Judicial Review  

Kelo: Hope for Property Rights

by Timothy Sandefur

Kelo is not the unmitigated disaster that it appears to be.

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In Kelo v. New London, the United States Supreme Court held that government may take property that belongs to one person and give it to another. That is hardly surprising. Government today does little else. What is surprising is that for the first time in over a century — perhaps the first time ever — a Justice of the Supreme Court held that the Constitution puts limits on the power of eminent domain. In fact, four Justices contended that government should not be in the business of redistributing property between private landowners.

Eminent domain is the government's power to force you to sell your land for whatever price the government decides is fair. Troubling as this authority is, American law has always considered it legitimate, so long as the government takes the land for a "public use," such as a highway or a post office. But in the past 50 years, government has engaged in much more ambitious projects of redistributing land in ways bureaucrats think are likely to increase revenue. I described some of the awful examples of these takings in Liberty (see "They're Coming For Your Land," March).

In its June decision, the Supreme Court upheld a Connecticut plan to take the homes of Susette Kelo and some of her neighbors in New London, Conn., and give the land to a private developer to build a convention center alongside a new Pfizer pharmaceutical plant. Kelo, a nurse who works three jobs to care for her home and her ill husband, was represented by the Institute for Justice (IJ), the Washington, D.C. libertarian legal foundation that does heroic work challenging some of the worst abuses of eminent domain. In their case, IJ cut to the major principle: the state simply had no authority to condemn this tidy, pleasant residential property and transfer it to a private developer for private use. The 5th Amendment's public use requirement, they argued, must mean something more than "public purpose," since just about anything can be called a "public purpose" in some way, including whatever private development the city officials might envision. In fact, as IJ's Dana Berliner pointed out, the city hasn't even decided what it wants to do with Susette Kelo's property.

But Justices John Paul Stevens, David Souter, Ruth Bader Ginsburg, Stephen Breyer, and Anthony Kennedy rejected this argument. They pointed to 19th century cases which allowed government to take property for railroads, or for dams that powered sawmills; these private enterprises had been authorized to use eminent domain because they contributed to the public welfare, so what was the difference? "The disposition of this case," Stevens concluded, "turns on the question whether the City's development plan serves a 'public purpose.'" Since constructing a convention center would create jobs and increase tax revenue to the city, the condemnation met the requirement. "Promoting economic development is a traditional and long accepted function of government."

None of this was novel. In the 1954 decision Berman v. Parker, the Court unanimously declared that Congress could eradicate slums by condemning large portions of Washington, D.C., and transferring the land to private developers. One victim, a storeowner whose business was not blighted, sued on the grounds that this redistribution violated the public use requirement. Justice William O. Douglas could hardly restrain his contempt. "When the legislature has spoken," he wrote, "the public interest has been declared in terms well-nigh conclusive. In such cases the legislature, not the judiciary, is the main guardian of the public needs. . . . This principle admits of no exception merely because the power of eminent domain is involved." Since the New Deal, it had become the norm for courts to ignore laws that violated property rights, and Douglas was not about to disturb the status quo. In fact, Douglas even found it acceptable for government to take a person's land and give it to someone else directly: "Appellants argue that this makes the project a taking from one businessman for the benefit of another businessman," he wrote. "But the means of executing the project are for Congress, and Congress alone, to determine once the public purpose has been established." The decision was unanimous.

Thirty years later, in Hawaii Housing v. Midkiff, the Court again allowed a state to take land from some owners and give it to others. The Hawaii legislature passed a law allowing anyone renting a home to request that the state seize it from the landlord and sell it at a discounted rate to the renter. Justice Sandra Day O'Connor wrote that, although the Constitution did theoretically prohibit the government from taking property from one person and giving it to another, "where the exercise of the eminent domain power is rationally related to a conceivable public purpose, the Court has never held a compensated taking to be proscribed by the Public Use Clause." Public use, essentially, means whatever the legislature says it means. And, again, Midkiff was unanimous.

Kelo is probably the first time that any Justice has so directly challenged the validity of any precedent as powerful as Berman and Midkiff. It certainly marks the first time in well over a hundred years that Supreme Court Justices have taken the public use requirement seriously. Even Justice O'Connor tried to retreat from her own Midkiff decision, describing it as containing "errant language." Justice Clarence Thomas went further. Berman and Midkiff should be overruled, he wrote; the public use requirement means public use, not private use. Even in the railroad and sawmill cases, courts had required the government to regulate the private beneficiaries of eminent domain to prevent that power from being exploited for private profit. Worse, when government can use eminent domain to transfer land to private developers, it is only a matter of time before powerful lobbyists seize that power for their own profit. As a result, the commonest victims of private takings are people with the least political influence. "Something has gone seriously awry with this Court's interpretation of the Constitution," he wrote. "Though citizens are safe from the government in their homes, the homes themselves are not."

Public outrage over the decision surprised many observers. After all, Kelo was predictably in line with precedent. But it seemed to have suddenly dawned on Americans that their homes could be next in line for the bulldozer. Some congressmen proposed barring the use of federal funds whenever eminent domain is used to benefit private parties, and legislators in several states began working on laws to prevent private condemnations.

Meanwhile, in California, redevelopment agencies and contractors immediately began spinning the decision: Californians had nothing to fear from the Kelo decision, they claimed, because California's redevelopment law only allows the condemnation of "blighted" property. But this requirement only means that the city must pass a resolution declaring a neighborhood to be "blighted" before they condemn it. And the criteria on which such a resolution may be based are startlingly vague: "Factors that . . . substantially hinder the economically viable use . . . of buildings . . . [including] substandard design, inadequate size given present standards and market conditions, lack of parking, or other similar factors," is one. This seems to mean that if a grocery store's parking spaces are too small for the Nissan Titan, the place is blighted. "Adjacent or nearby uses that are incompatible with each other and which prevent the economic development of . . . the project area," is another factor. If you've got a barbershop next to a bookstore, and Costco wants that land — watch out. "The existence of subdivided lots of irregular form and shape and inadequate size for proper usefulness and development that are in multiple ownership." What sort of usefulness is "proper"? Well, whatever the bureaucrats say, of course.

Worse, a property owner who seeks to challenge the city's declaration that his neighborhood is blighted has little opportunity for a day in court. Take, for example, the case of Ahmad Mesdaq, whose fashionable coffee shop and cigar store, the Gran Havana Cigar Factory in San Diego's Gaslamp District, was condemned earlier this summer to make way for a new hotel. Mesdaq went to court to prove that his land was not blighted, but the judge held that he was not allowed to introduce any new evidence, and that if the city's decision was based on any evidence — no matter how weak — the court would uphold it. When he appealed, the city complained that "if Mesdaq's 5,000 square feet is not included, the [hotel] project, on 35,000 square feet, has the following deficiencies:

1. The number of rooms is reduced from 334 rooms to 237 . . .
2. The on-site parking is reduced . . .
3. Increased costs are incurred to shore around Mesdaq's building . . .
4. Change of the project footprint from a rectangle to an "L" shape . . .
5. Loss of 150 linear feet of street footage . . .
6. Reduced ballroom size . . .
7. Changed "back of house" service areas . . .
8. Substandard lobby and arrival area . . .
9. Going back through the review and approval process . . .

The Court of Appeal agreed that these dire public emergencies must be remedied through the use of eminent domain, and Mesdaq was forced to relinquish his shop in May.

This is the reality of eminent domain, and if Kelo causes Americans to realize that "economic redevelopment" means just this sort of abuse, it will have taught them a lesson libertarians have tried to teach for years: whenever government has the power to redistribute property, that power will become a prize in a political competition which will be won by the lobbying of concentrated groups with the most to gain — not by the widely dispersed losers, who are often unaware of the legislation passed in their names. Thus the outcome will not depend on justice, but on which group can rally the most political support, which is why poor people so often lose their homes to companies like Costco, Ikea, or Home Depot — and not the other way around.

But at least as important as the education of citizens is the education of the judiciary itself. Since the New Deal, the Supreme Court has — with whatever degree of sincerity — insisted that the only solution for government's violations of economic freedom is the ballot box. That answer has always been absurd, because the whole purpose of the Constitution is to remove our rights, including the right to property, from the reach of democracy. The Constitution was not designed to strengthen government — government hardly needs the help — but to limit it. Federal courts, therefore, are supposed to police the boundaries by ensuring that the legislature does not exceed its constitutional authority. Deferring to the legislature on matters of wealth redistribution is simply turning over the henhouse to the fox.

Yet this deferential attitude on the part of the courts has been practically unshakeable. For 70 years, whenever a law that interferes with property rights or economic freedom is "rationally related to a legitimate state interest," the courts have given it a pass, and it has been considered almost rude, and certainly crude, to suggest in legal circles that the Constitution limits the legislature's authority to deprive people of their property or opportunity. According to the most widely respected legal scholars, courts are simply not in the business of "second-guessing" legislative attempts to rewrite the laws of economics. Things had reached such a state that in 1987 the Supreme Court confessed that "our cases have not elaborated on the standards for determining what constitutes a 'legitimate state interest.'"

That the United States Supreme Court does not know what a legitimate state interest is ought to shock people, but it is entirely understandable, given the Court's deference to legislatures. The Court has adopted an ultrademocratic principle under which almost anything the legislature decides to do is automatically considered legitimate. The Supreme Court's assertion that "promoting economic development is a traditional and long accepted function of government" was not supported by any argument or even a footnote, but simply dropped into the opinion as a matter of course. Yet it is simply another instance of the Court ignoring its constitutional duty to ensure that the legislature stays within its legitimate authority. "Long accepted" — by whom? Certainly not by the American Founders, who explained in the Declaration of Independence that government only exists to "secure" our rights, and that the states may only do things which government may "of right" do. It was not accepted by the framers of the Constitution, such as James Madison, who wrote that:

There is no maxim in my opinion, which is more liable to be misapplied, and which, therefore, more needs elucidation, than the current one that the interest of the majority is the political standard of right and wrong. Taking the word "interest" as synonymous with "ultimate happiness," in which sense it is qualified with every necessary moral ingredient, the proposition is no doubt true. But taking it in the popular sense, as referring to immediate augmentation of property and wealth, nothing can be more false. In the latter sense, it would be the interest of the majority in every community to despoil & enslave the minority of individuals. . . . In fact it is only reestablishing, under another name and a more specious form, force as the measure of right.

Although Justice Stevens' "deference" wraps itself in the rhetoric of democracy, it is really just substituting force as a measure of right: whenever the legislature decides, in the name of the people, to condemn a person's home and give it away to someone the legislature prefers, that decision is thoughtlessly endorsed.

As Justice Thomas noted, such deference is based solely on the Justices' political views; it would never be applied in the case of rights that the liberal members of the Court take seriously. "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, or when a convicted double-murderer may be shackled during a sentencing proceeding without on-the-record findings, or when state law creates a property interest protected by the Due Process Clause." So why the deference with regard to the public use clause? The only explanation is that taking property rights and economic freedom seriously might undercut the welfare state. Certainly it would raise complicated questions about how far American democracy has drifted from its actual constitutional authority. In defense of the welfare state, the liberal justices on the Court are willing even to abandon their traditional concern with political and economic outcasts.

Kelo is an excellent opportunity for civic education. People who have grown accustomed to seeing the redistributionary state as a kind-hearted way to eliminate poverty are now being confronted with the fact that for government to give, it must also take away. But more importantly, Kelo serves as an opportunity to teach a group of people who are in far more desperate need of education: the judges. The issue in Kelo was unavoidable: What is a legitimate state interest? Until the judges think seriously about that issue, using the materials bequeathed to us by the authors of the Constitution, their interpretations will continue on this chaotic, self-destructive path. That four justices did take these issues seriously is a great advance from the days of Berman v. Parker.

© Copyright 2010, Liberty Foundation

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