Property Rights Foundation of America®

Closing Address from the Ninth Annual National Conference
on Private Property Rights
(2005)

Eminent Domain Reforms at Every Level

Steven D. Anderson
Coordinator, Castle Coalition, Institute for Justice

Thank you, and I thank, Carol, for the invitation to come. I am going to talk a lot about Kelo today, and I guess now is the time to get pretty deep into it. So I am going to talk about the implications of the case but, also, what is happening in response to it.

I am going to start with a couple of quotes. These are ones you've probably already heard, but I am going to repeat them anyway, just because I've got them written down and I am supposed to repeat them. The first is:

"A specter of condemnation hangs over all property. Nothing is to prevent the state from replacing a Motel 6 with a Ritz Carlton, a home with a shopping mall, and a farm with a factory."

That is Justice O'Connor. Just a sign that says something has gone seriously wrong with this court's interpretation of the Constitution. The citizens are safe in their homes; the homes themselves are not. With these words both Justices O'Connor and Thomas rebuke a court that on June 23, 2005, in its decision in Kelo vs. The City of New London created a new land lottery for any government aligned with a well healed developer with a dollar and a scheme.

The issue before the court was simple—whether the mere possibility of economic development that will increase tax revenue is a public use under the Fifth Amendment of the Constitution. In an opinion long on consequence but short on logic, the court held that it did.

Eminent domain, the ability to forcibly remove property owners from their property, is one of the most awesome powers the government has at its disposal. Other than the ability to end life by execution or incarceration, there is nothing more menacing that a government can do. In fact, eminent domain was called "the despotic power" in the early days of this country. The power of eminent domain is a power of the sovereign. It doesn't owe its existence to any of the enumerated provisions of the Constitution. That doesn't mean the Constitution is irrelevant. As we all know, the Takings Clause of the Fifth Amendment serves as a substantive restriction on eminent domain. The unfortunate thing is that now this restriction has really lost its muscle. The plain language of the Takings Clause and all constitutional jurisprudence that interprets that phrase impose two distinct requirements on the use of eminent domain—public use and just compensation.

Kelo exclusively involved the first issue. There are innumerable issues with compensation, but as a practical matter, with an inquiry into compensation, you never make that inquiry unless you first have the public use. As a result of that, today I am going to talk solely about public use.

With very few, limited exceptions, until the middle of the twentieth century the term "public use" meant things that were actually owned and used by the public—roads, schools, post offices, things like that. In Berman vs. Parker, a case that was mentioned earlier, in response to an urban renewal scheme in Washington, D.C., the Supreme Court in 1954 made a very subtle but significant change in the language of the Takings Clause, ruling that removal of blight was a public purpose. As a matter of historic context, it is noteworthy that the theory of urban blight shares intellectual parentage with the Progressive movement, which believes that all social problems could be fixed if enough consultants, experts, planners, and academics got together to discuss an issue. Now, it is also interesting that nowhere in the Fifth Amendment does it say "public purpose," but that is what the Court said in Berman. The Berman court, in an opinion which has far outlasted its length in pages, also declared that courts were obliged to acquiesce in legislative definitions of public use.

Thirty years later, in a case that was also mentioned earlier today, the court reiterated its deferential approach to the interpretation of a fundamental constitutional provision in Hawaii Housing Authority vs. Midkiff, a case that removed Hawaii's land oligopoly, the remnants of which remained from Hawaii's feudal past.

In the states, pure economic development was first pronounced a public use in the infamous Poletown case from Michigan which, oddly enough, was unanimously overturned last year and upon which we relied significantly in our Kelo case. The problem with Poletown, even though it has now been overturned, is that its rationale spread swiftly across the country, and it now remains good law in other states.

What these three cases did is they served to embolden governments and developers alike, relegating the Takings Clause into a mere speed bump in an otherwise unencumbered race to redevelop. As a result, governments more and more began to take land merely because it could conceivably make more money as something else, effectively doing what the Takings Clause prohibits by implication—the transfer of property from one private owner to another. Communities and neighborhoods that were perfectly fine before were bulldozed on the promises of developers, promises that almost never come true.

Until Kelo, the Court had never considered a public use case involving pure economic development. And the decision reflects that the majority didn't consider much at all. Kelo, the most significant property rights case in half a century, asked whether the mere possibility that property could be put to a better economic use constituted a public use under the Takings Clause. In a narrow majority opinion the Court, for now, altered the fundamental nature of private property in this country. While most Supreme Court cases affect a small portion of the population, under Kelo literally every home and small business owner's property is now up for grabs. It is now for sale to anyone with a penny and a plan. After giving considerably less than lip service to the well settled notion that government cannot take property to transfer from a to b, the court expressly allows just that. A city's hope for projected jobs and tax revenue excused the confiscation of any home, business, or church regardless of whether those supposed benefits ever actually materialize. The majority justifies this position by emphasizing that Connecticut said that the use was constitutional, necessitating an undiscriminating deference to the state legislature. In addition, the Supreme Court declared that states are themselves free to protect property owners, evidenced by New London's carefully considered plan with plenty of promises.

The fundamental blunder of the majority is its underlying theory of constitutional interpretation, or revision, which is probably a better word, where deeply meaningful provisions that proved to be impractical, given the diverse and always evolving needs of society, are to be disregarded, or, in the case of the public use clause, written out of the text of the Constitution completely.

The majority's first point, that it must defer to a state deliberative body on the meaning of the federal Constitution, borders on lunacy. Its second point, that state laws requiring some type of plan protect property owners from an overreaching government, or, as in Kelo, its private un-elected redevelopment agency, confirms the Court's complete detachment from reality. Allowing a state or local legislative body to determine public use imperils property owners and enfeebles the Constitution itself. As Justice O'Connor, who, ironically, penned the Midkiff decision, points out in her Kelo dissent, where the political branch is the sole arbiter of the public-private distinction the public use clause would amount to little more than oratory fluff. The courts owe absolutely no deference to the legislature on this question. The definition of public use has always been one made by judges, a role which, sadly, has been abdicated by the majority, compounding the mistakes made in both Berman and Midkiff.

Justice Thomas highlights this in his dissent, noting with significance that such deference is absent in judicial decisions regarding other constitutionally guaranteed rights.

Some conservative commentators applauded this decision, arguing that the legislative process alone will fix whatever problems now exist with eminent domain abuse. This argument is as delusional as that of the majority's opinion. Between 1998 and 2002 the Institute for Justice found more than 10,000 actual or threatened condemnations involving private use, all of which occurred pursuant to some statute that was passed by a legislature. Justice O'Connor correctly comments that states claim many important functions in our system of dual sovereignty, but compensating for our refusal to properly enforce the federal Constitution is not one of them. The import of this deference to legislatures is menacingly clear. Government not only has the power to take your home; it has to power to decide if it has the power to take your home.

By restraining its historically mandated role to review the constitutional propriety of legislative action, the court provides no effective restraint on the government's ability to use eminent domain. Without this restraint, our delicate but deliberately conceived system of checks and balances is destroyed. The court's abdication effectively serves as its resignation as a third branch of government.

The majority also seems oddly comforted by the fact that New London had a plan. While the allegedly elaborate steps the City had to follow in order to condemn property may serve to soothe an insulated majority's distressingly absent sense of concern over the shady nature of local redevelopment, it alarms everyone else that lives in the real world. Redevelopment is already corrupt. There is a reason we found over 10,000 abuses in a five-year period, which, honestly, was only the tip of the iceberg. Connecticut is the only state that actually keeps track of its economic development condemnations. We found 31. The state reports over 500. So you see that that 10,000 number is a gross underestimation of what is really going on in the states. There is an entire industry of condemnation attorneys, planners, consultants, developers, and bond dealers that have significant financial incentives to push governments to condemn more and more land, all with grand titles, fancy conceptual drawings, and often unobtainable promises of more jobs and tax revenue. This industry exists solely to push the government to steal land all for their own profit, and that is a motive that is now sanctioned by the Supreme Court. It is naive for the Court to believe that a plan itself offers any protection for private property owners. No development has ever occurred without a plan. No developer arrives in a neighborhood and announces, today I am going to build my office park and I just thought of this yesterday. Because of this, no American property owner should feel secure.
Surely governments and developers do have to do something in order to push a redevelopment plan through. It is not an elaborate procedural process, as Justice Kennedy suggests, rather it is relatively simple process, one the developers are proficient at navigating but the public is not, unfortunately to their detriment.

City officials routinely lie to their constituents who seek information, stonewalling individuals who seek conversations between the government and the developers and other development agencies through FOIA requests. The legitimate public debate is a sham, since the deals have effectively been signed behind closed doors before the project is even announced.

Governments recite by rote that eminent domain will be used as "a last resort" despite the fact that the mere mention of eminent domain makes it the tactic of choice. It is also done that without exception in every news article and everywhere you go when they talk about eminent domain, every government official says that eminent domain is the last resort. The majority, in reciting that land in New London was successfully negotiated with willing sellers, fails to understand that negotiation under threat of government force is no negotiation at all. New London's own attorney admitted in oral argument that many of the sellers were persuaded to do so because they would lose their homes anyway.

And the stricter state laws, typically blight statutes, that the court believes will serve to shield home and small business owners from the covetous hand of government are already being abused themselves. These statutes were originally designed to allow government to remove dilapidated and vermin-infested slums, Blight statutes have mutated into a meaningless collection of words. Today "blight" means a neighborhood has too many owners or too many older homes. The statutes are so vague they apply to any property, essentially making them equal to the economic development statute at Kelo, just with a different name. We all know where that gets you.

The seriousness of this decision, unfortunately, isn't subject to hyperbole. Now that a simple chance that the confiscation of property will increase tax revenue or jobs comports with the public use clause, literally every property in this country is up for grabs. Any home can make more money as a luxury condominium, and any small business can make more money as a big box store. As both Justices O'Connor and Thomas point out in their dissents, middle working class Americans, those who are not politically connected, are especially susceptible to the abuse of eminent domain by the unholy alliance of tax-hungry governments and the land-hungry developers. As pointed out in the brief supporting our clients, every church, every VFW, every Moose Lodge may be taken, because they pay no taxes at all. Minorities and the elderly will be, as they have already, disproportionately affected by the government's role as a land baron. Kelo marked a sad day for this country.

States are certainly free to enact protective legislation, as the majority points out, but the decision is not about the rights of states to govern their citizens, but the essential character of the document upon which all our rights are based, rights that are inalienable and not subject to a faddish whim of the legislature. Unfortunately, the Supreme Court completely renounced its role, allowing the government to decide the rules by which it plays while giving it free reign to acquire other people's property. It is not a game, but we have all lost.

Despite the legal implications of the case, all hope is not lost. Polls directly after the case was decided show almost universal outrage with the decision. Within a week of the decision, the Institute for Justice and its grassroots project, the Castle Coalition, announced a $3 million Hands Off My Home campaign, an aggressive initiative to seize the momentum caused by the Kelo decision to effect real reforms of eminent domain laws at the state and local level. The grassroots groundswell has been startling. At last count legislators in 38 states and the federal government had introduced or promised to introduce bills reforming eminent domain laws, obviously taking Justice Steven's suggestion that elected officials do what they can to limit the abuse. Which is also in line with his comment to a Nevada bar association recently that he disagreed with Kelo on public policy grounds. Even more cities and counties are doing the same, restricting their own powers to take property for private commercial development. Alabama has the distinction of being the first state to ban eminent domain for economic development, though they will still need to take a look at its blight statutes as well. Texas also passed an eminent domain reform bill that, while doing some good, still includes some very large exceptions.

We at the Institute for Justice are working hard with legislators and citizens nationwide to craft statutes that will further and forever protect the rights of home and small business owners. We have been crisscrossing the country to make sure the legislatures know the problems with eminent domain and what can be done to fix it. The reforms are simple and many are outlined in our white paper that is available on our website at ij.org. The reforms we are seeking, which can be enacted at either the state or local level, include prohibiting transfers of property for private commercial development, restricting eminent domain to those situations where the government actually owns and uses the property or there is a subsequent transfer to a common carrier like a utility or a railroad, and prohibiting ownership or control by private interests, which will prevent sweetheart deals like the one in New London. To the extent blight removal is to remain an exception to the public use clause, requiring that blight mean actual concrete harm, objective harm, before land can be taken for private development. For instance, a designation criteria could include properties that are unfit for habitation, or tax delinquencies exceed the value of property, or where there is serious environmental contamination. It would also be helpful to have blight designations expire after a reasonable number of years. In most states there are no requirements that blight designations lapse. You can have a blight designation from the 1970s be utilized right now. And as a result of that, you have neighborhoods that were more blighted before but there is a disincentive to invest in properties that are subject to being taken by eminent domain, so it is called condemnation blight.

We will also continue with our property rights litigation across the country, and one day we will get another case before the Supreme Court and this time they are going to get it right.

But we are not the only ones that are pushing the issue. Groups from across the political spectrum are teaming up to stop the abuses that particularly affect their constituencies. Individuals can also do their part, contact their representatives to urge legislative reforms. It is important to get as many people as possible to do the same—your family, friends, customers, church members. Legislators do listen, but they have to hear you first. Our website, castlecoalition.org, is a great resource for those of you doing battle against these abuses. Take a look at our survival guide, and you will have everything you will need to make sure home and small businesses get to keep what is theirs.

I don't believe that planners, developers, and government officials had any expectation that the American people would be so significant in their disgust. Because of that I have an expectation of my own. We are going to win. Thank you.

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