A Critique of the Takings Executive Order in the Context of Environmental Regulation

Jerry Jackson and Lyle D. Albaugh

Editors' Summary: On March 15, 1988, President Reagan signed Executive Order 12630 entitled "Governmental Actions and Interference With Constitutionally Protected Property Rights." In the July issue of ELR, Roger Marzulla, head of the Land and Natural Resource Division of the U.S. Department of Justice, described the genesis of the takings Executive Order and how it might affect environmental regulation. Mr. Marzulla characterized the Order as a logical response to two 1987 regulatory takings decisions by the Supreme Court and concluded that the Order provides a systematic method for agencies to account for the takings implications of their actions without necessarily hindering vigorous enforcement of environmental laws. The authors of the two Dialogues that follow take a different view of the Executive Order. They assert that the Order imposes on federal agencies an expanded view of takings law not warranted by Supreme Court decisions, will not achieve its stated purposes, and will make environmental regulation more difficult.

[18 ELR 10463]

On March 15, 1988, the White House released Executive Order 12630 entitled "Governmental Actions and Interference With Constitutionally Protected Property Rights."¹ The Executive Order purports to address the issue of whether federal regulatory action affecting private property results in a taking or inverse condemnation subject to the Just Compensation Clause of the Fifth Amendment. The Executive Order describes its two purposes as (1) ensuring that federal agencies act "with due regard for the constitutional protections provided by the Fifth Amendment," and (2) reducing "the risk of undue or inadvertent burdens on the public fisc resulting" from agency action.²

The Executive Order fails its first purpose because it does not accurately describe current takings law as articulated by the Supreme Court. In fact, the document seeks to impose on federal agencies a view of takings law that is well beyond the point reached by the Supreme Court on inverse condemnation. Therefore, the Executive Order cannot ensure that the agencies act with due regard for the Just Compensation Clause, because it asserts that certain actions are or may be takings when in fact such actions have not been found to be takings by the Supreme Court. Also, the Executive Order implies that the Fifth Amendment creates a constitutional protection of private property against inverse condemnation.³ In contrast, the Supreme Court has held that the Just Compensation Clause merely ensures compensation for such takings and does not bar inverse condemnation.⁴

[18 ELR 10464]

As for the second purpose, the Executive Order never defines or describes "undue or inadvertent burdens on the public fisc" resulting from agency actions that may result in takings. Unless a federal statute provides otherwise, federal agencies are limited to the factors prescribed in their authorizing statute and regulations when making decisions on the application of federal regulatory authority to private property.⁵ For example, whether a permit denial may be construed by a court to effect a taking is not a relevant factor in an agency's decision to grant or deny the permit, absent express legislative authority making it a factor.⁶ As a result it is logical to conclude that agency actions that may be construed as takings are not "undue or inadvertent" so long as they are not arbitrary, capricious, unlawful, or outside of the authority granted by the enabling legislation.⁷ Of course, if agency regulatory actions fail to meet the test of the Administrative Procedure Act (APA)⁸ (if applicable) or they are beyond the scope of the agency's authority, they are subject to invalidation by a federal court, which would obviate any claim of a taking.⁹ Therefore, regulatory actions that may result in takings are either authorized and valid, in which case they are neither "undue nor inadvertent," or they are not, in which case they cannot withstand judicial scrutiny and, therefore, would not result in takings.¹⁰

Since neither stated purpose is valid or logical, one can conclude that the Executive Order's true purposes are unstated: to expand the circumstances in which a taking will be considered to have occurred and to "chill" the agencies from making regulatory decisions that may be construed as takings under existing inverse condemnation law as well as the expanded view of this law reflected in the Executive Order. Indeed, the Executive Order literally requires agencies to examine all regulatory actions that affect private property to consider potential takings.¹¹ If the agencies thus apply the Executive Order, even day-to-day operations, such as routine consideration of permit applications that have no apparent takings implications, would become enmeshed in a review that is essentially judicial in nature. However, the Executive Order goes on to suggest that the delay engendered by the Order may itself raise the liability for a taking.¹² The document appears to be a parting legacy from an Administration hoping to impose its regulatory philosophy on future administrations.

Expansion of Takings Law

The Executive Order is intended to respond to two takings cases decided by the Supreme Court in 1987: First English Evangelical Lutheran Church of Glendale v. County of Los Angeles; and Nollan v. California Coastal Commission.¹³ The general thrust of the Executive Order reflects an interpretation of these cases as new takings law. However, to the extent these cases simply reiterate preexisting takings law there is no need for the Executive Order, because nothing has changed. To the extent some new takings law was arguably articulated in these cases, the Executive Order does not accurately reflect the holdings in these cases.

Diminution in Value

The Executive Order states that "[a]ctions undertaken by governmental officials that result in a physical invasion or occupancy of private property, and regulations imposed on private property that substantially affect its value or use, may constitute a taking of property."¹⁴ The reference to physical invasion presents nothing new. In fact, physical invasion was first recognized by the Supreme Court as a type of inverse condemnation over 100 years ago and was the only kind of implied taking so recognized for 50 years.¹⁵

The assertion that "regulations imposed on private property that substantially affect its value or use … may constitute a taking of property" is an example of the subtle way in which this Executive Order seeks to undermine [18 ELR 10465] regulatory protection by chilling agency action.¹⁶ Strictly speaking, this excerpt may be accurate because of the word "may." However, inclusion of the same word strips this assertion of any value to agencies in determining whether a permit denial or regulation will effect a taking. Worse still, the Executive Order may be attempting to create a new, vague factor for finding a taking, and one that the Supreme Court has never articulated. Thus the Executive Order is calculated to gratuitously raise doubts about agency action as a taking without providing any guidance for assessment of whether a taking has occurred in the described situation and without being based on established takings law.

The next sentence in the Executive Order suffers from similar defects: "Further, governmental action may amount to a taking even though the action results in less than a complete deprivation of all use or value, or of all separate and distinct interests in the same private property and even if the action constituting a taking is temporary in nature."¹⁷ The reference to a taking through "less than a complete deprivation of all use or value" is seriously misleading because it states the reverse of Supreme Court holdings. The Supreme Court has expressly "reject[ed] the proposition that diminution in property value, standing alone, can establish a 'taking'…."¹⁸ The Court has also described a taking as occurring if a regulation "denies an owner economically viable use of his land…."¹⁹ Even complete elimination of "a beneficial use to which individual parcels had previously been devoted" does not constitute a taking.²⁰ In fact, the Court has rejected a takings determination in cases where the remaining value was only 13 to 25 percent of the unregulated value.²¹ These cases strongly imply that a taking is precluded if any economically viable use remains.²²

The same sentence is directly incorrect when it conjoins less than complete deprivation with the principle of temporary takings. First Evangelical, which established the principle of temporary takings, expressly limited its holding to circumstances "where the government's activities have already worked a taking of all use of property…."²³

Public Health and Safety Regulation

The Executive Order states that "[a]ctions to which this Order applies asserted to be for the protection of public health and safety … should be undertaken only in response to real and substantial threats to public health and safety, be designed to advance significantly the health and safety purpose and be no greater than is necessary to achieve the health and safety purpose."²⁴ There is no basis in the 1987 trilogy of Supreme Court takings cases for the assertion that actions for protection of health and safety must be limited to "real and substantial threats" and designed "to advance significantly" such protection. The standard as articulated by the Court in the past and in these three cases is actually much broader.

Neither Firrst English nor Nollan holds that the threat to the public health and safety must be "real and substantial." Instead, the Court in Keystone Bituminous Coal Association v. DeBenedictis restated well-established law that a taking occurs if the regulation "does not substantially advance a legitimate state interest."²⁵ The Court gave no indication that a threat to public health or safety must rise to the level of "substantial" to be considered a legitimate state interest. Nollan repeats the exact same language and explains, "Our cases have not elaborated on the standards for determining what constitutes a 'legitimate state interest'…. They have made clear, however, that a Broad range of governmental purposes and regulations satisfies these requirements."²⁶

The Executive Order is misleading because it suggests that a regulation or action that is arguably undertaken to protect health and safety must "be designed to advance significantly the health and safety purpose" or else it will be deemed a taking. Instead, the action need only "substantially advance" a "broad range of governmental purposes." Moreover, the Executive Order uses the word "significantly" rather than "substantially." It may be argued that "substantially" does not connote as high a standard as "significantly" but in any event the Executive Order provides no explanation for why it uses a different term than the one used by the Supreme Court. The Order does not explain whether a different standard is actually intended and, if so, the nature of the new standard, despite the Executive Order's purported intent of providing "guidance."

Even correctly stated, this standard is not new. That an ordinance must substantially advance a legitimate state interest was stated eight years ago by the Supreme Court in Agins v. City of Tiburon, citing a 1928 case, Nectow v. Cambridge.²⁷ Indeed, in Nectow the Supreme Court merely stated that an ordinance must "bear a substantial relation to the public health, safety, morals, or general welfare."²⁸ There is no apparent need to issue an executive order reminding the agencies of a 60-year-old case, especially when the Order does not accurately reflect the statement in that case. Besides, the enabling statute will normally provide the necessary public interest — protection of the environment or public health. If the agency's regulations are consistent with the statute's purpose, then the public interest test is met.

A clue to the origin of this limitation on health and safety regulations is provided by the Guidelines and Appendix [18 ELR 10466] promulgated by the U.S. Department of Justice pursuant to the Executive Order.²⁹ The Guidelines appear to derive the limitation on health and safety regulations from the so-called nuisance exception to the requirement for just compensation. The nuisance exception was recently restated in Keystone:

The special status of this type of state action [i.e., restraint of public nuisance] can also be understood on the simple theory that since no individual has a right to use his property so as to create a nuisance or otherwise harm others, the state has not "taken" anything when it asserts its power to enjoin the nuisance-like activity.³⁰

Although this language is clearly intended to narrow the circumstances in which regulatory action will result in a judicially determined taking, the Executive Order transforms it into a limitation on when agencies may regulate for health and safety purposes.

This problem is compounded by the Order's additional imposition of evidentiary requirements that may be stricter than those imposed by Congress in the enabling legislation or the APA or by the courts in reviewing agency action. For example, the Guidelines state that

the health and safety risk posed by the property use to be regulated must be … more than speculative. It must present a genuine risk of harm to public health and safety and the claim of risk of harm must be supported by meaningful evidence, in light of available technology and information, that such harm may result from the use.³¹

Further, the agencies "should" consider the "certainty that the property use to be regulated poses a health and safety risk in the absence of government action" as well as the "severity of the injury to public health and safety should the identified risk materialize, based on the best available information in the field involved."³²

In contrast, agency action is normally subject to a much lower standard of proof of the relationship between the evidence of potential harm and the regulatory cure: "[T]he agency must examine the relevant data and articulate a satisfactory explanation for its action including a 'rational connection between the facts found and the choice made.'"³³ At best, the Executive Order merely confuses the level of proof necessary for agency actions to withstand legal challenge. At worst, the Order seeks to limit regulatory actions to those meeting the higher level of proof notwithstanding the APA or relevant provisions of the applicable authorizing statute.

The Executive Order also seems to erect a higher barrier for health and safety regulatory actions than for other types of regulatory actions. The required showings of "real and substantial threats" and "certainty of risk" seem to apply only to regulatory actions based on public health and safety; no similar requirements are imposed on other types of regulatory actions. As a result, agencies may be tempted to premise their regulatory actions on other purposes to avoid the restrictions of the Executive Order. This would indeed be an ironic result, because agencies concerned about potential takings might previously have been tempted to do just the opposite to take advantage of the nuisance exception, which itself is supposedly the source of the Order's restrictions on health and safety regulations.

This all presupposes that the Executive Order is intended to force agencies to tailor regulatory actions precisely to the level of provable contribution to the targeted harm. This is conceded by the Order's requirement that the regulatory action must "be no greater than is necessary to achieve the health and safety purposes."³⁴ Given the inherent imperfectibility of risk assessment, especially in the area of human health, this standard may be intended to encourage agencies to err in favor of underregulating a health threat rather than overregulating it. At any rate it is in direct conflict with Keystone: "That a land use regulation may be somewhat overinclusive or underinclusive is, of course, no means for rejecting it."³⁵ The Supreme Court's approach is preferable because it leaves the decision of regulatory parameters up to Congress. Of course, Congress is free to delegate it to the agencies. However, in some situations, such as stratospheric ozone depletion, Congress may elect to overregulate before regulation can be precisely tailored to contribution, since it may be too late to take effective measures once the level of contribution is precisely determined.³⁶ Nonetheless, the Executive Order seems to be using the Just Compensation Clause as an excuse to impose a regulatory philosophy on the agencies notwithstanding different determinations that may have been made by Congress and reflected in enabling legislation.

Finally, the Executive Order ignores the fact that the failure of agency regulations to meet the standards imposed by the Order means, at most, that the agencies supposedly cannot invoke the nuisance exception. That fact alone does not transform a regulatory action into taking; it just removes the availability of an exception. Nonetheless, the Order's wording is such that it precludes agency actions based on health and safety considerations because they supposedly fail to meet the nuisance exception regardless of whether they would otherwise effect a taking under standards articulated by the Supreme Court.³⁷

[18 ELR 10467]

Temporary Taking

The Executive Order states that "a delay in processing may increase significantly the size of compensation due if a taking is later found to have occurred."³⁸ The Order also states that "[w]hen a proposed action involves a permitting process or any other decision-making process that will interfere with, or otherwise prohibit, the use of private property pending the completion of the process, the duration of the process shall be kept to the minimum necessary."³⁹ The Executive Order suggests that mere "delay" in processing a permit application is a factor in determining a taking or just compensation. These statements presumably react to First English, a decision involving unusual circumstances and a narrow holding.

First English involved an "interim" county ordinance in California prohibiting structures on land owned by a church in an area that had suffered severe flooding.⁴⁰ The landowner challenged the validity of the ordinance and sought compensation for the loss of use during the period the ordinance was in effect. The state trial court dismissed this portion of the suit under the theory that the state could elect to disown the ordinance if it were found to have created a taking.⁴¹ Therefore, the landowner could not state a claim for relief for loss of use, regardless of the disposition of the challenge to the ordinance's validity, or presumably could not do so until the county had the opportunity to abandon the ordinance if a taking were found. The state court of appeals affirmed.⁴²

The Supreme Court reversed on the narrow issue of whether a litigant may state a claim for an alleged taking through an absolute deprivation of all use of property by regulation, even though the loss of use may be temporary. The Court expressly declined to rule whether a taking had occurred under these alleged facts.⁴³ When the case is limited to only the result reached by the Supreme Court, its holding is extremely limited, hardly surprising, and largely irrelevant to the regulatory activities of most federal agencies.

For example, Federal Water Pollution Control Act (FWPCA) § 404,⁴⁴ in conjunction with § 301 of the Act,⁴⁵ prohibits the discharge of dredged or fill material into "navigable waters" absent a § 404 permit. Although unpermitted discharges are banned, the statute does not contain an absolute ban on discharges of such materials; they simply must be accompanied by a permit which the U.S. Army Corps of Engineers annually issues by the thousands.⁴⁶ Sections 301 and 404 do not ban other activities in or affecting "navigable waters," and do not ban any activities outside of "navigable waters" even on parcels or tracts containing such waters.⁴⁷ In contrast, the First English ordinance banned all structures on all of the property in question with no provision for permitting any such structures.⁴⁸ The Court held that the landowner was entitled to state a claim alleging that the ordinance constituted a taking.⁴⁹ The Court has also held in a previous case that the mere assertion of § 404 jurisdiction over privately owned wetlands cannot be challenged as a taking.⁵⁰

Since the circumstances presented in First English are unlikely to ever occur in the § 404 regulatory program, and may not constitute a taking in any event, there seems no reason why that program should be directed to keep "the duration of the [permitting] process to the minimum necessary."⁵¹ First English directly repudiated this concern as well as the Executive Order's claim that "delay in processing may increase significantly the size of compensation due,"⁵² by excluding from its ruling "the quite different questions that would arise in the case of normal delays in obtaining building permits, changes in zoning ordinances, variances, and the like which are not before us."⁵³

Conditions

The Executive Order makes its broadest leap beyond existing takings law in the following directive:

Executive departments and agencies shall adhere, to the extent permitted by law, to the following criteria when implementing policies that have takings implications:

(a) When an Executive department or agency requires a private party to obtain a permit in order to undertake a specific use of, or action with respect to, private property, any conditions imposed on the granting of a permit shall:

(1) Serve the same purposes that would have been served by a prohibition of the use or action; and

(2) Substantially advance that purpose.⁵⁴

Although this language is presumably based on the Nollan decision, there is in fact no legal basis for so restricting a regulatory agency's legislatively created power to impose conditions on permits. The Nollan decision created no new law relating to agencies' authority to condition permits "when implementing policies that have takings implications," or otherwise.

Nollan shares the same characteristics as First English in that the only new takings principle established by the case was exceedingly narrow and not particularly surprising. In addition, the new principle would seem to have little if any relation to most federal regulatory programs. Stripped of its dictum, Nollan established nothing more than the principle that "a classic right-of-way easement" is "a permanent physical occupation."⁵⁵ Once this point was reached, a compensatory taking seemed inevitable because "[w]hen [18 ELR 10468] faced with a constitutional challenge to a permanent physical occupation of real property, this Court has invariably found a taking,"⁵⁶ an observation made by the Court nearly six years before the promulgation of the Executive Order.

Many observers, presumably including the authors of the Executive Order, have perceived Nollan as establishing new restrictions on the ability of regulatory agencies to impose conditions on permits the denial of which might otherwise constitute a taking. In reality, the case actually achieved just the opposite: the Court created an exception to the rule that a permanent physical invasion "invariably" creates a taking. The Court impliedly held that if denial of the permit would not constitute a taking then conditioning a permit to "serve] [ the same legitimate police-power purpose as a refusal to issue the permit would not constitute a taking."⁵⁷ As long as the regulatory agency established that the condition "serves the same end … advanced as the justification for the prohibition," the agency may extract a permanent physical invasion as a permit condition and do so free of a taking.⁵⁸

This is a rather remarkable result because earlier the Court had held that

when the "character of the governmental action," … is a permanent physical occupation of property, our cases uniformly have found a taking to the extent of the occupation, without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner.⁵⁹

Never mentioned in the Executive Order's "guidance" to the regulatory agencies is the simple fact that Nollan, seems to hold that an agency may impose a physical invasion free of compensation even though the original prohibition itself, refusal to permit construction of a new dwelling, for example, did not involve such an invasion. Moreover, the agency can achieve through permit condition what it could not do through outright seizure.⁶⁰

Rather than acknowledge the true holding in Nollan, the Executive Order attempts to impose new hobbles on the conditioning of permits in any regulatory scheme that "implement[s] licensing, permitting, or other condition requirements or limitations on private property use…."⁶¹ Although the Nollan decision dealt only with a condition that required a permanent physical invasion, the Executive Order purports to impose the supposedly limiting criteria of Nollan on all permit conditions of any nature "when implementing policies that have takings implications."⁶² Worse still, the Executive Order requires not only that the condition serve the same purpose as the prohibition of the regulated activity but also gratuitously adds the requirement that the condition itself "substantially advance that purpose."⁶³ This last requirement is totally baseless under Nollan. Because the Supreme Court found that the permit condition at issue did not meet even the nexus requirement arguably articulated in Nollan, any further narrowing of the standard by adding the word "substantially" would have been dictum. The Nollan case went no further than to hold that the condition at issue "utterly fails to further the end advanced as the justification for the prohibition,"⁶⁴ which is a far cry from erecting a requirement that the condition "substantially advance" a particular purpose. The language in the Executive Order is found nowhere in the Court's opinion, not even in dictum.⁶⁵

Therefore, a Supreme Court decision that actually held that an uncompensated physical invasion may be effected in some circumstances through a permit condition has been tortured into a rule that all conditions in permits subject to the Order, whether or not they constitute physical invasions, are impermissible unless they meet a standard that was never articulated in that decision.

The Guidelines promulgated by the Justice Department take a somewhat different approach to this issue. Instead of imposing requirements on the criteria for conditioning permits, the Guidelines attempt to warn of the situations in which a taking may be found:

C. When implementing a regulatory policy or action and evaluating the takings implications … agencies should consider the following special factors:

1. Permitting Programs

….

[A] condition on the granting of a permit risks a takings implication unless:

a. The condition serves the same purpose that would be served by a prohibition of the use or action; and

b. The condition imposed substantially advances that purpose.⁶⁶

Thus the Guidelines seem to leave these criteria open for the agency's consideration rather than simply making them mandatory limitations on the agency's power to condition permits. However, even the Guidelines provide no realistic guidance for the agencies because they reflect the Executive [18 ELR 10469] Order's incorrect reading of the actual holding in Nollan, as discussed above. For that reason they fail to dispel the chilling effect created by the Executive Order.

Proportionality

The Executive Order also imposes the following restriction on regulatory agencies: "When a proposed action would place a restriction on a use of private property, the restriction imposed on the use shall not be disproportionate to the extent to which the use contributes to the overall problem that the restriction is imposed to redress."⁶⁷

Taken literally this language creates an obviously severe and significant limitation on regulatory agencies' authority to deny permits. For example, the Corps' § 404 regulations require an assessment of cumulative impacts in determining whether to permit the destruction of wetlands.⁶⁸ Therefore, an application to destroy a discrete parcel of wetlands may be denied or conditioned on the ground that too many similar wetlands or too many wetlands in the same region have already been destroyed. This would be true regardless of whether the applicant had made any historic contribution to "the overall problem [i.e., wetlands destruction] that the restriction [i.e., permit denial] is imposed to redress." Indeed, many federal statutes intended to protect water quality, endangered species, and marine mammals, for example, are premised on the principle that historic losses of these resources are not in the national interest and that future activities affecting these resources will be subject to stricter federal regulation in an effort to halt historic trends.⁶⁹

The Executive Order language, however, can be read to provide an argument that a landowner whose project is subject to restriction under the Endangered Species Act,⁷⁰ for example, is bearing a disproportionate burden if a species has been depleted through no fault of the landowner's and if the landowner's proposed activity will make only an incremental contribution toward further depletion.⁷¹

The same would presumably be true for wetlands destruction. For example, suppose a person applies for a § 404 permit to develop a 50-acre tract of wetlands located in a state where 100,000 acres of wetlands remain (i.e., the permit would allow destruction of .05 percent of remaining wetlands). The applicant could argue that if the Corps and the Environmental Protection Agency (EPA) fail to grant permission to destroy all but .025 acres (.05 percent of the tract at issue), the applicant's burden of protecting wetlands will be greater than the applicant's proportion of the destruction of all remaining wetlands in the state (.05 percent which equals .025 acres).⁷² In other words, the applicant could argue that the proportion of wetlands to be preserved on the discrete tract should be no greater than the applicant's proportional contribution to destruction of all remaining wetlands. Since Congress often cites historic losses as a justification for legislation and since agency regulations or practice often consider cumulative impacts in making discrete regulatory decisions, the Executive Order may put a significant limitation on the agencies' power to comply with congressional intent and their own regulations.

Aside from separation of powers and administrative procedure questions raised by this language, the Executive Order's language is also not premised on any recognizable principle yet established in takings law. In fact it appears to directly contradict Keystone: "The Takings Clause has never been read to require the States or the courts to calculate whether a specific individual has suffered burdens under this generic rule in excess of the benefits received."⁷³

The directive in the Executive Order is presumably derived from the following observation in Nollan: "If the Nollans were being singled out to bear the burden of California's attempt to remedy these problems, although they had not contributed to it more than other coastal landowners, the State's action, even if otherwise valid, might violate either the incorporated Takings Clause or the Equal Protection Clause. One of the principal purposes of the Takings Clause is 'to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.'"⁷⁴

Taken at face value, this language from Nollan appears to contradict the previously quoted statement in Keystone, even though both cases were decided in the same Term.⁷⁵ However, the Nollan majority was quick to follow the quoted statement with the observation that the theory of proportional contribution "is not the basis of the Nollans' challenge here."⁷⁶ Therefore, the purported basis for the Executive Order is once again dictum.

Finally, the proportionality theory rests on a statement of philosophy that provides no standards or guidance for [18 ELR 10470] determining whether any particular governmental action is a taking. The idea that some landowners should not be forced to bear what all of society should bear is just as useless for this purpose as Justice Holmes' famous assertion that "if regulation goes too far it will be recognized as a taking."⁷⁷ While this abstract statement might spawn no disagreement, it also provides no guidance as to precisely how far is "too far," particularly in any individual situation where a line must be drawn. The Court has recognized this problem posed by the burden-shifting homily quoted in Nollan:

[T]his Court, quite simply, has been unable to develop any "set formula" for determining when "justice and fairness" require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons…. Indeed, we have frequently observed that whether a particular restriction will be rendered invalid by the government's failure to pay for any losses proximately caused by it depends largely "upon the particular circumstances [in that] case."⁷⁸

Thus the Supreme Court believes that the philosophical generality quoted in Nollan provides an unworkable test for establishing a taking. The Executive Order, however, has transformed it into a prohibition of agency action with potentially severe consequences for regulatory protection of natural resources.

Public Benefit

If the Executive Order were truly intended to provide guidance to agencies on takings law, then it would have reminded the agencies of a countervailing philosophical statement frequently employed by the Supreme Court. For example, in one case the Court found no taking because

[t]his interference with the property rights of an employer arises from the benefits and burdens of economic life to promote the common good and, under our cases, does not constitute a taking requiring Government compensation.⁷⁹

Thus, while individuals should not alone bear burdens that should be borne by the public as a whole, everyone can be expected to bear burdens to promote the public good. No one, least of all the Supreme Court, has been able to draw a line between this principle and the notion of proportionality or use them to establish whether a taking has occurred in any situation.⁸⁰ Nonetheless, the Executive Order selectively requires the agencies to obey one of these general homilies while ignoring the other.

Contribution

The Guidelines create a similar but slightly different problem for agencies by asserting that "[t]he less direct, immediate, and demonstrable the contribution of the property-related activity to the harm to be addressed, the greater the risk that a taking will have occurred."⁸¹ The Appendix to the Justice Department Guidelines does not identify any legal authority for this particular theory.

Most environmental regulatory agencies can probably ignore this "advice" because showing a direct contribution from their action will not be a problem. Denying a permit to discharge pollutants into water or air, to destroy a wetland, or to take marine mammals or endangered species should meet this test with ease. However, a more substantial problem is presented by statutes that appropriately attempt to grapple with more indirect but nonetheless harmful environmental impacts. Examples include nonpoint source discharges subject to the 1987 amendments to the FWPCA⁸² and the provisions of the Endangered Species Act that mandate protection of wildlife habitat as distinguished from prohibitions against the taking of individual animals.⁸³ Assessing a proposed use of private property to determine its indirect impacts on an endangered species population due to alteration or removal of habitat is already a complex biological and political problem. The Guidelines needlessly exacerbate this complexity by gratuitously injecting the element of a potential taking of private property without identifying any legal authority for this criterion. The same problem may also arise when the Corps or EPA denies or vetoes a § 404 permit on the ground that destruction of a particular wetland has unacceptable adverse cumulative effects on wildlife habitat.

Under statutes such as the Endangered Species Act, for example, an agency should ignore this "guidance," concentrate on the responsibilities mandated by Congress in the Act, and let the courts determine whether the agency's biological judgment based on the best "scientific and commercial data available"⁸⁴ affected a taking under the tests so far articulated by the Supreme Court, not those of the Justice Department.

Reciprocity

As discussed, the Supreme Court's general statements about proportionality of burdens are counterbalanced by general statements focusing on the "public good" to be derived from regulation of property. The Supreme Court also cites a related general concept of reciprocity as articulated in Keystone: "While each of us is burdened somewhat by such restrictions, we, in turn, benefit greatly from the restrictions placed on others."⁸⁵ The Executive Order characteristically fails to remind the agencies to take this principle into account when evaluating a potential taking. The Guidelines refer to reciprocity but restate the concept by requiring agencies to determine "[w]hether the proposed … action [18 ELR 10471] carries benefits to the private property owner that offset or otherwise mitigate the adverse economic impact of the proposed policy or action…."⁸⁶ The Justice Department language implies that this principle is applicable only if the reciprocal benefit directly offsets economic impacts.

Thus the Supreme Court might consider the benefit to a landowner's health from clean air regulations that have led to denial of a permit for a smokestack necessary for construction of the landowner's proposed industrial plant, while the Guidelines seem to require a showing that this beneficial impact must offset the economic impact of permit denial to the landowner. The Guidelines establish a test that may make it difficult if not impossible for an agency not to find a taking. The Guidelines do not indicate whether a negative response to this determination (i.e., no offset can be demonstrated) implicates a taking. However, a landowner could cite the Guidelines and make such an argument against the United States in an inverse condemnation case. This would certainly be an ironic result given the origin of the reciprocity concept as militating against a taking finding.

Takings Implication Assessment — A Shot in the Dark

The Guidelines require the agencies to perform a "takings implication assessment" (TIA) which must include "[a]n assessment of the likelihood that the proposed action or policy may effect a taking" and "[a]n estimate of the potential financial exposure to the government should a court find the … action to be a taking."⁸⁷ The administrative burden placed on the agencies in complying with this requirement is obvious. Indeed, compliance may cause the Corps and EPA to run afoul of the FWPCA's requirement for the "drastic reduction of paperwork …, and the best use of available manpower and funds, so as to prevent needless duplication and unnecessary delays…."⁸⁸

More importantly the Guidelines seem to impose an impossible task because the Supreme Court has repeatedly conceded its inability

"to develop any 'set formula' for determining when 'justice and fairness' require that economic injuries caused by a public action be compensated by the government … Rather, [the Court] has examined the 'taking' question by engaging in essentially ad hoc, factual inquiries that have identified several factors … that have particular significance." … These "ad hoc, factual inquiries" must be conducted with respect to specific property, and the particular estimates of economic impact and ultimate valuation relevant in the unique circumstances.⁸⁹

Neither the Executive Order nor the Guidelines provide any clue to the agencies of how to make such an assessment in light of the "ad hoc" nature of even the Court's own analysis.

If, for example, the Corps or EPA proposes regulations or legislation intended to reduce wetlands destruction, they are required by the Guidelines to determine whether such regulations may affect a taking and what it will cost. Given the fact that approximately 100 million acres of wetlands still exist in the lower 48 states,⁹⁰ the task seems impossible, especially if the agencies are in no position to determine precisely what potential plans to develop these wetlands may be affected by such regulations. Moreover, even if they could answer that question, they would still be left with the task of "engaging in essentially ad hoc, factual inquiries [that] … must be conducted with respect to specific property, and the particular estimates of economic impact and ultimate valuation relevant in the unique circumstances." Even if the agencies could perform this task, it requires the agencies to also make essentially ad hoc decisions as to whether the Supreme Court would find a taking in any particular instance, which is probably impossible in view of the total lack of coherence exhibited by the Court's taking decisions over approximately the last 10 years.

The Executive Order presumably does not expect exact estimates of either the amount of takings or the total costs. But given the scope of the task and the virtual lack of meaningful standards it is unlikely that any useful information will be generated by this procedure, which of course raises the question of why bother to make the Corps or EPA engage in a useless paper chase. On the other hand, the sheer size and impossibility of the task may well discourage eitther agency from even attempting to propose regulations to further tighten controls on wetlands destruction.

One could of course speculate that this is in fact the real purpose of the Executive Order, since development of useful information does not seem likely. Lest there be any doubt on this score, the Guidelines make it clear that agencies proposing to reduce impacts on private property are exempt from the burdensome bureaucratic requirements of the Executive Order.⁹¹ Therefore, agencies have an incentive to propose regulations that weaken regulatory control over wetlands destruction, for example, rather than vice versa.

The same problem will frustrate agency attempts to assess takings potential in the application of regulations to an individual parcel of property. Even the Supreme Court must engage in "ad hoc" factual inquiries and it concedes the absence of any "set formula." What will constitute a taking depends largely if not entirely on the reactions of at least five of the Justices to the "unique circumstances" presented by any particular regulatory action. The Executive Order fails to acknowledge this problem and the Guidelines fail to provide the agencies with any solution. There is no reason to assume that the agencies will be able to anticipate the Supreme Court's reaction and thus no reason to have any confidence in the agencies' guesswork.

Impact of the Takings Implication Assessment

Once an agency has plowed through the Executive Order [18 ELR 10472] and Guidelines and prepared a TIA, the question arises of what to do with it. Where does this document fit into the agency's ordinary decisionmaking process in ruling or commenting on permit applications or proposing regulations or legislation? More important, what is supposed to be the impact on agency decisionmaking if the TIA concludes that a taking will occur?

The Guidelines superficially disclaim any intent to "prevent] [ an agency from making an independent decision about proceeding with a specific policy or action…."⁹² But this disclaimer rings hollow when the Guidelines also require that the TIA

shall be made available to the agency decisionmaker … to ensure that the decisionmaker may make a meaningful use of [it] in formulating his or her decision…. The TIA is to be integrated … into normal decisionmaking processes.⁹³

In addition, agencies are directed to "minimize the potential financial impact of takings by appropriate planning and implementation."⁹⁴ It is hard to believe that the agencies will still be able to reach independent decisions about regulatory actions in the face of such language when the TIA concludes that a taking will occur and estimates the cost thereof. If the agencies are to make "meaningful use" of the analysis and "minimize potential financial impact" they will need to think twice about denying the permit or promulgating the regulations.

The disclaimer is also unconvincing because the Executive Order and the Guidelines never remind the agencies that even if a potential for taking is present they can nonetheless "just say no" to the permit applicant. This reminder was conspicuously absent from these documents until it finally appeared in the last version of the Appendix:

The Guidelines … do not … preclude actions or policies which the decisionmaker determines necessary to meet [statutory] obligations. In those circumstances, the TIA process will identify the takings implications, if any, of the necessary governmental conduct while permitting that conduct to go forward.⁹⁵

This begrudged acknowledgement of Congress' role in administrative decisionmaking is tempered by the Guidelines, which indicate that action such as permit denial or tougher regulations should be taken only as a last resort:

In those instances in which a range of alternatives are [sic] available, each of which would meet the statutorily required objective, prudent management requires selection of the least risk alternative. In instances in which alternatives are not available, the takings implications are noted.⁹⁶

Where the circumstances or Congress has provided a range of alternatives, the potential for a taking will now govern the decisionmaking, notwithstanding Congress' failure to make it a factor and the inability of anyone to determine what will be a taking absent Supreme Court review.

Because of the technical complexity of many environmental issues, Congress tends to give the agencies broad discretion in applying the statutes and promulgating regulations. Therefore, the Executive Order has vast potential for skewing agency decisions toward a more permissive posture due to a possible taking based on legal analyses of takings law that are either incorrect or predisposed toward an expansion of takings law that has yet to occur. Thus, the disclaimer in the Appendix does little to offset the subtle but potentially significant goal of regulatory reduction, which the Reagan Administration has sought for eight years.⁹⁷

Even in situations where the agencies presumably have no choice but to say "no," the Executive Order may still provide a basis for avoiding regulatory denial through "mitigation." This can be illustrated through a wetlands case in which a developer proposed to site a shopping mall in a wetland known as Sweedens Swamp in Massachussetts. The FWPCA § 404(b)(1) Guidelines govern the issuance of § 404 permits and they appear to prohibit permits for most activities in wetlands that are not "water-dependent," i.e., they need not be located in aquatic sites to achieve their project purposes.⁹⁸ Shopping centers are seldom water dependent. In reviewing the application for this particular shopping mall the Corps concluded that the Guidelines could be met because the applicant proposed to build another wetland somewhere else to replace SweedensSwamp.⁹⁹ EPA concluded that using "mitigation" (actually compensation) to avoid the water dependency test was not valid and exercised its § 404(c) power to veto the permit.¹⁰⁰

Regardless of which agency correctly read the Guidelines, this example demonstrates how agencies can transform a statute that presumably prohibits wetlands destruction in certain instances into a "wetlands removal" statute. The Executive Order will simply exacerbate what is already a problem in the Reagan Administration, especially among some agencies.

Takings Implication Assessment — A Shot in the Foot

It is anyone's guess where takings law is headed in the wake of the 1987 trilogy of cases. Maybe the Supreme Court will expand the circumstances in which a taking may be found. Maybe the Court will articulate a "set formula" for determining the existence of a taking. At any rate, it is perfectly legitimate to argue that the 1987 cases can be construed quite narrowly and that they do not represent any major departures in takings law, particularly for most federal agencies.

[18 ELR 10473]

Assuming it can be argued just as legitimately that Nollan and First English presage a great expansion of the circumstances that will result in takings, one has to wonder why the United States Department of Justice is making such an argument. After all, Justice Department lawyers will represent the agencies in inverse condemnation actions in which landowners will presumably urge expansive views of Nollan and First English upon the lower courts and the Supreme Court.¹⁰¹ The agencies and the taxpayers have a right to expect that their lawyers will attempt to construe these two cases as narrowly as has been suggested in the preceding discussion. However, such arguments by Justice will be rather awkward, if not unpersuasive, when the landowner cites the Executive Order, the Guidelines, and the Appendix to support a contrary reading of these cases.

The agencies may well complain that the Justice Department has gratuitously shot itself in the foot with the unnecessarily broad interpretation of the Nollan and First English decisions. So, too, might the taxpayer, because this sort of undermining of the agency's case may make a takings finding more likely that it might have been without the Executive Order and Guidelines.

Indeed, the Executive Branch is effectively creating new takings law without waiting for the Supreme Court to do so. This is a truly ironic result if the whole purpose of the Executive Order is "to reduce the risk of undue or inadvertent burdens on the public fisc…."¹⁰² This may be the sort of assistance the public fisc can do without.

Similar problems may arise with the takings implication assessment. If such a document concludes that a taking is likely and the agency makes "an independent decision" to proceed with the regulatory action, the analysis is likely to become "Exhibit A" for the landowner in an inverse condemnation action arising from the regulatory decision. This will especially be true if the landowner agrees with the cost estimate contained in that analysis. Indeed, that estimate should be looked at as establishing the floor for the government's expert appraiser at trial and for any damages award in an inverse condemnation action.¹⁰³ Of course, the agencies are aware of these risks and this may lead them to fudge their analysis against a taking conclusion or to make their cost estimates as low as possible. In that event the analysis loses whatever utility it arguably might have had to begin with. Again, it is difficult to see how this reduces the burden on the public fisc.

None of these problems will be lost on the agencies and this will further the chilling effect that the Executive Order will have on agency decisionmaking.

Conclusion

Conservation organizations and their members would probably support any effort by the Executive Branch to reduce the likelihood that the application of environmental regulations result in takings findings by the courts. However, this support assumes that the effort does not reduce the amount of regulatory protection, through permit denials or tougher regulations, for example, which would be counterproductive from the conservationists' point of view. The Executive Branch could advise the agencies on how to structure regulatory decisions to make them as defensible as possible in the event they result in inverse condemnation claims. The Justice Department could devote the considerable legal talents of its lawyers to the task of developing arguments that construe Nollan and First English as narrowly as possible.

However, rather than helping the agencies to preserve as many regulatory options as possible notwithstanding the threat of a taking finding, the Executive Order and the Guidelines do just the opposite. Takings law is expanded and regulatory options are narrowed. Thisapproach appears effectively to usurp the respective roles of Congress and the Supreme Court, to the extent the takings issue influences agency decisions, by precluding regulatory actions that would have been taken in the absence of the Executive Order. Also, the process envisioned by the Executive Order may well weaken an agency's position in potential inverse condemnation suits, which would seem to create just the opposite effect of the stated intent of the Executive Order.

The next Administration would be well-advised to rescind Executive Order 12630 at the earliest opportunity.

Mr. Jackson is an associate with the Washington, D.C., office of Skadden, Arps, Slate, Meagher & Flom. He was formerly an attorney with the National Wildlife Federation in Washington, D.C. Mr. Albaugh is a third-year student at the University of Pennsylvania School of Law. The authors gratefully acknowledge the assistance of Erik J. Myers, a Senior Attorney at the Environmental Law Institute, in reviewing this Dialogue. The views expressed in this Dialogue do not necessarily reflect the views of Skadden, Arps, Slate, Meagher & Flom.

1. Exec. Order 12630, 53 Fed. Reg. 8859, ELR ADMIN. MATERIALS 45037 (Mar. 18, 1988).

2. Exec. Order 12630, § 1(c), ELR ADMIN. MATERIALS 45037.

3. Agencies are directed to "evaluate carefully the effect of their … actions on constitutionally protected property rights." Exec. Order 12630, § 1(b), ELR ADMIN. MATERIALS 45037. The Guidelines promulgated by the U.S. Department of Justice pursuant to the Executive Order direct agencies to "minimize the impacts of [their] activities on constitutionally protected private property rights." Attorney General's Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings 2 (June 30, 1988), ELR ADMIN. MATERIALS 35168 [hereinafter Guidelines]. Neither document identifies any "constitutionally protected property rights."

4. "[T]he Amendment makes clear that it is designed not to limit the governmental interference with property rights per se, but rather to secure compensation in the event of an otherwise proper interference amounting to a taking." First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 107 S. Ct. 2378, 2386, 17 ELR 20787, 20790 (1987) (emphasis in original). Cf. Hodel v. Irving, 107 S. Ct. 2076 (1987) (invalidating statute as unconstitutional violation of just compensation clause because it effected takings and contained no express provision for compensation) and Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1016-1017, 14 ELR 20539, 20546 (1984) (refusing to enjoin application of statute on ground of potential taking so long as statute did not expressly abrogate right to seek compensation in Court of Claims).

5. E.g.: "[O]n remand the Secretary must make new determinations based strictly on the merits and completely without regard to any considerations not made relevant by Congress in the applicable statutes…. If … [the] Secretary … took into account 'considerations that Congress could not have intended to make relevant,' his action proceeded from an erroneous premise and his decision cannot stand." D.C. Federation of Civic Associations v. Volpe, 459 F.2d 1231, 1246-1247, 1 ELR 20572, 20579 (D.C. Cir. 1972), cert. denied, 405 US 1030 (1972), quoting United States ex rel. Kaloudis v. Shaughnessy, 180 F.2d 489, 491 (2d Cir. 1950) (footnotes omitted).

6. "Normally an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider…." Motor Vehicle Manufacturers Association of the United States v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 43, 13 ELR 20672, 20679 (1983). This implies that the Executive Branch cannot unilaterally create new "relevant" factors contrary to congressional intent.

7. See 5 U.S.C. § 706(2)(A), ELR STAT. ADMIN. PROC. 007.

8. 5 U.S.C. §§ 500-559, 701-706, ELR STAT. ADMIN. PROC. 001.

9. In the event of invalidation it is possible that a claim may be stated for compensation for some period before the invalidation. See First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 107 S. Ct. 2378, 17 ELR 20787 (1987), and discussion of that case in text accompanying notes 38-53 infra.

10. The Appendix to the Guidelines, supra note 3, impliedly recognizes this principle by pointing out that Congress is presumably empowered to statutorily prohibit agencies from committing takings except in specified circumstances, thus arguably making the existence of a taking a relevant factor. See Appendix to Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings at 5-6, ELR ADMIN. MATERIALS 35175 [hereinafter Appendix], citing Southern California Financial Corp. v. United States, 634 F.2d 521, 524 (Ct. Cl. 1980); NBH Land Co. v. United States, 576 F.2d 317, 319 (Ct. Cl. 1978). The Guidelines cite no statutes and the Executive Order is not limited in its application to only such statutes.

11. Exec. Order 12630, § 2(a), ELR ADMIN. MATERIALS 45037.

12. Section 3(d), ELR ADMIN. MATERIALS 45038.

13. First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 107 S. Ct. 2378, 17 ELR 20787 (1987); and Nollan v. California Coastal Commission, 107 S. Ct. 3141, 17 ELR 20918 (1987). See Guidelines, supra note 3, at 1, ELR ADMIN. MATERIALS 35168. In the 1987 Term, the Court also decided another significant takings case, Keystone Bituminous Coal Association v. DeBenedictis, 107 S. Ct. 1232, 17 ELR 20440 (1987). Although Keystone receives little attention in the Guidelines, it is a significant case because it reaffirms a number of takings law principles established before the 1987 Term.

14. Exec. Order 12630, § 3(b), ELR ADMIN. MATERIALS 45038.

15. Pumpelly v. Green Bay Co., 80 U.S. (13 Wall.) 166 (1872). Inverse condemnation was expanded to include other takings in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922). See Meltz, Revisiting the Law of Regulatory Takings: The Supreme Court's Decisions in Keystone, Nollan, and First English, CONG. RES. SERV. REP. 87-959A, at 2-3 (1987) [hereinafter Meltz]; McGinley, Regulatory "Takings:" The Remarkable Resurrection of Economic Substantive Due Process Analysis in Constitutional Law, 17 ELR 10369, 10372 (1987). "When faced with a constitutional challenge to a permanent physical occupation of real property, this Court has invariably found a taking." Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 427 (1982) (footnote omitted).

16. The Order does not define "substantially affect," giving rise to potential inconsistency in application by the agencies.

17. Exec. Order 12630, § 3(b), ELR ADMIN. MATERIALS 45038.

18. Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 131, 8 ELR 20528, 20535 (1978).

19. Agins v. City of Tiburon, 447 U.S. 255, 260, 10 ELR 20361, 20362 (1980) (emphasis added).

20. Penn Central, 438 U.S. at 125, 8 ELR at 20533.

21. Euclid v. Ambler Realty Co., 272 U.S. 365 (1926) (75 percent reduction); Hadacheck v. Sebastian, 239 U.S. 394 (1915) (87 1/2 percent reduction). Both cases were cited by the Court in 1978 for the identical proposition. Penn Central, 104 U.S. at 131, 8 ELR at 20535.

22. "Land use restrictions … work a taking if they either (1) do not substantially advance a legitimate government objective, or (2) fail to leave the owner any 'economically' viable use of his property." Meltz, supra note 15, at 4 (first emphasis original, second emphasis added).

23. 107 S. Ct. at 2389, 17 ELR at 20791 (emphasis added).

24. Exec. Order 12630, § 3(c), ELR ADMIN. PROC. 45038.

25. 107 S. Ct. 1232, 1242, 17 ELR 20440, 20443 (1987), quoting Agins, 447 U.S. at 260, 10 ELR at 20362 (emphasis added).

26. 107 S. Ct. at 3146, 17 ELR at 20920 (emphasis added).

27. Agins, 447 U.S. at 260, 10 ELR at 20362, citing Nectow v. Cambridge, 277 U.S. 183, 188 (1928).

28. 277 U.S. at 188.

29. Exec. Order 12630, § 1(c), ELR ADMIN. MATERIALS 45037.

30. Keystone, 107 S. Ct. at 1245, n. 20, 17 ELR at 20445, n.20. The Guidelines' discussion of the Executive Order's health and safety regulation requirements cites a portion of the Appendix that discusses the nuisance exception and cites Keystone and other cases. Guidelines, supra note 3, at 15-16, ELR ADMIN. MATERIALS 35171; Appendix, supra note 10, at 12-13, ELR ADMIN. MATERIALS 35178.

31. Guidelines, supra note 3, at 15, ELR ADMIN. MATERIALS 35171.

32. Guidelines, supra note 3, at 16, ELR ADMIN. MATERIALS 35171.

33. Motor Vehicle Manufacturers Association of the United States v. State Farm Mutual Automobile Insurance Co., 463 U.S. at 43, 13 ELR at 20676, quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962). Under the APA, the agency may at most be subject to the substantial evidence test in certain circumstances. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 414, 1 ELR 20110, 20113 (1971).

34. Exec. Order 12630, § 3(c), ELR ADMIN. MATERIALS 45038.

35. 107 S. Ct. at 1243, n. 16, 17 ELR at 20444, n.16.

36. The Court has made it clear that the Commerce Clause (the source of constitutional power for most environmental regulation) provides Congress ample power to over- or underregulate as it sees fit in solving any particular problem: "[W]hen it is necessary in order to prevent an evil to make the law embrace more than the precise thing to be prevented it may do so." Westfall v. United States, 274 U.S. 256 (1927). Cf. National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 46 (1937) ("The Constitution does not forbid 'cautious advance, step by step,' in dealing with … evils….").

37. See Exec. Order 12630, § 4(d), ELR ADMIN. MATERIALS 45038. Perhaps this is not the intent of the Executive Order and the language under discussion here is limited to agency assessments of whether the nuisance exception applies. However, neither the Order nor the Guidelines contains any such express disclaimer.

38. Exec. Order 12630, § 3(d), ELR ADMIN. MATERIALS 45038.

39. Exec. Order 12630, § 4(c), ELR ADMIN. MATERIALS 45038.

40. First English, 107 S. Ct. at 2381-2382, 17 ELR at 20788.

41. Id. at 2382-2383, 17 ELR at 20788.

42. Id.

43. Id. at 2384-2385, 17 ELR at 20789.

44. 33 U.S.C. § 1344, ELR STAT. FWPCA 054.

45. 33 U.S.C. § 1311(a), ELR STAT. FWPCA 025.

46. OFFICE OF TECHNOLOGY ASSESSMENT, WETLANDS: THEIR USE AND REGULATION 143-144 (1984).

47. The term "navigable waters" is defined by the Act to mean "waters of the United States," FWPCA § 502(7), 33 U.S.C. § 1362(7), ELR STAT. FWPCA 058, which in turn has been construed by the Corps to include wetlands. 33 C.F.R. § 328.3(b) (1987).

48. 107 S. Ct. at 2381-2382, 17 ELR at 20788.

49. Id. at 2387-2389, 17 ELR at 20791.

50. United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 126-129, 16 ELR 20086, 20087-88 (1985).

51. Exec. Order 12630, § 4(c), ELR ADMIN. MATERIALS 45038.

52. Exec. Order 12630, § 3(d), ELR ADMIN. MATERIALS 45038.

53. 107 S. Ct. at 2389, 17 ELR at 20791.

54. Exec. Order 12630, § 4(a), ELR ADMIN. MATERIALS 45038.

55. Nollan, 107 S. Ct. at 3145 & n.1, 17 ELR at 20919 & n.1.

56. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 427 (1982) (footnote omitted).

57. Nollan, 107 S. Ct. at 3147, 17 ELR at 20921. The quotation is actually the Court's paraphrase of the argument presented by the regulatory agency in question but it is followed by the sentence, "We agree." Id.

58. Id. at 3148, 17 ELR at 20921.

59. Loretto, 458 U.S. at 434-435, quoting Penn Central, 438 U.S. at 124, 8 ELR at 20528 (emphasis added).

60. "Although … a … permanent grant of continuous access to the property would have to be considered a taking if it were not attached to a development permit, the Commission's assumed power to forbid construction of the house in order to protect the public's view of the beach must surely include the power to condition construction upon some concession by the owner, even a concession of property rights that serves the same end." Nollan, 107 S. Ct. at 3148, 17 ELR at 20921.

61. Exec. Order 12630, § 2(a), ELR ADMIN. MATERIALS 45037. The quotation comes from the portion of the Executive Order that euphemistically bills itself as a "definition" of the phrase "Policies that have takings implications," which in turn is the operative phrase in the requirements on permit conditions mandated by § 4(a). The Executive Order defines this term as including policies or actions that "could effect a taking."

62. Exec. Order 12630, § 4(a), ELR ADMIN. MATERIALS 45038.

63. Exec. Order 12630, § 4(a)(2), ELR ADMIN. MATERIALS 45038.

64. 107 S. Ct. at 3148, 17 ELR at 20921.

65. The requirement that a condition "substantially advance" "the purpose served by a prohibition of the use or action" cannot be justified by the Keystone case's reiteration that a regulation must "substantially advance a legitimate state interest," 107 S. Ct. at 1242, 17 ELR at 20443, because the Keystone standard is much broader. See supra text accompanying notes 25-26. If this language in the Executive Order purports to rest on Keystone and not Nollan, it raises unanswered questions such as why the Order uses different language than Keystone to supposedly reach the same result and, since the Keystone language merely restates a 1928 holding, why the White House waited 60 years to bring this principle to the attention of its agencies. See Nectow v. Cambridge, 277 U.S. 183, 188 (1928).

66. Guidelines, supra note 3, at 15, ELR ADMIN. MATERIALS 35171 (emphasis in original).

67. Exec. Order 12630, § 4(b), ELR ADMIN. MATERIALS 45038. The Guidelines restate this requirement somewhat differently: "Regulation of an individual's property must not be disproportionate, within the limits of existing information or technology, to the degree to which the individual's property use is contributing to the overall problem." Guidelines, supra note 3, at 14, ELR ADMIN. MATERIALS 35171. The rationale behind this difference is not explained.

68. 33 C.F.R. § 320.4(a)(1)(1987). The U.S. Environmental Protection Agency also considers cumulative impacts in determining whether to invoke its authority under § 404(c), 33 U.S.C. § 1344(c), ELR STAT. FWPCA 054, to "veto" a permit which the Corps may intend to issue. See Final Determination of the Assistant Administrator for External Affairs Concerning the Sweedens Swamp Site in Attleboro, Massachusetts, Pursuant to Section 404(c) of the Clean Water Act at 10, 25, and 30-31 (May 13, 1986) [hereinafter Sweedens Swamp Veto].

69. FWPCA § 101, 33 U.S.C. § 1251(a), ELR STAT. FWPCA 003; Endangered Species Act § 2, 16 U.S.C. § 1531, ELR STAT. ESA 002; Marine Mammal Protection Act § 2, 16 U.S.C. § 1361, ELR STAT. MMPA 002.

70. 16 U.S.C. §§ 1531-1543, ELR STAT. ESA 001.

71. A federal agency may be required to deny a permit for activity on private property if that activity "is likely to jeopardize the continued existence of any endangered species…." Endangered Species Act § 7(a)(2), 16 U.S.C. § 1536(a)(2), ELR STAT. ESA 010. See Riverside Irrigation District v. Andrews, 758 F.2d 508, 15 ELR 20333 (10th Cir. 1985).

72. If over half of the original wetlands in the state have already been destroyed then the Corps and EPA may be subject to the argument that the proportions should apply to the total original wetlands acreage rather than what is left.

73. Keystone, 107 S. Ct. at 1245 n.21, 17 ELR at 20445 n.21.

74. Nollan, 107 S. Ct. at 3147 n.4, 17 ELR at 20920 n.4, quoting Armstrong v. United States, 364 U.S. 40, 49 (1960).

75. Both the Keystone and Nollan majority opinions arose from 5-4 votes and only Justice White joined the majority in both cases. Assuming there is a conflict in the two decisions and that it reflects continuing uncertainty over the Court's basic philosophy of takings law, it is hardly appropriate for the White House to resolve this conflict before the Court does and to do so adversely to the fiscal interests of the federal agencies and the statutory integrity of their regulatory programs.

76. Nollan, 107 S. Ct. at 3147 n.4, 17 ELR at 20920 n.4.

77. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922).

78. Penn Central, 438 U.S. at 124, 8 ELR at 20533, quoting United States v. Central Eureka Mining Co., 357 U.S. 155, 168 (1958) (citations omitted).

79. Connolly v. Pension Benefit Guaranty Co., 475 U.S. 211, 225 (1986).

80. The fact that neither of these general philosophical statements provides a useful standard is demonstrated by Connolly, where the Court quoted both the "public good" and "proportionality" homilies in the same opinion and still found no taking. 475 U.S. at 225 and 227.

81. Guidelines, supra note 3, at 18, ELR ADMIN. MATERIALS 35172.

82. FWPCA § 319, 33 U.S.C. § 1329, ELR STAT. FWPCA 046.

83. For illustrations of how the Act governs habitat encroachment see National Wildlife Federation v. Coleman, 529 F.2d 359, 6 ELR 20344 (5th Cir. 1976) and Cabinet Mountains Wilderness v. Peterson, 685 F.2d 678, 12 ELR 21058 (D.C. Cir. 1982). Under the Act the term "taking" refers to killing or otherwise harming individual members of a protected species. See Endangered Species Act § 3(19), 16 U.S.C. § 1532(19), ELR STAT. ESA 003; 50 C.F.R. § 17.3 (1987).

84. Endangered Species Act § 7(a)(2), 16 U.S.C. § 1536(a)(2), ELR STAT. ESA 010.

85. Keystone, 107 S. Ct. at 1245, 17 ELR at 20445. The Court expressly rejected any notion that the reciprocity must be exactly proportional to avoid a taking. Id. at 1245 n.21, 17 ELR at 20445 n.21.

86. Guidelines, supra note 3, at 19, ELR ADMIN. MATERIALS 35171 (emphasis added).

87. Guidelines, supra note 3, at 21-22, ELR ADMIN. MATERIALS 35172-73.

88. FWPCA § 101(f), 33 U.S.C. § 1251(f), ELR STAT. FWPCA 003.

89. Keystone, 107 S. Ct. at 1247, 17 ELR at 20446, quoting Hodel v. Virginia Surface Mining & Reclamation Association, 452 U.S. 264, 294-296, 11 ELR 20569, 20576-77 (1981), and Kaiser Aetna v. United States, 444 U.S. 164, 175, 10 ELR 20042, |X{20045|L|910086|20045} (1979) (citation omitted).

90. R. TINER, WETLANDS OF THE UNITED STATES: CURRENT STATUS AND RECENT TRENDS 28 (1984). The destruction of wetlands may equal a half-million acres per year. Id. at 31.

91. Guidelines, supra note 3, at 5-6, ELR ADMIN. MATERIALS 35169.

92. Guidelines, supra note 3, at 2, ELR ADMIN. MATERIALS 35168.

93. Id. at 21 (emphasis added), ELR ADMIN. MATERIALS 35172.

94. Id. at 12, ELR ADMIN. MATERIALS 35170-71.

95. Appendix, supra note 10, at 2, ELR ADMIN. MATERIALS 35175. This sentence was absent from the May 16, 1988, draft of the Appendix which was then called a "Supplement" to the Guidelines.

96. Guidelines, supra note 3, at 2, ELR ADMIN. MATERIALS 35168.

97. The Guidelines pay lip service to the agencies' legal obligations to take regulatory action notwithstanding a potential taking: "[F]ederal agency decisionmakers … to the extent permitted by law, consistent with their statutory obligations, can minimize the impacts of [agency] activities on constitutionally protected private property rights." Guidelines, supra note 3, at 2, ELR ADMIN. MATERIALS 35168. However, the Executive Order and the Guidelines clearly intend to interject potential takings as a factor that governs decisionmaking notwithstanding the absence of statutory authority for the agencies to do so and notwithstanding this disclaimer.

98. 40 C.F.R. § 230.10(a)(3) (1987).

99. Sweedens Swamp Veto, supra note 68, at 4-7.

100. Id. at 53-66. Using mitigation in such situations due to the Executive Order runs counter to the Council on Environmental Quality regulations which suggest that mitigation, especially in the form of compensation, is itself a last resort. 40 C.F.R. § 1508.20 (1987). The Executive Order seeks to reverse this philosophy by making permit denial the last resort. EPA also vetoed the Sweedens Swamp permit for other reasons. See Bersani v. U.S. Environmental Protection Agency, 850 F.2d 36, 18 ELR 20874 (2d Cir. 1988).

101. In fact, the Justice Department is currently defending $ 1 billion in takings claims. Marzulla, The New "Takings" Executive Order and Environmental Regulation — Collision or Cooperation?, 18 ELR 10254, 10255 (July 1988).

102. Exec. Order 12630, § 1(c), ELR ADMIN. MATERIALS 45037.

103. The Justice Department may well assert the privilege for predecisional deliberative materials but asserting a privilege is no guarantee that the trial court will not order production of the document, especially with regard to factual materials that are not subject to the privilege. See generally LITIGATION UNDER THE FREEDOM OF INFORMATION ACT AND PRIVACY ACT 79-90 (A. Adler ed. 1987). Resisting discovery requests under this privilege may be especially difficult since the Appendix states that "Questions as to the existence of takings require the sifting of numerous facts … This focus on facts lies at the heart of the advice contemplated by the" takings implication assessment. Appendix, supra note 10, at 2, ELR ADMIN. MATERIALS 35175.