Eminent domain: legal principles and applications

Kelo v. New London and Eminent Domain

When the United States Supreme Court heard oral arguments in the case of Kelo v. City of New London, Connecticut in February of 2005, the issue legally speaking was a seemingly straightforward matter of Fifth Amendment jurisprudence. What was at stake as a point of Constitutional law was the last clause of the Fifth Amendment, generally referred to as the "takings clause." The actual wording within the Bill of Rights is just twelve words long: "nor shall private property be taken for public use, without just compensation." The government has an enumerated constitutional right, therefore, of what is termed eminent domain, and the only legal issue here was one of interpretation of those twelve words. To couch what was at stake in Kelo in such a deliberately bland and legalistic manner, though, utterly understates the extent of public outcry and outrage the Supreme Court's decision in Kelo would occasion when the decision, written by Justice John Paul Stevens, was handed down four months later. In part, the public outcry was occasioned because Susette Kelo made a particularly sympathetic media story: she refused to yield up her "little pink house" in New London's downtown Fort Trumbull neighborhood to the city's particularly broad interpretation of "public use." At the time of oral arguments on February 22, 2005, Dahlia Lithwick then writing for Slate gave a summary of what constituted "public use" in Kelo:

In the working-class neighborhood of Fort Trumbull, Conn., the local government has some big plans. Not a monorail, but adjacent to and complementing a brand new $300 million research facility for the pharmaceutical giant, Pfizer, there would be condos, health clubs, a luxury hotel, shops, and other assorted mega-stuff. Most of the folks in town agreed to sell, but seven families, owning 15 homes, refused. They like their crumbly Victorians. So when the state tried to condemn their property, they sought injunctions. Traditionally, the "public use" requirement in eminent domain cases allowed the local government to condemn property to build railroads, or bridges, or highways. But in a 1954 case, Berman v. Parker, the Supreme Court found that "public use" could include condemning blighted neighborhoods to build better ones. Fort Trumbull isn't blighted, but since the Michigan Supreme Court decided its famous Poletown case in 1981 -- razing hundreds of homes to build a GM plant -- many jurisdictions have insisted that increased tax revenues and the prospect of new jobs was "public use" enough to justify nabbing land that subsequently became Costcos, shopping malls, and fancy office buildings. New York used eminent domain to improve Times Square and build the World Trade Center. The Connecticut Supreme Court agreed with New London that seizing homes for purposes of private economic development was permissible. The homeowners appealed. (Lithwick 2005).

The Supreme Court's decision was authored by the Nixon appointee John Paul Stevens, who was joined by the court's liberal wing in 2005, Justices Kennedy, Souter, Ginsberg and Breyer, and found in favor of New London's right to claim Susette Kelo's home under eminent domain. Those dissenting were Chief Justice Rehnquist, Justice Sandra Day O'Connor, and the court's paleoconservative-originalist phalanx of Scalia and Thomas. But the public condemnation of the decision was immediate, as was legislative response on the state level. However, six years after the Kelo decision, it is worth inquiring what effects is seems to have had. This survey will assess various interpretations of what the effects of Kelo have been, and to see if the "fallout," so to speak, has been as radioactive as the initial public response to the decision might have indicated.

The initial public outcry from intellectuals and members of the legal community, upon reading Stevens' decision in 2005, was quickly joined by journalists and members of the public, especially in response to what were seen as sudden reactions by state and local governments to take advantage of what seemed to be unusually broad powers now granted to them by the Supreme Court under the Fifth Amendment. Woodyard and Boggs in their 2009 survey of the public response -- or "outcry," to use the term they use -- to Kelo summarize:

Critics of Kelo were quick to seize upon reported local government actions, which they saw as abusive uses of eminent domain powers. For example, the Institute for Justice contended that the City of Freeport, Texas attempted to condemn waterfront shrimp processing companies in order to develop a marina mere hours after the Supreme Court rendered its judgment. Just two days later, the City of Boston also began the process for seizing waterfront properties. Officials from Newark, New Jersey told the press that but for the Kelo decision they would have abandoned plans for a downtown condo and retail project. (441)

It is first necessary to note that the Kelo decision found that economic improvement schemes meant that neighborhoods could be seized for eminent domain even if they did not constitute "blight" under the 1954 Berman ruling, thus granting a much broader power of eminent domain to state and local governments. Therefore the strongest reaction to this could largely be described as libertarian, of both left and right wing varieties. The term is particularly apropos because it was, in fact, a libertarian activist law firm, the "Institute for Justice" led by attorney Scott Bullock, that argued Susette Kelo's case before the Supreme Court. On the fifth anniversary of oral argument in February of 2010, Bullock himself issued a press release to mark the occasion, and more importantly to note that in some sense events had proved his initial dire warnings correct, at least in the specific case of Susette Kelo herself:

This past November (2009)…Pfizer announced it will close its New London research and development headquarters. This marks the end of an eminent domain error. New London created a redevelopment plan that gave land to Pfizer at a nominal cost and provided free environmental cleanup to the site. The plan also called for redevelopment of an area called Fort Trumbull, a working-class neighborhood adjacent to the Pfizer headquarters. It housed approximately 70 to 80 homes, as well as a few small businesses and an abandoned Navy base. The plan called for this area to be replaced by an upscale hotel, office buildings and new housing. This redeveloped area would "complement" the new Pfizer facility, leading to increased taxes and job growth for New London -- or so the city promised. The state agreed to provide $78 million for the project. Pfizer received an 80% tax abatement for 10 years. Keep in mind, when the five justices of the U.S. Supreme Court ruled against our clients -- holding that taking property for "economic development" does not violate the U.S. Constitution's Takings Clause -- the justices stressed that there was a plan in place, and that so long as lawmakers who looked to use eminent domain for someone's private gain had a plan, the courts would wash their hands. Now, nearly five years after the redevelopment scheme passed constitutional muster, the plant that was the magnet for the development is closing its doors just as its tax abatements expire. The very land where Susette Kelo's home once stood remains barren -- home to nothing but feral cats, seagulls and weeds. For years, the disastrous Fort Trumbull project will be Exhibit A in demonstrating the folly of government plans that involve corporate welfare and abuse eminent domain for private development. Hopefully, city officials, planners and developers will take the Fort Trumbull experience to heart and pursue revitalization efforts only through voluntary, not coercive, means. Until they do, IJ will stand with property owners nationwide to fight for what is rightfully theirs. (Bullock, 2010)

Bullock's summary is worth quoting at length, because his advocacy of Kelo's case in front of the Supreme Court was, in some sense, a work of activism, and his own assessment represents the generally libertarian interpretation of eminent domain (on both right and left) which was strongest in the "outcry." On the level of the initial drama which captured the attention of the media and the public, then, the fallout could not be worse for supporters of the Kelo decision, when Susette Kelo's house remains a vacant lot in mid-2011, some six years later. And Pfizer's actions bolstered the credibility of those who had claimed that essentially the Court had licensed local governments, on the same model that they offer tax incentives, to basically offer sacrifices of entire working class neighborhoods to appease fickle corporate monoliths who are likely in a globalized economy to pack up and move with absolutely no regard for the communities in which they temporarily base their operations.

However, it is important to note that the initial "outcry" was met with a flurry of legislation on the state level to respond specifically to Kelo by limiting its most extensively broad interpretation by statute. In a summary issued in 2007 by the National Conference of State Legislatures, Morandi breaks down the response into three different sorts of legal provisions. The first were statutes initiating a "prohibition for economic development," which deliberately barred any such powers as granted in Kelo. Next were statutes issuing a "limitation to public use" for eminent domain, enshrining a much narrower interpretation of the words in the Fifth Amendment. And finally there were those which restricted it to "blight" and offered a clear definition of the term "to emphasize public health, safety and welfare considerations" (Morandi 2007). Morandi notes that from the first category, laws specifically repudiating Kelo were passed by 23 states. 12 states passed statutes issuing the "limitation to public use," and 12 passed statutes which limited it to cases of clearly-defined "blight." In some cases there was overlap when a state legislature passed two of the above, but in total 43 separate states passed legislation intended to react to, and limit, the scope of the Kelo decision It cannot be reasonably claimed that there was no organized political reaction against the decision, then, as so many different state legislatures moved to block the extension of their own powers of eminent domain. But was this flurry of legislation actually effective? In 2007, Bert Gall of the Institute for Justice, the legal firm which argued Susette Kelo's case, offered an "optimist's view" of "post-Kelo America" in 2007, suggesting that those who took Kelo's side would have reason to feel confident in the legislative response:

The passage of 38 eminent domain reform bills -- again, most of which are strong -- has taken place in the span of less than two years, and more reforms may be on the way. Even more remarkably, these reforms have been passed despite the fact that powerful interest groups -- developers, planners, municipal officials -- have fought desperately to preserve their power. Indeed, given their tremendous influence, as well as the fact that ordinary home and business owners don't have lobbyists or special access, the question that critics of these reforms should be asking is: "How on earth did the Kelo backlash meet with such success?" For some broader historical perspective, they might then ask what other national reform movement has achieved so much in such a short period of time. It's also important to remember that the Kelo backlash has manifested itself in powerful ways outside the legislative arena. Eminent domain abuse remains a wildly unpopular policy choice for local governments and developers in the wake of Kelo. Moreover, since the decision, the state supreme courts of Ohio and Oklahoma have rejected Kelo under their respective state constitutions. And the state supreme courts of Maryland, Rhode Island, and South Dakota have cast doubt on its viability. These victories reinforce legislative gains, and can help pave the way for further reforms (as may be the case in Ohio). (Gall 2007).

But the difficulty nonetheless remained that the breadth of interpretation of eminent domain that was licensed by Kelo might still remain accessible nonetheless. In 2009, Jacob Sullum observed that the definition of "blight" still remained sufficiently broad that, with the encouragement of Kelo, New York state had begun to permit the sort of activity that was most feared by critics of the extension of eminent domain in the first place. Sullum notes that the existing legal definition of "blight" in New York dates from 1975 and specifies "that the areas eligible for such renewal are not limited to 'slums' as that term was formerly applied, and that, among other things, economic underdevelopment and stagnation are also threats to the public sufficient to make their removal cognizable as a public purpose" -- he then observes that

Although New York courts could interpret the state constitution as imposing more restrictions on eminent domain than the U.S. Constitution does, this generous blight standard is hard to distinguish from the open-ended development rationale endorsed in Kelo, under which no one's property is secure if politicians can imagine a better use for it. & #8230; Last week a lower appeals court reached the same conclusion in a case involving Columbia University's expansion into the Manhattanville section of Harlem. As in the Atlantic Yards case, the Empire State Development Corporation, the authority empowered to use eminent domain, went looking for "characteristics that demonstrate blight conditions" so it could reach a predetermined conclusion that condemnation was justified. The result, said the court, was "a preposterous summary of building and sidewalk defects" that could be found in "virtually every neighborhood in the five boroughs." It concluded that the blight designation was "mere sophistry." Refreshing as this rebuke is, it is likely to be reversed by the Court of Appeals… "It may be that the bar has now been set too low," the court that set the bar conceded, "that what will now pass as 'blight,' as that expression has come to be understood and used by political appointees to public corporations relying upon studies paid for by developers, should not be permitted to constitute a predicate for the invasion of property rights and the razing of homes and businesses."

It is worth noting that New York State was one of the seven states which passed no legislative response to Kelo at all, so to a certain degree it can only be claimed that the latitudinarian interpretation of Kelo's powers was already present and only encouraged by the decision. But the notion that "mere sophistry" can convert any property into a target for eminent domain is confirmed by the actions in New York, which Sullum thinks are now legally viable under Kelo.

From a legal standpoint, though, Kelo has remained undoubtedly controversial as the years continue. Upon the retirement of Justice John Paul Stevens in 2010, the Economist's pseudonymous columnist "Lexington," who covers the American political scene for the London-based publication, offered a survey of Stevens' legacy which defined it in terms of Kelo, calling it his "worst decision."

Amazingly, Justice Stevens -- and a slim majority of the court…rejecting "any literal requirement that condemned property be put into use for the ...public"…said it was enough that the seizure should serve some vaguely defined "public purpose" -- such as those new taxes…. Most Americans are repelled by the idea that the state might take your house and give it to Donald Trump. (This is not rhetoric: New Jersey once tried, unsuccessfully, to seize someone's home because The Donald needed somewhere to park limousines outside one of his casinos.) Since the Kelo ruling, no fewer than 34 states have passed laws or constitutional amendments aimed at curbing the abuse of eminent domain. At the mid-term elections, voters in ten states approved measures curbing politicians' power to seize private property, all by wide margins. Only two ballot initiatives failed, in California and Idaho, and that because they clearly went too far. Re-worded, they could easily pass. Public revulsion against such seizures is visceral and nearly uniform: polls find between 85% and 95% of Americans are opposed to them. Political affiliation makes no difference. Republicans hate to see property rights violated and individuals bullied by the state. Democrats hate to see the state's coercive power hired out to big corporations, and worry, correctly, that the chief victims of eminent domain abuse will be the working class and ethnic minorities. The backlash may end up strengthening property rights.... Just as the courts keep tabs on Congress and the executive, striking down unconstitutional laws and constantly reminding the president that he is subject to the rest, so too can Congress, the states and ultimately the people curb the excesses of the Supreme Court. Kelo v New London was a terrible decision. But most states have now neutered it, and more will doubtless follow.

Of course this is written from the standpoint of the British legal system, which depends largely upon an unwritten constitution, so it emphasizes the aspect of Kelo least likely to happen in a political system which is not American -- namely, the specific interpretation of a clause within the U.S. Constitution which suddenly triggers broad shifts in policy. From the standpoint of the Economist, then, the most peculiar factor is the broad unpopularity of a matter of Constitutional interpretation, on both sides of the political spectrum. Moreover, the abuse of the powers -- such as the amazing case in New Jersey involving Donald Trump -- is so broadly unpopular that it occasions a fundamental reinterpretation of property rights in order to strengthen them. To a certain degree, this outsider's view on the American Constitutional process raises the issue that "85 to 95% of Americans" who oppose a specific policy will not rewrite the actual text of the Fifth Amendment.