Kagan’s Testimony on Property Rights

In an exchange with Republican Senator Charles Grassley yesterday, Elena Kagan made some interesting comments on property rights and the controversial Kelo decision:

GRASSLEY: …. I want to start with private property.

The takings clause of the Fifth Amendment states, “Nor shall private property be taken for public use without just compensation.” The plain language of the Constitution says an individual’s property shall not be taken for public use.

Yet, the majority of the Supreme Court case in Kelo wrote that the government could take a person’s private property for public purpose, not using the word “use,” which they determined included private redevelopment of land.

Do you believe that the Supreme Court correctly decided the Kelo case or do you believe that the Supreme Court improperly undermined constitutionally protected private property rights?

KAGAN: Senator Grassley, it was obviously a very controversial decision that has inspired a great deal of action in the state legislatures.

I’ve — I’ve — I’ve not commented on particular cases, I’ve not graded cases, but a few thoughts about Kelo.

Of course, what — what the — what the court in Kelo did was to say that the question of public use was not necessarily use by the public, but instead was use for a public purpose. And the court said that in the context of a taking of property that was done pursuant to a broad-scale urban development plan.

So I think it remains an open question whether that public purpose test would apply in any other context without such a broad- scale urban development plan…..

It’s also true — it’s also true that in some sense what the — what the — what the court did in this area when it said this was to kick the question back into the political process. In other words, the court didn’t say, of course, that the government had to do such takings. What the government said was that a state was permitted to do so.

And what states have done in the wake of that decision, in a — in a — in a very striking manner, I think, is to say, “Thanks, but no thanks, you know. We don’t want that power. We don’t want to be — we don’t want to do this. We think doing this, taking property from one person to give it to another person, even in the context of a broad redevelopment plan, is not appropriate public policy.”

And so a number of states, I know — I don’t know the exact number, but quite a number — have passed these kinds of anti-Kelo legislation, which makes sure that the — that the question never arises because the state government doesn’t try to effect such a taking in the first instance…..

GRASSLEY: Under Kelo, the court said that the pretextual (ph) takings are still unconstitutional violation of public use doctrine. Could you give me an example of a condemnation that’s an unconstitutional pretextual (ph) taking?

KAGAN: Gosh, you know, I don’t remember that exact line from Kelo. So I’m a little bit guessing as to the context.

But I think probably what the court meant was a taking that the government does not truly to serve a public purpose, but instead more to give the property to another individual person, the kind of Calder v. Bull scenario, take property from A, give it to B, under the guise of a public purpose.

So I would think that that’s what the court meant, although I don’t recall that exact statement. And I think that that also would provide a limit of the kind you’re speaking about on the doctrine.

GRASSLEY: Can you think of any areas where, in your opinion, the Supreme Court has failed to provide adequate protection of constitutional property rights? And if you can think of any, then I’d like to know examples — or an example.

KAGAN: Well, you know, I’ve tried very hard, Senator Grassley, not to suggest where I see deficiencies with — in — in — in the court’s handling of cases. So I think, you know, I think I won’t answer that question with that degree of specificity.

I mean, it is quite clear that the — that the Constitution does in various ways, and most notably by the takings clause, protect property rights, and that the job of the courts in — with respect to those rights, as any other, is to ensure that government does not overstep its proper bounds.

GRASSLEY: The president who appointed you, in “Audacity For Hope,” his book, said our Constitution places the ownership of private property at the very heart of our system of liberty. Do you agree with that statement?

KAGAN: Well, I do think that property rights are a foundation stone of liberty, that the two are intimately connected to each other in our society and in our history.

I. A Sign of Progress for Property Rights.

Unlike Sotomayor, Kagan does not have an extensive prior record on property rights. The fact that these issues came up in her hearings nonetheless is a further step forward for property rights, on the heels of the extensive questioning of Sotomayor on that subject. Property rights has now become a subject that any Supreme nominee must address. That is a small but genuine sign of progress.

I am happy that Kagan believes that “property rights are a foundation stone of liberty” and that “the job of the courts.. with respect to [property] rights, as any other, is to ensure that government does not overstep its proper bounds.” At the same time, I’m not optimistic that this means she will go against the Court’s oft-repeated pattern of giving property rights far less protection than other enumerated constitutional rights.

II. Kagan’s Discussion of Kelo.

Kagan’s comments on Kelo are reasonable and largely accurate. It’s a substantial improvement over Sonia Sotomayor’s mischaracterizations of the decision during her testimony last year (see here and here).

However, I do have a few bones to pick. First, it is slightly incorrect to state that Kelo said that the “public purpose” test applies only to cases involving “a broad-scale urban development plan.” The Kelo majority opinion was quite clear in stating that the test applies to all takings. Kagan was probably confused by the majority’s statement that “a one-to-one transfer of property, executed outside the confines of an integrated development plan” might not deserve as much judicial deference as one that is part of a plan. However, as the Court emphasized, the “public purpose” test applies even to these types of cases; it’s just that courts might not be as deferential to the government’s claim that a public purpose existed.

Much more importantly, Kagan was wrong to suggest that the existence of a “development plan” is a meaningful constraint on the scope of condemnation authority under Kelo. As I emphasized in this article, virtually all economic development and blight takings are pursuant to some plan or another. Ironically, even 99 Cents Only Stores vs. Lancaster Redevelopment Agency, a California district court cases specifically cited by the majority as an example of an impermissible “one to one taking” was actually part of a redevelopment plan. And the Kelo majority’s refusal to even consider the quality of the plans in question ensures that it is possible for a state or local government to create a “plan” justifying virtually any taking.

I also think that Kagan is a bit too optimistic in suggesting that post-Kelo reform in the states ensures that “the question never arises because the state government doesn’t try to effect such a taking in the first instance.” As I have explained in my academic work on post-Kelo reform, many of these are primarily symbolic and don’t actually restrain condemnations in any significant way. However, Kagan is not an expert on post-Kelo reform and it is understandable that she might not be well-informed about the nature of these laws.

Finally, Kagan and Grassley were right to note that the Kelo majority stated that “pretextual” takings are unconstitutional. What exactly counts as a pretextual taking under Kelo is hotly disputed. For a good discussion, see this article by Daniel Kelly. Justice Sotomayor, the president’s last Supreme Court nominee, ruled in the Didden case that even blatant extortion for the benefit of a private interest doesn’t qualify as a pretextual taking. That was the main reason why I testified against her.

Very extreme cases like Didden aside, the Supreme Court’s broad definition of “public purpose” ensures that even cases of fairly blatant favoritism will often be upheld. It’s easy to claim that almost any taking potentially benefits the public in some sense, especially since the Kelo Court explicitly held that the government has no obligation to prove that the claimed benefits will actually materialize. In Kelo itself, there was a great deal of evidence that the condemnations were undertaken as a result of lobbying by the Pfizer corporation.

Overall, I suspect that Kagan probably thinks that Kelo was rightly decided, and I doubt that she will be a strong protector of property rights on the Court. That said, I think she may turn out to be better on these issues than Sotomayor, and I see no reason to reconsider my view that Kagan is less bad from a libertarian perspective than most other plausible Obama nominees would have been. I am not opposed to her nomination, and what she said in answer to Grassley’s questions doesn’t alter my overall impression of her.

FULL DISCLOSURE: I should mention that a member of Senator Grassley’s staff consulted with me on property rights issues prior to the hearings. However, it is important to emphasize that it was not I who persuaded the senator to question Kagan about either property rights generally or Kelo specifically. Rather, his staff approached me because he was already interested in asking about these subjects, and wanted to go over some details with an outside expert.

UPDATE: I have edited this post slightly to remove some repetitive or non-substantive statements from the exchange between Grassley and Kagan. As per usual practice, I have used ellipses to note my omissions.