6/27/2005
Kelo v. City of New London: Supreme Court Allows Seizure of Private Property
By Matt Anderson
In a 5-4 decision on Friday, June 24, the Supreme Court upheld the decision by the city of New London, Connecticut to condemn certain residential property and use it for economic development purposes. In 2000, after the town's population had declined and its unemployment rate rose to double that of the state average, New London created a plan to improve the city's economic status and increase tax revenues.
In 1998, the state had approved money to help create Fort Trumball State Park in New London, and, a month later, Pfizer declared their intent to build a multimillion-dollar research facility in the new development. New London hoped the Pfizer facility would encourage more outside businesses to come to the area. The Fort Trumball development consisted of 115 privately owned lots, and the development was split into seven different parcels, of which the nine petioners owned 15 lots. The project developers were authorized to condemn the privately owned lots, which would then be developed for office space and parking. None of the petitioners' condemned property, however, was in poor condition. The sole reason for acting under eminent domain and condemning the property was its location within the development area.
The petitioners brought suit under the Fifth Amendment takings clause, arguing that economic development was not a public use. Justice Stevens, in writing for the majority, emphasized that the decision reached would not authorize the taking of governmental property from one citizen and giving it to another private citizen for their sole benefit. The Fifth Amendment requires that any property taken from a private citizen for public use be justly compensated. The issue here is not whether there was just compensation, but whether taking property for economic development is considered public use.
In this case, land condemned by the government was not intended entirely for general use by the public. In recognizing this, Justice Stevens said that public use is not narrowly limited to actual use by the public. Over time, the definition of public use has broadened to public purpose as it has adapted to the changing needs of society.
When determining what is considered a public purpose, the Court emphasized their deference to the legislature. To support their definition of public use, the Court applied past precedent. In Berman v. Parker (1954), Washington, D.C. sought to redevelop a blighted area of the city. The project involved creating new roads, schools and other public areas, and the land not used for those purposes was left for the development of low-income housing. A department store owner in the targeted area brought suit, claiming his store was not in poor condition and argued that creating a more attractive community would not suffice as public use. In ruling against the store owner, the Court determined that it would not evaluate each plot of land to determine its condition but would instead defer to the local government, saying that public welfare was "broad and inclusive." The Court then went on to say, "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." In Hawaii Housing Authority v. Midkiff (1984), the Court upheld a statute requiring the transfer of ownership of certain properties to reduce the concentration of land owners. The Court determined that the reduction of the "social and economic evils of land oligopoly" was considered a public use.
In applying these decisions to the case at hand, the majority concluded that even though New London would not have to remove blight from the Fort Trumball area, deference should be given to their determination that economic development was necessary for the livelihood of the city. "Promoting economic development is a traditional and long accepted function of government." The Court then determined that it would be inconsistent to apply a different standard here than in Berman and Midkiff.
Responding to the petitioners' argument that using eminent domain for economic development will blur the boundary between public and private takings, the majority said that pursuit of public purposes will often benefit private parties. Justice Stevens cited Berman where it said, "the public end may be as well or better served through an agency of private enterprise than through a department of government...we cannot say that public ownership is the sole method of promoting public purposes of community redevelopment projects." The Court also noted that there was no evidence of an illegitimate purpose in the Fort Trumball development project.
The petitioners also contended that a bright-line rule was necessary to prevent the government from transferring property from one citizen to another who might put the property to better use. Because this case did not deal with those specific facts, the Court decided not to even address this potential issue.
Finally, the petioners argued in the alternative that when dealing with this type of government taking, the Court should require the government to show there is a "reasonable certainty that the expected public benefits would actually accrue." In response, the majority said that determination was beyond the Court and should be left up to the legislature. The Court emphasized that their role was only to determine if there was a public use, not whether the decisions by local government were wise.
In closing, the majority mentioned that the role of federal law was to only create a bare minimum. "We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power." Many states have stricter laws dealing with eminent domain, but the Court limited itself to determining public use.
In concurring, Justice Kennedy focused on the concern over the great deference given to the local governments. Even under a rational basis standard, such as that employed in Midkiff, the court should still invalidate a proposed taking if it showed favoritism or a clear intent to injure a certain class of private parties. Justice Kennedy believed the lower courts in this case did a thorough investigation and determined that any private beneficiaries of this development were incidental or after the fact. This by no means rules out applying a stricter standard in cases where "transfers are so suspicious...that courts should presume an impermissible private purpose." In this case, however, no such suspicion exists.
One of two dissents in this case was authored by Justice O'Connor, with whom Chief Justice Rehnquist and Justices Scalia and Thomas joined. The dissent's overall concern is that all private property is now threatened with being taken away and given to another private owner if the new owner would improve the value. Although some deference is given to the legislature, they alone cannot determine what is considered a public use. As Justice O'Connor says, "...but were the political branches the sole arbiters of the public-private distinction, the Public Use Clause would amount to little more than hortatory fluff."
The dissent distinguishes two of the cases most heavily relied upon in the majority opinion from this case. In Berman, the neighborhood was so deteriorated that there was great concern for the safety of those in the neighborhood and Congress had determined that it was necessary to remove all "injurious conditions." In Midkiff, the majority of all the property in Hawaii was owned by a small group of land owners. This oligopoly had inflated land prices and was injuring the public welfare.
Justice O'Connor argued that both Berman and Midkiff involved a specific harm to society and that the action taken by the government in both cases was necessary to eliminate the harm. In this case, the distinguishing factor is that none of the property was considered a social harm. The majority admitted that the property was taken for the sole purpose of economic development. According to Justice O'Connor, this decision expands public use to allow the government to take private property and turn it over to other private owners as long as there is some secondary or incidental public benefit, such as job creation or increased tax revenue.
Justice O'Connor also disagrees with the majority's contention that, after this decision, the Court still has the ability to prevent a government taking only for the benefit of a private party. "The trouble with economic development takings is that private benefit and incidental public benefit are, by definition, merged and mutually reinforcing." In other words, it is almost impossible to determine whether the original intent of the plan was for public use or private benefit. If an incidental public benefit is enough to justify the taking, Justice O'Connor says, then why even worry about what inspired it in the first place? The dissent also refutes the majority's limitation requiring that all eminent domain actions upgrade 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." O'Connor's dissent closes by raising the concern that citizens with disproportionate influence might now have property transferred from less resourceful citizens for the sake of economic development.
After joining Justice O'Connor, Justice Thomas also authored his own dissent to include the application of a more natural and narrow reading of public use. According to Thomas, the original meaning of public use was read narrowly to mean actual use by the public. "When the government takes property and gives it to a private individual, and the public has no right to use the property, it strains the language to say that the public is 'employing' the property regardless of the incidental benefits that might accrue to the public from the private use." Justice Thomas argues that a narrow reading of "use" is appropriate because in other places the Constitution gives it that same narrow meaning. He also points out that if public use was intended to mean public benefit, the Constitution might have used a more broadly applied phrase, such as "general welfare." Early state applications of eminent domain provisions also focused on benefits to the entire public.
Similar to Justice O'Connor, Justice Thomas is also concerned with the broad deference given to the legislature on a legal question such as the public use question. "We would not defer to a legislature's determination of the various circumstances that establish, for example, when a search of a home would be reasonable." Justice Thomas also showed concern with the disproportionate effect that eminent domain, for the sole purpose of economic development, has on minorities. Citing Justice O'Connor, Thomas says that it encourages those with disproportionate influence to victimize the weak.
While many economic development programs do revitalize less ascetically pleasing areas, there are serious consequences for those who live there. Nevertheless, in the last century, the Fifth Amendment takings clause has expanded greatly. And with the Kelo decision, it seems as though the clause has reached a new level.
Matt Anderson, a student at Southern Illinois University School of Law, is part of The Rutherford Institute's Summer Internship Program.
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2004 Year-in-Review Case Report
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