Expropriation and the Public Use Clause: The Legislature’s Eminent Domain

The Sedgwick Law Firm > Expropriation and the Public Use Clause: The Legislature’s Eminent Domain

Society’s power to reallocate land through eminent domain has provoked controversy with each novel exercise. Opponents have long sought to limit government action by invoking the Fifth Amendment’s public use clause applicable to the states through the 14th Amendment. The courts, however, have validated governmental exercise of eminent domain power, deferring to Legislatures’ determinations of “public use.”

In Kelo v. Cityof New London, 125 S. Ct. 2655 (2005), the U.S. Supreme Court ruled in a 5-4 decision that the taking of homes (that were admittedly not blighted) for private development in connection with a city-approved redevelopment plan was consistent with the “public use” clause. A firestorm of criticism ensued, in which opponents assailed the Court for allowing appropriation of private property for private use. Critics of the Kelo ruling have targeted the use of eminent domain as an inappropriate tool to rectify societal ills and further broad public goals.

The Kelo Meander: An Old Dance, A New Step

In response to an eroding job supply and a deteriorating economy, the City of New London invoked a state statute that expressly authorized the use of eminent domain to promote economic development. The city formulated a development plan designed to revitalize its ailing economy. The plan called for construction of a waterfront hotel, restaurants, retail stores, residences and office space. However, some property owners refused to sell, and brought an action in the state court challenging the redevelopment agent’s exercise of eminent domain.

The trial court granted a permanent injunction prohibiting the taking of some of the homes in issue, and the city appealed. The Connecticut Supreme Court reversed and allowed the city to take all of the property in issue. The U.S. Supreme Court granted certiorari.

The U.S. Supreme Court ruled that the taking was constitutional, consistent with the public use clause of the Fifth Amendment. The disposition of this case, the Court stated, turned “on the question whether the [c]ity’s development plan serves a ‘public purpose.'” The Court ruled that “[w]ithout exception, our cases have defined that concept broadly, reflecting our longstanding policy of deference to legislative judgments in this field.”

There were two passionate dissents. The dissents recognized the salutary nature of the compensation clause, but stated that the public use requirement “imposes a more basic limitation, circumscribing the very scope of the eminent domain power.” Having framed the issue in this manner, Justice Sandra Day O’Connor asked: “[W]here is the line between ‘public’ and ‘private’ property use?” Unfortunately, neither she nor Justice Clarence Thomas provided an answer. The dissenters were certainly not the first to ask where to draw the line between “public” and “private”use, and they were not the only ones who have had difficulty in answering it.

Public Use, Public Utility and Judicial Deference

The earliest American exercises of eminent domain were for public roads, private rights-of way for landlocked parcels, and private grist-mill dams. (Fisher v. McGirr, 67 Mass. 1 (1854)) The development of eminent domain law in the colonies focused exclusively on the compensation requirement. When the colonies became states and the states a nation, the theory and practice of eminent domain remained unchanged.

At the turn of the 20th century, the U.S. Supreme Court heard a string of cases involving the public use clause. In Head v. Amoskeag, 113 U.S. 9 (1885), for example, the Court made clear that the public use clause, now applicable to the states through the 14th Amendment, did not preclude exercise of the eminent domain power for the condemnation of private property to transfer that property to private manufacturing companies. Thereafter the Court manifested great willingness to rely on local exigencies as determined by local governments, deferring to state determinations of public use.

In the last Supreme Court decision regarding the public use clause before Kelo, the Supreme Court unanimously upheld a land condemnation scheme in Hawaii in which fee title to real property was taken from property owners and transferred to private tenants leasing the property. (Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984).)

The Practical Implications Of Kelo

Implications for the courts

The arguments in support of deference almost universally granted to legislatures on socioeconomic issues are well known. First, elected officials are better suited than unelected judges to give effect to society’s values. Legislatures have the resources to conduct a thorough investigation of the benefits and detriments of specific legislation. On the other hand, courts must focus their inquiry primarily on the litigants before them. Second, these values are necessarily abstract and thus vulnerable to manipulation by courts. Indeed, although the cases are few in which courts have vetoed a grant of eminent domain on public use grounds, no clear rationale arises from those cases other than basic disagreement regarding the public benefit of the grant. Finally, courts lack technical competence to determine whether a proposed redistribution of resources actually serves its articulated purpose.

Nowhere is this clearer than in the history of eminent domain, where courts have struggled vainly to enunciate a principled and usable rule defining the boundaries of public use.

Indeed, although the Court in Kelo recognized that the police power and eminent domain have been treated interchangeably for purposes of review, the arguments for deference are even stronger in connection with eminent domain. For all the similarities between the two, there remains at least one crucial difference: the Fifth Amendment provides that the Legislature may exercise eminent domain only upon justly compensating the owner of the property taken. It would be incongruous to hold government exercise of eminent domain to stricter scrutiny for “public use” than for other socioeconomic legislation given the Fifth Amendment’s requirement of just compensation. In contrast, the Supreme Court has consistently upheld zoning regulations that, without compensation, have diminished the property value by as much as 90 percent. The judiciary has recognized that even in these extreme cases, if it is to avoid the specter of arbitrariness, it must defer to legislative determination of public purpose, although the consequences may cause some individual hardship. Where that hardship is mitigated in large part, if not fully, by just compensation, the case for judicial deference to the Legislature’s determination of public use is yet stronger.

What would the legal landscape look like if courts began to make policy decisions about public use? Courts have historically had difficulty differentiating between those uses that are public and those that are not. In one case decided after Kelo, for example, a Superior Court judge in Arizona ruled against Tempe’s use of eminent domain to condemn private property despite the city’s determination that redevelopment would help to mitigate methane gas concentration in the area, improve fire protection and resolve soil subsidence problems. Since the property would be used for private commercial use, and no needed public services would be provided by the end use of the property, the court said profit, not public improvement, was the motivating force.

In so doing, the court appears to have rejected 200 years of American history, substituting its view of public good for the view expressed by the city. Yet, what is the difference between the use of eminent domain to transfer property from a private landowner to a private railroad company for the latter’s profit and its use to transfer property for a shopping mall, a business park and a marina? What is the difference between using eminent domain to support the private mining of natural resources, or to create reservoirs by local water districts for private agricultural interests, and using it to allow private developers to build housing, a hotel or a restaurant? Courts have been challenged, and have uniformly failed, to come up with any principled answer.

The Changing Landscape

Does the call for a new jurisprudence in takings law by the dissenters in Kelo signal a change in the manner in which courts will address constitutional parameters of “public purpose”? While many courts have followed Kelo and the centuries old law it embodies, a review of appellate decisions since Kelo yielded few appellate decisions in which a court ruled that a legislative body’s exercise of eminent domain power ran afoul of constitutional considerations.

Opponents of the broad exercise of eminent domain power have had perhaps a more profound effect upon state legislatures, in which scores of legislative bills to restrict eminent domain use have been offered. The political capital created by interest in the Kelo decision has been used to attack the exercise of eminent domain, particularly its exercise to eliminate blight or enhance economic conditions. The bills have sought to restrict eminent domain in a variety of ways, from limiting the definition of “public use” to requiring the government to pay attorney’s fees in cases in which a property owner established a higher valuation of his or her property than the government had offered before trial. While it is too soon to know whether eminent domain will continue to be a “hot-button” issue, it appears likely that at least some of the bills will become law.

Conclusion

While courts have given lip service to the notion that taking property from A for the purpose of giving it to B violates the public use clause, eminent domain jurisprudence over the last 200 years developed justifications for doing just that. Courts continually followed Legislatures’ leads in expanding the ambit of permissible uses of eminent domain.

Legislatures’ attempts to solve modern social problems through eminent domain have brought about renewed interest in the meaning of the public use clause. In the last decades, governments have attempted to exercise their eminent domain powers to reduce unemployment, to curb inflation, and to stimulate economic development. For the most part, courts have permitted such applications of eminent domain, holding that determinations of public use were for legislative bodies to make, not for courts.

Although the Court in Kelo followed this established law, the vote was close. The opponents of eminent domain, bolstered by this apparent success, have already moved on to the next battle. However, they will be challenged to express a principled rule of law that accounts for historical exercise of eminent domain power while prohibiting uses such as the ones in Kelo.