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H.R. 3405, STRENGTHENING THE

OWNERSHIP OF PRIVATE PROPERTY ACT OF 2005 (STOPP)

LEGISLATIVE HEARING

BEFORE THE

COMMITTEE ON RESOURCES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

Thursday, October 27, 2005

Serial No. 109-33

Printed for the use of the Committee on Resources

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

or

Committee address: http://resourcescommittee.house.gov

(II)

COMMITTEE ON RESOURCES

RICHARD W. POMBO, California, Chairman

NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska

Jim Saxton, New Jersey

Elton Gallegly, California

John J. Duncan, Jr., Tennessee

Wayne T. Gilchrest, Maryland

Ken Calvert, California

Barbara Cubin, Wyoming

Vice Chair

George P. Radanovich, California

Walter B. Jones, Jr., North Carolina

Chris Cannon, Utah

John E. Peterson, Pennsylvania

Jim Gibbons, Nevada

Greg Walden, Oregon

Thomas G. Tancredo, Colorado

J.D. Hayworth, Arizona

Jeff Flake, Arizona

Rick Renzi, Arizona

Stevan Pearce, New Mexico

Henry Brown, Jr., South Carolina

Thelma Drake, Virginia

Luis G. Fortun ̃ o, Puerto Rico

Cathy McMorris, Washington

Bobby Jindal, Louisiana

Louie Gohmert, Texas

Marilyn N. Musgrave, Colorado

Vacancy

Dale E. Kildee, Michigan

Eni F.H. Faleomavaega, American Samoa

Neil Abercrombie, Hawaii

Solomon P. Ortiz, Texas

Frank Pallone, Jr., New Jersey

Donna M. Christensen, Virgin Islands

Ron Kind, Wisconsin

Grace F. Napolitano, California

Tom Udall, New Mexico

Rau ́l M. Grijalva, Arizona

Madeleine Z. Bordallo, Guam

Jim Costa, California

Charlie Melancon, Louisiana

Dan Boren, Oklahoma

George Miller, California

Edward J. Markey, Massachusetts

Peter A. DeFazio, Oregon

Jay Inslee, Washington

Mark Udall, Colorado

Dennis Cardoza, California

Stephanie Herseth, South Dakota

Steven J. Ding, Chief of Staff

Lisa Pittman, Chief Counsel

James H. Zoia, Democrat Staff Director

Jeffrey P. Petrich, Democrat Chief Counsel

(III)

CONTENTS

Page

Hearing held on Thursday, October 27, 2005 ........................................................ 1

Statement of Members:

Bonilla, Hon. Henry, a Representative in Congress from the State of

Texas .............................................................................................................. 7

Prepared statement of ............................................................................... 8

Drake, Hon. Thelma, a Representative in Congress from the State of

Virginia .......................................................................................................... 5

Gibbons, Hon. Jim, a Representative in Congress from the State of

Nevada ........................................................................................................... 4

Herseth, Hon. Stephanie, a Representative in Congress from the State

of South Dakota ............................................................................................ 5

Otter, Hon. C.L. ‘‘Butch,’’ a Representative in Congress from the State

of Idaho .......................................................................................................... 10

Prepared statement of ............................................................................... 12

Pallone, Hon. Frank, Jr., a Representative in Congress from the State

of New Jersey ................................................................................................ 3

Pombo, Hon. Richard W., a Representative in Congress from the State

of California ................................................................................................... 1

Prepared statement of ............................................................................... 2

Statement of Witnesses:

Arroyo, Mario, Co-Owner, Arroyo’s Cafe ́, Stockton, California ..................... 30

Prepared statement of ............................................................................... 31

Gall, Bert, Attorney, Institute for Justice, Washington, D.C. ...................... 23

Prepared statement of ............................................................................... 24

Hance, Earl, President, Maryland Farm Bureau, Inc., on behalf of the

American Farm Bureau Federation ............................................................ 27

Prepared statement of ............................................................................... 29

Marzulla, Nancie, President, Defenders of Property Rights, Washington,

D.C., Prepared statement of ......................................................................... 20

Wally, Barbara, Attorney, Defenders of Property Rights, Washington,

D.C., Oral statement of ................................................................................ 19

(1)

LEGISLATIVE HEARING ON H.R. 3405,

STRENGTHENING THE OWNERSHIP OF PRIVATE PROPERTY ACT OF 2005 (STOPP).

Thursday, October 27, 2005

U.S. House of Representatives

Committee on Resources

Washington, D.C.

The Committee met, pursuant to call, at 10:03 a.m. in Room

1324 Longworth House Office Building, Hon. Richard W. Pombo,

Chairman, Committee on Resources, presiding.

Present: Pombo, Gibbons, Pallone, Drake, and Herseth.

STATEMENT OF THE HON. RICHARD W. POMBO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

The CHAIRMAN. The Committee will come to order. We are holding a hearing today on H.R. 3405, Strengthening the Ownership of

Private Property Act of 2005.

Property rights are the heart of individual freedom and the foundation for all other civil rights guaranteed to Americans by the

Constitution. Without the freedom to acquire, possess, and defend

property, all other guaranteed rights are merely words on a page.

The Fifth Amendment holds that private property shall not be

taken by the government for public use without just compensation.

These safeguards have been under assault for decades. And until

now, the typical victims were family farmers and ranchers in the

West.

The Supreme Court’s decision in Kelo v. the City of New London

case to allow local governments to declare eminent domain in this

case goes beyond compensation. It wholly perverts the intent of

public use, and in so doing, may turn the American dream of home

ownership into a nightmare. It has delivered the property rights

assault from rural America right to the doorsteps of suburbia.

In New London, Connecticut, city planners essentially decided

that evicting 15 homeowners from their homes was in the greater

good as a public use for an office park and new condos. But the

public, to be directly served in this case, was a private corporation.

Whether they were newlywed couples in their first home or lifelong

residents who own their homes outright, whether it is farmers and

ranchers who have been on their land for generations or suburban

communities with the promise of fellowship, this appalling

behavior cannot be tolerated anymore.

2

The Supreme Court’s decision to allow local government to de- clare eminent domain turns the Fifth Amendment on its head. We

cannot forget about rural America, as well. Rural America deserves

greater protections, too, more than a mere Sense of Congress. No

longer will public use correctly be defined as a road, a bridge, a

school, or a hospital. It can be defined as an abstract greater good,

such as increased tax revenue or economic development.

Private property can now be taken at will by government and re- allocated to another private entity if it runs afoul of a local bureaucrat’s notion of public use and greater good. Fortunately, Congress maintains the power over the purse strings. We will act to minimize the effects of this ruling to the

greatest extent possible. States and local communities alike are

recognizing the importance of private property rights, and are beginning to act to protect themselves from this decision. We have a

chance at real reform here, but should we have such a narrow

focus on private property protections? Should we include intellectual private property rights protections in this bill, as well? Why just a Sense of Congress for rural America? Aren’t these important enough issues to address in this bill? I hope when we eventually go to the Floor with the bill, we do not shortchange property owners for political expedience. I have

been fighting these injustices since before I was elected to this

body, and will continue to do so in the future. [The prepared statement of Chairman Pombo follows:]

Statement of The Honorable Richard Pombo, Chairman,

Committee on Resources

Property rights are the heart of individual freedom and the foundation for all other civil rights guaranteed to Americans by the Constitution. Without the freedom

to acquire, possess and defend property, all other guaranteed rights are merely

words on a page.

The Fifth Amendment holds that private property shall not be taken by the government for public use without just compensation. These safeguards have been

under assault for decades and until now, the typical victims were family farmers

and ranchers in the West.

The Supreme Court’s decision in the Kelo v. City of New London case to allow

local governments to declare eminent domain in this case goes beyond compensation; it wholly perverts the intent of public use, and in so doing, may turn the American dream of home ownership into a nightmare. It has delivered the property rights

assault from rural America right to the doorsteps of suburbia.

In New London, Connecticut, city planners essentially decided that evicting 15

homeowners from their homes was in the ‘‘greater good’’ as a ‘‘public use’’ for an

office park and new condos. But the public, to be directly served in this case, was

a private corporation. Whether they were newly-wed couples in their first home or

life-long residents who owned their homes outright, whether it is farmers and

ranchers which have been on their land for generations or suburban communities

with the promise of fellowship, this appalling behavior cannot be tolerated any

more. The Supreme Court’s decision to allow local governments to declare eminent

domain turns the Fifth Amendment on its head. We cannot forget about rural America as well. Rural America deserves to be greater protections too, not just a Sense

of Congress.

No longer will public use correctly be defined as a road, bridge, school or hospital,

it can be defined as an abstract greater good, such as increased tax revenue or economic development. Private property can now be taken at will by government and

reallocated to another private entity if it runs afoul of a local bureaucrat’s notion

of public use and greater good.

Fortunately, Congress maintains the power over the purse strings. We will act to

minimize the effects of this ruling to the greatest extent possible. And, States and

local communities alike, recognizing the importance of private property rights, have

also begun to act to protect themselves from this decision. We have a chance at real

3

reform here. Should we have such a narrow focus on private property protections?

Should we include intellectual property rights protections on the Floor? Why just

a Sense of Congress for rural America? Aren’t these important enough issues to address in this bill? I hope when we go to the Floor with whatever bill, we do not

short shift property owners for political expedience. I have been fighting these injustices since before I was elected to this body and will continue to do so in the future.

The CHAIRMAN.Mr. Pallone.

STATEMENT OF THE HON. FRANK PALLONE, JR., A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF

NEW JERSEY

Mr. PALLONE. Mr. Chairman, I want to thank you for holding this hearing. And although I didn’t hear everything you said, I

want you to know that I agree with all of it, at least what I heard

from when I came in.

I have grown concerned with the increasing rate of eminent domain abuse cases across the country. Eminent domain has often

been properly invoked to allow for the building of new roads, public

facilities, and critical military infrastructure.

In 2000, however, with the City of New London, Connecticut

case, the City condemned 15 homes so a developer could build offices, a hotel, and a convention center. Suzette Kelo and her neighbors spent years in the legal battle that culminated in June, when

the U.S. Supreme Court ruled five to four against them.

The Kelo v. New London ruling set a disturbing precedent, in my

opinion, the precedent that a town has the right to invoke eminent

domain in the name of so-called economic revitalization. This decision raises serious concerns about whether there are any limits to

the government’s power with regard to the takings clause of the

Constitution.

I strongly oppose the majority’s opinion in the Kelo case. This decision weakens the basic Constitutional protection against taking

private property for private uses. Our founding fathers were clear

when they drafted the Fifth Amendment, writing that the government could only take private property for public use, provided that

property owners are paid just compensation.

I agree with Justice Sandra Day O’Connor’s dissenting opinion in

Kelo. She made clear that there have been appropriate uses of eminent domain throughout history, but that without the proper safeguards, eminent domain can easily be abused.

My State of New Jersey is particularly prone to eminent domain

abuse because of our high real estate prices and plentiful

beachfront property in my district. Municipalities that want to

make way for luxury housing in the name of economic revitalization can easily replace a well-kept middle or working class community. And that is definitely not what our founding fathers meant

when they wrote the Fifth Amendment.

Now, I understand that eminent domain is necessary in rare and

exceptional circumstances involving a public health or safety crisis,

but is not appropriate to allow residents of our communities to be

displaced for luxury condominiums without giving any thought to

where the people from these communities would go.

That is why I have also introduced my own legislation to curb

the inappropriate use of eminent domain. The Protect Our Homes

4

Act that I have introduced simply states that there should be no

taking of homes for economic development unless there are rare

and exceptional circumstances involving a public health or safety

crisis. This legislation would render any state or local government

that does otherwise ineligible for Federal financial assistance under

any program administered by the Department of Housing and

Urban Development.

It would also put in place appropriate safeguards to ensure that

any eminent domain process is fair and transparent.

Finding the right balance between a state or municipality’s

rights in Federal involvement is never easy. But with this particular issue, Congress must take action. We have an obligation to

protect our citizens as we revitalize our aging neighborhoods. We

should not sit idly by and tolerate abuses of eminent domain in the

name of economic revitalization. It is time we strengthened the

Federal law to guarantee that homeowners throughout this great

country are protected.

And again I want to commend the Chairman for holding this

hearing. I commend Mr. Bonilla for working to put together this

legislation. And I look forward to hearing from the witnesses and

working further so that we can actually accomplish something on

this very important issue.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you. Mr. Gibbons, did you have an opening statement?

STATEMENT OF THE HON. JIM GIBBONS, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF NEVADA

Mr. GIBBONS. I do, Mr. Chairman, very briefly though, if you

would permit me. Thank you. And again, Mr. Chairman, thank you

for your leadership in bringing this bill before us today.

I, like many of my colleagues, believe that the recent Kelo Supreme Court decision went against the basic principles of our democracy, and was a slap in the face of private property rights. And

as a Congress, it is our responsibility to uphold the Constitution

and the rights of the American people to own property, and not to

worry that it will be taken for a greater private good.

The Kelo decision is a travesty, and a direct contradiction to the

intent of the framers of the Constitution. And I am sure that we

can all see the dangers, the imminent dangers that are posed by

the Kelo decision in our communities, in our states, and throughout

districts across America. And I am sure the framers of the Constitution never intended for state and local governments to use

eminent domain to give an advantage to one private property

owner over another.

I am pleased to be here today to receive the testimony and to

hear and discuss this legislation, to address the misguided Kelo decision, and the abuse of powers of eminent domain that it represents. And I look forward to hearing from my good friends, Mr.

Bonilla of Texas and Mr. Otter of Idaho. After all, Mr. Otter represents the Western Caucus Private Property Tax Force, which I

am proud to be a member of. Both of these witnesses, Mr. Chairman, and their testimony today is particularly important to all of

us, because they can speak to the broad range of property rights

5

challenges that are particularly important, and those that we face

in the western states especially.

Again, Mr. Chairman, thank you. I look forward to the hearing;

I look forward to the testimony by witnesses.

The CHAIRMAN. Thank you. Ms. Drake.

STATEMENT OF THE HON. THELMA DRAKE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA

Ms. DRAKE. Thank you, Mr. Chairman. I also would like to thank

you for holding this hearing so timely. I would like to thank the

patrons of the bill for their work on this.

I have been involved in this issue of eminent domain for over 20

years. I am probably one of the few Members of Congress where

an authority has tried to take my own personal home, but I can

assure that I still live in my home, even though that was 17 years

ago.

I think it is a basic right of Americans to own property and to

know that they control the future of that property. It is part of our

American dream.

I think, as distressed as I was with the Kelo decision, I think the

good that will come from it is that we will see legislation in all 50

states to address it. I hope that Congress will continue to address

issues that we can, and send a clear message to the Court that this

was absolutely the wrong decision. And that in America, we believe

in private property rights.

And I thank you, Mr. Chairman.

The CHAIRMAN. Thank you. One of the co-authors of the bill, Ms.

Herseth.

STATEMENT OF THE HON. STEPHANIE HERSETH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH

DAKOTA

Ms. HERSETH. Thank you, Mr. Chairman. And thank you for taking the time during this busy period to schedule a hearing on the

strengthening of ownership of private property.

I want to acknowledge the hard work of Chairman Bonilla for his

strong leadership on this issue, as well as Chairman Goodlatte, and

your hard work, Chairman Pombo. I have been pleased to be part

of this process, and Mr. Bonilla and I have been very pleased by

the determined and thoughtful attention given to our legislation by

champions of private property rights like yourself.

This legislation is a priority for many, including farmers and

ranchers and landowners across my home State of South Dakota.

I am extremely pleased that the Agriculture Committee took its

primary jurisdiction on the STOPP Act seriously, and made reporting out the bill a priority. It is important, common-sense legislation

that deserves our attention.

As my colleagues know, the Supreme Court decision in Kelo v.

New London dealt a serious blow to fundamental property rights

in the United States. This ruling allows governments to take private property from one landowner and give it to another private individual, so long as some economic development justification is

given. In short, it means that governments can take your property,

and give it to someone else.

6

I have been impressed by the widespread support for the proposition that this decision requires prompt Congressional action. And

I am pleased that the leadership and Members of this Congress

seem to agree that action on this legislation should be expedited.

As I have said before, South Dakotans from all walks of life have

expressed their outrage about the Supreme Court’s Kelo decision.

As I have repeatedly noted in previous discussions of the STOPP

Act, even Justice John Paul Stevens, the author of the Kelo decision, has expressed the feeling that the use of eminent domain by

the City of New London was ‘‘unwise as a matter of policy.’’ And

I agree.

It is time for Congress to take action, and I am pleased to have

been a part of that effort to craft a good bipartisan response that

addresses these policy shortcomings by discouraging state and local

governments from arbitrarily taking land from private landowners,

and giving it to another party.

South Dakota is a rural state, and our population’s livelihood is

deeply tied to the land. This is true for virtually all of my state citizens, whether they live on a farm or in town. Because of this, the

belief in private property rights runs strong and deep, and everyone that I have talked to back home on this matter has delivered

the same message: landowners should not be vulnerable to the

whims of a government that decides to take their land, and often

their livelihood, just to give it to someone else who the government

decides would deliver more in tax revenues.

I am pleased to say that many of my colleagues agree with this,

which is why, in the short time since its introduction, as I mentioned, the STOPP Act has garnered broad bipartisan support because the legislation makes so much sense. I would encourage my

colleagues here today to co-sponsor the bill, many of whom I know

already have, and to continue to work with Chairman Pombo,

Chairman Goodlatte, Chairman Bonilla, myself and others, to ensure that this issue is brought before the full House as soon as possible.

I think it is appropriate to mention at this time another bill

being marked up by the Judiciary Committee as we speak. As

many of you know, Chairman Bonilla and I drafted H.R. 3405 to

provide a strong response to the Kelo decision. At the time we introduced the STOPP Act, the legislation produced by the Judiciary

Committee, which took a similar approach by withholding Federal

funds when eminent domain is used to facilitate a private-to-private transfer of property for economic development purposes, left

open the possibility that a creative community or state could essentially shift funds within its budget to render the Federal response

essentially meaningless.

In the words of Bob Stallman, President of the American Farm

Bureau, in his testimony before the Agriculture Committee, ‘‘All of

the Federal bills introduced thus far take this approach. The differences among them are the degree to which such funding is withheld. While we support all the approaches taken in these bills,

H.R. 3405 seems to offer the most effective deterrent to abuses of

eminent domain.’’

Yesterday I introduced legislation, along with Mr. Bonilla and

Mr. Goodlatte once again, as well as Judiciary Committee

7

Chairman Sensenbrenner, Ranking Member Conyers and others,

modeled heavily on the approach taken in the STOPP Act. I think

this development is a testament to the hard work of individuals

like Chairman Bonilla and Chairman Goodlatte, Ranking Member

Peterson, you, Chairman Pombo, and others to develop, refine, and

promote a strong common-sense approach to the situation presented by the Kelo decision.

As I have said, I am happy to have been part of these important

efforts, and look forward to testimony from today’s witnesses.

Thank you.

The CHAIRMAN. Thank you. At this time I recognize our first

panel of witnesses: Henry Bonilla from the State of Texas, and

Butch Otter from the State of Idaho.

Mr. Bonilla, you were the lead author of the bill that we are

holding the hearing on today. And I know you acted very quickly

after that decision, and, working in tandem with Ms. Herseth, were

able to come up with legislation that a number of us became original co-sponsors on.

We appreciate all the work that you put into this, and we are

looking forward to hearing from you.

STATEMENT OF THE HON. HENRY BONILLA, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. BONILLA. Thank you, Mr. Chairman. I ask unanimous consent that my written testimony be entered into the record.

The CHAIRMAN. Without objection.

Mr. BONILLA. And I will just briefly summarize. As I listened

carefully to the opening remarks that you made, Mr. Chairman,

and other Members of your Committee, I think they speak to the

heart of the issue.

The Kelo decision is one that created an uproar around the country, no matter where you lived, whether it was an urban area or

a rural community. And I think for that reason, there is overwhelming support to do something about this outrageous ruling

from the Supreme Court earlier this year that related, of course,

to the New London, Connecticut, situation.

The bill, as Ms. Herseth points out, is a bipartisan bill. It is a

rare moment in this town to see people standing side by side, in

some cases who identify with the far right, and in some cases identify with the far left, to stand side by side and say that we need

to get something done. And I think that if anyone looks at the list

of Members that are co-sponsoring our legislation, it is a testament

to the sincere effort that we have underway with House Bill 3405.

I also would like to commend you, Mr. Chairman, because from

the first day you came to Congress, and you and I walked in the

door the same day after the 1992 election, property rights was an

issue that you have championed.

In some cases when people were working on other issues that

perhaps are more popular at the moment, property rights has been

the issue that you have championed day in and day out since you

arrived here. And I want to commend you for that, as a believer

in the Constitution, and in the rights granted by our forefathers,

and how you have never lost sight of that. So you were a

8

trailblazer, and continue to be so. And I appreciate the strong support that you have given to this bill from the very beginning. Again, we have an all-star cast that has been a part of this since we wrote the bill. And I cannot say enough about also Ms. Herseth,

who was my partner in putting this bill together early on, and

worked very hard. The primary jurisdiction for this bill, although Resources obvi- ously has a major role in moving this bill forward, is the Committee on Agriculture, of which Ms. Herseth is also a Member. And

she has worked very hard to get co-sponsors and put the word out,

and move this bill through the system. And I am also glad to say that because of the work that we have done, as Ms. Herseth pointed out, there were other efforts pending

that dealt with the same concept of cutting money off to communities that try to undertake a taking for private gain. But there

were some loopholes in some of the bills. And although the Members who worked on those bills are very sincere in their efforts, we

looked at those and closed the door on any ability to shift funds

around, as Ms. Herseth said in her opening remarks. And because

of the work that was done, the hard work by Chairman Goodlatte,

this bill was reported out by that Committee by a vote of 40 to 1,

Mr. Chairman. And again, it is unusual to see such strong, acrossthe-board support for just about anything except for naming a post

office now and then in this town, but for an issue that is this significant to people across the country. So thank you for your support. And Ms. Herseth, thank you for your willingness to get on board with me early on when you and

I were the only ones who had our name associated with this bill.

We have come a long way. And Mr. Chairman, I appreciate your helping us move this bill down the road even farther. And the fact that we are going to actually, within a few days is my understanding, we are going to have

this bill on the Floor. And we can all wear it as a badge of honor. [The prepared statement of Mr. Bonilla follows:]

Statement of The Honorable Henry Bonilla, a Representative in Congress from the State of Texas

In July of 2004, the Supreme Court was petitioned to hear one of the most impor- tant property rights cases ever. Earlier that year the Connecticut Supreme Court ruled that even if there is noth- ing wrong with your home or business, church or synagogue, or even your whole

neighborhood or community, that government can still use eminent domain to take

your property and transfer it to someone else for their private gain. This ruling placed in jeopardy the very essence of the American way of life: that someone can start with nothing, build a family, a home, a business, and work to

make his community better. This dream is directly threatened by the fear that while

you work to create the American Dream, it may be taken away should government

decide that another individual could create greater tax revenue. This fear is real

and every individual who owns real property knows that homes generate less tax

revenue than businesses and small businesses generate less tax revenue than larger

ones. The issue before the Court was brutally simple: does government enjoy protection

under the Constitution to take property from one private party in order to give it

to another private party for the purpose of increasing tax revenue and income? Kelo

v. New London presented this question to the court in no uncertain terms.

The constitution of every state, as well as that of the US, requires that private

property only be taken for ‘‘public use,’’ such as transportation or public functions,

not for private or commercial economic gain. The use of eminent domain authority

to increase tax revenue is an abuse of the intent of ‘‘public use.’’ Such takings are

9

arguably the most outrageous and broad action possible by government against its

own citizens.

Not only does this decision put in jeopardy the ownership of property in our nation, it places ethical government in the crosshairs of those which who would seek

to manipulate the system for their personal gain. Those with deep pockets and questionable intentions now have both the legal means and profit motive to sway local

officials to do their bidding.

The Court’s ruling in favor of New London creates a precedent that will hang like

a stone around the neck of the average citizen, the small businessman, the common

man. This stone will weigh down the rights of Americans trying to make a success

of themselves through the sweat of their own brow.

Many feel that their voices cannot, and will not, be heard on this issue. As Members of Congress, it’s our job to make sure that this stone is shattered and those

voices are not only heard, but pushed to the forefront.

Several of our colleagues have answered this call and introduced pieces of legislation which we think could make a positive impact on the situation. However, these

measures apply only to specific projects which have federal funding attached to their

completion. While this is a great effort the fact is it does not go far enough. These

measures have a loophole which localities may try to exploit. Each of these pieces

of legislation take actions against specific projects in which the power of eminent

domain is abused. The funding ‘‘shell-game’’ that would follow any federal action

would see localities moving local and private funds into projects which are questionable all the while continuing to receive federal funding for other projects related to

other economic development.

In order to address this issue, I, along with several of my colleagues here today,

introduced the Strengthening The Ownership of Private Property, or STOPP Act.

This bill confronts this issue head on with legislation to stop this practice in its

tracks. This legislation would take much more comprehensive approach in preventing state and local entities from wrongly taking private property.

The first step is to make local governments follow the same guidelines imposed

upon the federal government by the Uniform Relocation Act in instances where eminent domain powers are abused. This measure provides that the federal government

must not only provide fair compensation for the property taken, but also cover the

costs of relocation for any business or home which must move. Currently, local entities don’t have this restriction and are only subject to this law if there are federal

funds used for the project.

The second, and more substantial step, would be to withhold ANY federal economic development funds to localities which choose to take property for private commercial development. This measure would not make it illegal for entities to continue

their practices, but would make them think twice by forgoing any federal funding

for any project should they proceed. Under the other measures which have been introduced, local entities could use private or local funding when pursuing eminent

domain of this type, however, under our bill they would have to think twice before

pursuing this practice.

We think this bill strongly discourages governmental entities from moving forward with trading citizens dreams for taxes. The STOPP Act is the least we can

do, a measure with teeth, a measure for average citizens, a bill to correct a far

reaching decision with horrific consequences. I commend Chairman Pombo and

Ranking Member Rahall for their interest in moving forward quickly on this important legislation. I also commend Chairman Pombo for his never-ending fight for the

private property owners of our great nation. I would also like to thank my lead cosponsor Rep. Herseth for her strong advocacy on behalf of those who may be adversely impacted by this decision. Last I would like to thank my colleagues from

every end of the political and ideological spectrum who have come together to endorse and support this piece of legislation to protect the American property owner.

The CHAIRMAN. Well, thank you. I would like to at this time recognize Mr. Otter who, in his time, has been a Member of the House

of Representatives; has worked tirelessly on property rights issues.

And as a result of that, has taken a leadership role in the Western

Caucus in heading up their private property rights protection

efforts.

Mr. Otter, welcome to the Committee.

10

STATEMENT OF THE HON. C.L. ‘‘BUTCH’’ OTTER, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF IDAHO

Mr. OTTER. Thank you very much, Mr. Chairman. It is my pleas- ure to be here. And though I no longer serve on this Committee,

I certainly appreciate the accommodation that the Chairman and

the Committee Members have made for me, and for my colleagues,

to come and speak about this bill.

Let me also say that I really appreciate Mr. Bonilla and Ms. Herseth’s leadership in this. It was, as they have already stated,

probably one of the broadest-supported early on pieces of legislation

that I have ever seen in my short time in the U.S. Congress. ‘‘Nor shall private property be taken for public use without just compensation.’’ Mr. Chairman, all of us here know those simple 12

words, phrased in the Fifth Amendment of the Constitution. We all

know it was pointedly intended to limit the national government’s

power over people.

How, then, in a five-to-four majority decision in the United States Supreme Court on June 23, that such a straightforward

phrase actually grants government nearly unfettered authority to

strip citizens of their homes, their farms, their businesses, their

private property? I believe it ranks amongst history’s most outrageous examples of constitutional revisionism.

In fact, we all need to remember the words of Ben Franklin as

he exited the Freedom’s Hall, or the Church in Philadelphia, when

he was queried after they had completed their work on our system

of government. He was asked by a citizen, ‘‘Mr. Franklin, what

form of government have you given us?’’ And he said, ‘‘Madam, we

have given you a republic, and it will fall to each and every generation to improve, protect, and defend it.’’

Well, I would say that I suspect that the Kelo decision is our generation’s Boston Massacre. It probably took an affront to private

property like this in order to collect together this group of citizens

and this group of political leaders that now support it.

And so having said that, the immediate murmurs of criticism

from a few people in response to the Court’s ruling of Kelo v. New

London has turned into a widespread public outcry of frustration,

and even despair, as people realize the implications. No one is safe.

As Justice Sandra Day O’Connor put it succinctly in her sharply

worded 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 mall, or any farm

with a factory.’’

The leaders of New London, Connecticut, almost certainly would

have failed if the land in question, I believe, had been the habitat

of an endangered bug or a plant or an animal. Instead it was a

neighborhood of working class people unwilling to give up their

homes for a private development that the City determined would

provide greater public benefit and greater public taxes.

They counted on the Constitution to protect them. And Mr.

Chairman, the Court let them down. Each state constitution,

Idaho’s included, imposes restrictions on the power of eminent

domain. However, each state constitution is required to fall within

the essential principles that govern it as the subordinate, and

11

accountable to the individual citizens, and not the other way

around. Put more simply, our constitutions are designed to ensure

that government remains the servant, and not our master.

That is why the framers insisted on the clear wordings of ‘‘public

use’’ in the Fifth Amendment. We all thought we understood what

that meant. There was no disagreement or confusion. Now we find

ourselves with a narrow majority of the highest Court in the land,

willing to simply erase the rights of private property owners, the

foundation of our freedom and prosperity, and the beacon of individual liberty that has drawn generations to pound the shores for

citizenship of the United States.

It is unthinkable that the framers of the Constitution designed

‘‘to secure the blessings of liberty to ourselves and our prosperity’’

would intend that private property be subject to government confiscation, and confiscation it is. For how can just compensation be

possible when government wields the power to define public use so

broadly?

Mr. Bonilla’s bill, H.R. 3405, goes a long way toward addressing

the problems created by the Kelo decision, creating economic disincentives for the taking of private property for the purpose of private economic development. I believe the Kelo decision woke America up to the fact that over time, our property rights have quietly

been eroding, the same way a stream of water slowly erodes its

banks. Fortunately, this erosion has not gone unnoticed by westerners or those who have been sent here to represent them.

Private property rights have long been held dear by families and

landowners in the West, and for good reason. Their farms and

ranches have been their livelihood, and part of the national heritage, since the frontier was closed to the west, and the West was

settled.

Today many westerners not only have to fight for their economic

survival, but have to worry whether or not the property will be

around them, for them to pass on to their children and future generations. The Federal government owns more than half of all the

land in the West, and almost two thirds of that in Idaho. And population in the region continues to grow.

As the Chairman has correctly noted, I am a Member of the Congressional Western Caucus, and we count amongst our core principles the necessity to protect and defend private property. It is the

Caucus’s position that property rights are the foundation of a free

society, that landowners must be justly compensation when their

land is taken.

Immediately after the Kelo decision the Caucus asked me to

chair the Private Property Rights Task Force. With the aid of many

in the property rights community, we have created a comprehensive property rights package we call CPR-2, the Comprehensive

Property Rights Reform Act. We believe this bill, in addition to

H.R. 3405, will help breathe new life into property rights.

The Western Caucus Property Rights Bill will formalize the policy of the Federal government with respect to all private property

that the government should protect, and exert eminent domain

only when absolutely necessary. The bill will ensure that the property is taken, and the government will avoid or minimize the

12

extent of the taking, and provide just compensation for the loss of

any value, at any level.

Mr. Chairman, I ask in closing that my entire statement be submitted for the record, and to the record. And once again, Mr. Chairman, I thank you and Ms. Herseth and Mr. Bonilla for your great

leadership in this effort.

[The prepared statement of Mr. Otter follows:]

Statement of The Honorable C.L. ‘‘Butch’’ Otter, a Representative in

Congress from the State of Idaho

Thank you, Mr. Chairman.

While I am no longer a member of the Committee, I appreciate you holding this

hearing today and allowing me to testify. I also appreciate Mr. Bonilla’s leadership

on this issue and am pleased to join him as a co-sponsor of H.R. 3405 the STOPP

Act.

‘‘...nor shall private property be taken for public use without just compensation.’’

Mr. Chairman, all of us here know that simple 12-word phrase in the Fifth Amendment to the Constitution. We all know it was pointedly intended to limit the new

national government’s power over the people.

How then, did a 5-4 majority of the United States Supreme Court rule on June

23 that such a straightforward phrase actually grants government nearly unfettered

authority to strip citizens of their homes, farms and businesses?

I believe it ranks among history’s most outrageous examples of constitutional revisionism.

The immediate murmurs of criticism from a few people in response to the court’s

ruling in Kelo v. City of New London has turned into a widespread public outcry

of frustration and even despair as people realize the implications: No one is safe.

As Justice Sandra Day O’Connor put it succinctly in her sharply worded 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

mall, or any farm with a factory.’’

The leaders of New London, Connecticut, almost certainly would have failed if the

land in question had been the habitat of an endangered plant or animal. Instead,

it was a neighborhood of working-class people unwilling to give up their homes for

a private development that the city determined would provide a greater public benefit.

They counted on the Constitution to protect them, but the court let them down.

Each state constitution, including Idaho’s, imposes restriction on the power of

eminent domain. However, each state constitution is required to fall within the essential principle that government is subordinate and accountable to the individual

citizen, not the other way around. Put more simply, our constitutions are designed

to ensure that government remains the servant, not the master.

That’s why the Framers insisted on the clear words ‘‘public use’’ in the Fifth

Amendment. We all thought we understood what it means; there was no disagreement or confusion. Now we find ourselves with a narrow majority on the highest

court in the land willing to simply erase the rights of private property owners, the

foundation of our freedom and prosperity and the beacon of individual liberty that

has drawn generations to our shores.

It is unthinkable that the Framers of a Constitution designed to ‘‘secure the blessings of liberty to ourselves and our posterity’’ would intend that private property

be subject to government confiscation—and confiscation it is, for how can ‘‘just compensation’’ be possible when government wields the power to define ‘‘public use’’ so

broadly?

Mr. Bonilla’s bill, H.R. 3405, goes a long way toward addressing the problems created by the Kelo decision by creating economic disincentives for the taking of private property for the purpose of private economic development.

I believe the Kelo decision woke America up to the fact that over time, our property rights have quietly been eroding the same way a stream of water slowly but

surely erodes its banks.

Fortunately, this erosion has not gone unnoticed by westerners or those they’ve

sent here to represent them.

Private property rights have long been held dear by families and landowners in

the West, and for good reason. Their farms and ranches have been their livelihood

and part of our national heritage since the frontier was closed and the West was

settled.

13

Today many westerners not only have to fight for their economic survival but also have to worry whether their property will be around for them to pass on to their

children and future generations. The federal government owns more than half of all

land in the West—almost two-thirds in Idaho—and populations in the region continue to grow. I am a member of the Congressional Western Caucus, and we count among our core principles the necessity to protect private property. It is the Caucus’ position

that property rights are the foundation of a free society; that landowners MUST be

justly compensated when their land is taken or when regulations deprive them of

the use of their property. Immediately after the Kelo decision the Caucus asked me to chair the Property Rights Task Force. With the aid of many in the property rights community, we have

created a comprehensive property rights package we call CPR2, the Comprehensive

Property Rights Reform Act. We believe this bill, in addition to H.R. 3405, will help

breathe life into property rights reform. The Western Caucus property rights bill will formalize the policy of the federal government with respect to all private property, that the government should protect

private property and exert eminent domain only when absolutely necessary. The bill

will ensure that when property is taken, the government will avoid or minimize the

extent of the taking and provide just compensation for loss of value at any level. The bill also includes creation of a property rights ombudsman, bars use of emi- nent domain for economic development, ensures direct access to federal courts for

takings claims, and provides several mechanisms for protecting what little private

property remains in the West. The property rights issue is not a class issue. It’s not a partisan issue. It’s an issue of the most fundamental importance to America’s future, and one on which

none of us can afford to be what Thomas Paine called ‘‘sunshine patriots.’’

Thank you again Mr. Chairman for holding this hearing, and I look forward to working with the committee on this important issue.

The CHAIRMAN. Thank you. Mr. Bonilla, I know that you have a tight schedule this morning. But I did want to ask you, as the primary author of the legislation, was your intention to use what powers Congress has to stop cities or counties or municipalities from

using eminent domain to take property from private property owners and sell it to another private owner? That was the underlying

intention of the legislation, was it not?

Mr. BONILLA. Yes, Mr. Chairman. Again, using the power of the purse, which Congress does control, we feel that this would be an

airtight case against any community that receives any type of Federal funding, a great disincentive for them to undertake any kind

of taking for private gain. The CHAIRMAN. As we move forward, both you and Ms. Herseth have talked about other legislation that has been introduced. As

you move forward with this effort, do you not believe that we need

to make sure that we restrict that funding to the point where it

is a disincentive?

Mr. OTTER. Yes, Mr. Chairman. And again, we believe that this bill does that. And we are delighted that, as other legislation is

being crafted as we speak, to be the legislation that moves through

Congress, that perhaps all or most of the points in our bill will be

incorporated.

The CHAIRMAN. Thank you. Mr. Otter, just briefly, one of the issues that has arisen is, over the years that we have been involved

in this battle over private property rights, it always predominantly

was an issue of western farmers and ranchers and their land being

taken.

Now, with the Kelo decision, we see suburban and urban America being threatened. Do you believe that there is any difference in

protecting private property, in private property rights, based upon

14

where the land is located, or the size of the property? It seems like

in some of the bills that have been introduced they somehow try

to differentiate between someone’s farm and someone’s home, as if

there is a difference in the constitutional protection for those properties.

Mr. OTTER. Thank you very much, Mr. Chairman. I believe

there’s no difference between dirt in Idaho or dirt in New London,

Connecticut, or anyplace else.

The dirt and the private property that we own is actually an extension of our constitutional rights. And our Constitution will not

survive in a nation that doesn’t recognize and hold sacred the concept of private property. Our Constitution just was not built in

order for a government that doesn’t believe in private property and

holds that sacred, that it is going to survive.

And so sometimes in our enthusiasm, we say well, if we are

going to take the land for this purpose, it is OK. This public use,

or public benefit, it is OK.

We in the West, for many reasons, mostly because of absentee

management by the Federal government, are constantly affected by

decisions on our private property that is made relative to the public

property. In other words, whether it is noxious weed eradication

that the Federal government fails to keep up on its BLM, or Forest

Service, or parks lands, or whatever, those seeds don’t stop at the

boundary. When they start blowing around, they explode into private property. In fact, they even blow to the 1,300,000 acres in

Idaho that we hold in trust in Idaho as state lands for our education system.

And we have to spend a lot of money, whether it is fighting noxious and invasive weeds that become a fire hazard, or become some

kind of an infective hazard to the value of that land, we constantly

have to fight that.

But we have gotten on a slippery slope. And we establish a national policy of, say, clean water. I see nothing wrong with that. I

think a national policy of clean water is good, is healthy. No different, though, than a national policy of good highway infrastructure. And if we take a person’s land to build a highway and we

think nothing of it, and we pay them for that land because we need

the highway.

But if a national policy of clean water is also essential, then I

think we need to pay those people for the land that we take from

them, whether it is in the wetlands, under the Wetlands Provision,

or the Endangered Species Act.

The CHAIRMAN. Well, thank you. I thank both of you for your testimony.

Ms. Herseth, do you have any questions? Mr. Gibbons?

Mr. GIBBONS. Thank you very much, Mr. Chairman. And to our

colleagues who have come here today and presented us with this

bill, congratulations to you.

I think the most important thing that we can do today in this

hearing is to set a legislative record that will be reviewed by a

court later on in their determinations of how to apply eminent

domain, and what the legislative intent was at the time we passed

it.

15

So what I would like to do is just have a very frank discussion

with you in helping build that record, if I may. And as we know,

the Kelo decision expanded the definition of public purpose. It expanded the definition of public purpose outside of the traditional

definition, which included public uses of roads, parks, reservoirs,

schools, and public buildings. Those were the traditional uses. And

Kelo has seemed to take that public purpose, and expand that definition to the increase in the taxable value of the land as a public

purpose, something that was an expansion, a legislative expansion,

and never intended by Congress, I am sure, in the original, or the

framers in the original definition of what could be taken under

eminent domain.

My question to you involves the intent of this legislation to limit

eminent domain to non-economic development purposes, is it the

intent of the legislation to limit eminent domain from a combination of truly public purposes under historic definitions, and eminent—or, excuse me—economic development, a combination of the

two. How do you see the application of this bill, when there is a

dual or multiple purpose of the eminent domain?

Mr. BONILLA. Well, first of all, this bill in no way threatens traditional constitutionally based practices of eminent domain of airports, transportation systems, hospitals, things that are truly for

the public good.

If there is one that a community feels that might have a combination of an economic advantage, it is going to be their job to

show that this is a public interest, not a private interest.

Mr. GIBBONS. Mr. Bonilla, my intent is not here to question or

to criticize the bill or the legislation at all. What I am trying to do

is establish a record.

So if the Court, on review of an eminent domain case that was

principally decided by a community or government entity on the

purpose of public use, whether it is a road, hospital, school, public

building, plus either an ancillary or an intended side use of increasing the economic development in an area, can your bill intercede in that and stop the eminent domain process?

Mr. BONILLA. I would think that once this bill is enacted, that

communities would themselves have the burden of showing that

this is, that a taking would be for public use. And if it was gray

enough, or there was an indication that perhaps they were trying

to pull an end around and say this is a public use taking, but they

really had an economic motivation, that we would be able to see

through that. But it is going to be their responsibility to differentiate.

Certainly in every law you pass, you are going to face some situations that might be a little gray. But historically, we have not

seen situations like that. They have been very clearly delineated

for the most part in this country, and we have not had a problem

until the Kelo decision.

Mr. GIBBONS. So we can take that the Court, from this day forward, will look at our record here today in Congress, and review

the decisions based upon whether or not the public use is the predominant eminent domain clause under which the taking occurred.

So that there has to be a predominance of evidence showing that

the taking was under eminent domain for public purpose, rather

16

than eminent domain for economic purpose, it can make that decision then based on the evidence before it. But a combination would

not be stopped.

I just want to make sure that we are clear on the record of how

a court should interpret this law going forward from today.

Mr. BONILLA. This is a very good question. I am not an attorney,

so I probably do not have the expertise in the legalities that differentiate. But the Judiciary Committee is also playing a great role

in this, and that is a question that we will take as we move this

bill forward.

Mr. GIBBONS. Good. Because I just want to make sure that we

set it straight. And Mr. Chairman, excuse my indulgence of going

over the time.

Mr. OTTER. Mr. Chairman, if I may respond to my colleague. I

can tell you this. That if the Court reads this record in manifesting

their decision on a future case, that they look at the reason Butch

Otter is going to vote for this bill, the reason Butch Otter supports

this bill.

The Constitution is pretty explicit on the purposes for which the

Federal government can own land. And they are delineated in its

posts and its roads and such other buildings necessary for the convenience of government. That does not include apartment houses,

and it does not include strip malls, and it does not include centers

for entertainment.

And so it is my hope that once again, the Bonilla-Herseth legislation will remind the Federal courts, the courts at all levels, that

they should restrict themselves to the purposes for which the design of eminent domain was to be used, and for the sole purposes

that the government should own land.

Mr. GIBBONS. Mr. Otter, you do know that most government

agencies are very intelligent; they always find ways around legislation to accomplish the intent or the purpose of which they started

out.

So I hope that at some point we can tell them that you must separate economic development from public purpose.

Mr. OTTER. I think the best way that we could have told them

that, Mr. Gibbons—and I hope that the lack of attention and the

interest in this subject is not manifested by the amount of Members for the Committee in this room. I hope they already agree

with us, and that is why they are not here.

But I would say the best way that we could send a signal to any

future court is to have an overwhelming majority vote in favor of

this legislation.

Mr. GIBBONS. Well, in addition to what the Court will look at is

the words that are spoken here at this Committee, the intention of

the legislation in terms of its intended goal, and how that is to be

interpreted by the Court.

I think it is very clear it is incumbent upon us to make sure that

our record establishes a clear intent that this legislation is to prohibit eminent domain for economic purposes between private parties. In other words, taking from one private party for an economic

development purpose, to increase the tax base, or whatever other

non-public purpose, and transfer it to another private property.

Mr. BONILLA. Mr. Gibbons, may I make a further comment?

17

Mr. GIBBONS. Well, it would be with the concurrence of the

Chairman, who might not——

The CHAIRMAN. No, absolutely.

Mr. BONILLA. We would think that reality would set in when this

bill becomes law, and that any local government out there—we are

creating a very hard road for any local government to go down if

they have an idea of taking property for private gain.

So I would think that any government entity out there with half

a brain would not want to go down this road. Because we are going

to make it real hard. If they want to go to court for 10 years and

challenge it, you know, local governments usually don’t have that

kind of money or time. So this is, again, an effort to create the

most difficult route for any local government to take if they have

any idea whatsoever of taking property for private gain.

Mr. GIBBONS. Well, I just want to tell you I am completely in

support of the legislation. I thank you for your leadership, for everyone who has brought this bill forward. I want to thank the Committee and the Chairman for allowing us to have this dialog. And

I look forward to the vote on the Floor when I can vote yes to reverse the Kelo decision.

Ms. HERSETH. Mr. Chairman.

The CHAIRMAN. Ms. Herseth.

Ms. HERSETH. If I might just briefly supplement the comments

of my colleagues in response to Mr. Gibbons’ question.

I think it is very much the intent as we work to draft the language to redraft the language, to tighten it up, so that we would

not be in a position to have a loophole big enough to drive a truck

through with the creativity of local officials who want to get around

this somehow. And that is why we did not start making decisions

in the drafting of the language for ancillary purposes, or what may

be an indirect use or private transfer.

And we talked about if you have a public building, and one floor

then is rented out—we did not want to make those types of distinctions, because we wanted to drive a hard line that if there is any

evidence that if there is going to be an economic purpose and a private-to-private transfer of any kind after utilizing eminent domain

for a public purpose, the funding would be cutoff. Because we don’t

want—I mean, we are trying to cutoff that type of creativity where

they always seem sort of one step ahead in what they are trying

to do to circumvent some of the restrictions that we want to put

on the power of the purse, so to speak.

So that was the intent. And for purposes of the record, we think

that we have drawn it in such a way that with the private right

of action, that any individual that may be affected who believes

and can show evidence—and I think that with public meetings at

the local level, with the involvement of citizens in these types of

decisions, when they can anticipate a certain local unit of government going down a certain road to take a certain action, that they,

as Chairman Bonilla explained, can, under this legislation, and it

is incumbent upon them to exercise that right to bring a private

right of action, to demonstrate that while this local entity may be

attempting to take land under eminent domain under a traditional

use of eminent domain, that if there is a combination of economic

purpose in there, that they can demonstrate that with the

18

evidence. And it is incumbent upon the District Court Judge to review that evidence, and if there is any indication of an economic

development purpose, that it is ruled impermissible, under this

statute. And that they can either cure it by giving the land back,

or they forgo their Federal funding as specified in the statute.

So I think that in response to your question, which is a very good

one, that the intent of the legislation is to not allow any kind of

combination, whether it is a 60/40, if you can put a percentage on

it, or a 95/5 percentage of public use versus economic use.

Mr. GIBBONS. Well, let me say that that is exactly what the

record ought to reflect. And that is why it is great to have a conversation and a discussion on this matter, so that when they look

back at what is the intent of Congress when we pass this legislation, that it is clear to them without a doubt that we have fired

a rifle bullet at this decision. And we are not just clipping away

at the edges, but we are killing it dead.

There is no economic development other than for eminent

domain, for purposes of transfer of private property from one

individual to another.

The CHAIRMAN. All right. I thank our panel for their testimony,

and I appreciate my colleagues for trying to set on the record what

Congressional intent is.

I do want to stress, before I dismiss this panel, that there is no

difference in the constitutional protection of private property based

upon the size or the location or the use of private property. Just

because in this particular case we are talking about people who lost

their homes, it does not mean that it is any difference in terms of

importance or constitutional protection than if they were to go after

somebody’s ranch or somebody’s home and take their property.

When you start differentiating in the law between the size or the

location of a piece of property, you begin to take away the property

rights of somebody. And once you take away the property rights of

anyone, we all lose them. And it is extremely important that as we

move forward, that there is no differentiation in the size of the

property or the location of the property, or the use of that property.

We need to make sure that the constitutional rights of private

property owners are protected, no matter who or where they are.

So thank you very much. I am going to allow this panel to go.

I appreciate you both taking so much time here this morning to

spend with us, and to help set the record straight and present your

legislation to us. Thank you.

We call up our second panel. Ms. Barbara Wally, Attorney,

Defenders of Property Rights; Mr. Bert Gall, Staff Attorney,

Institute of Justice; Mr. Earl Hance, President of the Maryland

Farm Bureau and a member of the Board of Directors of the American Farm Bureau; and Mr. Mario Arroyo, Co-Owner of Arroyo’s

Cafe in Stockton. You can join us at the witness table.

[Pause.]

The CHAIRMAN. Welcome to the Committee. Your entire written

statements will be included in the record. I would ask that your

oral testimony be limited to the five minutes that is customary on

the Committee, but your entire written testimony will be included

in the record.

Ms. Wally, we are going to begin with you.

19

STATEMENT OF BARBARA WALLY, ATTORNEY,

DEFENDERS OF PROPERTY RIGHTS

Ms. WALLY. Good morning. I am delighted to be testifying before the Committee today in support of the STOPP Act. On behalf of the

Defenders of Property Rights and all of its membership, I would

particularly like to thank Chairman Pombo and his staff for their

strong and bold leadership on proposing legislation that effectively

balances the need for protection of endangered species with the

need for protection of constitutionally guaranteed rights and

property. The need for protection of constitutionally guaranteed rights and property is underscored by last term’s trilogy of Supreme Court decisions: Kelo v. New London, Lingle v. Chevron, and San Remo v.

City and County of San Francisco. In light of these decisions, I

would like to impress upon the Committee the importance of Congress providing greater guidance to litigants, to government agencies, and to lower courts.

The Supreme Court confused the issues by not only failing to provide bright-line rules, but also by moderating the existing rules.

Thus, it is imperative that Congress act to provide greater certainty in order to protect these important constitutional rights. Kelo, Lingle, and San Remo are inconsistent internally, incon- sistent with one another, and inconsistent with prior Supreme

Court jurisprudence and the Constitution. In Kelo, the Court examined what a public purpose is by looking into the legislative record, and weeding through the public findings

in order to arrive at a definition of public use. In the end, the Court

deferred to the Legislature’s decision, but it only deferred to that

decision after it looked into the legislative record. Also, the Court indicated that public use really means public

purpose. But redefining public use to mean public purpose is at

odds with the plain language of the Constitution, which states that

private property shall not be taken for public use without just compensation.

In Lingle, the Court struck down a takings test, holding that

whether a government regulation substantially advances a legitimate state interest is not a valid takings inquiry. But this test was

adopted by the Supreme Court in 1980, and affirmed in many cases

subsequent to it, most notably Nolan v. California Coastal Commission in 1987. In striking down the substantially advances test,

however, the Court announced that the Nolan decision was still

good law, leaving property owners, decisionmakers, and local courts

utterly perplexed as to how to apply the Lingle decision.

The Nolan test allows government to impose permit conditions if

those conditions substantially advance legitimate state interests.

And the Court also suggested that no court should ever decide

whether regulations affecting property rights are effective or not.

Finally, in San Remo, the Court refused to look at local legislation, holding that zoning and land use regulations are a local issue

for state courts, and not Federal courts. And therefore, the Court

suggested that there are some courts equipped to analyze regulations affecting property rights.

In light of these decisions, it is more important than ever that

Congress provide greater clarification and direction to property

20

owners, to government agencies, and to the lower courts in order

to promote clear, transparent, and predictable rules.

Congress will take important steps toward providing these rules

by passing the STOPP Act.

I would like to extend my thanks to the Chairman and to the

Committee for this opportunity to testify. Thank you.

[The prepared statement of the Defenders of Property Rights

follows:]

Statement of Nancie Marzulla, President,

Defenders of Property Rights

Mr. Chairman and Members of the Committee:

I am pleased to be here today on behalf of Defenders of Property Rights, the only

national public interest legal foundation devoted exclusively to protecting private

property rights. Through a program of litigation, education and legislative support,

Defenders seeks to realize the promise of the Fifth Amendment of the U.S. Constitution, that private property shall not be ‘‘taken for public use, without just compensation.’’ Defenders, which is based in Washington, D.C., has a large national membership comprised of property owners, users and beneficiaries of the rights protected

by the Constitution and traditional property law. Defenders participates in litigation

when it is in the public interest and when the property rights of its members are

affected, and has also devoted significant resources to analyzing legislative proposals concerning property rights at both the state and federal level.

Today, I am here to comment on H.R. 3405, Strengthening the Ownership of Private Property Act of 2005 (STOPP). By prohibiting federal financial assistance

under any federal economic development program to any State, State agency, or

local government, that uses its eminent domain power for private commercial development or fails to provide relocation assistance for persons displaced by use of eminent domain for economic development, this bill seeks to prevent the taking of private property for public use without just compensation, as required by the Fifth

Amendment to the United States Constitution.

I. The Constitution Imposes a Duty on Government to Protect Private

Property Rights Because Property Rights are an Essential Element of

a Free Society.

As reflected in various provisions in the Constitution, the Founding Fathers clearly recognized the need for vigorously protected property rights. They also understood

the vital relationship between private property rights, individual rights and economic liberty. Property rights is the ‘‘line drawn in the sand’’ protecting against tyranny of the majority over the rights of the minority.

The Founding Fathers, in drafting the Constitution, drew upon classical notions

of legal rights and individual liberty which recognize the importance of property

ownership in a governmental system where individual liberty is paramount. Concurrently, the constitutional framers drew upon their own experience as colonists of an

oppressive monarch, whose unlimited powers allowed him to deprive his subjects of

their ‘‘life, liberty, and property’’ (subsequently revised by Thomas Jefferson to substitute ‘‘the pursuit of happiness’’ for ‘‘property’’).

To the framers of the Constitution, the protection of individual liberty was essential. The fundamental liberties guaranteed by the Bill of Rights include freedom of

speech and religion; freedom of press and assembly; the right to bear arms; the right

to trial by jury and cross examination of accusing witnesses; and freedom from cruel

or unusual punishment. Recognizing that a government could easily abuse these

civil rights if a citizen’s property and livelihood were not guaranteed, the United

States Constitution also imposes a duty on government to protect private property

rights.

Thus, within the Bill of Rights, numerous provisions directly or indirectly protect

private property rights. The Fourth Amendment guarantees that people are to be

‘‘secure in their persons, houses, papers, and effects....’’ The Fifth Amendment states

that no person shall ‘‘be deprived of life, liberty, or property, without due process

of law; nor shall private property be taken for public use without just compensation.’’ In addition to the Bill of Rights provisions, the Fourteenth Amendment echoes

the Due Process Clause of the Fifth Amendment, stating that no ‘‘State shall deprive any person of life, liberty or property without due process of law....’’ Indirectly

the Contracts Clause of the Constitution also protects property by forbidding any

21

state from passing any ‘‘law impairing the Obligation of Contracts.’’ U.S. Const. art.

1, § 10.

The Constitution places such strong emphasis on protecting private property rights because the right to own and use property was historically understood to be

critical to the maintenance of a free society. The ability to use, enjoy and exclusively

possess the fruits of one’s own labor is the basis for a society in which individuals

are free from oppression. Indeed, some have argued that there can be no true freedom for anyone if people are dependent upon the state for food, shelter, and other

basic needs. Understandably, where the fruits of citizen’s labor are owned by the

state and not individuals, nothing is safe from being taken by a majority or a tyrant.

Ultimately, as government dependants, these individuals are powerless to oppose

any infringement on their rights due to absolute government control over the fruits

of their labor.

Accordingly, it is a founding principle of our nation that private land may not be taken for public use (unless it be purchased from the owner). This basic principle—

that the government must lawfully acquire private land rather than merely seize

it—is predicated upon fundamental notions of fairness. As the Supreme Court stated in Armstrong v. United States, ‘‘[t]he Fifth Amendment...was designed to bar

Government from forcing some people alone to bear public burdens which, in all

fairness and justice, should be borne by the public as a whole.’’ 364 U.S. 40, 49

(1960).

The Founding Fathers understood the vital relationship between private property rights, individual rights, and economic liberty. However, the Founding Fathers could

never have envisioned the growth of government that has occurred of late years.

Never before have government regulations threatened to destroy private property

rights on so large a scale and in so many different contexts as they do today. In

just two short decades, the United States has developed from scratch the most extensive governmental regulatory programs in history. Environmental regulations

have become an elaborate web of intricate laws and regulations covering every conceivable aspect of property use, yet very few recognize the fundamental importance

of property rights to our Constitution and our system of government under law.

II. The Supreme Court’s October 2004 Term

The Supreme Court’s October 2004 term provided an excellent opportunity for the Court to straighten out the law with regard to the meaning of the Fifth Amendment’s ‘‘public use’’ requirement, the application of the ‘‘substantially advances’’ test,

and the ability of plaintiffs to get their just compensation cases before the federal

courts. Instead, in Kelo v. New London, 125 S. Ct. 2655 (2005), Chevron v. Lingle,

125 S. Ct. 2074 (2005), and San Remo Hotel v. San Francisco, 125 S. Ct. 2491

(2005), the Court offered a series of disappointing decisions that did nothing to further an individual’s fundamental property rights. Moreover, these decisions were

fraught with internal inconsistencies, as well as inconsistencies with previous just

compensation decisions. Let me briefly outline the Court’s decisions in these three

just compensation cases:

Kelo v. New London

The Kelo case is certainly the most talked about of last year’s three Supreme Court takings cases. In Kelo, private property owners had their property taken from

them and turned over to a private development corporation to be redeveloped for

private use. The question before the Court was whether taking land from one private landowner and giving it to another, violated the public use requirement of the

Just Compensation Clause, where that taking was part of an economic redevelopment plan. The Court upheld the taking. In upholding the taking, the Court rejected a bright-line rule that would have clearly prevented the state from taking private property from A and giving it to B,

instead favoring a test that asks whether the development plan serves a ‘‘public

purpose.’’ The dissent, and judging from the public reaction, much of the public, rejected the majority’s interpretation. The dissent reasoned that after Kelo, ‘‘[u]nder

the banner of economic development, all private property is now vulnerable to being

taken and transferred to another private owner, so long as it might be upgraded—

i.e., given to an owner who will use it in a way that the legislature deems more

beneficial to the public—in the process.’’ 125 S. Ct. at 2671. According to the dissent, the majority had ‘‘effectively...delete[d] the words ‘for public use’ from the

Takings Clause of the Fifth Amendment.’’ Id.

Chevron v. Lingle

In Chevron v. Lingle, the lower courts had applied the ‘‘substantially advances’’

formula set forth in Agins v. City of Tiburon, 447 U.S. 255 (1980), to determine

whether a Hawaii law, which limits the rent that oil companies may charge dealers

22

who lease service stations owned by the companies, effects a taking. The lower

courts held that the rent cap effects an uncompensated taking of private property

in violation of the Fifth and Fourteenth Amendments because it does not substantially advance Hawaii’s asserted interest in controlling retail gasoline prices. The

Supreme Court reversed the lower courts straight forward application of the ‘‘substantially advances’’ test, holding that the ‘‘substantially advances’’ test was a test

of due process and has no place in the Court’s takings jurisprudence.

The Court reasoned that ‘‘[i]nstead of addressing a challenged regulation’s effect

on private property, the ‘‘substantially advances’’ inquiry probes the regulation’s underlying validity.’’ 125 S. Ct. at 2084. The Just Compensation Clause, according to

the Court, ‘‘does not bar government from interfering with property rights, but rather requires compensation ‘in the event of otherwise proper interference amounting

to a taking.’’’ Id.

San Remo Hotel v. San Francisco

The Court, in San Remo Hotel v. San Francisco, dealt with a question that involved the ability of property owners, who have had their property taken by state

or local governments, to get those claims into federal courts. Under the standards

set forth in Williamson County Regional Planning Commission v. Hamilton Bank,

473 U.S. 172 (1985), a just compensation claim against a state or local government

cannot be brought in federal court until after the claimant seeks just compensation

in state court. However, in San Remo, when the claimants went to state court, the

court addressed the claimants federal constitutional claims; thus preventing later

consideration of the case on its merits in federal court. In other words, the claimants could not originally bring their case in federal court because they had not been

denied just compensation in state court, and once they were denied just compensation in state court they could not bring a new case in federal court because their

case had already been decided in state court.

In a concurrence, the late Chief Justice Rehnquist, joined by three of his fellow

justices, wrote that the he believed, echoing the position taken by Defenders of

Property Rights as amicus curie, that Williamson County’s requirement that once

a government entity has reached a final decision with respect to a claimant’s property that claimant must seek redress first in state court, was incorrectly decided.

However, without the needed fifth vote, property owners will continue to be denied

a federal forum in which to bring an original action.

III. Legislative reform is essential to fully protect all Property Rights and

to realize the purpose of the Fifth Amendment.

From the perspective of those who cherish private property rights, the Supreme

Court’s last term was disappointing. In the three just compensation cases that came

before the Court, the Court effectively deleted the words ‘‘for public use’’ from the

Just Compensation Clause, eliminated one of tests that limited the ability of the

government from taking private property, and declined an invitation to extend a

federal forum to property owners who had their property taken by a state government. On the bright side, however, the Supreme Court is not the only arbiter of the

Constitution under our system of government. There is a role for Congress as well.

The Strengthening the Ownership of Private Property Act of 2005 is an excellent

vehicle for Congress to step in and re-invigorate a fundamental right the Supreme

Court has weakened through its decisions of the last term.

Although it is often stated that it is the role of the courts to say what the law

is, the Members of Congress also take an oath to support, defend, and bear true

faith and allegiance to the Constitution of the United States. Here, through the use

of a power specifically enumerated to Congress in the Spending Clause, Congress

has an opportunity to fulfill its oath to the Constitution and reaffirm that document’s fundamental protections for private property. When the courts fail, it is up

to Congress to make the federal, state, and local governments give the rights of private property owners the respect and deference that the Constitution requires.

IV. Conclusion

The proposed bill, H.R. 3405, goes along way in attempting to restore the damage

done to the text of the Just Compensation Clause by the Supreme Court’s recent

ruling in Kelo. The reform embodied in H.R. 3405 will attempt to ensure that State

and local governments do not use their eminent domain powers for private commercial development and, that when eminent domain power is used, those governments

will provide relocation assistance for property owners displaced for economic development.

I would be pleased to answer any questions you may have concerning my testimony.

23

The CHAIRMAN. Thank you. Mr. Gall.

STATEMENT OF BERT GALL, ATTORNEY,

INSTITUTE FOR JUSTICE, WASHINGTON, D.C.

Mr. GALL. Thank you, Mr. Chairman and Members of the Committee for this opportunity to testify about the abuse of eminent

domain, which is an issue that has obviously captured the attention of the American people since the Supreme Court handed down

its now very infamous decision in Kelo v. City of New London.

The Institute for Justice represented the homeowners in the Kelo

case, and we continue to fight for them so that they can stay in

their home, because they are true American heroes who are taking

a stand against a very longstanding problem, but one that has really come to light in the wake of Kelo.

In that case, the Supreme Court declared that cities and towns

can take a person’s home or business or other property, and hand

it over to another person if they think that the other person can

make more money off the land. That is the standard that the Supreme Court established in Kelo, a very weak standard that has essentially eviscerated the protections that the Fifth Amendment provides to home and business owners. The public use clause is essentially no more after Kelo.

As Justice O’Connor wrote in her powerful dissent before members of the Court, ‘‘The specter of condemnation hangs over all

property. Nothing is to prevent the state from replacing a Motel 6

with a Ritz-Carlton, any home with a shopping center, and any

farm for a factory.’’

Now, understandably after the decision, Americans of all backgrounds and political affiliations expressed their outrage that the

Court abandoned its primary responsibility of protecting them from

the government, government’s abuse of power. Particularly in the

important area of protecting homes or businesses. I mean, the Kelo

decision literally touched home.

Thankfully, this body, the Congress, as well as state legislators,

have heard the call, and members of both sides of the aisle are

working together to craft legislation that ensures that cities that

abuse eminent domain will not be rewarded with the receipt of

Federal economic development funds.

Now, the need for eminent domain reform is very real. In fact,

it was really needed even before the Kelo decision took place. Over

a five-year period, the Institute for Justice documented over 10,000

examples where property was either condemned or threatened to

be condemned for the benefit of private parties. And now that the

Kelo decision has come down, the gloves really seem to be off. In

fact, just hours after the Kelo decision was issued, many cities

began condemnation actions against property owners to transfer

their property to other people to make more money off the land.

The Court has given the green light to abuse in cities, and developers are putting the pedal to the metal.

It is useful to discuss just briefly how we have arrived at this

state of affairs in the law. It did start a little bit before Kelo in the

Supreme Court’s decision in 1954, in Berman v. Parker. That is

where you saw the Court starting to change the words ‘‘public use’’

in the Constitution to ‘‘public purpose.’’ And it was at that point

24

that cities and communities took advantage of that changing in the

wording of the Constitution to move away from the traditional conception of public use.

You know, the founding fathers early on referred to, and the Su- preme Court early on referred to, eminent domain as the despotic

power, because they understood that taking away someone’s home,

their business, their property, was one of the most powerful, one

of the worst things that a government could do to its citizens. With the Berman case, cities using the words ‘‘public purpose’’ and ‘‘public welfare’’ began using things such as urban redevelopment laws to take perfectly nice properties, or properties that could

be remediated by the owner, and then transfer those over to other

owners for private development. And of course, that has now culminated in the Kelo decision, where once again the standard is if

you think you can make more money off of someone else’s property,

we will use eminent domain and transfer it to you. Now, unfortunately, Federal money is often used to fuel this abuse of eminent domain. In fact, the Kelo case is an example of

just that. In my written testimony I have listed examples where

Federal money has certainly been involved. The legislation that you are considering today, along with other legislation that is also before Congress, appropriately uses

Congress’s power under the spending clause to deny economic development funds to those cities that abuse their eminent domain

powers.

The abuse of eminent domain uproots families. It destroys small businesses, and it tears apart communities. The Federal government should not be in the business of funding that abuse. And that

is why I commend all of you, and Congressman Bonilla and other

who worked on this and other legislation, for bringing it before

Congress, and taking real steps to make sure that the Kelo decision

will eventually, we hope, be consigned to the dustbin of history. Thank you very much for the opportunity to testify.

[The prepared statement of Mr. Gall follows:]

Statement of Bert Gall, Attorney, 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 committee and

the sponsors of H.R. 3405, which this committee is currently considering, are to be

commended for taking action to end this misuse of government power. My name is Bert Gall, and I am an attorney at the Institute for Justice, a non- profit public interest law firm in Washington D.C. that represents people whose

rights are being violated by government. One of the main areas in which we litigate

is property rights, particularly in cases where homes or small businesses are taken

by government through the power of eminent domain and transferred to another

private party. I have represented property owners across the country fighting eminent domain for private use, and the Institute also represents the homeowners in

the Kelo v. City of New London case, in which the U.S. Supreme Court decided that

eminent domain could be used to transfer property to a private developer simply to

generate higher taxes, as long as the project is pursuant to a plan. We have also

published a report about the use of eminent domain for private development

throughout the United States (available at www.castlecoalition.org/report).

In the Kelo decision, a narrow majority of the Court decided that, under the U.S.

Constitution, property could indeed be taken for another use that would 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 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

25

something else could make more money than the homes 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.’’ In response to the decision, there has been an outpouring of 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, with significant bipartisan support, including

H.R. 3405, which this committee is considering now.

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 kick citizens out of 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 has been 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 has become widespread. We

documented more than 10,000 properties either taken or threatened with condemnation for private development in the five-year period between 1998 through 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. In Connecticut, the only state that keeps separate track of redevelopment condemnations, we found 31, while the true number 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.

Since the Kelo decision, local governments have become further emboldened to

take property for private development. For example:

• Freeport, TX. 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, CA. 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, CT. 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.

26

As the judge commented, ‘‘The United States Supreme Court has denied the Alamo

reinforcements.’’ On August 19, 2005, a court in Florida, with no reluctance, relied

on Kelo in upholding the condemnation of several boardwalk businesses for newer,

more expensive boardwalk development.

Federal funds currently support eminent domain for private use

Federal agencies of course continue to take property for public uses, like military

installations, federal parks, and federal buildings, and that is legitimate under the

public use requirement of the Fifth Amendment. The agencies themselves generally

do not take property and transfer it to private parties. However, 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, CT. 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, including some run by local nonprofits. The older housing will be replaced by luxury housing. The project received at least $3 million in HUD funds, and may have received another $3 million in block grant funds as well.

• New Cassel, NY. 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

holds 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 Housing and Urban

Development, 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, OH. 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 part 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 would find a political solution. Congress, this committee, and the sponsors of H.R. 3405 are all to be

commended for their efforts to provide protections that the Court 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 use 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 conditions laid out in H.R. 3405 are well within the bounds that

courts have articulated regarding the relationship of the funding restrictions to the

federal interest. 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.

27

H.R. 3405 takes a good approach to curbing the abuse of eminent domain

nationwide

H.R. 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. This is an appropriate response. 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 private commercial 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, the bill represents a strong statement that this awesome government

power should not be abused. The states are currently studying the issue and considering legislative language, and they will certainly look to any bill passed by Congress as an example. The bill also specifically tells state and local government entities what funds they risk losing.

Conclusion

Eminent domain sounds like an abstract issue, but it affects real people. Real people lose the homes or businesses they love and watch as they are replaced with the

condos and shopping malls that many localities find 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, 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.

The CHAIRMAN. Thank you. Mr. Hance.

STATEMENT OF EARL HANCE, PRESIDENT,

MARYLAND FARM BUREAU, INC.

Mr. HANCE. Good morning, Mr. Chairman, ladies and gentlemen.

My name is Earl Hance. I am a corn and soybean producer from

Port Republic, Maryland. I am also President of the Maryland

Farm Bureau, and I serve on the Board of Directors for the American Farm Bureau Federation.

I certainly appreciate the opportunity to be here today to discuss

this potentially devastating impact of the recent Kelo decision on

agriculture.

We commend this Committee for holding hearings on this important matter. And I ask that my written statement be submitted for

the record.

The Kelo decision has struck a raw nerve around the country.

We are gratified that so many Members of Congress have introduced and co-sponsored bills to address the situation. We fully support the efforts that have been taken thus far, and we will work

diligently with this Committee and others to pass legislation to encourage states to limit their use of eminent domain to truly public

uses.

Farmers and ranchers understand that circumstances arise in

which their land can be designated for a legitimate public use. We

cannot support the rationale of Kelo, however, that private property can effectively be taken for the profit of other private parties.

28

The difference between legitimate uses of eminent domain and

what is so objectionable in Kelo is the difference between building

firehouses or factories, between courthouses or condominiums.

After Kelo, no property is safe. Any property can now be seized and

transferred to the highest bidder.

As Justice O’Connor said in her stinging 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.’’

Agricultural lands are particularly vulnerable. The fair market

value of agricultural land is less than residential or commercial

property, making a condemnation of agricultural land less costly

and more attractive. While agricultural lands are vital to the Nation because they feed our people, they do not generate as much

property tax revenue as homes or offices.

Finally, municipalities generally grow outward into farming or

rural areas. There is nothing to stop farms that have been in families for generations from being taken for industrial developments,

shopping malls, or housing developments. Nowhere is this more

true than in my State of Maryland, where land is already at a premium.

In the State of Maryland, many of you know that the Chesapeake Bay and its tributaries reach far and wide, and waterfront

property is at a premium. And we are very concerned that after the

Kelo decision, any development corporation could legitimately purchase one tract of land, and then present a project that was much

larger in scope, and immediately have cause to take other land just

for the creation of great tax revenue. That is the concern that in

Maryland we have with this Kelo decision.

Reaction from our members to Kelo has been swift and overwhelming. Farmers and ranchers from across the state are asking

us to help them keep their property. We are currently working with

our state legislator to make more strict our state laws concerning

condemnation to try to protect our agricultural lands.

Farm Bureau has initiated the Stop Taking Our Property campaign, or STOP. As part of the campaign, we have developed an

educational brochure which models state legislation, and a web

page for interested people. Representative STOP materials are attached to our written statement.

One key element to our campaign is to promote the message of

H.R. 3405 or similar legislation. Since eminent domain is a creature of state law, substantive changes must be made at that level.

Currently, 50 state legislatures have to act. However, it is an uncertain and lengthy process. That is why Federal legislation is so

necessary.

Congress has the authority and the responsibility to determine

how our tax dollars are spent. Using Federal funds to help municipalities take from the poor and give to the rich adds insult to injury to those who work hard for themselves and their families.

Congress can ensure that state and local governments do not use

a person’s own tax dollars to dispossess them in favor of other private interests.

All of the Federal bills introduced thus far take this approach.

The differences among them are the degree to which such funding

29

is withheld. While we support all the approaches taken in these

bills, H.R. 3405 seems to offer the most effective deterrent to

abuses of eminent domain.

Justice Stevens, who wrote the majority opinion in Kelo, seems

to disagree with the state law he upheld. In a recent address, the

Clark County, Nevada Bar Association, discussing this case, he

said that ‘‘I was convinced that the law compelled a result that I

would have opposed if I were a legislator.’’

Mr. Chairman, Farm Bureau strongly supports swift Congressional action on legislation to withhold Federal funding to states

and local governments that use eminent domain to take property

from one private entity and transfer it to another for economic development purposes.

Farmers and ranchers across this country have held onto their

property for generations. They fought battles, they fought pests,

they fought droughts, they fought low prices to hold onto that property. It appalls us that now we can lose that property which we

have held for generations just because the property could create a

higher tax revenue.

Thank you for the opportunity to be here today, and I would be

pleased to answer any questions. Thank you.

[The prepared statement of Mr. Hance follows:]

Statement of Earl Hance, President, Maryland Farm Bureau, Inc.,

on behalf of the American Farm Bureau Federation

My name is Earl Hance and I am a corn and soybean producer from Port Republic, Maryland. I also operate several greenhouses. I serve as president of Maryland

Farm Bureau, Inc., and serve on the Board of Directors of the American Farm Bureau Federation. I appreciate the opportunity to be here today to present testimony

on behalf of the American Farm Bureau Federation. Farm Bureau is deeply concerned about the potentially devastating impacts of the recent Kelo decision on agriculture. We commend the committee for holding hearings on this important matter.

The Kelo decision has struck a raw nerve around the country. Congress responded

swiftly to this outrageous decision through the introduction of H.R. 3405 and similar bills. H.R. 3405 and H.R. 3135 both have over 100 cosponsors and a companion

bill in the Senate has more than 30 cosponsors. We fully support the efforts that

have been taken thus far and we will work diligently to pass legislation to encourage states to limit their use of eminent domain to truly public uses.

Farm Bureau has a long history in support of private property rights. We have

participated in property rights cases at the appellate and Supreme Court levels, including filing a ‘‘friend of the court’’ brief in the Kelo case in support of the homeowners.

Farmers and ranchers understand that there are legitimate public uses, such as

roads and highways, which can have a claim on private land. However, we cannot

understand—nor can we support—our land being taken for the profit of private corporations. The difference between legitimate uses of eminent domain and what is

so objectionable in Kelo is the difference between building firehouses and factories,

between courthouses and condominiums.

After Kelo, no property is safe. Any property can now be seized and transferred

to the highest bidder. As Justice O’Connor said in her ringing 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.’’

I would like to stress to the committee that agricultural lands are particularly

vulnerable to these types of actions. The fair market value of agricultural land is

less than residential or commercial property, making a condemnation of agricultural

land less costly and more attractive. While agricultural lands are vital to the nation

because they feed our people, they do not generate as much property tax revenue

as homes or offices. As a result, they can easily become targets for being taken for

any of these other uses. Finally, as municipalities grow, they naturally put pressure

on farms and rural areas. There is nothing to stop farms that have been in families

30

for generations from being taken for industrial developments, shopping malls or

housing developments.

Development pressures are particularly acute in my state of Maryland, where

land is already at a premium. As the areas surrounding Baltimore and Washington,

D.C. continue to grow, planners and developers increasingly look to agricultural

lands for their next housing development or shopping mall. The Kelo decision opens

up a whole new avenue for them.

We are understandably concerned about the possible impacts of Kelo on farm and

ranchlands across Maryland and the country. Reaction from our members has been

swift and overwhelming. Farmers and ranchers from across the state are asking us

to help them keep their property.

Farm Bureau has initiated a Stop Taking Our Property (STOP) Campaign, designed to educate the public about the impacts of the Kelo decision and to provide

materials to help state Farm Bureaus address the issue. The Maryland Farm Bureau has fully embraced this campaign and made it a cornerstone of our legislative

efforts.

There are several components to the Farm Bureau campaign. One element focuses

on educating the general public and our members about the Kelo decision and its

impacts. We have developed an educational brochure and web page for those interested in the issue. Another element focuses on encouraging state Farm Bureaus to

seek changes to state laws to prohibit the use of eminent domain for private economic development. We have developed model state legislation and supporting documents to help achieve those changes.

Another key element is to encourage and promote passage of H.R. 3405 or similar

legislation. Since eminent domain is a creature of state law, substantive statutory

change must be made at that level. Getting multiple state legislatures to act, however, is an uncertain and lengthy process. In addition, states interested in maximizing revenues may be reluctant to take action that might deny their municipalities the opportunity for increased property taxes.

That is why federal legislation is necessary. While eminent domain is defined by

state law, Congress does have the authority and the responsibility to determine how

our tax dollars are spent. Using federal funds to help municipalities take from the

poor and give to the rich adds insult to injury to those who work hard for themselves and their families. As elected officials, you can appropriately respond to the

Kelo decision by ensuring that states and local governments cannot use federal tax

dollars to dispossess property for the benefit of another private entity.

All of the federal bills introduced thus far take this approach. The difference

among them is the degree to which such funding is withheld. H.R. 3405 is the only

one of the bills that would deny all federal economic development assistance to a

state if there were any uses of eminent domain for economic development that

transferred private property from one private entity to another.

We support the approach taken by all of these bills. Withholding all federal economic development funding from states where Kelo-type eminent domain is being

used, whether or not it is used in the specific project, offers the greatest disincentive

for states to continue using eminent domain for private economic development. By

not tying the funds to any particular project, H.R. 3405 avoids the fiscal shell game

of moving federal funds away from individual projects that use eminent domain for

private economic development.

Though the Supreme Court said the Connecticut law was legal, not every Justice

endorsed it as good policy. Even Justice Stevens, who wrote the majority opinion

in Kelo, seems to disagree with the law he upheld. In a recent address to the Clark

County (Nevada) Bar Association discussing the case, he said that ‘‘I was convinced

that the law compelled a result that I would have opposed if I were a legislator.’’

We urge swift passage of legislation that would withhold federal funding to states

and local governments that use eminent domain to take property from one private

entity and transfer it to another for economic develop purposes.

Thank you for the opportunity to testify. I look forward to answering your questions.

The CHAIRMAN. Thank you. Mr. Arroyo.

STATEMENT OF MARIO ARROYO, PART OWNER,

ARROYO’S CAFE ́ , STOCKTON, CALIFORNIA

Mr. ARROYO. Thank you, Mr. Chairman. I appreciate the invitation and the opportunity to offer testimony of my personal story.

31

In May of 1999 property that my family business stood on for 29 years was taken by our downtown redevelopment agency in Stockton, California through the use of eminent domain. The three main

objectives of the agency were to eliminate blight, preserve viable

businesses, and to encourage citizens from outside the area to visit

downtown.

Our business met all three criteria. We were never a source of

blight, always maintaining a safe and clean environment for our

patron. In fact, the developer that received the rights to our land

was a major contributor to the problems in the area through a pool

hall on the property he leased out, as well as a liquor store that

he still owns.

Second, we were a viable business, as 29 years in one location

should attest. In fact, in a March, 1993 draft report by the consultant firm of Keyser, Marston and Associates, they recommended

that Arroyo’s Cafe should be retained, and to avoid relocation of

said business. The firm was hired by the redevelopment agency.

Third, our patrons came from all over Stockton and outside our

city, as well, to dine in our restaurant, or to dance in our club area,

or both. In our case, our case received media attention, and the

local news stations aired segments on the process. The most impressive thing to me was the amount of letters and support that

we received through the community.

The Deputy City Manager at the time came to us with three proposals that would allow us to remain on the property. One was

agreed upon, and later she returned to say that the developer

wanted all the property. In my view, this was then just to allow

the developer to secure more tenants for a project.

I understand that at times eminent domain may be a necessity

for public good. But our business, a successful restaurant that my

father started in 1946, and at one location for 29 years, was relocated to provide for a gas station and a fast food restaurant. It was

nothing short of a land grab, with no concern for private harm.

I feel that allowing developers with deep pockets to use and

abuse eminent domain is contrary to what many Americans feel is

a constitutional right to own land without fear of losing it. We had

done no wrong, and we were in good standing with the community,

paying taxes, contributing to charities, all the things that make

good citizens. We should expect nothing but to be treated the same

way.

This bill is exactly what we feel government should be: standing

up for the common citizen. You saw a wrong, like the Kelo decision,

and now you are trying to right it. This bill would bring nothing

but more faith to the government by the common person, by protecting his rights.

And again, thank you very much. I am open to any questions, as

well.

[The prepared statement of Mr. Arroyo follows:]

Statement of Mario Arroyo, Co-Owner,

Arroyo’s Cafe ́, Stockton, California

In May of 1999 property that my family business stood on for 29 years was taken

by our downtown redevelopment agency in Stockton, Ca through the use of eminent

domain. The three main objectives of the agency were to; eliminate blight, preserve

viable business, and to encourage citizens from outside the area to visit downtown.

32

Our business met all three criteria. We were never a source of blight always maintaining a safe and clean environment for our patrons. In fact the developer that

received the rights to our land was a major contributor to problems in the area

through a pool hall on his property he leased out as well as a liquor store he still

owns. Secondly, we were a viable business as 29 years at one location should attest. In fact in a March of 1993 draft report the Consultant Firm of Keyser, Marston and

Associates, recommended that Arroyo’s Cafe ́ should be retained and to avoid relocation of said business. The firm was hired by the redevelopment agency. Thirdly, our patrons came from all over Stockton and outside of our city some to dine in our restaurant others to dance in our club area or both. Our case received

media attention as local news stations aired segments on the process. Most impressive to me was the amount of letters to the local newspaper (The Record) supporting

our cause to stay at that location. The deputy city manager at the time came to us with three proposals to that would allow us to remain on part of the property. One was agreed upon she later

returned to say the developer wanted all the property. In my view this was done

to allow more time for the developer to secure tenants for their project.

I understand that at times eminent domain may be necessary, for public good.

But our business a successful restaurant my father started in 1946 and at one location for twenty-nine years was relocated to provide for a gas station with a fast food

chain restaurant inside of it was nothing short of a land grab. With no concern for

private harm.

I feel that allowing developers with deep pockets to use and abuse eminent

domain is contrary to what many Americans feel is their right, to own land without

the fear of losing it.

The CHAIRMAN. Thank you, Mr. Arroyo. And thank you to the entire panel.

I want to begin with Mr. Arroyo, who is a constituent who lives

in my district. You had a restaurant that was in place for nearly

30 years, a family business. And you employed people in the neighborhood. You were part of what was downtown Stockton. And I

have been in your restaurant many times, I think most of my staff

has been there many, many times.

We were all surprised when your property was taken. But I

think what shocked me, and I think most of Stockton even more,

was to see that a McDonald’s took the place of what was a Stockton

institution.

I do not understand who thought that was a good idea. But it

is my understanding that under California law, they can take your

property if they consider it blighted.

Mr. ARROYO. That is correct.

The CHAIRMAN. They considered you part of the blight in downtown Stockton?

Mr. ARROYO. No. Actually when our case went to trial, they could

not bring up any reason or any cause that would suggest blight.

On the contrary, the developer contributed to the blight and to the

actual crime in the area by maintaining a liquor store around the

corner. But there was no police records; we had no problems with

any kind of a blight or crime from our business.

The CHAIRMAN. Then why were they able to take it? Because I

have been told repeatedly by opponents of this legislation that in

a state like California, the only way they can take your property

under eminent domain is if it is blighted.

Mr. ARROYO. That is contrary to what happened to us. When we

went to trial, even the Judge saw that there was no resolution of

necessity to take our property, but she still sided with the developers at the end of trial.

33

The CHAIRMAN. So when opponents of this legislation, particularly in California, because every state has different laws when it

comes to the use of eminent domain within that state. But when

opponents say that the only way they can take property is if they

condemn it and have it declared blighted by the city or the county,

that is not what happened in your case. They just had a different

use that they wanted for your property, so they took it.

Mr. ARROYO. Absolutely. The developer made it known that he

wanted all the property. And even though we were offered three

different plans to stay on the property, since the developer didn’t

accept either one of those, we were taken off the property.

They had about nine years before we went to trial. And even

though everything seemed to be in our favor, just because they had

deeper pockets, they were a larger group of investors, they were allowed to take our property. And now on my property sits a Union

76 station and a McDonald’s, which incidentally does not have as

many employees as we had at that time.

And because the gas station opened on that block, a gas station

just one block north of that closed. So actually the tax dollars were

basically balanced out.

The CHAIRMAN. Was that the Chevron?

Mr. ARROYO. The Chevron station, right. It is closed now.

The CHAIRMAN. Were you able to relocate your business?

Mr. ARROYO. Yes, we were. And when the City came to us and

offered different properties, they offered us properties that were not

even for sale. And to eliminate going and trying to do this to someone else, we purchased property that was for sale by a different

property owner in North Stockton. We did not want to impose this

kind of dealings with anybody else. They offered us quite a few

properties that I think had, the property owners had no intention

of selling.

The CHAIRMAN. You were compensated the fair market value for

your property

Mr. ARROYO. Right. They decided on fair market value, and that

is what we received.

The CHAIRMAN. And I am glad you put it that way. They decided

the fair market value, and that is what you received.

Mr. ARROYO. Right.

The CHAIRMAN. The fair market value of your property, the definition of fair market value is what you would be willing to sell it

for, and what somebody would be willing to pay you for it.

Mr. ARROYO. Right. We saw other properties in the vicinity, with

the same amount or close amount of square footage. And they were

going at a higher rate than actually what we received.

The CHAIRMAN. And if your restaurant were still in the same location, there is now a baseball stadium, a new soccer stadium, a

multi-screen movie theater, a number of new businesses that have

been located in that area over the last few years. Would that have

changed the value of that property?

Mr. ARROYO. Oh, absolutely. It would have went up 20 times the

amount maybe what it was valued at in 1999. The only reason the

city government was interested in our property after being there

such a long time was the completion of a crosstown freeway that

connected two major interstates. Before that, there was no concern

34

about us. Some of the people didn’t even bother to go down in that

area.

The CHAIRMAN. I thank you for making the effort to be here and

be part of this hearing. I know that, as a small business owner, it

is very difficult for you to take time away from your business. And

I appreciate you making the effort to be here and testify before the

Committee, and share your experience with the Committee, because I do believe it is very helpful in moving forward. So thank

you very much.

Mr. ARROYO. Thank you, Chairman.

The CHAIRMAN. Ms. Herseth.

Ms. HERSETH. Thank you, Mr. Chairman. I would like to thank

all the members of the panel today.

Let me just start with you, Mr. Gall. You had mentioned in your

testimony that since the Kelo case, you actually witnessed an uptick of the type of eminent domain authority that was exercised for

economic development reasons.

Can you tell me, given the actions in the House, with this legislation, the resolution that was passed overwhelmingly earlier this

summer, has it plateaued off? Or is there still this uptick of this

type of activity in local communities trying to beat the actions that

Congress may take to stave off this type of activity?

Mr. GALL. Well, unfortunately, the uptick after Kelo has continued. And I think certainly many people may be wanting to get in

under the wire in terms of any legislation that Congress may propose.

We issued, and I would be glad to provide to the Committee a

press release on the floodgates and how that had opened in terms

of condemnations that were filed subsequent to the Kelo decision.

But before Kelo, a lot of cities had operated with a little bit of

doubt as to what they were doing was legal, but people weren’t

challenging them. They could proceed under their urban renewal

laws, and slap blight designations or things like that on particular

pieces of property.

But now, after Kelo, the Court has said all it really takes is you

think you can make more money off the land than someone else.

So now that that cloud has been removed, you know, the cloud in

the perspective of developers and officials, they want to press full

steam ahead.

Ms. HERSETH. I raise this question, Mr. Chairman, because we

may want to look at our legislation and any others in terms of effective dates, particularly with the resolution that passed the

House overwhelmingly. I want to send a clear message to the country so that it is not just maybe necessary the date of the enactment

of the Act, but I mean, we put folks on notice with that resolution.

So I wanted to raise that for that purpose.

And then Mr. Hance, I appreciate the efforts of you and other

members of the American Farm Bureau Federation, particularly

with the efforts to set forth some model legislation for state legislatures. Do you know, in your monitoring activity of what state legislatures are doing—now, some, like in South Dakota, are only in

session for two months out of the year, but already some discussions about moving forward to introduce legislation when they go

into session in January—do you know how many states have

35

actually taken action to limit local governments or economic

development authorities from exercising eminent domain power for

economic development?

Mr. HANCE. To my knowledge, there is one or two.

The CHAIRMAN. If you would just identify yourself for the record.

so that we have that.

Mr. KRAUS. I am Rick Kraus. I am the Senior Regulatory Director for the American Farm Bureau.

There have been two states that have taken, actually three

states that have taken action since the Kelo decision was announced. The first was Alabama; they restricted the use of eminent

domain for private economic purposes. The second was Texas, and

the third was Delaware, which we recently did, just in the past

couple months.

We have heard probably from, in our State Farm Bureaus, we

have heard probably about 20, 25 states that we know that are

moving forward with the coming session. Some states were in session earlier this year, by annual basis, and don’t meet until the following year, until 2007. So, but there are probably 20, 25 states already that we know of that are working on this, including Maryland.

Mr. HANCE. Our session, as yours, does not start until January,

but we have already begun discussions with both parties. And I am

happy to announce that we have strong bipartisan support to do

something to strengthen the condemnation requirement so that agriculture will be protected.

Ms. HERSETH. Thank you, Mr. Hance. And just one last comment, Mr. Chairman.

Mr. Arroyo, Chairman Pombo shared with us, with the Members

of this Committee and the Agriculture Committee, some examples

from activities that have taken place in his district and other locations within California that have been particularly egregious. And

it has made a strong impact on all of us.

But to hear from you directly today has been very important. For

me, I wish more Members of the Committee were here to hear from

you directly today.

But let me just say that we appreciate the fact that you are here.

And one of the comments that you made about a consulting firm’s

report to the local economic development authority is precisely the

kind of evidence that a business like yours, or other individual,

whether it be a home or a farm or ranch, would be able to point

to to support your private right of action under this important

legislation.

So thank you for being here today.

Mr. ARROYO. Thank you.

Ms. HERSETH. Thank you, Mr. Chairman.

The CHAIRMAN. If I could, I would like to address a question to

the two attorneys that are on the panel. It relates to what Mr

Arroyo has talked about.

In our Constitution we have the protection on private property.

And the protection starts where no person shall be deprived of life,

liberty, or property. And that is our constitutional mandate.

It goes on to state ‘‘nor shall private property be taken for a public use without just compensation.’’ As if the exception to no person

36

shall be deprived of property is, if you have to have it for a public

use, you have to pay for it.

In this case, what we had was the government stepping in and

taking someone’s property not for a public use, but for a private

economic development. As was the case with Kelo v. New London.

It is my position, my argument, that we should be protecting people’s property to the point that it is an extremely rare occurrence

that eminent domain would ever be used, and it would have to be

a very clear public use before we would take that property. Not

what is, and I wrote down what you called a public purpose. That

is not in the Constitution anywhere about a public purpose. There

was an exception made on a public use.

So what this legislation is attempting to do is use our power of

the purse to enforce what is a constitutional mandate. So how do

we go back now, even though we can control the money, how do

we go back and fix what obviously was a very wrong court decision

that actually makes this legal for them to do that? What possible

legislation could be introduced that actually goes back to what the

Constitution says?

Ms. WALLY. Mr. Chairman, I think that is an excellent question.

I think this legislation represents an important first step. As you

said, Congress controls the purse, and this legislation makes very

clear that economic development purposes will not be funded by

Congress.

I think other legislation that is being passed currently before

Congress is another excellent step in enforcing Constitutional mandates, such as requiring just compensation for any deprivation of

private property, whether it be physical or economic. And that is

an important part of our Constitution as well, to make sure that

property owners do get just compensation as we have discussed.

We have discussed that the government often defines what just

compensation is. And this is often unfair to property owners. I

don’t know if my colleague would have anything to add.

Mr. GALL. Well, certainly Congress can do a lot through the

spending clause power.

Eminent domain has traditionally been a state power, and a local

power. So that is why what is going on in state legislatures is so

very important right now, because those states can pass legislation

that directly proscribes the actual use of eminent domain by cities

and towns for private use for private commercial development. And

states will be considering not only state legislation, but state constitutional amendments.

And as Justice Stevens pointed out in the majority for Kelo,

states can provide a greater level of protection than the U.S. Supreme Court chose to provide.

The hope certainly is that states will provide this increased protection; that Congress will use the power of the purse here, and

send us in the momentum of a change. You know, once again, in

public use jurisprudence, back to what the founding fathers understood when they said public use. This is the despotic power, and

should only be used in the very, very limited set of circumstances.

And hopefully the Kelo decision will be overturned one day. But

until that time, Congress and the states can have a lot to say about

that.

37

The CHAIRMAN. Congressman Otter, in his testimony earlier,

talked about what a public use was. And at the time the Constitution was drafted, Congressional power was, Federal government

power was very limited. There were 17 different areas that our

founding fathers said that Congress could pass laws affecting.

When they talked about public use at that time, it was extremely

limited as to what was envisioned at that time as a public use. We

were talking about roads, military bases, post offices. It was very,

very limited as to what anyone envisioned it to be used for.

We have seen that change over the years. We have seen the

power of the Federal government expanded dramatically over the

years.

But when they talked about a public use in the Constitution, it

was a very limited set of circumstances that they ever envisioned

that that could be used for. We have seen that expanded dramatically. And granted, states and local governments have dramatically

more power than the Federal government should have, but in the

Constitution what we were able to use or declare as a public use

was very, very limited. And we have seen that expanded to the

point where, through regulation and through law, we are taking

private property rights. And taking substantial value away from

private property owners.

I would like to ask you something that I asked the first panel

about, and that is dealing with the differences in private property

protection. Do you see there being any difference whatsoever between Mr. Arroyo’s restaurant and the farmer who lives a few

miles away and his land? Is there any difference in the Constitution about the protection of private property based on the size of

the property, or the use of the property?

We have a representative from the Farm Bureau who testified,

and the Farm Bureau has been very involved with this. These two

gentlemen right here, one grows soybeans and one owns a restaurant. Is there any difference in the property rights protection in

the Constitution for these two gentlemen, and what they should expect from the courts and from their government?

Ms. WALLY. No. The Constitution makes no distinction between

any kind of private property.

Mr. GALL. None whatsoever. The Constitution makes no

distinction. And the really bad thing about the Kelo decision, of

course, though, is it says those with more, those with more property, those with more resources are in a better position to take advantage of Kelo and to take property from those who are generating less profits with their property.

So no, there is none, and there should be no distinction.

The CHAIRMAN. Well, I appreciate that. That is something that

I believe Congress has to be very, very careful of. Because when we

start to differentiate between the use, location of property, and the

level of protection that we are going to grant, I believe that we are

making a fundamental mistake in understanding constitutional

protections.

There has been legislation introduced that does differentiate between property. It is the use of that property and the level of protection that we would give. And I believe that that is a very, very

38

dramatic mistake that Congress would be making if we were to go

down that path.

I appreciate all of you making the effort to be here and be part

of this hearing. Obviously this is an issue that the Congress is

moving on very rapidly. It is something that, in Congressional

terms, not only is it bipartisan and bicameral, but it is something

that, rare here, is moving very quickly. So I appreciate you making

the effort to be here, and your valuable testimony on this issue.

So thank you all very much.

If there is no further business before the Committee, the Committee now stands adjourned.

[Whereupon, at 11:30 a.m., the Committee was adjourned.]

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