Congress considers bill restricting eminent domain for economic development; Institute for Justice backs bill, professor warns against it

Will Congress reform eminent domain? Yesterday the House Judiciary Subcommittee on the Constitution held a hearing on H.R. 1433, the "Private Property Rights Protection Act," which would prohibit states or political subdivisions to exercise eminent domain (or allow such exercise) over property to be used for economic development.

It drew both strong support and harsh criticism from a split panel of witnesses.

This reprises a similar bill passed by the House of Representatives in reaction to the Supreme Court's controversial 2005 Kelo v. New London decision, which upheld eminent domain for economic development.

(The previous vote was 376-38, indicating bipartisan consensus; it's likely the Republican-dominated House would still support the bill, though perhaps without such consensus. The Senate, Democratic then and now, never voted.)

However, it would not have any effect on agencies pursuing eminent domain under the justification of blight removal, as in the state of New York. Hence recommendations for reform of laws regarding blight, as proposed by two academics in a paper delivered in February at a Fordham Law School symposium.

In Congress, divide or consensus?

It's hardly clear that there's a consensus for reform in Congress. Eminent domain abuse has generated pushback most significantly from the right, but has also provoked those from a wide ideological range.

Advocates such as the libertarian Institute for Justice (IJ) portray the new bill as having bipartisan support, and it is cosponsored by Representatives Jim Sensenbrenner (R-WI) and Maxine Waters (D-CA). However, the 16 cosponsors are Republicans, which does not indicate broad support.

Two of the three witnesses yesterday spoke in support of the bill, and they were highlighted by the Institute for Justice.

Witness: homeowner

Lori Ann Vendetti, a homeowner in Long Branch, NJ, described her neighborhood, threatened by a redevelopment zone:

There is real blight in Long Branch, but the city didn't want to fix up the abandoned buildings across from city hall. They wanted our well-kept but modest beachside homes so they could sell them to a developer who could build more expensive houses.

While a lower court judge agreed with the city's findings of blight, an appellate court reversed that decision; the city then halted eminent domain action against Venditti and hers neighbors, began fixing the infrastructure it had neglected, and offered them the same tax abatements it provided to its designated private developer.

Witness: IJ attorney

Dana Berliner, Senior Attorney for the Institute of Justice, testified that, after the Kelo decision, "the floodgates opened," as the rate of eminent domain abuse tripled. One of her five examples:

Last year, the New York Court of Appeals--the state's highest court--allowed the condemnation of perfectly fine homes and businesses for two separate projects. First, a new baksetball arena and residential and office towers in Brooklyn, and then for the expansion of Columbia University--an elite, private institution--into Harlem.

Note that the justification in both cases was blight, not economic development, though there's obviously conceptual overlap.

Berliner observed that, while some states have reformed their laws, "it remains a major problem in many other states," with New York the worst state in the country, "and it has gotten even worse since Kelo." (There's broad consensus on that.)

She noted that federal funds were used to support eminent domain in numerous communities around the country, including Liberty Bonds for the Bank of America Tower at One Bryant Park in New York City.

Berliner argued for federal action, as "reforms not embedded in state constitutions will always be subject to repeal or exception whenever a pie-in-the-sky project catches the eye of state legislators or local officials."

She noted that the legislation still allows jurisdictions to acquire abandoned property and clear title.

Witness: critic of legislation

John D. Echeverria, a Professor at Vermont Law School, testified forcefully against the legislation, noting he had represented the American Planning Association and other organizations in Kelo and co-authored a 2006 report, Kelo’s Unanswered Questions: the Policy Debate Over the Use of Eminent Domain for Economic Development:

One conclusion of that report is that eminent domain is, in many instances, an important tool to accomplish redevelopment objectives in the face of highly fragmented land ownership patterns and recurring holdout problems. Another finding is that the use of eminent domain, though rarely completely free from controversy, often enjoys deep and widespread community support...

Echeverria warned that national legislation is "unnecessary, unwise as a matter of policy, and
would be highly destructive of the recent efforts by the States to address this specific issue."

He classified three categories of responses by states: "those that have essentially abolished the use of eminent domain for economic development or at least placed very strong limitations on its use; those that have enacted significant reforms while still allowing for the continuing use of eminent domain in some circumstances; and those that have adopted no new legislation or adopted only minor changes."

He suggested that the impacts of such measures "remain to be determined based on experience," and that "the wide differences between the States – in terms of population density, the age of communities and building stocks, and redevelopment objectives" ensures that they will take different approaches.

Echeverria did not, however, address the situation in New York, where reform has been gridlocked.

He criticized the bill's proponents:

In light of the enormous attention state legislators have given this issue over the last half-dozen years, and the Institute for Justice’s not inconsiderable success in achieving its policy objectives at the state level, one wonders what the Institute’s rationale is for now supporting action at the national level. Is it that not every State has gone as far as the Institute thinks they should, and therefore Congress needs to step in with national legislation that would preempt the recent State efforts and trump the policy judgments so recently made at the state level? Apparently so. The better conclusions to draw from the recent spate of state policy–making on eminent domain are that the States have already responsibly addressed the eminent domain issue, they have done so in a way that achieves a different balance in each State, time will tell how some of these reforms will work out, and Congress should not seek to intervene in this issue now.

He also suggested that the enforcement feature, which would not directly restrict the use of eminent domain but penalize states and localities after the fact "could have disastrous fiscal consequences for State and localities."