    [Senate Hearing 114-918]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-918

                         THEFT BY ANOTHER NAME: EMINENT
                             DOMAIN TEN YEARS AFTER
                           KELO v. CITY OF NEW LONDON

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

                                    HEARING

                                   before the

                        SUBCOMMITTEE ON THE CONSTITUTION

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION
                                   __________

                                OCTOBER 8, 2015
                                   __________

                               Serial No. J-114-34
                                   __________

             Printed for the use of the Committee on the Judiciary

                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                            www.judiciary.senate.gov
                                www.govinfo.gov

                                    ------

                      U.S. GOVERNMENT PUBLISHING OFFICE

    53-825                    WASHINGTON : 2025

                           COMMITTEE ON THE JUDICIARY

                      CHARLES E. GRASSLEY, Iowa, Chairman
    ORRIN G. HATCH, Utah                 PATRICK J. LEAHY, Vermont, Ranking
    JEFF SESSIONS, Alabama                 Member
    LINDSEY O. GRAHAM, South Carolina    DIANNE FEINSTEIN, California
    JOHN CORNYN, Texas                   CHARLES E. SCHUMER, New York
    MICHAEL S. LEE, Utah                 RICHARD J. DURBIN, Illinois
    TED CRUZ, Texas                      SHELDON WHITEHOUSE, Rhode Island
    JEFF FLAKE, Arizona                  AMY KLOBUCHAR, Minnesota
    DAVID VITTER, Louisiana              AL FRANKEN, Minnesota
    DAVID PERDUE, Georgia                CHRISTOPHER A. COONS, Delaware
    THOM TILLIS, North Carolina          RICHARD BLUMENTHAL, Connecticut

                Kolan L. Davis, Chief Counsel and Staff Director
          Kristine Lucius, Democratic Chief Counsel and Staff Director

                        SUBCOMMITTEE ON THE CONSTITUTION

                          JOHN CORNYN, Texas, Chairman
    THOM TILLIS, North Carolina          RICHARD J. DURBIN, Illinois,
    LINDSEY O. GRAHAM, South Carolina      Ranking Member
    TED CRUZ, Texas                      SHELDON WHITEHOUSE, Rhode Island
    DAVID VITTER, Louisiana              CHRISTOPHER A. COONS, Delaware
                                         AL FRANKEN, Minnesota

                Noah Phillips, Chief Counsel and Staff Director
           Joseph Zogby, Democratic Chief Counsel and Staff Director

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page

    Cornyn, Hon. John................................................     1
    Durbin, Hon. Richard J...........................................     2
        Prepared statement...........................................    37

                                   WITNESSES

    Alban, Dan.......................................................     6
        Prepared statement...........................................    18

    Casillas, Clemente...............................................     4
        Prepared statement...........................................    30

    Dana, David A....................................................     7
        Prepared statement...........................................    33

                         THEFT BY ANOTHER NAME: EMINENT
                             DOMAIN TEN YEARS AFTER
                           KELO v. CITY OF NEW LONDON

                                  ----------

                           THURSDAY, OCTOBER 8, 2015

                                  United States Senate,
                              Subcommittee on the Constitution,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 2:02 p.m., in
    Room 226, Dirksen Senate Office Building, Hon. John Cornyn
    (presiding), Chairman of the Subcommittee.
        Present: Senators Cornyn [presiding], Tillis, and Durbin.

                 OPENING STATEMENT OF HON. JOHN CORNYN,
                 A U.S. SENATOR FROM THE STATE OF TEXAS

        Chairman Cornyn. Good afternoon. This hearing of the
    Constitution Subcommittee of the Senate Judiciary Committee
    will come to order.
        I want to begin by thanking the witnesses for being here
    today and sharing your experiences and expertise with us. We
    look forward to hearing from you.
        Private property rights are civil rights. This is a fact
    that is often forgotten, but secure property rights are as
    fundamental to liberty as freedom of speech or religion. Our
    Founders understood this. As John Adams wrote, ``Property must
    be secured or liberty cannot exist.''
        Recognizing that, the Founders built property protections
    into the U.S. Constitution. Central among these is the Fifth
    Amendment's declaration that private property shall not ``be
    taken for public use, without just compensation.'' This
    language imposes 2 requirements on a Government's ability to
    take private property: first, it must be for a public use; and,
    second, the owner must be paid just compensation.
        The first limitation is a critical requirement and a way to
    rein in Government power. It says that Government may take
    property under appropriate circumstances, but that the
    Government must use that property directly or make it open to
    the public.
        Unfortunately, 10 years ago, in the Kelo case, the Supreme
    Court wrote the public use requirement out of the Constitution
    when it found that any public purpose, including economic
    development, justifies the taking of property. Oddly, this
    public purpose test is not in the Constitution, but it is now
    the law of the land.
        Under this standard a city could take any person's home or
    business and give it to another for any use the city thinks may
    be more profitable or produce more jobs, for example. In most
    cases, it is a development of condos, big-box stores, and
    hotels. The potential for abuse is obvious.
        When the Government is empowered to decide the most
    valuable use of personal property and redistribute it fulfill
    that judgment, no one's property is truly their own. As the
    dissenting Justices in Kelo noted, ``In such a world, the
    specter of condemnation hangs over all property.''
        The public was, rightly, outraged by the Kelo decision.
    Between 70 to 90 percent of every race, gender, and party
    opposed the decision. Most States, to their credit, have
    responded to the public's concerns and enacted new property
    protections. In Texas, for example, we have enacted both
    statutory and constitutional protections against the takings
    for private development.
        Some of the reforms have been more successful in some
    States than others, and States like New York and Massachusetts
    have enacted no reforms at all.
        While eminent domain abuse has slowed, it has not
    disappeared. The question we must ask 10 years after Kelo is:
    Are existing protections enough? That is what we hope the
    witnesses will be able to illuminate and elucidate.
        Do recent reforms provide the same level of protection that
    the Constitution should have provided--or did before the Kelo
    case? I suspect the answer is no, but I hope our witnesses can
    give us more insight.
        Where abuse still exists, we in Congress must ask ourselves
    if and how the Federal Government is complicit. Does the
    Federal Government make it more or less difficult for States
    and local governments to take someone's home and build a
    shopping mall? These are questions I hope the witnesses can
    help us answer today.
        As James Madison wrote, ``Government is instituted to
    protect property of every sort . . . that alone is a just
    Government, which impartially secures to every man, whatever is
    his own.'' This is the standard by which we should judge the
    use of eminent domain in the United States, and I fear we are
    not measuring up to that.
        At this point I would like to ask consent to offer the
    statement of the Chairman, Senator Grassley, and absent any
    objection, his statement will be made part of the record.
        [The prepared statement of Chairman Grassley appears as a
    submission for the record.]
        Chairman Cornyn. Senator Durbin.

              OPENING STATEMENT OF HON. RICHARD J. DURBIN,
               A U.S. SENATOR FROM THE STATE OF ILLINOIS

        Senator Durbin. Mr. Chairman, thank you very much, and I am
    going to put my entire statement in for the record. Thank you.
    I want to welcome especially the witness Professor David Dana
    from Northwestern University School of Law in Chicago,
    Illinois.
        I did not know when I went to law school nor when I was
    elected to Congress that I would be debating eminent domain. It
    seemed to me to be an issue that probably would not come my
    way. As the Chairman noted, the Supreme Court decision has at
    least raised the issue and raised the debate, and that is why
    we are here today.
        It is interesting that not only have we raised the debate,
    we have actually had a chance to vote on it this year. The
    Senate held votes on eminent domain earlier this year, on
    January 22nd. There was a bill on the floor that sought to
    authorize the construction of the Keystone XL pipeline to run
    through America. The pipeline's owner is a foreign company
    called ``TransCanada.'' It wanted to use eminent domain to
    build the pipeline across private farms in Nebraska and other
    States over the objection of landowners. The Senate was offered
    an amendment by Senator Menendez of New Jersey to ensure that
    private property would not be ``seized through condemnation or
    eminent domain for the private gain of a foreign-owned business
    entity.''
        It sounded pretty reasonable to me, and I voted for it. We
    lost. The amendment was defeated 43-to-54. One Republican, Rand
    Paul, supported the amendment. Many Senators who criticized the
    Kelo decision in speeches before that vote voted against the
    Menendez amendment.
        There was a side-by-side amendment that passed 64-to-33.
    Here is what it said. The amendment said that the land taken to
    build Keystone XL may only be acquired consistently with the
    Constitution. That is an interesting vote given that the Kelo
    decision is part of the constitutional case law on eminent
    domain.
        While Senators may have disagreed over Keystone amendments,
    I hope we can agree the debate over striking the right balance
    on eminent domain is an important one. I look forward to the
    discussion. Thank you.
        [The prepared statement of Senator Durbin appears as a
    submission for the record.]
        Chairman Cornyn. I would like to now introduce the
    witnesses.
        Clemente Casillas is president of the Community Youth
    Athletic Center. CYAC seeks to give youth what they seek
    through gang membership in an alternative socially positive
    environment. CYAC's programs focus on physical fitness,
    alternative education services, youth development, and
    employment-based learning opportunities. Mr. Casillas has also
    worked in the real estate industry for more than 19 years as a
    real estate broker and business owner. He earned his
    undergraduate degree in business administration from the
    University of Southern California. Welcome.
        Dan Alban is an attorney with the Institute for Justice. He
    litigates constitutional cases protecting free speech, property
    rights, economic liberty, and other individual liberties.
    Before joining the institute, Mr. Alban practiced employment
    law with Littler Mendelson P.C. and clerked for Chief Judge
    Royce Lamberth on the United States District Court for the
    District of Columbia. He received his law degree at Harvard Law
    School in 2006, where he was executive editor of the Harvard
    Journal of Law and Public Policy, and he earned his
    undergraduate degree in political rhetoric from Berry College
    in Rome, Georgia, and originally hales from Nampa, Idaho.
        David Dana is the Kirkland & Ellis Professor of Law at
    Northwestern, as Senator Durbin said. He is a leading scholar
    in the fields of environmental law, property, land use, and
    professional responsibility. Before becoming a professor, he
    was a litigator with Wilmer, Cutler & Pickering and the
    Department of Justice. He taught at Boston University before
    going to Northwestern, and he has been a visiting professor at
    Harvard and Virginia. He received both his undergraduate degree
    and J.D. degree from Harvard University.
        Could I get you please to stand and take the oath? Do you
    affirm that the testimony you are about to give before the
    Committee will be the truth, the whole truth, and nothing but
    the truth, so help you God?
        Mr. Casillas. I do.
        Mr. Alban. I do.
        Mr. Dana. I do.
        [Witnesses are sworn in.]
        Chairman Cornyn. Thank you very much. Mr. Casillas, I think
    we have 5 minutes for opening statements for each of the
    witnesses and then some questions. We will start with you.

               STATEMENT OF CLEMENTE CASILLAS, PRESIDENT,
                    COMMUNITY YOUTH ATHLETIC CENTER,
                       NATIONAL CITY, CALIFORNIA

        Mr. Casillas. Thank you for the opportunity to speak with
    you about eminent domain abuse and how it affected me and my
    nonprofit organization.
        My name is Clemente Casillas, and I am the president of the
    Community Youth Athletic Center, south of San Diego. CYAC is a
    nonprofit boxing and after-school mentoring program for at-
    risk, inner-city youth, staffed mostly by volunteers. We bought
    a little building in National City and turned it into a boxing
    gym and mentoring center.
        Nonprofit boxing gyms do not generate as much property tax
    as luxury condos. The City of National City and its federally
    funded Community Development Commission tried to seize our gym
    using eminent domain in order to hand it over to a private
    developer who wanted to replace it with high-rise luxury
    condos.
        I would like to share my story with you to help you
    understand how eminent domain abuse affects real people and why
    the Federal Government should stop funding it.
        When I was a teenager, I participated in a youth boxing
    program similar to CYAC. I was already involved in with the
    wrong crowd. Because of boxing and the discipline that comes
    with boxing, I was able to avoid kids who were in gangs. That
    led me to USC where I received a bachelor's degree and became a
    professional real estate agent and broker. If boxing made the
    difference in my life. I came from some of the same streets
    that these kids come out of, and I went to some of the same
    schools. I want boxing to make a difference in their lives as
    well.
        CYAC began in 1991 with a punching bag hung up in a
    backyard. Over the years we have opened up our doors to
    thousands of kids. These kids face the challenges of poverty,
    but have strong spirit and determination. All they seek is a
    shot at opportunity. That is what CYAC gives them. Our motto
    is: ``Making a difference, one round at a time.''
        The world these kids face every day has drugs, gangs,
    obesity, and oftentimes an educational system that assumes that
    they will fail. When they step into my ring, I see winners,
    eager to fight for their dreams. CYAC supplies the gloves and
    the ring. They supply the heart.
        We also have a tutoring program to help them succeed
    academically. We require that all of our students maintain good
    grades in order to participate in the boxing program. Several
    of our kids have been successful at national tournaments and
    are among the top-ranked youth boxers in the Nation. No doubt
    one or more will represent the U.S. in the Olympics. Every kid
    that we bring home tonight and put into a classroom tomorrow
    morning is our gold medal.
        In 2001, we used generous donations to buy an old gun store
    on National City Boulevard. It was the perfect location for
    students to be able to come to the gym on the bus after school.
    We remodeled it with volunteer labor and donated materials into
    a boxing gym and mentoring center for kids. That is true
    community-based redevelopment.
        In 2005, National City and the CDC gave a developer their
    permission to build luxury condos on our property. One day we
    even found a sign stuck in the ground in front of our building
    that said ``Coming Soon'' with an image of the luxury condos.
    The CDC and the developer sent us threatening letters saying we
    had to sell the building or face eminent domain. This was not
    about the money. This was about staying at the perfect location
    for after-school programs in a gym we had built with our own
    sweat and blood.
        We tried to negotiate with the city and the developer to
    find out if it was possible to keep the gym on the first floor
    of the proposed development, with the luxury condos on the
    floors above. We were told that the people who could afford to
    live in those condos would not want our kids around. That was
    when we realized we needed to stand up for our kids and show
    them that sometimes you have to take a stand and fight for your
    rights--not in the ring or in the streets, but in city hall and
    in the courts.
        Fortunately, we were represented pro bono by the Institute
    for Justice, which won our lawsuit. IJ litigated the case for 8
    years, in a case as grueling as a 15-round boxing match, and
    saved our gym from eminent domain. It never should have come to
    that.
        What happened to us should not happen to anyone else.
    Congress needs to send a message to local governments that this
    kind of abuse of power will not be funded or tolerated.
    Congress should pass legislation to withhold Federal
    development funding for cities that abuse eminent domain.
        Special interests are working to convince the public that
    there is not a problem. What happened to our gym, and countless
    other people, proves otherwise. What we have now amounts to
    ``Government by the highest bidder,'' and that has got to stop.
        Eminent domain abuse affects real people. Homeowners, small
    businesses, and even nonprofit boxing gyms need the protections
    guaranteed by the Constitution. The Supreme Court failed to
    enforce these protections 10 years ago in Kelo v. New London,
    but Congress still has that opportunity. I ask you to please
    stop funding redevelopment for local governments like the city
    of National City that use Federal dollars to take away homes,
    businesses, and even nonprofits for private gain. Thank you
    very much for the opportunity.
        [The prepared statement of Mr. Casillas appears as a
    submission for the record.]
        Chairman Cornyn. Thank you. Mr. Alban.

                   STATEMENT OF DAN ALBAN, ATTORNEY,
               INSTITUTE FOR JUSTICE, ARLINGTON, VIRGINIA

        Mr. Alban. Thank you for the opportunity to testify on
    eminent domain abuse. It is an important issue that has
    received significant national attention as a result of the
    Supreme Court's notorious decision in Kelo v. City of New
    London, which was handed down 10 years ago in June.
        My name is Dan Alban. I am an attorney at the Institute for
    Justice, a nationwide, nonprofit public interest law firm that
    represents people whose rights are being violated by the
    Government, including those whose homes or businesses or
    nonprofit boxing gyms are being taken by the Government through
    the power of eminent domain and transferred to another private
    party. I have successfully represented property owners across
    the country--from the CYAC in Southern California, to an
    elderly piano tuner in Atlantic City, New Jersey--all of whom
    are fighting this abuse of the eminent domain power.
        The Institute for Justice represented the homeowners in
    Kelo, the infamous 2005 case in which the Supreme Court ruled
    5-to-4 that eminent domain could be used to transfer perfectly
    fine private property to a private developer based solely on
    the mere promise of increased tax revenue. Ten years later, and
    after $80 million in taxpayer money was spent, the Fort
    Trumbull neighborhood where Susette Kelo's little pink house
    once stood is a barren field that is home to nothing but feral
    cats. The developer abandoned the project while Pfizer, the
    intended beneficiary, closed its plant and left New London.
        On its tenth anniversary, legal observers described Kelo as
    ``a grave error,'' ``one of the most destructive and appalling
    decisions of the modern era,'' and ``the worst Supreme Court
    decision of the 21st century.'' Overwhelming majorities in
    every major poll taken after Kelo have condemned the result,
    and it continues to be wildly unpopular. Forty-four States have
    reformed their eminent domain laws in the wake of the decision.
    Nine State supreme courts have made it more difficult for the
    Government to engage in eminent domain abuse, three of them
    even explicitly rejecting the reasoning of Kelo.
        These State-level reforms vary greatly. Some States did
    little or nothing to reform their laws, and Kelo opened
    floodgates for eminent domain abuse, which tripled in the year
    after the decision was issued. That is, in part, because
    Federal law still allows Federal funds to be spent on
    condemnations for the benefit of private developers, which
    continues to encourage widespread eminent domain abuse, as I
    detail in my written testimony. The Federal Government should
    not be complicit in an abuse of power already deemed
    intolerable by most States.
        Unfortunately, Congress' previous efforts to restrict the
    use of Federal funds for eminent domain have been ineffective.
    Immediately after Kelo was decided in 2005, Senator Christopher
    Bond introduced an appropriations bill amendment which stated
    that Federal dollars could not be spent on any project where
    eminent domain is used for ``economic development that
    primarily benefits private entities.'' This language continues
    to appear in appropriations bills, including the currently
    pending bill. The Bond amendment has no enforcement mechanism
    and, thus, relies on agencies and grant recipients to police
    themselves. There is no way for individuals to enforce the
    spending restriction, and it does not appear that any agency
    has ever investigated or enforced a violation of that spending
    limitation.
        Funding restrictions like the Bond amendment will only work
    if they can be enforced. Any Federal reform must include an
    enforcement mechanism to halt Federal funding if the funds are
    used for a prohibited purpose, as well as a private method of
    enforcement so that homeowners, tenants, or small business
    owners who are threatened by the abuse of eminent domain can
    take immediate action to prevent the misuse of Federal funds.
    One bill that does include such enforcement measures is the
    Private Property Rights Protection Act. The original version of
    hat bill passed the House 376-to-38 back in 2005. It has been
    reintroduced several times over the years, most recently in
    July by Representative Sensenbrenner as H.R. 3013.
        The Private Property Rights Protection Act is common-sense
    legislation that will stop the Federal Government from being
    complicit in an abuse of power that most States have already
    rejected. I encourage this Committee to work with the House
    Judiciary Committee to find a way to finally pass this bill and
    prevent Federal taxpayer dollars from being used to violate the
    private property rights of homeowners and small business
    owners.
        Reform at the Federal level would not only reduce funding
    for eminent domain abuse nationwide, but it may also encourage
    further State-level reforms once Federal funds dry up and are
    not available for projects that abuse eminent domain. It also
    sends an important message to the American people. When the
    power of eminent domain is used so that a richer, better
    connected person can live or work on the land you used to own,
    it tells everyday Americans that their hopes, dreams, and hard
    work do not matter as much as money or political influence.
    Commercial developers everywhere need to be told that they can
    only obtain property through private negotiation, not
    Government force, and that the Federal Government will not be a
    party to these private-to-private transfers of property. Thank
    you.
        [The prepared statement of Mr. Alban appears as a
    submission for the record.]
        Chairman Cornyn. Professor Dana.

                  STATEMENT OF DAVID A. DANA, KIRKLAND
                 & ELLIS PROFESSOR OF LAW, NORTHWESTERN
                     UNIVERSITY, CHICAGO, ILLINOIS

        Professor Dana. Chairman Cornyn, Ranking Member Durbin,
    thank you for inviting me here today. I would like to make
    several points about eminent domain in my testimony. The first
    is--
        Senator Durbin. Could you check and see if your microphone
    is on? There should be a red light.
        Professor Dana. Okay.
        Senator Durbin. Thank you.
        Professor Dana. They do not train us at law school.
        The first is, as you have heard, in some ways the post-Kelo
    reaction is an example of how federalism is supposed to work.
    The States have really owned up to the question of how to
    address eminent domain, and there has been a variety of
    responses suited to the different circumstances of each State.
    I would urge the Committee and the Congress to allow the States
    to continue to address the problem.
        The second issue is while some have advocated a complete
    ban on eminent domain for economic development, there are good
    reasons based in economic theory and in experience to believe
    that that actually would harm overall poor communities in
    cities that need urban development. There is a strong rationale
    based in economic theory that eminent domain, cautiously used,
    is necessary.
        The third point I would make is that while a complete ban
    on eminent domain for economic development is not appropriate,
    there are reforms that could be adopted at the State level and
    even at the Federal level that would encourage eminent domain
    to be used in a way that is more sensitive to the needs of low-
    income communities.
        The final point I guess I would like to make, picking up on
    some of the opening remarks, is eminent domain can be
    problematic whether it is used for economic development or
    whether in the context of urban redevelopment or whether it is
    used for transportation or infrastructure or pipelines. Any
    kind of reform really should look at the impact of eminent
    domain broadly across all sorts of categories.
        Just to go through those points in a little greater detail,
    by one count 47 States have enacted some response to Kelo. The
    numbers keep going up and down, however you count it. The
    responses have really been incredibly broad. Some States like
    Florida have essentially banned the use of eminent domain for
    almost all uses, both for economic development and for blight
    removal. Other States have tightened the definition of
    ``blight'' and added procedural safeguards. Some States have
    greatly increased the compensation formula. Other States have
    provided other kinds of protections. Many States have combined
    these in an ongoing process.
        One way to look at what has happened after Kelo is States
    have adapted or responded to their own particular needs and
    circumstances in trying to reform eminent domain, and that is
    really what federalism is supposed to do, the sort of notion of
    laboratories of democracy. Given that and given that States are
    still actively involved in that, I think there should be a
    heavy burden against Federal intervention unless it is shown
    that it is absolutely necessary.
        The second point I would make is that there is a good
    rationale for when eminent domain really is needed sometimes in
    the context of urban redevelopment. Urban areas tend to have
    more fragmented land holdings. In older cities and inner-ring
    suburbs, land is held in a variety of different ways. You will
    have many different owners. Sometimes it is an extraordinary
    effort just to figure out who owns exactly what. For developers
    or for city agencies or public-private partnerships, that makes
    it much harder to assemble land for redevelopment.
        By contrast, in outer-ring suburbs, ex-urban areas,
    greenfields, it is much easier to assemble land or land is
    already in larger groups. What that means is assembly costs are
    higher in urban areas, and there is a problem or greater risk
    of holdouts, essentially having negotiations fail over
    holdouts.
        The possibility of eminent domain, cautiously used,
    addresses this holdout problem. It allows redevelopment,
    successful redevelopments like the Baltimore City Harbor to go
    forward where they might have floundered in the absence of it.
    Without eminent domain as a possibility for urban areas, it may
    be those areas will have a much harder time attracting capital
    relative to ex-urban or more rural areas. That will tend to
    sort of impact lower-income communities that need more revenue.
        I should say also that we know a great deal about eminent
    domain, but there is also a lot we do not know about it. There
    are instances where certainly it has not been used well, but
    there are instances where it clearly has been used well. One of
    the things that is important to do when thinking about any kind
    of reform is to really get an understanding of the overall
    universe of the categories that exist today.
        The third point I would make is even though eminent
    domain--I guess another point I would like to make is one
    argument that has been made by a number of academics and
    commentators for why the holdout problem is not really a
    problematic one is that large areas can be assembled through
    secret purchases, that basically developers working with cities
    or governments can do redevelopment by quietly or without
    publicly announcing the fact that they are assembling land. I
    think that that is really not a solution. We want redevelopment
    projects to be subject to public debate. If an area in a city
    is going to be redeveloped, we want public engagement. What
    that means is governments have to redevelop in a public, open
    way, and that does invite a holdout problem, and eminent domain
    is one response to that problem and an important one. I am
    running out of time. Law professors tend to be very long-
    winded, so I apologize for this.
        I guess the final point I would just say is there really
    are a number of reforms, including greater tenant relocation
    assistance--tenants are not protected constitutionally--greater
    compensation for good will for small businesses, that I think
    would be useful in the context of eminent domain. I also think
    greater attention to the loss of affordable housing to eminent
    domain is important.
        Finally, I would say that whatever reforms are done, it is
    important to realize eminent domain can hurt poor and low-
    income minority communities when it is done to build a road or
    when it is done to build a pipeline or other infrastructure
    just as much as when it is done for luxury condos. I think the
    debate has to be framed more broadly than simply concerns about
    eminent domain in the context of urban redevelopment. Thank
    you.
        [The prepared statement of Professor Dana appears as a
    submission for the record.]
        Chairman Cornyn. Thank you, Professor Dana. We will start
    with 5-minute rounds. Mr. Alban, it seems to me that the
    Supreme Court substituted ``public purpose'' for ``public
    use,'' and that undefined phrase has given rise to the
    potential for abuses that you talked about. Is that the source
    of these problems? Or is it more complicated than that?
        Mr. Alban. I would say essentially that is the key problem,
    Senator. It actually happened prior to the Kelo case, but the
    Kelo case sort of cemented the understanding that that not only
    applied to some sort of unique situations where the Supreme
    Court had considered it in urban renewal in DC and in
    redistributing property that had been formerly owned by the
    King of Hawaii in Hawaii, but now could apply to any instance
    of redevelopment where a locality determined that the use of
    eminent domain would generate greater tax revenue. And that is
    really the outrage over Kelo.
        Chairman Cornyn. It seems to be a tempting thing for a
    locally elected city council that maybe is dependent--an
    individual councilmember is dependent on political support from
    local developers to be lobbied to designate some property as
    being for a public purpose when that public purpose may just be
    generating more revenue for the local municipality's tax base,
    so Mr. Casillas' point that his boxing club and facility could
    be taken for no other reason than the fact that city council
    wanted to generate more revenue. Is that about right?
        Mr. Alban. That is exactly right. I mean, you often have
    these instances of capture where special interests lobby,
    developers get in tight with city councilmembers, and, you
    know, the redevelopment policies of a city are really driven by
    the interests of developers, and folks who are minorities or
    low-income or do not have as much political influence are
    really not able to affect the process as much. I think that
    actually goes to Professor Dana's point earlier about how, you
    know, States have considered a variety of reforms that may be
    appropriate for their State. I think that is, frankly, a very
    naive view of democracy. The State-level legislatures are also
    influenced by special interests, the developers and real estate
    lobby, lots of folks that have influenced the direction of the
    reforms. Professor Dana has even written about how many of
    those reforms do not adequately protect the poor and low-income
    from bogus blight designations and actually end up only
    protecting sort of the middle class and the wealthy. Frankly,
    that is a concern that I share, not with respect to every
    single State but there are certainly States where that is the
    case.
        Chairman Cornyn. To Senator Durbin's point about the
    Keystone XL pipeline actually being owned by a foreign
    corporation, that really is not covered in the Fifth Amendment
    to the United States Constitution, is it? It is a question of
    is it a public use and is there just compensation for a taking
    for a public use? Isn't that what the Constitution calls for?
        Mr. Alban. I am not aware of anything in the Fifth
    Amendment about who is the owner of the property or who the
    property is transferred to, whether it is foreign or domestic.
    Frankly, I do not know a lot about the facts of the Keystone XL
    pipeline and who owns it. Yes, the Constitution does not
    discuss the foreign ownership issue.
        Chairman Cornyn. I suspect that the people along the
    railroad lines where this oil travels, where they have
    occasionally had derailings and safety incidents, clearly it
    seems to me that the pipeline would be for a public purpose. I
    want to get to last questions on my time.
        First of all, part of the concern at the Federal level--I
    understand Professor Dana is talking about an example of
    federalism, and I want to follow up on that. There are Federal
    funds being used for these takings and to pay the landowners
    where there is potentially abuse of the eminent domain power.
    Isn't that right, Mr. Alban?
        Mr. Alban. That is correct, although I would say most of
    the Federal funds are not actually used to compensate the
    landowners. They are used for whatever the pie-in-the-sky
    development projects are that get built on the land after the
    fact. The benefit is really to the private developer who gets
    the property, not to the original owner of the property that is
    condemned and loses their property.
        Chairman Cornyn. Okay. Professor Dana, you talked about
    federalism working, given the fact that the States have--many
    of them have enacted post-Kelo reforms. How would you respond
    to Mr. Alban's comment about use of Federal funds? That clearly
    implicates the Federal spending authority and Federal
    responsibility and not just leaving that up to the States and
    local governments.
        Professor Dana. It is complicated in the sense that Federal
    funds are heavily involved in a lot of what States do, even in
    areas where there is a lot of State leeway. There are Federal
    transportation and transit funds. Those could be related to
    kind of redevelopment projects. There is some Federal funding
    directly for redevelopment. It is usually part of a whole suite
    of things.
        I think one thing to be cautious about is if the Federal
    Government is going to withdraw funds every time anything that
    is done at the State and local level basically for good reason,
    but the particular case does not seem to be in the judgment of
    the Federal authorities, then it is very hard to have a general
    Federal support policy, because I think these categories are
    quite vague. So, ``economic development'' is a very broad and
    vague term, and so if you say that you are not going to provide
    Federal funding for economic development takings, it is not
    really clear what that means. That could mean funding for
    transportation projects because those are often tied to
    economic development. It could mean a lot of projects that you
    actually might be very, very comfortable with and actually
    think there is a strong Federal need for.
        I think ``economic development'' is a malleable term, and
    that is one of the problems with creating it as a category of
    kind of the use of eminent domain we do not like. It raises a
    question about Federal legislation as well. The only other
    thing I would say about the federalism issue is I think these
    eminent domain issues involve a balancing of interests, and it
    is a difficult balance. States that have deteriorating urban
    areas and really want to bring in revenue and have a different
    kind of balance that they may strike compared to other areas
    that have different levels of urban growth or different levels
    of urbanism. I do think there is a reason to be sensitive to
    the different needs of the States.
        Chairman Cornyn. I will hand it off to Senator Durbin, but
    I will note that even the subject of eminent domain has gotten
    involved in the Presidential primaries, the subject of some
    discussion, strangely enough. Senator Durbin.
        Senator Durbin. Now, I know why we are here.
        [Laughter.]
        Senator Durbin. Mr. Alban, the website ThinkProgress wrote
    an article on March 1st titled, ``TransCanada Is Seizing
    People's Land to Build Keystone, But Conservatives Have Been
    Dead Silent.'' The article discussed the story of Julia Trigg
    Crawford of Direct, Texas. I do not know where that town is,
    but I will bet Senator Cornyn does. A portion of Ms. Crawford's
    farm was condemned through eminent domain and used to construct
    part of the southern leg of the Keystone pipeline. The article
    said Ms. Crawford ``cannot wrap her head around why
    TransCanada, a foreign company, was granted the right of
    eminent domain to build a pipeline that would not be carrying
    Texas oil through the State of Texas.''
        ThinkProgress interviewed Steve Anderson, the managing vice
    president of your employer, the Institute for Justice, and
    asked why the institute, which ably represented Mr. Casillas,
    has not taken a position on the use of eminent domain for
    transferring land to TransCanada for the Keystone XL pipeline.
    Mr. Anderson said the group focuses on ``obvious private to
    private transfers'' and not ``traditional public uses.''
        I ask you, do you think it is problematic when landowners
    who do not want an oil pipeline to be built across their land
    have their land taken through eminent domain? Do you sympathize
    with the Texas farmers, the Nebraska landowners, and others who
    have challenged the taking of their land for the pipeline? Let
    me dismiss immediately the notion that the foreign corporation
    makes this different. Any corporation, private, profit-making
    corporation.
        Mr. Alban. Yes, Senator, I find it deeply troubling, and I
    share your concerns about depriving people of private property
    for even a pipeline. I think the reason that the Institute for
    Justice has not gotten involved legally in these matters is
    because there is a long tradition in the common law of common
    carriers being treated as a public use under the common law of
    most States. Although we object to how people's property is
    being taken away, the legal avenue to challenge that has long
    since been foreclosed in many instances, although we continue
    actually to explore the possibility of cases challenging such
    takings.
        Senator Durbin. Even if the common carrier is a private,
    profit-making corporate entity, you are arguing that it is a
    public use and that they can use eminent domain to seize
    property?
        Mr. Alban. I am not arguing that at all, Senator. I am
    telling you my understanding of the common law is that the
    common law treats that as--in many States, most States, treats
    that as a common carrier. Common carriers as a general matter
    are private entities, and in many cases private, profit-making
    entities. What makes them a common carrier, at least in theory,
    is that they are open to any member of the public to use them.
        Obviously, in the case of an oil pipeline, there are not a
    whole lot of us that ship oil, so the common carrier
    designation for oil pipelines is perhaps quite questionable.
    Nonetheless, when certain areas of legal challenge are
    foreclosed by the long tradition of the common law, we try to
    use our donors' resources wisely and, you know, not waste time
    challenging things that we do not think we could win.
        Senator Durbin. Professor Dana, I am trying to sort out
    this notion of public use. Mr. Alban says we are talking about
    a common carrier exception here. I vaguely remember that from
    law school, not enough to fill in a question on a final, I am
    sure. How do we define public use in general terms? It seems to
    me that if a city wanted to take land by eminent domain to
    build a park, they say, Okay, public use. If they wanted to put
    a concession in that park, then, question: Has it gone beyond
    public use to something else? If they seize the land to have it
    owned by the city but then to lease it out for the construction
    of a football stadium, is that a public use? How do you sort
    out these varieties? Should we do it on a Federal basis,
    imposing it from Washington, as opposed to allowing the States
    under, here I go again, States' rights to assert their own
    definitions?
        Professor Dana. Yes, well, defining public use is a
    conundrum. Once you move away from Justice Thomas' definition,
    which is the public actually is using it, so a park that you
    can actually go into or a pipeline you can actually tap oil out
    of, I guess, or use, once you move away from that definition,
    which has not really been our historical definition, then there
    is a real question of where do you draw the line and what
    counts as a good public use or not a good public use and who
    gets to decide and is it contextual. I agree with you. I think
    that that is a very difficult decision, and there is going to
    be a lot variation balancing of factors. It is a situation
    where I think there is wisdom in a certain deference to the
    States. I think the Kelo opinion, as criticized as it is, I
    think reflected that in its reasoning. Essentially, the opinion
    said we understand there is this situation here, but we have
    allowed eminent domain for a variety of things, and we have
    called it public use. How do we decide, how does the Federal
    constitutional law decide this one is not? Maybe it is better
    for the States and localities to decide that or kind of shape
    those definitions.
        Senator Durbin. Thanks.
        Chairman Cornyn. Senator Tillis.
        Senator Tillis. Thank you, Mr. Chair. Professor Dana, when
    you were talking about the complexities of defining or getting
    to the matter of public use, I was having a deja vu over my
    time as Speaker of the House in North Carolina when we put
    forth a constitutional amendment in reaction to the Kelo
    decision that passed out of the House, but unfortunately, we
    could not get our colleagues in the Senate to--I think they had
    more attorneys over there, and we just could not get them all
    to come to a consensus on how to do that right. There are very
    clearly instances where you have to have that ability to gain
    property for things that are legitimately public use.
        The States in reaction to Kelo, are there any best
    practices out there, people that seem to be--I personally
    believe a lot of this needs to be solved in the States, is what
    I attempted to do as speaker. Do you have any suggestions or
    examples of best practices out there in reaction to the Kelo
    decision? I will expand that to anyone on the panel who would
    like to answer.
        Professor Dana. I think one thing, for example, Minnesota
    has done is it has narrowed the definition of what ``blight''
    is. Under most States' statutes, you have to have a finding of
    blight to use eminent domain, even apart from the Kelo
    decision. There is a fair point that blight is often vaguely
    defined, and there is a lot of deference. Minnesota enacted a
    statute that required much more specific findings. They
    essentially said in less deference to the findings, and they
    provided more procedural protections for the property owners.
    California has also done that, although obviously in some cases
    it required a lot of litigating to get it enforced. I think
    that is statutory refinement of what blight meant so that you
    are really requiring much more fact finding by the local agency
    before they----
        Senator Tillis. I think that is a great point. What
    concerns me is that blight sometimes gets defined by the
    contrast between what somebody may want it to be versus what it
    is, and not necessarily--you know, people talk about the
    neighborhoods that are just destroyed, no real use, no tax
    base, versus just older sections of a community that happen to
    be functioning just fine. It may not be the highest economic
    use for it, but people are being responsible in the community,
    and somehow they use the system to define that as blight. I
    think that is blatantly unfair to the property owners.
        Anyone else?
        Mr. Alban. I certainly think Professor Dana and I agree
    that the definitions of ``blight'' need to be tightened up. I
    would probably say further than Professor Dana does, but that
    is certainly an area that is widely abused. As you said,
    Senator, it is often just a matter of sort of subjective
    perception, ``Oh, I wish we had better-looking houses here, so
    we are going to declare this area blighted.'' Blight should
    really be limited to when there is a serious public health
    threat, a fire hazard, a building that is about to fall over,
    something like that.
        Senator Tillis. A threat to public safety----
        Mr. Alban. Some sort of threat to public health and safety.
        Senator Tillis. It should not be based on the differences
    in potential future economic value. I do not think that that is
    a fair basis for defining blight, and that is a discussion we
    went through. Mr. Casillas.
        Mr. Casillas. Say again?
        Senator Tillis. Again, I was just kind of curious. What I
    am trying to do is find out, when I go back to my State--I was
    just speaker there last year; I have friends in the
    legislature--what more we could do to actually make progress in
    the State. I would like for North Carolina to take action, put
    into our Constitution, subject to a referendum, obviously,
    things that better define it within our State.
        The other thing I will say is I do not agree with Senator
    Durbin by using the Keystone example. I think if you take a
    look at power transmission lines, you take a look at the
    Colonial pipeline that runs through my State, and a number of
    other things, it very clearly fits more into a legitimate
    definition of public use. Concerns with takings of property
    notwithstanding, as long as there is a fair process to go
    through. I think that it is a lot easier to argue the case for
    something like an energy pipeline just as you would energy
    transmission lines as a legitimate public use versus taking a
    neighborhood that somebody has just decided they can get a
    better return on equity by clearing houses in a neighborhood
    that is functioning just fine. We know that that occurs from
    time to time, hopefully no more in my State. Thank you.
        Chairman Cornyn. I am glad you mentioned that, Senator
    Tillis, because I had the same reaction. Just because you do
    not drive on a highway personally does not mean the highway
    itself is not condemned for public use, that property that the
    highway is built on. It cannot be limited to that.
        I guess the concern I have is that the words of the
    Constitution, ``public use,'' I think seem to have a pretty
    generally well accepted definition and understanding. When the
    Supreme Court talked about ``public purpose,'' that seems to
    open things up almost to the point where it is impossible to
    know what the limit may be.
        Mr. Casillas, if you had not found the Institute for
    Justice to represent you, what would you have done?
        Mr. Casillas. We fought the city as far as we could, and if
    it had not been for the Institute for Justice, there was no way
    we could have taken on the city. I think the amount of legal
    fees went up in excess of $1.9 million. We have about a
    $150,000 budget. I stretch my resources. I stretched, you know,
    even the fight I could alone, but had it not been for IJ, we
    would not exist, and we probably would be an empty lot right
    now.
        Chairman Cornyn. If there was ever a David versus Goliath
    sort of issue, this would seem to be it. I find so many times
    the arguments are--we find ourselves in unusual positions
    because those of us who are trying to protect the private
    property rights of individual citizens, we are talking about
    people like you and other individuals who perhaps cannot stand
    up to the financial wealth and resources and law firms and
    suffer the delay and the time it takes for litigation against
    big companies that have limitless resources. Hence, the
    importance of this topic.
        Mr. Alban, Professor Dana talked about other ways that we
    could get at this issue, and, again, you mentioned the Federal
    financial resources that basically facilitate or enable the
    development once this taking occurs. Do you have any
    recommendations or thoughts for us--or would you perhaps like
    to send those to us later--about other ways we might constrain
    the use of Federal resources for clearly what is not a public
    use but condemnations which are of the kind we have been
    describing here, which are subject to abuse?
        Mr. Alban. Sure. As I mentioned before, the Bond Amendment
    is already law, and it gets passed each time the appropriations
    act gets passed, and it already contains a prohibition against
    using Federal funds for eminent domain that is designed
    primarily to benefit private parties. The key is to put some
    enforcement mechanisms in there. Just as in the case of the
    CYAC in California, if there had not been a private enforcement
    mechanism, if the CYAC had not been able to go to the courts
    and challenge the attempted taking, you know, the CYAC would
    not exist anymore.
        There needs to be something similar at the Federal level
    where private parties whose property is being threatened by a
    development funded by Federal dollars are able to bring a cause
    of action in order to stop those Federal funds from being used
    inappropriately. It is those folks who have the most interest,
    the greatest interest, that need to be empowered to take
    action. The Private Property Rights Protection Act contains one
    such idea of how that would go about, and it also contains
    other protections such as having the Attorney General and DOJ
    investigate any misuse of funds by State or local agencies.
        I think those are the sorts of proposals we need, and I
    would be happy to further brief the Senator if he has any
    additional questions.
        Chairman Cornyn. I think maybe this is--there are other
    areas in which takings can effectively occur through regulatory
    overreach and other circumstances where private property rights
    are threatened by Government. Perhaps Senator Tillis and I and
    the Committee can work together with you and others who are
    interested in helping us put together something that might be
    not just focused on this limited issue but a broader private
    property rights protection piece of legislation.
        Mr. Alban. That is certainly the case, and we would welcome
    the opportunity to work with you on that. I focused my remarks
    on eminent domain because the topic of the hearing was on Kelo.
    Regulatory takings are also a very serious issue that affects
    many homeowners and business owners.
        Chairman Cornyn. Senator Tillis.
        Senator Tillis. I wanted only to say that I think Waters of
    the U.S. may be one of the most profound potential regulatory
    takings in U.S. history and something that we need to spend a
    lot of time on, having people understand it. It amazes me how
    few people know about it and the extent to which they are going
    to be affected if those rules go into place.
        Incidentally, it does not really relate to the subject of
    this Committee meeting, but there are other practices that I
    think the States really have to take a look at, and that has to
    do with annexation and annexation reform. We passed sweeping
    annexation reform a couple of years ago in North Carolina to
    vest a lot more power in the rights of the property owners, but
    you see how that is sometimes used as a chess game, first to
    expand your jurisdiction, and then to do the kinds of takings
    that we are talking about in this Committee. Thank you for
    being here.
        Mr. Alban. Thank you, Senator. That is absolutely right.
    Related to that is amortization, which is a process by which
    local governments often do an end run around whatever
    protections are available in the State for eminent domain,
    often without compensating the property owners.
        I did not get a chance earlier to identify States that
    maybe act as models in terms of their eminent domain reform. I
    think Professor Dana identified Florida earlier as a State that
    actually had effectively stopped eminent domain abuse, eminent
    domain that is used to benefit private entities. My home State
    of Virginia has also passed a constitutional amendment that
    largely prohibits that sort of activity.
        It is important for States to pass constitutional
    protections rather than mere statutory protections because
    those can always be changed. In California, they passed
    redevelopment protections that increased the standards for
    blight, and then a few years later, they abolished
    redevelopment agencies. Just 2 weeks ago, they were revived
    under a new name, and these new redevelopment agencies are not
    subject to the post-Kelo reforms. That is why constitutional
    amendments are so important.
        Chairman Cornyn. As we are talking about it, I can think of
    another category of ways that the Federal Government grabs
    private property through declaration of endangered species and
    the like. Maybe we can have a working list of subjects we can
    deal with in this Private Property Protection Act that we might
    be able to cobble together with your help.
        I want to thank all the witnesses and by who is here today.
    The record for this hearing will remain open for 1 week for any
    additional questions or statements that might be propounded or
    offered. Thank you again for being here with us, and this
    hearing is adjourned.
        [Whereupon, at 2:53 p.m., the Subcommittee was adjourned.]
        [Additional material submitted for the record follows.]

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