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Could compensation be coming for property attached by the government?

Anyone who owns or plans to buy real estate should watch what happens to a key piece of legislation _ the Property Rights Act _ when the Senate takes it up as scheduled before the August congressional recess.

The bill (S. 605) attempts to deal with a fundamental real estate problem: When a federal government agency reduces the economic value of the property you own to fulfill a public purpose _ such as protecting the environment or saving endangered species _ shouldn't you have the right to be compensated for your economic loss? And shouldn't you be able to obtain redress without having to fight for years, at potentially huge personal legal expense, through the federal courts?

If you buy a few acres of dry woodland, and obtain all required local permits to build a retirement house on the parcel, should you be subject to an economic wipeout if the U.S. Army Corps of Engineers subsequently declares your property to be a "wetland," and prohibits construction or landscaping of any sort?

Under current federal law _ as interpreted by federal regulatory agencies _ the answer to questions like these is straightforward: The loss in value or use is the property owner's problem, not the federal government agency's. In fact, the property owner may well be subject to fines, prosecution or even a jail term if any disturbance of the land occurred, however innocently.

Under the Property Rights Act, the answer would be starkly different: If the federal agency's restriction on the use of your acreage after you bought it reduced its economic value, you'd have the right to be compensated for your loss, provided it represented a 33 percent decline in use or value of the affected portion of the property.

Here's how the bill would work for real estate owners facing potential administrative actions under either the Clean Water Act (wetlands) or the Endangered Species Act:

Federal agency personnel no longer would be allowed to enter privately owned property without written consent of the owners, and would have to share any data collected during their visits. You could as a property owner challenge the data, its accuracy or the method used to collect it.

Under current procedures, by contrast, regulators can enter your private property without your knowledge or permission, conduct soil tests, search for endangered plants or animals, and not tell you a thing about it until they hit you with a cease-and-desist order curtailing your use. Under the new bill, you'd at least be aware that a study of your property was under way, and you could bring in experts of your own to challenge the regulators' findings, before you got hit with a formal legal order restricting your rights as an owner.

You would get the right as an individual to challenge agencies' delineations under either the Endangered Species Act or the Clean Water Act. For example, if you didn't think your property should be included in the delineated habitat for some rare beetle, you'd have the opportunity to appeal the regulators' decision before it took effect. Similarly, if you found it hard to believe that your bone-dry back yard was about to be included in a wetlands delineation, you'd have the ability to challenge the agency on the facts.

Once hit with a restriction you think devalues the affected portion of your property by 33 percent or more, you'd have 90 days to file a compensation claim with the regulatory agency. The government would then have 180 days to dispute your claim, or to offer to buy the affected property from you. You would have another 60 days to decide what to do: accept the offer or reject it and seek arbitration.

So what's the outlook for the Property Rights Act and a less-comprehensive companion bill that's already passed the House? Not rosy at the moment. The Senate bill has the support of between 51 and 54 members _ primarily Republicans, and more than enough to pass the measure if a vote were taken. But the bill faces a likely filibuster on the floor by Senate Democrats who think that forcing agencies to compensate property owners would wreck the budgets of environmental regulators like the Corps of Engineers and the Environmental Protection Agency (EPA), and thereby discourage vigorous enforcement of environmental laws.

And just in case the filibuster fails, President Clinton may be waiting in the wings. He opposes agency compensation of real estate owners hurt by regulatory actions, and may well veto any version of a 1996 property rights reform bill that makes it to his desk.

But this is an election year, and the latest national poll on the subject is just sinking in on Capitol Hill: 64 percent of Americans think property owners should be compensated for regulatory takings, 28 percent think they shouldn't, according to a poll commissioned by the Competitive Enterprise Institute, a non-partisan, free-enterprise oriented think tank.

Washington Post Writers Group

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