A Brief Guide to the “Written Determination” and “Aid” Provisions of H.R. 3824 i
James M. McElfish, Jr.
Environmental Law Institute, Washington, D.C.
H.R. 3824 - “The Threatened and Endangered Species Recovery Act,” introduced by Reps. Pombo and Cardoza on September 19, 2005 , adds two entirely new features to the Endangered Species Act (ESA). This analysis describes these features and then addresses their legal implications.
Written Determination
Section 13(d) of the bill would amend Section 10 of the ESA to create a process in which any “property owner” may at any time request the Secretary (of Interior or Commerce) to “make a written determination that a proposed use of the owner’s property” will not result in a “take” of protected species prohibited by Section 9(a) of the ESA. The request is “deemed to be sufficient” if it includes “the nature, the specific location, and the anticipated duration of the proposed use” and any “incidental take” of species that the property owner “reasonably expects to occur as a result of the proposed use.” The property owner may submit other information, but the Secretary may not require additional information. The Secretary “shall provide” a written determination whether the proposed use will result in a prohibited “take” no later than 90 days from the submission of the request. The requestor “may grant,” but is not required to grant, a written extension of this deadline. If the Secretary fails to provide a written determination within the period, the Secretary “is deemed to have determined” that the use is compliant, and any action taken by the property owner in “reasonable reliance” on a written determination of compliance or “deemed” compliance is not a violation of the Act. The “written determination” provision “shall not apply with respect to agency actions that are subject to consultation under section 7.”
Aid to Property Owners
Section 14 of the bill would amend Section 13 of the ESA, creating provisions for both discretionary “grants” and mandatory “aid” to private property owners. This analysis addresses only the mandatory “aid” provisions. Subsection (d) provides that the Secretary “shall award” cash to private property owners who receive a written determination that their “proposed use” would not comply with Section 9(a). The award is “no less than the fair market value” of the proposed use, if the use is foregone by the owner, the owner has filed a request for aid within 180 days of receiving the written determination, and the proposed use was not “as demonstrated by the Secretary, considered a nuisance based upon long-standing background principles of nuisance and property law as understood within the State in which the property is situated.” The term “fair market value” is defined to mean the “fair market value of the forgone use of the affected portion of the private property including business losses.” The Secretary is required to pay the sum within 180 days after the owner’s request, unless there are “unresolved questions regarding fair market value”; and the Secretary is required to make a “best and final offer” in the event of no agreement within 270 days from the initial date of the request. Ambiguities regarding fair market value “shall be resolved in favor of the property owner.” Aid fund liabilities carry over from year to year and must be paid “without further action on the part of the property owner.”
Analysis
Ripeness
The bill would allow a property owner to initiate the written determination process at any time for any proposed use. Unlike compensation procedures under the U.S. Constitution or eligibility requirements for federal funding under other government programs, there is no requirement that the “proposed use” be in place or “ripe” for review. For example, a proposed use might be inconsistent with zoning laws, or might consist only of a development concept plan that has not undertaken the permitting processes required to make it viable “but-for” the potential ESA determination. Under the bill, the Secretary would be compelled to commit staff and make determinations within 90 days for mere proposals rather than for projects that have demonstrated investment-backed expectations.
Threshold for requesting a determination
The adoption of a very low threshold for requesting written determinations (any property at any time with regard to any proposed use) is likely to lead to many thousands of requests annually. Requests could be filed for any development project, regardless of its actual potential for affecting endangered species, as the result specified in the bill will be either immunity or cash payment. Indeed, it is likely that lawyers who did not advise their clients to make a precautionary filing for every routine housing and commercial development, forestry activity, agribusiness, or other activities (even in areas not known to have endangered species) would be committing malpractice. Federal staffing for these reviews would need to be substantially increased; indeed, the availability of such review may involve federal officials in many more land issues than is currently the case.
Information required
The bill defines what information is “deemed to be sufficient” for a mandatory determination by the Secretary – viz. the “nature, the specific location, and the anticipated schedule and duration” of the proposed use, and the requestor’s own estimate of incidental take of listed species, if any. It authorizes the requestor to submit additional information, but does not authorize the Secretary to require additional information or to set specific standards for such information.
Immunity
The missing of the 90-day deadline or a written determination that a proposed action will not result in a take of species immunizes the owner against liability for a violation based on any action in reasonable reliance thereon. There is no provision for rescission of an erroneous determination, nor is it clear to what extent the determination offers immunity if the project changes in certain particulars – viz. increase or decrease in size, shifting of activities within a parcel, variation in timing.
Interaction with ESA Section 7
The bill is ambiguous as to the connection between these provisions and ESA section 7, which requires federal agencies to consult with the Secretary to determine whether an action authorized, funded, or carried out by the agency is likely to jeopardize the continued existence of a listed species. According to the bill, the written determination section “shall not apply with respect to agency actions that are subject to consultation under section 7.” But a conflict may arise if a private owner requests a written determination for a proposed use and only later applies for, or is requested to apply for a permit subject to section 7 consultation. Does the immunity created by the bill still apply? And to what extent would mitigation provisions required after consultation affect the owner’s entitlement to “fair market value” for the “foregone use” under the new section 13?
Fair market value
The new section 13 provides for payment of “not less than fair market value of the use that was proposed by the property owner” rather than for diminution in value of the property. This unusual drafting would not appear to allow the government to offset against this amount remaining values of the property if used for another potential use. Nor does the aid provision appear to include an offset for development costs that would have been incurred to develop the proposed use. Because of the way in which this section is drafted, a proposed housing development whose fair market value as a proposed use might be $10 million but whose planning, permitting and construction costs might have been $8 million, would be entitled to the former figure. (Indeed the bill compensates for any “business losses” in addition to compensation for the value of the use). The aid provision also does not address whether other factors (such as zoning, state regulatory requirements, or other provisions) that would have prevented the use mitigate or eliminate the federal government’s liability. None of these results are consistent with compensation provisions that apply even in an outright condemnation of property by the U.S. government. The bill gives the claimant’s valuation a “rebuttable presumption,” thus entitling it to weight as against an equivalent showing by the government; it also provides that all “ambiguities” regarding fair market value “shall be resolved in favor of the property owner.” This is unique in claims against the federal government and gives these claims a privileged status that not even constitutional claims of deprivations of property rights have in the Court of Federal Claims. Finally, the bill’s definition of “fair market value” requires compensation for foregone use of the “affected portion” of property, apparently requiring that it be considered in isolation from the parcel as a whole. This is the converse of federal law governing “just compensation” for constitutional impairments of property rights.
Claim against the treasury
The bill characterizes the mandatory obligation to pay property owners as “aid” and contains no provision for a judicial cause of action or clear coverage of such obligations under the Tucker Act, 28 U.S.C. 1491 (conferring jurisdiction and waiving sovereign immunity of the United States for certain claims against the government). The result is ambiguous and may produce substantial litigation, especially when disputes arise over fair market value, timeliness of payment, or whether payment is due. Statutory creation of a new claim-based compensation requirement is ordinarily considered by Congressional committees with jurisdiction over the federal judiciary.
Nuisance exception
The bill offers a limited exception from the obligation to pay if the Secretary has demonstrated that the foregone proposed use was “considered a nuisance based upon long-standing background principles of nuisance and property law.” Although this formulation superficially resembles that in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), the Lucas test for when even claims for total losses could be denied was when the limitation reflected background principles of law including property law and nuisance; the court also recognized other background principles barring compensation including the federal “navigation servitude” in Scranton v. Wheeler, 179 U.S. 141 (1900). The court remanded for the state to identify “background principles of nuisance and property law that prohibit the uses [Lucas] now intends in the circumstances in which the property is presently found.” 505 U.S. at 1031.The bill, however, makes the standard “nuisance,” and uses property law only as an apparent measure of nuisance.
i This analysis is provided for informational purposes only and does not represent a position of the Environmental Law Institute on the legislation.