[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.
---------------------------------------------------------------------------
\1\ 545 U.S. 469 (2005).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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).
---------------------------------------------------------------------------
\8\H.R. 4128, 109th Cong.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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,
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\21\See Bernard H. Siegan, Property and Freedom 20-21 (1997).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\29\Kelo, 545 U.S. at 473.
\30\Id. at 475.
\31\Id. at 483.
\32\Id. at 478.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\33\Id. at 480 (emphasis added).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\34\Id. at 494 (O'Connor, J., dissenting).
\35\Id. at 501.
\36\Id. at 510 (Thomas, J., dissenting).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
\38\Id. at 497 (O'Connor, J., dissenting).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\39\Id. at 505.
---------------------------------------------------------------------------
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,
---------------------------------------------------------------------------
\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:
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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\
---------------------------------------------------------------------------
\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)).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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)).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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]