SB4

Report Title:

Government Taking of Property; Eminent Domain; Other Acts

Description:

Requires the attorney general to prepare written guidelines to assist state and county agencies in the identification of actions that may constitute takings of private property; requires assessment of a taking prior to any action and establishes guidelines for the assessment.

THE SENATE	S.B. NO.	4
TWENTY-FIRST LEGISLATURE, 2001
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO PRIVATE PROPERTY RIGHTS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that government action that results in the taking of private property for a public purpose should be undertaken on a well-reasoned basis with due regard for fiscal accountability and for the financial impact of the obligations imposed by the United States Constitution and the Constitution of the State of Hawaii. The Fifth and Fourteenth Amendments of the United States Constitution and article I, section 20, of the state constitution provide that private property shall not be taken or damaged for public use without just compensation.

Government historically has used the formal exercise of the power of eminent domain, which provides orderly processes for paying just compensation, to acquire private property for public use. Recent United States Supreme Court decisions, in reaffirming the fundamental protection of private property rights provided by the Fifth and Fourteenth Amendments, and in assessing the nature of governmental actions that have an impact on constitutionally protected property rights, have reaffirmed that governmental actions, including regulations, that do not formally invoke the condemnation power also may result in a taking for which just compensation is required.

In Lucas v. South Carolina Coastal Commission, 505 U.S. 1003, 112 S.Ct. 2886 (1992), the United States Supreme Court emphasized that government may not insulate itself from claims for just compensation by simply asserting that a regulation was imposed for a valid health, safety, or welfare purpose, if there is a lack of factual evidence to support the assertion.

In Dolan v. City of Tigard, 512 U.S. 374, 114 S.Ct. 2309 (1994), the United States Supreme Court further emphasized that there must be an "essential nexus" between a legitimate state interest and the regulation. If this nexus exists, then the degree of the exactions demanded by regulation must be rationally related both in nature and extent to the use that is being made of the private property. A regulation that does not satisfy this test will be considered a compensable taking.

Accordingly, the legislature finds that responsible fiscal management and fundamental principles of good government require that the government decision-makers evaluate carefully the effect of their administrative, regulatory, and legislative actions on constitutionally protected property rights. State and county departments and agencies should review their actions carefully to prevent unnecessary takings and should account in decision-making for those takings that are necessitated by statutory mandate. Similar laws have been enacted in a number of states, including Arizona, Delaware, Florida, Kansas, Maine, Michigan, Montana, North Dakota, Texas, Utah, and Virginia.

The purpose of this Act is to:

(1) Assist state and county departments and agencies in undertaking these reviews and in proposing, planning, and implementing actions with due regard for the constitutional protections provided by the Fifth and Fourteenth Amendments of the United States Constitution and article I, section 20, of the state constitution;

(2) Reduce the risk of undue or inadvertent burdens on the state treasury resulting from governmental action; and

(3) Direct the attorney general, consistent with the principles stated in this Act, to develop guidelines for evaluation of risk and avoidance of unanticipated takings to which each state and county agency shall refer in making the evaluations required by this Act or in otherwise taking any action that is subject to this Act.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

PRIVATE PROPERTY RIGHTS PROTECTION

§ -1 Purpose. It is the policy of this State that a person may not be deprived of the use of private property without due process of law and that private property may not be taken or damaged by a state or county agency without just compensation paid to the owner in accordance with the meaning ascribed to these concepts by the United States Supreme Court and the Hawaii supreme court. An assessment of each state and county agency action with taking or damage implications is needed to avoid imposing expensive litigation burdens on citizens and to minimize the risk of unanticipated demands on the State's and the counties' fiscal resources. The purpose of this chapter is to establish an orderly and consistent process that better enables state and county agencies to evaluate whether an action with taking or damage implications might result in the taking or damage of private property. It is not the purpose of this chapter to expand or diminish the private property protections provided in the United States Constitution and the state constitution.

§ -2 Definitions. Unless otherwise clear from the context, as used in this chapter:

"Action":

(1) Includes:

(A) Any rule or policy that, if adopted or enforced, may limit the use of private property;

(B) Any licensing or permitting condition or requirement that may limit the use of private property;

(D) Any other action or policy of an agency that may have the effect of limiting use of private property;

provided that an "action" shall be construed broadly so as to effectuate the purposes of this chapter;

(2) Shall not include:

(A) A formal exercise of the power of eminent domain;

(B) The repeal or amendment of any rule or policy that has the effect of lessening interference with the use of private property;

(C) A law enforcement proceeding involving seizure or forfeiture of private property for violations of law or as evidence in criminal proceedings; or

(D) An order or judgment of a court of law.

"Agency" has the same meaning as defined in section 91-1.

"Essential nexus" means a connection between a legitimate state or county interest and the action of the state or county agency, to the extent that the action serves the same governmental interest or purpose that was originally purported by the state or county agency for the use of the private property.

"Private property" means any real or personal property protected by the Fifth and Fourteenth Amendments to the United States Constitution or article I, section 20, of the state constitution, and includes the right to use or receive water.

"Taking" means any action that results or may result in a requirement of payment of just compensation to an owner of private property under the Fifth and Fourteenth Amendments to the United States Constitution or article I, section 20, of the state constitution.

§ -3 Taking guidelines. No later than December 31, 1999, the attorney general shall prepare and publicly disseminate written guidelines to assist agencies in the identification of actions that may constitute takings. In formulating these guidelines, the attorney general shall observe and incorporate the following principles:

(1) Agencies shall be sensitive to, anticipate, and account for the obligations imposed by the Fifth and Fourteenth Amendments to the United States Constitution and article I, section 20, of the state constitution in planning and carrying out governmental actions so as to avoid unanticipated or undue additional burdens on the state treasury;

(2) Any action taken by any agency resulting in a physical invasion or occupation of private property and any action affecting the value or use of private property may constitute a taking;

(3) An action may constitute a taking even though the action constitutes less than a complete deprivation of all use or value, or of all separate and distinct interest in the same private property, and even if the action is temporary in nature;

(4) Any action taken specifically to protect public health and safety is ordinarily given broader latitude by courts before being adjudged to be takings. However, the mere assertion of a public health and safety purpose is insufficient to avoid a taking. Therefore, any action that purports to protect the public health and safety shall be:

(A) Taken only in response to a real and substantial threat to public health and safety;

(B) Designed to advance substantially the health and safety purpose;

(D) Supported by factual evidence that demonstrates the need for the action;

(5) Any action taken by agencies shall have an essential nexus to a legitimate state or county interest;

(6) Although normal governmental process does not ordinarily constitute a taking, undue delays in decision-making that interfere with private property use carry a risk of being determined to be a taking. In addition, a delay in processing may increase significantly the amount of compensation due if a taking is later found to have occurred; and

(7) Constitutional protections against the taking of private property are self-executing and require compensation, regardless of whether the underlying action contemplated a taking or authorized the payment of just compensation.

The guidelines prepared pursuant to this section shall be reviewed annually by the attorney general and updated to the extent necessary to maintain consistency with court rulings.

§ -4 Taking assessment. (a) Prior to taking any action, an agency, with the assistance of the guidelines prepared pursuant to section -3, shall prepare an assessment that examines at least the following with respect to the action:

(1) The likelihood that the action may result in a taking, including a description of how the action would affect use or value of private property;

(2) Whether there are alternatives to the action that may fulfill the agency's legal obligations while reducing the risk of constituting a taking;

(3) An estimate of the financial cost to the State or county for compensation, and the source of payment within the agency's budget, if the action should be determined to effect a taking; and

(4) Whether, and to what extent, reasonably ascertainable empirical evidence supports the proposed action.

The assessment shall be considered in conjunction with, and be a part of the public record of, any agency decision made regarding the proposed action.

(b) In addition to compliance with the guidelines prepared pursuant to section -3, the agency, to the extent permitted by law, shall adhere to the following criteria if implementing or enforcing actions that have taking implications:

(1) Where a permit is necessary for specific use of private property, any conditions imposed by the permit shall:

(A) Have an essential nexus to a legitimate state interest;

(B) Directly and rationally relate, in nature and extent, to the purpose for which the permit is issued, and substantially advance that purpose; and

(2) Any restriction imposed on the use of private property shall be in proportion to the extent the use contributes to the overall problem that the restriction seeks to address;

(3) If an action involves a permit process or other decision-making process that will interfere with, or otherwise prohibit, the use of private property pending completion of the process, the process shall be kept to the minimum duration necessary;

(4) Prior to taking an action restricting use of private property for the protection of public health or safety, the agency shall:

(A) Clearly identify, with as much specificity as possible, the legitimate state interest protected and the public health or safety risk created by the use of private property;

(B) Establish that the action substantially advances the purpose of protecting public health and safety against the specifically identified risk;

(C) Establish that there is an essential nexus and rational relationship between the regulation and the use that is being made of the private property;

(D) Establish, to the extent possible, that the restrictions imposed on the private property are in proportion to the extent the use contributes to the overall risk; and

(E) Estimate, to the extent possible, the potential cost to the government if a court determines that the action constitutes a taking.

(c) If there is an immediate threat to health and safety that constitutes an emergency and requires an immediate response, the analysis required by subsection (b) may be made when the response is completed.

(d) Before the agency implements an action that has taking implications, the agency shall submit a copy of the assessment of taking implications to the governor, and, in the case of a county agency, to the mayor of the county.

(e) The requirements of this section shall apply to any agency action that has not been substantially consummated or completed prior to the date of public dissemination of the initial guidelines prepared pursuant to section -3."

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________