Antitrust and Eminent Domain:

In response to my post on Anti-Kelo legislation in Pennsylvania, Skip Oliva calls my attention to this interesting use of the eminent domain power. The facts are a bit sketchy and he seems to be relying primarily on an antitrust complaint filed by the Pennsylvania AG's office--I'm relying on his post as well as the AG's press release, so please let me know if I have any of the facts wrong.

Cramer Airport Parking was a private company that competed with the airport parking owned by the local airport authority, the Susquehanna Area Regional Airport Authority which owned the Harrisburg airport. The airport charged more than Cramer and was operating at below capacity. The airport invoked its eminent domain power to seize Cramer's land, even though it apparently has announced no plans to put the land to any public use. Skip summarizes the eminent domain portion of the case as follows:

[Attorney General] Corbett does outline a persuasive case against HIA's invocation of eminent domain. The complaint alleges that HIA "has no actual plans for the Cramer property," and that the property isn't directly adjacent to the airport, which "precludes most development directly related to aviation." The complaint also cites unnamed employees of HIA as saying that the taking of the Cramer property is intended to eliminate the parking competition and to aid the airport in a "dispute with the Middletown Area School District on the imposition of a parking tax."

The PA AG's press release is here and adds the following facts from its complaint:

The Cramer land does not abut SARAA's property, and instead is surrounded by property owned by Amtrak and Norfolk Southern, plus other commercial and residential lots.

According to the complaint, Cramer Airport Parking offers 1,000 spaces less than one mile from HIA and can expand to 2,000 spaces. The current rates are $5 per day, $28 per week and a reduced fee if the customer uses available discount coupons. The parking facility provides shuttle service to the airport.

SARAA offers 2,474 parking spaces in its parking garage at the airport. The rates are $1 per hour for the first two hours and $2 for each additional hour up to a daily maximum of $14. Garage parking is adjacent to the HIA terminal.

In addition, SARAA offers 3,100 parking spaces at its Economy Long-Term Parking lot known as "SmartPark," less than a mile from the terminal by shuttle. Customers using that facility pay $5 per day and $30 per week. SARAA has the potential to expand its facility by 9,000 parking spaces using space in its daily lots, "SmartPark" and property in front of Penn State's Middletown Campus.

The complaint states that HIA parking lots already operate well below capacity. The airport also purchased property from Bethlehem Steel that remains undeveloped.

I haven't been able to determine whether Cramer challenged the eminent domain proceeding before launching the antitrust case, nor does it seem obvious that he would have succeeded. Even though there apparently is no plan to use the confiscated land for any sort of public use, Kelo seems to pretty clearly reject the idea that a specific plan for public use be proposed at the time of the taking. Moreover, by providing a monopoly to the city airport, presumably this will increase government revenues, which seems to put it within the capacious scope of Kelo. Other cases have permitted eminent domain to be used against churches as tax-exempt entities in order to turn their land over to private businesses (see Charles Haynes's summary of some of those cases as well as the Beckett Fund's amicus brief in Kelo).

So I don't see anything in Kelo that would prevent a city from condemning the property of its competitor so as to give itself a monopoly in the provision of an economic service, but perhaps I've missed something that readers can point out to me.

There is no indication whether the airport consulted with all of its "stakeholders" before condemning its competitor's business. Cramer has expressed its side of the story on its web site.

There is a point here, as well as in my post the other day on New Jersey. Boosters of Kelo might say that these are not the kind of takings that the Supreme Court had in mind. But the problem is that inherent in the Court's decision is an assumption about the nature of the political process, namely that it usually operates in a deliberative and even-handed fashion. As a result, the Court essentially put local governments on the honor system when it comes to use of the eminent domain power to take private property and give it to other private parties. There are very few other provisions in the Constitution where the Supreme Court has decided to simply leave the protection of constitutional rights up to the democratic processes--imagine if the Supreme Court interpreted the First Amendment, Fourth Amendment, or Fifth Amendment in the same "honor system" manner that it has interpreted the "public use" clause.

And I submit that what underlies this hands'-off approach of the Supreme Court is a particular assumption about the nature of the political process, that in can be trusted in taking people's property, but not for protecting speech, religion, or criminal rights. So the corruption and self-interest of local governments in using the eminent domain power is plainly a part of this debate, because it goes to the central core of the proposition embraced by the Supreme Court, that it can trust the political process in this area more than with respect to other rights. I disagree that the political process can be trusted any more here than anywhere else. If anything, the defects of the political process are even greater here because of the opportunities for individuals and governmental actors to use political processes transfer wealth to themselves from others (searching a house without a warrant, for instance, harms the suspect but there is no particular benefit to the government from doing it).

Indeed, Madison warned in Federalist 10 that factions are most dangerous when it came to the protection of property precisely because of the incentives that private actors have to plunder the property rights of others. And what we are seeing in cases such as this one (and the New Jersey case) is that the Court's assumption in Kelo that the political process can be trusted to prevent improper use of the eminent domain power rests on a questionable characterization of the political process.

My personal view is that the honor system should never apply to the protections of the Bill of Rights--whether the First, Second, Fourth, or even the Takings Clause of the Fifth Amendment. Nor do I find it persuasive to argue that because a majority of Americans reject Kelo and are moving against it legislatively to think that shows that the Court isn't necessary. A majority of Americans also presumably support the Free Speech and Free Exercise Clauses of the Constitution but that doesn't seem like a very good argument to me that therefore the Supreme Court should stop enforcing those too.

Prof. Zywicki is a very smart man. He KNOWS Kelo did not create a safe harbor for any taking that "increases government revenues." He KNOWS Kelo did not purport to set an outer boundary, nor did it say that due to the lack of an outer boundary, any taking is permissible. But instead of using his blog space to clarify and explain the myths of Kelo, he chooses to perpetuate them. It's deeply disappointing.

No, Kelo does not say that this particular taking is unconstitutional, any more than Brown v. Board of Education does. But that hardly makes the taking constitutional; it is simply a new, more extreme case.

I would think there are a lot of good arguments for reading "public use" more stringently, but if the best that an intelligent law professor can do is to invoke this bogeyman that "anything goes" because of Kelo, maybe there aren't any good arguments after all.
10.17.2005 12:57pm
You miss one check on the abuse of the takings clause that does not exist for First or Fourth Amendments--the requirement to pay compensation for the property taken.

A person can chose to waive his or her First or Fourth Amendment rights, but the compensation clause gives the government the right to, in effect, force a waiver of the right to private property.
10.17.2005 1:02pm
"My personal view is that the honor system should never apply to the protections of the Bill of Rights--whether the First, Second, Fourth, or even the Takings Clause of the Fifth Amendment."

Too late on the Second.
10.17.2005 1:05pm
HeScreams (mail):
The way I understand it, Kelo didn't loosen the precidents for takings. Wasn't the court just following Midkiff?

If there was anything new in the Kelo case, I don't see that it was an implementation of an "honor system" for local governments, but rather a careful outline -- in Kennedy's concurring opinion -- of the vetting and re-vetting of the New London takings by the Conn. state courts. The opinion states that the state courts investigated the political process that generated the New London takings, and found that they were politically honest. With no reason to believe that these investigations are wrong or flawed, the Supreme Court is defers to the state courts, implying that there is already a check-and-balance in place.

It's a restrained decision, but it also outlines how another taking, like the airport in the above post, might not pass muster under Kelo. If this case were to go to court under emminent domain arguments, it would be up to the courts involved to investigate the legislative history of the taking and use that information in its ruling. If this case got to the Supreme Court, it would be the quality and findings of those investigations that would decide if this is another New London, or something more sinister.

Based on the description in the post, it sounds more sinister, and I'm betting it would not be protected by Kelo.
10.17.2005 1:53pm
David M. Nieporent (www):
Prof. Zywicki is a very smart man. He KNOWS Kelo did not create a safe harbor for any taking that "increases government revenues."

That's true. The Court wasn't even willing to impose that minimal requirement. All that is required is a rational basis for believing that the taking might hypothetically increase government revenues in some bizarro world in which we all agree to pretend that centralized economic planning by local functionaries actually works.

He KNOWS Kelo did not purport to set an outer boundary,

Exactly. In fact, it did the opposite; it declined to set an outer boundary. It actually set a minimum outer boundary which effectively swallowed the universe of potential outer boundaries.

nor did it say that due to the lack of an outer boundary, any taking is permissible.

Right. It intimated that some theoretical taking might be impermissible if the local government is so stupid that it openly admitted it was engaged in the taking for nefarious purposes.


HeScreams: Even if Kennedy's concurring opinion was controlling -- it isn't, since he also joined the majority opinion -- Kelo essentially defined the appropriate standard of federal court review as rational basis. Do you really think the local authority in the airport case above -- even if it "sounds sinister" -- couldn't supply an argument that would satisfy the minimal scrutiny of rational basis?
10.17.2005 2:37pm
Nick (www):
I find this quotation from the linked article to be the most humorous:

The first problem with the use of antitrust law here is the jurisdictional paradox. The Commonwealth of Pennsylvania is essentially suing one of its own subdivisions in federal court for violating a federal law. No state law charges are raised in the complaint. (Presumably Pennsylvania has state laws that mirror the federal Sherman and Clayton Acts.) This means HIA's actions must constitute interstate commerce to fall under federal jurisdiction. But even the most expansive construction of "interstate commerce" cannot be read to deal with a purported market for parking at a single airport. This is precisely the sort of legal matter that needs to be dealt with under state law.

So now the government is actually going to support a strict interpretation of the commerce clause? Oh that's right... this is actually one place where a strict interpretation benefits the government. If only us regular folks could cherry pick it like that.
10.17.2005 2:40pm
David M. Nieporent (www):
But even the most expansive construction of "interstate commerce" cannot be read to deal with a purported market for parking at a single airport.

What a bizarre argument. This one isn't even a close call. If staying at a hotel can be interstate commerce, then parking at an airport obviously is. Given Raich's reaffirmation of the logic of Wickard, how on earth can any person make the above claim?

Not that I endorse such an expansive reading, to be sure -- but the expansive reading that currently represents the law clearly encompasses parking at an airport.
10.17.2005 2:46pm
cfw (mail):
I agree with Public Defender - just compensation for takings makes the 5th JCC different from the 4th and self incrimination protection under the 5th.

I write to object to use of propaganda about "plunder" and similar language:

"Indeed, Madison warned in Federalist 10 that factions are most dangerous when it came to the protection of property precisely because of the incentives that private actors have to plunder the property rights of others."

Opponents of Kelo like to pretend they are stopping plunder, or uncompensated taking. They need to clean up the rhetoric, eh?

If this is a violation of the antitrust laws, it can be litigated as such. Why that means we need to change the laws about ED escapes me. Having lived in Carlisle for 2 years, about 30 miles from Harrisburg, I doubt that there is enough of a land sarcity to allow monopoly pricing by the airport. I am also not seeing any convincing evidence of intent to monopolize. Perhaps the owner of the land is simply flinging mud, hoping some will stick, and that will mean more money for himself (and his lawyer)?
10.17.2005 2:48pm
Mark F. (mail):
I hate the government forcing people to sell their property as much as anyone, but why is the "Incorporation Doctrine" such a sacred cow? It's clear to me that the 14th Amendment was not intended to apply the Bill of Rights to the states (see the writings of R. Berger).

For every decision of the Supremes striking down bad state laws, there have been 10 decisions increasing Federal governmental power. The idea that if we just get the "right" judges in there we will then be on our way to some limited government utopia is pure Randy Barnett fantasy.

Decentralization and extreme Federalism are imperfect, but they seem preferable to the growing Federal quasi-dictatorship. And judges should not be permitted to twist the Constitution into knots to support their policy preferences.

I think that post-Kelo, the ~general~ direction the states are taking regarding property rights is positive.
10.17.2005 3:15pm
HeScreams (mail):
D. Neiporent:

Kennedy's opinion may not be controlling, but doesn't it signal a list of conditions that would inspire his defection from the majority? He seems to be outlining an example of the minimum standard for a case that would get his vote. Since Kelo was 5-4, his opinion seems to carry some weight (due to the threat of his defection). I realize that this isn't precident, though.

As far as the rational basis test goes, I'm not sure that Kelo defines it as the standard for review. In my reading, the opinion outlines something stronger. But this case is pretty blatant; the motive is obviously anti-competition. If that doesn't fail rational basis, then I give up.

...I guess proceeding on antitrust grounds is the safer route, though.
10.17.2005 3:20pm
Unnamed Co-Conspirator:
Mark F. gets it. The Kelo case should have made its last stop in Connecticut, not in the US Supreme Court.
10.17.2005 6:38pm
lyle (mail):
All: PA does NOT have a state Sherman/Clayton Act, or any state antitrust legislation. You can try to argue common law as the basis for antitrust, but I haven't heard of it being done recently.
10.17.2005 9:59pm
c&d (mail) (www):
"<i>I don't see anything in Kelo...</i>"
The Court deals with controversies on a case by case basis, so expecting to find something in Kelo that addresses this new (and quite different) case is a bit silly. Kelo focuses on the facts of that case and has a good amount of cautionary language not to do what Zywicki does: assume Kelo opens the door to corrupt takings.

-my comments
="the city could not take petitioners' land simply to confer a private benefit on a particular private party"
-it could be inferred that a city cannot also take private property simply to stifle competition when acting as a private party (say, selling parking).
="the takings at issue here would be executed pursuant to a carefully considered development plan, which was not adopted "to benefit a particular class of identifiable individuals,""
-Here, you have no plan to benefit a particular identifiable business
="The city's determination that the area at issue was sufficiently distressed to justify a program of economic rejuvenation is entitled to deference."
-Here, there is no evidence of economic distress or need for rejuvenation
="Promoting economic development is a traditional and long accepted governmental function, and there is no principled way of distinguishing it from the other public purposes"
-Here, the airport would not be promoting economic development, but the opposite.

And, from Kennedy, "A court . . . should strike down a taking that, by a clear showing, is intended to favor a particular private party, with only incidental or pretextual public benefits"
-If the taking here is so clearly bad, the parking lot owner will be able to make "a clear showing" in court.
="My agreement with the Court . . . does not foreclose the possibility that a more stringent standard of review . . . might be appropriate for a more narrowly drawn category of takings . . . . This is not the occasion for conjecture as to what sort of cases might justify a more demanding standard."
10.18.2005 12:23am
It looks like the democratic check on takings is working in New London. According to the local paper (The Day), the city has voted to break ties with the NLDC and remove the NLDC's authority to act on behalf of the city.

Untangling the contracts could be a litigator's paradise, but the democratic process appears to be working, just like the Kelo majority said it could.
10.18.2005 8:22am
Adrock (mail) (www):
I say bravo to your reasoning sir.
10.19.2005 12:43pm