[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
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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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