Private Property; Takings

Requires the attorney general to develop guidelines to assist
state and county agencies in evaluating risk and avoidance of
unanticipated takings of private property.

THE SENATE                              S.B. NO.           762
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The legislature finds that government action
 2 should be undertaken on a well-reasoned basis with due regard for
 3 fiscal accountability and for the financial impact of the
 4 obligations imposed by the United States Constitution and the
 5 Constitution of the State of Hawaii.  The Fifth and Fourteenth
 6 Amendments of the United States Constitution and article I,
 7 section 20, of the state constitution provide that private
 8 property shall not be taken or damaged for public use without
 9 just compensation.
10      Government historically has used the formal exercise of the
11 power of eminent domain, which provides orderly processes for
12 paying just compensation, to acquire private property for public
13 use.  Recent United States Supreme Court decisions, in
14 reaffirming the fundamental protection of private property rights
15 provided by the Fifth and Fourteenth Amendments, and in assessing
16 the nature of governmental actions that have an impact on
17 constitutionally protected property rights, have reaffirmed that
18 governmental actions, including regulations, that do not formally
19 invoke the condemnation power also may result in a taking for

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 1 which just compensation is required.
 2      In Lucas v. South Carolina Coastal Commission, 505 U.S.
 3 1003, 112 S.Ct. 2886 (1992), the United States Supreme Court
 4 emphasized that government may not insulate itself from claims
 5 for just compensation by simply asserting that a regulation was
 6 imposed for a valid health, safety, or welfare purpose, if there
 7 is a lack of factual evidence to support the assertion.
 8      In Dolan v. City of Tigard, 512 U.S. 374, 114 S.Ct. 2309
 9 (1994), the United States Supreme Court further emphasized that
10 there must be an "essential nexus" between a legitimate state
11 interest and the regulation.  If this nexus exists, then the
12 degree of the exactions demanded by regulation must be rationally
13 related both in nature and extent to the use that is being made
14 of the private property.  A regulation that does not satisfy this
15 test will be considered a compensable taking.
16      Accordingly, the legislature finds that responsible fiscal
17 management and fundamental principles of good government require
18 that the government decision-makers evaluate carefully the effect
19 of their administrative, regulatory, and legislative actions on
20 constitutionally protected property rights.  State and county
21 departments and agencies should review their actions carefully to
22 prevent unnecessary takings and should account in decision-making
23 for those takings that are necessitated by statutory mandate.

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 1 Similar laws have been enacted in a number of states, including
 2 Arizona, Delaware, Florida, Kansas, Maine, Michigan, Montana,
 3 North Dakota, Texas, Utah, and Virginia.
 4      The purpose of this Act is to:
 5      (1)  Assist state and county departments and agencies in
 6           undertaking these reviews and in proposing, planning,
 7           and implementing actions with due regard for the
 8           constitutional protections provided by the Fifth and
 9           Fourteenth Amendments of the United States Constitution
10           and article I, section 20, of the state constitution;
11      (2)  Reduce the risk of undue or inadvertent burdens on the
12           state treasury resulting from governmental action; and
13      (3)  Direct the attorney general, consistent with the
14           principles stated in this Act, to develop guidelines
15           for evaluation of risk and avoidance of unanticipated
16           takings to which each state and county agency shall
17           refer in making the evaluations required by this Act or
18           in otherwise taking any action that is subject to this
19           Act.
20      SECTION 2.  The Hawaii Revised Statutes is amended by adding
21 a new chapter to be appropriately designated and to read as
22 follows:

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 1                             "CHAPTER
 3         -1  Purpose.  It is the policy of this State that a
 4 person may not be deprived of the use of private property without
 5 due process of law and that private property may not be taken or
 6 damaged by a state or county agency without just compensation
 7 paid to the owner in accordance with the meaning ascribed to
 8 these concepts by the United States Supreme Court and the Hawaii
 9 supreme court.  An assessment of each state and county agency
10 action with taking or damage implications is needed to avoid
11 imposing expensive litigation burdens on citizens and to minimize
12 the risk of unanticipated demands on the State's and the
13 counties' fiscal resources.  The purpose of this chapter is to
14 establish an orderly and consistent process that better enables
15 state and county agencies to evaluate whether an action with
16 taking or damage implications might result in the taking or
17 damage of private property.  It is not the purpose of this
18 chapter to expand or diminish the private property protections
19 provided in the United States Constitution and the state
20 constitution.
21         -2  Definitions.  Unless otherwise clear from the
22 context, as used in this chapter:
23      "Action":

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 1      (1)  Includes:
 2           (A)  Any rule or policy that, if adopted or enforced,
 3                may limit the use of private property;
 4           (B)  Any licensing or permitting condition or
 5                requirement that may limit the use of private
 6                property;
 7           (C)  Any requested or required dedication, impact fee,
 8                or exaction from an owner of private property; and
 9           (D)  Any other action or policy of an agency that may
10                have the effect of limiting use of private
11                property;
12           provided that an "action" shall be construed broadly so
13           as to effectuate the purposes of this chapter;
14      (2)  Shall not include:
15           (A)  A formal exercise of the power of eminent domain;
16           (B)  The repeal or amendment of any rule or policy that
17                has the effect of lessening interference with the
18                use of private property;
19           (C)  A law enforcement proceeding involving seizure or
20                forfeiture of private property for violations of
21                law or as evidence in criminal proceedings; or
22           (D)  An order or judgment of a court of law.
23      "Agency" has the same meaning as defined in section 91-1.

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 1      "Private property" means any real or personal property
 2 protected by the Fifth and Fourteenth Amendments to the United
 3 States Constitution or article I, section 20, of the state
 4 constitution, and includes the right to use or receive water.
 5      "Taking" means any action that results or may result in a
 6 requirement of payment of just compensation to an owner of
 7 private property under the Fifth and Fourteenth Amendments to the
 8 United States Constitution or article I, section 20, of the state
 9 constitution.
10         -3  Taking guidelines.  No later than December 31, 1999,
11 the attorney general shall prepare and publicly disseminate
12 written guidelines to assist agencies in the identification of
13 actions that may constitute takings.  In formulating these
14 guidelines, the attorney general shall observe and incorporate
15 the following principles:
16      (1)  Agencies shall be sensitive to, anticipate, and account
17           for the obligations imposed by the Fifth and Fourteenth
18           Amendments to the United States Constitution and
19           article I, section 20, of the state constitution in
20           planning and carrying out governmental actions so as to
21           avoid unanticipated or undue additional burdens on the
22           state treasury;
23      (2)  Any action taken by any agency resulting in a physical

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 1           invasion or occupation of private property and any
 2           action affecting the value or use of private property
 3           may constitute a taking;
 4      (3)  An action may constitute a taking even though the
 5           action constitutes less than a complete deprivation of
 6           all use or value, or of all separate and distinct
 7           interest in the same private property, and even if the
 8           action is temporary in nature;
 9      (4)  Any action taken specifically to protect public health
10           and safety is ordinarily given broader latitude by
11           courts before being adjudged to be takings.  However,
12           the mere assertion of a public health and safety
13           purpose is insufficient to avoid a taking.  Therefore,
14           any action that purports to protect the public health
15           and safety shall be:
16           (A)  Taken only in response to a real and substantial
17                threat to public health and safety;
18           (B)  Designed to advance substantially the health and
19                safety purpose;
20           (C)  No greater than necessary to achieve the health
21                and safety purpose; and
22           (D)  Supported by factual evidence that demonstrates
23                the need for the action;

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 1      (5)  Any action taken by agencies shall have an "essential
 2           nexus" to a legitimate state interest and shall be
 3           rationally related both in nature and extent to the use
 4           of the private property;
 5      (6)  Although normal governmental process does not
 6           ordinarily constitute a taking, undue delays in
 7           decision-making that interfere with private property
 8           use carry a risk of being determined to be a taking.
 9           In addition, a delay in processing may increase
10           significantly the amount of compensation due if a
11           taking is later found to have occurred; and
12      (7)  Constitutional protections against the taking of
13           private property are self-executing and require
14           compensation, regardless of whether the underlying
15           action contemplated a taking or authorized the payment
16           of just compensation.
17 The guidelines prepared pursuant to this section shall be
18 reviewed annually by the attorney general and updated to the
19 extent necessary to maintain consistency with court rulings.
20         -4  Taking assessment.  (a)  Prior to taking any action,
21 an agency, with the assistance of the guidelines prepared
22 pursuant to section    -3, shall prepare an assessment that
23 examines at least the following with respect to the action:

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 1      (1)  The likelihood that the action may result in a taking,
 2           including a description of how the action would affect
 3           use or value of private property;
 4      (2)  Whether there are alternatives to the action that may
 5           fulfill the agency's legal obligations while reducing
 6           the risk of constituting a taking;
 7      (3)  An estimate of the financial cost to the State or
 8           county for compensation, and the source of payment
 9           within the agency's budget, if the action should be
10           determined to effect a taking; and
11      (4)  Whether, and to what extent, reasonably ascertainable
12           empirical evidence supports the proposed action.
13 The assessment shall be considered in conjunction with, and be a
14 part of the public record of, any agency decision made regarding
15 the proposed action.
16      (b)  In addition to compliance with the guidelines prepared
17 pursuant to section    -3, the agency, to the extent permitted by
18 law, shall adhere to the following criteria if implementing or
19 enforcing actions that have taking implications:
20      (1)  Where a permit is necessary for specific use of private
21           property, any conditions imposed by the permit shall:
22           (A)  Have an "essential nexus" to a legitimate state
23                interest;

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 1           (B)  Directly and rationally relate, in nature and
 2                extent, to the purpose for which the permit is
 3                issued, and substantially advance that purpose;
 4                and
 5           (C)  Be expressly authorized by law;
 6      (2)  Any restriction imposed on the use of private property
 7           shall be in proportion to the extent the use
 8           contributes to the overall problem that the restriction
 9           seeks to address;
10      (3)  If an action involves a permit process or other
11           decision-making process that will interfere with, or
12           otherwise prohibit, the use of private property pending
13           completion of the process, the process shall be kept to
14           the minimum duration necessary;
15      (4)  Prior to taking an action restricting use of private
16           property for the protection of public health or safety,
17           the agency shall:
18           (A)  Clearly identify, with as much specificity as
19                possible, the legitimate state interest protected
20                and the public health or safety risk created by
21                the use of private property;
22           (B)  Establish that the action substantially advances
23                the purpose of protecting public health and safety

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 1                against the specifically identified risk;
 2           (C)  Establish that there is an "essential nexus" and
 3                rational relationship between the regulation and
 4                the use that is being made of the private
 5                property;
 6           (D)  Establish, to the extent possible, that the
 7                restrictions imposed on the private property are
 8                in proportion to the extent the use contributes to
 9                the overall risk; and
10           (E)  Estimate, to the extent possible, the potential
11                cost to the government if a court determines that
12                the action constitutes a taking.
13      (c)  If there is an immediate threat to health and safety
14 that constitutes an emergency and requires an immediate response,
15 the analysis required by subsection (b) may be made when the
16 response is completed.
17      (d)  Before the agency implements an action that has taking
18 implications, the agency shall submit a copy of the assessment of
19 taking implications to the governor, and, in the case of a county
20 agency, to the mayor of the county.
21      (e)  The requirements of this section shall apply to any
22 agency action that has not been substantially consummated or
23 completed prior to the date of public dissemination of the

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 1 initial guidelines prepared pursuant to section    -3."
 2      SECTION 3.  This Act shall take effect upon its approval.
 4                           INTRODUCED BY:  _______________________