. I have been involved with environmental issues for the past 35 years. Since 1992, we have witnessed the greatest assault ever on private property.
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Ordinary, law-abiding citizens today have found themselves at odds with their government. Historically in America, major obstacles facing a landowner and his ability to make a living off the land came from weather and markets.
Today, however, landowners are much more vulnerable because government has become all-powerful, regulating every facet of our lives and determining all of our land management practices from thousands of miles away.
The old saying: ''Absolute power corrupts absolutely'' was never more true than today. Innocent people are being trampled by arrogant, seemingly out of control bureaucrats who are accountable to no one. We have a serious problem in this country that is much broader than what this bill addresses today.
However, H.R. 992 is a major step in the right direction. It will assist thousands of landowners nationwide by rectifying a serious flaw in our Judicial System.
In Texas, we are staunch defenders of the Fifth Amendment. We believe if government regulates your property to the point it is of no or little value, they should be held accountable and pay for the taking of the property.
John Adams said: ''Property must be secured or liberty cannot exist.'' Our liberty in this country today rests in your hands. If we are to be a free nation, under just laws, our government must be held to the same if not higher standards than required of us.
Page 110 PREV PAGE TOP OF DOC The ability of federal agencies to drag its people through the judicial system only to break them mentally, physically and monetarily is not right.
H.R. 992 goes a long way in rectifying this problem. It would provide a ''fix'' for the landowner preventing arduous delays and increased costs of litigating a Fifth Amendment taking claim. So many people have gone through the administrative process only to be thrown out a technicalities and end up not only losing their case, but their land as well.
Well all know how expensive it is to litigate. The government, using our tax dollars, has the ability to out-wait, out-spend and out litigate any one individual. Government can and does hold all the cards when it comes to power over the people.
Under the Tucker Act today, landowners are forced to make a choice to seek either monetary relief in the U.S. court of Federal Claims or injunctive relief in a federal district court. Because of this split jurisdiction, no one court can provide full relief to a property owner whose property has been taken. The landowner has no choice but to go through lengthy and expensive administrative proceedings and trials.
Property owners are denied their day in court because of the intimidation and expense of facing the government. Congressman Smith's Amendment would resolve the jurisdictional quandary by eliminating the Tucker Act Shuffle and permit landowners to fully recover for a taking in one court by giving concurrent jurisdiction to hear all claims relating to property rights.
This provides a much needed relief to individual landowners and deserves each and everyone's support. I support Congressman Smith and H.R. 992 and urge each and everyone of you to look favorably on this legislation and give American landowners the protection they deserve.
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I am grateful for this opportunity and I will be pleased to respond to any questions.
Mr. SMITH OF TEXAS. Mr. Baird.
STATEMENT OF EDWARD R. BAIRD, JR., WILLCOX & BAIRD
Mr. BAIRD. Mr. Congressman, I appreciate the opportunity to be here. I think the bill makes excellent public policy, and I strongly support it.
I wound up practicing environmental law on behalf of the government for many years in Norfolk, Virginia, first in the State's Attorney's Office, and then in the U.S. Attorney's Office. Among other things, I found the biological definition of ''wetlands,'' which the Corps has carried way too far, and I also found the gas chromatograph as a method of fingerprinting oil spills, and that method is now government policy.
I got out of the Corps, wound up in private practice, and wound up with a client who the Corps had denied a permit to fill in to a wetlands permit. The case is called 1902 Atlantic, Ltd. The case has severalto start off with, I am not a Constitution lawyer, so I cannot address the professor's comments, but in the case of 1902 Atlantic, Ltd., the judge found that there was unconstitutional taking, and that the Corps' administrative procedure was bad, arbitrary and capricious. And the judge's relief, I think, was really telling because he double-barreled the government. He gave them the option of reviewing their permit denial in light of his opinion and/or condemning the property. This was the government's option, not the property owner's.
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In my case, the property owner did not want money. That was the last thing he wanted. He was dying to use his property. And so Judge Doumar's relief, I think, is very indicative of what your bill specifies, that the court can order the administrative agency to review on an administrative procedure basis, which is a normal APA-type thing, or to issue the permit. And that way there is no raid on the Government's purse. If the landowner cannot raid the Government's purse, the Government has the option of saying, ''Well, we think we denied the permit because this property has valuable ecological things. And maybe it does. But the next issue is, who pays for it?'' The government has the choice of saying, do we want to pay for it and preserve it, or do we want to let it go? So I think that is a cheap way and a very efficient one. And your bill, to a degree, does that. But Judge Doumar came up with this idea, years ago.
The second thing is when I was prosecuting wetlands cases, I got sued for $30 million for malicious prosecution. My answer to that was have you ever seen a friendly prosecution? Somebody else sued me for trespassing, for wandering around on somebody's property in Chincoteague. There may be liability of the Federal employees under Bivens. If a district engineer for the Corps denies a permit, and that permit denial is later held to be unconstitutional, the district engineer then is subject to a potential Bivens-type case. If the postal employee drives his postal truck into the side of my car, I think I am prohibited from suing the postal employee in State court. My real claim is against the Government in the Claims Court.
So what I would say is let's take the governmental employee off the hook, but put the United States Government on the hook. You know, if I really wanted to, I could have sued the district engineer and all the other people for $96,000 and collected. Of course, the Corps' District engineer would not have terribly appreciated it, but that would have an enormous chilling influence on the governmental people. Government agents would sit there and wonder if I denied this permit, is anybody going to come after me? The answer right now is possibly yes.
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The next thing is when you have a takings claim in two different court systems, each judge has to have a view of the property. I heard the first man say the facts in Loveladies were very unique. Well, the facts in our case were highly unique. The judge had to actually go take a look at the property. So we had two different judges come out and view the property. So that was an enormous waste of judicial time and effort.
What we did in our case was after the District Court found a taking, and the Corps finally issued a permit, then we got treated so nastily that we went to the Claims Court. We finally settled the case out for $96,000. So we were one of the first to get a wetlands holding and one of the first to collect money. And it took us 12 years to do it, and $96,000 hardly paid for the other costs.
My conclusion is ''Tucker Act shuffle'' really hurts. It hurts litigants. Somebody with 10 acres cannot afford to pay to litigate over 12 years.
In Virginia we have got 75,000 acres of nontidal wetlands, and 135,000 acres of tidal wetlands. They are regulated by the Corps. So the Corps's regulation is big business.
But having said that, Virginia's economy is now going to an information age where the quality of life is crucial; and, so, the protection of the environment is necessary. So I think there is something to be said on both sides of protecting the environment, and I am very much for that.
Page 114 PREV PAGE TOP OF DOC But I think private property rights have got to be respected, too, and how one draws that line, I do not know.
Mr. SMITH OF TEXAS. Thank you, Mr. Baird.
By the way, you are one of the few people I know that has been successful against the government. I know you would like to be more successful more often, but we appreciate the battles you have waged.
[The prepared statement of Mr. Baird follows:]
PREPARED STATEMENT OF EDWARD R. BAIRD, JR., WILLCOX & BAIRD
Hon. HENRY J. HYDE,
|Willcox & Baird|
|Norfolk, VA., September 5, 1997.|
Chairman, Subcommittee on Immigration and Claims,
Committee on the Judiciary,
House of Representatives,
Re: testimony concerning H.R. 992the ''Tucker Act Shuffle Relief Act of 1977''
DEAR CHAIRMAN HYDE:
Page 115 PREV PAGE TOP OF DOCA. Background
My curriculum vitae may be of some relevance because I was able to combine my avocation of the water with my vocation of environmental litigation, including twelve years of litigation with the ''Tucker Act Shuffle.''
I grew up in a family that was interested in the environment. My grandfather and my father were admiralty lawyers. My father and I hunted ducks during the winter, shot crows during the spring and fall and fished during the summer. I still sail a cruising sailboat on the Chesapeake Bay.
I graduated from the University of Virginia with a degree in English in 1960, so I do not have scientific training. I served as a deck officer for three years on a small Navy. The plaque in the wardroom of our ship expressed my awe of the sea: ''Oh God, thy sea is so great and my ship is so small.'' I graduated from the University of Virginia Law School in 1966.
I soon found myself practicing law as an Assistant District Counsel with the Norfolk District of the U.S. Army Corps of Engineers handling general legal matters. Three years of bouncing around the ocean on a small ship only taught me that the ocean was composed of salt water and sea gulls. Curiosity prompted me to audit a night course in Oceanography at Old Dominion University. I audited another night course in Marine Ecology in 1969.
There was no apparent connection between the Corps of Engineers and oceanography in 1968, but, by the next year the Corps began to be accused of having the ''beaver complex'' of damming up free running streams. There was a growing realization of the connection between the Corps of Engineers and marine ecology by 1970, however.
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Oil spills were a routine occurrence in the Hampton Roads Harbor in the early 1970s. Several major oil spills had brought public attention to oil spills. The Corps of Engineers began to prosecute oil spill cases under the venerable Rivers and Harbors Act of 1899, so I began to handle oil spill cases in the Hampton Roads region for the Corps.
English scientists studying the large ''Torrey Canyon'' oil spill incorrectly concluded that oil only killed a few birds and fouled a few beaches. Then, Dr. Max Blumer at the Woods Hole Oceanographic Institute used the gas chromatograph to discover that oil spills were very toxic to the marine environment.
The prosecution of oil spill cases in Hampton Roads soon ran into a serious problem. We could not prove that the oil in the water came from a particular ship. I began a long search to find a way to prove that the oil in the water came from a particular ship. My search started with several scientists at the Old Dominion University. A scientist at the Scripps Institute of Oceanography later put me in touch with Dr. Blumer at the Woods Hole Oceanographic Institute and gave me a copy of Dr. Blumer's seminal paper. Dr. Blumer confirmed on the phone that the gas chromatograph could ''finger print'' oil spills.
The gas chromatograph was very high tech and expensive for that day. Further research revealed that the Virginia State Water Control Board had just acquired a gas chromatograph and had a chemist who knew how to use it. The gas chromatograph was so new that it was still sitting in an unopened box under a secretary's desk when I stopped by the State Control Board's offices in Richmond.
Page 117 PREV PAGE TOP OF DOC A month later we had a huge oil spill in Hampton Roads. Oil was six inches deep for a mile. The Corps' inspector, Charles Brickner, was standing ankle deep in oil on the deck of the ship, M.V. Melodic, when the ship captain claimed the oil in the harbor was not his, but came instead from an English ship at the next dock. Samples of the oil were sent to the State Water Control Board for analysis with the gas chromatograph. The graphs of the oil in the water and the oil on the deck of the M.V. Melodic came back identical within four decimal places. The chemist said she had never seen such a close match.
The next issue in the case was coming up with enough scientific evidence to get the court to assess the full $10,000 fine under the then law. Dr. Gerald F. Levy, an Old Dominion University ecology professor and I spent two days at the Woods Hole Oceanographic Institute. The first day Dr. Blumer took us around his laboratory and explained the finer points of organic chemistry of why oil spills were so toxic to the marine environment. Dr. Levy and I were convinced that Dr. Blumer really did know his subject.
The Woods Hole Oceanographic Institution had been receiving large sums of money from oil companies to look for oil under the oceans, so it became apparent that Woods Hole was caught in the dilemma of following the science or following the law. We found out that Dr. Saunders, the head of the Chemistry Department, chose to follow the science rather than follow the money. All of us, unfortunately, have probably met other scientists who are quite willing to follow the money.
Dr. Blumer volunteered to come to Norfolk and to testify in our case. The admiralty lawyer representing the M.V. Melodic agreed to settle the case for $6,250, which was then the largest oil spill penalty in the country. The favorable publicity generated by this case spurred the Corps to vigorously prosecute oil spill cases all over the country.
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The gas chromatograph became the accepted method of ''finger printing'' oil spills and is still used by the Government today.
A barge full of diesel oil had gone aground and polluted the marshes around Falmouth, Massachusetts and polluted the state owned oyster grounds. This was the functional equivalent of a bank robber running out of gas in front of the police station. Bad form! Dr. Blumer saw the scientific implications of the oil spill for the environment, but he did not see the social implications of oil spills for the law.
We spent the second day at Woods Hole explaining what governmental laws had been broken and how the State of Massachusetts, the town of Falmouth and the private oyster ground lessors had been financially damaged by the oil spill and how they could sue the oil company. They were also told that the oil companies did not want adverse publicity and would probably be willing to settle out of court for the Falmouth spill. Dr. Blumer later called me up and said in his broken German accent: ''Mr. Baird, Mr. Baird, I am so excited! I am so excited! I am holding two checks from the oil company for third of million dollars!''
We both discovered how fast a scientific discovery can move from the laboratory to the social system. Dr. Blumer then went on to testify to Congress about the toxic effects of oil pollution. His testimony formed the basis of the then Oil Pollution Act of 1972.
Dr. Blumer's discovery also formed the basis of a group called CARE, who successfully fought the construction of an oil refinery in Hampton Roads. CARE lost all the battles, but won the war. The refinery was not built and the Exxon Valdez spill occurred in Alaska, rather than the mouth of the Chesapeake Bay.
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The Odums and other scientists at Sapelo Island, Georgia discovered that marshes were very valuable to the marine ecosystem. This discovery sent another shock wave through the scientific and growing environmental law communities. The Corps began to take jurisdiction over dredging and filling of wetlands under the old Rivers and Harbors Act of 1899. The Corps began to successfully prosecute illegal dredge and fill cases in the mangrove swamps of Florida.
There were a lot of illegal dredge and fill cases in Virginia, primarily on the Eastern Shore of Virginia. But, prosecution of marsh illegal dredge and fill cases in Virginia was much more difficult. The Corps of Engineers jurisdiction only went up to the mean high water mark. The standard engineering technique of using a tide gauge and surveying to determine the mean high water mark was too expensive and was too uncertain to stand up in court. The illegal dredgers and fillers on the Eastern Shore were almost laughing at the Corps. Something had to be done.
Much time and effort was expended on trying to locate the mean high water mark in tidal wetlands using aerial color infrared photography. That attempt eventually failed, but in the process I ran across a Virginia Marine Science Institute publication that casually mentioned that salt marsh cord grass, Spartina alterniflora, grew below the mean high water mark and that salt meadow hay, Spartina patens, grew above the mark. Eureka! We now had a biological test that was both reasonably certain and easy to apply. The biological test withstood court challenges in Norfolk and soon became the standard in the Corps of Engineers.
The Captain's Cove project on Chincoteague Bay on the Eastern Shore of Virginia dredged and filled eight hundred acres of marsh without a Corps permit. We dug down through the recent fill and found salt marsh cordgrass. Captain's Cove had violated the law. The case was turned over to the Corps' administrative process.
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Film producers from the British Broadcasting Corporation (BBC) came through Virginia to produce a prime time television film called The Billion Dollar Marsh. They wanted a prime example of the destruction of pristine wetlands. Captain's Cove was a good example of how to destroy the environment. The BBC film crew photographed the Captain's Cove development from both the air and the water.
As an Assistant District Counsel for the Norfolk District of the Corps of Enginners, I had been bugging the U.S. Attorney's Office to sue various polluters for the Corps. The U.S. Attorney's Office in Norfolk soon grew tired of doing my dirty work and finally told me in so many words, ''You come over here and you handle these environmental cases directly.'' That was probably a bad mistake for the federal government because they turned the fox loose in the hen house.
The next four years, from 1973 to 1977 marked the beginning of the environmental law movement and was a time of intense controversy and litigation for me. If nothing else, I discovered that I was litigating in the U.S. District Court for the Eastern District of Virginia under the stern tutelage of Judge Walter E. Hoffman. That Court was, and still, is the big ballpark where the big boys play very clean, but play very hard. Judge Hoffman invented the now famous ''Rocket Docket'' which drove cases to trial in short order.
Captain's Cove then sued me for thirty million dollars for malicious prosecution after I got into the U.S. Attorney's Office because of the BBC film. My defense was ''have you ever seen a friendly prosecution?'' The government never got Captains Cove and Captains Cove never got me.
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I brought a suit against Eddie Tull, another illegal wetlands dredger and filler in on Chincoteague Island. I had to walk over Eddie Tull's marsh in preparation for trial. Eddie Tull then swore out criminal charges against me and various Corps personnel for trespassing on his property. He also threatened to kill me. That case prompted a large article in the local newspaper with my photograph and the headline: Baird, Defendant!
The state trespass case was removed to the U.S. District Court in Norfolk. My friends in the Marshall's office wanted to process me and then to release my mug shot to the press. One judge, with tongue in cheek, began to refer to me as ''the criminal element in our midst.'' My friends kidded me unmercifully.
The controversy continued. The Fish and Wild Life Service sent twenty eight armed agents to Tangier Island on the Chesapeake Bay during the winter of 1977 to close down an illegal duck hunting camp that slaughtered ducks by the thousands. That incident gained national attention and was called the ''Tangier Island Duck Hunting Raid of 1977.'' I had to prosecute friends in Norfolk, out of town businessmen and a few Tangier Island watermen for illegal duck hunting. I am not welcomed on Chincoteague Island and cannot go to Tangier Island to this day.
The average environmental case involved a multitude of scientific and legal questions. During the early development of the field of environmental law we had a variable number of variables with each variable varying the other variables at varying times. That meant I did not know what was going on, but was somewhat less ignorant than others. Fortunately, every environmental case we tried usually eliminated a variable or two and added to our knowledge base.
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The field of environmental law exploded at that time. Many answers have been provided. But, it seems that each answer raises several more good questions. That situation still applies to day to the field of environmental law, with special emphasis on the takings issue. Right now there are many, many questions about takings and precious few answers. I hope this Committee will help draft a few of the procedural answers.
This background material is only relevant to show that I have the perspective of an active environmentalist who has both litigated for and against the Government.
I have no pending wetlands litigation or other financial stake in my comments which follow. But, I still have an interest in the field of wetlands and still try to follow the new developments in wetlands science and law. My biography can be found in Who's Who. I have not had any federal grants, contracts or subcontracts for the preceding two years.
B. 1902 Atlantic, Ltd. V. United States
Peter Meredith, Jr., graduated from VMI and formed his own construction and demolition company, named 1902 Atlantic, Ltd. His company tore down the Atlantic Hotel built in 1902, for which the company was named. Mr. Meredith needed a large hole in the ground to contain the clean fill material from the Atlantic Hotel and other old buildings. 1902 Atlantic, Ltd. bought a ten acre borrow pit, or man made hole in the ground, in Chesapeake, Virginia to hold the clean building rubble and to use the property as an industrial park after the hole in the ground was filled up.
Page 123 PREV PAGE TOP OF DOC 1902 Atlantic, Ltd.'s borrow pit was connected to tidal waters and was filled with about a foot of water at low tide. Fringe marshes had grown around the edges of the borrow pit. 1902 Atlantic, Ltd. obtained permits from all state and local authorities to fill the borrow pit. A permit application was made to the Corps of Engineers. The Corps informally informed Peter Meredith, Jr. that the Corps' regulations would not allow the Corps to issue a wetlands permit for a non-water dependent use.
The three engineers who owned 1902 Atlantic, Ltd. were busy knocking down old buildings during the gogo time of the 1980s and they desperately needed a place to put their building rubble. They approached me to see what I could do about getting a permit from the Corps.
The Corps claimed that there was some environment in the bottom of the man made borrow pit, but I could not find any significant environment. The Corps said they would not grant the permit, but the Corps refused to deny the permit, either. It began to look like a simple permit application would result in litigation.
Notice was given to the Corps during the permit application process that failure to grant the permit could result in an unconstitutional taking without compensation.
Suit was brought in the U.S. District Court for the Eastern District of Virginia. The complaint requested that the Corps be forced to rule on the permit application and that the Corps' District Engineer should be enjoined to issue the permit because the eventual permit denial was arbitrary and capricious, in violation of the Administrative Procedure Act and was an unconstitutional taking. The complaint only sought injunctive relief and did not request monetary relief because of the Tucker Act.
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There had been no successful wetlands takings cases at that time. The Justice Department put on a ''full court'' defense which raised many factual and legal issues. One of the major legal issues was that the Claims Court, rather than the District Court, had jurisdiction of a takings claim. This defense was later called the ''Tucker Act Shuffle,'' and is the subject now before the Subcommittee.
Had I known about the Tucker Act Shuffle in advance, I would have ''double barreled'' the Corps by initially filing in both the District Court and the Claims Court.
The case of 1902 Atlantic, Ltd. V. Hudson was tried before the Honorable Robert G. Doumar, a judge of the U.S. District Court for the Eastern District of Virginia. Judge Doumar also tried the Corps' case of U.S. v. Edward Tull.
Judge Doumar called counsel for two separate Corps of Engineers wetlands cases together and handed down two back to back opinions on the same day dealing with the Corps of Engineers. In 1902 Atlantic, Ltd. the landowner went through the judicial process and was rewarded by the Court. In U.S. v. Edward Tull, the defendant dredged first with out a Corps permit and asked questions later and so was duly rewarded by a third of a million dollar fine. The Tull case was later appealed to the Supreme Court. Judge Doumar's message to go through the legal system was unmistakable.
Judge Doumar's 1902 Atlantic, Ltd. opinion overruled the Corps's ''Tucker Act Shuffle'' defense and took jurisdiction. Judge Doumar's opinion, copy enclosed, found both a taking without compensation and a violation of the Administrative Procedure Act.
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Judge Doumar was rather dubious about his power to order an administrative official to perform the discretionary act of issuing a permit. Judge Doumar's solution was to order the Corps to reconsider the permit denial in light of the Court's opinion or to institute condemnation proceedings. For lack of a better term, I will call this brilliant solution the ''Doumar Double.''
The Doumar Double had several major benefits.
First, nobody knew in the beginning that the particular permit denial would be held to be a taking. Constitutional law is peculiarly the province of judges and not administrators. An administrative act is not unconstitutional until a judge says it is. This puts the Corps in a quandary of not knowing in advance whether a particular permit denial will be ruled by a Judge to be an unconstitutional taking which will result on a drain on the U.S. Treasury. The Corps should have been hesitant to deny a permit application that could result in an expensive takings claim.
Second, the Corps, but not the property owner, was given the choice of either paying for the property or granting the permit. Apparently, in the Lucus case the governmental agency was forced to pay the landowner for the property. The governmental agency then turned around and sold the former Lucus property to recover their expense. The Doumar Double would have allowed the South Carolina agency to reconsider their permit denial and to let Mr. Lucas have his property back at no cost to the agency.
Third, the Doumar Double would give the property owner what he really wants, that is the ability to develop his property. The plaintiff in 1902 Atlantic, Ltd. was not particularly interested in getting money, but it was highly interested in being allowed to develop the property.
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Consequently, the Doumar Double would have been a winwin situation for both the Corps and the landowner.
The lack of an adequate statutory remedy then caused a serious clash between the judicial and executive branches of the U.S. Government. There were approximately a half dozen good appellate issues in Judge Doumar's opinion. But the Justice Department, for whatever reason, chose did not appeal 1902 Atlantic, Ltd. v. Hudson, 574 F. Supp.1381 (E.D.Va. 1983) to the Fourth Circuit and let the decision become final.
The Corps's District Engineer later denied the permit application a second time and then retired and turned this mess over to a new District Engineer. The former opinion had become final, but was disobeyed by the Corps of Engineers.
Another hearing was held before Judge Doumar with the new District Engineer in attendance. Judge Doumar was quite disturbed that a final court order had not been obeyed. Judge Doumar reminded the new District Engineer that the penalties for the disobedience of a Federal Court order were fine and imprisonment.
Judge Doumar then asked the new District Engineer if he understood what the Court had ordered. The District Engineer was a good military officer who understood a direct order when he got one. The District Engineer's response was ''Yes, Sir!'' Corps personnel later testified that the District Engineer did not come down out of orbit for two weeks!
The District Engineer was caught in the classic dilemma of trying to obey two different masters. The District Engineer clearly saw that his neck was in Judge Doumar's noose, but he still had to get the permission of the Corps' sister agencies before he could grant the permit.
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The District Engineer, in a stroke of genius, issued a notice that he intended to issue the permit unless one of the sister agencies objected. It was quite apparent that any other sister agency personnel objecting to the permit would also be inserting their necks into Judge Doumar's noose along with the District Engineer. The clamor of the other agency personnel to deny the permit was suddenly stilled. Nobody objected. The new District Engineer complied with the Court's order and issued the permit.
The lack of an adequate remedy consequently put the Corps' District Engineer and possibly other agency personnel in harm's way. Having been sued myself while in the Government, I had no particular desire to pursue remedies against individual government personnel. But, there is case law that says that governmental personnel can be held to be personally liable damages from unconstitutional acts. The District Engineer and other agency personnel could have been sued for $96,000 in damages, but were not. That potential for individual governmental personnel liability for unconstitutional takings still exists today without some sort of Congressional relief.
Judge Doumar then filed a second, unpublished, opinion, copy enclosed, which held that the Corps's second denial was made in bad faith. The permit application was finally issued after five years of litigation. The Corps' lawyers said at the beginning that it was impossible to force the Corps to issue a permit. The impossible occurred.
We had made several offers during the District Court litigation that we would drop our Tucker Act claim for monetary damages for the issuance of the permit. The Justice Department did not even bother to reply to some of our offers. The Doumar Double should make this kind of offer much more acceptable to the Corps in the future.
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The landowner finally got its permit after the loss of use of its property for five years. An administrative claim for the loss of use was filed with the Corps and denied. Another case was then filed in the U.S. Claims Court for the five years loss of use of the property. The case was tried before Judge Robinson of Claims Court sitting in Norfolk. The Judge Robinson went out and had a view of the property.
Judge Robinson's opinion rejected the landowner's claim that Judge Doumar's opinion was res judicata and was binding on the Claims Court. Judge Robinson found that there was a taking, but that the time of the taking was a mere administrative delay. The landowner filed a notice of appeal and a brief to the Federal Circuit in Washington.
The Defenders of Property Rights then intervened and filed an amicus brief in the Federal Circuit on the behalf of 1902 Atlantic, Ltd. Nancie Marzullo's brief for the Defenders of Property Rights was so clear and convincing that it basically explained my whole case to me.
The case was transferred from the Natural Resources Section to the Appellate Section inside the Justice Department. The Natural Resources Section had steadfastly refused to even discuss settling the case. The Appellate Section, however, was amenable to settlement negotiations. They knew that hard cases sometimes make bad law. An adverse opinion from the Federal Circuit could have hurt the Corps wetlands permitting process.
The case was finally settled prior to trial for $96,000.
Page 129 PREV PAGE TOP OF DOC The 1902 Atlantic, Ltd. takings case took twelve long, hard fought years to resolve. But, it was one of the speedier resolutions of wetlands taking cases when compared with Florida Rock and other similar cases that bounced around from the Claims Court to the Federal Circuit and back again.
Most landowners could not have stood the strain. But the President of 1902 Atlantic, Ltd. was a VMI graduate and a Corps of Engineers reserve officer who did not go looking for legal fights, but was willing to fight the Justice Department when necessary.
The case of 1902 Atlantic, Ltd. exposed several weaknesses in the Tucker Act procedure.
The first and most compelling weakness is that both the District Court and the Claims Court judges had to have a view of the property. The District Courts are closer to the wetlands than the Claims Court. Having the District Courts decide the issue will eliminate a lot of expensive travel for the Claims Court judges.
Second, the Tucker Act Shuffle will encourage lawyers with takings claims to ''double barrel'' and file in both courts at the same time. This will entail a race to judgement, leaving the slower court stuck with a res judicata argument.
Third, the Tucker Act Shuffle does not give either the Claims Court or the District Courts the horsepower to completely dispose of the case, which encourages the waste of judicial time and money. Right now it takes two independent courts to completely resolve a takings claim with injunctive and monetary relief. This is hardly judicial economy or efficiency.
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Fourth, the Tucker Act Shuffle and the lack of an adequate remedy leaves the Corps and sister agency personnel exposed to being caught in the dilemma of trying to serve two masters.
Fifth, the knowledge that a non-tidal wetlands permit denial might lead to monetary loss to the Corps or sister agencies could chill the agencies willingness to deny large permit applications. The large applicant can fight back in court, which would encourage the agencies to only deny small permit applications where the applicant does not have the resources to fight back. Were I back in the Corps today, I would have to advise the Corps' permit branch to grant the big permits and to deny the small ones for fear of takings claims.
Sixth, the Corps' permit cases are not subject to public scrutiny in the same way as the courts. The Corps has a built up experience of takings cases across the country cases that the individual permit applicants do not have. Publishing on the Internet all the large controversial permit applications that raise the issue of an unconstitutional taking would level the playing field and would help restore the public's confidence in the permit process. Public exposure would also help to eliminate bad faith permit processing, as was the case in 1902 Atlantic, Ltd.
Seventh, there is no present requirement that the landowner exhaust his administrative remedies by warning the Corps of a possible takings claim during the permit process. Under the present Tucker Act procedure, the landowner can lay back during the permit process and then sandbag the Corps in court with a takings claim. The personnel in Corps districts and sister field agencies need to be notified during the permit process that they have a hot potato on their hands so they can seek the advice of higher authorities.
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Eighth, it is a crime for citizens to take property of the Federal Government. I have cast various miscreants into the uttermost depths of the jailhouse for stealing from the Government. But, what happens when the Government takes property from a citizen, as it did in 1902 Atlantic, Ltd.? There is very little redress for citizen whose property has been taken by the Government at present. This is not fair.
Ninth, the District Courts now take the environment very seriously and are not likely to go on a binge of giving the taxpayers money away every time the Corps of Engineers denies a non-tidal wetlands permit application. Giving the district courts the authority to order the Doumar Double will probably save the Government money, rather than spending it.
Tenth, the District Engineer found that he was painted into the corner of denying the permit application by the Corps's water dependent rule. The book, The Death of Common Sense in the Law, makes the point that the agency personnel are not given adequate discretion by the agency rules and regulations. Perhaps the Corps's district engineers could be given discretion in the Tucker Act to avoid potential wetlands takings claims.
C. Later Developments
Developments after the resolution of the 1902 Atlantic, Ltd case have added urgency to the need for legislative relief from the Tucker Act Shuffle.
The Corps' regulations defining federal jurisdiction over wetlands were later changed to reflect the new biological, as opposed to the engineering, definition. I am probably partly to blame for the new biological definition. The Corps' biological definition of wetlands vastly expanded the Corps's jurisdiction from tidal wetlands to cover non-tidal wetlands as well.
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The distinction of tidal and non-tidal wetlands in Virginia is significant from the point of view of takings cases. Generally speaking, there can be no taking of tidal wetlands below the mean high water mark because the dominant servitude of the Corps of Engineers over navigable waters. The dominant servitude of navigation does not protect the Corps from takings claims in non-tidal wetlands, however.
Dr. William E. Odum's article, ''Non-Tidal Freshwater Wetlands in Virginia,'' published in Volume 7, Spring 1988, at page 421 of the Virginia Journal of Natural Resources Law is significant because of Dr. Odum's estimate of 135,000 acres of tidal wetlands and 750,000 acres of non-tidal wetlands in Virginia.
The Corps's use of the biological definition of wetlands effectively expanded the Corps jurisdiction from 135,000 acres to a total of 885,000 acres in Virginia. That expansion makes the Corps a very big, if not the biggest, land use regulatory agency in Virginia. The scientific need for and the politics of that expansion were far beyond my understanding. But, the expansion seems to be an accomplished fact at this point in time, so we are stuck with it without further Congressional legislation.
The Corps still has not defined the locations of wetlands with a map. A potential property real estate purchaser cannot go to the court house and definitely tell whether the property in question is or is not wetlands. The economic consequences of the lack of a map can be severe. One local bank lost twenty million dollars by lending money on real estate that later turned out to be wetlands. Also, there have been many state and local agencies that have not been able to site infrastructure because of wetlands. Some of these organizations are big enough and aggressive enough to file substantial takings claims.
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There now seems to be major disagreements between the scientists concerning the value of preserving wetlands. The Corps of Engineers has an official ''no net loss'' of wetlands goal. The recent JulyAugust, 1997 edition of the National Wetlands Newsletter carried an article entitled: ''How We Achieved No Net Loss.'' The courts will probably be willing to find a taking if the permit denial is based on junk science.
Another major issue is strictly economic. The Commonwealth of Virginia appears to be rapidly converting from an agricultural economy to an information based economy. The September, 1997 edition of the Virginia Business magazine carried an article ''The Care and Feeding of Geeks'' in which it was claimed that the shortage of knowledge workers was so severe that twelve year old children were getting jobs designing Internet web pages! The article said that there are 20,000 unfilled technology jobs in Northern Virginia alone.
These knowledge intensive jobs are highly mobile and gravitate towards areas that have a high quality of life. The high quality of life of Chesapeake Bay region is rapidly attracting knowledge workers. Hence, the preservation of wetlands can be a major stimulus, rather than a deterrent, to economic growth.
These circumstances indicate that the only thing that does not change is change itself. The preservation of property rights still involves a variable number of variables, varying the other variables at varying times. The case of 1902 Atlantic, Ltd. seems to have answered some of the questions about the Tucker Act Shuffle. It is hoped that the following recommendations can add a few touches to the present H.R. 992.
Page 134 PREV PAGE TOP OF DOC Fortunately, one of the few certainties in this sea of confusion is the expertise and decency of the Defenders of Property Rights. Both Nancie and Roger Marzullo are family people trying to raise small children in the heart of Washington. Both are exceptionally bright and hardworking. The Defenders of Property Rights have been working on this subject for some while and has attracted some of the finest minds anywhere.
I respect the Defenders of Property Rights to the extent that if there are any disagreements between my ideas and their recommendations, I will endorse the Defenders of Property Rights recommendations.
Enough lessons have been learned by now to call for changes in the Tucker Act procedure to eliminate the ''Tucker Act Shuffle.'' I believe that the following recommendations fairly treat both the Government and the property owners.
The Tucker Act should be amended to provide the following procedural changes:
I. The District Courts and the Claims Courts should be given concurrent authority to hear property takings claims.
II. Potential claimants should give the administrative agencies notice of potential taking case on the permit application form or be relegated to only obtaining relief in the Claims Court.
Page 135 PREV PAGE TOP OF DOCIII. The administrative agencies, especially the Corps of Engineers, should put the administrative record of all takings claims on the Internet, if the applicant agrees.
IV. A Tucker Act claim against the United States for the taking of property will be in lieu of all other claims against individual governmental personnel.
V. Both the District Courts and the Claims Court should have jurisdiction to issue both injunctive and monetary relief in a proper wetlands taking case.
VI. Both the District Courts and the Claims Court should be given the authority to order the Doumar Double, that is, after the finding of a taking, to give the agency, but not the property owner, the option of either issuing the permit or instituting condemnation proceedings.
VII. Payments for unconstitutional takings should come from the sister agencies objecting to the issuance of the permit as well as the Corps of Engineers.
VIII. The District Engineer, or other governmental officer making a decision that potentially involves a taking of private property, should be given discretion in the Tucker Act to avoid possible taking claims despite governmental regulations to the contrary.
IX. The actions of the appropriate state and local officials in granting permits for the requested work shall be a factor in determining whether there has been a takings at the federal level.
X. The courts should have the discretion to award reasonable attorneys' fees and other litigation expenses against the Government in a takings case. Punitive damages and class action suits should not be allowed.
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I will be happy to try to answer any questions from the members or staff of the Subcommittee. My address is Edward R. Baird, Jr., Willcox and Baird, 210 Monticello Arcade, Norfolk, Virginia 23510, telephone (757) 6274217, fax (757) 6221442. My email address is firstname.lastname@example.org.
Mr. SMITH OF TEXAS. Ms. Marzulla my question is for you. The Justice Department has stated, and this is a quote, that one of their ''top priorities is to achieve a just resolution of Federal court cases as quickly as possible, including cases involving property rights under the Fifth Amendment.''
In your testimony a while ago, you referred to a couple of cases. One, I think, took 16 years, and another took 17 years. Have you seen any noticeable improvement in the Department of Justice's record as far as handling of the kind of cases that are in question?
Ms. MARZULLA. No, I have not. I am familiar with that statement of policy and was pleased when I first heard it announced, but I have been disappointed to see that the way that these cases move through the court system remains the same.
In every instance as people have testified, right off the bat the property owner must decide whether to file a case for monetary damages or file a case for equitable damages. And so right off the bat there is a strategical decision that must be made. And in every case, as I have testified, the expected and anticipated response by the government is that the forum selected has been the wrong one. Even if you survive the motion to dismiss, you must anticipate that to obtain the full relief, you are going to have to file two lawsuits.
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A typical case, at best, takes 5 or 6 years to move through the U.S. Court of Federal Claims. The same can be anticipated for the Federal court system. So there you are looking at easily a decade. And I guess the question is why do we have this kind of process, particularly when we are talking about constitutional rights. And, in the infringement of those rights and stakes, why should any litigant be forced to litigate 10, 15, 20 years to resolve a claim? Why should he be forced to file two lawsuits in every instance to obtain full relief? And, in the case of seeking monetary damages, why should someone in Texas or California be forced to fly across the country and prosecute his case in a court here in Washington, D.C.?
Yes, it is true, the U.S. Court of Federal Claims does hear trials and in some cases ADR settlement processes in jurisdictions across the country. But every other dispositive motion and hearing occurs here in Washington. The judges do not fly out across the country for every single motion and every single hearing.
So, for example, with the Handler plaintiffs, all of whom are elderly individuals, their property is located in Riverside, California, a trial on the merits regarding a regulatory takings issue was held in Riverside, but all the other substantive motions have been held here in Washington. And those people cannot get on an airplane every single time the court convenes.
Mr. SMITH OF TEXAS. That is a perfect example of the real-life situationthat we are dealing with people's lives, people's finances, people's time.
One question on another subject. Several times today constitutional concerns have been raised about the bill. Do you share the concerns raised? And if not, why not?
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Ms. MARZULLA. Well, no, I do not.
First of all, as Chief Judge Loren Smith so articulately explained, the Court of Federal Claims already exercises equitable relief. They issue injunctions and declaratory relief. So they are already exercising equitable power.
Furthermore, there is a decision out of the United States Supreme Court several years ago in which the Supreme Court said that Article I courts have the power to exercise this sort of authority. And finally, I can only point out the obvious; and that is, every branch of government, the Executive Branch, the Legislative Branch and the Judicial Branch, have the responsibility of upholding and enforcing the Constitution.
Mr. SMITH OF TEXAS. I understand that you have some additional material that you would like to put into the record.
Ms. MARZULLA. Yes. We did not address this issue in our written testimony, and I would love the opportunity to be able to supplement our written testimony on this point.
Mr. SMITH OF TEXAS. Without objection, we will put that additional information in the record. Thank you.
[The information follows:]
Page 139 PREV PAGE TOP OF DOCINSERT OFFSET RING FOLIOS 1 TO 9 HERE
Mr. SMITH OF TEXAS. Dr. Klussman, you have been involved in environmental issues and private property right issues back home, I think, for 35 years, or something on that order.
What is your experience as far as how the government hasI started to say ''operated against'' private property owners, but that is too biased. But what is your experience as to how the government has treated private property owners during your involvement with the issue?
Mr. KLUSSMAN. As you indicated, I have been involved with these things for a long, long time, and currently, I think, if we could phrase it that way, is the toughest time we faced in terms of maintaining the use of private property.
I firmly believe that we live in a Nation, using agriculture as an example, where private property and free enterprise gives us the opportunity to spend only 9 percent of our income to food on our table. We are the only country in the world that can do that for that low amount. I think the conservation ethic, our environmental concerns, are all based on free enterprise and private property. Every time we take a step in the wrong direction of limiting the use of private property, limiting the stewards of our land to produce food and fiber, we are getting at the very foundation of what makes this Nation great, and that is free enterprise and the use of private property.
And in the past few years, as I said, through the Endangered Species Act, through many other things that are coming out of the present administration, we have the greatest assault on private property that we have ever had. We will not feel the results of these kinds of assaults immediately. It will take a few years. But as the ability to use our private property diminishes, our ability to produce the food and maintain the kind of quality of living we have is going to be diminished.
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If you do not believe that, look at Mexico, look at Russia, look at any of the nations that do not have free enterprise and private property. The environment is the first thing that suffers. So I am an environmentalist, but I am concerned that we are trying to protect the environment in the wrong way. We have got to protect private property first, free enterprise first, protect quality of living first; and then the environmental ethic will indeed be one that we can save, and rightly so.
Mr. SMITH OF TEXAS. Thinking in terms of the folks back home, what is your experience as far as the normal treatment that a private property owner receives from the government when there has been a regulatory taking? You and I have both witnessed a lot of examples of that, I am afraid.
Mr. KLUSSMAN. Well, at first it is seen by the landowner as not an impossible task, and it usually results in being an impossible task. In other words, if we use the Endangered Species Act as an example, you have to get a ''bird letter,'' as they call it, to develop a piece of property. To my knowledge, nobody has ever gotten one. So although that opportunity exists, it never becomes a reality.
And I think we face the same thing here in this act. It is an endless pursuit that is just that, an endless pursuit; and that is the concern. As I said a while ago, I think all of us recognize that a landowner with meager or even reasonable resources is at a tremendous loss. He cannot respond, as Nancie indicated, to the tremendous challenge of the system. He just doesn't have the time or the resources. His livelihood will suffer. He cannot run a ranch and pursue litigation, as is now required.
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Mr. SMITH OF TEXAS. Thank you, Dr. Klussman.
Mr. Baird, we heard your examples. I just want to hear you say specifically, for the record, that you feel that the bill that we are having a hearing on today would improve the lives of private property owners and would make the system more fair and make the government more responsible.
Would you agree with that?
Mr. BAIRD. Yes, sir, I would absolutely.
Mr. SMITH OF TEXAS. What part of the bill do you consider to be the greatest help to private property owners?
Mr. BAIRD. Well, being able to grant injunctive relief and monetary damages in both courts. We are very lucky in our area. Our District Courts are quite environmentally conscious, and they understand the technical scientific issues that he had talked about. But I think the Claims Court is beginning to get enough of these cases, so they are beginning to understand the scientific issues. The Claims Court is getting a much better feel for what is going on the scientific issues.
So I think that the Claims Court knowledge of the environment is a major issue. Quite frankly, if I had another case now, I would file it in the Claims Court, not because of any problem with the District Court, but the Claims Court now has had enough track record. So if I start talking about spartina alternflora, or marsh grass, the judge would know what it is, and the Claims Court would know what it is.
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Mr. SMITH OF TEXAS. Let met summarize here by saying one of the real problems we face in trying to advance a piece of legislation like the one we have all been discussing is that it seems arcane, it seems abstract, it is full of legalese, legal terms. And what you all have done so well is to help us put a human face on the problems created by the current Tucker Act.
We ought not to call it the Tucker Act Shuffle. Maybe we should call it the Tucker Act Reshuffle.
We thank you for your testimony and, again, for conveying in real-life terms the problems that individuals face when they deal with the situation where there has arguably been a regulatory taking by the government and their private property rights have been infringed. So that is most welcome and most helpful. And I have to say to you all that it is my hope that we will do more than have a hearing on this bill, and that we will consider it in Subcommittee in the coming months. So thank you again for your help.
[Whereupon, at 12:53 p.m., the subcommittee adjourned.]
THE TUCKER ACT SHUFFLE RELIEF ACT OF 1997
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IMMIGRATION AND CLAIMS
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
SEPTEMBER 10, 1997
Serial No. 79
Printed for the use of the Committee on the Judiciary
For sale by the U.S. Government Printing Office
Page 144 PREV PAGE TOP OF DOCSuperintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
STEVEN SCHIFF, New Mexico
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB INGLIS, South Carolina
BOB GOODLATTE, Virginia
STEPHEN E. BUYER, Indiana
SONNY BONO, California
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JOHN CONYERS, Jr., Michigan
Page 145 PREV PAGE TOP OF DOCBARNEY FRANK, Massachusetts
CHARLES E. SCHUMER, New York
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
THOMAS E. MOONEY, Chief of Staff-General Counsel
JULIAN EPSTEIN, Minority Staff Director
Subcommittee on Immigration and Claims
LAMAR SMITH, Texas, Chairman
ELTON GALLEGLY, California
SONNY BONO, California
WILLIAM L. JENKINS, Tennessee
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
Page 146 PREV PAGE TOP OF DOCED BRYANT, Tennessee
MELVIN L. WATT, North Carolina
CHARLES E. SCHUMER, New York
HOWARD L. BERMAN, California
ZOE LOFGREN, California
ROBERT WEXLER, Florida
CORDIA A. STROM, Chief Counsel
EDWARD R. GRANT, Counsel
GEORGE FISHMAN, Counsel
MARTINA HONE, Minority Counsel
C O N T E N T S
September 10, 1997
Smith, Hon. Lamar, a Representative in Congress from the State of Texas, and chairman, Subcommittee on Immigration and Claims
Page 147 PREV PAGE TOP OF DOC Acheson, Eleanor D., Assistant Attorney General, Office of Policy Development
Baird, Edward R., Jr., Willcox & Baird
Kinnard, Stephen D., Esq., Skadden, Arps, Slate, Meagher & Flom
Klussmann, Wallace, Llano County, TX
Marzulla, Nancie G., President and Chief Legal Counsel, Defenders of Property Rights
Noone, Michael F., Catholic University of America, Columbus School of Law
Smith, Hon. Loren A., Chief Judge, U.S. Court of Federal Claims
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Acheson, Eleanor D., Assistant Attorney General, Office of Policy Development: Prepared Statement
Baird, Edward R., Jr., Willcox & Baird: Prepared Statement
Echeverria, John D., Professor, Georgetown University law Center: Prepared Statement
Page 148 PREV PAGE TOP OF DOC Kinnard, Stephen D., Esq., Skadden, Arps, Slate, Meagher & Flom: Prepared Statement
Klussmann, Wallace, Llano County, TX: Prepared Statement
Marzulla, Nancie G., President and Chief Legal Counsel, Defenders of Property Rights:
Noone, Michael F., Catholic University of America, Columbus School of Law: Prepared Statement
Smith, Hon. Lamar, a Representative in Congress from the State of Texas, and chairman, Subcommittee on Immigration and Claims: Prepared statement
Smith, Hon. Loren A., Chief Judge, U.S. Court of Federal Claims: Prepared Statement
(Footnote 1 return)
For a general discussion of the existing limbo government claims litigants face resulting from §1500 and the need for remedial legislation, see The Nash & Cibinic Report, September 1993, Notes 53, pp. 14144. The Supreme Court has indicated that any relief from the current impasse must come from Congress. Keene Corp. v. United States, 113 S. Ct. 2035, 2045 (1993) (''It may well be . . . that §1500 operates in some circumstances to deprive plaintiffs of an opportunity to assert rights that Congress has generally made available to them . . . But the 'proper theater' for such arguments . . . 'is the halls of Congress . . .' '').
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''Damages'' was defined as relief ''intended to provide a victim with monetary compensation for an injury to his person, property, or reputation''; ''specific relief'' was defined to include the recovery of a payment of money based on statutory or regulatory entitlement thereto. Bowen v. Massachusetts, 487 U.S. at 893.
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For related background material concerning application of equitable doctrines and fashioning of equitable relief, e.g. rescission or reformation of contract, in federal claims litigation, see Pauley Petro. Inc. v. United States, 219 Ct. Cl. 24, 3640, 591 F.2d 1308, 131517 (1979) (holding that Court of Claims could employ substantive equitable doctrines as an incident to adjudication of claims seeking monetary relief).
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The Administrative Procedure Act, 5 U.S.C. §706, provides the following scope and standards for judicial review of agency action:
To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall
(1) compel agency action unlawfully withheld or unreasonably delayed;
(2) hold unlawful and set aside agency action, findings, and conclusions found to be
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More recently, however, a panel of the Court of Appeals for the Federal Circuit indicated that both the Federal Circuit and the Court of Federal Claims employ review standards prescribed by the Administrative Procedure Act, 5 U.S.C. §706, when conducting judicial review of agency action. McCall Stock Farms, Inc., 14 F.3d 1562, 1567 (citing Foote Mineral Co. v. United States, 228 Ct. Cl. 230, 23334, 654 F.2d 81, 85 (1981), for proposition that the ordinary standards for review of agency action reflected in the APA, 5 U.S.C. §706(2), governed judicial review of agency action in the Court of Claims and citing Heinemann v. United States, 796 F.2d 451, 45455 (Fed. Cir. 1986), for proposition that the Federal Circuit and Court of Federal Claims both employ these same standards in reviewing agency action).
This more recent pronouncement is consistent with the review provision set forth in this bill.
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It is sometimes mistakenly assumed that the Administrative Procedure Act assigned judicial review of agency action to the district courts. The judicial review provisions of the APA (originally constituting section 10 of act of June 11, 1946, Pub. L. 79404; now set out, as amended, in 5 U.S.C. §701706) are emphatically not jurisdictional provisions. Califano v. Sanders, 430 U.S. 99, 10407 & n.6 (1977) (''None of the [APA judicial review] sections . . . is phrased like the usual grant of jurisdiction to proceed in the federal courts. . . . Furthermore, . . . there is no basis for concluding that Congress . . . actually conceived of the Act in jurisdictional terms. . . . We thus conclude that the APA does not afford an implied grant of subject-matter jurisdiction permitting federal judicial review of agency action.''); McGrath v. United States, 207 Ct. Cl. 978, 521 F.2d 1406 (1975) (''The Administrative Procedure Act is not a jurisdictional statute but merely outlines procedures for judicial review of administrative action.'')
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''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.'' U.S. Const., amend. V.