Second Throughts on Kelo

A proper understanding of property rights suggests that the Kelo decision wasn't so bad after all.

THE SUPREME COURT'S DECISION in Kelo v. City of New London has sparked a great deal of comment, most of it critical. Conservatives, in particular, have denounced Kelo's holding that economic development projects are a "public use" that municipalities and other government units can use eminent domain to carry out. George Will's analysis was representative:

The question answered yesterday was: Can government profit by seizing the property of people of modest means and giving it to wealthy people who can pay more taxes than can be extracted from the original owners? The court answered yes.

Many conservatives seemed to enjoy waxing populist over the decision; Pfizer, Inc. was a popular target. Pfizer-bashing started at the top. Justice Thomas, writing in dissent, said that the majority held, "against all common sense, that a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation, is for a 'public use.'" Justice O'Connor, also dissenting, echoed the theme: ". . . any boon for Pfizer or the plan's developer is difficult to disaggregate from the promised public gains in taxes and jobs." And the Washington Times editorialized:

City officials sought to lure Pfizer there to build a $300 million research facility with the understanding that the surrounding parcels of land could be developed into an upscale complex of residences along with a marina, hotel and conference center. . . .The city argues that because Pfizer can pay more taxes, and because it can provide more jobs, it will make better use of the Ft. Trumbull properties than the ordinary people who currently own them.

In fact, however, Pfizer has little or nothing to do with the New London project. In February 1998, Pfizer announced that it would build a global research and development headquarters on a site in New London that was then used as a garbage dump. It was after Pfizer's announcement that the city decided to embark on a redevelopment project that would include land near Pfizer's. Pfizer completed construction of its research and development headquarters four years ago; its project was in no way contingent on the city's separate redevelopment efforts. Pfizer--whose spokesman noted that the company's role in the New London condemnation case has become an "urban legend"--has no involvement in the Kelo case, no interest in the property at issue, and has never supported either side in the controversy.

In reality, the New London economic development project is similar to efforts that hundreds of towns and cities have made to revitalize aging or depressed neighborhoods. Focused on a 90-acre area called Fort Trumbull that is comprised of both publicly and privately owned land, the project includes a typical mix of public and private uses: a pedestrian "riverwalk," a waterfront hotel and conference center, marinas for recreational and commercial uses, a new Coast Guard Museum, new residences, and an industrial park to which the city hopes small biotechnology companies will be lured by Pfizer's nearby research facility. The city created the New London Development Corporation ("NLDC") to carry out the Fort Trumbull project, and, as is usual in such cases, gave the NLDC powers of eminent domain to acquire the necessary parcels of land. The NLDC was able to negotiate purchase agreements with most landowners, but a few refused to sell and ultimately commenced the litigation that reached the Supreme Court.

Fort Trumbull is such a typical mixed-use municipal development project that it is a little hard to understand the significance that commentators have given to the Court's decision. The issue before the Court was phrased very broadly by the majority: "We granted certiorari to determine whether a city's decision to take property for the purpose of economic development satisfies the 'public use' requirement of the Fifth Amendment." Thus, if the minority had prevailed, no municipality in America could condemn any property in order to carry out an "economic development" project. This would have the practical effect of making such projects virtually impossible.

It is noteworthy, however, that the Supreme Court held long ago that a governmental unit can use its eminent domain power to relieve "urban blight" (see Berman v. Parker, 348 U.S. 26, 1954). That principle was not challenged by any party in the Kelo case or by the Kelo dissenters (with the possible exception of Justice Thomas). So, had the dissenters been in the majority, a city would be powerless to carry out a redevelopment project in a neighborhood that is only depressed--like Fort Trumbull--but if it waited until the neighborhood is actually blighted, a redevelopment project would be permissible. Permissible, but probably too late. It is not obvious how this result would represent an advance for either individual rights or public policy.

MANY CRITICS of the Kelo decision have said that it authorizes seizing the property of one person merely to give it to another. Apart from any misunderstanding of Pfizer's role, this can only be because, once the NLDC acquires title to the Fort Trumbull property, it will be conveyed to a developer, Boston's Corcoran Jennison, to carry out the project. Some hostility to the Kelo decision seems to be based on the belief that Corcoran Jennison may profit from its work--an odd concern, one might have thought, to be expressed by conservatives. But New London's use of a private developer highlights an important point: there is no doubt that the city (or the NLDC) could use its eminent domain power in support of the Fort Trumbull project if it planned to retain ownership of the land and administer the project itself. If the project were publicly owned, no one could question that the associated condemnation proceedings would be in support of a "public use." But are the rights of Americans any less imperiled by condemnation in support of publicly-owned projects? And, as a matter of policy, if a city wants, for example, to create more housing, does it make any sense to force it to pursue the long-discredited practice of building public housing projects, rather than facilitating the use of private capital and private management to achieve the same end?

There have, in fact, been development projects in recent years that have strained the Fifth Amendment's "public use" requirement to near, and perhaps beyond, the breaking point. In a number of instances, cities have condemned thriving businesses to clear space for a company to erect its corporate headquarters. Such transactions--very different from anything at issue in Kelo--can perhaps be characterized as seizing property from one individual or business to give it to another.

Even here, though, it is possible to sympathize with the affected municipalities. Suppose a large company whose headquarters are located in an urban area needs more space--say, a whole city block. Lacking powers of eminent domain, it has only two choices. It can negotiate with each landowner on the block and try to buy all of the individual parcels. This, however, is often difficult or impossible; once it becomes known that the company is buying land for its corporate headquarters, any individual landowner can block the project by refusing to sell. Occasionally such "holdouts" are motivated by sentimental attachments, but usually they simply want to extort an unreasonable sum from the corporate buyer. (It is interesting that in her Kelo dissent, Justice O'Connor stressed that: "Petitioners are not hold-outs; they do not seek increased compensation. . . ." Yet the majority opinion notes that "[t]en of the parcels [at issue] are occupied by the owner or a family member; the other five are held as investment properties." If petitioners had won their case, the value of those investment properties would have skyrocketed.)

Faced with the difficulty of assembling an adequate real estate package at a reasonable cost, our hypothetical company has one obvious alternative: buy a cornfield remote from any city, and erect a "campus" rather than a high-rise building. Rather than accept the loss of a major employer and taxpayer under these circumstances, it is not surprising that some cities have chosen to cooperate in development projects that put the city's eminent domain power at the disposal of a private company.

Today most significant development projects involve multiple uses and cooperation between public and private entities. While such projects can no doubt be subject to various abuses, they can also be enormously successful and of great public benefit--to take just one example, consider the spectacular renovation of Baltimore's inner harbor. Moreover, two factors minimize the danger that economic development projects pose to individual rights. First, they are carried out in the glare of publicity. Nothing in local government attracts more scrutiny or more criticism than such projects. Second, the Fifth Amendment requires that anyone whose property is taken for a public use be fairly compensated, and in practice, most takings are compensated generously. Thus, while condemnation can undoubtedly impose hardship on individuals, it is unlikely to result in gross injustice.

The principal threats to property rights lie elsewhere. In particular, regulatory actions often severely limit what an owner can do with his property. Unlike urban development projects, such regulations are often adopted in forums that are remote from, and unresponsive to, the political process. And what an owner generally hopes for in such situations is to be covered by the Fifth Amendment's guarantee of compensation for the loss of use of his property, which is automatic in the case of a condemnation.

So it is a good thing that the Kelo decision has focused attention on the erosion of property rights; but, despite the critical consensus that has formed among conservatives, it is far from clear that the case was wrongly decided.

John Hinderaker is a contributor to the blog Power Line and a contributing writer to The Daily Standard.

Wrong "precedents" should be corrected, not reinforced with even worse "precedents" for some future generation.

Kelo, unfortunately, reinforces the 'redistribution of wealth' philosophy which has prevailed in American government (among legislative, executive and judicial branches) from the 1930's to now.

America's Founders, from Gov. Bradford in the 1600's, through the Framers of the Constitution, soundly rejected that philosophy. Their writings are replete with strong statements outlining the dangers to liberty once such an idea would be a society's prevailing law.

Recent decisions on freedom of religious expression and citizens' private property rights are examples of decisions that threaten freedom and harbor the seeds of a return to tyranny.

"Our Ageless Constitution," Bicentennial Edition (1987), outlined principles underlying the Constitution of the United States, one of which it titled, "Private Property Rights." Another section of this Bicentennial Volume, laid out by outstanding constitutional scholars, dealt with the 200-year history of court and legislative decisions that already had seriously eroded those principles.

One essay is reprinted below, with permission:

"Private Property Rights -- A basic Premise Of America's Constitution"

"Tired of having the fruits of their labors confiscated by an overpowering British government, America's Founders declared themselves free and independent.

"Most American schoolchildren can recite their claim that '. all men are endowed by their Creator with certain unalienable rights ... to life, liberty, and the pursuit of happiness.' Less familiar, however, are these lines from their Declaration of Independence:

"'He ( King George III ) has erected a multitude of new offices, and sent hither swarms of officers to harrass our people, and eat out their substance .... He has combined with others to subject us, ... imposing taxes on us without our consent.'

"What, then, did the Founders consider to be the real cornerstone of man's liberty and happiness? On what basic premise did they devise their Constitution? Let them speak for themselves:

"John Adams: 'The moment the idea is admitted into society that property is not as sacred as the laws of God ... anarchy and tyranny commence. PROPERTY MUST BE SECURED OR LIBERTY CANNOT EXIST.'

"James Madison: 'Government is instituted to protect property of every sort .... This being the end of government, that is NOT a just government,... nor is property secure under it, where the property which a man has ... is violated by arbitrary seizures of one class of citizens for the service of the rest.'

"Their guiding principle was that people come together to form governments in order to SECURE their rights to property - not to create an entity which will, itself, 'take from the mouths of labor the bread it has earned.' What was wrong for individual citizens to do to one another, they believed, was equally wrong for government to do to them.

"The right to own property and to keep the rewards of individual labor opened the floodgates of progress for the benefit of the entire human race. Millions have fled other countries to participate in the Miracle of America."

End of quoted material. Underlining emphasis added

As homes and schools have failed to study, understand, teach, and pass on the principles which produced a constitutionally limited power in the various levels of government, we see the constitution's protections eroded.

The 'redistribution of wealth' advocates of the past several decades, some of whom were dedicated to other philosophies, but many of whom were well-intentioned, but ignorant of founding ideas, have provided a gate by which tyranny and oppression threaten liberty. This Court's decision simply has reinforced that oppresive idea.

America's Founders understood the human tendency to abuse power, and they meant for both elected and unelected persons with delegated power to be bound down by the "chains" (Jefferson) of the constitution. It is up to our courts, especially our Supreme Court, to heed Jefferson's admonition: "On every question of construction, carry ourselves back to the time when the Constitution was adopted, recollect the spirit manifested in the debates, and instead of trying what meaning may be squeezed out of the text, or invented against it conform to the probable one in which it was passed."

As late as 1968, Justice Hugo Black's words constitute another wise warning:

"The public welfare demands that constitutional cases must be decided according to the terms of the Constitution itself, and not according to judges' view of fairness, reasonableness, or justice. I have no fear of constitutional amendments properly adopted, but I do fear the rewriting of the Constitution by judges under the guise of interpretation."

Ideas have consequences (Weaver)! The Founders ideas, summarized in the foregoing quotations, produced liberty and plenty: the idea exemplified by the Court's recent ruling allowing "arbitrary (property) seizures of one class of citizens for the service of the rest" is, as Madison asserted, not the idea of a JUST government. Its consequences are, as Adams declared, "anarchy and tyranny."

Perhaps decisions that weakened public acknowledgement of the "sacredness" of the "Laws of God" contributed to the Court's willingness to intrude on property rights.

"As much as I support states' rights, if states and municipalities violate individual rights that are expressly stated in the Bill of Rights, then Congress certainly has a right to define that by statute."

Congress certainly has that right unless the Supreme Court says that it doesn't.
This is the problem that we keep circling back to.
Example: the US Constitution says that Congress has the power to set the jurisdiction of the federal courts. But just let the Congress try to deprive the federal courts of the power of constitutional review of anything, and the Supreme Court will strike down the act of Congress limiting the jurisdiction of the federal courts when it comes to constitutionality as itself being a unconstitutional limitation. Whichever way you go, if you follow American precedent, the result is entirely predictable: after much huffing and puffing of the political classes, the Supreme Court of the United States will rule, and that decision will be final. When the Supreme Court created for itself out of wholecloth the power of judicial review in 1803, it was not challenged by President Jefferson or the Congress. And, other than Lincoln, and one incident with Jackson, it has not been directly challenged since then. One can talk about passing laws to limit the court, but it is not even on the agenda, nor would any such law pass absent use of the nuclear option on straight legislation in the US Senate: a position even the Republicans have not dared propose.

"The house passed a resolution something like 385 to 35 (with several members simply voting present) condemning the decision in very strong terms."

And the US Senate...?

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