Defending American Taxpayers From Abusive Government Takings Act of 2013

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 1944) to protect private property rights.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 1944, currently under consideration.

Mr. Speaker, I yield myself such time as I may consume.

In 1997, Susette Kelo was trying to rebuild her life when she purchased a small, Victorian house perched on the waterfront in the Fort Trumbull neighborhood of New London, Connecticut.

It was Susette's dream to own a home that looked out over the water. The little pink house she purchased was in need of repair, but with lots of hard work, she was able to restore it and start a new life for herself on the banks of the Thames River. Susette was finally living her dream.

Tragically, however, the city of New London turned that dream into a nightmare.

In 1998, pharmaceutical giant Pfizer announced its intent to build a plant in Fort Trumbull, and the city of New London began planning a massive redevelopment of the area surrounding the Pfizer plant. The city handed its power of eminent domain to a private corporation to take the entire neighborhood for economic development purposes.

Susette and several of her neighbors, some of whose families had lived in their homes for generations, challenged the city's use of eminent domain all of the way to the U.S. Supreme Court in a desperate attempt to save their homes and their mostly blue collar neighborhood.

However, the Supreme Court, in one of the most controversial rulings in its history, held that private economic development constitutes a ``public use'' under the Fifth Amendment to the United States Constitution. Under the Court's reasoning, the government can now use the eminent domain power to take the property of any individual for nearly any reason. As the dissenting justices observed, by defining public use so expansively, the result of the decision is:

Effectively to delete the words ``for public use'' from the

takings clause of the Fifth Amendment. 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

government now has license to transfer property from those

with few resources to those with more. The Founders cannot

have intended this perverse result.

The Court's 5-4 decision against Susette and her neighbors sparked a nationwide backlash against eminent domain abuse. Susette's fight helped remind Americans that private ownership of property is vital to our freedom and our prosperity, and is one of the most fundamental principles embedded in the Constitution. Poll after poll that came out in the wake of the Court's ruling consistently showed that Americans from across every demographic cross-section overwhelmingly opposed the decision and supported efforts to strengthen property rights protections.

Although Susette's story is probably the most infamous case of eminent domain abuse, it is by no means an isolated case. Every day across this country, Americans are forced to sit back and watch powerlessly as their homes, small businesses, family farms, and churches are bulldozed to make way for high-end condos, shopping malls, and other upscale developments.

Oftentimes, after Americans go through the trauma of losing their private property to eminent domain abuse, the planned private economic development doesn't even occur. In New London, for instance, the Fort Trumbull redevelopment project never got off the ground. After spending close to $80 million in taxpayer money, there has been no new construction, and the neighborhood where Susette Kelo's little pink house was located is now a barren field, overrun by weeds.

It is time for Congress finally to step in and do its part to rein in eminent domain abuse by passing the Private Property Rights Protection Act. I want to thank Mr. Sensenbrenner for reintroducing this legislation. He and I have worked together on this issue for many years, and I am pleased that this legislation incorporates many provisions from legislation I helped introduce in the 109th Congress, the STOPP Act.

Specifically, the Private Property Rights Protection Act prohibits State and local governments that receive Federal economic development funds from using economic development as a justification for taking property from one person and giving it to another private entity. Any State or local government that violates this prohibition will be ineligible to receive Federal economic development funds for a period of 2 years.

Moreover, this legislation grants adversely affected landowners the right to use appropriate legal remedies to enforce the provisions of the bill. In addition, it allows State and local governments to cure violations by giving the property back to the original owner. No one should have to live in fear of the government snatching up their home, farm, church, or small business. As the Institute for Justice has observed:

Using eminent domain so another richer, better-connected

person may live or work on the land you used to own tells

Americans that their hopes, dreams, and hard work do not

matter as much as money and political influence. The use of

eminent domain for private development has no place in a

country built on traditions of independence, hard work, and

protection of property rights.

This bill creates incentives for State and local governments to help ensure that eminent domain abuse does not occur in the future. I urge my colleagues to support this legislation.

I reserve the balance of my time.

Mr. Speaker, at this time, it is my pleasure to yield such time as he may consume to the gentleman from Wisconsin (Mr. Sensenbrenner), the chairman of the Crime, Terrorism, Homeland Security, and Investigations Subcommittee, and the chief sponsor of this legislation.

Mr. Speaker, I yield myself such time as I may consume.

I have in my hand bits of the few remaining bricks from the foundation of Susette Kelo's home in New London, Connecticut. They were picked up at the site just over a year ago.

They once supported the lovingly arranged sanctuary of a woman who raised five sons and put herself through nursing school by working as an emergency medical technician. They gave her a place to rest after a long day's work surrounded by the things that meant the most to her. They were the foundations of her castle until the government's bulldozers arrived.

Mr. Speaker, Ms. Kelo's home, known as the ``little pink house,'' was reduced to rubble--this rubble--by the government's abuse of eminent domain and has remained just that--rubble.

These bits of bricks serve as a stark reminder of the government's inability to plan people's lives better than they can plan them themselves. They are the dramatic result of a type of government abuse that should never be rewarded with Federal taxpayer dollars. The homes that hardworking Americans have earned should be protected from government abuse, and we here in the people's House have a duty to do just that.

I had the opportunity to meet Susette Kelo. To me, she is a genuine American hero, fighting all the way to the United States Supreme Court to protect her little pink house and to protect all of our Fifth Amendment rights under the United States Constitution.

To me, the failure of the Court to correctly rule on that eminent domain case cries out for the Congress to correctly rule on this abuse by passing Mr. Sensenbrenner's bill, by passing the Private Property Rights Protection Act.

As has been noted, 43 States have acted to protect eminent domain rights. Isn't it time for the United States Congress to do the same?

I urge my colleagues to support the Private Property Rights Protection Act, and I yield back the balance of my time.

Mr. Speaker, I rise in opposition to H.R. 1944, and I yield myself such time as I may consume.

Mr. Speaker, in the wake of the Supreme Court's decision in Kelo v. City of New London, I have been concerned that States and municipalities could use this decision to expand their power of eminent domain, whether for the benefit of private parties or for public projects, to the detriment of those who are least powerful in the community.

While I believe the power of eminent domain has been abused, particularly against those lacking economic or political power, in the 9 years since the Kelo decision, States have properly addressed the issue on their own, and we should respect their judgment rather than impose this awkward, one-size-fits-all Federal legislative response.

I have reached this conclusion for several reasons. The first and foremost is that it is important to note that in Kelo, the Supreme Court acknowledged that State courts may interpret their own eminent domain powers in a manner that is actually more protective of property rights. I am, therefore, encouraged that no fewer than 43 States have followed that advice and taken steps to restrict their own powers of eminent domain to guard against abuse.

Given the fact that our system of federalism appears to be working and that the States have already enacted legal protections that are needed to prevent abuse of eminent domain power, I do not believe that Federal intervention is necessary or appropriate at this time.

Second, the bill's enforcement provisions are very troubling. A jurisdiction found in violation of this legislation would be stripped of all Federal economic development funds for 2 years, which could have a devastating impact on its financial health.

The Supreme Court has long held that, ``when Congress attaches conditions to a State's acceptance of Federal funds, the conditions must be set out 'unambiguously.''' But the term ``Federal economic development funds'' is, in fact, ambiguous and could conceivably include transportation, housing, and all kinds of significant Federal funding.

Those who could bear the heaviest burden of cuts and programs like the Community Development Block Grants could be precisely the same communities that have suffered the most under the abuse of eminent domain power in the past, that is, the powerless in our communities.

Furthermore, the impact of this legislation could be severe, even if a city or State never exercised the power of eminent domain. That is because no lender could ignore the risk of a future administration violating this legislation by using them in a domain for a prohibited purpose and, consequently, facing the devastating penalties during the life of the bond, thereby affecting the city's ability to make the payments on the bond.

This bill gives no discretion and no flexibility with respect to the penalty. It fails to take into account the severity or magnitude of the violation, so even a small violation would have to result in a complete loss of all economic development funds for 2 years.

No matter how clean a city's record may be, the danger that some future violation would have such a devastating effect could negatively impact its bond rating.

Finally, against this backdrop, we need to remember that eminent domain has a long and shameful history

of disproportionately impacting foreign minority communities.

Inner-city neighborhoods that lacked institutional and political power were often designated as blighted areas slated for redevelopment through urban renewal programs. Properties were condemned, and land was turned over to private developers.

That abuse was not confined to the use of eminent domain for economic development purposes. Many of those abuses would still be allowed under this bill. You can trace the cost of any major highway in America to see where poor and minority communities were located. You can map political power, where it is and where it isn't, by the proposed route of the Keystone pipeline today.

This bill does nothing to protect property owners like the witness who testified before the House Judiciary Committee about how her property was taken to benefit the foreign corporation building that pipeline.

The bill does not even give property owners the right to sue to stop an illegal taking in the first place. Suits can only be brought after the property is taken, after it is too late. Despite the draconian penalties in the bill, the actual property owner would get nothing.

This underscores why it is important that we continue to monitor the facts on the ground to determine whether Federal action is warranted. If so, what effective action should be taken?

If the States fail to protect our citizens, Congress should remain ready, willing, and able to do so. However, as the States have already acted to curb reviews, we in Congress should allow them to maintain their authority to act.

Even if you believe the bill achieves the correct balance between State authority and Federal intervention and prohibits the inappropriate use of eminent domain, the irrational penalties it imposes and the fact that individual property owners are not even protected still require that the bill be defeated.

I urge my colleagues to oppose the legislation and reserve the balance of my time.

Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. Speaker, I am pleased that the House of Representatives today is considering H.R. 1944, the Private Property Rights Protection Act, as part of Stop Government Abuse Week. My bill aims to restore the property rights of all Americans the Supreme Court took away 9 years ago.

The Founders of our country recognized the importance of an individual's right to personal property when they drafted the Constitution. The Fifth Amendment states, ``nor shall private property be taken for public use, without just compensation.''

In Kelo v. the City of New London, in a 5-4 decision, the Supreme Court decided that economic development can be a public use under the Fifth Amendment's Takings Clause. The Court held that the government could take private property from an owner to help a corporation or a private developer.

The now infamous Kelo decision was met with swift and strong opposition. As former Justice O'Connor stated, ``Government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.''

In the nearly 9 years since Kelo, polls show that Americans overwhelmingly oppose property being taken and transferred to another private owner, even if it is for a public economic good.

Groups including the AARP and NAACP oppose Kelo, noting that, ``the takings that result [from the Court's decision] will disproportionately affect and harm the economically disadvantaged and, in particular, racial and ethnic minorities and the elderly.''

Representatives of religious organizations have stated that, ``Houses of worship and other religious institutions are, by their very nature, nonprofit and almost universally tax-exempt. These fundamental characteristics of religious institutions render their property singularly vulnerable to being taken under the rationale approved by the Supreme Court.''

Should the government be able to close churches if it prefers malls?

The Private Property Rights Protection Act is needed to restore to all Americans the property rights the Supreme Court took away. Although several States have independently passed legislation to limit their power of eminent domain, the supreme courts of Illinois, Michigan, and Ohio have barred the practice under State constitutions. These laws exist on a varying degree.

H.R. 1944 would prohibit State and local governments that receive Federal economic development funds from using economic development as a justification for taking property from one person and giving it to another private entity.

Any State or local government that violates this prohibition will be ineligible to receive Federal economic development funds for 2 years.

The protection of property rights is one of the most important tenets of our government.

I am mindful of the long history of eminent domain abuses, particularly in low-income and often predominantly minority neighborhoods, and the need to stop it.

I am also mindful of the reasons we should allow the government to take land when the way in which the land is being used constitutes an immediate threat to public health and safety. I believe this bill accomplishes both goals.

I urge my colleagues to join me in protecting property rights for all Americans and limiting the dangerous effects of the Kelo decision on the most vulnerable in society.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I rise today in support of H.R. 1944, the Private Property Rights Protection Act of 2013.

This legislation addresses the eminent domain practice of seizing private property for the ``public benefit'' of economic development, which was deemed constitutional by the United States Supreme Court in its decision in Kelo v. City of New London. This bill prohibits a state or local government from seizing private property for

economic development if that state or local government receives federal economic development funds, and prohibits the federal government from exercising eminent domain powers for economic development purposes.

While it has not received much attention or debate in the full House of Representatives, my colleagues on the Committee on Financial Services and I have become increasingly concerned about a new proposed use of eminent domain which would be incredibly destructive to our housing markets and to Main Street investors alike.

Dozens of communities across the country are considering a vulture fund-developed investment scheme by which the municipality's eminent domain power is used to acquire underwater--but otherwise performing-- mortgage loans held by private-label mortgage-backed securities and then refinance those loans through programs administered by the Federal Housing Administration (FHA).

Our housing finance system depends on private capital to take risk, make loans, purchase mortgage-backed securities, and help millions of Americans fulfill the dream of homeownership. What this eminent domain scheme considers would be incredibly destructive to the finance of homeownership and would do little more than help a few homeowners who can already afford their mortgage and line the pockets of the investors who developed this proposal. Who would invest in a mortgage knowing that their investment could be stolen just a few months or years later? Ironically, this new risk to the housing finance system would freeze the return of private capital to our markets at a time when many in Congress are looking for ways to increase the role of the private sector and decrease the federal government's footprint.

Using eminent domain in this manner will hurt Main Street investors the most. Those investors and pensioners may be invested in mortgages sitting in communities considering this plan--like Richmond, California--and not even know it. They are the ones who will suffer the most from this particular form of eminent domain.

Mr. Sensenbrenner's legislation shines a spotlight on the abusive uses of eminent domain, including this investment scheme, and I am proud to support the bill. I believe this legislation may have the effect of defeating such a scheme. In addition, I support Chairman Hensarling's efforts to directly target and defeat this use of eminent domain, and I look forward to future opportunities to ensure the protection of private property and the security of our housing finance system.

Mr. Speaker, I rise in support of H.R. 1944, the Private Property Rights Protection Act of 2013. Unfortunately, I was delayed in returning to Washington and, regrettably, but want to take this opportunity to note its importance.

When we hear the words ``eminent domain,'' we often visualize the government taking a home, an office building, or a piece of land, often for a highway or some other public infrastructure. But my colleague Mr. Sensenbrenner articulated well in his remarks that the powers of eminent domain are sometimes used for very different purposes.

One abuse of eminent domain that I have long been publicly against is the use of eminent domain to seize mortgage notes from investors, using the courts to unilaterally restructure the terms of those loans before selling them to other investors. In this scheme, some private investors have their investments seized and incur losses while other private investors benefit. Many of the investors who will incur losses are the savers and retirees who own them through their 401(k), IRA, or pension accounts. But ultimately, this is a blatant abrogation of private property rights and undermines longstanding contract law. As a response, I have introduced H.R. 2733, which prohibits Fannie Mae, Freddie Mac, and the Federal Housing Administration from making, purchasing, or guaranteeing loans in areas where eminent domain is being used to seize mortgage notes. This legislation is also included in the Protecting American Taxpayers and Homeowners (PATH) Act.

I believe that property rights, whether real property or the financial instruments that finance them, should be protected. Doing so will give certainty to the housing finance system, which is necessary to transition from a system dominated by government-guaranteed mortgages to one based on private capital.

The Private Property Rights Protection Act of 2013 is not the only legislation to address the issue of abusive eminent domain practices. Section 407 of the Consolidated Appropriation Act of 2014, Pub. L. No. 113-76, prohibits the expenditure of federal funds to support activities that utilize eminent domain powers, unless it's exclusively for a public purpose. The schemes being considered call for the Federal Housing Administration (FHA) to guarantee the seized and restructured mortgage loans. Given that some private investors and their paid intermediaries stand to benefit, it is apparent that FHA is unable to participate in these restructuring programs, so long as eminent domain powers are used. With this provision signed into law just last month, Congress and the President have already begun to define the limits of acceptable usage of eminent domain.

I thank Mr. Sensenbrenner for his important work on this issue.