Kelo v. City of New London

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Kelo v. City of New London, 125 S. Ct. 2655 (2005)^{[#endnote_citation]}, was a case decided by the Supreme Court of the United States involving the use of eminent domain to transfer land from one private owner to another to further economic development. The case arose from the condemnation by New London, Connecticut of privately owned real property so that it could be used as part of a comprehensive redevelopment plan. The Court held in a 5-4 decision that the general benefits a community enjoyed from economic growth qualified such redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment.

The decision was widely criticized by American politicians and the general public. It was commonly seen as a misinterpretation of the Fifth Amendment whose consequence would be to benefit large corporations at the expense of individual homeowners and local communities.

Contents

History

The case was appealed from a decision in favor of the city of New London by the Supreme Court of Connecticut, which found that the use of eminent domain for economic development (the central focus of the case) did not violate the public use clauses of the state and federal constitutions. The court found that if an economic project creates new jobs, increases tax and other city revenues, and revitalizes a depressed (even if not blighted) urban area, it qualifies as a public use. The court also found that government delegation of eminent domain power to a private entity was also constitutional as long as the private entity served as the legally authorized agent of the government.

The United States Supreme Court granted certiorari to consider questions last raised in Berman v. Parker, [348 U.S. 26] (1954). Namely, does the Fifth Amendment protect landowners from the use of eminent domain for economic development, rather than, as in Berman, for the elimination of slums and blight.

The case

The development plan

The city of New London, Connecticut had by the early 2000s fallen on hard economic times. The city's tax base and population were continually decreasing, and city leaders were growing desperate for some hope of economic development. In 1998, the pharmaceutical company Pfizer began construction of a major new research facility on the outskirts of the Fort Trumbull neighborhood of New London. Seeing an opportunity, the city of New London reactivated the New London Development Corporation, a private entity under the control of the city government, to consider plans to redevelop the Fort Trumbull neighborhood and encourage new economic activities that might be brought in by the Pfizer plant. (see the [NLDC Case Study])

The development corporation created a development plan that included a resort hotel and conference center, a new state park, 80–100 new residences, and various research, office, and retail space. The plan divided the area into seven parcels, but did not specify the exact plans for development in any but the first parcel (the resort hotel and conference center). The city in 2000 approved the development plan and authorized the corporation to acquire land in the Fort Trumbull neighborhood.

Fort Trumbull was an older neighborhood, some 90 acres (364,000 m²) in size and including 115 residential and commercial lots. The development corporation offered to purchase all 115 lots; however, the owners of 15 of these properties did not wish to sell to the corporation. Of the 15 properties, ten were owned by occupants, and five by investors. These owners were the petitioners in this case; the lead plaintiff, Susette Kelo, owned a small home on the Thames River in the development area.

The city of New London chose to exercise its right of eminent domain. The city ordered the development corporation, a private entity acting as the city's legally appointed agent, to condemn the 15 holdout owners' lots.

The case in the Connecticut courts

The owners sued the city in Connecticut courts, arguing that the city had misused its eminent domain power. The power of eminent domain is limited by the Fifth and Fourteenth Amendments to the United States Constitution. The Fifth Amendment, which restricts the actions of the federal government, says in part that "private property [shall not] be taken for public use, without just compensation"; under Section 1 of the Fourteenth Amendment, this limitation is also imposed on the actions of U.S. state and local governments. Kelo and the other appellants argued that economic development, the stated purpose of the Development Corporation, did not qualify as public use.

Certiorari to the U.S. Supreme Court

This case was the first major eminent domain case heard at the Supreme Court since 1984. In that time, states and municipalities had slowly extended their use of eminent domain, frequently to include economic development purposes. In the Kelo case, there was an additional twist in that the development corporation was ostensibly a private entity; thus the plaintiffs argued that it was not constitutional for the government to take private property from one individual or corporation and give it to another, simply because the other might put the property to a use that would generate higher tax revenue.

The first eminent domain case since Midkiff to reach the Supreme Court, Kelo became the focus of vigorous discussion and attracted numerous supporters on both sides. Some 40 amicus curiae briefs were filed in the case, 25 on behalf of the petitioners. Kelo's supporters ranged from the libertarian Institute for Justice (the lead lawyers) to the NAACP, AARP and the late Martin Luther King's Southern Christian Leadership Conference. The latter three groups signed an amicus brief arguing that eminent domain has often been used against politically weak communities with high concentrations of minorities and elderly.

Oral argument

The case was argued on February 22, 2005. The case was heard by only seven members of the court with Associate Justice Sandra Day O'Connor presiding, as Chief Justice William Rehnquist was recuperating from medical treatment at home and Associate Justice John Paul Stevens was delayed on his return to Washington from Florida; both absent Justices read the briefs and oral argument transcripts and participated in the case decision.

During oral arguments, several of the Justices asked questions that forecast their ultimate positions on the case. Justice Scalia, for example, suggested that a ruling in favor of the city would destroy "the distinction between private use and public use," asserting that a private use which provided merely incidental benefits to the state was "not enough to justify use of the condemnation power."

The Court's decision

Majority and concurring opinions

On June 23, 2005, the Supreme Court, in a 5–4 decision, found for the City of New London. Justice John Paul Stevens wrote the majority opinion; he was joined by Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg and Stephen Breyer. Justice Kennedy also penned a concurring opinion setting out more detailed standards for judicial review of economic development takings than that found in Stevens' majority opinion. Stevens said that local governments should be afforded wide latitude in seizing property for land-use decisions of a local nature. "The city has carefully formulated a development plan that it believes will provide appreciable benefits to the community, including, but not limited to, new jobs and increased tax revenue." The decision pre-empted criticism of the possibility that the decision would be abused for private purposes by arguing that "the hypothetical cases posited by petitioners can be confronted if and when they arise. They do not warrant the crafting of an artificial restriction on the concept of public use." Justice Stevens also emphasized the importance of judicial restraint, stating that the Court recognized that condemnation of property would entail hardship and that the states were free to impose restrictions on the use of this power by local authorities. Justice Kennedy's concurring opinion observed that in this particular case the development plan was not "of primary benefit to . . . the developer" and suggested that, if it had been, the taking might have been impermissible.

Dissenting opinions

Justice Sandra Day O'Connor wrote the principal dissent, joined by Chief Justice William Rehnquist, Justice Antonin Scalia, and Justice Clarence Thomas. Justice O'Connor suggested that the use of this power in a reverse Robin Hood fashion—take from the poor, give to the rich—would become the norm, not the exception: "Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms." She argued that the decision eliminates "any distinction between private and public use of property — and thereby effectively [deletes] the words 'for public use' from the Takings Clause of the Fifth Amendment."

Clarence Thomas also penned a separate originalist dissent, in which he argued that the precedents the court's decision relied upon were flawed and that "something has gone seriously awry with this Court's interpretation of the Constitution." He accuses the majority of replacing the Fifth Amendment's "Public Use" clause with a very different "public purpose" test: "This deferential shift in phraseology enables the Court to hold, 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.'" Thomas also made use of the argument presented in the NAACP/AARP/SCLC amicus brief, (co-authored by South Jersey Legal Services) on behalf of three low-income residents' groups fighting redevelopment in New Jersey, noting: "Losses will fall disproportionately on poor communities. Those communities are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful."

Subsequent history

Following the decision, many of the plaintiffs expressed an intent to find other means by which they could continue contesting the seizure of their homes. However, the Supreme Court having disposed of the eminent domain issue, the only legal avenue left to Kelo and her fellow residents may be to contest the fairness of the amount that the city intends to pay for the land—the city has reportedly set aside $1.6 million to buy all 15 homes, and city officials believe that they will be in possession of the property within a few months.^{[#endnote_Newsday]} Soon after the decision, city officials announced plans to charge the residents of the homes for back rent for the five years since condemnation procedures began. The city contends that the residents have been on city property for those five years and owe tens of thousands of dollars of rent.

In June 2006 Governor Jodi Rell intervened with New London city officials proposing the homeowners involved in the suit be deeded property in the Fort Trumbull neighborhood so they may retain their homes. [link]

The wider effect of Kelo remains to be seen. It will have little effect in the eight states that specifically prohibit the use of eminent domain for economic development except to eliminate blight: Arkansas, Florida, Illinois, Kentucky, Maine, Montana, South Carolina and Washington. As of July 4, 2005, The Washington Times claims that the decision has spurred action by officials in Newark, New Jersey and Arnold, Missouri.^{[#endnote_WashTimes]} As of August 4, 2005, Alabama has banned takings like those authorized by Kelo, while such laws have been proposed in sixteen states and are likely to be proposed in seven more. Additionally, Alabama, California, Florida, Michigan, New Jersey and Texas are all considering constitutional amendments for the same purpose. This is expected to be a pivotal issue in the 2006 elections.^{[#endnote_WaTimes]} As of March 2006, the town of Scituate, Massachusetts, in its annual town meeting, voted to limit its own eminent domain power to cases where the property in question is seized only for public ownership and public use.^{[#endnote_Scituate]}

A study of more than 10,000 allegedly abusive uses of the eminent domain clause conducted by an organization that supported the landowners in the Kelo case supports the argument that, as predicted in the dissenting opinions, neighborhoods with low-income minority residents will be most likely to see the power of Kelo used. Other likely locations for use of Kelo power include older neighborhoods near waterfront or developed commercial areas and low- and middle-class areas in general.^{[#endnote_WaPo]}

Judge Richard Posner, University of Chicago Law School professor and widely respected scholar of law and economics, published an analysis of the Kelo decision. ^{[#endnote_bp-amendment]} Although Posner does not take a position as to whether Kelo was properly decided, he observes that the eminent domain power can play an important role in eliminating economic problems associated with holdout owners (an economic term). He says that eminent domain can properly be used to address holdouts even in transactions involving private parties, such as utilities or other entities. He observes, however, that the Court apparently did not consider whether there was in fact a holdout program or assess net effect of the development plan on economic welfare, and notes many of the difficulties and complexities of the issues.

On January 25, 2006, BB&T Corporation, a large bank, announced that it "will not lend to commercial developers that plan to build condominiums, shopping malls and other private projects on land taken from private citizens by government entities using eminent domain," holding that the ruling is morally objectionable and violates "basic rights". On February 7, 2006, a compromise was proposed by Mayor Beth Sabilia between the residents of Fort Trumbull and the City of New London under which four of the six residences would remain, and the other two would be relocated within the new proposed complex. Under this proposal, the city would gain the title to the disputed properties, and rent would be imposed in lieu of taxes.[link]

On May 23, 2006, the city council of Hercules, California voted unanimously to use the right of eminent domain to seize 17 acres owned by Walmart corporation. At a hearing preceding the decision, many dozens of residents spoke against Walmart, complaining that the box stores economically depress an area by driving small shops bankrupt, and moving profits out of the local economy. The council applied the reasoning in the Kelo decision to pre-emptively prevent Walmart from depressing the city's economy.

It is unclear if Walmart intends to take legal action against Hercules, California, up to and including challenging the very court decision making this possible.

Public Reaction

Opinion polls found that the public overwhelmingly disapproved of the ruling. A Christian Science Monitor online poll found that 93% disagreed with the ruling. Most other polls, depending on the question posed, reacted negatively in the 65% to 97% range. Opposition to the ruling was stated by populist groups such as AARP, the NAACP, the Libertarian Party, and the Institute for Justice. Many owners of family farms also disapproved of the ruling, as they saw it as an avenue by which cities could seize their land for private developments. The grassroots lobbying group American Conservative Union and The New Media Journal described the decision as judicial activism, as did numerous blogs. [link] [link]

Presidential reaction

On June 23, 2006, the one year anniversary of the original decision, President George W. Bush issued a executive order instructing the federal government to use eminent domain "...for the purpose of benefiting the general public and not merely for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken." However, eminent domain is often exercised by local and state governments; the order may thus have little overall effect.

Congressional reaction

On June 27, 2005, Senator John Cornyn (R-TX) introduced legislation, the "Protection of Homes, Small Businesses, and Private Property Act of 2005" (S.B. 1313), to limit the use of eminent domain for economic development. The operative language (1) prohibits the federal government from exercising eminent domain power if the only justifying "public use" is economic development; and (2) imposes the same limit on state and local government exercise of eminent domain power "through the use of Federal funds." Similar bills have subsequently been put forth in the House of Representatives by Congressman Dennis Rehberg (R-MT), Tom DeLay (R-TX), and John Conyers (D-MI) with James Sensenbrenner (R-WI). As most small-scale eminent domain condemnations (including notably those in the Kelo case) are entirely local in both decision and funding, it is unclear how much of an effect the bill would have if it passed into law.^{[#endnote_Volokh]} House Minority Leader Nancy Pelosi (D-CA) believes that the proposed laws would violate separation of powers and that it would require a constitutional amendment to alter the meaning of the Fifth Amendment as interpreted by Kelo: "when you withhold funds from enforcing a decision of the Supreme Court you are, in fact, nullifying a decision of the Supreme Court... I would oppose any legislation that says we would withhold funds for the enforcement of any decision of the Supreme Court." ^{[#endnote_Pelosi]}

Other Reactions

New Hampshire

Subsequent to this decision, there was widespread outrage across the US. A California developer and libertarian, Logan Darrow Clements scooped a similar proposal by New Hampshire libertarians to seize Justice Souter's 'blighted' home in Weare, NH via eminent domain in order to build a "Lost Liberty Hotel" which he said would feature a "Just Desserts Cafe". Officials of the Libertarian Party of New Hampshire (LPNH) and the Coalition of New Hampshire Taxpayers had been eyeing the Justice's property to build a Constitution Park. A few weeks later, LPNH Vice-Chair Mike Lorrey discovered that Justice Breyer owned an extensive vacation estate in Plainfield, NH and announced on the New Hampshire Public Radio show The Exchange focusing on eminent domain that LPNH would be pursuing their Constitution Park concept with Breyer's property in mind. Lorrey and Clements have both advocated an amendment to New Hampshire's Constitution limiting eminent domain, which passed New Hampshire's legislature on March 24, 2006 and will go to a statewide vote in November.

California

Doug McNea, President of the Silicon Valley Taxpayers' Association, has drafted an initiative called the California Eminent Domain Limitations Act that would ban the use of eminent domain to transfer property from one private owner to another in California. The initiative has not gathered enough signatures by the deadline for the November 2006 election, but is still collecting signatures.

Notes

↑ Richard Posner, "The Kelo Case, Public Use, and Eminent Domain." The Becker-Posner Blog, June 26, 2005. [link]
↑ Matt Apuzo, "High court ruling divides New London", Newsday.com
↑ Mark Steyn, "Eminent case of domain poisoning." ''Washington Times, July 4, 2005 [link]
↑ "Alabama limits eminent domain." The Washington Times, August 4, 2005
↑ Kenneth R. Harney, "Court Ruling Leaves Poor at Greatest Risk." The Washington Post, July 2, 2005 [link]
↑ Nancy Pelosi, as reported in U.S. Newswire transcript, June 30, 2005. [link]
↑ Professor Eugene Volokh, "Senator Cornyn (R-TX) Proposes Limits on Eminent Domain." The Volokh Conspiracy, June 27, 2005 [link]
↑ Town of Scituate, results of the Annual Town Meeting, 4 March 2006 [link]

References

Matt Apuzo (June 23, 2005). "[High court ruling divides New London]". Newsday.com.

External links

↑ [Full text of the decision on the Supreme Court's website (PDF)]
[Full text of the decision courtesy of Findlaw.com]
[Text of the lower court decision]
[The Supreme Court Docket for the case and list of amicus briefs]
[Transcript of the oral argument in this case]
[Congress works to blunt court decision]
[Lessons From the Kelo Decision], essay by Congressman Ron Paul on LewRockwell.com
[Article in the New York Times: States Curbing Right to Seize Private Homes]
Barry Yeoman, [Whose House Is It Anyway?, AARP: The Magazine]

[Limit Eminent Domain] organization gathering signatures for the California Eminent Domain Limitations Act

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