RealClearPolitics - Commentary - How Eminent Domain Ran Amok by Carla T. Main

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In 1998, New London, Connecticut, was a city in decline. Pfizer came in, bought up some land, and built a corporate park adjacent to the Fort Trumbull neighborhood of New London. The city saw this as an opportunity for salvation. The New London Development Corporation (nldc), established years earlier, was reactivated and rustled up $73 million from the state. It made a plan to raze some land in Fort Trumbull to build a hotel, offices, and condominiums that would serve Pfizer’s guests and employees. There would also be a marina with restaurants and shopping. There were seven parcels in the overall plan. Many of the homeowners sold voluntarily. But some wanted to stay.

From the outset, IJ was faced with some tough choices. Midkiff, and most especially the sweeping language of Berman, seemed to have sealed the fate of the Kelo petitioners. How IJ approached the briefing and argument of the case is a matter of some interest, since it is an advocacy organization advancing a particular political ideology — one that sees no room for compromise on the question of economic development takings and looks with great suspicion on all uses of eminent domain.

IJ had first to decide whether to try to overturn precedent or to work within precedent by arguing for a change in the constitutional standard. Under the first strategy, one would argue that Berman and Midkiff were fundamentally wrong and should be overturned. The Cato Institute argued, in an amicus brief written by Professor Richard Epstein of the University of Chicago, that those cases improperly expanded the public use clause beyond any plausible understanding of its meaning, conflating it with public benefit in an improper way. Alternatively, one could primarily urge the court to adopt a stricter standard of scrutiny than the one established in 1984 in Midkiff, which held that the court would not invalidate a takings statute that was “rationally related to a conceivable public purpose.”

As its primary argument, IJ asked the court to establish a bright-line rule — no economic development takings whatsoever — but without explicitly overturning Berman and Midkiff, in which the takings benefiting private parties were justified for public purposes other than economic development.

Judicial philosophies at the high court have an ebb and flow, with different alliances favoring “rules” and others favoring “standards” (or balancing tests) at various points in the court’s history. As Kathleen M. Sullivan deftly described in her oft-cited article, “The Justices of Rules and Standards,” the conservative justices on the modern court, most especially those who have gravitated toward Justice Scalia, can usually be counted on to favor rules, while the liberals on the court tend to favor more flexible, fact-sensitive weighing of interests. She cited Justice Stevens (who would write the Kelo decision) chiding Justice Scalia, who favored a bright-line rule in a regulatory takings case: “ ‘[L]ike many bright-line rules, the categorical rule established in this case is only “categorical” for a page or two in the U.S. Reports before it gives way to an exception.’ ”18

When IJ came before the court in Kelo, its primary task was not to persuade the conservatives on the bench; they were already predisposed in the petitioners’ favor. By arguing for a bright-line rule, IJ was preaching to the choir and alienating the very audience it most had to persuade.

There is no doubt that on the day of the oral argument, the bright-line argument had all the buoyancy of a lead weight. The justices struggled with how to square such a draconian outcome with the sweeping language of Berman, which allows for the taking of private property for turnover to other private parties for purposes as amorphous as improving the human spirit. Logic led them more than once to ask why the petitioners’ position would not require the court to overturn Berman and Midkiff. Justice O’Connor repeatedly asked for a constitutional test (in lieu of a bright-line rule). Scott Bullock, arguing for IJ, finally offered a “reasonable forseeability” test as an alternative — that is, that project planners should demonstrate some reasonably foreseeable likelihood of achieving their economic goal. “That’s a big retreat,” said Justice Breyer, “and it comes to me that now you’re getting to what I think is a possible realm of reason here.”

The Supreme Court is a place where vocabulary matters tremendously, and fashioning the request for relief in the language the court is accustomed to allows the court to fit the case into its long lines of jurisprudence. It was clear that the court was frustrated by a lack of familiar arguments. There was a key point in the oral argument at which Justice Kennedy, in classic appellate court fashion, made an analogy to the nineteenth-century railroad cases and to public utility cases, inviting Bullock to distinguish them. He responded with an IJ stump speech against economic development takings.

When it came time for the city’s attorney to speak, he was hardly given a free pass. It was equally clear that the justices were troubled by the idea of the government taking from A to give to B simply because B would pay more in taxes, and they returned more than once to the issue of just compensation. The city’s attorney, Wesley Horton, conceded that he did not agree with imposing any judicial test on an economic development taking, nor did he think it necessary to confine economic development takings to depressed areas. “[U]nder your theory of public use, [a city could] say, yes, we are not doing badly, but we could do better,” said Justice Scalia. Horton agreed.

In the end, the court majority rejected the adoption of a higher standard of review in economic development takings, finding it inconsistent with the precedent of Berman, which gives deference to legislative judgment, expressly out of fear that it would create an impractical system in which such takings would be mired in litigation to test their “reasonableness” before new projects could ever begin. Nonetheless, the majority practically invited state legislatures to pass laws prohibiting such takings: “We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power. Indeed, many States already impose ‘public use’ requirements that are stricter than the federal baseline . . . as a matter of state constitutional law [or] state eminent domain statutes.”

The dissenters, led by Justice O’Connor, seemed alarmed by the potential for cherry-picking of individual properties, as well as by the facts laid out in the amicus briefs detailing the disparate impact of such takings on the poor and minorities. O’Connor argued that the majority’s holding essentially rendered the public use clause of the constitution meaningless. Picking up the thread of the Hathcock decision, she distinguished Berman and Midkiff by reasoning that in those cases the very acts envisioned by the condemnation statute advanced the public interest because they eliminated blight and a pernicious oligopoly, respectively.

The decision set off a firestorm. Debates about eminent domain have found their way into local, state, and national politics. The National Law Journal (August 1, 2005) reported that in the months following the decision, legislatures in 28 states have introduced more than 70 bills aimed at curbing local eminent domain powers, and legislators in five states have proposed constitutional amendments to prohibit eminent domain for private development. Alabama has passed a statute prohibiting economic development takings but making an express exception for “blighted properties” (which could easily become a loophole). Two federal bills have been introduced. Each, with variations, would prevent the use of federal money by states and local governments for eminent domain projects in which private economic development is the goal; they would also prohibit the federal government from undertaking such projects.

The debate has entered local politics in many strange permutations. For example, in what can only be regarded as comic relief for those who live in New Jersey — a state that never met an eminent domain project it didn’t like — warring gubernatorial candidates Douglas Forrester (a Republican) and Jon Corzine (a Democrat) have tried mightily to outdo each other in demonstrations of outrage over Kelo. The mini-melodrama illustrates just how insular and tangled up in local intrigue eminent domain abuses can become. Within weeks of the Kelo decision, Forrester called a news conference to announce solemnly the creation of a task force “to study the impact of the court’s ruling.” He did not wait for its report to denounce an abuse of eminent domain in the proposal to build a golf course on Petty’s Island — a project reportedly supported by a New Jersey Democratic power broker close to Corzine (according to Forrester). Corzine soon fired back with his own seven-point plan — which he insisted he had formulated even before the Kelo case was decided — for ridding New Jersey of the evil of eminent domain abuse, “except in rare and exceptional circumstances.”

Not to be outdone by their neighbors across the Hudson, the challengers in the New York City primary race for Public Advocate — always a slugfest — were also slinging mud over eminent domain this summer. In the post-Kelo world, it seems, it is de riguer for politicians to at least look as if they despise eminent domain. The incumbent public advocate, Betsy Gotbaum, was feverishly attacked for publicly supporting the highly controversial Atlantic Yards project on Brooklyn’s waterfront (an enormous economic development taking) while at the same time insisting that she is opposed to such takings. Among her critics was a city councilwoman who has introduced a bill to prevent the use of city funds to facilitate such takings. Gotbaum countered that the powerful and well-funded developer was still negotiating buyouts with the holdout residents, and besides, the developer had told her “he didn’t want to use eminent domain.” That’s a bit like saying that a robber who puts a gun to a man’s head and takes his wallet did not obtain it by force since he never actually pulled the trigger.

All of this nuttiness would be amusing if one could feel certain that it would lead to some lasting reform. But other forces have been at work since the Kelo decision. For one thing, there has been a groundswell of takings activity, as the many development projects that were put on ice while Kelo was pending before the high court have now been reactivated. In addition, it is not at all clear that the many bills introduced in state legislatures around the country will actually become law. The lobbies against such bills are many and highly organized: state and local governments, real estate developers, sports franchises in search of arenas, the hotel industry, big-box retailers, and many others with an interest in seeing urban and even rural development in convenient locations through the use of economic development takings.

On the other hand, opposition to such projects — and hence support for pending legislation — is by definition scattered. Its base is primarily and most fervently composed of people who stand in harm’s way of such takings. But while the fervor generated by the decision may have been enough to get the bills introduced, it may not be enough, with such supporters relatively few in number, for politicians to take the issue to the mat against powerful lobbies.

And even if they are passed, blight removal — an eminent domain category that traditionally has been as slippery as an eel — can always surface again as a convenient loophole (as it has in the Alabama statute). Or legislatures, under pressure from business lobbies, might fashion some other standard under which to test the confines of lawful takings.

As for the homeowners in Fort Trumbull, their fate is still uncertain. The city, sore winners, slapped a bill for unpaid “rent” on the Kelo homeowners, reasoning that since petitioners lost the case, they have effectively been living in city-owned property for several years now. Connecticut Governor M. Jodi Rell, a Republican, has called for a moratorium on takings until the legislature can consider a pending bill on the subject. The city of New London has become embittered, to say the least. The nldc, whose executives are not elected, ran through nearly all of its $73 million and went begging to the city for an additional $4 million in 2003. The city council agreed and then changed its mind after the nldc demanded that the city immediately bond the money, which would have meant an even greater tax hike for its citizens. The council’s relationship with the nldc deteriorated so badly that after two years of haggling, in March 2005, the council and nldc entered into mediation workshops with a professional conflict resolution consultant.

As the Kelo majority noted, it is now a matter for individual state legislatures and state courts. While a lot of hot air has been blowing, it remains to be seen whether Connecticut or other states will reverse their course as Michigan has done. Political passions, after all, come and go. It is worth bearing in mind that it took Michigan’s high court 23 years to reverse itself after what had been one of the greatest mass uprootings of a civilian population in America since the 1950s, when Robert Moses used eminent domain as a blunt instrument to slice the Bronx in half to build the Cross Bronx Expressway. If we are to be serious about eradicating economic development takings, it must become an issue that is more than just a passing political fad.

Carla T. Main, a former opinion page editor at the National Law Journal, writes often about law and society. She lives in Jersey City, New Jersey.

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18 Kathleen M. Sullivan, “The Justices of Rules and Standards,” Harvard Law Review 106 (November, 1992).