[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
PROTECTING PROPERTY RIGHTS AFTER KELO
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
COMMERCE, TRADE, AND CONSUMER PROTECTION
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
OCTOBER 19, 2005
__________
Serial No. 109-55
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
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------------------------------
COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia BART GORDON, Tennessee
BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING, ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon HILDA L. SOLIS, California
LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
Bud Albright, Staff Director
David Cavicke, Deputy Staff Director and General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Commerce, Trade, and Consumer Protection
CLIFF STEARNS, Florida, Chairman
FRED UPTON, Michigan JAN SCHAKOWSKY, Illinois
NATHAN DEAL, Georgia Ranking Member
BARBARA CUBIN, Wyoming MIKE ROSS, Arkansas
GEORGE RADANOVICH, California EDWARD J. MARKEY, Massachusetts
CHARLES F. BASS, New Hampshire EDOLPHUS TOWNS, New York
JOSEPH R. PITTS, Pennsylvania SHERROD BROWN, Ohio
MARY BONO, California BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska GENE GREEN, Texas
MIKE FERGUSON, New Jersey TED STRICKLAND, Ohio
MIKE ROGERS, Michigan DIANA DeGETTE, Colorado
C.L. ``BUTCH'' OTTER, Idaho JIM DAVIS, Florida
SUE MYRICK, North Carolina CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania TAMMY BALDWIN, Wisconsin
MARSHA BLACKBURN, Tennessee JOHN D. DINGELL, Michigan,
JOE BARTON, Texas, (Ex Officio)
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Anderson, Steven D., Castle Coalition Coordinator, Institute
for Justice................................................ 11
DeLong, James V., Senior Fellow and Director, Progress and
Freedom Foundation......................................... 27
Finkle, Jeffery, President and CEO, International Economic
Development Council........................................ 21
Ramsey, Michael D., Professor of Law, University of San Diego
Law School................................................. 7
Shelton, Hilary O., Director, NAACP, Washington Bureau....... 17
(iii)
PROTECTING PROPERTY RIGHTS AFTER KELO
----------
WEDNESDAY, OCTOBER 19, 2005
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Commerce, Trade,
and Consumer Protection,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:05 p.m., in
room 2123 of the Rayburn House Office Building, Hon. Cliff
Stearns [chairman] presiding.
Members present: Representatives Stearns, Bass, Otter,
Blackburn, Schakowsky, and Green.
Staff present: Brian McCullough, majority professional
staff; David Cavicke, general counsel; Chris Leahy, policy
coordinator; Will Carty, majority professional staff; Andy
Black, deputy policy staff director; Lisa Miller, deputy
communications director; Shannon Jacquot, majority counsel;
Jonathon Cordone, minority counsel; Jonathon Brater, staff
assistant; Chris Treanor, staff assistant; and Billy Harvard,
clerk.
Mr. Stearns. Good afternoon. The subcommittee will come to
order. Let me say first of all, to my colleagues, I welcome
this opportunity, and I think all of us should in Congress, to
learn more about one of the most important Supreme Court
decisions in recent memory. Kelo v. the city of New London is a
decision that has implications for every commercial interest in
the country. Kelo also challenges widely held notions about the
nature of private property and the power of the government to
take that property, albeit with due compensation, in the name
of economic progress. The economic and social implications of
the Supreme Court's current ``economic development'' analysis,
applied in Kelo and somehow derived from the Fifth Amendment's
Takings Clause, I think should concern all consumers in the
private property marketplace.
I must also confess, like many Americans, this decision has
made me think about any commercial property that I have or even
a home. You know, developers' eyes could be looking at it an
saying, you know, I think I could use that for a new golf
course, a coffee shop, or a movie house. I have nothing against
any of those things, in fact, many of us can't live without
them, but the economic relationship to my community and its tax
base takes on new significance in light of Kelo. And this is
not just another not-in-my-backyard knee-jerk reaction. To
many, Kelo represents the ability of a powerful economic
interest to not only take the backyard, but also the house, the
garage, and the whole darn neighborhood if the economics
applies. And this is wrong and it is a great concern to me and
others here in Congress, and that is why today's hearing is an
essential step in trying to unpack Kelo's legal rationale, what
it means for our neighborhoods, our communities, and our
society.
Historically, the condemnation of private property through
the Fifth Amendment power of eminent domain has followed a
continuum. In the 19th Century, the Supreme Court generally
regarded the concept of public use as synonymous with public
purpose. In other words, after a condemnation, the property had
to be government-owned or, in the case of an exclusively
private transfer, had to involve a private party allowing some
sort of public access to the property, similar to the railroads
and public utilities common carrier duties. But as private
property development continued around the country during the
20th Century, the court began to reject the notion that public
use always means public purpose. In fact, a notion of public
use in eminent domain causes--in cases involving private
transfers evolved into an economic benefit analysis regardless
of whether the public actually had physical access. A
collective economic development benefit analysis began to trump
the traditional public purpose and function test.
Over the last 30 years, the eminent domain battle has been
waged over whether an economic development benefit constitutes
a public use. Many contend, including Mrs. Kelo, that
developers, to advance their project in the name of
redevelopment of blighted or economically underperforming
areas, have simply co-opted the so-called economic development
test. The problem is that one man's blight is another man's
bliss. The additional challenge is then how the government is
going to equitably and accurately reflect intangibles, like
what makes a house a home, in an antiseptic economic analysis.
And don't forget that these hard-fought local battles can just,
can just get as political as they do in the great body here in
Congress. Unfortunately, more times than not, the Nation's Mrs.
Kelos, with their modest but blissful slice of the world, lose
out to big money and redevelopment issues. That is a very scary
proposition for the vast majority of Americans who, like Mrs.
Kelo, want to live freely in communities they know and love
without fear of being removed in favor of so-called progress.
That concern is even more urgent for our fellow Americans
living in economically depressed areas.
While Kelo might be just another step down the continuum
that started with the Supreme Court of the 1890's, 1890's, I
hope it is the beginning of the end for the proposition that if
your private--if your private land or property is not being put
to its best economic use, you are vulnerable. No American
should have to relent to a private party under the guise of
government and give up his home or business. I doubt if many of
us would sell our homes if given twice the value. But after
Kelo, the sad truth is that the use of eminent domain to take
private property and give it directly to another private party
is the de facto standard. At this point, it is only the
Congress and the States that can stop the erosion and work to
reestablish the original intent of the Fifth Amendment Takings
Clause to protect Americans from government action, not subject
them to government-sponsored unfair bargaining sweetheart deals
in the name of the greater good.
I would like to thank our distinguished panel of witnesses
for joining us this afternoon, and I look forward to their
testimony.
[The prepared statement of Hon. Cliff Stearns follows:]
Prepared Statement of Hon. Cliff Stearns, Chairman, Subcommittee on
Commerce, Trade, and Consumer Protection
Good afternoon. I welcome this opportunity to learn more about one
of the most important Supreme Court decisions in recent memory. Kelo v.
City of New London is a decision that has implications for every
commercial interest in the country. Kelo also challenges widely held
notions about the nature of private property and the power of the
government to ``take'' that property, albeit with due compensation, in
the name of economic progress. The economic and social implications of
the Supreme Court's current ``economic development'' analysis, applied
in Kelo and somehow derived from the Fifth Amendment's ``takings''
clause, should concern all consumers in the private property
marketplace.
I also must confess, like many Americans, this decision has made me
think about my own little piece of the world that perhaps might, in
developers' eyes, make an enticing site for a new golf course, a coffee
shop, or a movie house. I have nothing against any of those things, in
fact, many of us can't live without them, but their economic
relationship to my community and its tax base takes on new significance
in light of Kelo. And this is not just another ``Not-In-My-BackYard''
knee jerk reaction. To many, Kelo represents the ability of powerful
economic interests to not only take the backyard, but also the house,
the garage, and the whole darn neighborhood if the economics warrant
it. This is wrong and of great concern. And that is why today's hearing
is an essential step in trying to unpack Kelo's legal rationale and
what it means for our neighborhoods, our communities, and our society.
Historically, the condemnation of private property through the
Fifth Amendment power of eminent domain has followed a continuum. In
the 19th century, the Supreme Court generally regarded the concept of
``public use'' as synonymous with ``public purpose.'' In other words,
after a condemnation, the property had to be government-owned or, in
the case of an exclusively private transfer, had to involve a private
party allowing some sort of public access to the property, similar to
the railroads and public utilities common carrier duties. But as
property development continued around the country during the 20th
century, the Court began to reject the notion that ``public use''
always meant ``public purpose.'' In fact, the notion of ``public use''
in eminent domain cases involving private transfers evolved into an
economic benefit analysis regardless of whether the public actually had
physical access. A collective economic development benefit analysis
began to trump actual the traditional public purpose and function test.
Over the last thirty years, the eminent domain battle has been
waged over whether an economic development benefit constitutes a
``public use.'' Many contend, including Mrs. Kelo, that developers to
advance their projects in the name of ``redevelopment'' of blighted or
economically underperforming areas have simply co-opted the so-called
``economic development'' test. The problem is that one man's blight is
another man's bliss. The additional challenge is then how the
government is going to equitably and accurately reflect intangibles,
like what makes a house a home, in an antiseptic economic analysis. And
don't forget that these hard-fought local battles can get just as
political as they do in this great body. Unfortunately, more times than
not, the nation's Mrs. Kelos, with their modest but blissful slice of
the world, lose out to big money and redevelopment plans. That is a
very scary proposition for the vast majority of Americans who, like
Mrs. Kelo, want to live freely in communities they know and love
without fear of being removed in favor of so-called progress. That
concern is even more urgent for our fellow Americans living in
economically depressed areas.
While Kelo might be just another step down the continuum that
started with the Supreme Court of the 1890s, I hope it is the beginning
of the end for the proposition that if your private land or property is
not being put to its best economic use you are vulnerable. No American
should have to relent to a private party under the guise of government
and give up his home or business. I doubt many of use would sell our
homes if given twice the value. But after Kelo, the sad truth is that
the use of eminent domain to take private property and give it directly
to another private party is the de facto standard. At this point, it is
only the Congress and the states that can stop the erosion and work to
reestablish the original intent of the Fifth Amendment takings clause
to protect Americans from governmental action, not subject them to
government-sponsored unfair bargaining and sweetheart deals in the name
of the greater good.
I would like to thank our distinguished panel of witness for
joining us this afternoon. We look forward to your testimony. Thank
you.
Mr. Stearns. And with that, I will give the opening
statement to the ranking member, Ms. Schakowsky.
Ms. Schakowsky. Thank you, Mr. Chairman. I, too, want to
welcome our panel, and I want to extend a special welcome to
Mr. Shelton, whose work and his organization I respect so much.
Thank you for holding this hearing to discuss the Supreme
Court's recent decision in Kelo v. New London, and potential
congressional responses.
The Kelo decision issued June 23, 2005, held that economic
development can be a public use under the Fifth Amendment's
taking clause. Essentially, the court held that a private
developer may take homes and put the property on which they sit
to public use, as long as the development plan would provide
some benefits to the community, such as creating new jobs or
increasing tax revenues. The court decision approving the
government's taking of private property for commercial
development has been met with strong disapproval by the
American public. According to a Wall Street Journal/NBC News
poll, ``in the wake of the court's eminent domain decision,
Americans, overall, cite private property rights as the current
legal issue they care most about.'' And according to an
American Survey poll conducted in July among 800 registered
voters nationwide, ``public support for limited the power of
eminent domain is robust and cuts across demographic and
partisan groups; 60 of self-identified Democrats, 74 percent of
Independents, and 70 percent of Republicans support limits.''
Indeed, in response to this decision, legislators in 35
States, including Illinois, are considering changes to eminent
domain laws to prevent the taking of private land for private
development, because they argue, the Kelo decision went too far
in taking private property; however, local governments,
including my hometown, the city of Evanston, Illinois, stand by
the Kelo decision, citing that Federal law should not constrain
their ability to decide when to use the power of eminent domain
for the benefit of their communities. Few would question that
there is a legitimate role for eminent domain. It is allowed by
the Constitution, provided the condemnation is for a public
use, and it is a vital and necessary tool for local government
that must find for public uses such as roads and schools and
public utilities. Because of the potential harm and good that
will result from the Kelo decision, I believe we need to
thoroughly examine all consequences of the decision, and
whether further congressional action is needed. This is a
serious issue and a timely debate, beyond a simple resolution
of disapproval that we passed, and this debate is necessary.
In the aftermath of Hurricane Katrina and Hurricane Rita,
the Gulf Coast will be the center of a colossal rebuilding
effort, costing an estimated $200 billion. We may see an
increased use of eminent domain and the Takings Clause to
rebuild blighted and flood-devastated areas. What we learned
from Katrina is not just the failure of government to respond
to a natural catastrophe, but the failure to respond to people
living without opportunity and in poverty. It will be a shame
if we fail once again to protect the poor and vulnerable, which
could happen if eminent domain is abused by government
officials as a way to provide favors to selected businesses.
Today, we will hear from the NAACP about how the history of
eminent domain shows that the poor minority neighborhoods are
specifically targeted, and minorities and elderly are
disproportionately displaced when takings occur. I am concerned
about how eminent domain invariably diminishes lower-cost
housing and replaces it with either businesses or higher-cost
housing. This reduces the supply of affordable housing in the
area and drives up prices, making it more and more difficult
for the underprivileged racial and ethnic minorities and the
elderly to live in the neighborhoods they call home.
Additionally, we need to discuss whether compensation in
eminent domain cases is fair, especially if those who are
displaced are unable to find comparable housing they can
afford.
Even Justice John Paul Stevens, who wrote the Kelo decision
for the five justice majority, has said publicly, he has
concerns about the results of Kelo. Justice Stevens recently
told the Clark County, Nevada, Bar Association that if he were
a legislator instead of a judge, he would have opposed the
results of his own ruling by working to change current law.
Justice Sandra Day O'Connor and the other dissenting justices
also raised serious concerns with the case and claimed that,
pursuant to the decision, ``nothing is to prevent the State
from replacing any Motel 6 with a Ritz, any home with a
shopping mall, or any farm with a factory.'' Specifically,
Justice O'Connor states that ``the government now has the
license to transfer property from those with fewer resources to
those with more.'' Considering the broad implications of the
Kelo decision, I really look forward to hearing from the
witnesses today, about how eminent domain can be used to help
or hurt the property rights and well-being of the public,
especially those who may vulnerable to the abuses of eminent
domain. Thank you, Mr. Chairman.
Mr. Stearns. I thank my colleague. The gentleman from
Texas, Mr. Green.
Mr. Green. Thank you, Mr. Chairman. And I have a full
statement I would like to place into the record.
Mr. Stearns. By unanimous consent, so ordered.
[The prepared statement of Hon. Gene Green follows:]
Prepared Statement of Hon. Gene Green, a Representative in Congress
from the State of Texas
Thank you, Chairman Stearns and Ranking Member Schakowsky for
holding this hearing today.
The issue we face today is a complicated one. The use of eminent
domain varies greatly by region, and there are various view points on
this issue on both sides of the aisle.
In Texas, we place a strong value on the right to own property.
The decision in Kelo vs. City of New London has weakened citizens
of their constitutional right to own property.
The premise of eminent domain under the Takings Clause of the Fifth
Amendment is to protect the rights of property owners.
It states, ``Private Property can not be taken for public use
without just compensation.''
Over time, this premise has been tested in the courts and
gradually, the definition of what constitutes public use has been
expanded to include the economic development of areas in need of
revitalization.
I'm afraid the Supreme Court's ruling in Kelo v. New London may
have opened the door for ``public use'' to be interpreted as ``private
gain'' in some cases. This was not the intention of the 5th Amendment.
In the past, local governments have been able to acquire property
from private owners under a more strict definition of ``public use''
such as to build highways, schools, parks, or to eliminate property
that endangers the public.
I believe the spirit of the law is absent when the government
condemns or purchases private property through eminent domain then
sells it to another private owner.
The Kelo decision tips the scales in favor of the right of
government to execute economic development plans than it does in
protecting the rights of property owners.
I strongly support economic development. Enterprise zones have been
effective in revitalizing neighborhoods with input from the citizens
that live there. Local governments often use tax incentives to entice
businesses to locate in their area.
I believe that eminent domain can be used to achieve outstanding
results and boost local economies, but it has to be done responsibly.
When local governments can use eminent domain to take away private
property and turn it over to developers in order to benefit from higher
tax revenues, the spirit of the 5th Amendment is broken.
Clearly, the Consitution calls for ``just compensation'' when
eminent domain is used. We must examine what this means, because often,
a person who has lived in a home or run their own business for all
their lives will say that fair market value is not just compensation at
all.
It is difficult to argue that there is just compensation when your
home is taken away so that a strip mall can be built in its place.
In Texas, the state legislature has already taken action to protect
property owners by enacting a law prohibiting the local government or
private entities from taking property through eminent domain for
private benefit or economic development purposes.
I hope this hearing will give us a place from which we can craft
solid solutions that will protect the rights of property owners and
preserve the ability if local governments to use eminent domain for the
public good.
Thank you Mr. Chairman, I yield back the balance of my time.
Mr. Green. I think that we have heard so far, there is
bipartisan concern on the Kelo case v. the city of New London,
and I think the issue was, we have always had the right for
governments to take property for public use, highways, schools,
parks, things like that, but when you actually take it and then
sell it to a private sector person for the economic
development, that is where I think it crosses the line. We do
have, historically, railroads have the right of eminent domain
as of private property and frankly, I guess, that was from two
centuries ago, now, but I think that is what the concern is
about this. And I am glad that Congress is actually taking--
making an effort to do it. I know, in the State of Texas, our
legislature actually has already changed the law because of the
Supreme Court case, and that is where most eminent domain laws
come from, on the State level, anyway. But I am glad to see
local governments and State governments are responding. And if
we can, on our Federal level, I am glad to be able to do it.
And, Mr. Chairman, again, I ask that my full statement be
placed in the record.
Mr. Stearns. And I thank my colleague. If there are no more
opening statements, we will move to the panel.
We have Professor Michael Ramsey, Professor of Law, the
University of San Diego Law School; we have Mr. Steven
Anderson, Castle Coalition Coordination, the Institute for
Justice; Mr. Hilary O. Shelton is direction of the NAACP in the
Washington Bureau; Mr. Jeff Finkle, President and CEO of
International Economic Development Council; and last we have
Mr. James B. DeLong, Senior Fellow and Director of the
IPCentral Information Progress and Freedom Foundation.
And with that, we welcome all of you. And Professor Ramsey,
we will start with your opening statement. And if you can, just
pull the mike close to you and make sure it is on. And I think
you can get it a little closer to you. There you go, there you
go. Good.
STATEMENTS OF MICHAEL D. RAMSEY, PROFESSOR OF LAW, UNIVERSITY
OF SAN DIEGO LAW SCHOOL; STEVEN D. ANDERSON, CASTLE COALITION
COORDINATOR, INSTITUTE FOR JUSTICE; HILARY O. SHELTON,
DIRECTOR, NAACP, WASHINGTON BUREAU; JEFFERY FINKLE, PRESIDENT
AND CEO, INTERNATIONAL ECONOMIC DEVELOPMENT COUNCIL; AND JAMES
V. DELONG, SENIOR FELLOW AND DIRECTOR, IPCENTRAL.INFO, PROGRESS
AND FREEDOM FOUNDATION
Mr. Ramsey. Thank you very much. I thank you very much for
having me here to express my views on this case. I wanted to
address Kelo from the perspective of constitutional law, and I
have two fairly simply points. The first is that the decision
was wrongly decided. And the second is that Congress has power
to substantially correct it, if it so chooses.
The Fifth Amendment states that private property cannot be
taken for public us without just compensation. The clear
negative implication from that is, that any taking must be for
``public use,'' which has historically been understood to mean
a direct benefit to the public. Normally, as we have heard
already, this is understood to mean either actual use by the
public, that is, property open to the public, use by the
government on behalf of the public, or use by a common carrier,
such as a railroad, with a legal obligation to serve the
public. Kelo, in contrast, allowed taking of private homes to
make way for a private economic development, much of which, at
least, would not be open to the public at all. The benefit to
the public was wholly indirect. Different private use of the
property, it was said, would lead to higher taxes and more jobs
and thus a benefit to the community indirectly.
The court reached its result by rewriting the
Constitution's language. The court--and it did not make any
bones about what it was doing. It rejected ``use by the public
as the proper definition of public use.'' Instead, it found,
``the diverse and always evolving needs of society'' require it
to ``embrace the broader and more natural interpretation of
public use'' as ``public purpose,'' then applied the public
purpose requirement to give substantial, indeed, I would say,
essentially complete deference to the city to determine what
would constitute a public purpose. If any conceivable benefit
to the public could be imagined, the court said, then the city
could go forward with the condemnation. As a result, as Justice
O'Connor said in dissent, ``the specter of condemnation hangs
over all property.'' Or, if I could put it in my own words, if
you do not use your property to the satisfaction of the
government, then the government can take it away and give it to
someone else who will use it as they think would be better.
Now, I find the court's decision to be deeply corrosive of
constitutional rights, because, if the court believes that a
right stated in the Constitution's text can be eliminated,
rewritten, as in effect they did in Kelo, to serve the
``diverse and always evolving needs of society,'' meaning the
needs of the government, then we effectively have no
constitutional rights, beyond what five members of the court
think is appropriate to place on government at any particular
time. That is contrary to the way we understand the written
Constitution to operate; to be written limitations upon the
power of government to act against the people.
So finally, let me turn to what Congress is empowered to do
about this, if it so chooses. Congress cannot directly overrule
the Supreme Court, as the Supreme Court held in the Boerne v.
Flores case, with respect to the Religious Freedom Restoration
Act some years ago. However, Congress can use its spending
power to limit the use of Federal money in projects that rely
on private takings, or perhaps under current law, to limit the
use of Federal money by any State and local entity that uses
private takings in that project or elsewhere. This is on the
authority of the case of South Dakota v. Dole from the 1980's.
Further, Congress can use its commerce power to prohibit
private takings in projects that operate in interstate
commerce. Under current law, the definition of Congress'
interstate commerce power is quite broad, particularly, as held
in the most recent case of Raich v. Gonzales just this term.
And many, if not most, projects that could use private takings,
in the way Kelo imagined, could, I think, also be limited by
Congress' interstate commerce power.
In conclusion, the combination of spending power and
interstate commerce power will likely give Congress the ability
to constitutionally correct the court's error and restore the
property rights guaranteed by the Constitution. Thank you.
[The prepared statement of Michael D. Ramsey follows:]
Prepared Statement of Michael D. Ramsey, Professor of Law, University
of San Diego Law School
I thank the Committee for the opportunity to express my views of
the protection of private property rights after the Supreme Court's
decision in Kelo v. City of New London. My views are, in sum, as
follows.
(1) The plain text of the Constitution, and its undisputed
historical understanding, is that the government's power to take
private property by eminent domain is limited by the Fifth Amendment to
situations in which the property will be put to ``public use.'' This
means situations in which the property will be used by the government
itself to fulfill one of the traditional public functions of
government, such as providing a park or a highway, or situations in
which the property is operated by a ``common carrier,'' such as a
railroad, with an obligation to serve the public.
(2) In Kelo v. City of New London, the U.S. Supreme Court greatly
reduced this protection for private property. It ruled that the City
could seize and demolish private homes to make way for private office
buildings and other private development that the City believed would
increase its tax revenues and create new jobs, even though the land
would be privately owed and not open to the public.
(3) The Court did not pretend to base its conclusion upon the text
and historical understanding of the Constitution. Instead, it said that
the evolving modern needs of society required that it substitute the
phrase ``public purpose'' for the Constitution's phrase ``public
use''--so that the government could seize private land any time that
seizure would facilitate ``economic development.'' As Justice O'Connor
pointed out in dissent, this effectively removes all constitutional
limits on the eminent domain power.
(4) The Kelo decision is an attack, not only upon private property
rights, but upon the whole idea of constitutional rights. If a right
written into the text of the Constitution can be altered by five
members of the Supreme Court simply because they believe that the
evolving modern needs of government require it to give way, then we
have no fixed rights, but only those rights the Court is willing to
accept at any given time.
(5) Congress can remedy the Court's error in several ways. It
cannot directly overrule the Court. However, it can, for example, use
its spending power to insist that no federal money be spent in any
project that takes private property for private use. It can use its
commerce power to prohibit the operation in interstate commerce of any
project that take private property for private use. Using these powers,
it can largely restore the rights denied in Kelo.
I. THE CONSTITUTION'S PROTECTION FOR PRIVATE PROPERTY
The plain text of the Constitution, and its undisputed historical
understanding, is that the government's power to take private property
by eminent domain is limited to situations in which the property will
be put to ``public use.'' The Fifth Amendment, made applicable to
states and local governments by the Fourteenth Amendment, provides:
``[N]or shall private property be taken for public use, without just
compensation.'' The most obvious meaning of this provision is that if
the government wants to take private property for ``public use,'' it
must pay ``just compensation''--thus assuring that the public a whole,
not just the property owner, bears the cost.
Although the text does not say so in exactly these words, the clear
and undisputed indication is that private property may not be taken,
other than for ``public use,'' under any circumstances. Otherwise, the
clause would be incoherent: it would mean that the government could
take private property for private use without paying any compensation
at all. No court or commentator reads the clause in that way. Rather,
everyone agrees that the Fifth Amendment, as historically understood,
imposes two restrictions on the eminent domain power: the property must
be taken ``for public use'' and the government must pay ``just
compensation.''
The question here, then, is the meaning of ``public use.'' As a
historical matter, that phrase meant exactly what it appears to mean.
Most obviously, it refers to situations in which the property will be
used by the government itself to fulfill one of the traditional public
functions of government, such as providing a park or a highway.
Additionally, it may refer to situations in which the property will be
operated by a ``common carrier,'' such as a railroad, with an
obligation to serve the public. It emphatically did not include
situations in which the government transferred property from one
private owner to another. Under no possible meaning of the phrase could
that be considered taking land ``for public use.''
II. THE DECISION IN KELO V. CITY OF NEW LONDON
In Kelo v. City of New London, 125 S.Ct. 2655 (2005), the U.S.
Supreme Court greatly reduced the Fifth Amendment's protection for
private property. It ruled that the City could take private homes to
make way for private office buildings and other private development
that the City believed would increase its tax revenues and create new
jobs, even though, after the taking, the land would be privately owed
and not open to the public. As the Court explained: ``The City has
carefully formulated an economic development plan that it believes will
provide appreciable benefits to the community, including--but by no
means limited to--new jobs and increased tax revenue.'' (at p. 2665).
In particular, the Court concluded, the plaintiffs' private homes could
be seized and demolished, and replaced by private ``research and office
space'' that would ``complement'' an adjacent facility planned by
Pfizer, Inc., the multinational pharmaceuticals company. (at. p. 2659;
dissent at p. 2671-72).
The Court specifically held that ``promoting economic development''
qualifies as a ``public use'' of property under the Fifth Amendment. As
it concluded, ``[p]romoting economic development is a traditional and
long accepted function of government,'' and ``the City's interest in
the economic benefits to be derived from the development'' on the land
taken from the plaintiffs--by which the Court principally meant
increased tax revenue from the expected new commercial use--had enough
of a ``public character'' to satisfy the Amendment. (p. 2665).
The Court added that it would not second-guess the City's
determination that the re-development would, in fact, boost economic
development and hence tax revenues. As Justice Kennedy acknowledged in
concurrence, the Court would uphold a taking ``as long as it is
rationally related to a conceivable public purpose'' (p. 2669). Under
this very low standard, it is hard to imagine any seizure of private
property being unconstitutional under the ``public use'' requirement.
As Justice O'Connor stated in dissent,
Under 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 . . .
[The Court] holds that 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 aesthetic
pleasure. But nearly any lawful use of real private property
can be said to generate some incidental benefits to the public.
Thus, if predicted (or even guaranteed) positive side effects
are enough to render transfer from one private party to another
constitutional, then the words ``for public use'' do not
realistically exclude any takings, and thus do not exert any
constraint on the eminent domain power. (pp. 2671, 2675)
III. THE BASIS OF THE COURT'S DECISION
The Kelo Court did not pretend to base its conclusion upon the
words and historical understanding of the Constitution. Instead, it
effectively admitted that it was re-writing the key phrase in the Fifth
Amendment to produce what it thought was a better outcome. According to
the Court, modern needs required it to substitute the phrase ``public
purpose'' for the Constitution's phrase ``public use.'' This would
allow the government to seize private land and transfer it to other
private parties any time that such transfer would facilitate ``economic
development,'' even though neither the government nor the public would
end up owning or using the land.
Indeed, in a move of Orwellian proportions, the Court specifically
rejected `` `use by the public' as the proper definition of public
use.'' (p. 2663). Instead, it declared that ``the diverse and always
evolving needs of society'' required it to ``embrace[] the broader and
more natural interpretation of public use as `public purpose.' '' (at
p. 2663).
Only this re-definition allowed the Court to reach its conclusion
that ``economic development'' in the sense of (supposedly) higher tax
revenues satisfied the Fifth Amendment. It is at least plausible to
say, as the Court did, that the New London development plan has a
``public purpose,'' but no possible stretch of language would allow one
to say that the City's plan allowed ``public use'' of the property.
The Court purported to be following prior precedent in reaching
these conclusions. It is true that at least two prior decisions had
allowed a transfer of property from one private owner to another,
without any guarantee of public use. Hawaii Housing Authority v.
Midkiff, 467 U.S. 229 (1984); Berman v. Parker, 348 U.S. 26 (1954).
These decision were themselves in some tension with the plain language
of the Constitution, and illustrate the danger of bending
constitutional rules even for the best of purposes. But as Justice
O'Connor pointed out in her Kelo dissent (p. 2674-75), Midkiff and
Berman only created a limited exception to the general rule of ``public
use.'' In both cases, prior to the taking the property had been used in
a way that was harmful to the public interest. Kelo abandoned any such
limitation. No one argued that there was anything injurious about the
plaintiffs' use of their property in Kelo (these are ``well-maintained
homes'') (p. 2675). Instead, Kelo allows seizure whenever the
government thinks some better use (not a non-injurious use) could be
made of the property. As Justice O'Connor concluded, this effectively
eliminates any constitutional limit on the eminent domain power.
IV. THE EFFECT ON CONSTITUTIONAL LAW
The Kelo decision is an attack, not only upon private property
rights, but upon the whole idea of constitutional rights. If a right
written into the text of the Constitution can be eliminated by five
members of the Supreme Court simply because they believe that ``the
diverse and always evolving needs of society'' require it to give way,
then we have no fixed rights, nor, for that matter, any fixed structure
of government. Everything depends upon what the Court thinks most
useful at any particular moment.
Such an approach is contrary to the basic function of a written
Constitution. The reason a phrase such as ``public use'' is written
into the Constitution is so that it--and not some other standard, such
as ``public purpose''--is the measure of our rights. This approach is
also contrary to the basic function of a constitutional court. As
Alexander Hamilton argued in Federalist 78, ``A constitution is, in
fact, and must be regarded by the judges as, a fundamental law''; thus
he referred to ``that inflexible and uniform adherence to the rights of
the Constitution, and of individuals, which we perceive to be
indispensable in the courts of justice.'' Just as courts exceed their
authority by inventing new limits on government that do not exist in
the written Constitution, they shirk their duty when they fail to
enforce rights that do exist in the written Constitution.
V. HOW CONGRESS MAY RESTORE PRIVATE PROPERTY RIGHTS
Congress can remedy the Court's attack upon property rights in
several ways. It cannot directly overrule the Court on a matter of
constitutional law. In parallel circumstances, the Supreme Court held
that Congress lacked power to overturn a constitutional holding by
statute, even though Congress sincerely believed that the Court had
failed to enforce individual rights guaranteed by the plain text of the
Constitution. Boerne v. Flores, 521 U.S. 507 (1997) (invalidating part
of the Religious Freedom Restoration Act, which sought to correct the
Court's perceived misinterpretation of the First Amendment's Free
Exercise Clause).
However, Congress has a number of constitutional options available.
First, it can declare that, with respect to the exercise of eminent
domain power by the U.S. government, the constitutional rule of
``public use'' remains in force. There is precedent for this approach:
the Religious Freedom Restoration Act directed that federal laws would
remain subject to the constitutional rule of the Free Exercise Clause,
as Congress understood it, despite the Court's contrary holding. No one
doubts that this part of the Act is constitutional, and remains in
effect: Congress can always limit the scope of federal action.
Congress also has several options for limiting the scope of state
and local government exercise of eminent domain power. Under current
law, Congress may use its spending power to insist that no federal
money be spent in any state or local project that takes private
property for private use. South Dakota v. Dole, 438 U.S. 203 (1987). If
the limitation is strictly linked to state and local projects that
themselves use federal money, the limitation would not be at all
constitutionally problematic; even the dissenting opinion in South
Dakota would uphold such a provision. A more aggressive approach would
ban any state or local entity that takes private property for private
use from receiving any federal money for any redevelopment project (or,
even more controversially, from receiving any federal money for any
purpose). The less direct the link between the federal money and the
state or local taking, the more constitutionally-suspect the law would
become.
Finally, under current law, Congress can use its commerce power to
prohibit any project that takes private property for private use, if
the project operates in or substantially affects interstate commerce.
Because current law defines Congress' interstate commerce power quite
broadly, Gonzales v. Raich, 125 S.Ct. 2195 (2005), this would likely
reach most ``economic development'' projects such as the one proposed
in New London. Even under the dissent's view in Raich, a key element
was that the activity in that case was non-economic, and thus (said the
dissent) beyond Congress' power. Here, the economic elements would be
much greater, and thus the argument for Congress' power would be
correspondingly stronger. It is worth noting, though, that this broad
reading of Congress' interstate commerce power (that is, that it
reaches all economic activity) remains controversial in some circles,
and it is possible that some (though probably not many) redevelopment
project could be considered so localized as to be beyond Congress'
power.
Mr. Stearns. I thank the gentleman. Mr. Anderson.
STATEMENT OF STEVEN D. ANDERSON
Mr. Anderson. Thank you, Chairman Stearns and Ranking
Member Schakowsky for the opportunity to testify today about
Kelo v. New London. The subcommittee is to be commended for
examining this issue and this misuse of government power. I
work for the Institute for Justice, the nonprofit law firm that
represented the plaintiffs in the New London case. It is a law
firm that is dedicated to defending the individual rights of
individuals and protecting the basic notions of a free society.
I personally work with homeowners and small business owners
around the country to fight eminent domain for private
development. In the wake of the Kelo case, we have launched our
Hands Off My Home campaign, which is a initiative, an
aggressive initiative, to effect real change at the Federal,
State, and local level, and it is that desire to do that that
brings me here today.
In Kelo, a narrow majority of the Supreme Court decided
that under the United States Constitution, property could
indeed be taken for another use that would potentially generate
more jobs and taxes, as long as the project was pursuant to a
development plan. The Kelo case was, unfortunately, the final
signal that the United States Constitution, at least according
the Supreme Court, provides no protection for private property
rights for any American. Indeed, the court ruled that it is
okay to use the power of eminent domain when there is a mere
possibility that something else could make more money than the
homes or small businesses that currently occupy the land. It is
no wonder, then, as the ranking member mentioned, that Justice
O'Connor remarked in her dissent that the specter of
condemnation hangs over all property.
Because of this threat, there has been a considerable
public outcry against this closely divided decision.
Overwhelming majorities in every poll I have seen have
overwhelming said the Kelo decision was wrong. Several bills
have been introduced in the House and Senate, which shows that
there is bipartisan support against the abuse of eminent
domain. Eminent domain in the early days of this Republic was
called the despotic power, because it is the power to force
citizens from their homes and small businesses. Because the
founders were acutely aware of this power, the Fifth Amendment
provides a simple restriction: nor shall private property be
taken for public use without just compensation.
As the chairman mentioned, historically, with very few
exceptions, the power of eminent domain was used for things
that the public actually used, schools, courthouses, roads, and
post offices. Over the last 50 years, particularly after Berman
v. Parker in a 1954 Supreme Court decision, the meaning of
public use has expanded to include ordinary private uses, like
condominiums and big-box stores. After Berman v. Parker, the
Supreme Court effectively opened a Pandora's Box and now
properties are routinely taken pursuant to redevelopment
statutes when there is absolutely nothing wrong with them,
except that some well-heeled developer covets them and the
government hopes to increase its tax revenue.
We did a study from 1998 to 2002 that showed there were
more than 10,000 actual or threatened condemnations around this
country for private use. This number was reached in counting
properties that were mentioned in the local news report, and
because of this, it is a gross underestimation. In Connecticut,
for instance, we only found 31 examples, but Connecticut also
keeps track of its economic development condemnations and they
found 543.
Now that the Supreme Court has actually sanctioned the
abuse of eminent domain in Kelo, the floodgates to abuse have
further been thrown open. Home and business owners have every
reason to be very, very worried. Despite the fact that so many
abuses were already occurring, since the decision, local
governments have become further emboldened to take property for
private development. For instance, in Freeport, Texas, just
hours after the Kelo case came down, officials in Freeport
began legal filings to take away two waterfront businesses to
hand over to another. In Sunset Hills, Missouri, a couple of
weeks after the Kelo ruling, Sunset Hills officials voted to
allow the combination of 85 homes and small businesses for a
shopping center. In Oakland, California, John Revelli's tire
shop that he has owned since 1949 was taken. What Revelli said
to the paper was, we thought we would win, but the Supreme
Court took away my last chance.
Courts are already using the decision to reject challenges
by owners to the taking of their property for other private
parties. On July 6, 2005, a court in St. Louis, Missouri relied
on Kelo in reluctantly upholding the taking of a home for a
shopping mall. The judge commented, the United States Supreme
Court has denied the Alamo reinforcements. Perhaps the people
will clip the wings of eminent domain in Missouri, but today in
Missouri it soars and devours.
Of course, Federal agencies take property for public uses,
like military installations, Federal parks, Federal buildings.
These are all legitimate uses of the Fifth Amendment of the
Constitution. While agencies themselves generally do not take
property and transfer the private properties, they certainly do
fund them. Thus, Federal money does currently support the abuse
of eminent domain for private commercial development. A few
examples include New London, Connecticut. Two million dollars
in funds from the Economic Development Authority were used for
that project. In St. Louis, Missouri, 200 units of housing,
including some owned by a local ministry, were taken pursuant
to Housing and Urban Development block grants. St. Luke's
Pentecostal Church was taken from the congregation, who is now
relegated to the basement that they owned before, based on HUD
funds. HUD was involved in the Toledo, Ohio expansion of a
Daimler-Chrysler Jeep manufacturing plant. Ardmore,
Pennsylvania, there is a transit, part of a project in Ardmore,
Pennsylvania, but it also involves a retail and residential
development.
The Kelo decision cries out for congressional action. Even
Justice Stevens, as a ranking member, suggested--stated in a
recent speech that he believes eminent domain for economic
development is bad policy. Congress and this subcommittee are
to be commended for their efforts to provide protections that
the court itself has denied.
As the professor mentioned, Congress has the power to deny
Federal funding to projects that use eminent domain for private
commercial development, and to deny Federal economic funding to
government entities that abuse eminent domain in this way.
Congress may restrict Federal funding under the case of South
Dakota v. Dole. One of the most important requirements, though,
is that there be a relationship between the Federal interests
and the funded program, and that Congress be clear about the
conditions under which Federal funds will be restricted. The
purpose of Federal funds is to aid States in their various
development projects. If Congress chooses to only fund projects
or agencies that conduct development without using eminent
domain to transfer property to private developers, it may
certainly do so. Development is not the problem. It occurs
every day across the country without eminent domain and will
continue to do so. A very recent example is in Scottsdale,
Arizona, where they continue to lift free development area
designations, and as a result of that, a billion dollars in
development funds have poured into that city.
Mr. Stearns. Can I have you sum up pretty soon?
Mr. Anderson. Sure. Eminent domain sounds like an abstract
issue, but it affects real people. Real people lose the homes
they love and watch as they are replaced with condominiums.
Real people lose the businesses they count on to put food on
the table and watch as they are replaced with shopping malls.
And all this happens because localities find condominiums and
malls preferable to modest homes and small businesses. Federal
law currently allows the expending of Federal funds to support
condemnations for the development of private developers. By
doing so, it encourages this abuse nationwide. Using eminent
domain so that another richer, better connected person may live
on the land you used to own, tells Americans that their hopes,
dreams and hard work do not matter as much as money and
political influence. The use of eminent domain for private
development has no place in a country built on traditions of
independence, hard work, and the protection of property rights.
Again, I thank this--opportunity to testify.
[The prepared statement of Steven D. Anderson follows:]
Prepared Statement of Steven D. Anderson, Castle Coalition Coordinator,
Institute for Justice
Thank you for the opportunity to testify regarding eminent domain
abuse, an issue that's finally getting significant national attention
as a result of the U.S. Supreme Court's dreadful decision in Kelo v.
City of New London. This subcommittee is to be commended for responding
to the American people by examining this misuse of government power.
My name is Steven Anderson and I am the Coordinator of the Castle
Coalition, a project of the Institute for Justice. The Castle Coalition
is a nationwide network of grassroots activists committed to ending
eminent domain abuse through outreach and activism. The Institute for
Justice is a non-profit public interest law firm dedicated to defending
the fundamental rights of individuals and protecting the basic notions
of a free society. One of the Institute for Justice's core issues is
private property rights and we are the nation's leading critic of and
legal advocate against the abuse of eminent domain laws. To this end,
we represented the homeowners in the Kelo case and publish Public
Power, Private Gain, a report about the use of eminent domain for
private development throughout the United States, which is available
online at www.castlecoalition.org/report.
I personally work with home and business owners throughout the
country to combat eminent domain for private development. In the wake
of the Kelo decision, we launched our Hands Off My Home campaign, an
aggressive and focused initiative to effect real change at the federal,
state and local level. It is that desire that brings me here today.
In Kelo, a narrow majority of the Court decided that, under the
U.S. Constitution, property could indeed be taken for another use that
would potentially generate more taxes and more jobs, as long as the
project was pursuant to a development plan. The Kelo case was the final
signal that the U.S. Constitution, according to the Court, simply
provides no protection for the private property rights of Americans.
Indeed, the Court ruled that it's okay to use the power of eminent
domain when there's the mere possibility that something else could make
more money than the homes or small businesses that currently occupy the
land. It's no wonder, then, that the decision caused Justice O'Connor
to remark in her dissent: ``The specter of condemnation hangs over all
property. Nothing is to prevent the State from replacing any Motel 6
with a Ritz-Carlton, any home with a shopping center, or any farm with
a factory.''
Because of this threat, there has been a considerable public outcry
against this closely divided decision. Overwhelming majorities in every
major poll taken after the Kelo decision have condemned the result.
Several bills have been introduced in both the House and Senate to
combat the abuse of eminent domain, with significant bipartisan
support.
THE USE OF EMINENT DOMAIN FOR PRIVATE DEVELOPMENT HAS BECOME A
NATIONWIDE PROBLEM, AND THE COURT'S DECISION IS ALREADY ENCOURAGING
FURTHER ABUSE
Eminent domain, called the ``despotic power'' in the early days of
this country, is the power to force citizens from their homes and small
businesses. Because the Founders were conscious of the possibility of
abuse, the Fifth Amendment provides a very simple restriction: ``[N]or
shall private property be taken for public use, without just
compensation.''
Historically, with very few limited exceptions, the power of
eminent domain was used for things the public actually owned and used--
schools, courthouses, post offices and the like. Over the past 50
years, however, the meaning of public use has expanded to include
ordinary private uses like condominiums and big-box stores. The
expansion of the public use doctrine began with the urban renewal
movement of the 1950s. In order to remove so-called ``slum''
neighborhoods, cities were authorized to use the power of eminent
domain. This ``solution,'' which critics and proponents alike consider
a dismal failure, was given ultimate approval by the Supreme Court in
Berman v. Parker. The Court ruled that the removal of blight was a
public ``purpose,'' despite the fact that the word ``purpose'' appears
nowhere in the text of the Constitution and government already
possessed the power to remove blighted properties through public
nuisance law. By effectively changing the wording of the Fifth
Amendment, the Court opened a Pandora's box, and now properties are
routinely taken pursuant to redevelopment statutes when there's
absolutely nothing wrong with them, except that some well-heeled
developer covets them and the government hopes to increase its tax
revenue.
The use of eminent domain for private development is widespread. We
documented more than 10,000 properties either seized or threatened with
condemnation for private development in the five-year period between
1998 and 2002. Because this number was reached by counting properties
listed in news articles and cases, it grossly underestimates the number
of condemnations and threatened condemnations. Indeed, in Connecticut,
the only state that actually keeps separate track of redevelopment
condemnations, we found 31, while the true number of condemnations was
543. Now that the Supreme Court has actually sanctioned this abuse in
Kelo, the floodgates to further abuse have been thrown open. Home and
business owners have every reason to be very, very worried.
Despite the fact that so many abuses were already occurring, since
the Kelo decision, local governments have become further emboldened to
take property for private development. For example:
Freeport, Texas Hours after the Kelo decision, officials in Freeport
began legal filings to seize some waterfront businesses (two
seafood companies) to make way for others (an $8 million
private boat marina).
Sunset Hills, Mo. On July 12, less than three weeks after the Kelo
ruling, Sunset Hills officials voted to allow the condemnation
of 85 homes and small businesses for a shopping center and
office complex.
Oakland, Calif. A week after the Supreme Court's ruling, Oakland city
officials used eminent domain to evict John Revelli from the
downtown tire shop his family has owned since 1949. Revelli and
a neighboring business owner had refused to sell their property
to make way for a new housing development. Said Revelli of his
fight with the City, ``We thought we'd win, but the Supreme
Court took away my last chance.''
Ridgefield, Conn. The city of Ridgefield is proceeding with a plan to
take 154 acres of vacant land through eminent domain. The
property owner plans to build apartments on the land, but the
city has decided it prefers corporate office space. The case is
currently before a federal court, where the property owner has
asked for an injunction to halt the eminent domain proceedings.
Ridgefield officials directly cite the Kelo decision in support of
their actions.
Courts are already using the decision to reject challenges by
owners to the taking of their property for other private parties. On
July 26, 2005, a court in Missouri relied on Kelo in reluctantly
upholding the taking of a home for a shopping mall. As the judge
commented, ``The United States Supreme Court has denied
the Alamo reinforcements. Perhaps the people will clip the wings of
eminent domain in Missouri, but today in Missouri it soars and
devours.'' On August 19, 2005, a court in Florida, without similar
reluctance, relied on Kelo in upholding the condemnation of several
boardwalk businesses for a newer, more expensive boardwalk development.
FEDERAL FUNDS CURRENTLY SUPPORT EMINENT DOMAIN FOR PRIVATE USE
Of course, federal agencies take property for public uses, like
military installations, federal parks, and federal buildings, which is
legitimate under the requirements of the Fifth Amendment. While these
agencies themselves generally do not take property and transfer it to
private parties, in the states many projects using eminent domain for
economic development receive some federal funding. Thus, federal money
does currently support the use of eminent domain for private commercial
development. A few recent examples include:
New London, Conn. This was the case that was the subject of the
Supreme Court's Kelo decision. Fifteen homes are being taken
for a private development project that is planned to include a
hotel, upscale condominiums, and office space. The project received
$2 million in funds from the federal Economic Development Authority.
St. Louis, Mo. In 2003 and 2004, the Garden District Commission and
the McRee Town Redevelopment Corp. demolished six square blocks
of buildings, including approximately 200 units of housing,
some run by local non-profits. The older housing will be
replaced by luxury housing. The project received at least $3
million in Housing and Urban Development (HUD) funds, and may
have received another $3 million in block grant funds as well.
New Cassel, New York. St. Luke's Pentecostal Church had been saving
for more than a decade to purchase property and move out of the
rented basement where it held services. It bought a piece of
property to build a permanent home for the congregation. The
property was condemned by the North Hempstead Community
Development Agency, which administers funding from HUD, for the
purpose of private retail development. As of 2005, nothing has
been built on the property, and St. Luke's is still operating
out of a rented basement.
Toledo, Ohio. In 1999, Toledo condemned 83 homes and 16 businesses to
make room for expansion of a DaimlerChrysler Jeep manufacturing
plant. Even though the homes were well maintained, Toledo
declared the area to be ``blighted.'' A $28.8 million loan from
HUD was secured to pay for some parts of the project. The plant
ultimately employed far fewer people than the number Toledo
expected.
Ardmore, Pa. The Ardmore Transit Center Project has some actual
transportation purposes. However, Lower Merion Township
officials are also planning to remove several historic local
businesses, many with apartments on the upper floors, so that
it can be replaced with mall stores and upscale apartments. The
project receives $6 million in federal funding, which went to
the Southeastern Pennsylvania Transit Authority. This is an
ongoing project in 2005.
CONGRESS CAN AND SHOULD TAKE STEPS TO ENSURE THAT FEDERAL FUNDS DO NOT
SUPPORT THE ABUSE OF EMINENT DOMAIN
The Kelo decision cries out for Congressional action. Even Justice Stevens, the author of the opinion, stated in a recent speech that he
believes eminent domain for economic development is bad policy and hopes
that the country will find a political solution. Congress and this
subcommittee are all to be commended for their efforts to provide
protections that the Court itself has denied.
Congress has the power to deny federal funding to projects that use
eminent domain for private commercial development and to deny federal
economic development funding to government entities that abuse eminent
domain in this way.
Congress may restrict federal funding under the Spending Clause.
The Supreme Court has laid out the test for any conditions that
Congress places on the receipt of federal money in South Dakota v.
Dole. The most important requirements are that there be a relationship
between the federal interest and the funded program and that Congress
be clear about the conditions under which federal funds will be
restricted. The purpose of the federal funds is to aid states and
cities in various development projects. If Congress chooses to only
fund projects or agencies that conduct development without using
eminent domain to transfer property to private developers, it may
certainly do so.
Development is not the problem--it occurs everyday across the
country without eminent domain and will continue to do so. But
developers everywhere need to be told that they can only obtain
property through private negotiation, not public force.
THIS HOUSE IS CURRENTLY CONSIDERING SEVERAL GOOD APPROACHES TO CURBING
THE ABUSE OF EMINENT DOMAIN NATIONWIDE
H.B. 3405 achieves a vitally important goal. Americans throughout
the country have expressed their dismay at the Kelo
ruling, and this bill would provide desperately needed reform.
First and foremost, it states in no uncertain terms that state and
local governments will lose economic development funding if they take
someone's home or business for private commercial development. H.R.
3135 similarly restricts the use of eminent domain where federal funds
are involved and provides for a common sense approach to the use of
eminent domain by allowing it only for historic public uses or to cure
harmful effects. H.R. 3315 prohibits the use of Housing and Urban
Development funds where property is transferred from one private owner
to another for commercial or economic development. H.R. 3083 and H.R.
3087 explicitly provide that the term ``public use'' does not include
economic development and applies to exercises of eminent domain through
federal power or funding.
These are appropriate responses. Congress provides significant
funding throughout the country for economic development. Currently,
that money is being used in projects that take property from one person
and give it to another. Or it is being used in a way that gives a
locality more money to spend on projects that take people's homes and
businesses for economic development. If Congress wishes to ensure that
federal money will not support the misuse of eminent domain,
terminating economic development funds is the best approach.
Moreover, like H. Res. 340, passed shortly after the Kelo
decision and condemning the result, and H.J. Res. 60, a proposed
constitutional amendment limiting private-to-private transfers except
for public transportation purposes, all these bills represent a strong
statement that this awesome government power should not be abused. Each
is aimed at a commendable goal--restoring the faith of the American
people in their ability to build, own and keep their homes and small
businesses. Many states are presently studying the issue and
considering legislative language, and they will most certainly look to
any bill passed by Congress as an example. The bills also specifically
tell state and local government entities what funds they risk losing. I
suggest, however, the bills be amended to spell out even more
explicitly under what conditions local government will forfeit federal
economic development funding. I would also make sure to provide
definitions that are as unambiguous as possible. Specificity and
clarity are the most important requirements of any law that potentially
restricts federal funding.
CONCLUSION
Eminent domain sounds like an abstract issue, but it affects real
people. Real people lose the homes they love and watch as they are
replaced with condominiums. Real people lose the businesses they count
on to put food on the table and watch as they are replaced with
shopping malls. And all this happens because localities find condos and
malls preferable to modest homes and small businesses. Federal law
currently allows expending federal funds to support condemnations for
the benefit of private developers. By doing so, it encourages this
abuse nationwide. Using eminent domain so that another, richer, better-
connected person may live or work on the land you used to own tells
Americans that their hopes, dreams and hard work do not matter as much
as money and political influence. The use of eminent domain for private
development has no place in a country built on traditions of
independence, hard work, and the protection of property rights.
Again, thank you for the opportunity to testify before this
committee.
Mr. Stearns. Now, Mr. Shelton, welcome.
STATEMENT OF HILARY O. SHELTON
Mr. Shelton. Thank you very much, Chairman Stearns, Ranking
Member Schakowsky, a good friend to the NAACP, ladies and
gentlemen of the panel, for inviting me here today to talk
about property rights in a post-Kelo world. And you mentioned,
my name is Hilary Shelton and I am director of the NAACP's
Washington Bureau, our Nation's oldest and largest and most
widely recognized grassroots-based civil rights organization.
Given our Nation's sorry history of racism, bigotry, and a
basic disregard on the part of too many elected and appointed
officials of concerns and the rights of racial and ethnic
minority Americans, it should come as no surprise the NAACP was
very disappointed by the Kelo decision.
Racial and ethnic minorities are not just affected more
often by the exercise of eminent domain power, but we are
almost always affected differently and more profoundly. The
expansion of eminent domain to allow the government or its
designees 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.
The history of eminent domain is rife with the abuse of
specifically targeting racial and ethnic minorities and poor
neighborhoods. Indeed, the displacement of African-Americans in
urban renewal projects are so intertwined that urban renewal
was often referred to as black removal. The vast disparities of
African-Americans and other racial and ethnic minorities that
have been removed from their due to eminent domain actions are
well documented. For your information, I have included examples
of these documented disparities in my written testimony.
The motives behind the disparities are varied. They include
segregation and maintaining the insulation--the isolation of
poor minority and otherwise outcast populations. Furthermore,
condemnations in low-income or predominantly minority
neighborhoods are often easier to accomplish because these
groups are less likely, or are often unable, to contest the
action either politically or in our Nation's courts.
Last, municipalities often look to areas with low property
values when deciding where to pursue redevelopment projects
because it costs the condemning authority less, and thus the
State and local governments gain more financially when they
replace areas of low property values with those with higher
property values. Thus, even if you dismiss all the motivations
allowing municipalities to pursue eminent domain for private
development, as was upheld in the Supreme Court case of Kelo,
will clearly have disparate impact on African-Americans and
other racial and ethnic minorities in our country. Not only are
African-Americans and other racial and ethnic minorities more
likely to be subjected, or subject to the eminent domain, but
the negative impact of these takings of these women, men, and
families is much greater.
First, the term just compensation, when used in eminent
domain cases, is almost always a misnomer. The fact that a
particular property is identified or designated for economic
development almost certainly means that the markets are
currently undervaluing that property, or that the property has
some trapped valued that the market has not yet recognized.
Moreover, when an area is taken for economic development,
low-income families are driven out of their communities and
find that they cannot afford to live in revitalized
neighborhoods. The remaining affordable housing in the area is
almost certain to become less so.
Furthermore, the extent that such an exercise of takings
power is more likely to occur in areas with significant racial
and ethnic minority populations, and even assuming a proper
motive on the part of the government, the effect will likely be
to upset organized--likely to upset organized minority
communities. This dispersion both eliminates established
communities' support mechanisms, and has a deleterious effect
on these groups' ability to exercise the little political power
they may have established.
In conclusion, allow me to reiterate that by allowing pure
economic development motives to constitute public use for
eminent domain purposes, State and local governments will now
infringe on the property rights of those with less economic and
political power with more regularity. And as I have testified
today, these groups, low-income Americans, and a disparate
number of African-Americans and other racial and ethnic
minority Americans, are the least able to bear this burden. As
I have discussed in my testimony, too many of our communities,
the minority, the elderly, the low-income, have witnessed an
abuse of eminent domain powers. Given this history of abuse, it
is the hope of the NAACP that all legislative responses to Kelo
to be sensitive to that.
As this Congress advances these policies and works with the
various interests to do so, we need to ensure that certain
segments of our population that have long been voiceless in the
takings issue have a voice. We need to understand how it has
been easy to exploit these communities by exposing eminent
domain, not only in the pursuit of economic development, but
also in the name of addressing blight. Historically and today,
it has been too easy to characterize minority, elderly and low-
income communities as blighted for eminent domain purposes and
subject them to the will of the government. If the legislative
purposes contain language that could potentially exclude these
communities from protections against eminent domain abuses, we
have failed in our responsibility to serve and to give a voice
to these constituencies. These communities should be afforded
the same right of protection that all homeowners, business
owners, and other property owners will be afforded in a Federal
policy response to Kelo.
Additionally, in considering the interest of our
communities, we raise a broader concern regarding the use of
eminent domain for any purpose, including those purposes
traditionally viewed as public purposes, such as highways,
utilities, and waste disposal. Even these more traditional uses
of eminent domain have disproportionately burdened those
communities with the least political power, the poor,
minorities, and working class families. Furthermore, it is not
only our owners that suffer, but our renters, whether they be
residents or small businesses, who are provided no protection
and pay a heavy, uncompensated price when eminent domain is
imposed. For these reasons, as the majority in Kelo suggest,
there must be a sufficient process of protection for minority
communities regardless of the purpose of however beneficial to
the public. The process must be open and the participation of
the communities needs to be guaranteed. This is the voice that
our communities deserve.
Thank you again, Chairman Stearns and Ranking Member
Schakowsky and members of the committee for allowing me to
testify before you today about the NAACP's position on eminent
domain and the post-Kelo landscape. The NAACP stands ready to
work the Congress and State and local municipalities to develop
legislation to end eminent domain abuse while focusing on real
community development concerns, like building safe, clean and
affordable housing in established communities, with good
schools, an effective health care system, small business
development, and a significant, available living wage job pool.
[The prepared statement of Hilary O. Shelton follows:]
Prepared Statement of Hilary O. Shelton, Director, NAACP Washington
Bureau
Thank you, Chairman Stearns, Ranking Member Schakowski and ladies
and gentlemen of the panel for inviting me here today to talk about
property rights in a post-Kelo world.
My name is Hilary Shelton and I am the Director of the Washington
Bureau for the National Association for the Advancement of Colored
People, our Nation's oldest, largest and most widely recognized civil
rights organization. We currently have more than 2,200 units in every
state in our country.
Given our Nation's sorry history of racism, bigotry, and a basic
disregard on the part of too many elected and appointed officials to
the concerns and rights of racial and ethnic minority Americans, it
should come as no surprise that the NAACP was very disappointed by the
Kelo decision. In fact, we were one of several groups to file an Amicus
Brief with the Supreme Court in support of the New London, Connecticut
homeowners.1
---------------------------------------------------------------------------
\1\ The NAACP would like to offer our sincere gratitude and
appreciation to the law firm of Bondurant, Mixson & Elmore, LLP, of
Atlanta, Georgia, for their invaluable assistance in preparing the
brief.
---------------------------------------------------------------------------
Racial and ethnic minorities are not just affected more often by
the exercise of eminent domain power, but we are almost always affected
differently and more profoundly. The expansion of eminent domain to
allow the government or its designee to take property simply by
asserting that it can put the property to a higher use will
systemically sanction transfers from those with less resources to those
with more.
The history of eminent domain is rife with abuse specifically
targeting racial and ethnic minority and poor neighborhoods. Indeed,
the displacement of African Americans and urban renewal projects are so
intertwined that ``urban renewal'' was often referred to as ``Black
Removal.'' The vast disparities of African Americans or other racial or
ethnic minorities that have been removed from their homes due to
eminent domain actions are well documented.
A 2004 study estimated that 1,600 African American neighborhoods
were destroyed by municipal projects in Los Angeles 2. In
San Jose, California, 95% of the properties targeted for economic
redevelopment are Hispanic or Asian-owned, despite the fact that only
30% of businesses in that area are owned by racial or ethnic minorities
3. In Mt. Holly Township, New Jersey, officials have
targeted for economic redevelopment a neighborhood in which the
percentage of African American residents, 44%, is twice that of the
entire township and nearly triple that of Burlington County. Lastly,
according to a 1989 study 90% of the 10,000 families displaced by
highway projects in Baltimore were African Americans 4. For
the committee's information, I am attaching to this testimony a
document that outlines some of the higher-profile current eminent
domain cases involving African Americans.
---------------------------------------------------------------------------
\2\ Mindy Thompson Fullilove, Root Shock: How Tearing Up City
Neighborhoods Hurts America, and What We Can Do About It, p.17
\3\ Derek Werner: Note: The Public Use Clause, Common Sense and
Takings, pp 335-350), 2001
\4\ Bernard J. Frieden & Lynn B. Sagalyn, Downtown, Inc.: How
America Rebuilds Cities, p.29
---------------------------------------------------------------------------
The motives behind the disparities are varied. Many of the studies
I mentioned in the previous paragraph contend that the goal of many of
these displacements is to segregate and maintain the isolation of poor,
minority and otherwise outcast populations. Furthermore, condemnations
in low-income or predominantly minority neighborhoods are often easier
to accomplish because these groups are less likely, or often unable, to
contest the action either politically or in our Nation's courts.
Lastly, municipalities often look for areas with low property
values when deciding where to pursue redevelopment projects because it
costs the condemning authority less and thus the state or local
government gains more, financially, when they replace areas of low
property values with those with higher property values. Thus, even if
you dismiss all other motivations, allowing municipalities to pursue
eminent domain for private development as was upheld by the US Supreme
Court in Kelo will clearly have a disparate impact on African Americans
and other racial and ethnic minorities in our country.
As I said at the beginning of my testimony, not only are African
Americans and other racial and ethnic minorities more likely to be
subject to eminent domain, but the negative impact of these takings on
these men, women and families is much greater.
First, the term ``just compensation'', when used in eminent domain
cases, is almost always a misnomer. The fact that a particular property
is identified and designated for ``economic development'' almost
certainly means that the market is currently undervaluing that property
or that the property has some ``trapped'' value that the market is not
yet recognizing.
Moreover, when an area is taken for ``economic development,'' low-
income families are driven out of their communities and find that they
cannot afford to live in the ``revitalized'' neighborhoods; the
remaining ``affordable'' housing in the area is almost certain to
become less so. When the goal is to increase the area's tax base, it
only makes sense that the previous low-income residents will not be
able to remain in the area. This is borne out not only by common sense,
but also by statistics: one study for the mid-1980's showed that 86% of
those relocated by an exercise of the eminent domain power were paying
more rent at their new residences, with the median rent almost doubling
5.
---------------------------------------------------------------------------
\5\ Herbert J. Gans, The Urban Villagers: Group and Class in the
life of Italian Americans, p.380
---------------------------------------------------------------------------
Furthermore, to the extent that such exercise of the takings power
is more likely to occur in areas with significant racial and ethnic
minority populations, and even assuming a proper motive on the part of
the government, the effect will likely be to upset organized minority
communities. This dispersion both eliminates, or at the very least
drastically undermines, established community support mechanisms and
has a deleterious effect on these groups' ability to exercise what
little political power they may have established. In fact, the very
threat of such takings will also hinder the development of stronger
ethnic and racial minority communities. The incentive to invest in
one's community, financially and otherwise, directly correlates with
confidence in one's ability to realize the fruits of such efforts. By
broadening the permissible uses of eminent domain in a way that is not
limited by specific criteria, many minority neighborhoods will be at
increased risk of having property taken. Individuals in those areas
will thus have even less incentive to engage in community-building and
improvement for fear that such efforts will be wasted.
In conclusion, allow me to reiterate the concerns of the NAACP that
the Kelo decision will prove to be especially harmful to African
Americans and other racial and ethnic minority Americans. By allowing
pure economic development motives to constitute public use for eminent
domain purposes, state and local governments will now infringe on the
property rights of those with less economic and political power with
more regularity. And, as I have testified today, these groups, low-
income Americans, and a disparate number of African Americans and other
racial and ethnic minority Americans, are the least able to bear this
burden.
Thank you again, Chairman Stearns, Ranking Member Schkowski and
members of the subcommittee, for allowing me to testify before you
today about the NAACP position on eminent domain and the post-Kelo
landscape. The NAACP stands ready to work with the Congress and state
and local municipalities to develop legislation to end eminent domain
abuse while focusing on real community development concerns like
building safe, clean and affordable housing in established communities
with good schools, an effective health care system, small business
development and a significant available living wage job pool.
Mr. Stearns. Thank you. Mr. Finkle, you are next and your
comments are welcome.
STATEMENT OF JEFFERY FINKLE
Mr. Finkle. Good afternoon, Chairman Stearns, Ranking
Minority Schakowsky, subcommittee members, and fellow
panelists. Thank you for the opportunity to be with you today.
We hope that hearing about our experiences are helpful as you
and your colleagues review the rights of State and local
officials to regulate and exercise eminent domain. My name is
Jeff Finkle and I serve as the president and CEO of the
International Economic Development Council. IEDC is the premier
membership organization dedicated to economic development. Like
you and your colleagues, our 4,000 members work every day to
create high quality jobs, development vibrant communities, and
improve the quality of life in their communities.
From IEDC's perspective, eminent domain is an economic
development tool that allows local communities to assemble land
for redevelopment projects that generate jobs, investment and
tax base. We agree with the Supreme Court's decision in Kelo v.
New London. It affirms eminent domain as an important tool for
local governments, and leaves eminent domain decisions where
they should be, in the hands of States and localities. The
Supreme Court decision did not in any way expand the power of
eminent domain; rather, the court simply upheld the
longstanding inclusion of economic development as a public use.
Eminent domain has succeeded in improving the economies of
urban, suburban, and rural communities. For example, the city
of Newport, Kentucky voted to condemn several properties to
create Newport on the Levee, an entertainment complex that now
attracts three million visitors a year and generating hundreds
of jobs. This is a complete transformation of a community that
once had a terrible reputation for poverty, blight, and crime.
As many inner city residents know, missing essential
services, such as local grocery stores, have been provided
after land has been assembled using eminent domain. There is no
question that eminent domain is a power that, like any
government power, must be used prudently, and there are many
built-in checks. Once such check is the public nature of the
takings process. A few government or elected officials are
willing to risk their position in pursuit of a project
overwhelmingly opposed by their community.
Communities impacted by Hurricanes Katrina and Rita are of
special concern to us as well. While IEDC members in the region
are grateful for the Federal Government's support of economic
and infrastructure redevelopment, Gulf Coast communities
impacted by the hurricanes will face incredibly complicated
redevelopment challenges. In order to redevelop devastated
communities, States and localities will first need to raze
crumbling homes and businesses. We are concerned that proposed
congressional legislation limiting the use of Federal funds
from eminent domain would allow one holdout to stop the
redevelopment of an entire distressed area. This would have the
practical effect of thwarting the ability of communities with
demolished, ruined infrastructure and begin redevelopment
plans, further distressing an already devastated area.
Traditional uses of eminent domain for elimination of slums and
blights needs to be preserved.
Should Congress act to prohibit the use of eminent domain
for economic development purposes, the economies of many
communities will, in fact, suffer. In fact, the Department of
Defense has pit two cities against one another to protect an
airfield and the subsequent jobs. Will it be Virginia Beach or
will it be Cecil Field in Jacksonville, Florida, where, one,
the Department of Defense needs 900 homes torn down in one
community, or 27 homes acquired using eminent domain in another
community? At a time when so many of our businesses and
communities are being confronted with intense competition from
the global economy, and areas of our cities and regional rural
areas is in decline, Congress should be expanding its efforts
to solve the problems of economic deterioration, not imposing
restrictions on community growth and development.
Thank you again for the opportunity to speak to you today.
I am happy to answer questions you might have.
[The prepared statement of Jeffery Finkle follows:]
Prepared Statement of Jeffery Finkle, President and CEO, International
Economic Development Council
Chairman Stearns, Ranking Member Schakowsky, and Subcommittee
members, thank you for the opportunity to appear before you today. I am
honored to be here and to discuss the experiences of economic
development professionals. We hope our experiences can be an important
source of information as Congress reviews the rights of local officials
to exercise eminent domain in an effort to protect the economic health
and vitality of their communities.
My name is Jeff Finkle, and I am the President and CEO of the
International Economic Development Council (IEDC.) IEDC is the premier
membership organization dedicated to helping economic development
professionals create high-quality jobs, develop vibrant communities and
improve the quality of life in their regions. You and your colleagues
here in Congress work with our members each and every day to create
economically vibrant communities in your districts back home. IEDC
provides information to its members on the appropriate use of eminent
domain through two publications we have included at the end of our
testimony.
Before I begin my formal comments, I'd like to tell you about my
experience in our profession. I have been in the economic development
field for nearly 25 years and am the former U.S. Department of Housing
and Urban Development (HUD) Deputy Assistant Secretary of Community
Planning and Development during the Reagan Administration. In that
role, I was HUD's Deputy Assistant Secretary in charge of the Urban
Development Action Grant Program (UDAG), the Community Development
Block Grant Program (CDBG), and the Housing Rehabilitation program from
1981-1986. Since then I have been leading our professional association
as our members build vibrant local economies.
For our profession, eminent domain is an economic development tool
that allows local communities to acquire and assemble land for new
development projects that generate new jobs, investment and taxes. The
Supreme Court's 5-4 decision in Kelo v. New London leaves eminent
domain in the hands of states and affirms eminent domain as an
important tool for local governments in the redevelopment and
revitalization of economically distressed areas.
The court stated in its opinion that the pursuit of economic
development is a ``public use'' within the meaning of the Fifth
Amendment's Takings Clause. The New London economic development project
at issue in the case is similar to projects across the country aimed at
revitalizing depressed communities.
It is IEDC's understanding, based on conversations with attorneys
familiar with the decision, that the Supreme Court decision did not in
any way expand the power of eminent domain. Rather, the Court simply
upheld the long-standing inclusion of economic development as a
``public use.''
It is therefore unlikely that the Supreme Court's decision will
result in city officials exercising eminent domain randomly or without
balanced consideration. The Court's decision affirmed years of
interpretations allowing the use of eminent domain to redevelop our
nations' communities and to protect our local economies.
Judiciously used eminent domain is critical to the economic growth
and development of cities and towns throughout the country. Assembling
land for redevelopment can be an important element in the process of
revitalizing local economies, creating much-needed jobs, and generating
revenues that enable cities to provide essential services. When used
prudently and in the sunshine of public scrutiny, eminent domain helps
achieve a greater public good that benefits the entire community.
There are many examples of the public benefit of the judicious use
of eminent domain. One example of can be seen in the return of retail
to our urban cores. Eminent domain has been crucial in encouraging
retailers, particularly anchor tenant supermarkets, to locate in the
heart of inner cities rather than on the periphery where they have
traditionally positioned themselves. A combination of educational
efforts, land assembly, and economic development incentives are
encouraging the supermarkets that abandoned inner cities in the 1970s
to return.
For example, South Los Angeles, CA, a densely populated urban area
that is critically underserved by retail, will soon have a vibrant
shopping area thanks to the successful employment of eminent domain.
The Slauson Central Shopping Center will be the first retail shopping
center in the community in over 20 years. The supermarket-anchored
shopping center will include a state-of-the-art grocery store along
with small shop space, two freestanding commercial areas and a
community Educational Training Center. The project will create
approximately 150 new permanent jobs in the community and will bring
grocery services close to thousands of low-income residents.
Successful redevelopment projects facilitated by eminent domain are
proving that there are underserved populations/markets, and that
perceived or actual higher costs of doing business in inner cities can
be absorbed by sales volume. Without the ability to exercise the power
of eminent domain for redevelopment purposes, the public would be
unable to support many inner-city retail projects, and those
neighborhoods would continue to decline.
Eminent domain has also strengthened suburban economies. In the
early 1990's the city of Lakewood, CO was a Denver suburb at an
economic crossroads due to a struggling shopping mall. Then, the
Lakewood Reinvestment Authority and a developer decided to redevelop
the mall into a mixed-use town center. The result is Belmar, 22 city
blocks of stores, entertainment, office space, and residences that have
emerged as the symbolic heart of the community and center of Denver's
Metro West Side.
Eminent domain has also helped our struggling rural communities. In
March 2002, Shawnee County, Kansas exercised its power of eminent
domain to acquire the last few remaining parcels of a 432-acre site
intended in part for a new Target Corporation distribution center.
Although two property owners fought the condemnation proceedings
primarily on the grounds that the distribution center did not satisfy a
``public use,'' the Kansas Supreme Court ultimately ruled that the
taking of private property for industrial and economic development was
in fact a valid public purpose. The $80 million, 1.3 million square-
foot warehouse distribution center opened in June 2004 to the tune of
over 600 new jobs, with the expectation of adding an additional 400
jobs within the next three years.
Whether you represent an urban, suburban or rural area, the use of
eminent domain is never the first choice of any community. The eminent
domain process is time consuming and expensive; it is therefore the
last resort pursued during a land assembly process. Many local
authorities rarely exercise their power of eminent domain, particularly
when it deals with occupied housing. Public officials who do use
eminent domain comply with existing rules protecting individual
property owners, and they have the ultimate accountability to the
citizens and voters.
There is no question that eminent domain is a power that, like any
government power, must be used prudently, and there are many built in
checks. One such check is the public nature of the takings process.
Probing questions should be raised about any complex undertaking
financed by taxpayers, and nothing in local government attracts more
scrutiny or more criticism than eminent domain.
In their majority opinion in Kelo, the Supreme Court refers
favorably to New London's long engagement in an open and comprehensive
planning process. There are many other examples of public officials
engaging their constituents. When Lakewood, CO began the process of
redeveloping their failing mall, the city underwent an extensive public
process that over the course of one year established a citizens
advisory committee and invited members of the community to comment on
potential redevelopment options.
Each of your states and localities legislates the use of eminent
domain, and a public purpose or benefit needs to be clearly
demonstrated. Authorities that abuse this privilege risk creating
volatile political situations. Few government or elected officials are
willing to risk their position and political stability in pursuit of a
project overwhelmingly opposed by the community.
In another check on abuse, the Fifth Amendment requires that anyone
whose property is taken for a public use be fairly compensated, and in
practice, most takings are compensated generously. In case after case,
the majority of property owners willingly accept just compensation for
their property. According to our research, some are compensated as much
as 25% above market value for their property. Just compensation allows
property owners to relocate with an equal or improved quality of life.
Critics of the Kelo decision have said that it authorizes seizing
the property of one person merely to give it to another. While it is
true that once the public entity acquires title to the property, it is
conveyed to a developer or end user to carry out the project, the
public sector intervenes so that the private sector can bring much
needed investment to a distressed area. Government agencies are not and
should not be in the private real estate development business;
therefore, the assembled land is typically leased or sold to the
private sector for redevelopment. As a matter of policy, cities should
not be in the long-discredited practice of building redevelopment
projects; rather they should facilitate the use of private capital and
private management to achieve the same end.
The use of eminent domain has evolved over the years from a
``bulldozer'' technique to today's careful surgical approach. In the
1960s the federal government gave cities resources under the Urban
Renewal Act to plow down hundreds of acres of land and thousands of
homes and commercial buildings. That left many cities with land vacant
for years. This policy has since been attacked by many as an
inefficient use of resources. Today, economic development professionals
wait until there is a specific market opportunity before we use eminent
domain to acquire distressed properties. If your district's officials
have to wait for land assembly holdouts, your communities will see jobs
and market opportunities disappear.
In closing, I would like to comment on pending eminent domain
legislation. In response to the Kelo decision, Congress is offering
legislation that would prohibit the use of federal funds for economic
development projects that involve the exercise of eminent domain.
Should Congress act to prohibit the use of eminent domain for economic
development purposes, the economies of many Congressional districts
will suffer. No municipality in America could use eminent domain to
carry out an economic development project.
Communities impacted by hurricanes Katrina and Rita are of special
concern to us all. While IEDC members in the region are grateful for
the billions of dollars the federal government has pledged to support
economic and infrastructure redevelopment, gulf coast communities
impacted by the hurricanes will face incredibly complicated and
expensive redevelopment challenges. In order to redevelop devastated
communities, states and localities will first need to raze crumbling
homes and businesses.
We are very concerned that proposed Congressional legislation
limiting the use of federal funds for eminent domain would allow one
landowner to veto the redevelopment of an entire distressed area. This
would have the practical effect of thwarting the ability of communities
to demolish ruined infrastructure and begin successful redevelopment
plans, further distressing an already devastated area.
In IEDC's opinion, Congress should not preempt or displace existing
state and municipal laws that govern the local application of eminent
domain. The Supreme Court's decision keeps the economic health of
communities in the hands of local leaders who are not out to destroy
communities, but rather who work for the best interests of their
communities at large. State or federal bills prohibiting the use of
eminent domain for economic development are job-killing pieces of
legislation.
Assembling land for redevelopment helps revitalize local economies,
create much-needed jobs, and generate revenues that enable your
communities to provide essential services. Exemplified by New London,
eminent domain is used to breathe new life and give new hope to
residents.
Thank you again for the opportunity to speak with you today.
EMINENT DOMAIN GUIDING PRINCIPLES
1. When a public agency engages in land assembly, the process should be
open to community stakeholders such as residents and local
businesses.
2. Eminent domain should be employed as a last resort in the land
assembly process and only when a property owner, after
attempted negotiations, refuses to sell at a fair market value.
To protect landowners, independent appraisals should be
conducted.
3. All reasonable efforts should be made to avoid taking occupied
residences and active businesses. A community must carefully
weigh the benefits of redevelopment against the hardship
associated with displacement.
4. When eminent domain is used in the taking of occupied property,
relocation costs should be covered for the property owner. This
may also include providing assistance to homeowners in finding
a new home.
5. Before initiating the eminent domain process, municipalities should
carefully review the legal parameters of the process as
provided in their local charter. The process should be fully
documented and completely transparent.
6. States that only allow the use of eminent domain for blighted land
and property need to establish a clear definition of blight.
This will reduce ambiguity for municipalities initiating the
eminent domain process. Municipalities should establish a
standardized approach in land assembly and eminent domain to
provide consistent expectations amongst stakeholders.
Eminent Domain: Myth vs. Reality
Myth 1: Eminent domain is a quick and low cost means of acquiring
land.
Reality: Eminent domain is more expensive and time consuming than
the traditional method of land acquisition through negotiated purchase.
Land acquired through eminent domain is often acquired at a price above
fair market value. Unfortunately, the related legal fees frequently
nullify any sales price premium benefits for the landowner. The
acquiring agency is often affected even more by the premium price and
legal costs associated with eminent domain.
Myth 2: Eminent domain is typically used as the first option in the
land assembly process.
Reality: The eminent domain process is time consuming and
expensive; it is therefore the last resort pursued during a land
assembly process. Many local authorities rarely exercise their power of
eminent domain.
Myth 3: State and local authorities promote urban redevelopment for
the sole purpose of increasing the tax base.
Reality: Eminent domain is an important tool in revitalizing
declining areas. Redevelopment projects remove blight, create jobs, and
increase private investment in an area. Tax base growth is only one
potential benefit.
Myth 4: The use of eminent domain violates private property rights.
Reality: Local and state authorities have the constitutional power
to acquire property through eminent domain on the condition of just
compensation.
Myth 5: Eminent domain is a government tool used to strip
individuals of their private property rights.
Reality: Each state legislates its use of eminent domain. A public
purpose or benefit generally needs to be clearly demonstrated.
Authorities that abuse this privilege risk creating volatile political
situations. Few government or elected officials are willing to risk
their position and political stability in pursuit of a project
overwhelmingly opposed by the community.
Myth 6: Local authorities and private developers undertake land
assembly and eminent domain without involving the community.
Reality: Most local governments or redevelopment agencies
incorporate community participation early on in a redevelopment
initiative. There are many cases that demonstrate successful
collaboration between community, private sector, and government
representatives in the revitalization of distressed areas.
Myth 7: The government employs eminent domain to take property from
one owner and give it to another owner that is financially or
politically stronger. State and local governments use eminent domain as
part of corporate incentive packages that benefit specific businesses.
Reality: Eminent domain is part of the land assembly process for
redevelopment with the intent to remove blight and/or create jobs and/
or create housing. The public sector intervenes so that the private
sector can bring in much needed investment in a distressed area.
Government agencies are not in the private real estate development
business, therefore, the assembled land is typically leased or sold to
the private sector for redevelopment. Often the prices and terms of the
deals are very favorable because 1) the location and characteristics of
the property are otherwise very unfavorable, and/or 2) the private
party can create or retain much-needed jobs.
Myth 8: The flexible definition of blight facilitates the state's
power in repossessing land.
Reality: Each state has its own definition of blight. Some have a
strict test for blight, requiring physical or economic decline. Others
have a more flexible definition. A few states do not have a blight
requirement as a condition of eminent domain, but require that the
project lead to job creation. There have been some highly publicized
cases of local governments who have abused the blight designation to
justify government repossession of land. These negative cases highlight
the need for states to clarify their intentions and incorporate
community involvement in defining eminent domain regulations.
Myth 9: The public money spent on assembling land for private use
is tax money that will forever be lost to the community.
Reality: Initial public money invested is recaptured through
increased tax revenue generated by the increase in property values and
retail sales. In a well-planned project, the return on investment
usually exceeds the initial cost. Furthermore, the benefits of
redevelopment go beyond tax recovery to include job creation and area
revitalization.
Myth 10: Land assembly and condemnation activities position a
municipality as a real estate broker and developer in what has
traditionally been private land deals. The free market can and will
allow for redevelopment of older areas without any government
intervention.
Reality: In many cases, a large, blighted area is comprised of
numerous small properties. Private developers are reluctant to spend
the time and money necessary to acquire each property with no assurance
that they will ever assemble a large enough site to develop. Without
land assembly assistance in urban areas, developers are likely to
choose large tracts of undeveloped land on the suburban/city fringe.
Such actions promote sprawl. Urban land assembly curtails sprawl and
encourages smart growth.
Myth 11: Eminent Domain is an unnecessary tool for economic
development.
Reality: Eminent domain is an important tool for economic
development. Eminent domain gives communities a last resort option to
help ensure that significant development opportunities are not hindered
when reluctant landowners refuse to negotiate fair sale of their
property. Without this valuable tool, local economic development
professionals would not be able to sufficiently assemble land for
beneficial redevelopment and public gain.
Mr. Stearns. Thank you. Mr. DeLong?
STATEMENT OF JAMES V. DELONG
Mr. DeLong. Thank you, Mr. Chairman. I also realize that my
biography left out a very important fact, which is that I am
graduate of Evanston Township High School, but it has been more
years than I like to admit, I must say. I appreciate being here
today to talk about one of my favorite topics, which is the
importance of property rights.
I spent about 10 years working on what you would call dirt
property, involving with Endangered Species Act and
environmental issues and other property rights issues. I
actually wrote a book about it 10 years ago. The last few years
I have been with the Progress and Freedom Foundation here in
D.C., which is a think tank that is devoted to fostering public
awareness of the crucial nature of property rights and markets.
And as the director of its Center for the Study of Digital
Property, which is also called ``IBCentral.Info,'' I spend my
time on intellectual property issues.
Now, I wrote two papers for PFF, connecting Kelo to other
issues of property rights, especially intellectual property,
one called ``One Degree of Separation, Kelo and H.R. 1201,''
and the other called ``Intellectual Property, the Endangered
Species Act and the Property Rights Alliance,'' and I would
like to submit those for the record and have those including in
the hearing record, if I could.
Mr. Stearns. By unanimous consent, so ordered.
[The papers are retained in subcommittee files.]
Mr. DeLong. Thank you. Now, I have also, of course,
submitted my written testimony and one-pager, and I won't waste
your time recounting that. But I would like to take my time
just to emphasize two basic general points here.
The first is that everyone, including me, uses the term
property rights. And in fact, his is a shorthand, but it is not
quite correct, because it tends to put them at a subordinate
level. As the Supreme Court noted in 1972 in Lynch v. Household
Finance, property does not have rights; rather, each person in
the United States has a personal right to own and use property.
And this right is every bit as important as the other great
rights in our society, such as freedom of speech or religion.
And the late Chief Justice Rehnquist, speaking in Dole a decade
ago, commented, we see no reason why the Takings Clause of the
Fifth Amendment, as much a part of the Bill of Rights as the
First Amendment or Fourth Amendment, should be relegated to the
status of a poor relation.
Speaking for myself, I regard my right to own and use
property as somewhat more important than my right to engage in
nude dancing. And others may disagree, but property rights are
a crucial issue for many people, as they are showing in
response to Kelo.
Now second, the situation in Kelo is not an isolated
incident, in a sense that it is simply the latest example of
the casualness of government at all levels, including, most
emphatically, the Federal level, is now treating this
individual right to property. Now, in Napoleonic times, England
staffed its navy through impressment. If they could catch you
in a seaport town and you had anything to do with the sea, you
were now a sailor, and everybody said all right. The
Confederate States of America, I might add, also financed its
war largely through impressment of property, just took it, and
we all know what happened to them.
But in the U.S., governments tend to follow the same
policy, not just for redeveloping cities or finding locations
for big-box stores or, in fact, I think, as has been noted, the
owners may get compensated, but certainly not at any level that
anyone would consider adequate or just. But for protecting
endangered species or wetlands or historic structures or
securing open space, it is impressing property through
regulation. The use of impressment is not limited to real
estate or to dirt property, it is applied to intellectual
property, where Congress enacts compulsory licensing statutes,
or redefines various uses as fair, to the behest of special
constituencies, or because of special purposes it regards as
important. Impressment is being used in telecommunications. You
know, TelReg, under the 1996 telecom act, was an appropriation
of telecom property. And the cable companies are now protesting
mightily that the extension must carry provisions into HDTV is
an impressment of their property. And the roster of examples
could continue.
And I think, from the point of view of an organization
devoted to the idea that free markets will indeed work things
out, this governmental itch for central planning, especially
when combined with a need to reward supporters and
constituents, can be a devastating combination.
So my conclusion, further to, what is general? It is not--
the committee doesn't not need to, or should not focus entirely
on enacting particular laws to put a band-aid on the Kelo
problem. What is needed is leadership in a general
reorientation of governments to restore respect for the
personal right to property as one of the great bulwarks of
individual freedom and economic progress. And my second
recommendation is more specific, and that is, the key in most
of these areas I think is compensation; and that is, that if
the governments are forced to pay adequate compensation, then
the incentive structures will tend to fall into line, and the
incentives to take the property through impressment will, of
course, be reduced. But I would recommend focusing on that
dimension of the issue in all of these contexts. Thank you.
[The prepared statement of James V. DeLong follows:]
Prepared Statement of James V. DeLong, Senior Fellow & Director, Center
for the Study of Digital Property, Progress & Freedom Foundation
It is a pleasure to be here today to discuss the implications of
the Supreme Court decision in Kelo v. New London,1 a case
which has triggered a Katrina-like deluge of reaction and criticism.
---------------------------------------------------------------------------
\1\ 125 S. Ct. 2655 (2005).
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I have four points to make to the Committee today. Let me state
them, then go back and elaborate on each.
(1) Given the existing case law, the decision in Kelo was not a
surprise.
(2) As property rights horror stories go, Kelo is second-rank. Ms. Kelo
got paid for her property; there are uncounted numbers of
regulatory takings for which no compensation is paid.
(3) The strong public reaction of antipathy to the result in Kelo was a
surprise--a pleasant and, hopefully, productive one.
(4) One's understanding of the implications of Kelo is enriched by
viewing it in a more general context that includes rights to
intangible and intellectual property as well as to real estate.
These points are taken up in order.
(1) Given the existing case law, the decision in Kelo was not a
surprise.
To recapitulate the basic issues, a clause of the Fifth Amendment
to the U. S. Constitution says ``nor shall private property be taken
for public use, without just compensation.'' The phrase ``public use''
has always been regarded as a limitation on governmental power to take
property; that is, it has been assumed by judges and scholars that
government has no power to take property for private use--to take from
A to give to B--even if compensation is paid.2
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\2\ The Supreme Court cases usually cited for the ``no transfers
from A to B'' are collected in H. Christopher Bartolomucci, Statement
on H.R. 3405 Before the Committee on Agriculture, U. S. House of
Representatives, Sept. 7, 2005. Most of these are from the 19th or
early 20th centuries, and the validity of such pre-New Deal
constitutional precedents is dubious, to say the least, but they are
still quoted by the Court in dicta so apparently they remain valid in
the collective minds of the Justices.
---------------------------------------------------------------------------
So, the question in Kelo was whether some houses could be condemned
by the city pursuant to a redevelopment plan for a part of New London
even if the houses could in no way be classified as public nuisances or
part of a blighted area, and even if the use to which the land was to
be devoted involved transfer to a private developer.
A five-member majority of the Supreme Court upheld the validity of
the city's action, emphasizing the fact that it was part of an overall
redevelopment plan, not an individualized action, and that the city's
conclusion that the overall public weal would be served by the plan was
not unreasonable.
The most surprising thing about this conclusion was that it was by
a 5 to 4 vote; ahead of time, I had thought that under the existing
case law this result would be reached far more decisively.
In 1997, I published a book entitled Property Matters: How Property
Rights Are Under Assault--And Why You Should Care (Free Press, 1997).
It is still in-print and available on Amazon, but if you seek
illumination on this point of the meaning of ``public use,'' you are
out of luck. The reason is that the Supreme Court cases, stretching
back over at least half a century, appeared to make the public use
requirement a dead letter--if the government exercising condemnatory
powers decided the use was public, that was conclusive.
As the Supreme Court summed it up in 1992, in NRPC v. Boston &
Maine Corp.: 3
---------------------------------------------------------------------------
\3\ 503 U.S. 407, 422 (1992). There were dissents in the case, but
not from this language.
---------------------------------------------------------------------------
We have held that the public use requirement of the Takings
Clause is coterminous with the regulatory power, and that the
Court will not strike down a condemnation on the basis that it
lacks a public use so long as the taking ``is rationally
related to a conceivable public purpose.''
The power granted government by such a test is almost total. As
Justice Scalia has pointed out, and Justice O'Connor reiterated in
Kelo, a rational basis test should be renamed ``the stupid staffer''
test--any legislative or executive branch staffer who cannot dream up a
chain of logic that meets it, no matter how outrageous the government
action, is too dumb to hold his or her job.4
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\4\ Kelo, 125 S. Ct. 2655, 2671, 2675 (2005) (O'Connor, J.
dissenting); Lucas v. South Carolina Coastal Council, 505 U.S. 1003,
1025-1026, n.12
---------------------------------------------------------------------------
If Boston & Maine was not sufficient to establish that the ``public
use'' requirement was a paper tiger, then Lingle v.
Chevron,5 decided a mere month before Kelo, should have
finished the job. In some prior cases, the Court had indicated that
assessing a claim that a regulatory taking had occurred--a regulation
so intrusive that it should be treated as a ``taking'' under the Fifth
Amendment even though title did not pass--it would look at whether the
regulation ``substantially advance[d] legitimate state interests.'' In
Lingle, it repudiated the applicability of this test to a takings
claim. The logical conclusion to be drawn was that for takings of any
sort, the Court was getting itself out of the business of assessing the
legitimacy of the purpose of the exercise of power.
---------------------------------------------------------------------------
\5\ 125 S.Ct. 2074 (2005).
---------------------------------------------------------------------------
In Kelo, the four dissenters retreated considerably from such total
deference. Even the majority went to some pains to justify the
rationality of the city's action, focusing on its status as part of an
overall plan rather than a random regulatory act.
In sum, on this issue of the meaning of ``public use,'' Kelo
contains a significant verbal retreat from the sweeping deference to
governmental action exhibited in the prior cases. It indicates some
degree of judicial uneasiness with what the courts have wrought. The
retreat may be no more than verbal, since the majority of the Court
seemed willing to accept as a ``public use'' anything that claims an
economic development rationale, including higher tax production. As
Justice O'Connor said, it is difficult to see how any competent staffer
could fail to pass this test, but it is possible that a future case
will erect some substantive structural limitations on this verbal
foundation.
It is instructive to compare Kelo with the recent decision of the
Michigan Supreme Court in County of Wayne v. Hathcock, which reversed
the famous, and infamous, 1981 Poletown decision.6
---------------------------------------------------------------------------
\6\ County of Wayne v. Hathcock, 471 Mich. 445, 684 N.W. 2d 765
(Mich. Sup. Ct. 2004); Poletown Neighborhood Council v. Detroit, 410
Mich. 616, 304 N.W. 2d 455 (Mich. Sup. Ct. 1981).
---------------------------------------------------------------------------
In Poletown, the Michigan Supreme Court had allowed the destruction
of a vibrant ethnic community to clear land for an auto assembly plant.
The decision applied a test similar to that used by the majority in
Kelo: that the ``public use'' requirement allowed a project designed to
``alleviat[e] unemployment and revitalize[e] the economic base of the
community.'' In overruling this decision, Hathcock repudiated this
test, and said that a transfer of property from one private party to
another meets the public use requirement under only three conditions:
(1) ``The project generates public benefits whose very existence
depends on the use of land that can be assembled only by the
coordination of the central government.'' This applies
primarily to infrastructure projects--roads, railroads,
pipelines--which present particularly acute hold-out problems.
(2) Situations in which the private entity remains accountable to the
public, and (possibly--it is a bit unclear) the property
remains available for use by the public. Again, infrastructure
is the prime example. (This may actually be an add-on to the
first point--this, too, is a bit unclear.)
(3) Clearing a blighted area, if the clearance is the primary purpose
and the transfer is incidental.
The Hathcock standards most emphatically do not include wholesale
condemnation of land for the purpose of letting a developer erect an
``office park,'' or ``tech center,'' or any other buzzword de jour. The
court noted: 7
---------------------------------------------------------------------------
\7\ 684 N.W. 2d at 783-84.
[T]he landscape of our country is flecked with shopping
centers, office parks, clusters of hotels, and centers of
entertainment and commerce. We do not believe . . . that these
constellations required the exercise of eminent domain or any
other form of collective public action for their formation.
However, it is not clear that the Michigan Supreme Court would
refuse to uphold the use of eminent domain to take unblighted property
within a generally-rundown area, and it is entirely possible that it
would have decided Kelo the same way as the U.S. Supreme Court, albeit
after applying a different test. In Kelo, New London was ``not
confronted with the need to remove blight in the Fort Trumbull area,
but [its] determination that the area was sufficiently distressed to
justify a program of economic rejuvenation is entitled to our
deference.'' 8
---------------------------------------------------------------------------
\8\ 125 S. Ct. at 2665-66.
---------------------------------------------------------------------------
(2) As property rights horror stories go, Kelo is second-rank. Ms. Kelo
got paid for her property; there are uncounted numbers of
regulatory takings for which no compensation is paid.
As the above mention of Lingle indicates, the outcome in Kelo was
also foreshadowed by the trend of the Court's decisions in cases
involving ``regulatory takings,'' situations in which government does
not take title, but regulates the use of property significantly, often
appropriating not just the juice but the pulp, and leaving the
landowner the worthless rind.
Indeed, Susette Kelo was not treated as badly as many other people.
She at least got paid for her property.9 Uncounted others
have lost most or even all of their rights via regulatory takings with
no recompense whatsoever. As long as a government avoids actual
physical seizure, and as long as it avoids a complete destruction of
economic value, it can inflict huge losses on property owners. It can,
in essence, seize their property for public or private benefit with no
payment whatsoever. 10
---------------------------------------------------------------------------
\9\ However, newspaper accounts over the summer said that the New
London Redevelopment Authority is taking the position that the
compensation due Ms. Kelo should be set at the property's value as of
the original notice of taking five years ago (apparently without
interest), and that she should also pay rent for the time she occupied
the house during the litigation, with the rent adjusted upward to
reflect the inflation in property values. The accounts were not
terribly clear, however.
\10\ James V. DeLong, Property Matters: How Property Rights Are
Under Assault--And Why You Should Care (New York: 1997), passim.
---------------------------------------------------------------------------
Perhaps Ms. Kelo should be grateful that New London did not zone
her land to make it into an open space, or declare it an endangered
species habitat, or find a wetlands plant, or classify her house is a
historic structure that cannot be changed and must be maintained at the
expense of the owner (no ``demolition by neglect''), or decide that
building on a lot she bought years ago would cause unacceptable runoff
into the Atlantic Ocean. Any of these could result in a de facto taking
without compensation.
If Ms. Kelo owned an apartment building, it could be made subject
to rent control, which would transfer most of the value to the tenants.
If she owned a small business, it could be subjected to price controls.
If she wanted to change the use of a commercial structure, she could be
forced to pay exorbitant ``impact fees.''
If Ms. Kelo lived in the western United States, where the Federal
government owns more than half the land, and in theory holds it in
trust as a commons to which the people of the area are to have
reasonable access, she would find her access rights squeezed away, year
by year and right by right, by a hostility to the all productive uses
of the land, ranging from lumbering to mineral extraction to ranching
to farming. The result has been destruction of large numbers of
psychologically and economically rewarding jobs, along with the
communities and ways of life that depended on them. She would not be
losing a legally-recognized property right; but the principle of
reasonable access to the Federal commons was one of the basic bargains
of western settlement.
(Here it is necessary to put in an aside. There is no conflict
between reasonable environmental protection and viable natural-
resource-dependent industries and communities. For example, I once saw
the great East Texas Oil Field, and it was mostly cows, grazing among
an occasional pump. There is a conflict between these industries and
environmental protection as a fundamentalist religion, which maintains
the view that any productive use of the earth represents a criminal
rape of the planet.)
The list of possible regulatory exactions is exceedingly long. And
if Ms. Kelo tried to protest any of these exactions in court, she would
run into a hedgerow of delaying tactics and arcane legal doctrines
about ``exhaustion of remedies'' and ``ripeness'' cynically deployed to
exhaust her psychologically and financially, and prevent effective
enforcement of the few rights that she possessed.
As constitutional scholar Roger Pilon said recently before the
House Committee on Agriculture: 11
---------------------------------------------------------------------------
\11\ Roger Pilon, Statement Before the House Committee on
Agriculture on Strengthening the Ownership of Private Property Act of
2005, U. S. House of Representatives, Sept. 7, 2005, p. 4.
---------------------------------------------------------------------------
[In the] classic regulatory takings case, of course, the
government takes uses, thereby reducing the value of the
property, sometimes drastically, but refuses to pay the owner
for his losses because the title, reduced in value, remains
with the owner. Such abuses today are rampant as governments at
all levels try to provide the public with all manner of
amenities, especially environmental amenities, ``off budget.''
There is an old-fashioned word for that practice: it is
``theft,'' and no amount of rationalization about ``good
reasons'' will change the practice's essential character.
The Supreme Court has occasionally nullified a particularly
outlandish regulatory taking, but for the most part it has acquiesced
in serious erosion of the principle that private property should not be
taken without just compensation, even when the purpose of the
government action is to produce a public benefit rather than to avoid
some noxicity caused by the landowner.
The Court regularly states, but then ignores, the lodestar
principle that the Takings Clause of the Fifth Amendment is ``designed
to bar Government from forcing some people alone to bear burdens which,
in all fairness and justice, should be borne by the public as a
whole.'' 12
---------------------------------------------------------------------------
\12\ Armstrong v. United States, 364 U.S. 40, 49 (1960).
---------------------------------------------------------------------------
(3) The strong public reaction of antipathy to the result in Kelo was a
surprise--a pleasant and, hopefully, productive one.
On the other hand, the strong public reaction to Kelo has indeed
been a surprise, and a pleasant one. It is also a bit of a mystery.
None of the prior cases or the exactions by governments that triggered
them roused serious interest from the public, the media, or the
Congress, despite the tantrums that some of us threw. Books on the
topic had little impact.13 OpEd editors yawned. I cannot
remember the last time Congress held serious hearings on the issue. If
any did occur, they received no press attention.
---------------------------------------------------------------------------
\13\ The classic work is Richard Epstein, Takings: Private Property
and the Power of Eminent Domain (Cambridge: 1985). Two excellent works
that came out about the same time as my book, Property Matters: How
Property Rights Are Under Assault--And Why You Should Care (New York:
1997), were Richard Pipes, Property and Freedom: The Story of How
Through the Centuries Private Ownership Has Promoted Liberty and the
Rule of Law (New York: 1999), and Tom Bethell, The Noblest Triumph:
Property and Prosperity Through the Ages (New York: 1998).
The definitive legal treatise is Steven J. Eagle, Regulatory
Takings (3d ed.)(New York: 2005), and a useful look at the cases is
Bernard H. Siegan, Property and Freedom: The Constitution, the Courts,
and Land Use Regulation (New Brunswick: 1997).
---------------------------------------------------------------------------
Explanations as to why Kelo hit the collective nerve can be only
speculation, of course, but I think three main factors are involved.
The first is the nakedness of the city's assertion of its right and
intent to engage in massive central planning, and to exercise unlimited
power in pursuit of its vision. This power existed in law, but the
demonstration of its reality shocked most people, who were unaware of
the extent to which their legislatures have endorsed, and courts have
upheld, an ideology of central planning that dominates municipal
government.
Oh, everyone knew that cities have master plans and all that sort
of thing--newspapers are always yapping about them--but no one took
these seriously. People assumed that these plans are a glorified name
for zoning, of which everyone approves, at least in theory. Zoning
keeps the heavy industry away from the houses, ensures that commercial
enterprises are located on the main roads, and in general protects
property values.
Thus the idea that the New London or any other city could choose to
remake its map by fiat was a surprise to most people. The public had
assumed that city action, such as zoning, was designed as an adjunct of
a regime that depends on and defends private property rights. It was
not contemplated that city action would supplant the private sector.
A second major factor is that the abuse of eminent domain, by which
I mean the taking from A to give to B, has become exceedingly common.
Dana Berliner of the Institute for Justice reported on this in a report
on Public Power, Private Gain: in the five years 1998-2002, there were
over 10,000 documented cases of filed or threatened condemnations
designed to benefit private parties. And this figure covers only the
instances that reached the newspapers; the actual total could be 10 or
20 times as great.14
---------------------------------------------------------------------------
\14\ Dana Berliner, Power, Private Gain: A Five Year State-By-State
Report Examining the Abuse of Eminent Domain. Castle Coalition (April
2003), p. 2. To get some idea of the relationship between reported and
actual cases, Berliner checked the numbers for Connecticut, the only
state that keeps systematic track of such cases. During the 5-year
period, Connecticut courts recorded 543 redevelopment condemnations
whereas only 31 were reported in the newspapers. [http://
www.castlecoalition.org/report/pdf/ED--report.pdf]
---------------------------------------------------------------------------
There may have been a pause in the pace of such actions while Kelo
was pending, but now, with their power to issue the takings equivalent
of lettres de cachet reaffirmed by the Supreme Court, localities are
making up for the lost time.15
---------------------------------------------------------------------------
\15\ Dana Berliner, Statement Before the Committee on Agriculture,
U. S. House of Representatives, Sept. 7, 2005.
---------------------------------------------------------------------------
At some point, such activity reaches a level where everyone knows
someone who has been affected. Then, the possibility ceases to be an
abstract misfortune that threatens someone far away and becomes a
personal threat. We may have reached such a tipping point. I certainly
hope so.
A third major factor is the growing distrust of government's
competence and good faith as a central planner and real estate
developer. No one believes that the asserted unlimited authority to
remake the urban terrain will be exercised in some spirit of abstract
pro bono publico. Real estate development, in most times and most
places, is and always has been a sinkhole of corruption and special
influence.16 The public knows this full well. But the public
thought that it was protected from the direct effects of these dreary
realities. Now it has learned that it is not. If someone with influence
decides he wants your property, he can take it, through your local city
council.
---------------------------------------------------------------------------
\16\ See Richard Babcock, The Zoning Game (Univ. of Wisconsin
Press: 1966).
---------------------------------------------------------------------------
The most recent issue of Reason describes such a scenario. A state
agency, acting in concert with a developer and a large corporation,
used eminent domain to seize land needed for a new 52-story corporate
headquarters. No effort to purchase the land was made, but, under cover
of the need to eliminate ``blight,'' 11 buildings were seized and 55
businesses evicted, including ``a trade school, a student housing unit,
a Donna Karan outlet, and several mom-and-pop stores.'' The property
was bought at a bargain price, and if the legal settlements with the
original owners and tenants exceed it, the state agency will be on the
hook. In addition, the city and state offered the corporation $26
million in tax breaks for the project.17
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\17\ Matt Welch, ``Why the New York Times Loves Eminent Domain,''
Reason (Oct. 2005), p. 18 [http://www.reason.com/0510/co.mw.why.shtml]
---------------------------------------------------------------------------
The corporation was the New York Times, which, not surprisingly,
quite liked the Kelo decision. According to Reason:
[T]the Times, in an editorial entitled ``The Limits of
Property Rights,'' let out a lusty cheer. Kelo, the paper
declared, is ``a welcome vindication of cities' ability to act
in the public interest'' and ``a setback to the `property
rights' movement, which is trying to block government from
imposing reasonable zoning and environmental regulations.''
Dana Berliner's Public Power, Private Gain is full of similar
tales, and Professor Jonathan Turley recently summarized more examples
of takings that have been upheld by courts as legitimate ``public
uses.'' Included are condemnations of: 18
---------------------------------------------------------------------------
\18\ Prof. Jonathan Turley, ``Eminent Domain and the Supreme
Court's Public Use Doctrine,'' Statement on H.R. 3405 Before the
Committee on Agriculture, U. S. House of Representatives, Sept. 7, 2005
Property of six different private owners of lots in Manhattan to allow
the New York Times to expand and to construct a more valuable
array of condos and galleries.
Property next to Donald Trump's casino so that he could have a waiting
station for limousines. (This was ultimately overturned)
A lease held by a company in a shopping center in Syracuse to allow the
owner to redevelop the property free of its obligations under
the leasehold.
Property in Kansas for the sole purpose of attracting a new and more
promising business to the area.
Minneapolis property held by one business to give to another to
develop, despite the interest of the original owner in
developing the property in a similar fashion.
A Walgreens drug store in Cincinnati to build a Nordstrom department
store, which then required condemnation of a CVS pharmacy to
relocate the Walgreens, which then required condemnation of
other businesses to relocate the CVS. (The deal then fell
apart, and as of 2003 the Nordstrom's site was a parking lot.)
A parking lot in Shreveport to give it to another business for use as a
parking lot.
Granted, the dispossessed owners are supposed to be compensated,
but this will not pay for moving, or for disrupting their lives. And
compensation is often inadequate on any scale.
There is a broader point to be made here. It would be incorrect to
classify the Founders of this nation as cynics. But they were indeed
realists, and they did not trust government. It is not that government
officials are any worse than anybody else--it is that they are no
better. Officials are tempted by offers of political support, and
sometime by outright corruption.
The Founders did not have the vocabulary of ``public choice'' and
``rent seeking'' that characterizes contemporary discussions of
political theory,19 but they certainly understood the basic
concepts. The Federalist Papers are a long meditation on the
implications of public choice theory for practical government.
---------------------------------------------------------------------------
\19\ See, e.g., Fred S. McChesney, Money for Nothing: Politicians,
Rent Extraction, and Political Extortion (Harvard Univ. Press: 1997).
---------------------------------------------------------------------------
And even the most upright of public officials are vulnerable to the
potent seductions of power. The idea ``we can remake this city!'' can
be irresistible.
Of course, such efforts rarely work. Cities are organisms, not
machines, and they evolve and grow. For the most part, rigid plans are
never implemented. And even when the plans are executed, we usually
regret it. It turns out that one decade's urban planning fad is the
next decade's candidate for demolition. And in the meantime private
initiative is paralyzed by the dithering that accompanies broad land-
use initiatives.
Part of the genius of the Founders was their recognition that
government is simply one part of that entirety that we call a
civilization or a culture. It is important that government officials
recognize this, and recognize that it is not their job to be
responsible for everything, and it is not true that nothing good can
happen that they do not direct. Quite the contrary; their job is to
establish the conditions that make it make it possible for the other
institutions of society to function. (Or, to phrase this more
negatively, their job is to avoid making it impossible for other
institutions to function.)
Hence, as the Fifth Amendment provides, government officials are to
have the power to acquire property needed for public uses, but it is
not necessary for government to take on itself the responsibility for
``shopping centers, office parks, clusters of hotels, and centers of
entertainment and commerce,'' in the words of the Michigan Supreme
Court.
The perspective represents not just the view of the Founders, but
the contemporary good sense of the American people, ``90% of [whom,
according to polls] disapprove of the kind of seizures allowed by
Kelo.'' 20
---------------------------------------------------------------------------
\20\ The Economist, Hands Off Our Homes, Aug. 20, 2005.
---------------------------------------------------------------------------
In other words, the American people think that the virtues of the
free market and its invisible hand attach to land use as well as to
other economic activities. The people are content with the idea that
government does not bear total responsibility for urban perfection, and
that for the most part we will, rightly, let our urban spaces grow
organically.
But one place that has not gotten the word about this is the
Supreme Court. The Justices are still back in the New Deal era, or
perhaps even the Progressive Era, when the idea that the government is
responsible for everything, and hence must PLAN, came to dominate
political theory. The governmental Platonic Guardians depicted in
Supreme Court opinions bear little resemblance to the officials of
Richard Babcock's books on zoning, or to the decision-makers in
situations cited by Dana Berliner, or with the common sense of the
American people.
A Lexis search of Supreme Court opinions for the phrases ``public
choice'' and ``rent seeking'' produced zero results. This result is
quite extraordinary. Two concepts that are fundamental to any realistic
analysis of government, its problems, and its control are absent from
authoritative legal thought. Of course the Supreme Court's treatment of
Takings has become incoherent hash--it is impossible to analyze
something adequately if one has barred oneself from using the
intellectual tools required to deal with it in a serious way. On this
issue, there is a wide gap between the perceptions of the Court and
those of the people--with the latter having by far the more
sophisticated understanding of applied political science.
(4) One's understanding of the implications of Kelo is enriched by
viewing it in a more general context that includes rights to
intangible and intellectual property as well as to real estate.
There is, I think, a final reason that Kelo has struck the nerve of
the American people--the growing attention commanded by issues
involving intellectual property.
During the past five years or so, the nature and importance of
intellectual property--the debate over the level of hegemony that
should properly be exercised over the creations of the mind--has
received a tremendous amount of attention, in the media and in the
venues in which national attitudes are truly determined: conversations
in car pools, at parties, and around office water coolers.
Economic value in the contemporary world has become far more
dependent on the creations of the mind than on bricks and mortar or the
real estate on which they stand, and several high-profile controversies
have driven this point home--for example, the Microsoft antitrust case,
P2P file-sharing, reimportation of pharmaceuticals, the telecom bust
(which resulted largely from the confusion over property rights created
by the implementation of the 1996 Telecommunications Act).21
The whole computer/high tech industry depends on intellectual property
rights in the form of the patents and copyrights without which no firm
could attract investment capital.
---------------------------------------------------------------------------
\21\ One can argue with some cogency that telecom networks should
be classified as physical rather than intellectual property. But the
whole industry is so dependent on technological innovation, from the
technologies for making optic fiber to the software that runs the
network, that it seems reasonable to include this area in the list. It
also serves to make the point that tangible and intangible property,
and property rights, are becoming inextricably mixed.
---------------------------------------------------------------------------
I think the increased prominence of intellectual property is
causing people to refocus on property rights in general, and to realize
that any trend of events that undermines the security of all property
is not good.
About four years ago, I attended a panel session in which
representatives of the entertainment industry, mostly from Los Angeles,
expressed concern about the rise of unauthorized file sharing of music,
and bemoaned the lack of respect for property rights shown by the
sharers.
During the question period, I said to the panelists: ``Look, there
has not been an uncompensated taking of real estate in the last 20
years that you entertainment industry people have not endorsed, as long
as it could be justified in the name of endangered species protection,
or wetlands, or open space.22 You have taught a generation
of young people to hold property rights in contempt, and now you object
that they are practicing exactly what you preached.''
---------------------------------------------------------------------------
\22\ Actually, this was not completely true. Some in the
entertainment industry have objected strenuously to having public
access rights of way created across their Malibu beachfront properties.
---------------------------------------------------------------------------
For the most part, the reaction was blank looks. What could the one
possibly have to do with the other?
That reaction has changed. Now, there is general agreement that
property rights must be treated on a continuum, that the basic
philosophical principles supporting property rights as an institution
are constant across both tangible and intangible property, and that an
attack on one kind of property cannot be quarantined from an attack on
all.
The list of amici supporting the importance of the intellectual
property rights in the recent Grokster case contains not just the
Progress & Freedom Foundation, but the Defenders of Property Rights,
represented by former Solicitor General Theodore B. Olson. DPR has long
been one of the staunchest defenders of rights in physical property.
The most recent evidence of this evolution of attitudes is the
creation of a group called The Property Rights Alliance,23
which is bringing together a Noah's Ark of property rights interests--
inventors concerned with patents; content industries concerned with
file-sharing; cable companies concerned with must-carry rules; land-
rights groups devoted to maintaining access to the commons of the
public lands; land-owners whose property has been taken by the
Endangered Species Act; victims of rent control; and so on.
---------------------------------------------------------------------------
\23\ http://www.propertyrightsalliance.org/
---------------------------------------------------------------------------
By no means do the members of this alliance hold any unified
positions, and in some cases they are quite opposed. But for those of
us who have long regarded property rights as a crucial block in the
structure of political freedom and economic progress--the ``guardian of
every other right'' 24--it is tremendously encouraging to
see this disparate collection of interests debating the issues in terms
of ``what is the pro-property rights position?''
---------------------------------------------------------------------------
\24\ ``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.'' Arthur Lee, An Appeal to the Justice and Interests of the
People of Great Britain, in the Present Dispute with America, 4th ed.
(New York: 1775), p. 14 (Quoted in John W. Ely, The Guardian of Every
Other Right, (New York 1992), p. 26).
---------------------------------------------------------------------------
In consequence, you in the Congress can expect to hear an
increasing number of arguments phrased in terms of their impact on
property rights. To take one example, H.R. 1201, Digital Media
Consumers' Rights Act of 2005, which is pending before this committee,
raises profound issues of property rights. In effect, it redefines the
rights of creators and consumers by fiat, both prospectively and
retroactively. And, just as Kelo uses the concept of public benefit as
an all-purpose excuse for unlimited governmental power, H.R.1201 uses
the concept of fair use to justify a massive redefinition of
intellectual property rights. 25
---------------------------------------------------------------------------
\25\ James V. DeLong, One Degree of Separation: Kelo & H.R. 1201,
Progress & Freedom Foundation Progress Snapshot Release 1.7 August
2005. [http://www.pff.org/issues-pubs/ps/ps1.7kelo.html]
---------------------------------------------------------------------------
CONCLUSION
In Lynch v. Household Finance Corp.,26 the lower court
ruled that a particular statute served only to protect ``personal''
rights, not ``property'' rights. The Supreme Court rejected this
distinction:
---------------------------------------------------------------------------
\26\ 405 U.S. 538, 552 (1972) .
---------------------------------------------------------------------------
[T]he dichotomy between personal liberties and property
rights is a false one. Property does not have rights. People
have rights. The right to enjoy property without unlawful
deprivation, no less than the right to speak or the right to
travel, is in truth a ``personal'' right, whether the
``property'' in question be a welfare check, a home, or a
savings account. 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. J. Locke, Of Civil Government 82-85 (1924); J.
Adams, A Defence of the Constitutions of Government of the
United States of America, in F. Coker, Democracy, Liberty, and
Property 121-132 (1942); 1 W. Blackstone, Commentaries * 138-
140 [emphasis added].
Unfortunately, the Supreme Court seems to have forgotten these
principles. As in Kelo, on questions of the personal right to own and
use property it accords almost total deference to governmental
authority, deference certainly not accorded in other areas of
constitutional protection.
However, as the reaction to Kelo shows, and fortunately for the
health of the republic, the people of the nation have not forgotten the
principle expressed in Lynch. Now it is up to the Congress to show that
it, too, remembers,
Mr. Stearns. I thank the gentleman. I will start with the
questioning.
And, Professor Ramsey, it just occurred to me, with this
case, the Supreme Court--that you could have a case where the
government decides they want to take something for intellectual
property rights. If the government has decided, under the Kelo
case, they can take private property for a better economic use
and let the local governments do it, couldn't you extend that
same reasoning to intellectual property rights, the government
could take over intellectual property rights?
Mr. Ramsey. I see no reason, based on Kelo, that they could
not.
Mr. Stearns. I mean, isn't there--I mean, intellectual
property is intellectual property, and personal property is
personal property. And I mean, I think this is something that
we have to--I am just curious what your opinion is on this, a
little more nuanced question and ask you a little bit of a
hypothetical here, but it just occurred to myself and the
staff, why not intellectual property, if the Supreme Court
thinks personal property is okay?
Mr. Ramsey. Well, my job is to ask people hypothetical
questions, so I guess it is only fair that I get to answer one.
It is an excellent question and I think the answer is, I don't
see anything in Kelo that would prevent it. Obviously, as you
say, the facts in Kelo are quite different, and so perhaps a
differently inclined court could come up with some factual
distinction that would allow it to decide differently.
But the fundamental underpinning of Kelo is that if the
government decides that the property can be used to a better
economic benefit in the hands of a different person, and
therefore indirect benefits will go down to the public through
greater employment or greater tax revenues to the government
entity, then that is a sufficient public purpose to justify the
use of the eminent domain power, and I don't see any reason why
that would be limited to taking real property. It seems like
the same argument could be made for intellectual property. So I
don't see--I think that the extension could be done quite
easily.
Mr. Stearns. Okay. Now, Mr. Finkle, you are in sort of the
spot here defending the decision and I understand that, so we
are all going to come to you a little bit. Recently in an
article that was published in the Washington Times, concerning
the flow to this Riviera Beach community, they want to take
over a whole section of the beach because they said the beach
is one of the nicest beaches in all of Florida, and they want
to put in a mega-port for yachts and high-end housing, retail,
office space, a multi-level garage for boats, a 96,000 square
foot aquarium and manmade lagoon, and that all sounds good.
And so what they need to do is displace about 6,000 local
residents to do it, and most of these people are making less
than $19,000 a year. The mayor, I believe it was, went on to
say, people with large yachts need a place to keep them and
service them. So obviously, you can't agree with that; that if
you are making the argument, because it is more aesthetically
pleasing, then I can take your house, that is just a spurious
argument as opposed to one economically. Because if you are
saying it is economically you make more money, then there is a
conflict of interest when the city or town comes in and says
okay, Mr. Stearns, we are going to take your little property
here and we are going to make a mega-yacht pier, you are not
going to reimburse me for the value of the property later one,
you are giving me what the value is right there in my piece of
property, which is, you know, unattended and probably
dilapidated. So there is a conflict of interest, and there is a
fact that you are taking a property cheap and selling it a high
price. Don't all those things bother you a bit?
Mr. Finkle. Mr. Chairman, I am not prepared to sit here and
defend every public officials' prognosis about what should
happen.
Mr. Stearns. You are not defending a place for mega-yachts,
then?
Mr. Finkle. And the removing of 6,000 people from their
homes. I don't know the situation in Riviera Beach, but I will
tell you, there are lots of examples where an important factory
to a community, if it could expand, could employ another
hundred people in some rural community, where you--if you don't
figure out a way to expand them in place, they may leave the
community all together. There are places where we need to
redevelop, that--where eminent domain is an important tool to
allow redevelopment to go further. Now, I can't sit here and
say that what the mayor is proposing to do on Riviera Beach
makes sense or not. But moving 6,000 people seems to be a
little strong on the imagination.
Mr. Stearns. Yes. Well, my time has expired. Ms.
Schakowsky.
Ms. Schakowsky. Am I hearing right, that Mr. Anderson and
Mr. DeLong, and maybe others of you except for Mr. Finkle, and
I don't think Mr. Shelton, either, I don't know, would say that
the Takings Clause itself is an abuse of power in some way,
that if you could you would remove the Takings Clause?
Mr. Anderson. We recognize that the Takings Clause has a
public use component to it, and we are not opposed to takings
for public use when there is just compensation. Our problem is,
that when it goes beyond public use, and to kind of piggyback
on the intellectual property question, what is happened is the
court has defined it so much differently than it what it
actually says. It went from public use to public purpose in
Berman v. Parker, despite the fact that that doesn't protect--
--
Ms. Schakowsky. And so by public use, you mean used by the
public, as Professor Ramsey was describing?
Mr. Anderson. Correct. And even if you have--and then, from
then, it went from public purpose to public benefit. Now it
really doesn't mean anything anymore.
Ms. Schakowsky. Okay, okay. All right. And, Mr. DeLong?
Mr. DeLong. No, I concur. I mean, obviously, we need public
facilities of all sorts. And certainly, as the Nation developed
industrially, it turned out that you needed things, like lots
of network industries, you know, and the power of public
domain.
Ms. Schakowsky. So then let me go to a specific that Mr.
Finkle raised. We are all facing the situation now in the Gulf
area.
Mr. Anderson. Yes.
Ms. Schakowsky. And he described a situation where one
holdout could stop Gulf, the Gulf Coast redevelopment. I would
like comments on that. Let me ask Mr. Shelton about that first,
and then the others as well.
Mr. Shelton. Well, there, of course, are deep concerns
about what is happening in the Gulf Coast now, in other words,
when you have a circumstance, like a hurricane hitting, how do
we determine which property is actually blighted at this point,
and which property actually needs to be rebuilt, and what kind
of powers those who are now being--having to deal with the new
blighted situation, that will have to negotiate and making sure
that they can protect their own property rights in those cases.
And certainly, even beyond that, Congresswoman, when we talk
about those who are renting and now going to be displaced into
other areas, what kind of rights these Americans have as well.
Ms. Schakowsky. Okay. Anybody else want to comment?
Mr. DeLong. Yes, I would place--that is exactly the problem
or the reason, the intractability of that and of the holdout
problem, or the transaction cost problem, is exactly why I
would place far more emphasis on the compensation side.
Ms. Schakowsky. Right.
Mr. DeLong. And like Mr. Shelton's point.
Ms. Schakowsky. Right. And I appreciated that. You know,
Mr. Shelton, you point out, in the real world, because of all
of the inequities when it come so to lower income or people of
color that are built in, it is kind of hard to have a
discussion about this decision separate from those kinds of
realities. But I am wondering, if we were to focus on this
issue of just compensation in a real way, or I also want to get
to, doesn't Kelo--some of you gave examples of individual cases
that could happen. But doesn't it set up a process, a total
planning process, that, were everybody fully invested in that
and all voices were really heard, would that be sufficient
protection? Now I am going to shut up and let all of you
answer. And, Mr. Finkle, you said you don't see this decision
as expanding the power of eminent domain. I hear different
views and I wanted that more fully explored as well. So, Mr.
Shelton, you wanted to comment.
Mr. Shelton. What I was going to say, as we talk about the
real life, real world scenario, you are really talking about
moving entire communities, communities that have become
interdependent, particularly if you are a community that is of
color, and more specifically a community that is quite port.
Many of the things that we take for granted, for instance, in
being able to pay for babysitting, or being able to pay to own
a car to drive where you need to go, become things that are
quite different under these scenarios. If we look at the
hurricane victims in New Orleans, we are talking about a
community that has almost a 35 percent unemployment rate, where
50 percent of the population actually rent the homes that they
live in. So we are talking about the interdependency of a
community, we are talking about now uprooting relationships
between the person one side of the street who baby sits for the
person on the other side of the street in exchange for picking
up extra groceries for them, and now having to create these new
scenarios or new support mechanisms for these poor Americans.
Mr. Finkle. Yes. You covered a lot of issues. Let me answer
in three ways. First, you know, we are actually--on Monday I am
going to Baton Rouge to actually work on some of the Katrina
relief issues, or the redevelopment issues, dealing with what
the Gulf States are having to deal with. One of the things that
hit me instantly after the hurricane hit is, if those
communities did not have the ability to use eminent domain as
they start to rebuild some of these communities that were
completely destroyed, that you would have development looking
like, and the analogy I have been using is a hockey player's
teeth, you would have a home rebuilt and then you would have
one not. And you would have another home rebuilt and two not.
And unless there was a way to come across with a redevelopment
that you could implement, then some of the places, like the 9th
Ward in New Orleans, which we are all learning about, would be
very difficult to redevelop, or the parish immediately next to
it.
Second, the question was, you know, if you have a
redevelopment plan where the people have participated in that
plan, there was a lot of communication and a lot of public
discussion, couldn't you go forward with a plan after that,
whether it is in the Gulf States or not? I would point out, in
two of the cases which the Institute for Justice have shown a
great deal of interest, both Norwood, Ohio and New London,
Connecticut, there was redevelopment plans that had lots of
public hearings, lots of public participation, and the vast
majority of people in those neighborhoods actually were willing
to sell and it was the holdouts that we ended up--that we are
talking about today. So those would be the couple of points.
Oh, then finally the question was, what did the Supreme
Court do? Economic development practices, or eminent domain
with economic development, has been going on for quite some
time. The Supreme Court just upheld what communities have been
doing across the country up until this point.
Mr. DeLong. I think one point that should be made, and that
is, I think, with Mr. Anderson, am far less enamored of the
idea of massive redevelopment planning and centralized planning
and such. In accord with our basic view in most other areas, we
tend to think that if you get your property rights right and
then let your markets work, that you will get redevelopment.
You know, we are getting redevelopment all over Washington
without massive plans, whereas, Pennsylvania Avenue sat for
what, 20 years? And you do get extraordinary situations like
Katrina, but I think, to a larger extent, we sort of rely far
less on government and far more on sort of the genius of the
civilization, and on people knowing that they have property
rights, and they will then invest and prosper. Cities are
organisms rather than machines.
Mr. Otter [pesiding]. All right, the chair will now go to
the gentleman from New Hampshire, Mr. Bass. Five minutes.
Mr. Bass. Thank you, Mr. Chairman. My home State of New
Hampshire is considering a change in definition to its
constitution that would define eminent domain or limit eminent
domain to projects having public use--excuse me, public purpose
versus public use. Now, as you know, the U.S. Constitution uses
the term public use. I was wondering if any member of the
panel, perhaps starting with Professor Ramsey, would wish to
comment on that change and what it might imply, substitution of
the word purpose for use after public.
Mr. Ramsey. Well, that is a very interesting question,
because in my view that is exactly what the Supreme Court of
the United States already did for us in the Kelo case, and it
is one of the reasons that Kelo troubles me so much as the
constitutional matter, because I don't think the Supreme Court
is entitled to rewrite rights in that way. The people of New
Hampshire are, of course, are entitled to do that in their
State constitution for State law purposes. My opinion as to
what that would do, it is difficult to say, of course, as a
matter of State law, but I think that it likely would bring
State law in parallel with what the Kelo court said in Kelo was
permitted under Federal law. So I would view it as substantial
widening of State eminent domain power.
Mr. Bass. Any other members of the panel wish to comment on
that?
Mr. Anderson. I would also say that it would decrease any
protection. As we all know, the United States Constitution
provides the baseline rights, and the States are free to
provide even more than that, but to the extent that the New
Hampshire citizens want to lower the rights that they have
under the New Hampshire Constitution to what has been provided
under Kelo, then I think that they are in big trouble.
Mr. Finkle. If I could, I would add that I would be
concerned for any State that put any damper on their ability to
use eminent domain at some point in the future. I fear for
places like Texas and Alabama that have already rushed and
passed State legislation to put a limit without considering the
issues of blight and redevelopment that they may need. And
places like Birmingham in Alabama will need to do redevelopment
from time to time, and are they going to allow an occasional
holdout to keep a blighted area stay blighted because they have
put some type of cap on their ability or hindered their ability
to redevelopment at some point in the future.
Mr. Anderson. I would say--point out that both Alabama and
Texas do have exemptions for blight removal.
Mr. Bass. Are there alternatives to eminent domain
proceedings to achieve the same objective of acquiring property
for public use?
Mr. Finkle. I mean, clearly, from the municipal, from the
economic development point of view, eminent domain is the
choice of last resort.
Mr. Bass. Yes.
Mr. Finkle. In the deals that I am aware of, and I am
familiar with lots of them around the country, you typically
try to get the private sector to either--the government, if it
is doing a redevelopment plan, you try to get them to do the
deals through negotiated sale. You try to make offers and you
try to get that done in the private sector. And there just are
situations where you end up having a holdout. That is why
eminent domain has been useful in allowing for redevelopment of
a number of areas around the country.
Mr. Bass. Mr. Chairman, I have no further questions.
Mr. Otter. The chair recognizes that the gentleman yields
back, and the chair would recognize Congresswoman Blackburn.
Ms. Blackburn. Thank you, Mr. Chairman. I want to thank all
of you for taking the time to be with us today and we really do
appreciate this. And I will tell you, quite honestly, I am from
Tennessee and have heard a lot from my constituents about Kelo
and their concerns about this and the Supreme Court taking
property.
And in Tennessee, we talk about it in terms of also of
intellectual property. And I will tell you what, Mr. Finkle, if
you were out of Nashville, I think right now we would be
writing a country music song about you saying, if the mind can
achieve and conceive and believe, the government can take. And
unfortunately, I feel like that that is the opinion that you
have. It concerns me, sir, that you choose to refer to private
property owners as holdouts. By and large, sir, they are
American citizens who have worked hard, have earned some money,
have put together a little piece of the pie that they turn into
their American dream and their nest egg, and they are choosing
to protect that. So what you see as being a grand plan of
redevelopment, I would very respectfully disagree with you and
say I see it as massive government intervention and planning.
And so on that, we are going to have to disagree, but I go
want to come to you for some questioning, if we may, sir. You
say in your testimony that government agencies should not be in
the real estate development business, but then you turned
around and you keep talking about underdeveloped areas and
areas that look like, unfortunately, I think you used the term
hockey player's teeth. Some of my Nashville Predators might not
appreciate that term. But you are putting--talking about
putting government in the real estate business with
redevelopment, because government has decided that an area is
underdeveloped. So should not the private sector and the
property owners and not the government or the economic
professionals determine what is the best use of that land? So
where are you going to come down on this?
Mr. Finkle. Let me respond in a couple ways. First----
Ms. Blackburn. You can do without a song, right?
Mr. Finkle. You know, I thought you had a good start of the
song, too, but I think the rest of my family would be most
impressed, even if it had a little snide remark to it, that my
name in a song would be interesting.
At the end of the day, what we have done national is, we
have set up cities, in many cases, to fail. And we have set up
tax schemes that require cities to hold onto what jobs they
can, grow jobs where they can, and build tax base where they
can. And we pit their suburban community against a central
city, or a suburban community against another suburban
community, in the way that they have to pay for fire services,
police services, sanitation services, Meals on Wheels, homeless
shelters, is to generate taxes and jobs in the territory, the
land that is within their municipal boundaries.
With that, and with property taxes being one of the largest
parts of their tax base, they have to be cognizant as to where
they can get the highest and best use out of their taxes. So
government should not be in the development business. That is
what the private sector is for. But the government does need to
think about, how do you expand jobs in the community? That is
where your taxes are going to come from, if you have--and
listening to Mr. Shelton's testimony, he talked about, how do
we provide living wages to people in communities? We need to
think about, where are those places that we can put businesses,
how can those businesses grow, and where is it possible to grow
them?
Ms. Blackburn. So in essence, what you are telling me is
that you favor a centralized elitist approach to this and not a
local government-community involvement?
Mr. Finkle. No, that is not what I said.
Ms. Blackburn. That is not what you are saying?
Mr. Finkle. No. What I am saying is--and we have been
talking about redevelopment plans somewhat during this hearing
so far. You know, when a redevelopment plan is proposed for an
area, you are involving the private sector, the lenders. You
are involving neighborhood residents in helping to think about
what those future plans are for an area.
Ms. Blackburn. Well, my time is expired, but I will
respectfully say to you that I am delighted that we have had
this hearing, and I appreciate the debate from you all, and I
would continue to err on the side of allowing the local
communities and private property owners to work together to
decide how they want to use what is there for the city's use,
and private property owners, what they want to do with their
own property, but thank you very much.
Mr. Otter. The gentlelady's time has expired. The chair
would now recognize himself for 5 minutes. And I would begin by
asking unanimous consent that the opening statement which I did
not make be put in the record without objection.
Now, I am going to go along with everybody else, Mr.
Finkle, and probably pick on you because, you know, in Idaho,
we have one of the most liberal eminent domain laws in the
Nation, and we didn't know that until Kelo. Kelo was for us in
this generation, I think, the Boston Massacre. We have been on
a slippery slope on private property rights, whether it is
intellectual, and I see no difference between creative genius
and dirt, I see none whatsoever; in fact, I think one supports
the other. But when I took a look at Kelo, and when it first
came about, suddenly people started talking about private
property; suddenly there was a recognition that our
Constitution will not survive in a country that doesn't believe
in private property rights and hold that sacred, as well as all
the rest of the amendments.
But let first off go to the blight question, and there is
always a problem in the declaration of eminent domain. We have
got a lot of problems with that and we have got to clean that
up. But as I said, in Idaho, we have got one of the most
liberal ones, because nobody would ever think of taking away,
no public official would ever think of approaching anybody on
eminent domain, unless it was for a highway, or unless it was
for some very purpose that government needs to use it, not just
benefit by it, and that is the big difference that I think
Professor Ramsey mentioned but hadn't really spoken to. The
Constitution, I think, meant for public use, and the Supreme
Court interpreted it as public benefit. Well, there is a lot of
public benefit that we can get out of using somebody else's
property. We have been doing that for years with the Endangered
Species Act and the Wetlands Act and lots of others.
And by the way, while I am on the subject of the problems
that we have got in the Gulf, and I am certainly sympathetic
with those problems, but we do have planning and zoning laws,
and those are--will take care of most of that, No. 1. We do
have--in the 9th Ward, we do also have flood plain laws and
floodway laws, and there is a lot of places in Idaho, and we
are 2800 feet above sea level, that we can't build because it
is too close to a river and in 500 years there might be a
flood. We have them in every State, and most of those are
endowed some kind of Federal official sanction. So you know, I
think I am thankful for the Kelo decision, because I think it
really brings to the forefront how far afield that we have
actually gone.
But in declaring an eminent domain, why wouldn't we give,
or what would be wrong, then, with giving the property owner
who is going to lose the use of his property as a result of
this action, why don't you say, okay. Well, you can either take
the money or half the money, and you take a share in this
development that is going to happen as a result of investing
your property right into this new development. We are going to
give you the option. What would be wrong with that?
Mr. Finkle. Mr. Chairman, I was asked that question when I
testified before Congress in the Congressman Hayes' committee
when he had a field hearing in Ohio, and I guess my trite
answer back at that particular point in time was, would the
person be willing to take part of the loss if the project lost
money as well? And I would think somebody would want just
compensation. And you know, I think the issue that many of us
struggle with over this issue is, maybe we should be talking
about just compensation as opposed to, you know, whether you
can use eminent domain? Is it 150 percent of value that
somebody should get? Is it 125 percent of value? Is it 200
percent of value when you use eminent domain for an economic
development purpose? If you start giving somebody a share of
the upside, what if there is no upside, and then you have put
that person in worse shape as opposed to coming up with the
solution that you thought was going to make them rich.
Mr. Otter. Well, I believe that there is a basic concept
that is probably more important than even the private property
rights and the Fifth Amendment, and that is personal
responsibility. If you want to make the choice and take the
risk, be bold, be daring. That is the risk that you take. It
happens every day in this country and that is what has built
this country.
Mr. Finkle. But as Mr. Shelton said, too often these are
located in distressed communities. We are talking with people
that may not be as educated because they are in poverty. They
may not have made it through high school, and you are putting
them in a Catch 22, you know, the great riches or the ability
to have a home somewhere else that is equal to or better than
what they currently have.
Mr. Otter. My time has expired, and if the committee wants,
we will have a second go around. But I would only mention to
you that the last great effort we had in that direction was
called urban renewal.
Mr. Finkle. Yes.
Mr. Otter. And in Boise, Idaho, we still have holes in the
ground that were left from all the buildings they tore down and
never rebuilt. So I would now recognize Ms. Schakowsky for 5
minutes.
Ms. Schakowsky. Thank you, Mr. Chairman.
I would assume, Mr. Shelton, that the issues of just
compensation existed before the Kelo decision, even when
something was for a clearly defined public use. And I am just
wondering if you think there is any way to write a law or to
focus on this issue of just compensation that would take into
account more equitably the renters you are talking about, or if
any others think, Mr. DeLong, since you suggested it, whether
or not we actually could do that.
Mr. DeLong. I would think the human disruption cost seem to
me----
Ms. Schakowsky. Let me get Mr. Shelton and then----
Mr. DeLong. Oh, I am sorry.
Ms. Schakowsky. Okay, go ahead.
Mr. Shelton. I believe that the short answer is yes. I
think there is a possibility of doing just that, but it is
going to require a number of things being taken into
consideration. No. 1, usually when we are talking about just
compensation, you are looking at what the property is worth
just in the context of the way things are then and there.
Ms. Schakowsky. Right.
Mr. Shelton. But also, any negotiation requires there to be
power on each side to be able to negotiate. If the options are,
you can sell it to us at this price, I was going take it
anyway, which has a tendency to be exactly what we experience
in most communities.
Ms. Schakowsky. Yes.
Mr. Shelton. You have taken away the power of that person
to actually negotiate what is just and then being compensated.
Ms. Schakowsky. And you are suggesting, again, in the real
world, that these are not empowered communities or individuals
to begin with.
Mr. Shelton. Absolutely. And finding tools to actually
empower the community so they can make decisions along these
lines so they can actually actively negotiate the deal to
provide the just compensation, is one that we would have to
find a way to work out.
Ms. Schakowsky. Mr. DeLong?
Mr. DeLong. Yes. There are indeed a lot of sticky issues,
but I think this would be an excellent start. I think this has
been a problem for years, and that is, that people will tend to
get strictly the real estate value and they don't get the real,
the value of the loss, whether it is the human disruption or
whether it is the loss of a going concern value of a business.
Ms. Schakowsky. Yes.
Mr. DeLong. And it does seem to that this is an area where
the courts have been a bit remiss, and where Congress might
really--should really look at this is as a possible way of
solving the problem without getting into all these issues about
just what is public use and what is not.
Ms. Schakowsky. Mr. Otter raised the issue of zoning laws,
et cetera, and, Mr. Finkle, you were shaking your head, that
those are not applicable here or not sufficient to address
this.
Mr. Finkle. Thank you. It was specifically in relationship
to the question of the 9th Ward in New Orleans, that unless
there is an overall redevelopment effort as you are acquiring
the land, and I don't--I guess I am going back to--I don't see
us being able to redevelop those neighborhoods without, you
know, some abuse, if you want to call it abuse, of property
rights, grabbing the land in some way and redevelop, and then
pay people for the value of it or give them a new home at the
end of the process, whether it is on their plot of land or not
in the future. I don't see that as planning or zoning laws
actually helping to resolve that. It becomes an equity trade,
so to speak, as you start the redevelopment process. As you
rebuild some of the homes, whether it is in the 9th Ward or
whether it is elsewhere in New Orleans, how do you give it back
to them after you have taken it? And if you decide that it is
in flood zone and you are not going to rebuild, you still have
a compensation question, it seems to me, as you have prevented
them from going back and using their property rights at all.
Ms. Schakowsky. Well, you have the compensation question in
any case, right?
Mr. Finkle. Absolutely.
Ms. Schakowsky. And you know, we had, after a big flood on
the Mississippi River in 1993, a whole town that was moved off
the flood plain onto higher ground. I don't know if these were
all the questions that were involved, but I am certain that
people were compensated to help do that.
Mr. Finkle. Yes. I do know that some of the delegation from
North Dakota have had one hearing on this question, and did
raise this whole issue of what do you do, because they had
their river flow out its banks and then ended up having to
acquire some of the land, whether they were houses that were
once used, and there became an issue of eminent domain, and
they were particularly concerned about how do you address those
issues if you started to limit the Federal Government's
financial participation if you use eminent domain, and they
were saying that it is not practical.
Ms. Schakowsky. Thank you.
Mr. Otter. The chair would recognize Mr. Bass. Ms.
Blackburn?
Ms. Blackburn. Thank you, Mr. Chairman. I do have just a
couple of other things.
Going back, Mr. Finkle, you just--you are going to feel
like you have just had a day of it, aren't you?
Mr. Finkle. I am beginning to believe that you and I are
going to be real friends before the day is over.
Ms. Blackburn. Absolutely. The same song, second verse, how
is that? We will have at it.
Let us talk about the redevelopment again, because in
reading your testimony, I will have to tell you, it just
intrigues me to see your point of view. It is different from
my. You and I don't share the same philosophical underpinning,
I would assume. And as I said previously, I feel like you go
for the centralized approach; I would go for the local control
approach. Listening to you, I feel like that you believe, in
order for someone to be educated enough to know what the value
of their property is, they have got to have a Harvard degree. I
went to Mississippi State University, which is Cal College to a
lot of folks, and I think it had served me just fine. I
appreciate a good plot of dirt, and I think a lot of my
constituents from Nashville to Memphis to Clarksville,
Tennessee appreciate a good plot of dirt, too.
So let us talk for just a minute, because you state that
eminent domain facilitates redevelopment projects, because the
public would be unable to support many inner city projects. And
if they are not able to support it, then are we--you mentioned
earlier that you thought tax schemes and the way we organize
cities many times set up cities to fail. So if you are going to
practice eminent domain to facilitate redevelopment into areas
that could not support redevelopment, would that not be the
same thing, are you not creating an artificial market, are
trying to therefore create an artificial market through
acquiring the properties in local communities that you have
organized for their development, but it is an underserved
population or an area that cannot support it. So again, I turn
the question back around to you. Are you not setting them up to
fail?
Mr. Finkle. I would agree with most of what you said and
disagree with your conclusion. At the end of the day, what we
are doing with economic development, either through your State
Department of Economic Development in the State of Tennessee or
in the city of Nashville's Economic Development Department, is,
we are engaging in some type of intervention technique to help
create jobs, sustain tax base, and enhance the wealth of the
people that live in that local community. Is it an intervention
technique? It is. That is what the Economic Development
Administration is all about. That is what the CDBG Program is
all about. That is what many of the Federal tools are all about
that we use. It is to support places that are having a
difficult time in one way or the other. CDBG Program is
specifically used for low and moderate income neighborhoods,
and there are very specific definitions around it, but is to
prop up those neighborhoods. So yes, I would agree with you.
Now, once those investments have been made, you are hoping that
that hasn't set them up to fail in the future.
Ms. Blackburn. Okay. I thank you for that. I think the
difference, then, is that when we look at these programs when I
served in the State senate in Tennessee or here at the Federal
level, we don't take action unless the local community comes to
us with a request. And what you are saying is, you should
override that and take action in place of their making a
request.
Ms. Schakowsky. Would the gentlewoman yield?
Ms. Blackburn. Sure.
Ms. Schakowsky. In the case Kelo, though, we weren't
talking about the local----
Ms. Blackburn. Oh, I am aware of that. I am aware of that.
I am referring back to part of his testimony.
Ms. Schakowsky. Okay.
Ms. Blackburn. But thank you.
Mr. Finkle. We elect local officials to think about the
future for their communities. And you know, most of them do so
at a public request, and they understand where their areas of
opportunities are within their communities, and that is why
local officials are put in positions to lead, and that is what
we hope that they do.
Ms. Blackburn. We certainly do, and we thank you for your
time.
Mr. Otter. The chair would recognize himself for the second
round.
I wanted to get back on how we make local decisions about
the kind of development or the kind of planning and zoning, the
kind of neighborhoods we are going to have. Don't we do a lot
of that actually with planning and zoning laws and taxation?
Mr. Finkle.
Mr. Finkle. Is that a question? Yes.
Mr. Otter. Yes, that is a question.
Mr. Finkle. Of course, we do it with planning laws, zoning
laws. And you know, one of the additional tools that the
communities use is enterprise zones, and we provide tax
incentives for businesses to locate in particular places, or we
reduce taxes across the board, either at the State level or the
local level, to support local enterprise.
Mr. Otter. Yes. Professor Ramsey, do you see an opportunity
in the Kelo decision for one level of government to actually
supercede the use of another level of government's land? For
instance, at the State level in Idaho, we may want to see
something developed in one of the little cities or counties,
and decide through eminent domain to actually take the
government land away from the government. Actually, I think Mr.
Finkle is the one that generated this thought to me, is that
the State might decide that they have got a better use, a
higher economic purpose, and thus a better return in jobs and
everything else, to establish perhaps a Yucca Mountain site
someplace where they have--where the government already owns
the land, only it is just the wrong level of government. Could
the government of the State of Idaho supercede the government
of, say, a county in Idaho and say, we are going to take this
land away from you through eminent domain and use it?
Mr. Ramsey. Well, you really should be a law professor
because you ask the most excellent hypotheticals. Let me see
what I can do with that one.
My answer to that, I think, and it may not be satisfying to
you, is that I think that would be a question of Idaho State
law. I think the Kelo decision actually would not go to that at
all, because I don't think that the local government, you know,
locality in Idaho would have a constitutional right to
property. The eminent domain clause goes to the taking of
private property.
Mr. Otter. I understand. And not only that, the county is a
creation of the State.
Mr. Ramsey. Exactly.
Mr. Otter. Let us go one further. Because the Federal
Government is the creation of the States, and this is really
where I was headed, would it then be an opportunity for the
State to say, well, there is 35 million acres of Federal land
in Idaho, and we would like to build a dam on some of that
land. And so we are going to--because you are a creature of the
States and not vice versa, we are now going to take this land
and do with it what we want, let us say.
Mr. Ramsey. I think that would not be constitutional,
although, again, it would not come out of the Kelo----
Mr. Otter. Because of the supremacy law?
Mr. Ramsey. Exactly. Because of the supremacy clause and
because of Federal immunity against State interference, I think
that the State would not be constitutionally entitled to do
that. And if it were, there is certainly no doubt that Congress
could direct the State to stay well clear, and I actually
assume Congress has implicitly done that in authorizing the use
of the Federal land that is going forward right now. So I think
the State could not interfere with the Federal land.
Mr. Otter. I understand. I have no further questions. Did
you have any? This meeting is now over.
[Whereupon, at 3:35 p.m., the subcommittee was adjourned.]