Panel Backs Big Break for Landowners : Legislation: House committee OKs monetary compensation if federal rule lessens property value by at least 10%. Critics see it as blank check for developers.

The House Judiciary Committee voted Thursday to give developers and other landowners what critics charged is a potential multibillion-dollar blank check whenever a federal regulation lessens a property’s value by 10% or more.

The legislation would make exceptions when a development would be a hazard to public health or safety, when it would damage other property or when it would violate state or local laws, such as a zoning ordinance.

The bill, part of the GOP’s “contract with America” campaign manifesto, passed on a party-line voice vote. It would go far beyond current court rulings that protect property rights, creating what its Republican sponsors said would be a new “right to compensation” for landowners.

“This will make agencies accountable . . . and force them to take costs into account” before they enforce regulations affecting property, said Rep. Charles F. Canady (R-Fla.), one of the authors of the bill.

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Democrats and Clinton Administration officials said the measure, if it becomes law, could force taxpayers to pay billions of dollars in compensation to wealthy landowners and developers.

“I think this legislation will be seen as a laughingstock” when its implications become clear, said Rep. Barney Frank (D-Mass.). Another committee Democrat labeled it the “biggest new entitlement since Social Security.”

The bill now goes to the House floor. It could face trouble there, however, because 18 moderate Republicans have said that they oppose it.

The bill “as written could have severe and unintended consequences which could potentially harm, rather than help, the average American,” said Reps. John E. Porter (R-Ill.) and Sherwood Boehlert (R-N.Y.) in a letter Tuesday to Committee Chairman Henry J. Hyde (R-Ill.). “As fiscal conservatives, we . . . find it difficult to justify the creation of a new entitlement program whose potential costs are unknown and undeterminable,” they said.

Reacting to the letter, committee Republicans on Wednesday proposed a sharply scaled-back version of the bill that would cover only regulations involving wetlands and the Endangered Species Act. Those two environmental measures have prompted the most angry complaints from property owners, who sometimes find themselves unable to build on their land because of possible impact on wetlands or the habitat of an endangered animal.

But without explanation, committee Republicans on Thursday voted to drop the limited version of the bill.

“The federal government shall compensate an owner of property whose use of that property has been limited by an agency action . . . that diminishes (its) fair market value by 10% or more,” the legislation says.

Its sponsors said that an appraiser could determine the “fair market value” of the property but committee members disagreed on how that would be done. For example, is it the value of the land before it has been developed or its potential value after it has been developed? The answer to that question, like some other aspects of the bill, was not spelled out.

The bill says that property owners have 180 days to seek compensation after receiving “actual notice” that their development has been limited.

The Republican majority rejected a Democratic amendment that would have limited the law to new regulations.

During a hearing last week, critics of the bill said it would allow land speculators to buy wetlands or coastal property, propose to build on it and then demand huge compensation from the government if their plans were blocked.