[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
   HEARING ON THE ``PRIVATE PROPERTY RIGHTS PROTECTION ACT OF 2013''

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

                                HEARING

                               BEFORE THE

                   SUBCOMMITTEE ON THE CONSTITUTION 

                           AND CIVIL JUSTICE

                                 OF THE

                       COMMITTEE ON THE JUDICIARY

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 18, 2013

                               __________

                           Serial No. 113-17

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov




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                       COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        JERROLD NADLER, New York
HOWARD COBLE, North Carolina         ROBERT C. ``BOBBY'' SCOTT, 
LAMAR SMITH, Texas                       Virginia
STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
SPENCER BACHUS, Alabama              ZOE LOFGREN, California
DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona                  Georgia
LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio                     JUDY CHU, California
TED POE, Texas                       TED DEUTCH, Florida
JASON CHAFFETZ, Utah                 LUIS V. GUTIERREZ, Illinois
TOM MARINO, Pennsylvania             KAREN BASS, California
TREY GOWDY, South Carolina           CEDRIC RICHMOND, Louisiana
MARK AMODEI, Nevada                  SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho                 JOE GARCIA, Florida
BLAKE FARENTHOLD, Texas              HAKEEM JEFFRIES, New York
GEORGE HOLDING, North Carolina
DOUG COLLINS, Georgia
RON DeSANTIS, Florida
KEITH ROTHFUS, Pennsylvania

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel
                                 ------                                

           Subcommittee on the Constitution and Civil Justice

                    TRENT FRANKS, Arizona, Chairman

                    JIM JORDAN, Ohio, Vice-Chairman

STEVE CHABOT, Ohio                   JERROLD NADLER, New York
J. RANDY FORBES, Virginia            JOHN CONYERS, Jr., Michigan
STEVE KING, Iowa                     ROBERT C. ``BOBBY'' SCOTT, 
LOUIE GOHMERT, Texas                 Virginia
RON DeSANTIS, Florida                STEVE COHEN, Tennessee
KEITH ROTHFUS, Pennsylvania          TED DEUTCH, Florida

                     Paul B. Taylor, Chief Counsel

                David Lachmann, Minority Staff Director


                            C O N T E N T S

                              ----------                              

                             APRIL 18, 2013

                                                                   Page

                           OPENING STATEMENTS

The Honorable Trent Franks, a Representative in Congress from the 
  State of Arizona, and Chairman, Subcommittee on the 
  Constitution and Civil Justice.................................     1
The Honorable Jerrold Nadler, a Representative in Congress from 
  the State of New York, and Ranking Member, Subcommittee on the 
  Constitution and Civil Justice.................................    20
The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Committee on the Judiciary    22
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Ranking Member, Committee on 
  the Judiciary..................................................    23

                               WITNESSES

Susette Kelo, New London, CT
  Oral Testimony.................................................    26
  Prepared Statement.............................................    29
David T. Beito, Professor, University of Alabama
  Oral Testimony.................................................    31
  Prepared Statement.............................................    34
Julia Trigg Crawford, Farm Manager, Sumner, TX
  Oral Testimony.................................................    39
  Prepared Statement.............................................    41
Scott Bullock, Senior Attorney, Institute for Justice
  Oral Testimony.................................................    43
  Prepared Statement.............................................    46

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Discussion Draft of H.R. ___, the ``Private Property Rights 
  Protection Act of 2013''.......................................     3
Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Ranking Member, Committee on the Judiciary.....................    25

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of Andrew W. Schwartz, submitted by the 
  Honorable Jerrold Nadler, a Representative in Congress from the 
  State of New York, and Ranking Member, Subcommittee on the 
  Constitution and Civil Justice.................................    64
H.R. 1944, the ``Private Property Rights Protection Act of 2013''    78


   HEARING ON THE ``PRIVATE PROPERTY RIGHTS PROTECTION ACT OF 2013''

                              ----------                              


                        THURSDAY, APRIL 18, 2013

                        House of Representatives

                   Subcommittee on the Constitution 
                           and Civil Justice

                       Committee on the Judiciary

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 10:09 a.m., in 
room 2141, Rayburn Office Building, the Honorable Trent Franks, 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Franks, Goodlatte, Chabot, 
Gohmert, DeSantis, Nadler, Conyers, and Scott.
    Staff present: (Majority) Zach Somers, Counsel; Sarah 
Vance, Clerk; (Minority) David Lachmann, Subcommittee Staff 
Director; Veronica Eligan, Professional Staff Member.
    Mr. Franks. The Subcommittee on the Constitution and Civil 
Justice will come to order.
    Without objection, the Chair is authorized to declare 
recesses of the Committee at any time.
    We have called this hearing to examine the continuing need 
for Congress to pass the Private Property Rights Protection 
Act. This legislation is needed to blunt the negative impact of 
the Supreme Court's decision in Kelo v. City of New London, 
which permits the use of eminent domain to take property from 
homeowners and small businesses and transfer it to others for 
private economic development.
    In Justice O'Connor's words, the Kelo decision pronounced 
that, ``Under the banner of economic development, all private 
property is now vulnerable to be taken and transferred to 
another private owner so long as it might be upgraded. Nothing 
is to prevent a state from replacing any Motel 6 with a Ritz 
Carlton, any home with a shopping center, or any farm with a 
factory.''
    The Kelo decision was resoundingly criticized from across 
all quarters. In 2005, the House voted to express grave 
disapproval of the decision and overwhelmingly passed the 
Private Property Rights Protection Act, with 376 Members voting 
in favor and only 38 Members voting against.
    In the last Congress, the House once again passed this 
legislation, this time by voice vote. Unfortunately, the bill 
has not been taken up by the Senate.
    The Private Property Rights Protection Act prohibits states 
and localities that receive Federal economic development funds 
from using eminent domain to take private property for economic 
development purposes. States and localities that use eminent 
domain for private economic development are ineligible to 
receive Federal economic development funds for 2 fiscal years.
    Every day, local governments in search of more lucrative 
tax bases take property from homeowners, small businesses, 
churches and farmers and give it to large corporations for 
private redevelopment. Federal law currently allows Federal 
funds to be used to support such condemnations, encouraging 
this abuse nationwide. This bill will restore Americans' faith 
in their ability to build, own, and keep their property without 
fear that the government will take it and give it to someone 
else. It will tell commercial developers that they should seek 
to obtain property through private negotiation, not by 
government force.
    Too many Americans have lost homes and small businesses to 
eminent domain abuse, forced to watch as private developers 
replace them with luxury condominiums and other ``upscale'' 
uses. Family farms have been wiped out by eminent domain to 
make way for shopping centers and big-box stores. Churches, 
generally entitled to tax-exempt status, are often seized 
through eminent domain to be replaced by more lucrative private 
development.
    Unfortunately, it is usually the most vulnerable who suffer 
from economic development takings. As Justice Thomas observed 
in his dissenting opinion in Kelo, ``Extending the concept of 
public purpose to encompass any economically beneficial goal 
guarantees that these losses will fall disproportionately on 
poor communities. Those communities are not only systematically 
less likely to put their lands to the highest and best social 
use but are also the least politically powerful. The 
deferential standard this Court has adopted for the public use 
clause encourages the citizens with disproportionate influence 
and power in the political process, including large 
corporations and development firms, to victimize the weak.''
    I am pleased this week that Mr. Sensenbrenner and Ms. 
Waters introduced again the Private Property Rights Protection 
Act. We must restore the private property rights protections 
that were erased from the Constitution by the Kelo decision. 
John Adams wrote over 200 years ago that, ``property must be 
secured or liberty cannot exist.'' As long as the specter of 
condemnation hangs over all property, our liberty is 
threatened.
    I look forward to the witnesses' testimony, and now I 
recognize the Ranking Member, Mr. Nadler, for 5 minutes for his 
opening statement.
    [Discussion Draft of H.R. ___, the ``Private Property 
Rights Protection Act of 2013'' follows.]


































                               __________
    Mr. Nadler. Thank you, Mr. Chairman. Before we begin, I 
want to thank you for moving this hearing back an hour to 
accommodate a conflict the Democratic Members had due to our 
regularly scheduled meeting.
    Mr. Chairman, for once the Supreme Court defers to the 
elected officials, and Congress cries foul. The power of 
eminent domain is an extraordinary one and should be used 
rarely and with great care. All too often, it has been abused 
for private gain or to benefit one community at the expense of 
another. It is, however, an important tool, making possible 
transportation networks, irrigation projects, and other public 
purposes. To some extent, all of these projects are ``economic 
development projects.'' Members of Congress are always trying 
to get these projects for our districts, and certainly the 
economic benefits to our constituents is always a 
consideration.
    Has this bill drawn the appropriate line between 
permissible and impermissible uses of eminent domain? I think 
this is one of the questions we will need to consider. We all 
know the easy cases. As the majority in Kelo said, ``The city 
would no doubt be forbidden from taking petitioner's land for 
the purpose of conferring a private benefit on a particular 
private party, nor would the city be allowed to take property 
under the mere pretext of a public purpose when its actual 
purpose was to bestow a private benefit.'' But which projects 
are appropriate and which are not can sometimes be a difficult 
call.
    Historically, eminent domain has been abused and has 
destroyed communities for projects having nothing to do with 
economic development, at least as defined in this bill. For 
example, highways have cut through neighborhoods, destroying 
them. Some of these communities are in my district that have 
yet to recover from the wrecker's ball. Yet that would still be 
permitted by this bill. Other projects might have a genuine 
public purpose and yet would be prohibited. The rhyme or reason 
of this bill is not clear.
    One of our witnesses today will discuss the use of eminent 
domain to facilitate a project that many of my Republican 
colleagues want to see built and that this bill would permit. I 
think we owe it to the many property owners who have been 
subject to eminent domain by this foreign corporation to 
consider whether that use of the takings power is appropriate 
or whether, as many have argued, it is simply a case of the 
rich and powerful using governmental power to dispossess those 
without power.
    I continue to believe that this bill is the wrong approach 
to a very serious issue. The bill would permit many of the 
abuses and injustices of the past to continue by excluding from 
its coverage many of the projects that cause those abuses, 
including pipelines, transmission lines and railroads. It would 
allow the Keystone Pipeline to cut through the heartland of 
America and condemn property all along its route. It would 
allow highways to cut through communities. It would allow all 
the other public projects that have historically fallen most 
heavily on the poor and powerless. As Hillary Shelton at the 
NAACP has previously testified, these projects can be just as 
burdensome as projects that include private development.
    This bill allows the use of eminent domain to give property 
to a private party ``such as a common carrier that makes the 
property available for use by the general public as of right.'' 
Does that mean, for example, a stadium? A stadium is privately 
owned, available for use by the general public as of right, at 
least as much as a railroad. You can buy a seat, but that would 
apparently be permitted by this bill. Is it a shopping center? 
You don't even need a ticket.
    The World Trade Center could not have been built under this 
law. It was publicly owned but was predominantly leased for 
office space and retail use. Neither could Lincoln Center have 
been built. Affordable housing like the Hope VI or the Nehemiah 
program, a faith-based affordable housing program in Brooklyn, 
could never have gone forward. So public housing, apparently, 
completely constructed by the government, public housing 
projects are okay, but public-private partnerships for 
affordable housing are not okay.
    Since the Kelo decision, there have been new developments 
that call into question whether Congress should even act at 
this point. In response to the Kelo decision, states have moved 
aggressively to reconsider and amend their own eminent domain 
laws. More than 40 states have acted to narrow their eminent 
domain laws. States have carefully considered the implications 
of this decision and the needs of their citizens. I question 
whether Congress should now come charging in and presume to sit 
as a national zoning board, aggregating to our national 
government the right to decide which states have gotten the 
right balance and deciding which projects are or are not 
appropriate.
    The lawsuits authorized by this bill and the vagueness of 
the bill's definitions would cast a cloud over legitimate 
projects. A property owner or a tenant would have 7 years after 
the condemnation before the litigation and appeals need even 
begin. Did the trial lawyers write this bill?
    Most importantly, even if my colleagues believe that 
Congress needs to act in response to Kelo, the penalties in 
this bill are so draconian and misguided that even a government 
that never took a prohibited action would be hobbled 
financially by it. The local government would risk all of its 
economic development funding for 2 years even for unrelated 
projects and face bankruptcy if it guessed wrong about a given 
project. Even if a jurisdiction did not use eminent domain at 
all, the cloud this bill would cast over the possibility of 
some future taking, or that property taking for a permitted 
purpose could not be used because the funding dried up, would 
be enough to destroy their ability to float bonds at any time.
    And what does this bill give to an aggrieved tenant or 
homeowner who was aggrieved by the misuse of eminent domain? 
What does the bill give them? Nothing. They cannot sue to stop 
the taking. They cannot get any damages other than the 
compensation they got at the time of the taking. All they can 
get is the psychic satisfaction that they get from bankrupting 
their community.
    Mr. Chairman, this legislation goes well beyond dealing 
with a hypothetical taking of a Motel 6 to build a Ritz 
Carlton, which despite dire warnings at the time of the Kelo 
decision was simply not what the Court authorized. This bill 
threatens communities with bankruptcy without necessarily 
protecting the most vulnerable populations. It comes after 
years of state action in which states have decided which 
approach would satisfy their concerns and protect their 
citizens the best.
    I think this bill is unnecessary, and if it is to pass, it 
should certainly be changed as to the remedy so that the remedy 
deals with the problem and doesn't bankrupt communities that 
never even availed themselves of eminent domain.
    I want to join you in welcoming our witnesses, and I yield 
back the balance of my time.
    Mr. Franks. And I thank the gentleman, and I now yield to 
the Chairman of the Committee, Mr. Goodlatte from Virginia.
    Mr. Goodlatte. Well, thank you, Chairman Franks. I very 
much appreciate your holding this hearing on a very important 
subject.
    Private ownership of property is vital to our freedom and 
our prosperity and is one of the most fundamental principles 
embedded in our Constitution. The founders realized the 
importance of property rights by enshrining property rights 
protections throughout the Constitution, including in the Fifth 
Amendment, which provides that private property shall not be 
taken for public use without just compensation.
    This clause created two conditions to the government taking 
private property: that the subsequent use of the property is 
for the public, and that the government gives the property 
owner just compensation. However, the Supreme Court's 5-4 
decision in Kelo v. City of New London was a step in the 
opposite direction. This controversial ruling expanded the 
ability of state and local governments to exercise eminent 
domain powers to seize property under the guise of economic 
development when the public use is as incidental as generating 
tax revenues or creating jobs.
    The Kelo decision even permits the government to take 
property from one private individual and give it to another 
private entity. As the dissenting justices observed, by 
defining public use so expansively, the result of the Kelo 
decision is, ``effectively to delete the words `for public use' 
from the takings clause of the Fifth Amendment. The specter of 
condemnation hangs over property. The government now has 
license to transfer property from those with few resources to 
those with more. The founders cannot have intended this 
perverse result.''
    In the wake of this decision, state and local governments 
can use eminent domain powers to take the property of any 
individual for nearly any reason. Cities may now bulldoze 
private citizens' homes, farms and small businesses to make way 
for shopping malls and other developments. For these reasons, 
it is important that Congress finally pass the Private Property 
Rights Protection Act.
    I am pleased that this legislation incorporates many 
provisions from legislation I helped introduce in the 109th 
Congress, the STOPP act. Specifically, the Private Property 
Rights Protection Act would prohibit all Federal economic 
development funds for a period of 2 years for any state and 
local government that uses economic development as a 
justification for taking property from one person and giving to 
another private entity.
    In addition, this legislation would allow state and local 
governments to cure violations by giving the property back to 
the original owner.
    Furthermore, this bill specifically grants adversely 
affected landowners the right to use appropriate legal remedies 
to enforce the provisions of the bill.
    The bill also includes a carefully crafted definition of 
economic development that protects traditional uses of eminent 
domain such as taking land for public uses like roads, while 
prohibiting abuses of eminent domain powers. No one should have 
to live in fear of the government snatching up their home, farm 
or business, and the Private Property Rights Protection Act 
will help to create incentives to ensure that these abuses do 
not occur in the future.
    This bill is very bipartisan in nature, and the adage that 
one's home is one's castle applies to people across the 
economic spectrum.
    I look forward to the witnesses' testimony, and I am 
particularly looking forward to the testimony of Mrs. Kelo. I 
thank you very much for coming to the Committee.
    It is my understanding this is the first time that you have 
testified before the Judiciary Committee, and I want to say to 
you that as a woman who had the courage to take on the 
bureaucracy and take a case all the way to the United States 
Supreme Court, even though it resulted in an unfortunate 
decision by the Court, has helped to highlight this plight that 
many property owners face. The gentleman from New York is 
correct, 40 states have changed their laws as a result of your 
good work. So I thank you very much for that, and I will tell 
you that the decision that came down that many of us have 
protested was at the time the most unpopular Supreme Court 
decision in the history of polling when people were surveyed 
about that.
    I agree very much with Congresswoman Maxine Waters, who 
represents one of the poorest congressional districts in an 
urban area in the entire country and who strongly supports this 
measure because she knows two things: one, that a person's 
property is their castle, no matter what their background is; 
and she knows that so often it is people of lower incomes who 
are the first targets of the government saying I am going to 
take your property for economic development purposes because I 
think we collectively as a government can do better with your 
property than you can yourself. That is wrong. In my opinion, 
it is a clear violation of the United States Constitution, and 
anything this Congress can do to protect it will be wonderful.
    But nothing we do will ever match what you have already 
done. So thank you and God bless you.
    Mr. Franks. And I thank the gentleman.
    I would now yield to the Ranking Member of the Committee, 
Mr. Conyers from Michigan.
    Mr. Conyers. Thank you, Mr. Chairman. I rise as one who has 
changed my opinion of this measure. I was going to put my 
statement in the record, and my colleague from Virginia, Mr. 
Scott, reminded me that I might better, more ably explain why I 
have changed my position.
    I don't like the Kelo decision of the Supreme Court, and 
neither do I like the bill that was put in for this and that 
will be coming in very shortly.
    Mr. Scott also reminds me that downtown Detroit was built 
off the whole idea that eminent domain could pose a problem. So 
I am happy to make a few comments about the decision and the 
bill itself.
    Now, in the wake of the Kelo decision, the concern has 
arisen that state and municipalities can use this decision to 
expand their power of eminent domain, whether for the benefit 
of private parties or public projects, to the detriment of 
those who are the least powerful--the poor, the elderly, and 
the communities of color. While I believe that eminent domain 
can and has been abused, particularly with respect to those 
lacking this economic and/or political power, I have come to 
conclude that for the time being we should allow the states to 
craft responses rather than impose an awkward one-size-fits-all 
Federal legislative response.
    It is important to note that in Kelo, the Court 
acknowledged that the state courts may interpret their own 
eminent domain powers in a manner that is more protective of 
property rights. I am encouraged that no less than 43 states, 
as has been mentioned, have followed that advice and taken 
steps to restrict their own powers of eminent domain to guard 
against abuse.
    In my own State of Michigan, voters adopted an amendment to 
amend the Michigan Constitution to preclude takings for 
economic development or tax enhancement, among a number of 
other protections for property owners and tenants.
    Given the fact that our system of federalism appears to be 
working and that the states are in consensus on the need to 
prevent abuse, I don't think that we need Federal intervention 
at this time.
    The bill's enforcement provisions are very troubling. For 
example, a jurisdiction found in violation of the measure would 
be stripped of all Federal economic development funds for 2 
years, which could possibly bankrupt that jurisdiction. Despite 
that draconian penalty, the actual property owner would get 
nothing. The bill does not even give the property owner the 
right to sue to stop the taking in the first place. A suit can 
only be brought after the property is taken.
    The Supreme Court has long held that when Congress attaches 
conditions to a state's acceptance of Federal funds, the 
conditions must be set out unambiguously. The bill, however, 
fails to satisfy this requirement with respect to its 
definition of economic development funds, which therefore could 
subject a jurisdiction to its punitive provisions.
    For instance, the Government Accountability Office, GAO, 
testified in the last Congress about the difficulty of 
determining what qualifies as an ``economic development 
program.'' GAO has also warned that the loss of Federal funding 
to a state and local government could encompass highway trust 
funds, community development block grants and other Department 
of Housing and Urban Development programs intended to assist 
vulnerable communities. Of course, the sequester doesn't help 
much either.
    Mr. Chairman, I will stop at this point, put the remainder 
of my statement in the record, and thank the Chairman for the 
additional time that he has given me.
    [The prepared statement of Mr. Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative 
 in Congress from the State of Michigan, and Ranking Member, Committee 
                            on the Judiciary
    In the wake of the Supreme Court's decision in Kelo v. City of New 
London, I have been concerned that states and municipalities could use 
this decision to expand their power of eminent domain--whether for the 
benefit of private parties or for public projects--to the detriment of 
those who are the least powerful, namely, the poor, elderly, and 
communities of color.
    While I believe the power of eminent domain can and has been 
abused--particularly with respect to those lacking economic or 
political power--I have come to conclude that for the time being we 
should allow the states to craft responses, rather than impose and 
awkward and one size fits all federal legislative response. I have 
reached this conclusion for several reasons.
    First and foremost, it is important to note that in Kelo, the 
Supreme Court acknowledged that state courts may interpret their own 
eminent domain powers in a manner that is more protective of property 
rights.
    I am therefore encouraged that no less than 43 states have followed 
that advice and taken steps to restrict their own powers of eminent 
domain to guard against abuse.
    For example, in 2006 Michigan voters adopted an amendment to 
Michigan's Constitution to preclude takings for economic development or 
tax enhancement, among a number of other protections for property 
owners and tenants.
    Given the fact that our system of federalism appears to be working 
and that the states are in consensus on the need to prevent abuse, I do 
not believe that federal intervention is necessary or appropriate at 
this time.
    Second, the bill's enforcement provisions are very troubling. For 
example, a jurisdiction found in violation of the measure would be 
stripped of all federal economic development funds for two years, which 
could possibly bankrupt that jurisdiction.
    Despite that draconian penalty, the actual property owner would get 
nothing. The bill does not even give the property owner the right to 
sue to stop the taking in the first place. A suit can only be brought 
after the property is taken.
    The Supreme Court has long held that ``when Congress attaches 
conditions to a State's acceptance of Federal funds, the conditions 
must be set out `unambiguously.' '' \1\
---------------------------------------------------------------------------
    \1\ Arlington Cent. School Dist. Bd. Of educ. V. Murphy, 548 U.S. 
291, 296 (2006) (quoting Pennhurst State School and Hospital v. 
Halderman, 451 U.S. 1 (1981) (citations omitted).
---------------------------------------------------------------------------
    The bill, however, fails to satisfy this requirement with respect 
to its definition of ``economic development funds,'' which therefore 
could subject a jurisdiction to its punitive provisions.
    For instance, the Government Accountability Office testified in the 
last Congress about the difficulty of determining what qualifies as an 
``economic development program.''
    GAO also warned that the loss of federal funding to a state and 
local government could encompass Highway Trust Funds, Community 
Development Block Grants, and other Department of Housing and Urban 
Development programs intended to assist vulnerable communities.
    The recent sequester has further diminished the already shrinking 
federal funds that assist state and local governments.
    Given all of the uncertainty that sequestration has cast over the 
viability of states to stimulate job creation, provide health care, and 
build infrastructure, the bill's punitive provisions could prove 
devastating.
    Finally, against this backdrop, we need to remember that eminent 
domain abuse has a long and shameful history of disproportionately 
impacting minority communities.
    Inner city neighborhoods that lacked institutional and political 
power were often designated as blighted areas slated for redevelopment 
through urban renewal programs. Properties were condemned and land was 
turned over to private parties.
    In Detroit Michigan, neighborhoods such as Poletown have 
experienced firsthand how eminent domain can destroy neighborhoods, 
presenting issues similar to those in the Kelo case.
    This underscores why it is important that we continue to monitor 
the facts on the ground and hold hearings like we are today. If the 
states do not continue to act to protect our citizens, Congress should 
remain ready, willing and able to do so.
    Thank you.
                               __________

    Mr. Franks. I thank the gentleman, and without objection, 
other Members' opening statements will be made part of the 
record.
    Let me now introduce our witnesses. I welcome you all here 
today, along with those welcomes you have already received.
    Susette Kelo purchased and lovingly restored her dream home 
in 1997, a little pink house with views of the water in New 
London, Connecticut. Tragically, the City of New London turned 
her dream home into a nightmare. Ms. Kelo was the lead 
plaintiff in the landmark Supreme Court case Kelo v. City of 
New London. In that case, the Court ruled that the city could 
take her home and give it to a private developer for economic 
development purposes. Sadly, Ms. Kelo's story is all too 
familiar to many other Americans trying to save their private 
property from governmental seizure.
    David--is it Beito, sir? David Beito is an historian and 
professor of history at the University of Alabama. His research 
focuses on civil rights history. Dr. Beito is the author of 
three books and has also written numerous scholarly articles. 
In 2007, Dr. Beito was appointed to the Chair of the Alabama 
State Advisory Committee of the U.S. Commission on Civil 
Rights. As chair, he has addressed eminent domain abuse as a 
civil rights issue.
    Julia Trigg Crawford manages a 600-acre farm in Northeast 
Texas that has been in her family since 1948. Ms. Crawford is 
fighting the use of eminent domain to take a portion of her 
family's farm as part of the Keystone Pipeline project. Her 
case is currently before the Texas 6th Circuit Court of 
Appeals. Ms. Crawford is challenging TransCanada's authority 
under Texas law to exercise the power of eminent domain.
    Scott Bullock is a senior attorney at the Institute for 
Justice, a non-profit public-interest firm that represents 
people whose rights are being violated by the government. Since 
his time with the Institute for Justice, Mr. Bullock has 
brought numerous cases in which homes or small businesses have 
been seized by the government through the power of eminent 
domain and transferred to another private party. In 2005, he 
argued Kelo v. City of New London before the United States 
Supreme Court.
    Each of the witness' written statements will be entered 
into the record in its entirety, so I would ask that each 
witness summarize his or her testimony in 5 minutes or less. To 
help you stay within that time, there is a timing light in 
front of you. The light will switch from green to yellow, 
indicating that you have 1 minute to conclude your testimony. 
When the light turns red, it indicates that the witness' 5 
minutes have expired.
    Before I recognize the witnesses, it is the tradition of 
the Subcommittee that they be sworn. So if you would please 
stand to be sworn.
    [Witnesses sworn.]
    Mr. Franks. You may be seated.
    Let the record reflect that the witnesses answered in the 
affirmative.
    I now recognize our first witness. Please turn on your 
microphone, Ms. Kelo, before you speak. Thank you.

           TESTIMONY OF SUSETTE KELO, NEW LONDON, CT

    Ms. Kelo. I want to thank Representative Waters----
    Mr. Franks. Ms. Kelo, I am not sure that went on. Did the 
light turn on? Maybe pull it a little bit closer to you.
    Ms. Kelo. I want to thank Representative Waters and 
Sensenbrenner for their sponsorship of the Private Property 
Rights Protection Act and for their support of property owners 
and tenants nationwide. My name is Susette Kelo, and I am the 
Kelo in Kelo v. the City of New London, the case in which the 
United States Supreme Court ruled that private property, 
including my home, could be taken by another private party who 
promises to create more jobs and taxes with the land.
    While we homeowners of New London may have lost that 
battle, we are winning the war. The decision sparked a 
nationwide revolt against eminent domain abuse and demonstrated 
that virtually the entire country, regardless of background or 
political party, is against this practice.
    But Congress has so far refused to join the rest of the 
Nation in Kelo backlash and continues to fund eminent domain 
abuse.
    My 9-year battle began in 1997 when I searched all over New 
London for a house and finally found the perfect Victorian 
cottage with beautiful views of the water. I knew when I first 
entered it that I was meant to be there. My husband and I spent 
every spare moment fixing it up and creating the kind of home 
we had always dreamed of, and I painted it salmon pink, my 
favorite color.
    When I first bought the house, it had been run down. When 
finished, we made it beautiful. But the New London Development 
Corporation decided it wanted to give my property to a private 
developer, so it told my neighbors and me we had to sell or be 
condemned. But we all loved our homes and neighborhood and we 
were not prepared to give in. Nine years later, the United 
States Supreme Court ruled against us.
    My story is not unique. In just the year after the 
decision, almost 6,000 homes and businesses were threatened or 
condemned for private development. Just as my neighbors and I 
didn't want to sell and didn't ask to be condemned, neither did 
the hard-working, tax-paying Americans fighting to keep their 
homes and businesses.
    Congress must stop funding this abuse of power. Our Federal 
tax dollars shouldn't be used to take away our homes and 
businesses so that developers can build shopping malls and 
high-priced condominiums. For the project that was supposed to 
replace my New London home, New London received $2 million in 
funds from the Federal Economic Development Administration. If 
this bill had been in place, it could have helped prevent New 
London from seizing my little pink cottage, which my husband 
and I spent years making into the kind of home we could be 
proud of.
    And all of this was for nothing. After spending close to 
$80 million in taxpayer money, there has been no construction 
whatsoever in the neighborhood. To this day, it remains a 
barren field, home to weeds and feral cats. In 2009, Pfizer, 
the linchpin of the plan, announced that it was closing its 
research and development headquarters and leaving New London 
for good.
    My battle started as a way for me to save my home, but it 
has rightfully grown into something much larger, the fight to 
restore the American Dream and sacredness and security of each 
one of our homes.
    Property owners across the Nation are now up in arms and 
united in the fight to end eminent domain abuse. I thank 
Representative Waters and Sensenbrenner for being on the front 
lines, and I ask Congress to join them by passing the Private 
Property Rights Protection Act. Thank you.
    [The prepared statement of Ms. Kelo follows:]
    
    
    
    
    
    
                               __________

    Mr. Franks. Mrs. Kelo, thank you very much.
    Dr. Beito?

            TESTIMONY OF DAVID T. BEITO, PROFESSOR, 
                     UNIVERSITY OF ALABAMA

    Mr. Beito. Thank you, sir, for this opportunity to come 
here today and speak on this issue. My focus is going to be on 
how expansive eminent domain to benefit private interests as a 
consequence of subsidizing private development has posed and 
continues to pose a threat to the civil rights of minorities 
and the poor. In my view, the Private Property Rights 
Protection Act of 2013 provides the best available means to 
provide some measure of corrective relief.
    In the history of the United States during the last 100 
years, no group has suffered more from eminent domain abuse 
than African-Americans. According to one typical study, two-
thirds of those displaced by urban renewal, often via eminent 
domain, were non-White. Another study found that four-fifths of 
these paid substantially higher rents than they had before. 
Commenting on the fact that government-sponsored urban renewal 
destroyed far more housing units than it ever replaced, author 
James Baldwin charged that ``urban renewal means moving the 
Negroes out. It means Negro removal. The Federal Government is 
an accomplice.''
    The pattern of abuse did not end in the 1960's and 1970's. 
It has often continued to the present. In San Jose, California, 
for example, 95 percent of the businesses in recent years, 
destroyed by eminent domain, were minority owned, even though 
they constituted only 30 percent of the businesses in the city.
    In 2005, this long record of eminent domain overreach 
prompted several important minority organizations, including 
the NAACP and the Southern Christian Leadership Conference, to 
jointly file an amicus brief for the plaintiffs in the Kelo 
case. After reviewing the historical background, this brief 
warned that enabling local governments to take ``property 
simply by asserting that they can put the property to a higher 
use will systematically sanction transfers from those with less 
resources to those with more. . . . Even absent illicit 
motives, eminent domain power has affected and will 
disproportionately affect racial and ethnic minorities, the 
elderly and the economically disadvantaged. Well-cared-for 
properties owned by minority and elderly residents have 
repeatedly been taken so that private enterprise could 
construct superstores, casinos, hotels, and office parks.''
    It might be asked why Congress needs to step in now. Can't 
the states be trusted to prevent the abuse of eminent domain? 
Unfortunately, the 8-year aftermath of Kelo shows that they all 
too often will not, especially when Federal money is 
potentially at stake. My own state of Alabama is a case in 
point. In the wake of national outrage over Kelo, it was one of 
the first to enact corrective reform which greatly limited 
eminent domain for private purposes. Only last month, however, 
Alabama reversed course and gutted a key element of this 
reform.
    Now, while some who have voted for it have since stated 
that they did not intend to undermine the earlier reform, and 
even acknowledged the need to close inadvertent loopholes in 
the new law's wording, they have made no apparent effort to do 
so.
    If the states will not act to defend the property rights of 
the poor and vulnerable, Congress must. As generations of civil 
rights champions have stressed, the protection of the right to 
acquire and hold property is critical to the economic progress 
of the poor and oppressed. In 1849, for example, Frederick 
Douglass declared that the chief end of civil government is 
``to protect the weak against the strong, the oppressed against 
the oppressor, the few against the many, and to secure the 
humblest subject in the full possession of his rights of person 
and of property.''
    During a time of recession, it is all the more important to 
heed Douglass' timeless words. In this same spirit, it is also 
past due to start viewing the existing property owners in 
lower-income neighborhoods as assets to the community. The 
passage of the Private Property Rights Protection Act of 2013 
will greatly contribute to this goal by fostering an 
environment which will treat low-income property owners and 
entrepreneurs as valuable urban pioneers rather than as 
obstacles to be pushed out of the way if their rights conflict 
with some broader governmental or private agenda.
    Thank you.
    [The prepared statement of Mr. Beito follows:]
    
    
    
    
    
    
    
    
    
    


                               __________
    Mr. Franks. Thank you, sir.
    Ms. Crawford, you are recognized now for 5 minutes.

              TESTIMONY OF JULIA TRIGG CRAWFORD, 
                    FARM MANAGER, SUMNER, TX

    Ms. Crawford. Good morning. My name is Julia Trigg 
Crawford, and I manage the Texas farm my grandfather bought in 
1948. Our land was taken by TransCanada for the Keystone 
project, so I absolutely support measures to limit eminent 
domain. But I strongly oppose an exemption for TransCanada, 
Keystone XL, and any other entity that cannot provide proof 
their projects are for the public benefit.
    TransCanada abused the right of eminent domain in taking 
our land as it was the elbow they so desperately needed to 
avoid nearby wetlands, waterways and pipelines. We never wanted 
them on our place to start with, and told them so in 2008. We 
asked them to find another route through a willing neighbor, 
just a little further west. They refused.
    We told them we wanted to protect the 1,000-year-old Caddo 
Indian relics on our farm. TransCanada's archaeologists 
recently found 145 artifacts within the proposed easement, some 
as large as silver dollars, yet their report discounts their 
merit. How curious that TransCanada and the Texas Historical 
Commission concur that my entire 30-acre pasture qualifies for 
National Registry of Historic Places except for the one sliver 
of land that TransCanada must have to connect the two sections 
of pipe already built.
    We told them we feared for Bois d'Arc Creek. Water is a 
farmer's lifeblood, and pipelines leak, and we didn't want to 
be a guinea pig for how to clean up tar sands spills in Texas 
waters. TransCanada said they are coming anyway.
    But more than anything else, we do not believe a foreign 
corporation transporting a product produced outside of Texas 
meets our state's qualifications of common carrier. No common 
carrier, no eminent domain. But TransCanada moved ahead anyway, 
exploiting Texas' flawed permitting process, and starts 
construction on my land tomorrow.
    But we are pushing back. The 2011 Texas Supreme Court 
ruling in Denbury Green said that private property rights are 
too precious to be taken by simply checking a box on a form. 
They also said, when challenged by a landowner, the pipeline 
has the burden to present reasonable proof it meets the 
requirements of a common carrier. So we asked for the proof. 
TransCanada hid behind the skirts of the Texas Railroad 
Commission, an entity that fully admits they rubberstamp every 
application they receive.
    So we asked again for their tariff schedule. TransCanada 
said they could not have that tariff schedule until about the 
time product started flowing, meaning they could not produce 
the proof, they could take my land, until after they took my 
land, construction of the pipeline and tar sands were about to 
flow.
    These examples of abuse are why TransCanada and the 
Keystone XL must not be granted an extension, and it is why I 
cannot support this bill in its entirety. If we allow these 
exemptions, we will be setting a dangerous precedent, leaving 
the door open for further misuse of our legal system and abuse 
of landowners. The same system that enabled a judge to rule 
against us with a 15-word ruling sent from his iPhone would 
enable TransCanada and other pipeline companies to use this 
incredible legal and psychological leverage of eminent domain 
to continue stealing property from American citizens.
    We have appealed to the Sixth Circuit, and if our funds 
hold out we will take it to the Texas Supreme Court. My family 
and I are standing tall for what we believe.
    I have not seen one shred of documentation that proves that 
one single drop of the products in Keystone's pipeline will 
wind up in my gas tank or yours, for that matter, yet we are 
supposed to relinquish our family's tradition and the cultural 
heritage of the Caddo and endanger my land and water just 
because TransCanada says, without proof, that their pipeline is 
for the public good. How can this pipeline be for the public 
good when so much information about it is not even in the 
public record? Diluted bitumen, tar sands, whatever you want to 
call it, is a product we should fully understand before we 
start pumping it through waterways. TransCanada has called this 
product proprietary, refusing to provide specifics. How can we 
ensure the safety of a substance when we don't even know its 
ingredients?
    Pipeline companies do not deserve a free ride, especially 
when they can't clean up their own messes. Look at Enbridge in 
Michigan or Exxon in Arkansas, a spill I went to see for 
myself. The thought of that kind of destruction on my farm in 
my creek is frightening. America already subsidizes the oil 
industry at a monumental disproportion to other industries. Why 
should we further underwrite pipelines with our safety, our 
security, and our dignity?
    This bill, with its exemption of TransCanada and the 
Keystone XL, turns a blind eye to the most flagrant abuser of 
eminent domain today. Hold everyone to the same standards and 
let those who manipulate the system for their own good suffer 
the consequences. TransCanada stole land that has been in my 
family for six decades for a project that will line their 
pockets. To allow them to walk away from past abuses without 
penalty is unforgivable.
    I will continue to fight these injustices because life as 
we know it depends on it, and I am not alone. Thank you.
    [The prepared statement of Ms. Crawford follows:]
              Prepared Statement of Julia Trigg Crawford, 
                       Farm Manager, Summer Texas






                               __________

    Mr. Franks. Thank you, Ms. Crawford.
    Now, Mr. Bullock, I recognize you, sir.

  TESTIMONY OF SCOTT BULLOCK, SENIOR ATTORNEY, INSTITUTE FOR 
                            JUSTICE

    Mr. Bullock. Thank you, Mr. Chairman. Thank you for the 
opportunity to testify regarding eminent domain abuse, an 
important issue that has received significant national 
attention as the result of, as one of the Members just recently 
pointed out, one of the nearly universally despised Supreme 
Court decisions, certainly in recent memory.
    This Committee is to be commended for responding to the 
American people by continuing to examine this misuse of 
government power, and it is our hope that the Congress passes 
the Private Property Rights Protection Act.
    I did have the great honor of representing Susette Kelo and 
the other homeowners in New London and many other home and 
small business owners throughout the country that have been 
fighting this combination of public power and private gain.
    The Kelo case signaled that the U.S. Constitution provides 
very little protection for private property rights of Americans 
faced with eminent domain abuse. Indeed, the Court ruled that 
is it is acceptable to use the power of eminent domain where 
there is a mere possibility that something could make more 
money than the homes or small businesses that currently occupy 
the land. The Supreme Court has so far refused to reconsider 
the Kelo decision, just this week turning down another case 
that would have permitted the Court to reconsider its misguided 
ruling in Kelo.
    Because this threat has been noted by several people who 
have testified and by Members of this Subcommittee, there has 
been considerable public outcry against the closely divided 
Supreme Court decision. Organizations spanning the political 
spectrum have united in opposition to eminent domain abuse. 
Unfortunately, while several bills have been introduced in 
Congress, including one in the 109th Congress that passed the 
House by a vote of 376 to 38, Congress has yet to pass this 
legislation.
    The Private Property Rights Protection Act introduced in 
this Congress is commonsense legislation that will stop the 
Federal Government from being complicit in an abuse of power 
already deemed intolerable by most individuals.
    It should be noted that eminent domain abuse was a problem 
before the Kelo decision, and it remains a problem today. We 
noted in the study that we released in 2003 that there were 
over 10,000 instances of private-to-private transfers of 
property in a mere 5-year period. That is certainly an 
undercount of the number of times that eminent domain abuse 
occurs. In my written testimony we have documented several 
instances of eminent domain abuse that occurred, including 
several instances both before the Kelo decision and after the 
Kelo decision where these projects received Federal funds for 
this.
    As mentioned above, heeding a deafening public outcry 
against eminent domain abuse, 44 states have reformed their 
eminent domain laws in the wake of Kelo. These reforms vary 
greatly, and indeed no two states enacted the same legislative 
reforms, but eminent domain abuse has become virtually 
nonexistent in some states, while in others there remains 
serious abuse and much need for improvement.
    As Professor Beito just recently noted, Alabama passed 
legislation to roll back its eminent domain reform after being 
the first state to react legislatively to give its citizens 
stronger protection against this abuse of power. This 
demonstrates an ongoing need to remain vigilant against eminent 
domain abuse and for this Congress to act in order to not give 
Federal sanction to these abuses of private property rights.
    The legislation also contains important protections in 
order to preserve communities' ability, for instance, to deal 
with truly blighted properties, properties that are abandoned, 
properties that pose direct threats to public health and 
safety. It should also be noted that this bill will not 
interfere with communities' abilities to engage in economic 
development. Thankfully, most development occurs in this 
country without the use of eminent domain. These reforms and 
the reforms that have been passed by the states do not 
interfere with the ability of private property owners to sit 
down, negotiate, and engage in economic development projects.
    In this economy especially, Congress does not need to be 
spending scarce economic development funds for projects that 
not only abuse eminent domain and strip hard-working, tax-
paying home and small business owners of their constitutional 
rights, but in many instances these projects fail. The project 
in New London, as Ms. Kelo mentioned, is Exhibit A for what 
happens when governments abuse eminent domain and engage in 
massive corporate welfare. After $80 million being spent over 
12 years since the redevelopment plan has passed, over six or 7 
years since Mrs. Kelo and her neighbors were forced out of 
their homes, there remains no economic development in this 
peninsula whatsoever, and it is a barren field. That is too 
often the legacy left behind this abuse of eminent domain.
    So we ask the Congress to pass the Private Property Rights 
Protection Act to protect homeowners like Ms. Kelo and small 
business owners throughout the country. Thank you very much.
    [The prepared statement of Mr. Bullock follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                               __________

    Mr. Franks. Thank you, Mr. Bullock.
    Thank you all for your testimony, and we will now proceed 
under the 5-minute rule with questions, and I will begin by 
recognizing myself for 5 minutes. Ms. Kelo, I will begin with 
you.
    Let me add my own special expression of gratitude to you 
for being here and for all the things that you did to get here.
    Mrs. Kelo, you were provided monetary compensation for the 
property that the City of New London took from you, but could 
you explain the emotional and sentimental costs that losing 
your home inflicted, a cost that money simply doesn't 
compensate for?
    Ms. Kelo. Correctly said. It really didn't matter what they 
gave us. We did not want to leave our homes, all of us. It was 
never about the money, and we never talked about money. We 
never engaged in money conversations until the end, when we 
were forced to do so, after we had no choice and knew that we 
had to go.
    We had one family that was there since the 1890's, and what 
they did to us was absolutely horrible. Nobody in this country 
should have to live the way we lived. Nobody in this country 
should have to live the way we lived and lose what we lost.
    Mr. Franks. Yes. Well, thank you.
    Mr. Bullock, let me ask you, this legislation takes Federal 
economic development funds away from local governments that 
violate private property rights for a period of 2 years. Some 
have argued that the removal of these funds is unnecessary and 
that the right of private action would be sufficient. Could you 
explain why, from an enforcement perspective, that taking away 
Federal economic development funds is an important component of 
the legislation?
    Mr. Bullock. Well, it would provide a very strong incentive 
for local communities to not engage in these types of abuses. 
It should be noted that this bill would not override the 
substantive rights that would still be given to private 
property owners to fight against takings of property. So this 
is not a bill that tries to impose some type of Federal 
standard of substantive rights into the court procedures that 
occur. So property owners would still, hopefully, if their 
state has passed good eminent domain legislation, would have 
the ability to fight the taking itself. What this bill I think 
really aims at is to try to persuade communities that engage in 
economic development to not abuse eminent domain in the first 
instance. If they don't abuse eminent domain and if they are 
not taking people's property against their will for private 
development projects, then there would be no effect upon those 
Federal economic development funds.
    Mr. Franks. Let me continue with you. It is very 
unfortunate that some of Ms. Crawford's land is being taken to 
build the Keystone Pipeline. However, it is my understanding 
that, unlike the economic development taking in Kelo, that 
using eminent domain to take land to build a pipeline has 
traditionally been accepted to be a public use. Is using 
eminent domain for building a pipeline or any other public 
utility project a traditional, pre-Kelo use of the eminent 
domain power. Can you give us some contrasts?
    Mr. Bullock. Sure. That is something that Justice Thomas in 
his dissent in Kelo went through very carefully in looking at 
the history of eminent domain and in giving examples of how 
eminent domain is being used. Of course, he took the most 
restrictive definition of eminent domain possible. He really 
dissented alone, and he noted that common carriers and 
utilities have typically been granted eminent domain power to 
carry out those public uses.
    So that is quite different from the government taking land 
directly from one private property owner and handing it over to 
another private property owner that is not in any way a common 
carrier, has a special status under the law, but is just a 
garden-variety developer, whether it is a condominium developer 
or a big-box retail developer, the creator of a lifestyle 
center, which if you look through my written testimony and most 
of the examples of eminent domain abuse, that is what these 
cases involve, is just pure private development takings.
    Mr. Franks. Thank you, sir.
    Dr. Beito, some of the opponents of this legislation have 
argued that there is no reason for Congress to step in and try 
to limit economic development takings, that states have already 
done enough. How would you respond to such an argument?
    Mr. Beito. Well, again, the example of Alabama, this bill 
just last month was passed almost unanimously, and it 
specifically uses the term ``eminent domain.'' It gives an 
eminent domain protection for the automotive industry, I think 
biotech, several other industries. Now, what is interesting 
about this is that just after it passed, people were challenged 
on it, and some people who voted for it said, well, oh, we 
didn't mean to undermine eminent domain, but maybe our wording 
was sloppy and maybe we need to do something about it. So this 
kind of thing I think happens a lot in legislative bodies. 
Bills sort of are pushed through, nobody is really paying 
attention, and before you know it, it is there, and it stays 
there usually, even though we have some regret being expressed, 
and I suspect this kind of thing happens a lot.
    This doesn't limit the freedom of states, the ability of 
states to use eminent domain, even for private development. All 
it is saying is that we don't want our Federal subsidies to go 
for this, which I think is an important distinction to make.
    Mr. Franks. Well, I thank you all. I will now recognize the 
Ranking Member for 5 minutes for his questions.
    Mr. Nadler. Thank you, Mr. Chairman.
    We all have considerable unease about eminent domain. I 
certainly do, too, and it certainly has been abused in the 
past. I prefer to let the states deal with it to a large 
extent, but my real concern with this bill goes beyond 
generalities. I want to ask Mr. Bullock a few questions about 
it.
    The bill says that a state, a political subdivision, cannot 
condemn by eminent domain a property for purposes of economic 
development, and if it does, for a period of 7 years 
thereafter, for a period of 7 years from when such a use is 
consummated, the former property owner may sue. And if he sues, 
the remedy is cessation of economic aid from the Federal 
Government. That is the remedy scheme.
    Now, what bothers me about this is, aside from the fact 
that it doesn't help the property owner, all it does is perhaps 
bankrupt the municipality.
    Let's assume that a municipality condemns a property for a 
use which it thinks proper, let's say for a school, a public 
use. Let's assume that the funding for the school dries up 
because Congress enacts a sequestration and there is no more 
money for schools. That has been known to happen. Let's assume 
that a few years later, after five or 6 years, the municipality 
realizes it has no money for a school, and anyway there aren't 
that many school kids anymore because everybody has moved away 
because they closed the defense plant, so now it sells the 
property.
    The original purpose was a legitimate use, for a school. 
Now it sells the property to a private developer as surplus 
property. Now someone can come in and sue the government and 
sue the municipality to eliminate Federal aid for a few years. 
That is the way this bill works. Am I correct in saying that?
    Mr. Bullock. Well, that is not my understanding of how the 
bill would work.
    Mr. Nadler. Well, that is exactly what the bill says.
    Mr. Bullock. And I think if it goes to the private 
enforcement mechanism for it, I think it is important to have 
that because----
    Mr. Nadler. Never mind if it is important to have it. Why 
wouldn't it operate as I just said?
    Mr. Bullock. I am sorry?
    Mr. Nadler. Why wouldn't it operate as I just said? I don't 
doubt that the authors of the bill thought it important to have 
that clause in it for various reasons. I think it is a very 
misguided clause. I think all it will do is enable states to be 
sued, to lose their economic aid even if they proceed in 
perfectly good faith and for some reason the public purpose 
fell through and now they sell it as surplus property.
    Mr. Bullock. The reason why you have the 7-year limit in 
there and why I think it is a central part of the bill is so 
you do not get into a situation----
    Mr. Nadler. I understand that, but why wouldn't it operate 
the way I just said? And if it does operate the way I just 
said, wouldn't that be a pretty perverse result?
    Mr. Bullock. A pretty perverse result?
    Mr. Nadler. Yes. In other words, a state decides they are 
going to build a school. It condemns the property for the 
school. For some reason, the school doesn't get built, and then 
five or 6 years later it sells the property as surplus property 
to some private owner, at which point it is subject to lawsuits 
to stop economic aid.
    Mr. Bullock. Right. I don't know in those circumstances who 
would actually sue, because----
    Mr. Nadler. The former property owner would sue.
    Mr. Bullock. Right, but there could be a solution to this.
    Mr. Nadler. Well, I would like to see it. I have been 
asking this question for 4 years now.
    Mr. Bullock. Sure. But, I mean, you can always come up with 
certain types of hypotheticals that might----
    Mr. Nadler. But this is very important. This is how it 
would normally operate.
    Mr. Bullock. I have never heard of this situation.
    Mr. Nadler. You haven't gone to the--well, here is the 
bill, page 2. The bill is very clear in what it says, and it 
would operate the way I just said, unless you can tell me why 
it wouldn't.
    Mr. Bullock. You are asking the question as a hypothetical, 
and I am saying could this possibly happen? Maybe. I don't know 
of any other instances where it has happened.
    Mr. Nadler. Well, we haven't had this bill.
    Mr. Bullock. Right, but I am talking about----
    Mr. Nadler. But that scenario happens all the time.
    Mr. Bullock. No, it does not happen all the time.
    Mr. Nadler. It does not happen all the time that a 
government entity condemns the property from eminent domain for 
a project that ultimately falls through and then sells the 
property?
    Mr. Bullock. The key to this and why this provision is in 
there and why it is important to have it in there, leaving 
aside whatever hypothetical that might come up, that you might 
come up with, is to prevent a situation, the government from 
engaging in----
    Mr. Nadler. I understand that. That is the purpose. The 
effect is quite different. The purpose may be laudable. The 
effect is what I just said, and you haven't told me why the 
effect isn't as I just said.
    Mr. Bullock. Well, I don't know how you remedy a situation 
that is both hypothetical----
    Mr. Nadler. Well, let me ask you a different question, 
then. Let's assume that the government does nothing wrong. It 
doesn't even, in fact, condemn anything by eminent domain, but 
it wants to float a bond for economic development, and part of 
the revenue stream against which it is going to float the bond 
is anticipated Federal aid, which is what governments do. We 
are anticipating X dollars in Federal aid per year. We are 
going to float a bond for economic development, and this is 
part of our backing for the bond.
    Along comes bond counsel and says you can't do that because 
maybe the mayor who hasn't been elected yet--the mayor is going 
to be elected 4 years from now--maybe he will misuse the power 
of eminent domain and subject the county to this penalty, in 
which case there will be no Federal economic aid, and therefore 
we can't okay this bond. So you are destroying the bonding 
capacity of local governments without the government ever even 
doing anything.
    Mr. Franks. The gentleman's time has expired, but the 
witness may answer the question.
    Mr. Bullock. If I could just respond directly. There is one 
simple solution to this, and it is a solution to even your 
original hypothetical. Don't use eminent domain, don't use the 
property----
    Mr. Nadler. What I just said would happen if they didn't 
use eminent domain. Just the existence of the statute would 
present that possibility.
    Mr. Bullock. If a future mayor did not use eminent domain 
for private development, there would not be an issue with it. 
That is what this does.
    Mr. Nadler. No, no. You are missing the point.
    Mr. Franks. The gentleman's time has expired.
    Mr. Nadler. Can I ask for one additional minute?
    Mr. Franks. Without objection.
    Mr. Nadler. Thank you.
    The point is, the existence of this statute on the books 
would put a cloud, like a cloud of title, like a cloud on 
title, here being a cloud on future revenue. In case the city 
in the future screwed up and improperly used eminent domain, 
that would eliminate Federal aid in the future. Therefore, you 
cannot depend on the Federal aid now. Therefore, you can't 
float the bond. Any bond counsel would rule that way.
    Mr. Bullock. Right. And if a future counsel or a future 
mayor does not abuse eminent domain, which is the whole point 
of this, is to provide a strong disincentive----
    Mr. Nadler. Underwriting the bond, you have to assume that 
that might happen. The point is that now, that bonds could not 
be underwritten now because maybe that improper use would 
happen in the future, and the bill would then eliminate the 
ability to pay back the bond. So you couldn't underwrite the 
bond now even if no one ever misbehaves in any way.
    It puts a cloud on--not a cloud on title but a cloud on 
revenue, even if nobody ever does anything, and that is the 
basic flaw in this bill. It would eliminate the possibility, to 
a very large extent, of use of Federal financing as a basis for 
bonding for future economic development in states.
    I thank the Chairman for yielding me the extra time.
    Mr. Franks. The Chairman now recognizes Mr. DeSantis, the 
gentleman from Florida, for 5 minutes.
    Mr. DeSantis. Thank you, Mr. Chairman, and thank you for 
holding this very important hearing.
    Kelo v. City of New London to me was wrongly decided. I 
think it is actually an example of judicial activism. Now, the 
Court didn't actually strike anything down. It allowed this to 
go, but I think when courts twist texts to fit their desired 
outcome, when they manipulate or abuse precedent, that is a 
form of judicial activism in that you are abandoning, I think, 
the traditional judicial role, and that is really the key 
takeaway from Kelo, is that you had five justices empower the 
government at all levels at the expense of private property 
owners.
    I thought Sandra Day O'Connor hit it on the head in her 
dissent when she said, ``Under the banner of economic 
development, all private property is now vulnerable to be 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.'' And so under Kelo, private property is essentially 
at the mercy of central planners who may very well deem an 
individual's property too blighted and not optimal for 
commandeering the amount of tax revenues required to fund the 
ambitions of the central planners. So I just think it was a 
wrong turn.
    Mrs. Kelo, I want to thank you for what you did to fight 
this and for coming and appearing today. In terms of fighting 
this, I mean, how many different cases--because it went all the 
way up to the Supreme Court. Can you just briefly explain the 
process that you had to go through to try to vindicate your 
rights?
    Ms. Kelo. Well, Scott took the case. We started really just 
as grassroots and trying to fight it just with the 
neighborhood, and then the Institute for Justice got involved, 
and then we had to go to the Connecticut court, the New London 
Superior Court, and then to the state Supreme Court, and then 
to the United States Supreme Court.
    Mr. DeSantis. And you had mentioned that the Institute for 
Justice took your case. Had they not been willing to do that, 
would you have had the resources or the time----
    Ms. Kelo. Oh, absolutely not.
    Mr. DeSantis [continuing]. To take it all the way up there?
    Ms. Kelo. Absolutely not. Absolutely not. Absolutely not. 
No, no.
    Mr. DeSantis. Now, I guess you mentioned it in your opening 
statement, but you had your house taken. It was taken not for a 
traditional public use, like a road or a bridge, but to 
transfer to a private company who they thought would generate 
more tax revenue, essentially, and you mentioned that it has 
all kind of gone kaput. Can you just elaborate on that a little 
bit? Because I just find that amazing that you had gone through 
all of this, and now what they were promising didn't even 
happen.
    Ms. Kelo. That is correct. Nothing has been built or even 
developed there. As a matter of fact, as they took the 
properties by eminent domain, or as people, the elderly gave in 
and moved, they destroyed the houses one by one. So there was 
actually nothing even left in the neighborhood to save because 
they had tore down the houses.
    They tore down the house right next to me, and the houses 
were very close to each other, maybe only 15 or 20 feet apart, 
and with the threat of the neighbor's house being collapsed on 
my house that I was living in. So they systematically destroyed 
the neighborhood to make it so we were fighting for--there was 
nothing left to fight for.
    Mr. DeSantis. And you support this particular piece of 
legislation, and have you been involved in some of the efforts 
in some of the states to curb eminent domain abuse that has 
occurred since your case was decided at the Supreme Court?
    Ms. Kelo. Yes, I have. Yes.
    Mr. DeSantis. Okay. And I would just say, again, thank you 
for what you have done. I think that your case has brought this 
issue to the forefront, and a lot of folks, their rights are at 
stake too. So you have done a great bit of good.
    And I would also say, even though I disagreed with the 
decision, at least if a court fails to enforce a limitation on 
government, or fails to enforce a right, at least it allows 
states and Members of Congress to legislate protections for 
people. When the Court strikes down things and they are 
activists in that direction, that kind of freezes that and you 
need a constitutional amendment. So even though I thought it 
was a bad decision, I am happy that states have taken the lead 
in reforming this, and I think that I am certainly very 
favorably disposed to this piece of legislation, and I think it 
is common sense. I think it is consistent with the freedoms 
that the Founding Fathers intended, and I yield back, Mr. 
Chairman.
    Ms. Kelo. Thank you.
    Mr. Franks. And I thank the gentleman.
    Now I recognize the gentleman from Michigan, Mr. Conyers, 
for 5 minutes.
    Mr. Conyers. Thank you, Mr. Chairman.
    Dr. Beito, isn't it correct that there was objection to the 
Supreme Court decision in this matter because they added this 
new concept of economic development to expand the tax base was 
now a new reason to use eminent domain?
    Mr. Beito. Yes. I am not an expert in the legal history, 
but that was certainly one of the justifications. You could say 
that the door had really been opened in 1954 by Berman v. 
Parker, which used this doctrine of public purpose to say, 
well, you can--loosely interpreted the doctrine of public use. 
But I think that Kelo was sort of more notorious for focusing 
on that aspect of it.
    Mr. Conyers. And coming to you, Attorney Bullock, do you 
think that they also expanded the public purpose concept as an 
additional reason for eminent domain, which hadn't existed as 
clearly before?
    Mr. Bullock. That is correct, Representative Conyers. For 
the past 50 years, as Professor Beito pointed out, the Supreme 
Court had given a broad interpretation to the public use 
clause. I think wrongly, they have really turned it into a 
public purpose clause or a public benefit clause.
    But despite this broad language in previous decisions, the 
Supreme Court had never signed off on saying that merely using 
eminent domain simply to raise more tax revenue or to create 
more jobs to further economic development was a public use. 
That is what the majority opinion did in Kelo, and that is one 
of the real dangers of it, is because it is really a vision of 
eminent domain without any sort of limitation. Every home would 
produce more tax revenues and jobs if it were a business. Every 
small business, at least theoretically, would produce more jobs 
and tax revenue if it were a larger business. So that is the 
real danger of the Kelo decision. That is why there is the need 
for the reform at both the state level and then hopefully at 
the Federal level as well.
    Mr. Conyers. Thank you.
    Mrs. Crawford, the irony of your situation that brings you 
here today is that, of all things, it was the Keystone 
Pipeline, of all the businesses that could ever be imagined. 
Here is an issue so controversial that the President still 
hasn't announced what he is going to do, and these are the same 
people that visited you. I think you said, in effect, they told 
you that you couldn't win anyway, that you ought to cooperate a 
little bit more. Isn't that the gist of your testimony?
    Ms. Crawford. Yes, sir. And in court transcripts, there 
were comments made by their attorneys that said she will have 
her day in court, but they are not going to win under this 
statute, or we are not going to let one landowner stand in the 
way of a multi-billion-dollar pipeline that is for the public 
good.
    Our position is that until you prove it is for the public 
good, and if you are unwilling to provide any documents, then 
the only assumption I can make is that it is for private gain. 
So it is a foreign corporation using Texas to push a product 
through to export it for someone else, and that, sir, is not 
for the public good.
    I am not against eminent domain if someone is bringing 
water to a community or building a road or building a hospital. 
But they are taking my land because they need a way to get 
product from Canada to probably foreign markets. That is not 
benefitting me.
    Mr. Conyers. Well, I am glad to hear you say that, because 
this is a question of how far should eminent domain be allowed 
to go. And here, we are not talking about a clean American 
product. Here we are talking about a product that is so 
controversial, with sands and detriment and debris--I can't 
adequately describe what the scientific issue is with the XL 
Pipeline, but for them of all companies in this country to tell 
you that we can take it anyway because we are going to extend 
economic development and we are going to claim it is for a 
public purpose, I just think you are to be commended for 
continuing this battle, and I am glad that the Chairman has had 
another hearing on this. Would you make your final comment?
    Ms. Crawford. Well, I am just a farmer, so all this 
legalese is very difficult for me. But from my perspective, it 
seems a bit--it is hypocrisy to have a bill that claims to be 
so concerned about the property rights of individuals but then 
provides an exclusion for the guy with the biggest hammer, and 
he is beating us over the head with it. That seems to be a 
little one-sided.
    Mr. Conyers. Thank you very much.
    Mr. Franks. And I thank the gentleman, and I now recognize 
the gentleman from Virginia, Mr. Scott, for 5 minutes.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Bullock, just a couple of questions on the technical 
aspects of the bill. If you are in violation, what are the 
sanctions to be applied? Is it just loss of economic 
development funds? Is there any cloud over the title of the 
land?
    Mr. Bullock. Not from my understanding of the bill, my 
reading of it.
    Mr. Franks. Sir, can you pull your microphone?
    Mr. Bullock. Sorry. I am a litigator, so I have not 
litigated that. But from my understanding, it would be simply a 
loss of Federal economic development funds.
    Mr. Scott. There is no cloud over the title of the land?
    Mr. Bullock. I don't see how that could be. As I mentioned 
before, the property owners that are fighting this or are in 
dispute with local governments and so forth would still have 
the ability to raise whatever the claims they might within the 
state court litigation in which this has been taking place.
    Mr. Scott. Well, if it is public good but for economic 
development, if you can take it, this bill would just say if it 
is for economic development, you have to give up some Federal 
funds. It doesn't stop the proceedings from going forward.
    Mr. Bullock. Correct, and that is why I think it is a 
balanced approach. It is not the Federal Government coming in 
and overriding decisions made in the state courts or providing 
some type of substantive rights to it. It is simply saying 
these are scarce Federal economic development funds; we don't 
want these funds to be used to facilitate economic----
    Mr. Scott. Okay. And if you are in violation but don't do 
anything for 7 years, you just let it stay there before you 
develop it, are there any sanctions?
    Mr. Bullock. No, I think it is a 7-year limit. So I think 
that that is something that is----
    Mr. Scott. So if you haven't done anything for 7 years, you 
are home free?
    Mr. Bullock. Well, I think, from my reading of it, that is 
a way to balance it so you do not have a situation where 
property is taken for a supposed public purpose and then turned 
around and given to private development interests. The 7 years 
allows, I think, for a bit of a compromise, where if you wait 
for 8 or 9 years, perhaps you could do that and sell it for 
private development purposes; or, as I was responding to 
Representative Nadler before, is that even if it is taken for a 
school and the government decides that they don't need a school 
anymore, they can still use it for another public project, 
whether it is a public park or----
    Mr. Scott. Or they could wait 7 years and give it to a 
private developer.
    Mr. Bullock. Yes, I think that is right. Again, it is a way 
to try to balance not locking the government in perpetuity to 
having these restrictions on it, but still would prevent a 
situation where the government----
    Mr. Scott. Okay. I am not arguing that fact. I am just 
trying to get some facts. If the city were to take the property 
and, rather than give it to a private entity, gave it to a 
public-owned redevelopment authority, would that be okay?
    Mr. Bullock. Well, it would depend on what the public 
redevelopment authority did with it.
    Mr. Scott. Economic development.
    Mr. Bullock. Yes. I think if they transferred it to, then, 
private parties, which is typically what redevelopment agencies 
do, then the restrictions would still kick in.
    Mr. Scott. So if the redevelopment authority didn't give it 
to private people for the first 7 years, then they would be 
home free.
    Mr. Bullock. I think that that is right.
    Mr. Scott. What if they gave it to a non-profit, not a for-
profit?
    Mr. Bullock. For a non-profit?
    Mr. Scott. Right. Does the language in the bill say you 
can't give it to a for-profit private agency, for profit?
    Mr. Bullock. I would have to look at the particular 
provisions of it. I can't remember exactly what it would be.
    It would be important, though, to prevent a situation like 
what was happening in New London, and I think the bill does do 
this by preventing these leasehold agreements, where I think 
the bill is quite careful to try to prevent the government from 
doing like what happened in New London, where the property was 
originally given to a non-profit development corporation called 
the New London Development Corporation, but then they were 
going to lease that land for $1 a year for the next 99 years to 
private developers. That bill addresses something like that and 
prevents that situation from occurring.
    Mr. Scott. Dr. Beito, are you a lawyer? Dr. Beito?
    Mr. Beito. Me?
    Mr. Scott. Yes.
    Mr. Beito. No, no.
    Mr. Scott. Does anybody know what effect this part of the 
bill says that essentially waives the 11th Amendment to the 
Constitution, what effect that would have on the application of 
the 11th Amendment? It seems to me you just can't say the 
Constitution doesn't apply to this bill. I don't think that has 
much effect at all. Does anybody disagree with that?
    Mr. Bullock. I don't think it would. You know, the one 
thing it would do and that might be in there to allow for a 
private cause of action against folks, which I think is 
important to do to make sure it is enforced. However, it would 
not be for money damages. I mean, the property owner would not 
have the ability under this bill to enforce the provisions of 
it to gain any type of monetary damages, which would 
implicate----
    Mr. Scott. A statute cannot waive the application of a part 
of the United States Constitution; is that right?
    Mr. Bullock. Absolutely. The Constitution is paramount. 
That is true.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Franks. And thank you, Mr. Scott.
    This concludes today's hearing. So I want to thank the 
witnesses again for being here, thank the Members for their 
attendance, and those that were in the audience.
    Without objection, all Members will have 5 legislative days 
to submit additional written questions for the witnesses or 
additional materials for the record.
    I do thank the witnesses again, and I thank the Members and 
the audience, and this hearing is adjourned.
    [Whereupon, at 11:25 a.m., the Subcommittee was adjourned.]
                            A P P E N D I X

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