[House Report 115-859]
[From the U.S. Government Publishing Office]


115th Congress    }                                  {        Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                  {        115-859

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



 
             PRIVATE PROPERTY RIGHTS PROTECTION ACT OF 2017

                                _______
                                

 July 23, 2018.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Goodlatte, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1689]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 1689) to protect private property rights, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for the Legislation..........................     2
Hearings.........................................................    11
Committee Consideration..........................................    11
Committee Votes..................................................    11
Committee Oversight Findings.....................................    11
New Budget Authority and Tax Expenditures........................    11
Congressional Budget Office Cost Estimate........................    12
Duplication of Federal Programs..................................    13
Disclosure of Directed Rule Makings..............................    14
Performance Goals and Objectives.................................    14
Advisory on Earmarks.............................................    14
Section-by-Section Analysis......................................    14
Dissenting Views.................................................    17

                          Purpose and Summary

    H.R. 1689, the Private Property Rights Protection Act, will 
help eliminate abusive economic development takings in those 
states and political subdivisions that elect to receive federal 
economic development funds.

                Background and Need for the Legislation

    H.R. 1689 is bipartisan legislation introduced by 
Representatives Jim Sensenbrenner (R-WI) and Maxine Waters (D-
CA) that will help preserve the constitutional protections for 
private property jeopardized by the Supreme Court's decision in 
Kelo v. City of New London.\1\ The bill does this statutorily 
by conditioning state and local governments' receipt of federal 
economic development funds on their agreement to refrain from 
using eminent domain to transfer private property from one 
private owner to another for the purpose of economic 
development. If a state, or political subdivision of a state, 
uses its eminent domain power to take property for private 
economic development, the state is ineligible to receive 
federal economic development funds for two fiscal years 
following a judicial determination that the law has been 
violated. Additionally, the bill prohibits the federal 
government from using eminent domain for economic development 
purposes. The bill's provisions are enforceable through a 
private right of action or through an action brought by the 
Attorney General of the United States.
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    \1\ 545 U.S. 469 (2005).
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    The Fifth Amendment to the U.S. Constitution, made 
applicable to the states through the Fourteenth Amendment, 
provides that ``private property [shall not] be taken for 
public use, without just compensation.''\2\ The Fifth Amendment 
imposes two distinct conditions on the exercise of the power of 
eminent domain: (1) that the taking must be for ``public use,'' 
and (2) that the owner must be paid ``just compensation.'' As 
Justice O'Connor has explained, although the Takings Clause 
presumes that governments are given the authority to take 
property without an owner's consent, ``the just compensation 
requirement spreads the cost of condemnations and thus 
`prevents the public from loading upon one individual more than 
his just share of the burdens of government.'''\3\ And, ``the 
public use requirement, in turn, imposes a more basic 
limitation, circumscribing the very scope of the eminent domain 
power: Government may compel an individual to forfeit her 
property for the public's use, but not for the benefit of 
another private person.''\4\
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    \2\Additionally, as the Takings Clause is a prohibition, not an 
express grant of power, the use of eminent domain is further restricted 
by other limits on government power. For instance, the federal 
government may only exercise its power of eminent domain if it is 
necessary and proper for the execution of one of its enumerated powers. 
United States v. Morrison, 529 U.S. 598, 607 (2000) (``Every law 
enacted by Congress must be based on one or more of its powers 
enumerated in the Constitution.'').
    \3\Kelo, 545 U.S. at 497 (O'Connor, J., dissenting) (quoting 
Monongahela Nav. Co. v. United States, 148 U.S. 312, 325 (1893)).
    \4\Kelo, 545 U.S. at 497 (O'Connor, J., dissenting).
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    Unfortunately, the Kelo decision effectively ``delete[d] 
the words `for public use' from the Takings Clause of the Fifth 
Amendment''\5\ and thereby jeopardized the property rights of 
all Americans. The decision has been resoundingly criticized 
from all quarters. Indeed, in the wake of Kelo, a resolution 
expressing grave disapproval of the Court's decision was 
approved by the House of Representatives on June 30, 2005, by a 
vote of 365-33.\6\ Moreover, public opinion polling showed that 
Americans from across racial, ethnic, partisan, and gender 
lines condemned the decision.\7\ Disapproval of Kelo was 
expressed by 77% of men, 84% of women, 82% of whites, 72% of 
African-Americans, and 80% of Hispanics. The decision was also 
opposed by 79% of Democrats, 85% of Republicans, and 83% of 
Independents. Furthermore, advocacy groups ranging from the 
NAACP to the Libertarian Party and from the AARP to the 
American Farm Bureau Federation stood in opposition to the 
Court's decision.
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    \5\Id. at 494.
    \6\H. Res. 340, 109th Cong.
    \7\Two national polls conducted in the fall of 2005 showed that 81% 
and 95% of respondents were opposed to Kelo. American Farm Bureau 
Federation Survey, Oct. 29-Nov. 2, 2005, Zogby International (showing 
95 percent of respondents disagreed with the Court's ruling in Kelo); 
The Saint Index Poll, Oct.-Nov. 2005, Center for Economic and Civic 
Opinion at the University of Massachusetts/Lowell (showing 81 percent 
of respondents disagreed with the ruling).
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    On November 3, 2005, this widespread condemnation of the 
Kelo decision led 157 Democrats to join 218 of their Republican 
colleagues in the House to pass the Private Property Rights 
Protection Act, by a 376 to 38 vote margin.\8\ In subsequent 
Congresses, the legislation has passed the House by voice vote 
(in the 112th Congress) and by a vote of 353-65 (in the 113th 
Congress).
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    \8\H.R. 4128, 109th Cong.
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                 PROPERTY RIGHTS ARE FUNDAMENTAL RIGHTS

    The protection of ownership of private property lies at the 
foundation of American government. ``The conviction that 
private property was essential for self-government and 
political liberty was long a central tenet of Anglo-American 
constitutionalism.''\9\ According to John Locke, whose writings 
were widely read and quoted in the latter half of the 
eighteenth century and highly influential with the Framers, 
``[t]he great and chief end . . . of Mens uniting into 
Commonwealths, and putting themselves under Government, is the 
Preserving of their Property.''\10\ The Framers, who supported 
this tradition, ``were motivated in large part by the desire to 
establish safeguards for property. They felt that property 
rights and liberty were indissolubly linked.''\11\
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    \9\James W. Ely, Jr., ```Poor Relation' Once More: The Supreme 
Court and the Vanishing Rights of Property Owners,'' 2005 CATO Sup. Ct. 
Rev. 39, 40 (2005).
    \10\John Locke, Second Treatise Sec. 124 (emphasis added). ``It is 
very clear that the founders shared Locke's and Blackstone's affection 
for private property, which is why they inserted the eminent domain 
provision in the Bill of Rights.'' Richard A. Epstein, Takings: Private 
Property and the Power of Eminent Domain 29 (1985); see also James W. 
Ely, Jr., ``The Constitution and Economic Liberty,'' 35 Harv. J. L. & 
Pub. Pol'y 27, 29-30 (2012) (``John Locke and the Whig emphasis on the 
rights of property owners profoundly influenced the founding 
generation.'').
    \11\Ely, supra note 9, at 40.
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    James Madison said at the Constitutional Convention that 
``the primary objects of civil society are the security of 
property and public safety''\12\ and, in the Federalist Papers, 
that ``[g]overnment is instituted no less for the protection of 
property than of . . . individuals.''\13\ Madison believed that 
a government ``which [even] indirectly violates [individuals'] 
property in their actual possessions, is not a pattern for the 
United States.''\14\ Indeed, according to John Adams, 
``[p]roperty must be secured or liberty cannot exist.''\15\ 
Accordingly, although the word ``property'' does not appear in 
the Preamble of the Constitution,
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    \12\1 The Records of the Federal Convention of 1787 at 147 (Max 
Farrand ed., 1937).
    \13\The Federalist No. 54 (James Madison); see also James Madison, 
``Speech in the Virginia Constitutional Convention,'' reprinted in 
James Madison: Writings 824 (Jack N. Rakove ed., 1999) (``[T]he rights 
of persons, and the rights of property are the objects, for the 
protection of which Government was instituted. These rights cannot well 
be separated.'').
    \14\James Madison, Property (1792), reprinted in James 
Madison:Writings 515 (Jack N. Rakove ed., 1999).
    \15\6 John Adams, The Works of John Adams 280 (Charles Francis 
Adams, ed. 1850); see also Arthur Lee, ``An Appeal to the Justice and 
Interests of the People of Great Britain,'' in The Present Dispute with 
America 14 (4th ed. 1775) (``The right of property is the guardian of 
every other right, and to deprive a people of this, is in fact to 
deprive them of their liberty.'').

        The Federalist Papers make it very clear that each 
        objective enumerated in the Preamble involved, in part, 
        the protection of the citizen's property rights. In 
        fact, using the Madisonian conception that property 
        includes all of the fundamental aspects of the 
        integrity of the human person, life, liberty and 
        property, the whole preamble is about protecting the 
        citizens' rights in property and property in 
        rights.\16\
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    \16\Hon. Loren A. Smith, ``Life, Liberty, & Whose Property?: An 
Essay on Property Rights,'' 30 U. Rich. L. Rev. 1055, 1056 (1996).

    The early Supreme Court recognized Americans' fundamental 
right to private property. In 1795, in an opinion authored by 
Justice William Paterson, who was a delegate to the 
Constitutional Convention, the Supreme Court declared, 
``possessing property, and having it protected, is one of the 
natural, inherent, and unalienable rights of mand. . . . The 
preservation of property then is the primary object of the 
social compact.''\17\ Because, as Justice Story would later 
explain, ``government can scarcely be deemed to be free, where 
the rights of property are left solely dependent upon the will 
of a legislative body, without any restraint. The fundamental 
maxims of a free government seem to require, that the rights of 
personal liberty and private property should be held 
sacred.''\18\
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    \17\Vanhorne's Lessee v. Dorrance, 2 U.S. 304, 310 (1795).
    \18\Wilkinson v. Leland, 27 U.S. (2 Pet.) 627, 657 (1829).
---------------------------------------------------------------------------
    More recent Supreme Court opinions continue to acknowledge 
the fundamental nature of property rights, recognizing that 
``[i]ndividual freedom finds tangible expression in property 
rights.''\19\ And that the ``right to enjoy property without 
unlawful deprivation . . . is, in truth a personal right. . . . 
In fact, a fundamental interdependence exists between the 
personal right to liberty and the personal right in property. 
Neither could have meaning without the other. That rights in 
property are basic civil rights has long been recognized.''\20\
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    \19\United States v. James Daniel Good Real Property, 510 U.S. 43, 
61 (1993)
    \20\Lynch v. Household Finance, 405 U.S. 538, 552 (1972).
---------------------------------------------------------------------------
    The sanctity and centrality of private property rights are 
part of our constitutional design. The Bill of Rights, too, 
contains several interrelated rights, in addition to the 
Takings Clause, a fair reading of which anchors a variety of 
personal liberties on the protection of property rights: the 
prohibition on infringing people's right to keep and bear arms 
(Second Amendment); the prohibition on quartering soldiers on 
private property (Third Amendment); the prohibition on 
unreasonable searches and seizures of property (Fourth 
Amendment); the prohibition on depriving any person of life, 
liberty, or property without due process of law (Fifth 
Amendment); the right to trial by jury for controversies 
exceeding twenty dollars (Seventh Amendment); and the 
prohibition of excessive bails and fines (Eighth 
Amendment).\21\
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    \21\See Bernard H. Siegan, Property and Freedom 20-21 (1997).
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               PUBLIC USE AND KELO V. CITY OF NEW LONDON

    Prior to Kelo, it was generally understood that the public 
use requirement ``embodied the Framers' understanding that 
property is a natural, fundamental right, prohibiting the 
government from `tak[ing] property from A. and giv[ing] it to 
B.''\22\ As Justice Story observed, ``[w]e know of no case, in 
which a legislative act to transfer the property of A. to B. 
without his consent, has ever been held a constitutional 
exercise of legislative power in any state in the union.''\23\ 
Similarly, the distinguished jurist Thomas M. Cooley, in his 
landmark 1868 treatise, asserted, ``[t]he public use implies a 
possession, occupation, and enjoyment of the land by the 
public, or public agencies; and there could be no protection 
whatever to private property, if the right of government to 
seize and appropriate it could exist for any other use.''\24\ 
Moreover, the Supreme Court, in 1872, declared that ``[t]he 
right of eminent domain nowhere justifies taking property for a 
private use.''\25\ Thus, although the public use requirement 
has traditionally allowed property to be taken for unambiguous 
public uses, such as for roads, schools, and courthouses, prior 
to Kelo it had been interpreted to prohibit the use of eminent 
domain for private-to-private transfers of property.
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    \22\Kelo, 545 U.S. at 510-11 (Thomas, J. dissenting) (quoting 
Calder v. Bull, 3 U.S. (3 Dall.) 386, 388 (1798)).
    \23\Wilkinson, 27 U.S. (2 Pet.) at 658.
    \24\Thomas M. Cooley, A Treatise on the Constitutional Limitations 
Which Rest Upon the Legislative Power of the States of the American 
Union 531 (1868).
    \25\Olcott v. The Supervisors, 83 U.S. (15 Wall.) 678, 694 (1872).
---------------------------------------------------------------------------
    Under pre-Kelo Supreme Court precedent, there were 
generally three categories of takings that complied with the 
public use requirement. First, it was clear that a government 
could take land from its owner without his consent and transfer 
it to public ownership for use as a public road, a public 
hospital, or a military base.\26\ Second, Supreme Court 
precedent recognized that a government could take private 
property from an owner without his consent and transfer it to 
private parties, referred to as common carriers, who would then 
make the property available for the general public's use, such 
as with a railroad, a public utility, or a stadium.\27\ Third, 
and more controversially, the Supreme Court had interpreted the 
public use requirement to permit a government to take private 
property even though the property was subsequently put to 
private use in two cases in which the previous use of the 
property was determined to be harmful to the general 
public.\28\
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    \26\See, e.g., Old Dominion Land Co. v. United States, 269 U.S. 55 
(1925); Rindge Co. v. County of Los Angeles, 262 U.S. 700 (1923).
    \27\See, e.g., National Railroad Passenger Corporation v. Boston & 
Maine Corp., 503 U.S. 407 (1992); Mt. Vernon-Woodberry Cotton Duck Co. 
v. Alabama Interstate Power Co., 240 U.S. 30 (1916).
    \28\Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984); 
Berman v. Parker, 348 U.S. 26 (1954).
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    The Supreme Court's decision in Kelo greatly weakened the 
public use requirement by adding a fourth category to this list 
by upholding the use of eminent domain to take an individual's 
private property and give it to another for purely private 
economic development purposes. As the Court described the 
reason for the City's taking of private property in Kelo: ``the 
pharmaceutical company Pfizer Inc. announced that it would 
build a $300 million research facility on a site immediately 
adjacent to Fort Trumbull; local planners hoped that Pfizer 
would draw new business to the area, thereby serving as a 
catalyst to the area's rejuvenation.''\29\ The Supreme Court 
held that the properties taken by the City were ``[not] 
blighted or otherwise in poor condition; rather, they were 
condemned only because they happen to be located in the 
development area.''\30\ In fact, the Court refused to even look 
at the question of whether the area in question was in economic 
distress: ``[the City's] determination that the area was 
sufficiently distressed to justify a program of economic 
rejuvenation is entitled to our deference.''\31\ Thus, because 
the takings were part of ``a `carefully considered' development 
plan,''\32\ they were upheld as constitutional.
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    \29\Kelo, 545 U.S. at 473.
    \30\Id. at 475.
    \31\Id. at 483.
    \32\Id. at 478.
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    In reaching its determination that economic development 
constitutes a public use, the Court essentially read the words 
``public use'' out of the Constitution. The Court determined 
that the words ``public use'' are synonymous with ``public 
purpose'' such that the Court was able to pronounce that 
``[t]he disposition of this case therefore turns on the 
question of whether the City's development plan serves a public 
purpose.''\33\
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    \33\Id. at 480 (emphasis added).
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                    THE DISSENTING OPINIONS IN KELO

    Justice O'Connor, joined by Chief Justice Rehnquist and 
Justices Scalia and Thomas, and Justice Thomas in a separate 
dissent, vehemently criticized the majority opinion. In the 
words of Justice O'Connor, the majority opinion pronounced that 
``[u]nder the banner of economic development, all private 
property is now vulnerable to being taken and transferred to 
another private owner, so long as it might be upgraded--i.e., 
given to an owner who will use it in a way that the legislature 
deems more beneficial to the public.''\34\ According to Justice 
O'Connor, ``the sovereign may take private property currently 
put to ordinary private use, and give it over for new, ordinary 
private use, so long as the new use is predicted to generate 
some secondary benefit for the public--such as increased tax 
revenue, more jobs, maybe even esthetic pleasure.''\35\ 
However, ``[t]he Constitution's text . . . suggests that the 
Takings Clause authorizes the taking of property only if the 
public has a right to employ it, not if the public realizes any 
conceivable benefit from the taking.''\36\
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    \34\Id. at 494 (O'Connor, J., dissenting).
    \35\Id. at 501.
    \36\Id. at 510 (Thomas, J., dissenting).
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    Justice Thomas decried that not only did the Kelo majority 
opinion ignore the original understanding of the public use 
requirement, but its holding that the courts should defer to 
the legislature's judgment as to what constitutes a public use 
was a far cry from the lack of deference given to legislatures 
when other constitutional rights are at issue:

        We would not defer to a legislature's determination of 
        the various circumstances that establish, for example, 
        when a search of a home would be reasonable, or when a 
        convicted double-murderer may be shackled during a 
        sentencing proceeding without on-the-record findings, 
        or when state law creates a property interest protected 
        by the Due Process Clause. . . . The Court has 
        elsewhere recognized ``the overriding respect for the 
        sanctity of the home that has been embedded in our 
        traditions since the origins of the Republic,'' when 
        the issue is only whether the government may search a 
        home. Yet today the Court tells us that we are not to 
        ``second-guess the City's considered judgments,'' when 
        the issue is, instead, whether the government may take 
        the infinitely more intrusive step of tearing down 
        petitioners' homes. Something has gone seriously awry 
        with this Court's interpretation of the Constitution. 
        Though citizens are safe from the government in their 
        homes, the homes themselves are not.\37\
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    \37\Id. at 518 (citations omitted).

    As Justice O'Connor pointed out, ``were the political 
branches the sole arbiters of the public-private distinction, 
the Public Use Clause would amount to little more than 
hortatory fluff.''\38\ Moreover, as is discussed in the next 
section, the dissenting opinions predicted that the effects of 
the allowing takings for private economic development would 
fall most harshly on people of lower economic means, 
minorities, houses of worship, and farmers.
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    \38\Id. at 497 (O'Connor, J., dissenting).
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  EMINENT DOMAIN ABUSE DISPROPORTIONATELY AFFECTS THE MOST VULNERABLE

    The Kelo decision opened the door for virtually any 
property to be taken by eminent domain for economic development 
purposes. As Justices O'Connor and Thomas observed in their 
dissenting opinions, eminent domain abuse falls 
disproportionately on the poor, minorities, and other groups 
that are likely to be politically weak. The beneficiaries of 
the Kelo decision, Justice O'Connor wrote, are ``likely to be 
those citizens with disproportionate influence and power in the 
political process, including large corporations and development 
firms. As for the victims, the government now has license to 
transfer property from those with fewer resources to those with 
more.''\39\
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    \39\Id. at 505.
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    After Kelo, ``[n]othing is to prevent the State from 
replacing any Motel 6 with a Ritz-Carlton, any home with a 
shopping mall, or any farm with a factory.''\40\ In fact, 
according to a study conducted by the Institute for Justice,
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    \40\Id. at 503.

        Eminent domain project areas include a significantly 
        greater percentage of minority residents (58%) compared 
        to their surrounding communities (45%). Median incomes 
        in project areas are significantly less ($18,935.71) 
        than the surrounding communities ($23,113.46), and a 
        significantly greater percentage of those in project 
        areas (25%) live at or below poverty levels compared to 
        surrounding cities (16%) . . . . Taken together, more 
        residents in areas targeted by eminent domain--as 
        compared to those in surrounding communities--are 
        ethnic or racial minorities, have completed 
        significantly less education, live on significantly 
        less income, and significantly more of them live at or 
        below the federal poverty line.\41\
---------------------------------------------------------------------------
    \41\Dick M. Carpenter II & John K. Ross, Victimizing the Vulnerable 
at 6 (2007).

    Other studies show that areas populated by the poor and 
minorities are far more likely to be targeted for condemnation 
than other neighborhoods.\42\ These studies confirm Justice 
Thomas's strong statement in dissent that:
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    \42\See, e.g., Dick Carpenter & John Ross, Empire State Eminent 
Domain: Robin Hood in Reverse (2010) (describing extensive use of 
eminent domain New York, especially against poor and minority 
neighborhoods); Dick Carpenter & John Ross, ``Testing O'Connor and 
Thomas: Does The Use Of Eminent Domain Target Poor And Minority 
Communities?,'' 46 Urban Studies 2447 (2009).

        Allowing the government to take property solely for 
        public purposes is bad enough, but extending the 
        concept of public purpose to encompass any economically 
        beneficial goal guarantees that these losses will fall 
        disproportionately on poor communities. Those 
        communities are not only systematically less likely to 
        put their lands to the highest and best social use, but 
        are also the least politically powerful. If ever there 
        were justification for intrusive judicial review of 
        constitutional provisions that protect ``discrete and 
        insular minorities,'' surely that principle would apply 
        with great force to the powerless groups and 
        individuals the Public Use Clause protects. The 
        deferential standard this Court has adopted for the 
        Public Use Clause is therefore deeply perverse. It 
        encourages those citizens with disproportionate 
        influence and power in the political process, including 
        large corporations and development firms, to victimize 
        the weak.\43\
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    \43\Kelo, 545 U.S. at 521-22 (Thomas, J., dissenting).

    The studies also confirm the concerns raised by the 
National Association for the Advancement of Colored People, the 
American Association for Retired Persons, and other non-profit 
organizations in their amicus brief to the Supreme Court in the 
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Kelo case:

        Elimination of the requirement that any taking be for a 
        true public use will disproportionately harm racial and 
        ethnic minorities, the elderly, and the economically 
        underprivileged. These groups are not just affected 
        more often by the exercise of eminent domain power, but 
        they are affected differently and more profoundly. 
        Expansion of eminent domain to allow the government or 
        its designated delegate to take property simply by 
        asserting that it can put the property to a higher use 
        will systematically sanction transfers from those with 
        less resources to those with more. This will place the 
        burden of economic development on those least able to 
        bear it, exacting economic, psychic, political and 
        social costs. . . . The history of eminent domain is 
        rife with abuse specifically targeting minority 
        neighborhoods. Indeed, the displacement of African-
        Americans and urban renewal projects were so 
        intertwined that ``urban renewal'' was often referred 
        to as ``Negro removal''. . . . Well-cared-for 
        properties owned by minority and elderly residents have 
        repeatedly been taken so that private enterprises could 
        construct superstores, casinos, hotels, and office 
        parks.\44\
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    \44\Brief of Amici Curiae National Association for the Advancement 
of Colored People, AARP, Hispanic Alliance of Atlantic County, Inc., 
Citizens in Action, Cramer Hill Resident Association, Inc., and the 
Southern Christian Leadership Conference in Support of Petitioners, 
2004 WL 2811057 at *3-*9.

    Eminent domain abuse also tends to affect religious groups 
and their houses of worship and farmers and ranchers 
disproportionately. Houses of worship and other religious 
institutions are, by their very nature, non-profit and almost 
universally tax-exempt. These fundamental characteristics of 
religious institutions render their property vulnerable to 
being taken under the rationale approved by the Supreme Court 
in favor of for-profit, tax-generating businesses. As the 
Becket Fund for Religious Liberty wrote in its amicus brief in 
the Kelo case, ``[r]eligious institutions will always be 
targets for eminent domain actions under a scheme that 
disfavors non-profit, tax-exempt property owners and replaces 
them with for-profit, tax-generating businesses. Such a result 
is particularly ironic, because religious institutions are 
generally exempted from taxes precisely because they are deemed 
to be `beneficial and stabilizing influences in community 
life.'''\45\
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    \45\Brief of Amicus Curiae the Becket Fund for Religious Liberty, 
2004 WL 2787141 at *3 (quoting Walz v. Comm'r, 397 U.S. 664, 673 
(1970)).
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    Moreover, many other charitable organizations will face 
similar threats because of their tax-exempt status. Indeed, 
several charitable organizations have faced condemnation 
threats in recent years to satisfy municipal appetite for more 
tax revenue.\46\
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    \46\Brief of Amicus Curiae the Becket Fund for Religious Liberty, 
2004 WL 278714l, at *11 n.22 (citing Sue Britt, ``Moose Lodge Set for 
Court Fight; Group to Fight Home Depot Land Takeover,'' Belleville 
News-Democrat (Missouri), April 1, 2002, at 1B (Moose Lodge faced 
condemnation in order to bring a Home Depot to the city); April 
McClellan-Copeland, Hudson, ``American Legion Closer on Hall; City 
Wants Building to Demolish for Project,'' Plain Dealer (Cleveland), 
March 8, 2003, at B3 (American Legion property faced condemnation to 
make way for small upscale shops, restaurants, and offices); Todd 
Wright, ``Frenchtown Leaders Want Shelter to Move; Roadblock to 
Revitalization?,'' Tallahassee Democrat, July 13, 2003, at Al 
(describing threatened condemnation of homeless shelter to clear the 
way for business development); Joseph P. Smith, ``Vote on Land 
Confiscation,'' Daily Journal (Illinois), October 6, 2004, at 1A 
(detailing threatened condemnation of a Goodwill thrift store in order 
to build a shopping center)).
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    In addition, according to the American Farmland Trust, 
``[w]ith so much farmland on the urban edge and near cities 
still in steep decline, ex-urban towns could be tempted by [the 
Kelo] ruling to make farmland available for subdivisions.''\47\ 
As the American Farm Bureau Federation has pointed out, ``[a]s 
valuable as that land is to our members and to the rest of the 
country, however, it will often be the case that more intense 
development by other private individuals or entities for other 
private purposes would yield greater tax revenue to local 
government.''\48\ Thus, the Kelo decision threatens American 
farmers and ranchers ``with the loss of productive farm and 
ranch land solely to allow someone else to put it to a 
different private use.''\49\ American farmers and ranchers need 
their private property rights protected ``if they are to find 
economically feasible ways to use their land and remain in the 
agriculture business--the business of feeding the American 
populace.''\50\
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    \47\American Farmland Trust Policy Update (July 6, 2005).
    \48\Brief Amici Curiae of the American Farm Bureau Federation et 
al., 2004 WL 2787138, at *2-*4.
    \49\Id.
    \50\Id.
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      POST-KELO STATE-LEVEL EMINENT DOMAIN REFORM IS INSUFFICIENT

    The Kelo decision generated a massive public backlash that 
led most states to enact some sort of eminent domain reform. 
Some have argued that these state-level reforms have greatly 
diminished the problem of eminent domain abuse and, therefore, 
legislation at the federal level, such as the Private Property 
Rights Protection Act, is unnecessary. However, many such 
state-level efforts have been riddled with exceptions to their 
application that greatly limit their effectiveness. 
Furthermore, Congress has an obligation to directly protect 
federal taxpayer dollars to further economic development in 
states and localities that abuse eminent domain. In short, 
despite state-level reforms, ``eminent domain abuse is still a 
problem, and federal money continues to support the use of 
eminent domain for private commercial development.''\51\ 
Accordingly, federal eminent domain legislation, like the 
Private Property Rights Protection Act, is still needed to curb 
abusive economic development takings.
---------------------------------------------------------------------------
    \51\H.R. 1944, the ``Private Property Rights Protection Act'': 
Hearing Before the Subcomm. on the Constitution and Civil Justice of 
the H. Comm. on the Judiciary, 113th Cong. (2013) (statement of Scott 
Bullock, Senior Attorney, Institute for Justice).
---------------------------------------------------------------------------

              CONGRESS'S POWER TO CONDITION FEDERAL FUNDS

    Congress's power to condition the use of federal funds 
extends to prohibiting states and localities from receiving any 
federal economic development funds for a specified period of 
time if such entities abuse their power of eminent domain, even 
if only state and local funds are used in that abuse of power. 
Such a broader prohibition is an appropriate use of Congress's 
spending power, as the Supreme Court has made clear that 
``Congress may attach conditions on the receipt of federal 
funds . . . to further broad policy objectives by conditioning 
receipt of federal moneys upon compliance by the recipient with 
federal statutory and administrative directives.''\52\
---------------------------------------------------------------------------
    \52\South Dakota v. Dole, 483 U.S. 203, 206 (1987) (upholding as 
constitutional legislation in which Congress provided that a state 
would lose 5% of its federal transportation funds unless states 
mandated a drinking age of 21) (internal quotations omitted).
---------------------------------------------------------------------------
    Congress may attach such conditions to the receipt of 
federal funds provided they are related ``to the federal 
interest in particular national projects or programs'' and they 
are ``unambiguous.''\53\ The Act does nothing more than use 
Congress's ``spending power to create incentives for States to 
act in accordance with''\54\ the understanding of ``public 
use'' in the Constitution prior to the Supreme Court's 
notorious decision in Kelo v. City of New London,\55\ which 
allowed the government to take private property from one person 
simply to give it to another person or corporation. The fact 
that the Act's condition on federal spending applies beyond 
economic development projects that are directly funded by 
federal money is simply an acknowledgement that ``[m]oney is 
fungible.''\56\
---------------------------------------------------------------------------
    \53\Id. at 207-208.
    \54\Nat'l Fed'n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2602 
(2012).
    \55\545 U.S. 469 (2005).
    \56\Sabri v. United States, 541 U.S. 600, 606 (2004).
---------------------------------------------------------------------------
    The bill denies states or localities that abuse eminent 
domain all federal economic development funds for a period of 
two years. There is a clear connection between the Federal 
funds that would be denied and the abuse Congress is intending 
to prevent: states or localities that have abused their eminent 
domain power by using ``economic development'' as an improper 
rationale for a taking should not be trusted with federal 
taxpayer funds for other ``economic development'' projects that 
could themselves result in abusive takings of private property.
    Furthermore, to ensure that any conditioning of the use of 
federal funds is unambiguous, the bill includes a 
``notification'' section that requires the Attorney General to 
compile a list of the federal laws under which federal economic 
development funds are distributed and communicate such list to 
each state and make it available on the Internet. This will put 
states and localities on notice that if they choose to receive 
any federal funds under the listed federal laws, they must 
refrain from abusing their power of eminent domain or risk 
losing such funds for a period of two years. Moreover, if a 
locality abuses its eminent domain powers, only the locality, 
and not the whole state, would lose its economic development 
funds.

                                Hearings

    The Committee's Subcommittee on the Constitution and Civil 
Justice held 1 day of hearings on H.R. 1689 on March 30, 2017. 
Testimony was received from Jeffrey Redfern, Attorney, 
Institute for Justice; Tina Barnes, a client of the Institute 
for Justice in Charlestown, Indiana; and William Buzbee, 
Professor of Law at the Georgetown University Law Center, with 
additional material submitted by other interested individual 
and organizations.

                        Committee Consideration

    On April 25, 2018, the Committee met in open session and 
ordered the bill (H.R. 1689) favorably reported without 
amendment, by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 1689.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 1689, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 8, 2018.
Hon. Bob Goodlatte,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate of H.R. 1689, the Private 
Property Rights Protection Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Robert 
Reese and Janani Shankaran, who can be reached at 226-2860.
            Sincerely,
                                                        Keith Hall.
Enclosure.

cc:
        Honorable Jerrold Nadler
        Ranking Member




       H.R. 1689--Private Property Rights Protection Act of 2017


 As ordered reported by the House Committee on the Judiciary on April 
                                25, 2018




    H.R. 1689 would deny federal economic development 
assistance to state or local governments that exercise the 
power of eminent domain for economic development purposes. 
(Eminent domain is the right to take private property for 
public use.) The bill also would prohibit federal agencies from 
engaging in such practices. Private property owners would be 
given the right to bring legal actions seeking enforcement of 
those provisions, and the bill would waive states' 
constitutional immunity to such suits.
    The bill would require the Department of Justice (DOJ) to 
notify states and the public of how the legislation would 
affect individuals' property rights and to report to the 
Congress each year on private rights of action brought against 
state and local governments. Based on the costs of similar 
tasks, CBO estimates that additional reporting by the DOJ would 
cost less than $500,000; such spending would be subject to the 
availability of appropriated funds.
    The federal government provides economic development 
assistance to state and local governments through several 
programs, including the Community Development Block Grant 
Program, the Social Services Block Grant Program, Economic 
Development Administration Grants, Department of Agriculture 
grants and loans, and grants made by several regional 
commissions. CBO estimates that expenditures from those major 
programs totaled about $8.5 billion in 2017 (although, 
depending on how the term is interpreted, some of those 
expenditures may not meet the definition of economic 
development under the bill).
    Many states have amended their constitutions or enacted 
laws to directly or indirectly prohibit the use of eminent 
domain for economic development purposes. While data on eminent 
domain is difficult to obtain at the national level, evidence 
suggests that its use solely for economic development purposes 
is minimal compared to other purposes, such as public 
infrastructure projects (which would be allowed under the bill 
without penalty). CBO expects that most state and local 
governments would not risk the loss of federal economic 
development assistance by exercising the use of eminent domain 
in situations described by the bill. As a result, CBO estimates 
that implementing the bill would have no significant net effect 
on those expenditures--which stem from both discretionary 
sources (such as the Community Development Block Grant Program) 
and mandatory sources (such as the Social Services Block Grant 
Program)--to state and local governments over the next five 
years.
    Enacting H.R. 1689 also could affect direct spending by 
agencies that are not funded through annual appropriations; 
therefore, pay-as-you-go procedures apply. The bill would 
require federal agencies to report to the DOJ on how to bring 
existing regulations and procedures related to eminent domain 
into compliance with the bill. However, CBO estimates that the 
effects would be insignificant. Enacting the bill would not 
affect revenues.
    CBO estimates that enacting H.R. 1689 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2029.
    H.R. 1689 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA), 
but it would impose significant new conditions on the receipt 
of federal economic development assistance by state and local 
governments. (Such conditions for receiving federal assistance 
are not considered mandates under UMRA.) Because the conditions 
would apply to a large pool of funds, the bill effectively 
would restrict the use of eminent domain by state and local 
governments, and would limit the ability of local governments 
to manage land use in their jurisdictions. Further, state and 
local governments could incur significant legal expenses to 
respond to private legal actions authorized by the bill. 
However, CBO cannot predict the magnitude, likelihood, or 
timing of such effects.
    The CBO staff contacts for this estimate are Robert Reese 
and Janani Shankaran (for federal costs) and Andrew Laughlin 
(for mandates). The estimate was reviewed by H. Samuel 
Papenfuss, Deputy Assistant Director for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 1689 establishes or reauthorizes a 
program of the Federal government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee finds that H.R. 1689 contains no directed 
rule making within the meaning of 5 U.S.C. 551.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
1689 is designed to condition the use of federal funds in a way 
that limits eminent domain abuse by State and local 
governments.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 1689 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Section 1. Short title. Section 1 sets forth the short 
title of the bill as the Private Property Rights Protection 
Act.
    Sec. 2. Prohibition on Eminent Domain Abuse by States. The 
Private Property Rights Protection Act protects property owners 
by restricting the ability of state and local governments to 
take private property for economic development purposes if they 
elect to receive federal economic development funds. 
Specifically, section 2(a) of the bill provides that:

        No State or political subdivision of a State shall 
        exercise its power of eminent domain, or allow the 
        exercise of such power by any person or entity to which 
        such power has been delegated, over property to be used 
        for economic development within 7 years after that 
        exercise, if that State received Federal economic 
        development funds during any fiscal year in which the 
        property is so used or intended to be used.

    If a state or political subdivision of a state uses its 
eminent domain power to transfer private property to other 
private parties for economic development, that state or 
political subdivision is ineligible to receive federal economic 
development funds for two fiscal years following a judicial 
determination that law has been violated:

        A violation of subsection (a) by a State or political 
        subdivision shall render such State or political 
        subdivision ineligible for any Federal economic 
        development funds for a period of 2 fiscal years 
        following a final judgment on the merits by a court of 
        competent jurisdiction that such subsection has been 
        violated . . . .

In order to encourage state and local governments to return 
private property that is taken for economic development to the 
former private landowner, section 2(c) terminates the 
ineligibility period if the offending state or local government 
returns all real property the taking of which the courts 
determine violated section 2(a).
    Sec. 3. Prohibition of Eminent Domain Abuse by the Federal 
Government. Section 3 prohibits the federal government from 
exercising its eminent domain power for economic development 
purposes.
    Sec. 4. Private Right of Action. Because previous 
congressional efforts to restrict the ability of federal, 
state, and local governments from using certain federal funds 
for economic development takings proved largely 
ineffective,\57\ this section provides for a private right of 
action and an action by the Attorney General of the United 
States to enforce the bill's provisions. The private right of 
action provides that:
---------------------------------------------------------------------------
    \57\See Section 726 of the Transportation, Treasury, Housing and 
Urban Development, the Judiciary, and independent Agencies 
Appropriations Act of 2006 (Pub. L. No. 109-115) (prohibiting the use 
of funds made available by that Act for projects that seek to use the 
power of eminent domain, unless eminent domain is employed only for a 
public use); Statement of Scott Bullock, supra note 53 (``Congress's 
previous efforts to restrict the use of certain federal funds for 
eminent domain . . . have unfortunately been ineffective.'').

        Any (1) owner of private property whose property is 
        subject to eminent domain who suffers injury as a 
        result of a violation of any provision of this Act with 
        respect to that property, or (2) any tenant of property 
        that is subject to eminent domain who suffers injury as 
        a result of a violation of any provision of this Act 
        with respect to that property, may bring an action to 
        enforce any provision of this Act in the appropriate 
---------------------------------------------------------------------------
        Federal or State court.

    Sec. 5. Reporting of Violations to Attorney General. 
Similarly, the Attorney General enforcement provision in this 
section provides that if the federal government or a state or 
local government fails to cure a violation of the Act within 90 
days of being notified of the violation, the ``Attorney General 
will bring an action to enforce the Act unless the property 
owner or tenant who reported the violation has already brought 
an action to enforce the Act.''
    Sec. 6. Notification by Attorney General. Section 6 
provides measures for notification to States and political 
subdivisions regarding their obligations under the Act, and to 
the public regarding their rights under the Act.
    Sec. 7. Reports. Section 7 provides that the Attorney 
General shall make public reports regarding violations of the 
Act.
    Sec. 8. Sense of Congress Regarding Rural America. Section 
8 provides a Sense of Congress regarding the vulnerability or 
rural lands to eminent domain abuse.
    Sec. 9. Sense of Congress. Section 9 provides a Sense of 
Congress regarding the policy of the United States to promote 
private property ownership and its protection.
    Sec. 10. Religious and Nonprofit Organizations. Section 10 
provides that no State or political subdivision of a State 
shall exercise its power of eminent domain, or allow the 
exercise of such power by any person or entity to which such 
power has been delegated, over property of a religious or other 
nonprofit organization by reason of the nonprofit or tax-exempt 
status of such organization, or any quality related thereto, if 
that State or political subdivision receives Federal economic 
development funds during any fiscal year in which it does so. 
The same prohibition applies to the Federal government.
    Sec. 11. Report by Federal Agencies on Regulations and 
Procedures Relating to Eminent Domain. Section 11 provides that 
not later than 180 days after the date of the enactment of this 
Act, the head of each Executive department and agency shall 
review all rules, regulations, and procedures and report to the 
Attorney General on the activities of that department or agency 
to bring its rules, regulations and procedures into compliance 
with this Act.
    Sec. 12. Sense of Congress. Section 12 provides a Sense of 
Congress regarding Hurricane Katrina, and its principles would 
apply to other natural disasters as well.
    Sec. 13. Disproportionate Impact. Section 13 provides that 
if a court determines that a violation of this Act has 
occurred, and that the violation has a disproportionately high 
impact on the poor or minorities, the Attorney General shall 
use reasonable efforts to locate former owners and tenants and 
inform them of the violation and any remedies they may have.
    Sec. 14. Definitions. Section 14 provides various 
definitions and exceptions for terms used in the Act. As the 
bill is intended to preserve the property rights protections 
jeopardized by the Supreme Court's decision in Kelo, its 
definition of ``economic development'' continues to allow the 
types of takings that have traditionally been considered public 
uses. Traditional public uses include those in which the 
condemned land is actually ``used'' by the public, such as for 
a public road, school, or military base. The bill also includes 
express exceptions for the transfer of property to common 
carriers and public utilities, and for related things like 
pipelines, and makes reasonable exceptions for the taking of 
land that is being used in a way that constitutes an immediate 
threat to public health and safety. Additionally, the bill 
makes exceptions for: the incidental use of a public property 
by a private entity, such as a retail establishment on the 
ground floor in a public property; the acquisition of abandoned 
property; and for clearing defective chains of title in which 
no one can be said to really own the property in the first 
place. However, while the bill does contain reasonable 
definitions and exceptions, it also includes a rule of 
construction that provides that its provisions shall be 
construed in favor of a broad protection of private property 
rights, to the maximum extent permitted by the terms of the 
bill and the Constitution.
    Sec. 15. Limitation on Statutory Construction. Section 15 
provides that nothing in this Act may be construed to 
supersede, limit, or otherwise affect any provision of the 
Uniform Relocation Assistance and Real Property Acquisition 
Policies Act of 1970 (which establishes minimum standards for 
federally funded programs and projects that require the 
acquisition of real property or displace persons from their 
homes, businesses, or farms).
    Sec. 16. Broad Construction. Section 16 provides that this 
Act shall be construed in favor of a broad protection of 
private property rights, to the maximum extent permitted by the 
terms of this Act and the Constitution.
    Sec. 17. Severability and Effective Date. Section 17 
provides that the provisions of this Act are severable, and if 
any provision of this Act, or any application thereof, is found 
unconstitutional, that finding shall not affect any provision 
or application of the Act not so adjudicated. It also provides 
the Act shall take effect upon the first day of the first 
fiscal year that begins after the date of the enactment of this 
Act, but shall not apply to any project for which condemnation 
proceedings have been initiated prior to the date of enactment.

                            Dissenting Views


     Dissenting Views for H.R. 1689. The ``Private Property Rights 
                        Protection Act of 2017''

    While H.R. 1689, the ``Private Property Rights Protection 
Act of 2017,'' has the laudable goal of preventing the abuse of 
the eminent domain power by states and localities to benefit a 
private party at the expense of another private party, it is 
nonetheless a flawed and potentially unconstitutional bill. The 
bill would prohibit states and localities that receive broadly-
defined ``federal economic development funds'' from using the 
power of eminent domain for the purpose of ``economic 
development,'' which it defines as the taking and conveyance of 
private property from one private owner to another for certain 
public purposes. The bill would also authorize property owners 
and tenants injured by a violation of this prohibition to sue 
the state or local government within seven years after the 
conclusion of condemnation proceedings. States and localities 
that fail to comply with this prohibition would lose all 
federal economic development funds for two fiscal years after a 
final ruling in such a lawsuit that the prohibition had been 
violated.
    The loss of economic development funds for two fiscal years 
would devastate state and local budgets. Many states and 
localities depend on federal funding for a significant portion 
of their budgets, much of which could be deemed ``federal 
economic development funds.'' Should the penalty actually be 
imposed on a jurisdiction, the loss in funding could easily 
render that jurisdiction insolvent, with catastrophic results. 
Moreover, by withholding such a broad array of funds, H.R. 
1689's penalty is overly punitive because it would punish an 
entire state or local community for the government's action in 
one eminent domain matter. Even the mere threat that this 
penalty could be imposed would have a devastating effect on 
governments' ability to raise funding by floating bonds.
    Further yet, H.R. 1689 violates federalism principles and 
may be unconstitutional. In particular, the bill imposes 
conditions on federal funding that may have too attenuated a 
relationship to any federal interest in how the funds are 
spent. Also, the threatened penalty is so draconian that it may 
amount to unconstitutional coercion of the states by the 
federal government. Additionally, H.R. 1689 provides no 
adequate remedy for an aggrieved property owner or tenant and 
offers no mechanism to prevent a prohibited taking from 
occurring. Instead, the legislation sets up a system where, if 
the property owner or tenant prevails, the jurisdiction would 
be subject to crushing penalties, while the aggrieved property 
owner would get nothing. Finally, most states have amended 
their laws since 2005 to curtail the use of eminent domain for 
economic development, obviating the need for this legislation.
    For these reasons, and those set out below, we respectfully 
dissent, and urge the House to reject this dangerously flawed 
legislation.

                              DESCRIPTION

    H.R. 1689 would restrict the use of eminent domain by 
states or their political subdivisions. Specifically, it would 
prohibit states and their political subdivisions from 
exercising eminent domain for ``economic development'' if the 
jurisdiction receives federal economic development funds during 
any fiscal year in which the property is used or intended to be 
used for economic development purposes. The bill defines 
``economic development'' as the ``taking of private property 
without the owner's consent and conveying or leasing that 
private property from one private owner to another private 
owner for commercial enterprise carried on for profit, or to 
increase tax revenue, tax base, employment, or general economic 
health.'' Notably, the bill explicitly excludes certain 
private-to-private conveyances from this definition, including 
those used for the building of roads, aqueducts, pipelines, and 
public utilities, or for property taken to remove harmful land 
uses or abandoned property.
    Persons whose property has been taken in violation of the 
Act, or tenants of that property, would have the right to sue 
the jurisdiction for temporary injunctive relief for a period 
of seven years following the completion of the taking. A 
violation of the Act would result in the state or political 
subdivision's ineligibility for any federal economic 
development funds for two fiscal years following a final ruling 
on the merits. The bill defines ``federal economic development 
funds'' to mean ``any Federal funds distributed to or through 
States or political subdivisions of States under Federal laws 
designed to improve or increase the size of the economies of 
States or political subdivisions of States.'' A jurisdiction 
could cure the violation by returning the real property that 
was unlawfully taken, replacing any property that was 
destroyed, and repairing any damage.

                        CONCERNS WITH H.R. 1689

 I. THE PENALTY IMPOSED BY H.R. 1689 COULD FINANCIALLY CRIPPLE STATES 
      AND LOCALITIES, AND WOULD PUNISH ENTIRE COMMUNITIES FOR THE 
                          GOVERNMENT'S ACTIONS

A. The loss of economic development funds for two years would devastate 
        state and local budgets

    The loss of economic development funds for two fiscal years 
would devastate state and local budgets. The legislation 
defines ``federal economic development funds'' very broadly to 
mean any ``Federal funds distributed to or through States or 
political subdivisions of States under Federal laws designed to 
improve or increase the size of the economies of States or 
political subdivisions of States.'' Many states and localities 
depend on federal funding for a significant portion of their 
budgets, much of which could be deemed ``federal economic 
development funds.'' Should the penalty actually be imposed on 
a jurisdiction, the loss in funding could easily render that 
jurisdiction insolvent, with catastrophic results.
    Notably, H.R. 1689 fails to identify which funds qualify as 
``federal economic development funds.'' According to one 
estimate, federal discretionary and mandatory spending in the 
form of grants accounts for approximately 22 percent of 
spending by state and local governments.\1\ While healthcare is 
the single largest category of grants to state and local 
governments by federal outlays, transportation, education/
training/employment, and community and regional development 
grants account for federal grant outlays in the approximate 
amount of $160 billion.\2\ Many of these grant programs would 
likely fall under H.R. 1689's expansive definition of ``federal 
economic development funds.'' Depending on the state or 
locality, the withheld funds could represent a significant 
percentage of budgetary spending. Moreover, these grants also 
often provide critical development capital in economically 
depressed and chronically underserved communities, through such 
programs as Community Block Development grants and United 
States Department of Agriculture (USDA) Rural Development 
programs. Given the broad potential scope of ``federal economic 
development funds,'' the loss of such funds could potentially 
cause states and localities to become insolvent.
---------------------------------------------------------------------------
    \1\Iris J. Lav & Michael Leachman, At Risk: Federal Grants to State 
and Local Governments, Center on Budget and Policy Priorities (Mar. 13, 
2017).
    \2\Robert Jay Dilger, Federal Grants to State and Local 
Governments: A Historical Perspective on Contemporary Issues, 
Congressional Research Service Report. R40638 (May 7, 2018). The 
Congressional Budget Office estimates that the legislation could impact 
$8.5 billion in federal funds in fiscal year 2017. H.R. 1689, the 
Private Property Rights Protection Act of 2017, Cost Estimate, 
Congressional Budget Office, at 1 (June 8, 2018). This illustrates one 
of the fundamental problems with the bill, namely, that its vague 
terminology and therefore applicability are nearly impossible to 
predict.
---------------------------------------------------------------------------
    Moreover, by withholding such a broad array of funds, H.R. 
1689's penalty is overly punitive because it would punish an 
entire state or local community for the government's action in 
one eminent domain matter. Under the legislation, any use of 
eminent domain power for economic development purposes would 
trigger a penalty that withholds all federal economic 
development funds for that state or locality, not just funds 
associated with the prohibited taking. The loss of these funds 
could create dire economic consequences for individuals and 
communities who have no connection whatsoever to the 
government's exercise of eminent domain.
    Private property ownership is an important right, but 
enforcing H.R. 1689's penalty would create an extreme and 
unjust scenario. Not only is the total loss of a state or 
localities federal economic development funds a 
disproportionate response to the harm done to the individuals, 
it punishes innocent individuals and communities for their 
government's actions.

B. The potential loss of all federal economic development funds would 
        have a devastating effect even on jurisdictions that never 
        exercised their eminent domain power

    H.R. 1689's penalty provision could further harm innocent 
individuals and communities by impairing the ability of states 
and municipalities to raise money by issuing bonds. A 
reasonable bond underwriter would never be confident that a 
jurisdiction would not, at some future point during the life of 
the bond, engage in a prohibited taking, or convert a property 
taken by eminent domain to a prohibited use. Because the 
concomitant penalties would necessarily affect the ability of 
the jurisdiction to repay the bond, a prudent underwriter would 
have to take this possibility into account and charge a 
substantial risk premium to protect investors. Moreover, a 
political subdivision would also be at risk that the state or 
county on which it is dependent for funding and services might 
incur the penalties, or that these units of government would 
face increased borrowing costs limiting their ability to aid a 
subdivision. As a result, even where the current administration 
foreswears the use of eminent domain, lenders would still have 
to lend as if the penalties might be imposed by the action of a 
future administration. In this additional way, H.R. 1689's 
penalty provision could harm completely innocent individuals 
and communities.

II. H.R. 1689'S HEAVY-HANDED PENALTY IS POTENTIALLY UNCONSTITUTIONAL AS 
 IT VIOLATES CONSTRAINTS ON CONGRESSIONAL SPENDING POWERS GROUNDED IN 
                         PRESERVING FEDERALISM

    H.R. 1689 likely exceeds the constraints the Constitution 
places on Congress' exercise of its spending clause powers. As 
the Supreme Court explained in National Federation of 
Independent Business v. Sebelius, a decision which, among other 
things, struck down the Medicaid expansion of the Affordable 
Care Act:

        We have upheld Congress's authority to condition the 
        receipt of funds on the States' complying with 
        restrictions on the use of those funds, because that is 
        the means by which Congress ensures that the funds are 
        spent according to its view of the ``General Welfare.'' 
        Conditions that do not here govern the use of the 
        funds, however, cannot be justified on that basis. 
        When, for example, such conditions take the form of 
        threats to terminate other significant independent 
        grants, the conditions are properly viewed as a means 
        of pressuring the States to accept policy changes.\3\
---------------------------------------------------------------------------
    \3\132 S. Ct. 2566, 2603-04 (2012).

    Here, there is no necessary connection between the federal 
economic development funds received and the eminent domain 
actions H.R. 1689 proponents intend to regulate. Any use of 
eminent domain power by the state or its localities can trigger 
the penalty imposed by this bill regardless of whether the 
project that is the beneficiary of the taking received federal 
economic development funds. The government or private entity 
undertaking the project need not have received any funds to 
trigger the bill's penalties. Instead, the jurisdiction that 
exercised the eminent domain power need only have received any 
federal economic development funds for any purpose no matter 
how unrelated to the project itself, even if the jurisdiction 
received only a de minimis amount of such funds. In short, the 
condition on the receipt of federal economic development funds 
is not related to the federal government interests in governing 
the use of such funds. The connection between the receipt of 
the funds and the prohibited use of eminent domain power is 
simply too tenuous, if it exists at all, to satisfy the Court's 
test in Sebelius.
    Furthermore, as the Court noted in Sebelius, conditional 
federal spending can constitute unconstitutional coercion if it 
threatens states with too great of a loss. Here, H.R. 1689's 
threatened loss of all federal economic development funds may 
be so draconian as to be unconstitutionally coercive.
    These constraints on federal spending power serve an 
important function in our constitutional scheme. Under our 
federal system, the states and the federal government are equal 
sovereigns. It is undisputed, however, that the federal 
government's considerable financial resources could be used to 
undermine state sovereignty were it allowed to attach 
oppressive conditions to the receipt of federal funds to coerce 
states into adopting federal views in a potentially broad 
spectrum of public policies. Moreover, the Constitution does 
not permit Congress to attach even reasonable conditions to 
federal funds if they are unrelated to the use of those funds 
because unrelated conditions by definition do not serve the 
federal government's interest in overseeing how the funds are 
spent.
    In fact, the federal interest in regulating a state's use 
of eminent domain powers appears to be minimal. At a hearing on 
this legislation before the Subcommittee on the Constitution 
and Civil Justice, Minority witness Professor William Buzbee of 
Georgetown University Law Center noted that the federal 
government has no special expertise in eminent domain abuse, a 
problem which creates no cross-border harms and which does not 
demand the federal government to set standards to prevent 
``regulatory races to the bottom.''\4\ Moreover, he noted that 
in the wake of the Supreme Court's decision in Kelo v. City of 
New London,\5\ which upheld the constitutionality of a city's 
use of eminent domain to transfer property from one private 
owner to another for the purpose of economic development, more 
than 40 states have enacted provisions to prohibit or restrict 
eminent domain use for such a purpose. He also testified that 
regulation of land use in the eminent domain context is highly 
dependent on local conditions, stating: ``Who knows state and 
local conditions and needs best? Again, not Congress. The 
diversity of circumstances and different political cultures and 
aspirations found in different states and localities would 
normally weigh strongly against uniform federal 
regulation.''\6\
---------------------------------------------------------------------------
    \4\The Private Property Rights Protection Act: Hearing on H.R. 1689 
before the Subcomm. on the Constitution and Civil Justice of the H. 
Comm. on the Judiciary, 115th Cong. 11 (2017) (testimony of Prof. 
William Buzbee).
    \5\545 U.S. 469 (2005).
    \6\The Private Property Rights Protection Act: Hearing on H.R. 1689 
before the Subcomm. on the Constitution and Civil Justice, H. Comm. on 
the Judiciary, 115th Cong. (2017) (written testimony of Prof. William 
Buzbee).
---------------------------------------------------------------------------
    H.R. 1689's condition on the receipt of federal funds is 
both oppressive and unrelated to Congress' interest in 
determining how federal funds should be spent. The fact that 
the condition is attached to enact a ``federal'' policy on the 
appropriate, lawful exercise of a state's eminent domain 
power--a power closely associated with the concept of 
sovereignty--emphasizes its suspect constitutionality.

       III. H.R. 1689 DOES NOT ADEQUATELY PROTECT PROPERTY OWNERS

    While the penalties that H.R. 1689 imposes on states and 
localities are extreme, the protections this bill offers to 
individual property owners are minimal and ineffective. H.R 
1689 does not permit a property owner to stop an offending 
taking before it occurs. Rather, a property owner may commence 
suit under this legislation's private right of action provision 
only after the conclusion of any condemnation proceedings 
concerning the property at issue. Furthermore, the bill does 
not provide for any compensation for the plaintiff beyond what 
is already authorized under applicable law.
    At the Committee's markup of H.R. 1689, Ranking Member 
Jerrold Nadler (D-NY) offered an amendment striking the bill's 
draconian penalty provision and replacing it with one that 
would permit an aggrieved party to seek an injunction to block 
a taking before it occurs. This amendment would have allowed a 
party to prevent the harm, rather than force the party to wait 
until after the damage is done, and inflict a penalty designed 
to wreak financial ruin on the entire community. The Committee, 
however, rejected this amendment.
    In addition to failing to give aggrieved property owners an 
adequate remedy, H.R. 1689 also does nothing to prevent 
``traditional'' abuses of the eminent domain power. Abuse of 
eminent domain powers did not begin with and was never confined 
to economic development projects of the kind prohibited by this 
legislation. In fact, some of the greatest abuses cited by 
critics of the Kelo decision have come about in the context of 
public works, such as highways and other projects which are 
explicitly permitted by this legislation. Robert Caro, in his 
seminal work on urban political power, The Power Broker, 
observed:

          [D]uring the seven years since the end of World War 
        II, there had been evicted from their homes in New York 
        City for public works . . . some 170,000 persons . . . 
        . If the number of persons evicted for public works was 
        eye-opening, so were certain of their characteristics. 
        Their color for example. A remarkably high percentage 
        of them were [African American] or Puerto Rican. 
        Remarkably few of them were white. Although the 1950 
        census found that only 12 percent of the city's 
        population was nonwhite, at least 37 percent of the 
        evictees . . . and probably far more were nonwhite.\7\
---------------------------------------------------------------------------
    \7\Robert Caro, The Power Broker 967-68 (Vintage Books 1974).

    These public projects have often had a disproportionate 
impact on low-income and minority communities. Nevertheless, 
the bill's definition of a prohibited taking for economic 
development purposes explicitly exempts these types of public 
works. Thus, H.R. 1689 fails to curb many of these past abuses.
    Finally, H.R. 1689 also fails to prevent the use of eminent 
domain to seize private property and give it to a private 
developer for economic development purposes. The legislation 
would permit the exercise of eminent domain ``conveying private 
property. . . . to an entity, such as a common carrier, that 
makes the property available to the general public as of right, 
such as a railroad or public facility.''\8\ Arguably, then, a 
state or locality could still convey private land from one 
private party to another private party for the purpose of 
constructing a sports stadium or shopping mall as both are 
facilities open to public use.
---------------------------------------------------------------------------
    \8\H.R. 1689, 115th Cong. Sec. 14(1)(A)(ii) (2017).
---------------------------------------------------------------------------

                               CONCLUSION

    H.R. 1689's heavy-handed approach to preventing eminent 
domain abuse punishes faultless communities for the 
government's wrongdoing, while failing to provide adequate 
protections and remedies for individual property owners. In the 
13 years since the Kelo decision, more than 40 states have 
enacted legislation to curtail the use of eminent domain for 
economic development purposes.\9\ Congress should not belatedly 
substitute its judgment for that of state legislatures by 
enacting this flawed and deeply harmful legislation. For these 
reasons we urge our colleagues to oppose H.R. 1689.
---------------------------------------------------------------------------
    \9\50 State Report Card: Tracking Eminent Domain Reform Legislation 
since Kelo, Castle Coalition (last accessed May, 8 2018) available at 
http://castlecoalition.org/50-state-report-card.

                                   Mr. Nadler.
                                   Ms. Lofgren.
                                   Mr. Johnson, Jr.
                                   Mr. Raskin.
                                   Ms. Jayapal.

                                  [all]