Supreme Reign

By Fred Kelly Grant

Let there be no doubt: government’s power to condemn private property is now virtually limitless! If the government can afford to compensate the private property owner, it can now take his or her property for any reason. The Fifth Amendment’s restriction that such “taking” can be only for “public use” has been written out of existence by the United States Supreme Court decision in Kelo v. City of New London, issued on June 23. The 5-4 decision, as well as other important federalism and property rights decisions issued during the last term, demonstrate that no longer can private property owners rely on 9 robed humans to protect their rights. Efforts to restore protection of property rights must be focused on elected legislators instead of judicial Russian roulette.

Justice Stevens authored Kelo, which allows the City of New London, Connecticut, and any other city, county or state government to condemn the private property of one owner for the benefit of another private person. Stevens (appointed by President Ford (R.)), was joined by Justices Souter (appointed by the first President Bush (R.)), Kennedy (appointed by President Reagan (R.)), Ginsberg and Breyer (both appointed by President Clinton(D)).

Practically, this decision only permits one area for judicial review in a case challenging the reason for which private property is taken: did the legislative body believe that a governmental or public interest would benefit, even indirectly. Under this decision, when a city council believes that replacing private residences with newer residences or with commercial or industrial uses will increase tax revenue and/or offer more jobs, or in any other way improve the economy of the city, private property rights give way.

The Fifth Amendment was clearly intended to be a restriction on governmental power to exercise eminent domain. The adopted language clearly states “nor shall private property be taken for public use, without just compensation.” The Founders never questioned the historical authority of a sovereign government to “take” private property for any reason. Such power had existed from the beginning of time. One of the prime purposes of Magna Carta was to require the King to pay for property he took, not to prevent the actual taking. The understanding of the British noblemen continued at the time of the Constitutional Convention.

Unwilling to allow such unfettered sovereign power to exist in the New Republic the Founders drafted an amendment, which prevented a “taking” for private use. As Justice Thomas points out in his Kelo dissent: “Though one component of the protection provided by the Takings Clause is that the government can take private property only if it provides ‘just compensation’ for the taking, the Takings Clause also prohibits the government from taking property except ‘for public use’…The Public Use Clause, like the Just Compensation Clause, is therefore an express limit on the government’s power of eminent domain.”

After Kelo, the only restriction left is the payment of “just compensation.” The decision has resulted in a nationwide stir. Private property owners are outraged, as are proponents of protection for low income, economically helpless residents of inner city areas. The owners know that this decision encourages cities and counties to energetically pursue plans, which will result in higher tax revenues than can be gained from established residences and businesses. Urban mayors and administrators have praised the decision because it allows them to actively pursue redevelopment.

The Kelo case reached the Court after the Connecticut Supreme Court affirmed legislation authorizing a private corporation to act for the City of New London in exercising the power of eminent domain. The statute authorized eminent domain for the purpose of developing urban redevelopment and economic plans. Under it, the City of New London was designated a “distressed municipality.” As such, it was authorized by statute to delegate its redevelopment planning to a private corporation and to designate such corporation as its agent to exercise the eminent domain power.

In 1998, a major pharmaceutical manufacturer announced that it intended to build a “global research facility” in New London. Two months later, the New London City Council began the process of designating the New London Development Corporation to prepare a major development plan to “complement” the Pfizer facility. It also designated the Corporation to serve as the city’s condemnation agent. The Corporation is a non-profit private corporation whose directors and employees are privately employed.

The economic development plan created by the Corporation called for condemning property in order to utilize 90 acres for the following uses: a waterfront hotel and conference center, a health club, marinas, public walkways along the water, 80 new residences, “possibly” a Coast Guard Museum, high technology and other private office space and parking.

Once the Corporation condemns the property, it owns the land and then can lease it “to private developers for $1 per year.” (Petitioners’ Brief, 6). At the time of trial of the Petitioners’ challenge to the city and its designated agent, the Corporation was negotiating with a private developer “to enter into a 99 year lease for development projects,” the developer to be allowed to develop the land according to its own discretion and to select the tenants for the development projects. (Petitioners Brief, 6) The City of New London would have no oversight authority over the development and its use.

One of the New London residents that brought the case was 87 year old Wilhelmina Dery, who was born in her house in 1918. Her family moved to New London from Italy in the early 1880’s and, in 1901 bought the house now to be condemned. Mrs. Dery and her husband, Charles, were married 59 years ago and have lived in the house ever since. The Dery’s son, Matthew, his wife and son, live next door to the Derys in a home he was given by his grandmother as a wedding gift. That home has been in the Dery family since 1903. The Dery families challenged the right of the city to condemn their property “to make way for private business development in the hope that the new development projects will create more tax revenue and jobs than the homes” which are currently located in the planning area. (Petitioners’ Brief in Support of Certiorari, 1-2). They are not interested in receiving “just compensation” because to them there is no compensation that can adequately replace the homes in which they have “lived for years, have raised their families, and have grown old.” (Petitioners’ Brief, 2)

Another petitioner, Susan Kelo, a registered nurse, bought her Victorian-era house in 1997, a house that is right down the block from the Derys. She has “made extensive improvements” to the home, and “loves the water view from her home, the people in the area, and the fact that she can get in a boat and be out on Long Island Sound in less than ten minutes.” (Petitioners’ Brief, 2). Like the Derys, there is no amount of compensation that can adequately replace her home. She challenged the city’s authority, along with the Derys and 12 other homeowners in the area.

None of the properties could be termed “blighted” or “slum” properties. Four of the homes to be destroyed sit on land slated for private office spaces and parking; the other eleven are on land slated for “Park Support” use which is undefined in the Plan. It was not disputed that the homes to be condemned sit on only 1.54 acres of the 90 acre project area. The project development would not be hampered or jeopardized by leaving these homes in place. In spite of these facts, the Corporation began condemnation actions from which arose the challenges.

The Petitioners did not contend that their property was exempt from condemnation if the government’s use was a “public use.” Rather, they contended that there was no “public use” planned for the property. Condemnation was intended only to facilitate the economic redevelopment of the area, and was to serve the benefit of private businesses and enterprises. They contended that the Founders used the term “public use” as that term was understood at the time of the Constitutional Convention, not as the term had been interpreted by the Connecticut Supreme Court. That Court had replaced the concept of “public use” with the concept of “public benefit” which would allow condemnation even for private “use” if the government would benefit from higher tax revenues and from higher employment.

Petitioners cited as authority for their position the 2004 decision of the Michigan Supreme Court in County of Wayne v. Hathcock. Wayne County had condemned 19 non-blighted properties as part of a planned business park that would include offices, a hotel, conference center and a recreational facility. The park was projected to generate $350 million in additional tax revenues for the County and create 30,000 new jobs. The projected economic benefit far exceeded that expected by New London from its planned development. An earlier Michigan case, Poletown Neighborhood Council v. City of Detroit, had ruled that economic development to benefit General Motors was a “public use.” Under that decision the Wayne County condemnations would have been approved.

But, in Hathcock, the Michigan high court reversed its earlier decision, ruling that private entities’ pursuit of profit was not a “public use” for constitutional purposes, even though success of the private entities would increase government revenues and better the general economy.

Petitioners’ contentions made good constitutional sense to the dissenters: Justices O’Connor (appointed by President Reagan), Rehnquist (appointed by President Nixon (R.)), Scalia (appointed by President Reagan) and Thomas (appointed by the first President Bush). But, not to the 5 Justices who made up the majority.

Justice Stevens’ opinion admittedly established new law, even though it claimed a basis in prior Supreme Court decisions. He stated that neither the concept that the government cannot take private owner A’s property to transfer it to another private owner B, nor the concept that the government can take property and transfer it to another private party if the future use is for “use by the public” (citing the railroad, with common-carrier duties, as the example.) would determine the disposition of the question before the Court.

Rather, his opinion stated, prior decisions had slowly eroded the concept that an actual “public use,” i.e., use by the public, was necessary to justify condemnation:

“Accordingly, when this Court began applying the Fifth Amendment to the States at the close of the 19th century [after the Court had decided that the 14th amendment required application of the 5th Amendment to the States), it embraced the broader and more natural interpretation of public use as ‘public purpose’.”

Thus, the actual “public use” language of the Fifth Amendment is changed to a concept of “public purpose” or “public benefit.” The terms are then used interchangeably throughout the remainder of the opinion. Examples of “public benefit” which equate to “public use” then include redevelopment and economic plans which will “benefit” the public by improving the economy:

“Promoting economic development is a traditional and long accepted function of government. There is, moreover, no principled way of distinguishing economic development from the other public purposes [ed. Note, see the change from “public uses”] that we have recognized.”

The Court then rationalizes its position on the basis of its historic deference to legislative bodies, which make policy for their governments. Justice Stevens refers to the Court’s “long standing policy of deference to legislative judgments” in the field of condemnations. Therefore, he states, the decision in Kelo “turns on the question whether the City’s development plan serves a ‘public purpose’” as seen by the City Council.

This decision should come as no surprise to private property interests. The muddling of “public use” has been developing for many years, through the Court’s reliance on its “deference” to legislative bodies. Too much reliance may have been placed upon the courts for private property protection, when the protective efforts could have been directed to state and local governments.

In Fallbrook Irrigation Dist. v. Bradley, an 1896 decision, the Court moved toward defining “public use” as any use that serves a “public interest” rather than being limited to “use” by a public agency.

In Berman v. Parker, a 1954 decision, the Court “deferred” to Congress, which had adopted a redevelopment plan to remove a blighted area in the District of Columbia. Part of the land was to be used for streets, schools and other public facilities, but most of it was to be leased to or sold to private parties for redevelopment. The owner of a department store, which was not a blighted property, challenged condemnation of his property.

Justice Douglas, writing for a unanimous Court, said that the Court must defer to the legislative decision that the entire area must be “planned as a whole,” without special attention being given to private property that did not fit within the blighted category. Said Douglas:

“The concept of the public welfare is broad and inclusive…. The values it represents are spiritual as well as physical, aesthetic as well as monetary. It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled. In the present case, the Congress and its authorized agencies have made determinations that take into account a wide variety of values. It is not for us to reappraise them. If those who govern the District of Columbia decide that the Nation’s Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way.”

Kelo could certainly have been predicted from a careful study of that case and its unanimous opinion.

Then, in Hawaii Housing Authority v. Midkiff, a 1984 decision, the Court upheld a Hawaii statute, which took away the fee title of lessors of property and transferred such title to the lessees. The statute was designed to reduce the concentration of land ownership, which resulted from titles leading back to a feudal land tenure in which one island high chief controlled the land and assigned it to sub-chiefs who would govern the use of the land by tenants or lessees who paid for the use of the land. The much maligned, and most often deservedly so, Ninth Circuit Court held the statute unconstitutional, describing it as a “naked attempt on the part of the state of Hawaii to take the property of A and transfer it to B solely for B’s private use and benefit.” The description is apt. The state set out to take fee titles from property owners and give the fee titles to those who had been leasing the property. Citing Berman and other prior decisions, the unanimous Court again equated “public use” with “public purpose” and deferred to the Hawaii legislature’s decision that stripping the owners of their titles served the public purpose. In the decision, the following quotations should have forewarned of Kelo:

“The ‘public use’ requirement is thus coterminous with the scope of a sovereign’s police power.” (Referring to the language in Berman that ’Once the object is within the authority of Congress, the right to realize it through the exercise of eminent domain is clear. For the power of eminent domain is merely the means to the end. Once the object is within the authority of Congress, the means by which it will be attained is also for Congress to determine. Here one of the means chosen is the use of private enterprise for redevelopment of the area. … The means of executing the project are for Congress and Congress alone to determine, once the public purpose has been established.’)”

“To be sure, the Court’s cases have repeatedly stated that ‘one person’s property may not be taken for the benefit of another private person without a justifying public purpose, even though compensation be paid.’ …But where the exercise of the eminent domain power is rationally related to a conceivable public purpose, the Court has never held a compensated taking to be proscribed by the Public Use Clause.”

“The Court long ago rejected any literal requirement that condemned property be put into use for the general public. ‘It is not essential that the entire community, nor even any considerable portion…directly enjoy or participate in any improvement in order [for it] to constitute a public use.’”

“Thus, if a legislature, state or federal, determines that there are substantial reasons for an exercise of the taking power, courts must defer to its determination that the taking will serve a public use.”

The author of this opinion containing the foregoing statements transposing “public use” to “public purpose” and deferring all authority as to whether a “public use” exists to the legislative body, was Justice O’Connor.

What is surprising about Kelo is not that the decision was written as it was, but that Justice O’Connor issued a spirited dissent in spite of her opinion in the Hawaii case. In her Kelo dissent she states, correctly, that if “the incidental public benefits resulting from the subsequent ordinary use of private property render economic development takings for ‘public use’ [the result will be] to wash out any distinction between private and public use of property - and thereby effectively to delete the words for ‘public use’ from the Takings Clause of the Fifth Amendment.” While her conclusion is correct, Justice Thomas cannot resist, in his individual dissent, pointing out that the exact same thing could have and should have been said in the Hawaii decision authored by Justice O’Connor.

No longer is Justice O’Connor willing to defer to the legislative decision as to what constitutes a “public use:” “Where is the line between ‘public’ and ‘private’ property use? We give considerable deference to legislatures’ determinations about what governmental activities will advantage the public. But were the political branches [legislatures] the sole arbiters of the public-private distinction, the Public Use Clause would amount to little more than horatory fluff”

No doubt it stings her that Justice Stevens’ opinion can anchor itself with her opinion affirming a complete taking of private land titles in the Hawaii case. She spends the better part of three pages of her opinion trying to justify that the deference to legislative judgments in Berman and Hawaii Housing Authority can be distinguished from the New London case.

But, Justice Thomas was having none of the O’Connor rationale, pointing out that both the Berman decision and her Hawaii Housing Authority opinion were incorrectly decided:

“Our current Public Use Clause jurisprudence, as the Court notes, has rejected this natural reading of the Clause. …The Court adopted its modern reading blindly, with little discussion of the Clause’s history and original meaning, in two distinct lines of cases: first, in cases adopting the ‘public purpose’ interpretation of the Clause, and second, in cases deferring to ‘legislatures’ judgments regarding what constitutes a valid public purpose. Those questionable cases converged in the boundlessly broad and deferential conception of ‘public use’ adopted by this Court in Berman… and Hawaii Housing Authority….”

He calls for the Court to consider reversal of those cases and “consider returning to the original meaning of the Public Use Clause, that the government may take property only if it actually uses or gives the public a legal right to use the property.”

His opinion categorically rejects the notion that a taking for “economic redevelopment” by private owners may be said to constitute a “public use.” His opinion is well reasoned - historically, socially, and legally. Those who have been critical of the substance of some of his opinions should compare the solid reasoning of this dissent to the porous reasoning of the majority opinion and of Berman and Hawaii Housing Authority relied upon by the majority.

Kelo also should have come as no surprise because of the decision in Lingle v. Chevron, U.S.A. issued on May 23, just a month before Kelo was issued. In that case, the Court emphasized that courts are not suited to “scrutinize the efficacy of a vast array of state and federal regulations” and should not be put in a position of “substituting their predictive judgments for those of elected legislatures and expert agencies.”

So, in Kelo, out of deference to the scheme of planning and condemnation enacted by the Connecticut legislature and its implementation by the City of New London, the Court allowed condemnation of private property to be transferred to other private persons for their personal profit and benefit. Absolutely no “use” by any public agency, and no oversight regulation by a public agency, which would assure “use” by the public is even contemplated in the scheme. Applicable here is the conclusion reached many times regarding the growth of government in spite of the attempts by the Founders to limit government. If those uncommonly wise men who endured the heat and discomfort of Philadelphia to complete the Constitution had known that the public use clause would be re-written by the courts, as in Kelo, they would no doubt have packed their bags and gone home.

The results of the 2004 term make it clear that private property supporters must turn to their local and state governments to find relief. The Court declined to review the challenge to application of the Endangered Species Act to a species having no relationship to the interstate commerce clause (which is the only conceivable constitutional base for the Act). It also held that a property owner who, under a local zoning ordinance, loses a property use purportedly protected by a federal telecommunications statute, cannot seek damages under the due process concept advanced in the Monterrey Dunes case (under the Civil Rights Act). It issued other decisions putting a cloud on the progress, which had been made toward restoring state’s rights under the Tenth Amendment. And, in Lingle and Kelo, it made it clear that it will only take a very narrow look at legislative or expert agency actions related to “takings.”

It is frightening to imagine the limits to which Kelo can be taken now that “public purpose” has clearly replaced the constitutional requirement of “public use.” In many states, legislative acts have determined that the waters of the state are owned by the public, or are held in “public trust.” Can Kelo be taken to the point of affirming legislative or administrative takings of water rights from private owners for the benefit of other private persons? The argument can rationally be advanced that the courts should defer to any local determination that since water is committed to the “public trust” any taking of a water right is for a “public purpose.”

Can Kelo be taken to the point of affirming the taking of property for environmental and species protection on the ground that such protection furthers a “public purpose?” No doubt an argument can be rationally advanced for that position.

Efforts should be started now to secure protection from the Kelo decision, as well as from the judicial progeny of Kelo, through legislative actions by state and local governments.

In Texas, where a Special Session of the legislature was called to consider education funding, legislation was introduced to statutorily limit the power to eminent domain so that a taking cannot be made for personal, private gain even in the name of economic development. Other legislation was introduced to allow amendment of the Texas Constitution to put in place the same type of limitation. In Idaho, the Owyhee Cattleman’s Association resolved at its annual convention that a constitutional amendment should be sought to impose such specific limitation on takings. In South Carolina the state constitution specifically deals with takings for economic development. In California, apparently takings are not allowed for transfer to private persons for general economic development.

It appears that efforts will be made in several states to persuade local city and county governments to place restrictions on their own eminent domain powers. Those counties which have adopted a county natural resources plan, and in which natural resource planning committees exist, are perfectly suited for leadership in achieving such relief at the county level. In many areas of the country, relief can be gained on a local and state level far more quickly than we can expect a change in the position now taken by the United States Supreme Court.

Reliance on the courts for protection against takings for private gain is misplaced.

Permission to reprint is granted in whole or in part with attribution
to Stewards of the Range. Copyright 2005