High Court Defers to Legislatures on Takings for “Public Use”

The Supreme Court has upheld the City of New London’s plan to acquire private waterfront homes for private economic development, ruling that courts must defer to legislatures about whether a taking is for a “public use” within the meaning of the Fifth Amendment.

The Supreme Court has upheld the City of New London’s plan to acquire private waterfront homes for private economic development, ruling that courts must defer to legislatures about whether a taking is for a “public use” within the meaning of the Fifth Amendment.  Kelo v. City of New London, No. 04-108, --- S.Ct. ---, 2005 WL 1469529 (June 23, 2005). The 5-4 decision was written by Justice Stevens and joined by the other three liberals and Justice Kennedy.  Justice O’Connor wrote a dissent that was joined by Chief Justice Rehnquist and Justices Scalia and Thomas.  Justice Thomas also wrote his own dissent. 

The case is the second big defeat this Term for heightened protection of property rights.  Unlike the commercial rent control case last month, however, in this case the property rights that lost out were largely those of low-income, heavily minority residents, whose homes or neighborhoods are deemed expendable for large private developments.

The decision caps a Term in which the Court has repeatedly endorsed deference to legislatures.  Yet the fact that the decision was 5-4 with the conservatives in dissent shows that the battle for stricter controls on the authority of both state and federal legislatures may not be over if the composition of the Court changes.

Majority Opinion

None of the justices disagreed with two “polar propositions” summarized by the majority.  First, “the sovereign may not take the property of A for the sole purpose of transferring it to another private party B.”  Second, the government “may transfer property from one private party to another if future ‘use by the public’ is the purpose of the taking.”  That is, the courts will defer when government takes property for its own use, or for ownership by a private party that allows public use – as with a railroad or other common carrier, or a stadium. 

The question in this case was whether property may be taken for private economic development that has benefits for the public – i.e., an increased tax base, creation of jobs, or the aesthetic benefits of a revitalized area – but does not directly involve public use.

The majority answered a clear “yes.”  It endorsed the Court’s earliest takings cases from the 19^th century, which read the Fifth Amendment as requiring only a “public purpose,” determined by legislatures, not a literal public “use.”  “Our earliest cases in particular embodied a strong theme of federalism, emphasizing the ‘great respect’ that we owe to state legislatures and state courts in discerning local public needs.” 

The Court held that public benefit could not be a “mere pretext,” and indicated that a transfer from one single individual to another solely because the later would pay more taxes would be “unusual … [and] would certainly raise a suspicion that a private purpose was afoot.”  But in the instant case, New London was indisputably a “distressed municipality,” and the project involved “an integrated development plan.”  Other hypothetical cases could be decided as they arise.

The Court squarely reaffirmed Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984), which had allowed the State of Hawaii to force 72 landowners, who owned nearly all of the nonpublic land in the state, to break up their land oligopoly and sell their houses to the renters.  The Court also reaffirmed Berman v. Parker, 348 U.S. 26 (1954), which upheld the District of Columbia’s condemnation of a large blighted area that also included a nonblighted department store as part of a large redevelopment project that included schools but also sales of land to private parties.

The majority did not cite or indicate its views on the notorious Michigan Supreme Court case of Poletown Neighborhood Council v. Detroit, 410 Mich. 616, 304 N.W.2d 455 (1981), which upheld Detroit’s decision to bulldoze an entire a working-class, immigrant community in order to give it to a General Motors assembly plant.  (Justice O’Connor cited the case as a negative example.)  The Michigan Court overruled that case last year under its own constitution.  County of Wayne v. Hathcock, 471 Mich. 415, 684 N.W.2d 765 (2004).  The Kelo decision, however, would probably make that taking permissible under the federal Constitution.

In short, the deferential standard of review adopted by the Court will make it quite difficult to challenge most government takings under the Public Use Clause.

Justice Kennedy’s Concurrence

Justice Kennedy joined the majority opinion, but also wrote separately to emphasize that “meaningful rational basis review” might still invalidate some takings that, unlike in Kelo, were “intended to confer benefits on particular, favored private entities, and with only incidental or pretextual public benefits.”  He also did not foreclosed the possibility of “a more stringent standard of review … for a more narrowly drawn category of takings …in which the risk of undetected impermissible favoritism of private parties is so acute that a presumption (rebuttable or otherwise) of invalidity is warranted under the Public Use Clause.”

Justice O’Connor’s Dissent

Justice O’Connor, joined by Chief Justice Rehnquist and Justices Scalia and Thomas, wrote that the Court “abandons [a] long-held, basic limitation on government power.  Under the banner of economic development, all private property is now vulnerable ….”

She did not dispute that government may at times take property for a public “purpose,” not just a public “use.”  But she distinguished cases in which “the extraordinary, precondemnation use of the targeted property inflicted affirmative harm on society --- in Berman through blight resulting from extreme poverty and in Midkiff through oligopoly resulting from extreme wealth.”  Now, there is no constraint on government takings: “For who among us can say she already makes the most productive or attractive possible use of her property?”

Justice Thomas’s Dissent

Justice Thomas indicated that he would eliminate the entire category of public purpose takings – overruling Midkiff and Berman – and would allow only takings for the government’s own use or for acquisition by common carriers whose property may be used by the public.  In Berman, “if the slums at issue were truly ‘blighted,’ then state nuisance law … not the power of eminent domain, would provide the appropriate remedy.”

He based his position on his understanding of the original meaning of the Public Use Clause, supported by his interpretation of early English common law and early state takings cases.  He was unconcerned that his theory disregarded most of the U.S. Supreme Court’s taking jurisprudence, since those cases did not begin until the late 19th Century.

Justice Thomas also questioned why courts should defer to legislatures’ interpretation of “public use” but not to their view of whether a search of a home was reasonable.  Courts closely scrutinize the search of a home but not “the infinitely more intrusive step of tearing down petitioners’ homes.”

Finally, he observed that the property taken for economic development is overwhelming owned or rented by minorities and low income individuals.  “’In cities across the country, urban renewal came to be known as ‘Negro removal’” (citation omitted).  The poor and minorities “are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful.  If ever there were justification for intrusive judicial review of constitutional provisions that protect ‘discrete and insular minorities,’” this was the case.

Commentary

This is one of those troubling cases where it is difficult to square consistent legal principles with unjust results or rules that are impractical in a modern society.  There is a lot of truth to Justice Thomas’s final observation.  The majority did not really address his concerns, and the Court’s silence on the Poletown case is telling.  Yet, the powerless in society are at the losing end of legislative decisions every day; there is nothing unique about this case. 

Conversely, Justice O’Connor was unwilling to limit the takings power to 18th century uses, but once she opened the door to public purposes not tied to public uses, she had difficulty articulating a clear decision line.

Justice Thomas articulated a clear, bright line rule.  But it would have outlawed not only 21st Century development projects – many of which do benefit the entire community, including the poor – but even 19th Century statutes governing grist mills and manufacturing plants.

For both progressives and conservatives, the case also poses a challenge to develop consistent rules about when deference to legislatures is appropriate.  It is too easy to have a results-oriented approach that overrules legislatures when they do things that one doesn’t like and defers to them when they do.  For progressives, swallowing the consequences of this case (or the medical marijuana case) may be necessary to upholding deference to legislatures that adopt rent control ordinances, see Lingle v. Chevron, No.04-163, --S.Ct.--, 2005 WL 1200710 (May 23, 2005), or those that enact accommodations for individuals with disabilities or environmental protections.

For conservatives, they will have to ponder the meaning of a case that has Justice Stevens, not Chief Justice Rehnquist, on the side of federalism.