II

105TH CONGRESS

1ST SESSION S. 1181

To amend the Internal Revenue Code of 1986 to provide Federal tax incentives to owners of environmentally sensitive lands to enter into conservation easements for the protection of endangered species habitat, to allow

a deduction from the gross estate of a decedent in an amount equal

to the value of real property subject to an endangered species conservation agreement, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 16, 1997

Mr. KEMPTHORNE introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide

Federal tax incentives to owners of environmentally sensitive lands to enter into conservation easements for the

protection of endangered species habitat, to allow a deduction from the gross estate of a decedent in an amount

equal to the value of real property subject to an endangered species conservation agreement, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Endangered Species Habitat Protection Act of 1997’’.

4 (b) TABLE OF CONTENTS.—The table of contents for

5 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Nonrefundable credit for the agreement to manage land to preserve endangered species.

Sec. 4. Enhanced deduction for the donation of a conservation easement.

Sec. 5. Additional deduction for certain State and local real property taxes imposed with respect to property subject to an endangered species

conservation agreement.

Sec. 6. Exclusion from estate for real property subject to endangered species

conservation agreement.

Sec. 7. Exclusion of 75 percent of gain on sales of land to certain persons for

the protection of habitat.

Sec. 8. Right to compensation.

6 SEC. 2. FINDINGS.

7 The Senate finds and declares the following:

8 (1) The majority of American property owners

9 recognize the importance of protecting the environ10 ment, including the habitats upon which endangered

11 and threatened species depend.

12 (2) Current Federal tax laws discourage place13 ment of privately held lands into endangered and

14 threatened species conservation agreements.

15 (3) The Federal Government should assist land16 owners in the goal of conserving endangered and

17 threatened species and their habitat.

18 (4) If the environment is to be protected and

19 preserved, existing Federal tax laws must be modi-
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1 fied or changed to provide tax incentives to land2 owners to attain the goal of conservation of endan3 gered and threatened species and the habitats on

4 which they depend.

5 SEC. 3. NONREFUNDABLE CREDIT FOR THE AGREEMENT

6 TO MANAGE LAND TO PRESERVE ENDAN7 GERED SPECIES.

8 (a) IN GENERAL.—Subpart A of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of

10 1986 (relating to nonrefundable personal credits) is

11 amended by inserting after section 25A the following new

12 section:

13 ‘‘SEC. 25B. CREDIT FOR AGREEMENT TO MANAGE LAND TO

14 PRESERVE ENDANGERED SPECIES.

15 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al16 lowed as a credit against the tax imposed by this chapter

17 for the taxable year an amount equal to the lesser of—

18 ‘‘(1) the applicable acreage rate of the qualified

19 acreage, or

20 ‘‘(2) $50,000.

21 ‘‘(b) APPLICABLE ACREAGE RATE.—For purposes of

22 subsection (a), the applicable acreage rate is the rate es23 tablished by the Secretary of the Interior for the taxable

24 year utilizing rates comparable to rental payments under
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1 the conservation reserve program under section 1234 of

2 the Food Security Act of 1985 (16 U.S.C. 3834).

3 ‘‘(c) QUALIFIED ACREAGE.—For purposes of this

4 section, the term ‘qualified acreage’ means any acreage—

5 ‘‘(1) which is subject to an endangered species

6 conservation agreement under the Endangered Spe7 cies Act (16 U.S.C. 1531 et seq.) and accepted into

8 the expanded conservation reserve program pursuant

9 to section 1231(d)(2) of the Food Security Act of

10 1985 (16 U.S.C. 3831(d)(2)),

11 ‘‘(2) which is owned by one or more individuals

12 directly or indirectly through a partnership or S cor13 poration that is held entirely by individuals, and

14 ‘‘(3) subject to a perpetual restriction that is

15 valued pursuant to section 170(h)(7).

16 ‘‘(d) CREDIT RECAPTURE.—If, during the period of

17 the endangered species conservation agreement, the tax18 payer transfers the qualified acreage without also transfer19 ring the taxpayer’s obligations under the expanded con20 servation reserve program under subchapter B of chapter

21 1 of subtitle D of the Food Security Act of 1985 (16

22 U.S.C. 3831 et seq.) and the endangered species conserva23 tion agreement, then the taxpayer’s tax under this chapter

24 for the taxable year shall be increased by the amount of

25 the credit received under this section during all prior years
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1 by such taxpayer, plus interest at the overpayment rate

2 established under section 6621 on such amount for each

3 prior taxable year for the period beginning on the due date

4 for filing the return for the prior taxable year involved.

5 No deduction shall be allowed under this chapter for inter6 est described in the preceding sentence, and any increase

7 in tax under the preceding sentence shall not be treated

8 as a tax imposed by this chapter for purposes of determin9 ing the amount of any credit under subpart A, B, D, or

10 G of this part.

11 ‘‘(e) JOINT OWNERS.—For purposes of this section,

12 the amount of credit under this section that any joint

13 owner is entitled to constitutes the total credit allowable

14 under this section with respect to the qualified acreage

15 multiplied by the individual’s percentage ownership in the

16 qualified acreage. Each joint owner shall include on the

17 return of tax in which the credit is claimed the names and

18 taxpayer identification numbers of all other joint owners

19 in the property.

20 ‘‘(f) REGULATORY AUTHORITY.—

21 ‘‘(1) TREASURY DEPARTMENT.—The Secretary

22 shall promulgate regulations to ensure that a tax23 payer cannot subdivide property to determine such

24 taxpayer’s qualified acreage unless all of the acreage

25 such taxpayer owns within a significant region is
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1 submitted to the expanded conservation reserve pro2 gram, whether or not such acreage is eligible for a

3 credit under this section.

4 ‘‘(2) SECRETARY OF THE INTERIOR.—As nec5 essary, the Secretary of the Interior shall determine

6 the applicable acreage rate for regions within the

7 United States based on rates comparable to those

8 under the expanded conservation reserve program.

9 Once a rate is prescribed under an endangered spe10 cies conservation agreement, however, such rate

11 shall remain in effect for the duration of that agree12 ment.’’

13 (b) CONFORMING AMENDMENTS.—Subchapter B of

14 chapter 1 of subtitle D of the Food Security Act of 1985

15 (16 U.S.C. 3831 et seq.) is amended—

16 (1) in section 1231(b)—

17 (A) by striking the period at the end and

18 inserting ‘‘; or’’; and

19 (B) by adding at the end the following new

20 paragraph:

21 ‘‘(5) lands with respect to which the owner or

22 operator and the Secretary of the Interior or the

23 Secretary of Commerce have entered into an endan24 gered species conservation agreement.’’;
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1 (2) in section 1231(d), by striking ‘‘(d)’’ and

2 inserting ‘‘(d)(1)’’ and by adding at the end the fol3 lowing new paragraph:

4 ‘‘(2) The Secretary of the Interior and the Secretary

5 of Commerce shall enter into endangered species conserva6 tion agreements under this section to enroll acreage, in

7 addition to the 38,000,000 acres authorized by paragraph

8 (1), into the expanded conservation reserve, for which no

9 payment is due under section 3834, totaling 5,000,000

10 acres during calendar years 1997 through 2002. In enroll11 ing such acres, the Secretary of the Interior and the Sec12 retary of Commerce shall reserve 1,000,000 acres for en13 rollment under this section in calendar year 1997.’’;

14 (3) in section 1232, by adding at the end the

15 following new subsection:

16 ‘‘(f) This section shall not apply to owners and opera17 tors subject to endangered species conservation agree18 ments.’’;

19 (4) in section 1234, by adding at the end the

20 following new subsection:

21 ‘‘(i) This section shall not apply to owners and opera22 tors subject to endangered species conservation agree23 ments.’’; and

24 (5) by inserting after section 1234 the following

25 new section:
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1 ‘‘SEC. 1234A. NO PAYMENTS TO PROPERTIES FOR WHICH AN

2 INCOME TAX CREDIT OR DEDUCTION IS

3 TAKEN.

4 ‘‘The Secretary shall ensure that no payment be

5 made under this subchapter to any owner if that owner

6 has indicated an intention to claim an income tax credit

7 (under section 25B of the Internal Revenue Code of 1986)

8 for participation in this program, or an income tax deduc9 tion (under section 170(h)(4)(A)(iii) of such Code).’’

10 (c) CLERICAL AMENDMENT.—The table of sections

11 for subpart A of part IV of subchapter A of chapter 1

12 of the Internal Revenue Code of 1986 is amended by in13 serting after the item relating to section 25A the following

14 new item:

‘‘Sec. 25B. Credit for agreement to manage land to preserve endangered species.’’

15 (d) EFFECTIVE DATES.—

16 (1) CREDIT.—The amendments made by sub17 sections (a) and (c) shall apply to taxable years be18 ginning after December 31, 1995.

19 (2) CONFORMING AMENDMENTS.—The amend20 ments made by subsection (b) shall take effect on

21 the date of enactment of the Endangered Species

22 Habitat Protection Act of 1997.
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1 SEC. 4. ENHANCED DEDUCTION FOR THE DONATION OF A

2 CONSERVATION EASEMENT.

3 (a) IN GENERAL.—Subparagraph (A) of section

4 170(h)(4) of the Internal Revenue Code of 1986 (defining

5 conservation purpose) is amended by striking ‘‘or’’ at the

6 end of clause (iii), by striking the period at the end of

7 clause (iv) and inserting ‘‘, or’’, and by adding at the end

8 the following new clause:

9 ‘‘(v) the protection of a species des10 ignated endangered by the Secretary of the

11 Interior or the Secretary of Commerce.’’

12 (b) ENHANCED VALUATION.—Section 170(h) of the

13 Internal Revenue Code of 1986 (defining qualified con14 servation contribution) is amended by adding at the end

15 the following new paragraph:

16 ‘‘(7) ENHANCED VALUATION OF PROPERTY

17 WITH ENDANGERED SPECIES.—For purposes of this

18 section, the valuation of a perpetual restriction

19 granted to the Secretary of the Interior or the Sec20 retary of Commerce or to a State agency implement21 ing an endangered species program for the purpose

22 described in paragraph (4)(A)(iii) shall be made by

23 comparing the value of the property after the re24 striction is granted with the value of that same

25 property without either the encumbrance of such re26 striction or any of the restrictions placed on such
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1 property by the Endangered Species Act of 1973 (16

2 U.S.C. 1531 et seq.).’’

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to contributions made after the

5 date of the enactment of this Act.

6 SEC. 5. ADDITIONAL DEDUCTION FOR CERTAIN STATE AND

7 LOCAL REAL PROPERTY TAXES IMPOSED

8 WITH RESPECT TO PROPERTY SUBJECT TO

9 AN ENDANGERED SPECIES CONSERVATION

10 AGREEMENT.

11 (a) IN GENERAL.—Section 164 of the Internal Reve12 nue Code of 1986 (relating to deductions for taxes) is

13 amended by redesignating subsection (g) as subsection (h)

14 and by inserting after subsection (f) the following new

15 subsection:

16 ‘‘(g) ADDITIONAL DEDUCTION FOR CERTAIN STATE

17 AND LOCAL REAL PROPERTY TAXES IMPOSED WITH RE18 SPECT TO PROPERTY SUBJECT TO AN ENDANGERED SPE19 CIES CONSERVATION AGREEMENT.—

20 ‘‘(1) GENERAL RULE.—Except as provided in

21 paragraph (3), in the case of property—

22 ‘‘(A) which, on the last day of the taxable

23 year, is described in section 25B(c)(1), and

24 ‘‘(B) with respect to which no recapture

25 event described in section 25B(d) has occurred,
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1 a deduction in the amount determined under

2 paragraph (2) shall be allowed for all State and

3 local real property taxes paid or accrued with

4 respect to such property during such year. The

5 deduction allowed by this subsection shall be in

6 addition to any other deduction allowed by this

7 section.

8 ‘‘(2) AMOUNT OF ADDITIONAL DEDUCTION.—

9 The deduction allowed by this subsection shall equal

10 25 percent of the amount of State and local real

11 property taxes that are otherwise deductible under

12 this section without regard to this subsection.

13 ‘‘(3) DEDUCTION NOT ALLOWED.—No deduc14 tion shall be allowed under this subsection for taxes

15 imposed upon real property—

16 ‘‘(A) with respect to which a credit under

17 section 25B is allowable, or

18 ‘‘(B) subject to a perpetual restriction that

19 is valued pursuant to section 170(h)(7).’’

20 (b) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to taxable years beginning after

22 December 31, 1995.
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1 SEC. 6. EXCLUSION FROM ESTATE FOR REAL PROPERTY

2 SUBJECT TO ENDANGERED SPECIES CON3 SERVATION AGREEMENT.

4 (a) IN GENERAL.—Part IV of subchapter A of chap5 ter 11 of the Internal Revenue Code of 1986 (relating to

6 taxable estate) is amended by adding at the end the follow7 ing new section:

8 ‘‘SEC. 2057. CERTAIN REAL PROPERTY SUBJECT TO ENDAN9 GERED SPECIES CONSERVATION AGREE10 MENT.

11 ‘‘(a) GENERAL RULE.—For purposes of the tax im12 posed by section 2001, the value of the taxable estate shall

13 be determined by deducting from the value of the gross

14 estate an amount equal to the adjusted value of real prop15 erty included in the gross estate which is subject to an

16 endangered species conservation agreement.

17 ‘‘(b) PROPERTY SUBJECT TO AN ENDANGERED SPE18 CIES CONSERVATION AGREEMENT.—For purposes of this

19 section—

20 ‘‘(1) IN GENERAL.—Real property shall be

21 treated as subject to an endangered species con22 servation agreement if—

23 ‘‘(A) each person who has an interest in

24 such property (whether or not in possession)

25 has entered into—
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1 ‘‘(i) an endangered species conserva2 tion agreement with respect to such prop3 erty, and

4 ‘‘(ii) a written agreement with the

5 Secretary consenting to the application of

6 subsection (d), and

7 ‘‘(B) the executor of the decedent’s es8 tate—

9 ‘‘(i) elects the application of this sec10 tion, and

11 ‘‘(ii) files with the Secretary such en12 dangered species conservation agreement.

13 ‘‘(2) ADJUSTED VALUE.—The adjusted value of

14 any real property shall be its value for purposes of

15 this chapter, reduced by any amount deductible

16 under section 2053(a)(4) or 2055(f) with respect to

17 the property.

18 ‘‘(c) ENDANGERED SPECIES CONSERVATION AGREE19 MENT.—For purposes of this section—

20 ‘‘(1) IN GENERAL.—The term ‘endangered spe21 cies conservation agreement’ means a written agree22 ment entered into with the Secretary of the Interior

23 or the Secretary of Commerce—

24 ‘‘(A) which commits each person who

25 signed such agreement to carry out on the real
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1 property activities or practices not otherwise re2 quired by law or to refrain from carrying out on

3 such property activities or practices that could

4 otherwise be lawfully carried out,

5 ‘‘(B) which is certified by such Secretary

6 as assisting in the conservation of any species

7 which is—

8 ‘‘(i) designated by such Secretary as

9 an endangered or threatened species under

10 the Endangered Species Act of 1973 (16

11 U.S.C. 1531 et seq.),

12 ‘‘(ii) proposed for such designation, or

13 ‘‘(iii) officially identified by such Sec14 retary as a candidate for possible future

15 protection as an endangered or threatened

16 species, and

17 ‘‘(C) which applies to at least one-half of

18 the total area of the property.

19 ‘‘(2) ANNUAL CERTIFICATION TO THE SEC20 RETARY BY THE SECRETARY OF THE INTERIOR OR

21 THE SECRETARY OF COMMERCE OF THE STATUS OF

22 ENDANGERED SPECIES CONSERVATION AGREE23 MENTS.—If the executor elects the application of

24 this section, the executor shall promptly give written

25 notice of such election to the Secretary of the Inte-
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1 rior or the Secretary of Commerce. The Secretary of

2 the Interior or the Secretary of Commerce shall

3 thereafter annually certify to the Secretary that the

4 endangered species conservation agreement applica5 ble to any property for which such election has been

6 made remains in effect and is being satisfactorily

7 complied with.

8 ‘‘(d) RECAPTURE OF TAX BENEFIT IN CERTAIN

9 CASES.—

10 ‘‘(1) DISPOSITION OF INTEREST OR MATERIAL

11 BREACH.—

12 ‘‘(A) IN GENERAL.—Except as provided in

13 subparagraph (C), an additional tax in the

14 amount determined under subparagraph (B)

15 shall be imposed on any person on the earlier

16 of—

17 ‘‘(i) the disposition by such person of

18 any interest in property subject to an en19 dangered species conservation agreement

20 (other than a disposition described in sub21 paragraph (C)),

22 ‘‘(ii) the failure by such person to

23 comply with the terms of the endangered

24 species conservation agreement, or
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1 ‘‘(iii) the termination of the endan2 gered species conservation agreement.

3 ‘‘(B) AMOUNT OF ADDITIONAL TAX.—The

4 amount of the additional tax imposed by sub5 paragraph (A) shall be an amount that bears

6 the same ratio to the fair market value of the

7 real property at the time of the event described

8 in subparagraph (A) as the ratio of the amount

9 by which the estate tax liability was reduced by

10 virtue of this section bore to the fair market

11 value of such property at the time the executor

12 filed the agreement under subsection (b)(1).

13 For purposes of this subparagraph, the term

14 ‘estate tax liability’ means the tax imposed by

15 section 2001 reduced by the credits allowable

16 against such tax.

17 ‘‘(C) EXCEPTION IF TRANSFEREE AS18 SUMES OBLIGATIONS OF TRANSFEROR.—Sub19 paragraph (A)(i) shall not apply if the trans20 feror and the transferee of the property enter

21 into a written agreement pursuant to which the

22 transferee agrees—

23 ‘‘(i) to assume the obligations imposed

24 on the transferor under the endangered

25 species conservation agreement,
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1 ‘‘(ii) to assume personal liability for

2 any tax imposed under subparagraph (A)

3 with respect to any future event described

4 in subparagraph (A), and

5 ‘‘(iii) to notify the Secretary of the

6 Treasury and the Secretary of the Interior

7 or the Secretary of Commerce that the

8 transferee has assumed such obligations

9 and liability.

10 If a transferee enters into an agreement de11 scribed in clauses (i), (ii), and (iii), such trans12 feree shall be treated as signatory to the endan13 gered species conservation agreement the trans14 feror entered into.

15 ‘‘(2) DUE DATE OF ADDITIONAL TAX.—The ad16 ditional tax imposed by paragraph (1) shall become

17 due and payable on the day that is 6 months after

18 the date of the disposition referred to in paragraph

19 (1)(A)(i) or, in the case of an event described in

20 clause (ii) or (iii) of paragraph (1)(A), on April 15

21 of the calendar year following any year in which the

22 Secretary of the Interior or the Secretary of Com23 merce fails to provide the certification required

24 under subsection (c)(2).
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1 ‘‘(e) STATUTE OF LIMITATIONS.—If a taxpayer in2 curs a tax liability pursuant to subsection (d)(1)(A),

3 then—

4 ‘‘(1) the statutory period for the assessment of

5 any additional tax imposed by subsection (d)(1)(A)

6 shall not expire before the expiration of 3 years from

7 the date the Secretary is notified (in such manner

8 as the Secretary may by regulation prescribe) of the

9 incurring of such tax liability, and

10 ‘‘(2) such additional tax may be assessed before

11 the expiration of such 3-year period notwithstanding

12 the provisions of any other law or rule of law that

13 would otherwise prevent such assessment.

14 ‘‘(f) ELECTION AND FILING OF AGREEMENT.—The

15 election under this section shall be made on the return

16 of the tax imposed by section 2001. Such election, and

17 the filing under subsection (a) of an endangered species

18 conservation agreement, shall be made in such manner as

19 the Secretary shall by regulation provide.

20 ‘‘(g) APPLICATION OF THIS SECTION TO INTERESTS

21 IN PARTNERSHIPS, CORPORATIONS, AND TRUSTS.—The

22 Secretary shall prescribe regulations setting forth the ap23 plication of this section in the case of an interest in a part24 nership, corporation, or trust which, with respect to a de25 cedent, is an interest in a closely held business (within
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1 the meaning of paragraph (1) of section 6166(b)). For

2 purposes of the preceding sentence, an interest in a discre3 tionary trust all the beneficiaries of which are heirs of the

4 decedent shall be treated as a present interest.’’

5 (b) CARRYOVER BASIS.—Section 1014(a)(4) of the

6 Internal Revenue Code of 1986 (relating to basis of prop7 erty acquired from a decedent) is amended by inserting

8 ‘‘or 2057’’ after ‘‘section 2031(c)’’.

9 (c) CLERICAL AMENDMENT.—The table of sections

10 for part IV of subchapter A of chapter 11 of the Internal

11 Revenue Code of 1986 is amended by adding at the end

12 the following new item:

‘‘Sec. 2057. Certain real property subject to endangered species

conservation agreement.’’

13 (d) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to estates of decedents dying after

15 the date of the enactment of this Act.

16 SEC. 7. EXCLUSION OF 75 PERCENT OF GAIN ON SALES OF

17 LAND TO CERTAIN PERSONS FOR THE PRO18 TECTION OF HABITAT.

19 (a) IN GENERAL.—Part I of subchapter P of chapter

20 1 of the Internal Revenue Code of 1986 (relating to treat21 ment of capital gains) is amended by adding at the end

22 the following new section:
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1 ‘‘SEC. 1203. 75 PERCENT EXCLUSION FOR GAIN ON SALES

2 OF LAND TO CERTAIN PERSONS FOR THE

3 PROTECTION OF HABITAT.

4 ‘‘(a) EXCLUSION.—Gross income shall not include 75

5 percent of any gain from the sale of any land to a con6 servation purchaser if—

7 ‘‘(1) such land was owned by the taxpayer or a

8 member of the taxpayer’s family (as defined in sec9 tion 2032A(e)(2)) at all times during the 3-year pe10 riod ending on the date of the sale, and

11 ‘‘(2) such land is being acquired by a conserva12 tion purchaser for the purpose of protecting the

13 habitat of any species listed by the Secretary of the

14 Interior or the Secretary of Commerce under the

15 Endangered Species Act as endangered or threat16 ened, proposed for listing as endangered or threat17 ened, or which is a candidate for such listing.

18 ‘‘(b) CONSERVATION PURCHASER.—For purposes of

19 this section—

20 ‘‘(1) CONSERVATION PURCHASER.—The term

21 ‘conservation purchaser’ means—

22 ‘‘(A) any agency of the United States or of

23 any State or local government, and

24 ‘‘(B) any qualified organization.

25 ‘‘(2) QUALIFIED ORGANIZATION.—The term

26 ‘qualified organization’ has the meaning given such
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1 term by section 170(h)(3) (determined without re2 gard to section 170(b)(1)(A)(v)).’’

3 (b) CLERICAL AMENDMENT.—The table of sections

4 for part I of subchapter P of chapter 1 of the Internal

5 Revenue Code of 1986 is amended by adding at the end

6 the following new item:

‘‘Sec. 1203. 75-percent exclusion for gain on sales of land to certain persons

for the protection of habitat.’’

7 (c) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to sales after December 31, 1997.

9 SEC. 8. RIGHT TO COMPENSATION.

10 (a) PROHIBITION.—No agency action affecting pri11 vately owned property under this section shall result in

12 the diminishment of the value of any portion of that prop13 erty by 30 percent or more unless compensation is offered

14 in accordance with this section.

15 (b) COMPENSATION FOR DIMINISHMENT.—Any agen16 cy that takes an action the economic impact of which ex17 ceeds the amount provided in subsection (a)—

18 (1) shall compensate the property owner for the

19 diminution in value of the portion of that property

20 resulting from the action; or

21 (2) if the diminution in value of a portion of

22 that property is greater than 50 percent, at the op23 tion of the owner, such agency shall buy that portion

24 of the property and shall pay fair market value
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1 based on the value of the property before the dimi2 nution.

3 (c) REQUEST OF OWNER.—A property owner seeking

4 compensation under this section shall make a written re5 quest for compensation to the agency whose action would

6 limit the otherwise lawful use of property. The request

7 shall, at a minimum, identify the affected portion of the

8 property, the nature of the diminution, and the amount

9 of compensation claimed.

10 (d) CHOICE OF REMEDIES.—If the parties have not

11 reached an agreement on compensation within 180 days

12 after the written request is made, the owner may elect

13 binding arbitration through alternative dispute resolution

14 or seek compensation due under this section in a civil ac15 tion. The parties may by mutual agreement extend the pe16 riod of negotiation on compensation beyond the 180-day

17 period without loss of remedy to the owner under this sec18 tion. In the event the extension period lapses the owner

19 may elect binding arbitration through alternative dispute

20 resolution or seek compensation due under this section in

21 a civil action.

22 (e) ALTERNATIVE DISPUTE RESOLUTION.—

23 (1) IN GENERAL.—In the administration of this

24 section—
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1 (A) arbitration procedures shall be in ac2 cordance with the alternative dispute resolution

3 procedures established by the American Arbi4 tration Association; and

5 (B) in no event shall arbitration be a con6 dition precedent or an administrative procedure

7 to be exhausted before the filing of a civil action

8 under this section.

9 (2) REVIEW OF ARBITRATION.—

10 (A) APPEAL OF DECISION.—Appeal from

11 arbitration decisions shall be to the United

12 States District Court for the district in which

13 the property is located or the United States

14 Court of Federal Claims in the manner pre15 scribed by law for the claim under this section.

16 (B) RULES OF ENFORCEMENT OF

17 AWARD.—The provisions of title 9, United

18 States Code (relating to arbitration), shall

19 apply to enforcement of awards rendered under

20 this section.

21 (f) CIVIL ACTION.—An owner who prevails in a civil

22 action against any agency pursuant to this section shall

23 be entitled to, and such agency shall be liable for, just

24 compensation, plus reasonable attorney’s fees and other

25 litigation costs, including appraisal fees.
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1 (g) SOURCE OF PAYMENTS.—Any payment made

2 under this section shall be paid from the responsible agen3 cy’s annual appropriation supporting the agency’s activi4 ties giving rise to the claim for compensation. If insuffi5 cient funds are available to the agency in the fiscal year

6 in which the award becomes final the agency shall pay the

7 award from appropriations available in the next fiscal

8 year.

9 (h) DEFINITIONS.—For the purposes of this sec10 tion—

11 (1) the term ‘‘agency’’ has the meaning given

12 that term in section 551 of title 5, United States

13 Code;

14 (2) the term ‘‘agency action’’ means any action

15 or decision taken by any agency that at the time of

16 such action or decision adversely affects private

17 property rights;

18 (3) the term ‘‘fair market value’’ means the

19 likely price at which property would change hands,

20 in a competitive and open market under all condi21 tions requisite to fair sale, between a willing buyer

22 and willing seller, neither being under any compul23 sion to buy or sell and both having reasonable

24 knowledge of relevant facts, prior to occurrence of

25 the agency action;
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1 (4) the term ‘‘just compensation’’—

2 (A) means compensation equal to the full

3 extent of a property owner’s loss, including the

4 fair market value of the private property taken,

5 whether the taking is by physical occupation or

6 through regulation, exaction, or other means;

7 and

8 (B) shall include compounded interest cal9 culated from the date of the taking until the

10 date the United States tenders payment;

11 (5) the term ‘‘owner’’ means the owner or pos12 sessor of property or rights in property at the time

13 the taking occurs, including when—

14 (A) the statute, regulation, rule, order,

15 guideline, policy, or action is passed or promul16 gated; or

17 (B) the permit, license, authorization, or

18 governmental permission is denied or sus19 pended;

20 (6) the term ‘‘property’’ means land, an interest

21 in land, proprietary water rights, and any personal

22 property that is subject to use by the Federal Gov23 ernment or to a restriction on use;

24 (7) the term ‘‘private property’’ or ‘‘property’’

25 means all interests constituting real property, as de-
26

•S 1181 IS

1 fined by Federal or State law, protected under the

2 fifth amendment to the United States Constitution,

3 any applicable Federal or State law, or this section,

4 and more specifically constituting—

5 (A) real property, whether vested or

6 unvested, including—

7 (i) estates in fee, life estates, estates

8 for years, or otherwise;

9 (ii) inchoate interests in real property

10 such as remainders and future interests;

11 (iii) personalty that is affixed to or

12 appurtenant to real property;

13 (iv) easements;

14 (v) leaseholds;

15 (vi) recorded liens; and

16 (vii) contracts or other security inter17 ests in, or related to, real property;

18 (B) the right to use water or the right to

19 receive water, including any recorded liens on

20 such water right; or

21 (C) rents, issues, and profits of land, in22 cluding minerals, timber, fodder, crops, oil and

23 gas, coal, or geothermal energy.

Æ