COLUMN ONE : Raising the Price of Protecting Nature : Does government too zealously regulate private property? Some say making U.S. pay owners when land is devalued could curb excesses. Others fear it would gut enforcement.

For years the Simpson Timber Co. has conducted tours of its Sacramento Valley eucalyptus plantation, showing off the 12,000-acre tree farm to schoolchildren, civic groups, University of California forestry faculty and federal environmental experts.

So it came as a shock when agents from the U.S. Environmental Protection Agency appeared in January with a search warrant and formal charges that said, in effect, that Simpson had been thumbing its nose at federal law by systematically destroying wetlands.

Among those most surprised were officials of the U.S. Fish and Wildlife Service. Simpson has been working with the agency to preserve habitat for the endangered fairy shrimp, which lives in the same vernal pools that the EPA accused Simpson of destroying.

“They [Simpson officials] have shown great interest in following the law,” said Michael Horton, a habitat conservation official with the wildlife agency in Sacramento.

With the future of Simpson’s $14-million investment in doubt and hundreds of jobs on the line, local reaction is helping to fuel a much broader backlash--one that could dramatically change the way the federal government regulates the environment.

What is known locally as the EPA “raid” on the tree farm has become fodder in the fight to reduce the government’s power to police private property. That fight could stymie federal efforts to stop the destruction of sensitive wetlands or the cutting of trees in forests where endangered species live, and force a rethinking of 25 years of environmental policies.

Because most of the nation’s land is in private hands, protection of natural resources depends greatly on what happens on private property. For much of this century the government has had a broad license to prevent owners from polluting streams where fish spawn, cutting trees where rare birds nest or filling in bodies of water that nourish a variety of wildlife.

For the past year, a growing chorus of critics has accused federal agencies of abusing that license, often for questionable goals: preserving seasonal pools no bigger than potholes or saving rodents, reptiles and crustaceans of marginal value to society.

Now, Congress is moving to compensate owners whose holdings are devalued as a result of government regulation that restricts their use. Legislation passed the House this year and has strong support in the Senate.

If the government has to reimburse people who are forced to protect wetlands or endangered species habitats, advocates argue, regulators won’t be so quick to tell people what they can and cannot do on their own property.

But environmental groups and other opponents say such a law would price the government out of environmental protection. If owners were compensated, a Congressional Budget Office report said, the price tag of wetlands protection would increase from about $100 million to several billion.

“The cost of a single settlement could exceed the budget of the agency involved,” said former Sen. Paul Tsongas, a Massachusetts Democrat who is speaking out against the concept. “You could wipe out an agency. Is that the intent here? Is that the agenda of a congressional majority that boasts of its fiscal responsibility?”

At issue is an age-old squabble pitting the rights of owners to do what they want against the obligation of government to prevent people from using their property in a way that harms their neighbors or the environment.

Proponents of compensation contend that any regulation that decreases the value of a piece of property is a “taking” under the 5th Amendment, which says that private property shall not be “taken” for public use without just compensation.

Opponents counter that the U.S. Supreme Court said the government was free to put limits on the use of private property, much as it has the right to curb freedom of speech when the public well-being requires it.

“Government could hardly go on,” wrote Supreme Court Justice Oliver Wendell Holmes in a 1922 opinion, “if it has to pay for every regulation that lowers property values.”

Holmes’ view has influenced a half-century of rulings in property rights cases by both liberal and conservative Supreme Courts. Courts have tended to compensate property owners only in the most extreme cases, when regulations have all but wiped out the value of a piece of property.

The legislation heading to the Senate would provide considerably more relief to property owners.

It would require the federal government to pay owners who can show that even a fraction of their property is worth significantly less--20% in the House bill, 33% in the Senate version--as the result of regulations.

The proposal is mainly a reaction against regulations protecting wetlands and endangered species. But its scope is considerably broader, requiring compensation under a host of federal laws governing the environment, food and drugs, civil rights and occupational health and safety.

Even some of the harshest critics of federal regulatory practices have expressed reservations about the pending legislation. Gideon Kanner, a Los Angeles lawyer who has represented property owners nationwide, questions the proposed law for what he calls a one-size-fits-all approach.

“Any time you reduce anything to a formula,” Kanner said, referring to the 20% threshold, “you’re going to have problems. Obviously, it makes more sense to determine the equities on a case-by-case basis.”

He said, however, that federal agencies have only themselves to blame for the legislation.

“If the government had acted responsibly, if they hadn’t been so overreaching, it wouldn’t have precipitated the public anger that is being reflected in Congress.”

The political battle, likely to be resolved in the next few months, has created a dilemma for many lawmakers, such as Sen. Dianne Feinstein, a California Democrat who opposed the “takings” bills but sympathizes with property owners like Simpson.

“I find EPA’s enforcement action overbearing and unwarranted,” Feinstein wrote to EPA administrator Carol Browner in regard to the Simpson case. “This is the kind of federal agency action which is causing the public and the Congress to question all federal environmental regulation.”

Nationwide, the controversy over wetlands protection is (along with the Endangered Species Act) a driving force behind the efforts in Congress to restrict regulation of private property.

Fought over for decades, wetlands are prime real estate and precious natural resources.

Wetlands perform critical functions. Many are breeding grounds and nurseries for thousands of fish and birds. Estuaries and marshes act as buffers against storms, sponging up floodwaters and tidal surges. They also filter out pollutants and help recharge underground water supplies.

“Where land meets water tends to be the most valuable property for development,” said Richard Lazarus, an environmental law professor at Washington University in St. Louis. “It’s where people want to live, on the lake or by the sea, and that’s where you find an awful lot of the most ecologically valuable wetlands.”

Since colonial times, the United States has lost half of its wetlands and California has lost nearly 90%, contributing to a decline in birds and fish.

The task of preserving what is left is especially difficult because so much of it--about 70%--is in private hands. And putting wetlands out of reach of damage can have serious consequences for small property owners.

In recent months, opponents of wetlands protection have regaled Congress with stories of elderly couples facing economic ruin, their nest eggs unwittingly tied up in property that is subsequently placed off limits to development.

One study by a Washington, D.C., law firm that represents property owners contended that 10,000 people annually must wait a year or longer to find out whether they can build on their property after wetlands have been discovered.

“Fifty percent of the time, the property involved is about an acre or less,” said Virginia Albrecht, the lawyer in charge of the study.

But not all the horror stories have held up.

The subject of much congressional sympathy, John Chaconis of Louisiana, was said to be on the brink of losing his house because of wetlands regulations. But Chaconis proved to be a reluctant martyr.

Congressional backers of property rights legislation blamed his plight on high-handed regulators who threatened to condemn his house because it was built on wetlands without the necessary permit.

But in a prepared statement, Chaconis blamed the builder of the house for going ahead with construction after being told that filling in the marshy site might lead to flooding of adjacent lots.

The flooding did occur, said Chaconis, who went on to say: “What is wrong here is not wetlands policy gone awry, but the arrogant belief that some can do whatever they want with their property and all others be damned.”

Still, federal officials admit that there have been problems with wetlands enforcement.

“There has been confusion, inconsistencies and some overly cautious regulation,” said Michael Davis, chief of regulatory programs for the U.S. Army Corps of Engineers, one of the agencies with jurisdiction over wetlands.

Yet, he said, charges of wholesale government abuse are not supported by the facts.

Of the 48,000 people who requested permits to build on, farm or otherwise disturb wetlands in 1994, about 80% received permission in less than a month, Davis said.

“From the publicity, you would have thought we had sent hundreds of unsuspecting wetlands violators to jail,” Davis said. “The fact is four people in 23 years of enforcement have gone to jail.”

However, critics argue that the corps’ figures are misleading.

“Those numbers don’t begin to tell you about the people who have been discouraged from doing anything with their land because of the hang-ups or costs that come with so many permits,” said Richard Epstein, a University of Chicago law professor.

In her paper on wetlands regulation, Albrecht asserted that in the past five years, the majority of permit applications for wetlands were withdrawn. “People just get tired of waiting,” she said.

The Simpson Timber Co. dispute with the EPA is a classic example of the kind of clash between private enterprise and the federal bureaucracy that is fueling the campaign for less government regulation.

In the mid-1980s, the company decided to establish the eucalyptus farm on 12,000 acres of pasture and cropland about 100 miles north of Sacramento. Faced with increasing logging restrictions in the Sierra Nevada, Simpson needed a new source of pulp to supply its nearby paper mill.

Simpson’s property is surrounded by rolling countryside that once was dotted with vernal pools--small, shallow depressions that fill with water for a few months in winter, nourish native plants, and serve as oases for migratory birds and as habitat for tiny endangered species such as the fairy shrimp.

In the past century, many if not most pools have been lost as farmers churned the soil and destroyed the hardpan that cups the water.

According to Mark Parsons, Tehama County District conservationist for the federal Soil Conservation Service, Simpson officials were shown maps indicating no vernal pools on the first 2,000 acres the company wanted to plant.

Parsons said that Simpson was also told that soil surveys of Tehama County showed no signs of conditions necessary for the formation of vernal pools.

Today, Parsons concedes that those maps were wrong: “Science hadn’t quite caught up.” Although the survey errors were corrected by 1990, he said, Simpson was not notified of the changes.

By January, when the EPA came to the property with a search warrant, all but a few thousand acres were planted.

The EPA accused the company of “destroying or seriously degrading an enormous amount of wetlands . . . crucial for the continued presence in California of migratory ducks, numerous species of other water birds . . . endangered plants and animals.”

Characterizing Simpson as “a large, sophisticated company” well versed in environmental law, the EPA said the firm “knew or should have known” that its operations imperiled sensitive wetlands by plowing up ground that supports vernal pools.

The agency then ordered Simpson to cease all activities that could harm any remaining wetlands until a permit is issued saying where and how the company can continue to plant trees or replant trees that are harvested.

Angry Simpson executives protested that they were being treated like common criminals.

“Why couldn’t they just come and talk to us the way the Fish and Wildlife Service did?” asked Mark Pawlicki, the firm’s California public relations manager.

EPA officials said they acted as they did because they did not want to give Simpson the opportunity to destroy any incriminating documents that might show that the firm knew it was harming wetlands.

Interviewed recently, EPA officials insisted that they had no intention of shutting down the tree farm.

“We think it is possible to both operate and comply with the wetland provisions of the Clean Water Act,” said Gail Cooper, EPA’s regional counsel.

While Simpson’s lawyers argue that the company should be exempt from a permit, its lobbyists are pushing for changes in federal laws to make it harder for government to regulate vernal pools.

Company officials say Simpson is increasingly sympathetic to the campaign for “takings” legislation.

“A certain amount of regulation is fine,” Pawlicki said. “But there’s a breaking point. There comes a time when regulation amounts to ‘takings’ and you ought to be compensated.”