[House Hearing, 109 Congress]
[From the U.S. Government Printing Office]




 
H.R. 3405, STRENGTHENING THE OWNERSHIP OF PRIVATE PROPERTY ACT OF 2005 
                                (STOPP)

=======================================================================

                          LEGISLATIVE HEARING

                               before the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                       Thursday, October 27, 2005

                               __________

                           Serial No. 109-33

                               __________

           Printed for the use of the Committee on Resources



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
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                         COMMITTEE ON RESOURCES

                 RICHARD W. POMBO, California, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska                    Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Eni F.H. Faleomavaega, American 
Elton Gallegly, California               Samoa
John J. Duncan, Jr., Tennessee       Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Barbara Cubin, Wyoming               Donna M. Christensen, Virgin 
  Vice Chair                             Islands
George P. Radanovich, California     Ron Kind, Wisconsin
Walter B. Jones, Jr., North          Grace F. Napolitano, California
    Carolina                         Tom Udall, New Mexico
Chris Cannon, Utah                   Raul M. Grijalva, Arizona
John E. Peterson, Pennsylvania       Madeleine Z. Bordallo, Guam
Jim Gibbons, Nevada                  Jim Costa, California
Greg Walden, Oregon                  Charlie Melancon, Louisiana
Thomas G. Tancredo, Colorado         Dan Boren, Oklahoma
J.D. Hayworth, Arizona               George Miller, California
Jeff Flake, Arizona                  Edward J. Markey, Massachusetts
Rick Renzi, Arizona                  Peter A. DeFazio, Oregon
Stevan Pearce, New Mexico            Jay Inslee, Washington
Henry Brown, Jr., South Carolina     Mark Udall, Colorado
Thelma Drake, Virginia               Dennis Cardoza, California
Luis G. Fortuno, Puerto Rico         Stephanie Herseth, South Dakota
Cathy McMorris, Washington
Bobby Jindal, Louisiana
Louie Gohmert, Texas
Marilyn N. Musgrave, Colorado
Vacancy

                     Steven J. Ding, Chief of Staff
                      Lisa Pittman, Chief Counsel
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel


                                 ------                                

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on Thursday, October 27, 2005.......................     1

Statement of Members:
    Bonilla, Hon. Henry, a Representative in Congress from the 
      State of Texas.............................................     7
        Prepared statement of....................................     8
    Drake, Hon. Thelma, a Representative in Congress from the 
      State of Virginia..........................................     5
    Gibbons, Hon. Jim, a Representative in Congress from the 
      State of Nevada............................................     4
    Herseth, Hon. Stephanie, a Representative in Congress from 
      the State of South Dakota..................................     5
    Otter, Hon. C.L. ``Butch,'' a Representative in Congress from 
      the State of Idaho.........................................    10
        Prepared statement of....................................    12
    Pallone, Hon. Frank, Jr., a Representative in Congress from 
      the State of New Jersey....................................     3
    Pombo, Hon. Richard W., a Representative in Congress from the 
      State of California........................................     1
        Prepared statement of....................................     2

Statement of Witnesses:
    Arroyo, Mario, Co-Owner, Arroyo's Cafe, Stockton, California.    30
        Prepared statement of....................................    31
    Gall, Bert, Attorney, Institute for Justice, Washington, D.C.    23
        Prepared statement of....................................    24
    Hance, Earl, President, Maryland Farm Bureau, Inc., on behalf 
      of the American Farm Bureau Federation.....................    27
        Prepared statement of....................................    29
    Marzulla, Nancie, President, Defenders of Property Rights, 
      Washington, D.C., Prepared statement of....................    20
    Wally, Barbara, Attorney, Defenders of Property Rights, 
      Washington, D.C., Oral statement of........................    19


   LEGISLATIVE HEARING ON H.R. 3405, STRENGTHENING THE OWNERSHIP OF 
                 PRIVATE PROPERTY ACT OF 2005 (STOPP).

                              ----------                              


                       Thursday, October 27, 2005

                     U.S. House of Representatives

                         Committee on Resources

                            Washington, D.C.

                              ----------                              

    The Committee met, pursuant to call, at 10:03 a.m. in Room 
1324 Longworth House Office Building, Hon. Richard W. Pombo, 
Chairman, Committee on Resources, presiding.
    Present: Pombo, Gibbons, Pallone, Drake, and Herseth.

  STATEMENT OF THE HON. RICHARD W. POMBO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    The Chairman. The Committee will come to order. We are 
holding a hearing today on H.R. 3405, Strengthening the 
Ownership of Private Property Act of 2005.
    Property rights are the heart of individual freedom and the 
foundation for all other civil rights guaranteed to Americans 
by the Constitution. Without the freedom to acquire, possess, 
and defend property, all other guaranteed rights are merely 
words on a page.
    The Fifth Amendment holds that private property shall not 
be taken by the government for public use without just 
compensation. These safeguards have been under assault for 
decades. And until now, the typical victims were family farmers 
and ranchers in the West.
    The Supreme Court's decision in Kelo v. the City of New 
London case to allow local governments to declare eminent 
domain in this case goes beyond compensation. It wholly 
perverts the intent of public use, and in so doing, may turn 
the American dream of home ownership into a nightmare. It has 
delivered the property rights assault from rural America right 
to the doorsteps of suburbia.
    In New London, Connecticut, city planners essentially 
decided that evicting 15 homeowners from their homes was in the 
greater good as a public use for an office park and new condos. 
But the public, to be directly served in this case, was a 
private corporation. Whether they were newlywed couples in 
their first home or lifelong residents who own their homes 
outright, whether it is farmers and ranchers who have been on 
their land for generations or suburban communities with the 
promise of fellowship, this appalling behavior cannot be 
tolerated anymore.
    The Supreme Court's decision to allow local government to 
declare eminent domain turns the Fifth Amendment on its head. 
We cannot forget about rural America, as well. Rural America 
deserves greater protections, too, more than a mere Sense of 
Congress. No longer will public use correctly be defined as a 
road, a bridge, a school, or a hospital. It can be defined as 
an abstract greater good, such as increased tax revenue or 
economic development.
    Private property can now be taken at will by government and 
reallocated to another private entity if it runs afoul of a 
local bureaucrat's notion of public use and greater good.
    Fortunately, Congress maintains the power over the purse 
strings. We will act to minimize the effects of this ruling to 
the greatest extent possible. States and local communities 
alike are recognizing the importance of private property 
rights, and are beginning to act to protect themselves from 
this decision. We have a chance at real reform here, but should 
we have such a narrow focus on private property protections?
    Should we include intellectual private property rights 
protections in this bill, as well? Why just a Sense of Congress 
for rural America? Aren't these important enough issues to 
address in this bill?
    I hope when we eventually go to the Floor with the bill, we 
do not shortchange property owners for political expedience. I 
have been fighting these injustices since before I was elected 
to this body, and will continue to do so in the future.
    [The prepared statement of Chairman Pombo follows:]

          Statement of The Honorable Richard Pombo, Chairman, 
                         Committee on Resources

    Property rights are the heart of individual freedom and the 
foundation for all other civil rights guaranteed to Americans by the 
Constitution. Without the freedom to acquire, possess and defend 
property, all other guaranteed rights are merely words on a page.
    The Fifth Amendment holds that private property shall not be taken 
by the government for public use without just compensation. These 
safeguards have been under assault for decades and until now, the 
typical victims were family farmers and ranchers in the West.
    The Supreme Court's decision in the Kelo v. City of New London case 
to allow local governments to declare eminent domain in this case goes 
beyond compensation; it wholly perverts the intent of public use, and 
in so doing, may turn the American dream of home ownership into a 
nightmare. It has delivered the property rights assault from rural 
America right to the doorsteps of suburbia.
    In New London, Connecticut, city planners essentially decided that 
evicting 15 homeowners from their homes was in the ``greater good'' as 
a ``public use'' for an office park and new condos. But the public, to 
be directly served in this case, was a private corporation. Whether 
they were newly-wed couples in their first home or life-long residents 
who owned their homes outright, whether it is farmers and ranchers 
which have been on their land for generations or suburban communities 
with the promise of fellowship, this appalling behavior cannot be 
tolerated any more. The Supreme Court's decision to allow local 
governments to declare eminent domain turns the Fifth Amendment on its 
head. We cannot forget about rural America as well. Rural America 
deserves to be greater protections too, not just a Sense of Congress.
    No longer will public use correctly be defined as a road, bridge, 
school or hospital, it can be defined as an abstract greater good, such 
as increased tax revenue or economic development. Private property can 
now be taken at will by government and reallocated to another private 
entity if it runs afoul of a local bureaucrat's notion of public use 
and greater good.
    Fortunately, Congress maintains the power over the purse strings. 
We will act to minimize the effects of this ruling to the greatest 
extent possible. And, States and local communities alike, recognizing 
the importance of private property rights, have also begun to act to 
protect themselves from this decision. We have a chance at real reform 
here. Should we have such a narrow focus on private property 
protections? Should we include intellectual property rights protections 
on the Floor? Why just a Sense of Congress for rural America? Aren't 
these important enough issues to address in this bill? I hope when we 
go to the Floor with whatever bill, we do not short shift property 
owners for political expedience. I have been fighting these injustices 
since before I was elected to this body and will continue to do so in 
the future.
                                 ______
                                 
    The Chairman.Mr. Pallone.

 STATEMENT OF THE HON. FRANK PALLONE, JR., A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Mr. Chairman, I want to thank you for holding 
this hearing. And although I didn't hear everything you said, I 
want you to know that I agree with all of it, at least what I 
heard from when I came in.
    I have grown concerned with the increasing rate of eminent 
domain abuse cases across the country. Eminent domain has often 
been properly invoked to allow for the building of new roads, 
public facilities, and critical military infrastructure.
    In 2000, however, with the City of New London, Connecticut 
case, the City condemned 15 homes so a developer could build 
offices, a hotel, and a convention center. Suzette Kelo and her 
neighbors spent years in the legal battle that culminated in 
June, when the U.S. Supreme Court ruled five to four against 
them.
    The Kelo v. New London ruling set a disturbing precedent, 
in my opinion, the precedent that a town has the right to 
invoke eminent domain in the name of so-called economic 
revitalization. This decision raises serious concerns about 
whether there are any limits to the government's power with 
regard to the takings clause of the Constitution.
    I strongly oppose the majority's opinion in the Kelo case. 
This decision weakens the basic Constitutional protection 
against taking private property for private uses. Our founding 
fathers were clear when they drafted the Fifth Amendment, 
writing that the government could only take private property 
for public use, provided that property owners are paid just 
compensation.
    I agree with Justice Sandra Day O'Connor's dissenting 
opinion in Kelo. She made clear that there have been 
appropriate uses of eminent domain throughout history, but that 
without the proper safeguards, eminent domain can easily be 
abused.
    My State of New Jersey is particularly prone to eminent 
domain abuse because of our high real estate prices and 
plentiful beachfront property in my district. Municipalities 
that want to make way for luxury housing in the name of 
economic revitalization can easily replace a well-kept middle 
or working class community. And that is definitely not what our 
founding fathers meant when they wrote the Fifth Amendment.
    Now, I understand that eminent domain is necessary in rare 
and exceptional circumstances involving a public health or 
safety crisis, but is not appropriate to allow residents of our 
communities to be displaced for luxury condominiums without 
giving any thought to where the people from these communities 
would go.
    That is why I have also introduced my own legislation to 
curb the inappropriate use of eminent domain. The Protect Our 
Homes Act that I have introduced simply states that there 
should be no taking of homes for economic development unless 
there are rare and exceptional circumstances involving a public 
health or safety crisis. This legislation would render any 
state or local government that does otherwise ineligible for 
Federal financial assistance under any program administered by 
the Department of Housing and Urban Development.
    It would also put in place appropriate safeguards to ensure 
that any eminent domain process is fair and transparent.
    Finding the right balance between a state or municipality's 
rights in Federal involvement is never easy. But with this 
particular issue, Congress must take action. We have an 
obligation to protect our citizens as we revitalize our aging 
neighborhoods. We should not sit idly by and tolerate abuses of 
eminent domain in the name of economic revitalization. It is 
time we strengthened the Federal law to guarantee that 
homeowners throughout this great country are protected.
    And again I want to commend the Chairman for holding this 
hearing. I commend Mr. Bonilla for working to put together this 
legislation. And I look forward to hearing from the witnesses 
and working further so that we can actually accomplish 
something on this very important issue.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. Mr. Gibbons, did you have an 
opening statement?

STATEMENT OF THE HON. JIM GIBBONS, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF NEVADA

    Mr. Gibbons. I do, Mr. Chairman, very briefly though, if 
you would permit me. Thank you. And again, Mr. Chairman, thank 
you for your leadership in bringing this bill before us today.
    I, like many of my colleagues, believe that the recent Kelo 
Supreme Court decision went against the basic principles of our 
democracy, and was a slap in the face of private property 
rights. And as a Congress, it is our responsibility to uphold 
the Constitution and the rights of the American people to own 
property, and not to worry that it will be taken for a greater 
private good.
    The Kelo decision is a travesty, and a direct contradiction 
to the intent of the framers of the Constitution. And I am sure 
that we can all see the dangers, the imminent dangers that are 
posed by the Kelo decision in our communities, in our states, 
and throughout districts across America. And I am sure the 
framers of the Constitution never intended for state and local 
governments to use eminent domain to give an advantage to one 
private property owner over another.
    I am pleased to be here today to receive the testimony and 
to hear and discuss this legislation, to address the misguided 
Kelo decision, and the abuse of powers of eminent domain that 
it represents. And I look forward to hearing from my good 
friends, Mr. Bonilla of Texas and Mr. Otter of Idaho. After 
all, Mr. Otter represents the Western Caucus Private Property 
Tax Force, which I am proud to be a member of. Both of these 
witnesses, Mr. Chairman, and their testimony today is 
particularly important to all of us, because they can speak to 
the broad range of property rights challenges that are 
particularly important, and those that we face in the western 
states especially.
    Again, Mr. Chairman, thank you. I look forward to the 
hearing; I look forward to the testimony by witnesses.
    The Chairman. Thank you. Ms. Drake.

    STATEMENT OF THE HON. THELMA DRAKE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF VIRGINIA

    Ms. Drake. Thank you, Mr. Chairman. I also would like to 
thank you for holding this hearing so timely. I would like to 
thank the patrons of the bill for their work on this.
    I have been involved in this issue of eminent domain for 
over 20 years. I am probably one of the few Members of Congress 
where an authority has tried to take my own personal home, but 
I can assure that I still live in my home, even though that was 
17 years ago.
    I think it is a basic right of Americans to own property 
and to know that they control the future of that property. It 
is part of our American dream.
    I think, as distressed as I was with the Kelo decision, I 
think the good that will come from it is that we will see 
legislation in all 50 states to address it. I hope that 
Congress will continue to address issues that we can, and send 
a clear message to the Court that this was absolutely the wrong 
decision. And that in America, we believe in private property 
rights.
    And I thank you, Mr. Chairman.
    The Chairman. Thank you. One of the co-authors of the bill, 
Ms. Herseth.

 STATEMENT OF THE HON. STEPHANIE HERSETH, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF SOUTH DAKOTA

    Ms. Herseth. Thank you, Mr. Chairman. And thank you for 
taking the time during this busy period to schedule a hearing 
on the strengthening of ownership of private property.
    I want to acknowledge the hard work of Chairman Bonilla for 
his strong leadership on this issue, as well as Chairman 
Goodlatte, and your hard work, Chairman Pombo. I have been 
pleased to be part of this process, and Mr. Bonilla and I have 
been very pleased by the determined and thoughtful attention 
given to our legislation by champions of private property 
rights like yourself.
    This legislation is a priority for many, including farmers 
and ranchers and landowners across my home State of South 
Dakota. I am extremely pleased that the Agriculture Committee 
took its primary jurisdiction on the STOPP Act seriously, and 
made reporting out the bill a priority. It is important, 
common-sense legislation that deserves our attention.
    As my colleagues know, the Supreme Court decision in Kelo 
v. New London dealt a serious blow to fundamental property 
rights in the United States. This ruling allows governments to 
take private property from one landowner and give it to another 
private individual, so long as some economic development 
justification is given. In short, it means that governments can 
take your property, and give it to someone else.
    I have been impressed by the widespread support for the 
proposition that this decision requires prompt Congressional 
action. And I am pleased that the leadership and Members of 
this Congress seem to agree that action on this legislation 
should be expedited.
    As I have said before, South Dakotans from all walks of 
life have expressed their outrage about the Supreme Court's 
Kelo decision. As I have repeatedly noted in previous 
discussions of the STOPP Act, even Justice John Paul Stevens, 
the author of the Kelo decision, has expressed the feeling that 
the use of eminent domain by the City of New London was 
``unwise as a matter of policy.'' And I agree.
    It is time for Congress to take action, and I am pleased to 
have been a part of that effort to craft a good bipartisan 
response that addresses these policy shortcomings by 
discouraging state and local governments from arbitrarily 
taking land from private landowners, and giving it to another 
party.
    South Dakota is a rural state, and our population's 
livelihood is deeply tied to the land. This is true for 
virtually all of my state citizens, whether they live on a farm 
or in town. Because of this, the belief in private property 
rights runs strong and deep, and everyone that I have talked to 
back home on this matter has delivered the same message: 
landowners should not be vulnerable to the whims of a 
government that decides to take their land, and often their 
livelihood, just to give it to someone else who the government 
decides would deliver more in tax revenues.
    I am pleased to say that many of my colleagues agree with 
this, which is why, in the short time since its introduction, 
as I mentioned, the STOPP Act has garnered broad bipartisan 
support because the legislation makes so much sense. I would 
encourage my colleagues here today to co-sponsor the bill, many 
of whom I know already have, and to continue to work with 
Chairman Pombo, Chairman Goodlatte, Chairman Bonilla, myself 
and others, to ensure that this issue is brought before the 
full House as soon as possible.
    I think it is appropriate to mention at this time another 
bill being marked up by the Judiciary Committee as we speak. As 
many of you know, Chairman Bonilla and I drafted H.R. 3405 to 
provide a strong response to the Kelo decision. At the time we 
introduced the STOPP Act, the legislation produced by the 
Judiciary Committee, which took a similar approach by 
withholding Federal funds when eminent domain is used to 
facilitate a private-to-private transfer of property for 
economic development purposes, left open the possibility that a 
creative community or state could essentially shift funds 
within its budget to render the Federal response essentially 
meaningless.
    In the words of Bob Stallman, President of the American 
Farm Bureau, in his testimony before the Agriculture Committee, 
``All of the Federal bills introduced thus far take this 
approach. The differences among them are the degree to which 
such funding is withheld. While we support all the approaches 
taken in these bills, H.R. 3405 seems to offer the most 
effective deterrent to abuses of eminent domain.''
    Yesterday I introduced legislation, along with Mr. Bonilla 
and Mr. Goodlatte once again, as well as Judiciary Committee 
Chairman Sensenbrenner, Ranking Member Conyers and others, 
modeled heavily on the approach taken in the STOPP Act. I think 
this development is a testament to the hard work of individuals 
like Chairman Bonilla and Chairman Goodlatte, Ranking Member 
Peterson, you, Chairman Pombo, and others to develop, refine, 
and promote a strong common-sense approach to the situation 
presented by the Kelo decision.
    As I have said, I am happy to have been part of these 
important efforts, and look forward to testimony from today's 
witnesses.
    Thank you.
    The Chairman. Thank you. At this time I recognize our first 
panel of witnesses: Henry Bonilla from the State of Texas, and 
Butch Otter from the State of Idaho.
    Mr. Bonilla, you were the lead author of the bill that we 
are holding the hearing on today. And I know you acted very 
quickly after that decision, and, working in tandem with Ms. 
Herseth, were able to come up with legislation that a number of 
us became original co-sponsors on.
    We appreciate all the work that you put into this, and we 
are looking forward to hearing from you.

   STATEMENT OF THE HON. HENRY BONILLA, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Bonilla. Thank you, Mr. Chairman. I ask unanimous 
consent that my written testimony be entered into the record.
    The Chairman. Without objection.
    Mr. Bonilla. And I will just briefly summarize. As I 
listened carefully to the opening remarks that you made, Mr. 
Chairman, and other Members of your Committee, I think they 
speak to the heart of the issue.
    The Kelo decision is one that created an uproar around the 
country, no matter where you lived, whether it was an urban 
area or a rural community. And I think for that reason, there 
is overwhelming support to do something about this outrageous 
ruling from the Supreme Court earlier this year that related, 
of course, to the New London, Connecticut, situation.
    The bill, as Ms. Herseth points out, is a bipartisan bill. 
It is a rare moment in this town to see people standing side by 
side, in some cases who identify with the far right, and in 
some cases identify with the far left, to stand side by side 
and say that we need to get something done. And I think that if 
anyone looks at the list of Members that are co-sponsoring our 
legislation, it is a testament to the sincere effort that we 
have underway with House Bill 3405.
    I also would like to commend you, Mr. Chairman, because 
from the first day you came to Congress, and you and I walked 
in the door the same day after the 1992 election, property 
rights was an issue that you have championed.
    In some cases when people were working on other issues that 
perhaps are more popular at the moment, property rights has 
been the issue that you have championed day in and day out 
since you arrived here. And I want to commend you for that, as 
a believer in the Constitution, and in the rights granted by 
our forefathers, and how you have never lost sight of that. So 
you were a trailblazer, and continue to be so. And I appreciate 
the strong support that you have given to this bill from the 
very beginning.
    Again, we have an all-star cast that has been a part of 
this since we wrote the bill. And I cannot say enough about 
also Ms. Herseth, who was my partner in putting this bill 
together early on, and worked very hard.
    The primary jurisdiction for this bill, although Resources 
obviously has a major role in moving this bill forward, is the 
Committee on Agriculture, of which Ms. Herseth is also a 
Member. And she has worked very hard to get co-sponsors and put 
the word out, and move this bill through the system.
    And I am also glad to say that because of the work that we 
have done, as Ms. Herseth pointed out, there were other efforts 
pending that dealt with the same concept of cutting money off 
to communities that try to undertake a taking for private gain. 
But there were some loopholes in some of the bills. And 
although the Members who worked on those bills are very sincere 
in their efforts, we looked at those and closed the door on any 
ability to shift funds around, as Ms. Herseth said in her 
opening remarks. And because of the work that was done, the 
hard work by Chairman Goodlatte, this bill was reported out by 
that Committee by a vote of 40 to 1, Mr. Chairman. And again, 
it is unusual to see such strong, across-the-board support for 
just about anything except for naming a post office now and 
then in this town, but for an issue that is this significant to 
people across the country.
    So thank you for your support. And Ms. Herseth, thank you 
for your willingness to get on board with me early on when you 
and I were the only ones who had our name associated with this 
bill. We have come a long way.
    And Mr. Chairman, I appreciate your helping us move this 
bill down the road even farther. And the fact that we are going 
to actually, within a few days is my understanding, we are 
going to have this bill on the Floor. And we can all wear it as 
a badge of honor.
    [The prepared statement of Mr. Bonilla follows:]

Statement of The Honorable Henry Bonilla, a Representative in Congress 
                        from the State of Texas

    In July of 2004, the Supreme Court was petitioned to hear one of 
the most important property rights cases ever.
    Earlier that year the Connecticut Supreme Court ruled that even if 
there is nothing wrong with your home or business, church or synagogue, 
or even your whole neighborhood or community, that government can still 
use eminent domain to take your property and transfer it to someone 
else for their private gain.
    This ruling placed in jeopardy the very essence of the American way 
of life: that someone can start with nothing, build a family, a home, a 
business, and work to make his community better. This dream is directly 
threatened by the fear that while you work to create the American 
Dream, it may be taken away should government decide that another 
individual could create greater tax revenue. This fear is real and 
every individual who owns real property knows that homes generate less 
tax revenue than businesses and small businesses generate less tax 
revenue than larger ones.
    The issue before the Court was brutally simple: does government 
enjoy protection under the Constitution to take property from one 
private party in order to give it to another private party for the 
purpose of increasing tax revenue and income? Kelo v. New London 
presented this question to the court in no uncertain terms.
    The constitution of every state, as well as that of the US, 
requires that private property only be taken for ``public use,'' such 
as transportation or public functions, not for private or commercial 
economic gain. The use of eminent domain authority to increase tax 
revenue is an abuse of the intent of ``public use.'' Such takings are 
arguably the most outrageous and broad action possible by government 
against its own citizens.
    Not only does this decision put in jeopardy the ownership of 
property in our nation, it places ethical government in the crosshairs 
of those which who would seek to manipulate the system for their 
personal gain. Those with deep pockets and questionable intentions now 
have both the legal means and profit motive to sway local officials to 
do their bidding.
    The Court's ruling in favor of New London creates a precedent that 
will hang like a stone around the neck of the average citizen, the 
small businessman, the common man. This stone will weigh down the 
rights of Americans trying to make a success of themselves through the 
sweat of their own brow.
    Many feel that their voices cannot, and will not, be heard on this 
issue. As Members of Congress, it's our job to make sure that this 
stone is shattered and those voices are not only heard, but pushed to 
the forefront.
    Several of our colleagues have answered this call and introduced 
pieces of legislation which we think could make a positive impact on 
the situation. However, these measures apply only to specific projects 
which have federal funding attached to their completion. While this is 
a great effort the fact is it does not go far enough. These measures 
have a loophole which localities may try to exploit. Each of these 
pieces of legislation take actions against specific projects in which 
the power of eminent domain is abused. The funding ``shell-game'' that 
would follow any federal action would see localities moving local and 
private funds into projects which are questionable all the while 
continuing to receive federal funding for other projects related to 
other economic development.
    In order to address this issue, I, along with several of my 
colleagues here today, introduced the Strengthening The Ownership of 
Private Property, or STOPP Act. This bill confronts this issue head on 
with legislation to stop this practice in its tracks. This legislation 
would take much more comprehensive approach in preventing state and 
local entities from wrongly taking private property.
    The first step is to make local governments follow the same 
guidelines imposed upon the federal government by the Uniform 
Relocation Act in instances where eminent domain powers are abused. 
This measure provides that the federal government must not only provide 
fair compensation for the property taken, but also cover the costs of 
relocation for any business or home which must move. Currently, local 
entities don't have this restriction and are only subject to this law 
if there are federal funds used for the project.
    The second, and more substantial step, would be to withhold ANY 
federal economic development funds to localities which choose to take 
property for private commercial development. This measure would not 
make it illegal for entities to continue their practices, but would 
make them think twice by forgoing any federal funding for any project 
should they proceed. Under the other measures which have been 
introduced, local entities could use private or local funding when 
pursuing eminent domain of this type, however, under our bill they 
would have to think twice before pursuing this practice.
    We think this bill strongly discourages governmental entities from 
moving forward with trading citizens dreams for taxes. The STOPP Act is 
the least we can do, a measure with teeth, a measure for average 
citizens, a bill to correct a far reaching decision with horrific 
consequences. I commend Chairman Pombo and Ranking Member Rahall for 
their interest in moving forward quickly on this important legislation. 
I also commend Chairman Pombo for his never-ending fight for the 
private property owners of our great nation. I would also like to thank 
my lead cosponsor Rep. Herseth for her strong advocacy on behalf of 
those who may be adversely impacted by this decision. Last I would like 
to thank my colleagues from every end of the political and ideological 
spectrum who have come together to endorse and support this piece of 
legislation to protect the American property owner.
                                 ______
                                 
    The Chairman. Well, thank you. I would like to at this time 
recognize Mr. Otter who, in his time, has been a Member of the 
House of Representatives; has worked tirelessly on property 
rights issues. And as a result of that, has taken a leadership 
role in the Western Caucus in heading up their private property 
rights protection efforts.
    Mr. Otter, welcome to the Committee.

STATEMENT OF THE HON. C.L. ``BUTCH'' OTTER, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF IDAHO

    Mr. Otter. Thank you very much, Mr. Chairman. It is my 
pleasure to be here. And though I no longer serve on this 
Committee, I certainly appreciate the accommodation that the 
Chairman and the Committee Members have made for me, and for my 
colleagues, to come and speak about this bill.
    Let me also say that I really appreciate Mr. Bonilla and 
Ms. Herseth's leadership in this. It was, as they have already 
stated, probably one of the broadest-supported early on pieces 
of legislation that I have ever seen in my short time in the 
U.S. Congress.
    ``Nor shall private property be taken for public use 
without just compensation.'' Mr. Chairman, all of us here know 
those simple 12 words, phrased in the Fifth Amendment of the 
Constitution. We all know it was pointedly intended to limit 
the national government's power over people.
    How, then, in a five-to-four majority decision in the 
United States Supreme Court on June 23, that such a 
straightforward phrase actually grants government nearly 
unfettered authority to strip citizens of their homes, their 
farms, their businesses, their private property?
    I believe it ranks amongst history's most outrageous 
examples of constitutional revisionism.
    In fact, we all need to remember the words of Ben Franklin 
as he exited the Freedom's Hall, or the Church in Philadelphia, 
when he was queried after they had completed their work on our 
system of government. He was asked by a citizen, ``Mr. 
Franklin, what form of government have you given us?'' And he 
said, ``Madam, we have given you a republic, and it will fall 
to each and every generation to improve, protect, and defend 
it.''
    Well, I would say that I suspect that the Kelo decision is 
our generation's Boston Massacre. It probably took an affront 
to private property like this in order to collect together this 
group of citizens and this group of political leaders that now 
support it.
    And so having said that, the immediate murmurs of criticism 
from a few people in response to the Court's ruling of Kelo v. 
New London has turned into a widespread public outcry of 
frustration, and even despair, as people realize the 
implications. No one is safe.
    As Justice Sandra Day O'Connor put it succinctly in her 
sharply worded dissent, ``The specter of condemnation hangs 
over all property. Nothing is to prevent the state from 
replacing any Motel 6 with a Ritz-Carlton, any home with a 
shopping mall, or any farm with a factory.''
    The leaders of New London, Connecticut, almost certainly 
would have failed if the land in question, I believe, had been 
the habitat of an endangered bug or a plant or an animal. 
Instead it was a neighborhood of working class people unwilling 
to give up their homes for a private development that the City 
determined would provide greater public benefit and greater 
public taxes.
    They counted on the Constitution to protect them. And Mr. 
Chairman, the Court let them down. Each state constitution, 
Idaho's included, imposes restrictions on the power of eminent 
domain. However, each state constitution is required to fall 
within the essential principles that govern it as the 
subordinate, and accountable to the individual citizens, and 
not the other way around. Put more simply, our constitutions 
are designed to ensure that government remains the servant, and 
not our master.
    That is why the framers insisted on the clear wordings of 
``public use'' in the Fifth Amendment. We all thought we 
understood what that meant. There was no disagreement or 
confusion. Now we find ourselves with a narrow majority of the 
highest Court in the land, willing to simply erase the rights 
of private property owners, the foundation of our freedom and 
prosperity, and the beacon of individual liberty that has drawn 
generations to pound the shores for citizenship of the United 
States.
    It is unthinkable that the framers of the Constitution 
designed ``to secure the blessings of liberty to ourselves and 
our prosperity'' would intend that private property be subject 
to government confiscation, and confiscation it is. For how can 
just compensation be possible when government wields the power 
to define public use so broadly?
    Mr. Bonilla's bill, H.R. 3405, goes a long way toward 
addressing the problems created by the Kelo decision, creating 
economic disincentives for the taking of private property for 
the purpose of private economic development. I believe the Kelo 
decision woke America up to the fact that over time, our 
property rights have quietly been eroding, the same way a 
stream of water slowly erodes its banks. Fortunately, this 
erosion has not gone unnoticed by westerners or those who have 
been sent here to represent them.
    Private property rights have long been held dear by 
families and landowners in the West, and for good reason. Their 
farms and ranches have been their livelihood, and part of the 
national heritage, since the frontier was closed to the west, 
and the West was settled.
    Today many westerners not only have to fight for their 
economic survival, but have to worry whether or not the 
property will be around them, for them to pass on to their 
children and future generations. The Federal government owns 
more than half of all the land in the West, and almost two 
thirds of that in Idaho. And population in the region continues 
to grow.
    As the Chairman has correctly noted, I am a Member of the 
Congressional Western Caucus, and we count amongst our core 
principles the necessity to protect and defend private 
property. It is the Caucus's position that property rights are 
the foundation of a free society, that landowners must be 
justly compensation when their land is taken.
    Immediately after the Kelo decision the Caucus asked me to 
chair the Private Property Rights Task Force. With the aid of 
many in the property rights community, we have created a 
comprehensive property rights package we call CPR-2, the 
Comprehensive Property Rights Reform Act. We believe this bill, 
in addition to H.R. 3405, will help breathe new life into 
property rights.
    The Western Caucus Property Rights Bill will formalize the 
policy of the Federal government with respect to all private 
property that the government should protect, and exert eminent 
domain only when absolutely necessary. The bill will ensure 
that the property is taken, and the government will avoid or 
minimize the extent of the taking, and provide just 
compensation for the loss of any value, at any level.
    Mr. Chairman, I ask in closing that my entire statement be 
submitted for the record, and to the record. And once again, 
Mr. Chairman, I thank you and Ms. Herseth and Mr. Bonilla for 
your great leadership in this effort.
    [The prepared statement of Mr. Otter follows:]

 Statement of The Honorable C.L. ``Butch'' Otter, a Representative in 
                    Congress from the State of Idaho

    Thank you, Mr. Chairman.
    While I am no longer a member of the Committee, I appreciate you 
holding this hearing today and allowing me to testify. I also 
appreciate Mr. Bonilla's leadership on this issue and am pleased to 
join him as a co-sponsor of H.R. 3405 the STOPP Act.
    ``...nor shall private property be taken for public use without 
just compensation.'' Mr. Chairman, all of us here know that simple 12-
word phrase in the Fifth Amendment to the Constitution. We all know it 
was pointedly intended to limit the new national government's power 
over the people.
    How then, did a 5-4 majority of the United States Supreme Court 
rule on June 23 that such a straightforward phrase actually grants 
government nearly unfettered authority to strip citizens of their 
homes, farms and businesses?
    I believe it ranks among history's most outrageous examples of 
constitutional revisionism.
    The immediate murmurs of criticism from a few people in response to 
the court's ruling in Kelo v. City of New London has turned into a 
widespread public outcry of frustration and even despair as people 
realize the implications: No one is safe.
    As Justice Sandra Day O'Connor put it succinctly in her sharply 
worded dissent, ``The specter of condemnation hangs over all property, 
nothing is to prevent the state from replacing any Motel 6 with a Ritz-
Carlton, any home with a shopping mall, or any farm with a factory.''
    The leaders of New London, Connecticut, almost certainly would have 
failed if the land in question had been the habitat of an endangered 
plant or animal. Instead, it was a neighborhood of working-class people 
unwilling to give up their homes for a private development that the 
city determined would provide a greater public benefit.
    They counted on the Constitution to protect them, but the court let 
them down.
    Each state constitution, including Idaho's, imposes restriction on 
the power of eminent domain. However, each state constitution is 
required to fall within the essential principle that government is 
subordinate and accountable to the individual citizen, not the other 
way around. Put more simply, our constitutions are designed to ensure 
that government remains the servant, not the master.
    That's why the Framers insisted on the clear words ``public use'' 
in the Fifth Amendment. We all thought we understood what it means; 
there was no disagreement or confusion. Now we find ourselves with a 
narrow majority on the highest court in the land willing to simply 
erase the rights of private property owners, the foundation of our 
freedom and prosperity and the beacon of individual liberty that has 
drawn generations to our shores.
    It is unthinkable that the Framers of a Constitution designed to 
``secure the blessings of liberty to ourselves and our posterity'' 
would intend that private property be subject to government 
confiscation--and confiscation it is, for how can ``just compensation'' 
be possible when government wields the power to define ``public use'' 
so broadly?
    Mr. Bonilla's bill, H.R. 3405, goes a long way toward addressing 
the problems created by the Kelo decision by creating economic 
disincentives for the taking of private property for the purpose of 
private economic development.
    I believe the Kelo decision woke America up to the fact that over 
time, our property rights have quietly been eroding the same way a 
stream of water slowly but surely erodes its banks.
    Fortunately, this erosion has not gone unnoticed by westerners or 
those they've sent here to represent them.
    Private property rights have long been held dear by families and 
landowners in the West, and for good reason. Their farms and ranches 
have been their livelihood and part of our national heritage since the 
frontier was closed and the West was settled.
    Today many westerners not only have to fight for their economic 
survival but also have to worry whether their property will be around 
for them to pass on to their children and future generations. The 
federal government owns more than half of all land in the West--almost 
two-thirds in Idaho--and populations in the region continue to grow.
    I am a member of the Congressional Western Caucus, and we count 
among our core principles the necessity to protect private property. It 
is the Caucus' position that property rights are the foundation of a 
free society; that landowners MUST be justly compensated when their 
land is taken or when regulations deprive them of the use of their 
property.
    Immediately after the Kelo decision the Caucus asked me to chair 
the Property Rights Task Force. With the aid of many in the property 
rights community, we have created a comprehensive property rights 
package we call CPR2, the Comprehensive Property Rights Reform Act. We 
believe this bill, in addition to H.R. 3405, will help breathe life 
into property rights reform.
    The Western Caucus property rights bill will formalize the policy 
of the federal government with respect to all private property, that 
the government should protect private property and exert eminent domain 
only when absolutely necessary. The bill will ensure that when property 
is taken, the government will avoid or minimize the extent of the 
taking and provide just compensation for loss of value at any level.
    The bill also includes creation of a property rights ombudsman, 
bars use of eminent domain for economic development, ensures direct 
access to federal courts for takings claims, and provides several 
mechanisms for protecting what little private property remains in the 
West.
    The property rights issue is not a class issue. It's not a partisan 
issue. It's an issue of the most fundamental importance to America's 
future, and one on which none of us can afford to be what Thomas Paine 
called ``sunshine patriots.''
    Thank you again Mr. Chairman for holding this hearing, and I look 
forward to working with the committee on this important issue.
                                 ______
                                 
    The Chairman. Thank you. Mr. Bonilla, I know that you have 
a tight schedule this morning. But I did want to ask you, as 
the primary author of the legislation, was your intention to 
use what powers Congress has to stop cities or counties or 
municipalities from using eminent domain to take property from 
private property owners and sell it to another private owner? 
That was the underlying intention of the legislation, was it 
not?
    Mr. Bonilla. Yes, Mr. Chairman. Again, using the power of 
the purse, which Congress does control, we feel that this would 
be an airtight case against any community that receives any 
type of Federal funding, a great disincentive for them to 
undertake any kind of taking for private gain.
    The Chairman. As we move forward, both you and Ms. Herseth 
have talked about other legislation that has been introduced. 
As you move forward with this effort, do you not believe that 
we need to make sure that we restrict that funding to the point 
where it is a disincentive?
    Mr. Otter. Yes, Mr. Chairman. And again, we believe that 
this bill does that. And we are delighted that, as other 
legislation is being crafted as we speak, to be the legislation 
that moves through Congress, that perhaps all or most of the 
points in our bill will be incorporated.
    The Chairman. Thank you. Mr. Otter, just briefly, one of 
the issues that has arisen is, over the years that we have been 
involved in this battle over private property rights, it always 
predominantly was an issue of western farmers and ranchers and 
their land being taken.
    Now, with the Kelo decision, we see suburban and urban 
America being threatened. Do you believe that there is any 
difference in protecting private property, in private property 
rights, based upon where the land is located, or the size of 
the property? It seems like in some of the bills that have been 
introduced they somehow try to differentiate between someone's 
farm and someone's home, as if there is a difference in the 
constitutional protection for those properties.
    Mr. Otter. Thank you very much, Mr. Chairman. I believe 
there's no difference between dirt in Idaho or dirt in New 
London, Connecticut, or anyplace else.
    The dirt and the private property that we own is actually 
an extension of our constitutional rights. And our Constitution 
will not survive in a nation that doesn't recognize and hold 
sacred the concept of private property. Our Constitution just 
was not built in order for a government that doesn't believe in 
private property and holds that sacred, that it is going to 
survive.
    And so sometimes in our enthusiasm, we say well, if we are 
going to take the land for this purpose, it is OK. This public 
use, or public benefit, it is OK.
    We in the West, for many reasons, mostly because of 
absentee management by the Federal government, are constantly 
affected by decisions on our private property that is made 
relative to the public property. In other words, whether it is 
noxious weed eradication that the Federal government fails to 
keep up on its BLM, or Forest Service, or parks lands, or 
whatever, those seeds don't stop at the boundary. When they 
start blowing around, they explode into private property. In 
fact, they even blow to the 1,300,000 acres in Idaho that we 
hold in trust in Idaho as state lands for our education system.
    And we have to spend a lot of money, whether it is fighting 
noxious and invasive weeds that become a fire hazard, or become 
some kind of an infective hazard to the value of that land, we 
constantly have to fight that.
    But we have gotten on a slippery slope. And we establish a 
national policy of, say, clean water. I see nothing wrong with 
that. I think a national policy of clean water is good, is 
healthy. No different, though, than a national policy of good 
highway infrastructure. And if we take a person's land to build 
a highway and we think nothing of it, and we pay them for that 
land because we need the highway.
    But if a national policy of clean water is also essential, 
then I think we need to pay those people for the land that we 
take from them, whether it is in the wetlands, under the 
Wetlands Provision, or the Endangered Species Act.
    The Chairman. Well, thank you. I thank both of you for your 
testimony.
    Ms. Herseth, do you have any questions? Mr. Gibbons?
    Mr. Gibbons. Thank you very much, Mr. Chairman. And to our 
colleagues who have come here today and presented us with this 
bill, congratulations to you.
    I think the most important thing that we can do today in 
this hearing is to set a legislative record that will be 
reviewed by a court later on in their determinations of how to 
apply eminent domain, and what the legislative intent was at 
the time we passed it.
    So what I would like to do is just have a very frank 
discussion with you in helping build that record, if I may. And 
as we know, the Kelo decision expanded the definition of public 
purpose. It expanded the definition of public purpose outside 
of the traditional definition, which included public uses of 
roads, parks, reservoirs, schools, and public buildings. Those 
were the traditional uses. And Kelo has seemed to take that 
public purpose, and expand that definition to the increase in 
the taxable value of the land as a public purpose, something 
that was an expansion, a legislative expansion, and never 
intended by Congress, I am sure, in the original, or the 
framers in the original definition of what could be taken under 
eminent domain.
    My question to you involves the intent of this legislation 
to limit eminent domain to non-economic development purposes, 
is it the intent of the legislation to limit eminent domain 
from a combination of truly public purposes under historic 
definitions, and eminent--or, excuse me--economic development, 
a combination of the two. How do you see the application of 
this bill, when there is a dual or multiple purpose of the 
eminent domain?
    Mr. Bonilla. Well, first of all, this bill in no way 
threatens traditional constitutionally based practices of 
eminent domain of airports, transportation systems, hospitals, 
things that are truly for the public good.
    If there is one that a community feels that might have a 
combination of an economic advantage, it is going to be their 
job to show that this is a public interest, not a private 
interest.
    Mr. Gibbons. Mr. Bonilla, my intent is not here to question 
or to criticize the bill or the legislation at all. What I am 
trying to do is establish a record.
    So if the Court, on review of an eminent domain case that 
was principally decided by a community or government entity on 
the purpose of public use, whether it is a road, hospital, 
school, public building, plus either an ancillary or an 
intended side use of increasing the economic development in an 
area, can your bill intercede in that and stop the eminent 
domain process?
    Mr. Bonilla. I would think that once this bill is enacted, 
that communities would themselves have the burden of showing 
that this is, that a taking would be for public use. And if it 
was gray enough, or there was an indication that perhaps they 
were trying to pull an end around and say this is a public use 
taking, but they really had an economic motivation, that we 
would be able to see through that. But it is going to be their 
responsibility to differentiate.
    Certainly in every law you pass, you are going to face some 
situations that might be a little gray. But historically, we 
have not seen situations like that. They have been very clearly 
delineated for the most part in this country, and we have not 
had a problem until the Kelo decision.
    Mr. Gibbons. So we can take that the Court, from this day 
forward, will look at our record here today in Congress, and 
review the decisions based upon whether or not the public use 
is the predominant eminent domain clause under which the taking 
occurred. So that there has to be a predominance of evidence 
showing that the taking was under eminent domain for public 
purpose, rather than eminent domain for economic purpose, it 
can make that decision then based on the evidence before it. 
But a combination would not be stopped.
    I just want to make sure that we are clear on the record of 
how a court should interpret this law going forward from today.
    Mr. Bonilla. This is a very good question. I am not an 
attorney, so I probably do not have the expertise in the 
legalities that differentiate. But the Judiciary Committee is 
also playing a great role in this, and that is a question that 
we will take as we move this bill forward.
    Mr. Gibbons. Good. Because I just want to make sure that we 
set it straight. And Mr. Chairman, excuse my indulgence of 
going over the time.
    Mr. Otter. Mr. Chairman, if I may respond to my colleague. 
I can tell you this. That if the Court reads this record in 
manifesting their decision on a future case, that they look at 
the reason Butch Otter is going to vote for this bill, the 
reason Butch Otter supports this bill.
    The Constitution is pretty explicit on the purposes for 
which the Federal government can own land. And they are 
delineated in its posts and its roads and such other buildings 
necessary for the convenience of government. That does not 
include apartment houses, and it does not include strip malls, 
and it does not include centers for entertainment.
    And so it is my hope that once again, the Bonilla-Herseth 
legislation will remind the Federal courts, the courts at all 
levels, that they should restrict themselves to the purposes 
for which the design of eminent domain was to be used, and for 
the sole purposes that the government should own land.
    Mr. Gibbons. Mr. Otter, you do know that most government 
agencies are very intelligent; they always find ways around 
legislation to accomplish the intent or the purpose of which 
they started out.
    So I hope that at some point we can tell them that you must 
separate economic development from public purpose.
    Mr. Otter. I think the best way that we could have told 
them that, Mr. Gibbons--and I hope that the lack of attention 
and the interest in this subject is not manifested by the 
amount of Members for the Committee in this room. I hope they 
already agree with us, and that is why they are not here.
    But I would say the best way that we could send a signal to 
any future court is to have an overwhelming majority vote in 
favor of this legislation.
    Mr. Gibbons. Well, in addition to what the Court will look 
at is the words that are spoken here at this Committee, the 
intention of the legislation in terms of its intended goal, and 
how that is to be interpreted by the Court.
    I think it is very clear it is incumbent upon us to make 
sure that our record establishes a clear intent that this 
legislation is to prohibit eminent domain for economic purposes 
between private parties. In other words, taking from one 
private party for an economic development purpose, to increase 
the tax base, or whatever other non-public purpose, and 
transfer it to another private property.
    Mr. Bonilla. Mr. Gibbons, may I make a further comment?
    Mr. Gibbons. Well, it would be with the concurrence of the 
Chairman, who might not----
    The Chairman. No, absolutely.
    Mr. Bonilla. We would think that reality would set in when 
this bill becomes law, and that any local government out 
there--we are creating a very hard road for any local 
government to go down if they have an idea of taking property 
for private gain.
    So I would think that any government entity out there with 
half a brain would not want to go down this road. Because we 
are going to make it real hard. If they want to go to court for 
10 years and challenge it, you know, local governments usually 
don't have that kind of money or time. So this is, again, an 
effort to create the most difficult route for any local 
government to take if they have any idea whatsoever of taking 
property for private gain.
    Mr. Gibbons. Well, I just want to tell you I am completely 
in support of the legislation. I thank you for your leadership, 
for everyone who has brought this bill forward. I want to thank 
the Committee and the Chairman for allowing us to have this 
dialog. And I look forward to the vote on the Floor when I can 
vote yes to reverse the Kelo decision.
    Ms. Herseth. Mr. Chairman.
    The Chairman. Ms. Herseth.
    Ms. Herseth. If I might just briefly supplement the 
comments of my colleagues in response to Mr. Gibbons' question.
    I think it is very much the intent as we work to draft the 
language to redraft the language, to tighten it up, so that we 
would not be in a position to have a loophole big enough to 
drive a truck through with the creativity of local officials 
who want to get around this somehow. And that is why we did not 
start making decisions in the drafting of the language for 
ancillary purposes, or what may be an indirect use or private 
transfer.
    And we talked about if you have a public building, and one 
floor then is rented out--we did not want to make those types 
of distinctions, because we wanted to drive a hard line that if 
there is any evidence that if there is going to be an economic 
purpose and a private-to-private transfer of any kind after 
utilizing eminent domain for a public purpose, the funding 
would be cutoff. Because we don't want--I mean, we are trying 
to cutoff that type of creativity where they always seem sort 
of one step ahead in what they are trying to do to circumvent 
some of the restrictions that we want to put on the power of 
the purse, so to speak.
    So that was the intent. And for purposes of the record, we 
think that we have drawn it in such a way that with the private 
right of action, that any individual that may be affected who 
believes and can show evidence--and I think that with public 
meetings at the local level, with the involvement of citizens 
in these types of decisions, when they can anticipate a certain 
local unit of government going down a certain road to take a 
certain action, that they, as Chairman Bonilla explained, can, 
under this legislation, and it is incumbent upon them to 
exercise that right to bring a private right of action, to 
demonstrate that while this local entity may be attempting to 
take land under eminent domain under a traditional use of 
eminent domain, that if there is a combination of economic 
purpose in there, that they can demonstrate that with the 
evidence. And it is incumbent upon the District Court Judge to 
review that evidence, and if there is any indication of an 
economic development purpose, that it is ruled impermissible, 
under this statute. And that they can either cure it by giving 
the land back, or they forgo their Federal funding as specified 
in the statute.
    So I think that in response to your question, which is a 
very good one, that the intent of the legislation is to not 
allow any kind of combination, whether it is a 60/40, if you 
can put a percentage on it, or a 95/5 percentage of public use 
versus economic use.
    Mr. Gibbons. Well, let me say that that is exactly what the 
record ought to reflect. And that is why it is great to have a 
conversation and a discussion on this matter, so that when they 
look back at what is the intent of Congress when we pass this 
legislation, that it is clear to them without a doubt that we 
have fired a rifle bullet at this decision. And we are not just 
clipping away at the edges, but we are killing it dead.
    There is no economic development other than for eminent 
domain, for purposes of transfer of private property from one 
individual to another.
    The Chairman. All right. I thank our panel for their 
testimony, and I appreciate my colleagues for trying to set on 
the record what Congressional intent is.
    I do want to stress, before I dismiss this panel, that 
there is no difference in the constitutional protection of 
private property based upon the size or the location or the use 
of private property. Just because in this particular case we 
are talking about people who lost their homes, it does not mean 
that it is any difference in terms of importance or 
constitutional protection than if they were to go after 
somebody's ranch or somebody's home and take their property.
    When you start differentiating in the law between the size 
or the location of a piece of property, you begin to take away 
the property rights of somebody. And once you take away the 
property rights of anyone, we all lose them. And it is 
extremely important that as we move forward, that there is no 
differentiation in the size of the property or the location of 
the property, or the use of that property. We need to make sure 
that the constitutional rights of private property owners are 
protected, no matter who or where they are.
    So thank you very much. I am going to allow this panel to 
go. I appreciate you both taking so much time here this morning 
to spend with us, and to help set the record straight and 
present your legislation to us. Thank you.
    We call up our second panel. Ms. Barbara Wally, Attorney, 
Defenders of Property Rights; Mr. Bert Gall, Staff Attorney, 
Institute of Justice; Mr. Earl Hance, President of the Maryland 
Farm Bureau and a member of the Board of Directors of the 
American Farm Bureau; and Mr. Mario Arroyo, Co-Owner of 
Arroyo's Cafe in Stockton. You can join us at the witness 
table.
    [Pause.]
    The Chairman. Welcome to the Committee. Your entire written 
statements will be included in the record. I would ask that 
your oral testimony be limited to the five minutes that is 
customary on the Committee, but your entire written testimony 
will be included in the record.
    Ms. Wally, we are going to begin with you.

             STATEMENT OF BARBARA WALLY, ATTORNEY, 
                  DEFENDERS OF PROPERTY RIGHTS

    Ms. Wally. Good morning. I am delighted to be testifying 
before the Committee today in support of the STOPP Act. On 
behalf of the Defenders of Property Rights and all of its 
membership, I would particularly like to thank Chairman Pombo 
and his staff for their strong and bold leadership on proposing 
legislation that effectively balances the need for protection 
of endangered species with the need for protection of 
constitutionally guaranteed rights and property.
    The need for protection of constitutionally guaranteed 
rights and property is underscored by last term's trilogy of 
Supreme Court decisions: Kelo v. New London, Lingle v. Chevron, 
and San Remo v. City and County of San Francisco. In light of 
these decisions, I would like to impress upon the Committee the 
importance of Congress providing greater guidance to litigants, 
to government agencies, and to lower courts.
    The Supreme Court confused the issues by not only failing 
to provide bright-line rules, but also by moderating the 
existing rules. Thus, it is imperative that Congress act to 
provide greater certainty in order to protect these important 
constitutional rights.
    Kelo, Lingle, and San Remo are inconsistent internally, 
inconsistent with one another, and inconsistent with prior 
Supreme Court jurisprudence and the Constitution.
    In Kelo, the Court examined what a public purpose is by 
looking into the legislative record, and weeding through the 
public findings in order to arrive at a definition of public 
use. In the end, the Court deferred to the Legislature's 
decision, but it only deferred to that decision after it looked 
into the legislative record.
    Also, the Court indicated that public use really means 
public purpose. But redefining public use to mean public 
purpose is at odds with the plain language of the Constitution, 
which states that private property shall not be taken for 
public use without just compensation.
    In Lingle, the Court struck down a takings test, holding 
that whether a government regulation substantially advances a 
legitimate state interest is not a valid takings inquiry. But 
this test was adopted by the Supreme Court in 1980, and 
affirmed in many cases subsequent to it, most notably Nolan v. 
California Coastal Commission in 1987. In striking down the 
substantially advances test, however, the Court announced that 
the Nolan decision was still good law, leaving property owners, 
decisionmakers, and local courts utterly perplexed as to how to 
apply the Lingle decision.
    The Nolan test allows government to impose permit 
conditions if those conditions substantially advance legitimate 
state interests. And the Court also suggested that no court 
should ever decide whether regulations affecting property 
rights are effective or not.
    Finally, in San Remo, the Court refused to look at local 
legislation, holding that zoning and land use regulations are a 
local issue for state courts, and not Federal courts. And 
therefore, the Court suggested that there are some courts 
equipped to analyze regulations affecting property rights.
    In light of these decisions, it is more important than ever 
that Congress provide greater clarification and direction to 
property owners, to government agencies, and to the lower 
courts in order to promote clear, transparent, and predictable 
rules.
    Congress will take important steps toward providing these 
rules by passing the STOPP Act.
    I would like to extend my thanks to the Chairman and to the 
Committee for this opportunity to testify. Thank you.
    [The prepared statement of the Defenders of Property Rights 
follows:]

               Statement of Nancie Marzulla, President, 
                      Defenders of Property Rights

    Mr. Chairman and Members of the Committee:
    I am pleased to be here today on behalf of Defenders of Property 
Rights, the only national public interest legal foundation devoted 
exclusively to protecting private property rights. Through a program of 
litigation, education and legislative support, Defenders seeks to 
realize the promise of the Fifth Amendment of the U.S. Constitution, 
that private property shall not be ``taken for public use, without just 
compensation.'' Defenders, which is based in Washington, D.C., has a 
large national membership comprised of property owners, users and 
beneficiaries of the rights protected by the Constitution and 
traditional property law. Defenders participates in litigation when it 
is in the public interest and when the property rights of its members 
are affected, and has also devoted significant resources to analyzing 
legislative proposals concerning property rights at both the state and 
federal level.
    Today, I am here to comment on H.R. 3405, Strengthening the 
Ownership of Private Property Act of 2005 (STOPP). By prohibiting 
federal financial assistance under any federal economic development 
program to any State, State agency, or local government, that uses its 
eminent domain power for private commercial development or fails to 
provide relocation assistance for persons displaced by use of eminent 
domain for economic development, this bill seeks to prevent the taking 
of private property for public use without just compensation, as 
required by the Fifth Amendment to the United States Constitution.

I. The Constitution Imposes a Duty on Government to Protect Private 
        Property Rights Because Property Rights are an Essential 
        Element of a Free Society.
    As reflected in various provisions in the Constitution, the 
Founding Fathers clearly recognized the need for vigorously protected 
property rights. They also understood the vital relationship between 
private property rights, individual rights and economic liberty. 
Property rights is the ``line drawn in the sand'' protecting against 
tyranny of the majority over the rights of the minority.
    The Founding Fathers, in drafting the Constitution, drew upon 
classical notions of legal rights and individual liberty which 
recognize the importance of property ownership in a governmental system 
where individual liberty is paramount. Concurrently, the constitutional 
framers drew upon their own experience as colonists of an oppressive 
monarch, whose unlimited powers allowed him to deprive his subjects of 
their ``life, liberty, and property'' (subsequently revised by Thomas 
Jefferson to substitute ``the pursuit of happiness'' for ``property'').
    To the framers of the Constitution, the protection of individual 
liberty was essential. The fundamental liberties guaranteed by the Bill 
of Rights include freedom of speech and religion; freedom of press and 
assembly; the right to bear arms; the right to trial by jury and cross 
examination of accusing witnesses; and freedom from cruel or unusual 
punishment. Recognizing that a government could easily abuse these 
civil rights if a citizen's property and livelihood were not 
guaranteed, the United States Constitution also imposes a duty on 
government to protect private property rights.
    Thus, within the Bill of Rights, numerous provisions directly or 
indirectly protect private property rights. The Fourth Amendment 
guarantees that people are to be ``secure in their persons, houses, 
papers, and effects....'' The Fifth Amendment states that no person 
shall ``be deprived of life, liberty, or property, without due process 
of law; nor shall private property be taken for public use without just 
compensation.'' In addition to the Bill of Rights provisions, the 
Fourteenth Amendment echoes the Due Process Clause of the Fifth 
Amendment, stating that no ``State shall deprive any person of life, 
liberty or property without due process of law....'' Indirectly the 
Contracts Clause of the Constitution also protects property by 
forbidding any state from passing any ``law impairing the Obligation of 
Contracts.'' U.S. Const. art. 1, Sec. 10.
    The Constitution places such strong emphasis on protecting private 
property rights because the right to own and use property was 
historically understood to be critical to the maintenance of a free 
society. The ability to use, enjoy and exclusively possess the fruits 
of one's own labor is the basis for a society in which individuals are 
free from oppression. Indeed, some have argued that there can be no 
true freedom for anyone if people are dependent upon the state for 
food, shelter, and other basic needs. Understandably, where the fruits 
of citizen's labor are owned by the state and not individuals, nothing 
is safe from being taken by a majority or a tyrant. Ultimately, as 
government dependants, these individuals are powerless to oppose any 
infringement on their rights due to absolute government control over 
the fruits of their labor.
    Accordingly, it is a founding principle of our nation that private 
land may not be taken for public use (unless it be purchased from the 
owner). This basic principle--that the government must lawfully acquire 
private land rather than merely seize it--is predicated upon 
fundamental notions of fairness. As the Supreme Court stated in 
Armstrong v. United States, ``[t]he Fifth Amendment...was designed to 
bar Government from forcing some people alone to bear public burdens 
which, in all fairness and justice, should be borne by the public as a 
whole.'' 364 U.S. 40, 49 (1960).
    The Founding Fathers understood the vital relationship between 
private property rights, individual rights, and economic liberty. 
However, the Founding Fathers could never have envisioned the growth of 
government that has occurred of late years. Never before have 
government regulations threatened to destroy private property rights on 
so large a scale and in so many different contexts as they do today. In 
just two short decades, the United States has developed from scratch 
the most extensive governmental regulatory programs in history. 
Environmental regulations have become an elaborate web of intricate 
laws and regulations covering every conceivable aspect of property use, 
yet very few recognize the fundamental importance of property rights to 
our Constitution and our system of government under law.

II. The Supreme Court's October 2004 Term
    The Supreme Court's October 2004 term provided an excellent 
opportunity for the Court to straighten out the law with regard to the 
meaning of the Fifth Amendment's ``public use'' requirement, the 
application of the ``substantially advances'' test, and the ability of 
plaintiffs to get their just compensation cases before the federal 
courts. Instead, in Kelo v. New London, 125 S. Ct. 2655 (2005), Chevron 
v. Lingle, 125 S. Ct. 2074 (2005), and San Remo Hotel v. San Francisco, 
125 S. Ct. 2491 (2005), the Court offered a series of disappointing 
decisions that did nothing to further an individual's fundamental 
property rights. Moreover, these decisions were fraught with internal 
inconsistencies, as well as inconsistencies with previous just 
compensation decisions. Let me briefly outline the Court's decisions in 
these three just compensation cases:

Kelo v. New London
    The Kelo case is certainly the most talked about of last year's 
three Supreme Court takings cases. In Kelo, private property owners had 
their property taken from them and turned over to a private development 
corporation to be redeveloped for private use. The question before the 
Court was whether taking land from one private landowner and giving it 
to another, violated the public use requirement of the Just 
Compensation Clause, where that taking was part of an economic 
redevelopment plan. The Court upheld the taking.
    In upholding the taking, the Court rejected a bright-line rule that 
would have clearly prevented the state from taking private property 
from A and giving it to B, instead favoring a test that asks whether 
the development plan serves a ``public purpose.'' The dissent, and 
judging from the public reaction, much of the public, rejected the 
majority's interpretation. The dissent reasoned that after Kelo, 
``[u]nder the banner of economic development, all private property is 
now vulnerable to being taken and transferred to another private owner, 
so long as it might be upgraded--i.e., given to an owner who will use 
it in a way that the legislature deems more beneficial to the public--
in the process.'' 125 S. Ct. at 2671. According to the dissent, the 
majority had ``effectively...delete[d] the words `for public use' from 
the Takings Clause of the Fifth Amendment.'' Id.

Chevron v. Lingle
    In Chevron v. Lingle, the lower courts had applied the 
``substantially advances'' formula set forth in Agins v. City of 
Tiburon, 447 U.S. 255 (1980), to determine whether a Hawaii law, which 
limits the rent that oil companies may charge dealers who lease service 
stations owned by the companies, effects a taking. The lower courts 
held that the rent cap effects an uncompensated taking of private 
property in violation of the Fifth and Fourteenth Amendments because it 
does not substantially advance Hawaii's asserted interest in 
controlling retail gasoline prices. The Supreme Court reversed the 
lower courts straight forward application of the ``substantially 
advances'' test, holding that the ``substantially advances'' test was a 
test of due process and has no place in the Court's takings 
jurisprudence.
    The Court reasoned that ``[i]nstead of addressing a challenged 
regulation's effect on private property, the ``substantially advances'' 
inquiry probes the regulation's underlying validity.'' 125 S. Ct. at 
2084. The Just Compensation Clause, according to the Court, ``does not 
bar government from interfering with property rights, but rather 
requires compensation `in the event of otherwise proper interference 
amounting to a taking.''' Id.

San Remo Hotel v. San Francisco
    The Court, in San Remo Hotel v. San Francisco, dealt with a 
question that involved the ability of property owners, who have had 
their property taken by state or local governments, to get those claims 
into federal courts. Under the standards set forth in Williamson County 
Regional Planning Commission v. Hamilton Bank, 473 U.S. 172 (1985), a 
just compensation claim against a state or local government cannot be 
brought in federal court until after the claimant seeks just 
compensation in state court. However, in San Remo, when the claimants 
went to state court, the court addressed the claimants federal 
constitutional claims; thus preventing later consideration of the case 
on its merits in federal court. In other words, the claimants could not 
originally bring their case in federal court because they had not been 
denied just compensation in state court, and once they were denied just 
compensation in state court they could not bring a new case in federal 
court because their case had already been decided in state court.
    In a concurrence, the late Chief Justice Rehnquist, joined by three 
of his fellow justices, wrote that the he believed, echoing the 
position taken by Defenders of Property Rights as amicus curie, that 
Williamson County's requirement that once a government entity has 
reached a final decision with respect to a claimant's property that 
claimant must seek redress first in state court, was incorrectly 
decided. However, without the needed fifth vote, property owners will 
continue to be denied a federal forum in which to bring an original 
action.

III. Legislative reform is essential to fully protect all Property 
        Rights and to realize the purpose of the Fifth Amendment.
    From the perspective of those who cherish private property rights, 
the Supreme Court's last term was disappointing. In the three just 
compensation cases that came before the Court, the Court effectively 
deleted the words ``for public use'' from the Just Compensation Clause, 
eliminated one of tests that limited the ability of the government from 
taking private property, and declined an invitation to extend a federal 
forum to property owners who had their property taken by a state 
government. On the bright side, however, the Supreme Court is not the 
only arbiter of the Constitution under our system of government. There 
is a role for Congress as well. The Strengthening the Ownership of 
Private Property Act of 2005 is an excellent vehicle for Congress to 
step in and re-invigorate a fundamental right the Supreme Court has 
weakened through its decisions of the last term.
    Although it is often stated that it is the role of the courts to 
say what the law is, the Members of Congress also take an oath to 
support, defend, and bear true faith and allegiance to the Constitution 
of the United States. Here, through the use of a power specifically 
enumerated to Congress in the Spending Clause, Congress has an 
opportunity to fulfill its oath to the Constitution and reaffirm that 
document's fundamental protections for private property. When the 
courts fail, it is up to Congress to make the federal, state, and local 
governments give the rights of private property owners the respect and 
deference that the Constitution requires.

IV. Conclusion
    The proposed bill, H.R. 3405, goes along way in attempting to 
restore the damage done to the text of the Just Compensation Clause by 
the Supreme Court's recent ruling in Kelo. The reform embodied in H.R. 
3405 will attempt to ensure that State and local governments do not use 
their eminent domain powers for private commercial development and, 
that when eminent domain power is used, those governments will provide 
relocation assistance for property owners displaced for economic 
development.
    I would be pleased to answer any questions you may have concerning 
my testimony.
                                 ______
                                 
    The Chairman. Thank you. Mr. Gall.

               STATEMENT OF BERT GALL, ATTORNEY, 
            INSTITUTE FOR JUSTICE, WASHINGTON, D.C.

    Mr. Gall. Thank you, Mr. Chairman and Members of the 
Committee for this opportunity to testify about the abuse of 
eminent domain, which is an issue that has obviously captured 
the attention of the American people since the Supreme Court 
handed down its now very infamous decision in Kelo v. City of 
New London.
    The Institute for Justice represented the homeowners in the 
Kelo case, and we continue to fight for them so that they can 
stay in their home, because they are true American heroes who 
are taking a stand against a very longstanding problem, but one 
that has really come to light in the wake of Kelo.
    In that case, the Supreme Court declared that cities and 
towns can take a person's home or business or other property, 
and hand it over to another person if they think that the other 
person can make more money off the land. That is the standard 
that the Supreme Court established in Kelo, a very weak 
standard that has essentially eviscerated the protections that 
the Fifth Amendment provides to home and business owners. The 
public use clause is essentially no more after Kelo.
    As Justice O'Connor wrote in her powerful dissent before 
members of the Court, ``The specter of condemnation hangs over 
all property. Nothing is to prevent the state from replacing a 
Motel 6 with a Ritz-Carlton, any home with a shopping center, 
and any farm for a factory.''
    Now, understandably after the decision, Americans of all 
backgrounds and political affiliations expressed their outrage 
that the Court abandoned its primary responsibility of 
protecting them from the government, government's abuse of 
power. Particularly in the important area of protecting homes 
or businesses. I mean, the Kelo decision literally touched 
home.
    Thankfully, this body, the Congress, as well as state 
legislators, have heard the call, and members of both sides of 
the aisle are working together to craft legislation that 
ensures that cities that abuse eminent domain will not be 
rewarded with the receipt of Federal economic development 
funds.
    Now, the need for eminent domain reform is very real. In 
fact, it was really needed even before the Kelo decision took 
place. Over a five-year period, the Institute for Justice 
documented over 10,000 examples where property was either 
condemned or threatened to be condemned for the benefit of 
private parties. And now that the Kelo decision has come down, 
the gloves really seem to be off. In fact, just hours after the 
Kelo decision was issued, many cities began condemnation 
actions against property owners to transfer their property to 
other people to make more money off the land. The Court has 
given the green light to abuse in cities, and developers are 
putting the pedal to the metal.
    It is useful to discuss just briefly how we have arrived at 
this state of affairs in the law. It did start a little bit 
before Kelo in the Supreme Court's decision in 1954, in Berman 
v. Parker. That is where you saw the Court starting to change 
the words ``public use'' in the Constitution to ``public 
purpose.'' And it was at that point that cities and communities 
took advantage of that changing in the wording of the 
Constitution to move away from the traditional conception of 
public use.
    You know, the founding fathers early on referred to, and 
the Supreme Court early on referred to, eminent domain as the 
despotic power, because they understood that taking away 
someone's home, their business, their property, was one of the 
most powerful, one of the worst things that a government could 
do to its citizens.
    With the Berman case, cities using the words ``public 
purpose'' and ``public welfare'' began using things such as 
urban redevelopment laws to take perfectly nice properties, or 
properties that could be remediated by the owner, and then 
transfer those over to other owners for private development. 
And of course, that has now culminated in the Kelo decision, 
where once again the standard is if you think you can make more 
money off of someone else's property, we will use eminent 
domain and transfer it to you.
    Now, unfortunately, Federal money is often used to fuel 
this abuse of eminent domain. In fact, the Kelo case is an 
example of just that. In my written testimony I have listed 
examples where Federal money has certainly been involved.
    The legislation that you are considering today, along with 
other legislation that is also before Congress, appropriately 
uses Congress's power under the spending clause to deny 
economic development funds to those cities that abuse their 
eminent domain powers.
    The abuse of eminent domain uproots families. It destroys 
small businesses, and it tears apart communities. The Federal 
government should not be in the business of funding that abuse. 
And that is why I commend all of you, and Congressman Bonilla 
and other who worked on this and other legislation, for 
bringing it before Congress, and taking real steps to make sure 
that the Kelo decision will eventually, we hope, be consigned 
to the dustbin of history.
    Thank you very much for the opportunity to testify.
    [The prepared statement of Mr. Gall follows:]

        Statement of Bert Gall, Attorney, Institute for Justice

    Thank you for the opportunity to testify regarding eminent domain 
abuse, an issue that's finally getting significant national attention 
as a result of the U.S. Supreme Court's dreadful decision in Kelo v. 
City of New London. This committee and the sponsors of H.R. 3405, which 
this committee is currently considering, are to be commended for taking 
action to end this misuse of government power.
    My name is Bert Gall, and I am an attorney at the Institute for 
Justice, a nonprofit public interest law firm in Washington D.C. that 
represents people whose rights are being violated by government. One of 
the main areas in which we litigate is property rights, particularly in 
cases where homes or small businesses are taken by government through 
the power of eminent domain and transferred to another private party. I 
have represented property owners across the country fighting eminent 
domain for private use, and the Institute also represents the 
homeowners in the Kelo v. City of New London case, in which the U.S. 
Supreme Court decided that eminent domain could be used to transfer 
property to a private developer simply to generate higher taxes, as 
long as the project is pursuant to a plan. We have also published a 
report about the use of eminent domain for private development 
throughout the United States (available at www.castlecoalition.org/
report).
    In the Kelo decision, a narrow majority of the Court decided that, 
under the U.S. Constitution, property could indeed be taken for another 
use that would generate more taxes and more jobs, as long as the 
project was pursuant to a development plan. The Kelo case was the final 
signal that the U.S. Constitution provides no protection for the 
private property rights of Americans. Indeed, the Court ruled that it's 
okay to use the power of eminent domain when there's the mere 
possibility that something else could make more money than the homes 
that currently occupy the land. It's no wonder, then, that the decision 
caused Justice O'Connor to remark in her dissent: ``The specter of 
condemnation hangs over all property. Nothing is to prevent the State 
from replacing any Motel 6 with a Ritz-Carlton, any home with a 
shopping center, or any farm with a factory.''
    In response to the decision, there has been an outpouring of public 
outcry against this closely divided decision. Overwhelming majorities 
in every major poll taken after the Kelo decision have condemned the 
result. Several bills have been introduced in both the House and 
Senate, with significant bipartisan support, including H.R. 3405, which 
this committee is considering now.

The use of eminent domain for private development has become a 
        nationwide problem, and the Court's decision is already 
        encouraging further abuse
    Eminent domain, called the ``despotic power'' in the early days of 
this country, is the power to kick citizens out of their homes and 
small businesses. Because the Founders were conscious of the 
possibility of abuse, the Fifth Amendment provides a very simple 
restriction: ``[N]or shall private property be taken for public use 
without just compensation.''
    Historically, with very few limited exceptions, the power of 
eminent domain was used for things the public actually owned and used--
schools, courthouses, post offices and the like. Over the past 50 
years, however, the meaning of public use has expanded to include 
ordinary private uses like condominiums and big-box stores. The 
expansion of the public use doctrine began with the urban renewal 
movement of the 1950s. In order to remove so-called ``slum'' 
neighborhoods, cities were authorized to use the power of eminent 
domain. This ``solution,'' which has been a dismal failure, was given 
ultimate approval by the Supreme Court in Berman v. Parker. The Court 
ruled that the removal of blight was a public ``purpose,'' despite the 
fact that the word ``purpose'' appears nowhere in the text of the 
Constitution and government already possessed the power to remove 
blighted properties through public nuisance law. By effectively 
changing the wording of the Fifth Amendment, the Court opened a 
Pandora's box, and now properties are routinely taken pursuant to 
redevelopment statutes when there's absolutely nothing wrong with them, 
except that some well-heeled developer covets them and the government 
hopes to increase its tax revenue.
    The use of eminent domain for private development has become 
widespread. We documented more than 10,000 properties either taken or 
threatened with condemnation for private development in the five-year 
period between 1998 through 2002. Because this number was reached by 
counting properties listed in news articles and cases, it grossly 
underestimates the number of condemnations and threatened 
condemnations. In Connecticut, the only state that keeps separate track 
of redevelopment condemnations, we found 31, while the true number was 
543. Now that the Supreme Court has actually sanctioned this abuse in 
Kelo, the floodgates to further abuse have been thrown open. Home and 
business owners have every reason to be very, very worried.
    Since the Kelo decision, local governments have become further 
emboldened to take property for private development. For example:
      Freeport, TX. Hours after the Kelo decision, officials in 
Freeport began legal filings to seize some waterfront businesses (two 
seafood companies) to make way for others (an $8 million private boat 
marina).
      Sunset Hills, MO. On July 12, less than three weeks after 
the Kelo ruling, Sunset Hills officials voted to allow the condemnation 
of 85 homes and small businesses for a shopping center and office 
complex.
      Oakland, CA. A week after the Supreme Court's ruling, 
Oakland city officials used eminent domain to evict John Revelli from 
the downtown tire shop his family has owned since 1949. Revelli and a 
neighboring business owner had refused to sell their property to make 
way for a new housing development. Said Revelli of his fight with the 
City, ``We thought we'd win, but the Supreme Court took away my last 
chance.''
      Ridgefield, CT. The city of Ridgefield is proceeding with 
a plan to take 154 acres of vacant land through eminent domain. The 
property owner plans to build apartments on the land, but the city has 
decided it prefers corporate office space. The case is currently before 
a federal court, where the property owner has asked for an injunction 
to halt the eminent domain proceedings. Ridgefield officials directly 
cite the Kelo decision in support of their actions.
    Courts are already using the decision to reject challenges by 
owners to the taking of their property for other private parties. On 
July 26, 2005, a court in Missouri relied on Kelo in reluctantly 
upholding the taking of a home for a shopping mall. As the judge 
commented, ``The United States Supreme Court has denied the Alamo 
reinforcements.'' On August 19, 2005, a court in Florida, with no 
reluctance, relied on Kelo in upholding the condemnation of several 
boardwalk businesses for newer, more expensive boardwalk development.
Federal funds currently support eminent domain for private use
    Federal agencies of course continue to take property for public 
uses, like military installations, federal parks, and federal 
buildings, and that is legitimate under the public use requirement of 
the Fifth Amendment. The agencies themselves generally do not take 
property and transfer it to private parties. However, many projects 
using eminent domain for economic development receive some federal 
funding. Thus, federal money does currently support the use of eminent 
domain for private commercial development. A few recent examples 
include:
      New London, CT. This was the case that was the subject of 
the Supreme Court's Kelo decision. Fifteen homes are being taken for a 
private development project that is planned to include a hotel, upscale 
condominiums, and office space. The project received $2 million in 
funds from the federal Economic Development Authority.
      St. Louis, MO. In 2003 and 2004, the Garden District 
Commission and the McRee Town Redevelopment Corp. demolished six square 
blocks of buildings, including approximately 200 units of housing, 
including some run by local non-profits. The older housing will be 
replaced by luxury housing. The project received at least $3 million in 
HUD funds, and may have received another $3 million in block grant 
funds as well.
      New Cassel, NY. St. Luke's Pentecostal Church had been 
saving for more than a decade to purchase property and move out of the 
rented basement where it holds services. It bought a piece of property 
to build a permanent home for the congregation. The property was 
condemned by the North Hempstead Community Development Agency, which 
administers funding from Housing and Urban Development, for the purpose 
of private retail development. As of 2005, nothing has been built on 
the property, and St. Luke's is still operating out of a rented 
basement.
      Toledo, OH. In 1999, Toledo condemned 83 homes and 16 
businesses to make room for expansion of a DaimlerChrysler Jeep 
manufacturing plant. Even though the homes were well maintained, Toledo 
declared the area to be blighted. A $28.8 million loan from HUD was 
secured to pay for some part of the project. The plant ultimately 
employed far fewer people than the number Toledo expected.
      Ardmore, PA. The Ardmore Transit Center Project has some 
actual transportation purposes. However, Lower Merion Township 
officials are also planning to remove several historic local 
businesses, many with apartments on the upper floors so that it can be 
replaced with mall stores and upscale apartments. The project receives 
$6 million in federal funding, which went to the Southeastern 
Pennsylvania Transit Authority. This is an ongoing project in 2005.

Congress can and should take steps to ensure that federal funds do not 
        support the abuse of eminent domain
    The Kelo decision cries out for Congressional action. Even Justice 
Stevens, the author of the opinion, stated in a recent speech that he 
believes eminent domain for economic development is bad policy and 
hopes that the country would find a political solution. Congress, this 
committee, and the sponsors of H.R. 3405 are all to be commended for 
their efforts to provide protections that the Court has denied.
    Congress has the power to deny federal funding to projects that use 
eminent domain for private commercial development and to deny federal 
economic development funding to government entities that use eminent 
domain in this way.
    Congress may restrict federal funding under the Spending Clause. 
The Supreme Court has laid out the test for any conditions that 
Congress places on the receipt of federal money in South Dakota v. 
Dole. The most important requirements are that there be a relationship 
between the federal interest and the funded program and that Congress 
be clear about the conditions under which federal funds will be 
restricted. The conditions laid out in H.R. 3405 are well within the 
bounds that courts have articulated regarding the relationship of the 
funding restrictions to the federal interest. The purpose of the 
federal funds is to aid states and cities in various development 
projects. If Congress chooses to only fund projects or agencies that 
conduct development without using eminent domain to transfer property 
to private developers, it may certainly do so.

H.R. 3405 takes a good approach to curbing the abuse of eminent domain 
        nationwide
    H.R. 3405 achieves a vitally important goal. Americans throughout 
the country have expressed their dismay at the Kelo ruling, and this 
bill would provide desperately needed reform. First and foremost, it 
states in no uncertain terms that state and local governments will lose 
economic development funding if they take someone's home or business 
for private commercial development. This is an appropriate response. 
Congress provides significant funding throughout the country for 
economic development. Currently that money is being used in projects 
that take property from one person and give it to another. Or it is 
being used in a way that gives a locality more money to spend on 
projects that take people's homes and businesses for private commercial 
development. If Congress wishes to ensure that federal money will not 
support the misuse of eminent domain, terminating economic development 
funds is the best approach.
    Moreover, like H. Res. 340, passed shortly after the Kelo decision 
and condemning the result, the bill represents a strong statement that 
this awesome government power should not be abused. The states are 
currently studying the issue and considering legislative language, and 
they will certainly look to any bill passed by Congress as an example. 
The bill also specifically tells state and local government entities 
what funds they risk losing.

Conclusion
    Eminent domain sounds like an abstract issue, but it affects real 
people. Real people lose the homes or businesses they love and watch as 
they are replaced with the condos and shopping malls that many 
localities find preferable to modest homes and small businesses. 
Federal law currently allows expending federal funds to support 
condemnations for the benefit of private developers. By doing so, it 
encourages this abuse nationwide. Using eminent domain so that another, 
richer, person may live or work on the land you used to own tells 
Americans that their hopes, dreams and hard work do not matter as much 
as money and political influence. The use of eminent domain for private 
development has no place in a country built on traditions of 
independence, hard work, and the protection of property rights.
    Again, thank you for the opportunity to testify before this 
committee.
                                 ______
                                 
    The Chairman. Thank you. Mr. Hance.

              STATEMENT OF EARL HANCE, PRESIDENT, 
                   MARYLAND FARM BUREAU, INC.

    Mr. Hance. Good morning, Mr. Chairman, ladies and 
gentlemen. My name is Earl Hance. I am a corn and soybean 
producer from Port Republic, Maryland. I am also President of 
the Maryland Farm Bureau, and I serve on the Board of Directors 
for the American Farm Bureau Federation.
    I certainly appreciate the opportunity to be here today to 
discuss this potentially devastating impact of the recent Kelo 
decision on agriculture.
    We commend this Committee for holding hearings on this 
important matter. And I ask that my written statement be 
submitted for the record.
    The Kelo decision has struck a raw nerve around the 
country. We are gratified that so many Members of Congress have 
introduced and co-sponsored bills to address the situation. We 
fully support the efforts that have been taken thus far, and we 
will work diligently with this Committee and others to pass 
legislation to encourage states to limit their use of eminent 
domain to truly public uses.
    Farmers and ranchers understand that circumstances arise in 
which their land can be designated for a legitimate public use. 
We cannot support the rationale of Kelo, however, that private 
property can effectively be taken for the profit of other 
private parties. The difference between legitimate uses of 
eminent domain and what is so objectionable in Kelo is the 
difference between building firehouses or factories, between 
courthouses or condominiums. After Kelo, no property is safe. 
Any property can now be seized and transferred to the highest 
bidder.
    As Justice O'Connor said in her stinging dissent, ``The 
specter of condemnation hangs over all property. Nothing is to 
prevent the state from replacing any Motel 6 with a Ritz-
Carlton, any home with a shopping center, or any farm with a 
factory.''
    Agricultural lands are particularly vulnerable. The fair 
market value of agricultural land is less than residential or 
commercial property, making a condemnation of agricultural land 
less costly and more attractive. While agricultural lands are 
vital to the Nation because they feed our people, they do not 
generate as much property tax revenue as homes or offices.
    Finally, municipalities generally grow outward into farming 
or rural areas. There is nothing to stop farms that have been 
in families for generations from being taken for industrial 
developments, shopping malls, or housing developments. Nowhere 
is this more true than in my State of Maryland, where land is 
already at a premium.
    In the State of Maryland, many of you know that the 
Chesapeake Bay and its tributaries reach far and wide, and 
waterfront property is at a premium. And we are very concerned 
that after the Kelo decision, any development corporation could 
legitimately purchase one tract of land, and then present a 
project that was much larger in scope, and immediately have 
cause to take other land just for the creation of great tax 
revenue. That is the concern that in Maryland we have with this 
Kelo decision.
    Reaction from our members to Kelo has been swift and 
overwhelming. Farmers and ranchers from across the state are 
asking us to help them keep their property. We are currently 
working with our state legislator to make more strict our state 
laws concerning condemnation to try to protect our agricultural 
lands.
    Farm Bureau has initiated the Stop Taking Our Property 
campaign, or STOP. As part of the campaign, we have developed 
an educational brochure which models state legislation, and a 
web page for interested people. Representative STOP materials 
are attached to our written statement.
    One key element to our campaign is to promote the message 
of H.R. 3405 or similar legislation. Since eminent domain is a 
creature of state law, substantive changes must be made at that 
level. Currently, 50 state legislatures have to act. However, 
it is an uncertain and lengthy process. That is why Federal 
legislation is so necessary.
    Congress has the authority and the responsibility to 
determine how our tax dollars are spent. Using Federal funds to 
help municipalities take from the poor and give to the rich 
adds insult to injury to those who work hard for themselves and 
their families. Congress can ensure that state and local 
governments do not use a person's own tax dollars to dispossess 
them in favor of other private interests.
    All of the Federal bills introduced thus far take this 
approach. The differences among them are the degree to which 
such funding is withheld. While we support all the approaches 
taken in these bills, H.R. 3405 seems to offer the most 
effective deterrent to abuses of eminent domain.
    Justice Stevens, who wrote the majority opinion in Kelo, 
seems to disagree with the state law he upheld. In a recent 
address, the Clark County, Nevada Bar Association, discussing 
this case, he said that ``I was convinced that the law 
compelled a result that I would have opposed if I were a 
legislator.''
    Mr. Chairman, Farm Bureau strongly supports swift 
Congressional action on legislation to withhold Federal funding 
to states and local governments that use eminent domain to take 
property from one private entity and transfer it to another for 
economic development purposes.
    Farmers and ranchers across this country have held onto 
their property for generations. They fought battles, they 
fought pests, they fought droughts, they fought low prices to 
hold onto that property. It appalls us that now we can lose 
that property which we have held for generations just because 
the property could create a higher tax revenue.
    Thank you for the opportunity to be here today, and I would 
be pleased to answer any questions. Thank you.
    [The prepared statement of Mr. Hance follows:]

    Statement of Earl Hance, President, Maryland Farm Bureau, Inc., 
            on behalf of the American Farm Bureau Federation

    My name is Earl Hance and I am a corn and soybean producer from 
Port Republic, Maryland. I also operate several greenhouses. I serve as 
president of Maryland Farm Bureau, Inc., and serve on the Board of 
Directors of the American Farm Bureau Federation. I appreciate the 
opportunity to be here today to present testimony on behalf of the 
American Farm Bureau Federation. Farm Bureau is deeply concerned about 
the potentially devastating impacts of the recent Kelo decision on 
agriculture. We commend the committee for holding hearings on this 
important matter.
    The Kelo decision has struck a raw nerve around the country. 
Congress responded swiftly to this outrageous decision through the 
introduction of H.R. 3405 and similar bills. H.R. 3405 and H.R. 3135 
both have over 100 cosponsors and a companion bill in the Senate has 
more than 30 cosponsors. We fully support the efforts that have been 
taken thus far and we will work diligently to pass legislation to 
encourage states to limit their use of eminent domain to truly public 
uses.
    Farm Bureau has a long history in support of private property 
rights. We have participated in property rights cases at the appellate 
and Supreme Court levels, including filing a ``friend of the court'' 
brief in the Kelo case in support of the homeowners.
    Farmers and ranchers understand that there are legitimate public 
uses, such as roads and highways, which can have a claim on private 
land. However, we cannot understand--nor can we support--our land being 
taken for the profit of private corporations. The difference between 
legitimate uses of eminent domain and what is so objectionable in Kelo 
is the difference between building firehouses and factories, between 
courthouses and condominiums.
    After Kelo, no property is safe. Any property can now be seized and 
transferred to the highest bidder. As Justice O'Connor said in her 
ringing dissent: ``The specter of condemnation hangs over all property. 
Nothing is to prevent the State from replacing any Motel 6 with a Ritz 
Carlton, any home with a shopping center, or any farm with a factory.''
    I would like to stress to the committee that agricultural lands are 
particularly vulnerable to these types of actions. The fair market 
value of agricultural land is less than residential or commercial 
property, making a condemnation of agricultural land less costly and 
more attractive. While agricultural lands are vital to the nation 
because they feed our people, they do not generate as much property tax 
revenue as homes or offices. As a result, they can easily become 
targets for being taken for any of these other uses. Finally, as 
municipalities grow, they naturally put pressure on farms and rural 
areas. There is nothing to stop farms that have been in families for 
generations from being taken for industrial developments, shopping 
malls or housing developments.
    Development pressures are particularly acute in my state of 
Maryland, where land is already at a premium. As the areas surrounding 
Baltimore and Washington, D.C. continue to grow, planners and 
developers increasingly look to agricultural lands for their next 
housing development or shopping mall. The Kelo decision opens up a 
whole new avenue for them.
    We are understandably concerned about the possible impacts of Kelo 
on farm and ranchlands across Maryland and the country. Reaction from 
our members has been swift and overwhelming. Farmers and ranchers from 
across the state are asking us to help them keep their property.
    Farm Bureau has initiated a Stop Taking Our Property (STOP) 
Campaign, designed to educate the public about the impacts of the Kelo 
decision and to provide materials to help state Farm Bureaus address 
the issue. The Maryland Farm Bureau has fully embraced this campaign 
and made it a cornerstone of our legislative efforts.
    There are several components to the Farm Bureau campaign. One 
element focuses on educating the general public and our members about 
the Kelo decision and its impacts. We have developed an educational 
brochure and web page for those interested in the issue. Another 
element focuses on encouraging state Farm Bureaus to seek changes to 
state laws to prohibit the use of eminent domain for private economic 
development. We have developed model state legislation and supporting 
documents to help achieve those changes.
    Another key element is to encourage and promote passage of H.R. 
3405 or similar legislation. Since eminent domain is a creature of 
state law, substantive statutory change must be made at that level. 
Getting multiple state legislatures to act, however, is an uncertain 
and lengthy process. In addition, states interested in maximizing 
revenues may be reluctant to take action that might deny their 
municipalities the opportunity for increased property taxes.
    That is why federal legislation is necessary. While eminent domain 
is defined by state law, Congress does have the authority and the 
responsibility to determine how our tax dollars are spent. Using 
federal funds to help municipalities take from the poor and give to the 
rich adds insult to injury to those who work hard for themselves and 
their families. As elected officials, you can appropriately respond to 
the Kelo decision by ensuring that states and local governments cannot 
use federal tax dollars to dispossess property for the benefit of 
another private entity.
    All of the federal bills introduced thus far take this approach. 
The difference among them is the degree to which such funding is 
withheld. H.R. 3405 is the only one of the bills that would deny all 
federal economic development assistance to a state if there were any 
uses of eminent domain for economic development that transferred 
private property from one private entity to another.
    We support the approach taken by all of these bills. Withholding 
all federal economic development funding from states where Kelo-type 
eminent domain is being used, whether or not it is used in the specific 
project, offers the greatest disincentive for states to continue using 
eminent domain for private economic development. By not tying the funds 
to any particular project, H.R. 3405 avoids the fiscal shell game of 
moving federal funds away from individual projects that use eminent 
domain for private economic development.
    Though the Supreme Court said the Connecticut law was legal, not 
every Justice endorsed it as good policy. Even Justice Stevens, who 
wrote the majority opinion in Kelo, seems to disagree with the law he 
upheld. In a recent address to the Clark County (Nevada) Bar 
Association discussing the case, he said that ``I was convinced that 
the law compelled a result that I would have opposed if I were a 
legislator.''
    We urge swift passage of legislation that would withhold federal 
funding to states and local governments that use eminent domain to take 
property from one private entity and transfer it to another for 
economic develop purposes.
    Thank you for the opportunity to testify. I look forward to 
answering your questions.
                                 ______
                                 
    The Chairman. Thank you. Mr. Arroyo.

            STATEMENT OF MARIO ARROYO, PART OWNER, 
              ARROYO'S CAFE, STOCKTON, CALIFORNIA

    Mr. Arroyo. Thank you, Mr. Chairman. I appreciate the 
invitation and the opportunity to offer testimony of my 
personal story.
    In May of 1999 property that my family business stood on 
for 29 years was taken by our downtown redevelopment agency in 
Stockton, California through the use of eminent domain. The 
three main objectives of the agency were to eliminate blight, 
preserve viable businesses, and to encourage citizens from 
outside the area to visit downtown.
    Our business met all three criteria. We were never a source 
of blight, always maintaining a safe and clean environment for 
our patron. In fact, the developer that received the rights to 
our land was a major contributor to the problems in the area 
through a pool hall on the property he leased out, as well as a 
liquor store that he still owns.
    Second, we were a viable business, as 29 years in one 
location should attest. In fact, in a March, 1993 draft report 
by the consultant firm of Keyser, Marston and Associates, they 
recommended that Arroyo's Cafe should be retained, and to avoid 
relocation of said business. The firm was hired by the 
redevelopment agency.
    Third, our patrons came from all over Stockton and outside 
our city, as well, to dine in our restaurant, or to dance in 
our club area, or both. In our case, our case received media 
attention, and the local news stations aired segments on the 
process. The most impressive thing to me was the amount of 
letters and support that we received through the community.
    The Deputy City Manager at the time came to us with three 
proposals that would allow us to remain on the property. One 
was agreed upon, and later she returned to say that the 
developer wanted all the property. In my view, this was then 
just to allow the developer to secure more tenants for a 
project.
    I understand that at times eminent domain may be a 
necessity for public good. But our business, a successful 
restaurant that my father started in 1946, and at one location 
for 29 years, was relocated to provide for a gas station and a 
fast food restaurant. It was nothing short of a land grab, with 
no concern for private harm.
    I feel that allowing developers with deep pockets to use 
and abuse eminent domain is contrary to what many Americans 
feel is a constitutional right to own land without fear of 
losing it. We had done no wrong, and we were in good standing 
with the community, paying taxes, contributing to charities, 
all the things that make good citizens. We should expect 
nothing but to be treated the same way.
    This bill is exactly what we feel government should be: 
standing up for the common citizen. You saw a wrong, like the 
Kelo decision, and now you are trying to right it. This bill 
would bring nothing but more faith to the government by the 
common person, by protecting his rights.
    And again, thank you very much. I am open to any questions, 
as well.
    [The prepared statement of Mr. Arroyo follows:]

                 Statement of Mario Arroyo, Co-Owner, 
                  Arroyo's Cafe, Stockton, California

    In May of 1999 property that my family business stood on for 29 
years was taken by our downtown redevelopment agency in Stockton, Ca 
through the use of eminent domain. The three main objectives of the 
agency were to; eliminate blight, preserve viable business, and to 
encourage citizens from outside the area to visit downtown.
    Our business met all three criteria. We were never a source of 
blight always maintaining a safe and clean environment for our patrons. 
In fact the developer that received the rights to our land was a major 
contributor to problems in the area through a pool hall on his property 
he leased out as well as a liquor store he still owns.
    Secondly, we were a viable business as 29 years at one location 
should attest. In fact in a March of 1993 draft report the Consultant 
Firm of Keyser, Marston and Associates, recommended that Arroyo's Cafe 
should be retained and to avoid relocation of said business. The firm 
was hired by the redevelopment agency.
    Thirdly, our patrons came from all over Stockton and outside of our 
city some to dine in our restaurant others to dance in our club area or 
both. Our case received media attention as local news stations aired 
segments on the process. Most impressive to me was the amount of 
letters to the local newspaper (The Record) supporting our cause to 
stay at that location.
    The deputy city manager at the time came to us with three proposals 
to that would allow us to remain on part of the property. One was 
agreed upon she later returned to say the developer wanted all the 
property. In my view this was done to allow more time for the developer 
to secure tenants for their project.
    I understand that at times eminent domain may be necessary, for 
public good. But our business a successful restaurant my father started 
in 1946 and at one location for twenty-nine years was relocated to 
provide for a gas station with a fast food chain restaurant inside of 
it was nothing short of a land grab. With no concern for private harm.
    I feel that allowing developers with deep pockets to use and abuse 
eminent domain is contrary to what many Americans feel is their right, 
to own land without the fear of losing it.
                                 ______
                                 
    The Chairman. Thank you, Mr. Arroyo. And thank you to the 
entire panel.
    I want to begin with Mr. Arroyo, who is a constituent who 
lives in my district. You had a restaurant that was in place 
for nearly 30 years, a family business. And you employed people 
in the neighborhood. You were part of what was downtown 
Stockton. And I have been in your restaurant many times, I 
think most of my staff has been there many, many times.
    We were all surprised when your property was taken. But I 
think what shocked me, and I think most of Stockton even more, 
was to see that a McDonald's took the place of what was a 
Stockton institution.
    I do not understand who thought that was a good idea. But 
it is my understanding that under California law, they can take 
your property if they consider it blighted.
    Mr. Arroyo. That is correct.
    The Chairman. They considered you part of the blight in 
downtown Stockton?
    Mr. Arroyo. No. Actually when our case went to trial, they 
could not bring up any reason or any cause that would suggest 
blight. On the contrary, the developer contributed to the 
blight and to the actual crime in the area by maintaining a 
liquor store around the corner. But there was no police 
records; we had no problems with any kind of a blight or crime 
from our business.
    The Chairman. Then why were they able to take it? Because I 
have been told repeatedly by opponents of this legislation that 
in a state like California, the only way they can take your 
property under eminent domain is if it is blighted.
    Mr. Arroyo. That is contrary to what happened to us. When 
we went to trial, even the Judge saw that there was no 
resolution of necessity to take our property, but she still 
sided with the developers at the end of trial.
    The Chairman. So when opponents of this legislation, 
particularly in California, because every state has different 
laws when it comes to the use of eminent domain within that 
state. But when opponents say that the only way they can take 
property is if they condemn it and have it declared blighted by 
the city or the county, that is not what happened in your case. 
They just had a different use that they wanted for your 
property, so they took it.
    Mr. Arroyo. Absolutely. The developer made it known that he 
wanted all the property. And even though we were offered three 
different plans to stay on the property, since the developer 
didn't accept either one of those, we were taken off the 
property.
    They had about nine years before we went to trial. And even 
though everything seemed to be in our favor, just because they 
had deeper pockets, they were a larger group of investors, they 
were allowed to take our property. And now on my property sits 
a Union 76 station and a McDonald's, which incidentally does 
not have as many employees as we had at that time.
    And because the gas station opened on that block, a gas 
station just one block north of that closed. So actually the 
tax dollars were basically balanced out.
    The Chairman. Was that the Chevron?
    Mr. Arroyo. The Chevron station, right. It is closed now.
    The Chairman. Were you able to relocate your business?
    Mr. Arroyo. Yes, we were. And when the City came to us and 
offered different properties, they offered us properties that 
were not even for sale. And to eliminate going and trying to do 
this to someone else, we purchased property that was for sale 
by a different property owner in North Stockton. We did not 
want to impose this kind of dealings with anybody else. They 
offered us quite a few properties that I think had, the 
property owners had no intention of selling.
    The Chairman. You were compensated the fair market value 
for your property
    Mr. Arroyo. Right. They decided on fair market value, and 
that is what we received.
    The Chairman. And I am glad you put it that way. They 
decided the fair market value, and that is what you received.
    Mr. Arroyo. Right.
    The Chairman. The fair market value of your property, the 
definition of fair market value is what you would be willing to 
sell it for, and what somebody would be willing to pay you for 
it.
    Mr. Arroyo. Right. We saw other properties in the vicinity, 
with the same amount or close amount of square footage. And 
they were going at a higher rate than actually what we 
received.
    The Chairman. And if your restaurant were still in the same 
location, there is now a baseball stadium, a new soccer 
stadium, a multi-screen movie theater, a number of new 
businesses that have been located in that area over the last 
few years. Would that have changed the value of that property?
    Mr. Arroyo. Oh, absolutely. It would have went up 20 times 
the amount maybe what it was valued at in 1999. The only reason 
the city government was interested in our property after being 
there such a long time was the completion of a crosstown 
freeway that connected two major interstates. Before that, 
there was no concern about us. Some of the people didn't even 
bother to go down in that area.
    The Chairman. I thank you for making the effort to be here 
and be part of this hearing. I know that, as a small business 
owner, it is very difficult for you to take time away from your 
business. And I appreciate you making the effort to be here and 
testify before the Committee, and share your experience with 
the Committee, because I do believe it is very helpful in 
moving forward. So thank you very much.
    Mr. Arroyo. Thank you, Chairman.
    The Chairman. Ms. Herseth.
    Ms. Herseth. Thank you, Mr. Chairman. I would like to thank 
all the members of the panel today.
    Let me just start with you, Mr. Gall. You had mentioned in 
your testimony that since the Kelo case, you actually witnessed 
an uptick of the type of eminent domain authority that was 
exercised for economic development reasons.
    Can you tell me, given the actions in the House, with this 
legislation, the resolution that was passed overwhelmingly 
earlier this summer, has it plateaued off? Or is there still 
this uptick of this type of activity in local communities 
trying to beat the actions that Congress may take to stave off 
this type of activity?
    Mr. Gall. Well, unfortunately, the uptick after Kelo has 
continued. And I think certainly many people may be wanting to 
get in under the wire in terms of any legislation that Congress 
may propose.
    We issued, and I would be glad to provide to the Committee 
a press release on the floodgates and how that had opened in 
terms of condemnations that were filed subsequent to the Kelo 
decision. But before Kelo, a lot of cities had operated with a 
little bit of doubt as to what they were doing was legal, but 
people weren't challenging them. They could proceed under their 
urban renewal laws, and slap blight designations or things like 
that on particular pieces of property.
    But now, after Kelo, the Court has said all it really takes 
is you think you can make more money off the land than someone 
else. So now that that cloud has been removed, you know, the 
cloud in the perspective of developers and officials, they want 
to press full steam ahead.
    Ms. Herseth. I raise this question, Mr. Chairman, because 
we may want to look at our legislation and any others in terms 
of effective dates, particularly with the resolution that 
passed the House overwhelmingly. I want to send a clear message 
to the country so that it is not just maybe necessary the date 
of the enactment of the Act, but I mean, we put folks on notice 
with that resolution. So I wanted to raise that for that 
purpose.
    And then Mr. Hance, I appreciate the efforts of you and 
other members of the American Farm Bureau Federation, 
particularly with the efforts to set forth some model 
legislation for state legislatures. Do you know, in your 
monitoring activity of what state legislatures are doing--now, 
some, like in South Dakota, are only in session for two months 
out of the year, but already some discussions about moving 
forward to introduce legislation when they go into session in 
January--do you know how many states have actually taken action 
to limit local governments or economic development authorities 
from exercising eminent domain power for economic development?
    Mr. Hance. To my knowledge, there is one or two.
    The Chairman. If you would just identify yourself for the 
record. so that we have that.
    Mr. Kraus. I am Rick Kraus. I am the Senior Regulatory 
Director for the American Farm Bureau.
    There have been two states that have taken, actually three 
states that have taken action since the Kelo decision was 
announced. The first was Alabama; they restricted the use of 
eminent domain for private economic purposes. The second was 
Texas, and the third was Delaware, which we recently did, just 
in the past couple months.
    We have heard probably from, in our State Farm Bureaus, we 
have heard probably about 20, 25 states that we know that are 
moving forward with the coming session. Some states were in 
session earlier this year, by annual basis, and don't meet 
until the following year, until 2007. So, but there are 
probably 20, 25 states already that we know of that are working 
on this, including Maryland.
    Mr. Hance. Our session, as yours, does not start until 
January, but we have already begun discussions with both 
parties. And I am happy to announce that we have strong 
bipartisan support to do something to strengthen the 
condemnation requirement so that agriculture will be protected.
    Ms. Herseth. Thank you, Mr. Hance. And just one last 
comment, Mr. Chairman.
    Mr. Arroyo, Chairman Pombo shared with us, with the Members 
of this Committee and the Agriculture Committee, some examples 
from activities that have taken place in his district and other 
locations within California that have been particularly 
egregious. And it has made a strong impact on all of us.
    But to hear from you directly today has been very 
important. For me, I wish more Members of the Committee were 
here to hear from you directly today.
    But let me just say that we appreciate the fact that you 
are here. And one of the comments that you made about a 
consulting firm's report to the local economic development 
authority is precisely the kind of evidence that a business 
like yours, or other individual, whether it be a home or a farm 
or ranch, would be able to point to to support your private 
right of action under this important legislation.
    So thank you for being here today.
    Mr. Arroyo. Thank you.
    Ms. Herseth. Thank you, Mr. Chairman.
    The Chairman. If I could, I would like to address a 
question to the two attorneys that are on the panel. It relates 
to what Mr Arroyo has talked about.
    In our Constitution we have the protection on private 
property. And the protection starts where no person shall be 
deprived of life, liberty, or property. And that is our 
constitutional mandate.
    It goes on to state ``nor shall private property be taken 
for a public use without just compensation.'' As if the 
exception to no person shall be deprived of property is, if you 
have to have it for a public use, you have to pay for it.
    In this case, what we had was the government stepping in 
and taking someone's property not for a public use, but for a 
private economic development. As was the case with Kelo v. New 
London.
    It is my position, my argument, that we should be 
protecting people's property to the point that it is an 
extremely rare occurrence that eminent domain would ever be 
used, and it would have to be a very clear public use before we 
would take that property. Not what is, and I wrote down what 
you called a public purpose. That is not in the Constitution 
anywhere about a public purpose. There was an exception made on 
a public use.
    So what this legislation is attempting to do is use our 
power of the purse to enforce what is a constitutional mandate. 
So how do we go back now, even though we can control the money, 
how do we go back and fix what obviously was a very wrong court 
decision that actually makes this legal for them to do that? 
What possible legislation could be introduced that actually 
goes back to what the Constitution says?
    Ms. Wally. Mr. Chairman, I think that is an excellent 
question. I think this legislation represents an important 
first step. As you said, Congress controls the purse, and this 
legislation makes very clear that economic development purposes 
will not be funded by Congress.
    I think other legislation that is being passed currently 
before Congress is another excellent step in enforcing 
Constitutional mandates, such as requiring just compensation 
for any deprivation of private property, whether it be physical 
or economic. And that is an important part of our Constitution 
as well, to make sure that property owners do get just 
compensation as we have discussed.
    We have discussed that the government often defines what 
just compensation is. And this is often unfair to property 
owners. I don't know if my colleague would have anything to 
add.
    Mr. Gall. Well, certainly Congress can do a lot through the 
spending clause power.
    Eminent domain has traditionally been a state power, and a 
local power. So that is why what is going on in state 
legislatures is so very important right now, because those 
states can pass legislation that directly proscribes the actual 
use of eminent domain by cities and towns for private use for 
private commercial development. And states will be considering 
not only state legislation, but state constitutional 
amendments.
    And as Justice Stevens pointed out in the majority for 
Kelo, states can provide a greater level of protection than the 
U.S. Supreme Court chose to provide.
    The hope certainly is that states will provide this 
increased protection; that Congress will use the power of the 
purse here, and send us in the momentum of a change. You know, 
once again, in public use jurisprudence, back to what the 
founding fathers understood when they said public use. This is 
the despotic power, and should only be used in the very, very 
limited set of circumstances.
    And hopefully the Kelo decision will be overturned one day. 
But until that time, Congress and the states can have a lot to 
say about that.
    The Chairman. Congressman Otter, in his testimony earlier, 
talked about what a public use was. And at the time the 
Constitution was drafted, Congressional power was, Federal 
government power was very limited. There were 17 different 
areas that our founding fathers said that Congress could pass 
laws affecting.
    When they talked about public use at that time, it was 
extremely limited as to what was envisioned at that time as a 
public use. We were talking about roads, military bases, post 
offices. It was very, very limited as to what anyone envisioned 
it to be used for.
    We have seen that change over the years. We have seen the 
power of the Federal government expanded dramatically over the 
years.
    But when they talked about a public use in the 
Constitution, it was a very limited set of circumstances that 
they ever envisioned that that could be used for. We have seen 
that expanded dramatically. And granted, states and local 
governments have dramatically more power than the Federal 
government should have, but in the Constitution what we were 
able to use or declare as a public use was very, very limited. 
And we have seen that expanded to the point where, through 
regulation and through law, we are taking private property 
rights. And taking substantial value away from private property 
owners.
    I would like to ask you something that I asked the first 
panel about, and that is dealing with the differences in 
private property protection. Do you see there being any 
difference whatsoever between Mr. Arroyo's restaurant and the 
farmer who lives a few miles away and his land? Is there any 
difference in the Constitution about the protection of private 
property based on the size of the property, or the use of the 
property?
    We have a representative from the Farm Bureau who 
testified, and the Farm Bureau has been very involved with 
this. These two gentlemen right here, one grows soybeans and 
one owns a restaurant. Is there any difference in the property 
rights protection in the Constitution for these two gentlemen, 
and what they should expect from the courts and from their 
government?
    Ms. Wally. No. The Constitution makes no distinction 
between any kind of private property.
    Mr. Gall. None whatsoever. The Constitution makes no 
distinction. And the really bad thing about the Kelo decision, 
of course, though, is it says those with more, those with more 
property, those with more resources are in a better position to 
take advantage of Kelo and to take property from those who are 
generating less profits with their property.
    So no, there is none, and there should be no distinction.
    The Chairman. Well, I appreciate that. That is something 
that I believe Congress has to be very, very careful of. 
Because when we start to differentiate between the use, 
location of property, and the level of protection that we are 
going to grant, I believe that we are making a fundamental 
mistake in understanding constitutional protections.
    There has been legislation introduced that does 
differentiate between property. It is the use of that property 
and the level of protection that we would give. And I believe 
that that is a very, very dramatic mistake that Congress would 
be making if we were to go down that path.
    I appreciate all of you making the effort to be here and be 
part of this hearing. Obviously this is an issue that the 
Congress is moving on very rapidly. It is something that, in 
Congressional terms, not only is it bipartisan and bicameral, 
but it is something that, rare here, is moving very quickly. So 
I appreciate you making the effort to be here, and your 
valuable testimony on this issue.
    So thank you all very much.
    If there is no further business before the Committee, the 
Committee now stands adjourned.
    [Whereupon, at 11:30 a.m., the Committee was adjourned.]