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Property Rights Three Years after Kelo I - Why Kelo Was Better than Previous Supreme Court Public Use Decisions:

Three years ago today, the Supreme Court decided Kelo v. City of New London, the case in which it held that the Public Use Clause of the Fifth Amendment does not forbid government to transfer property from one private owner to another in order to promote "economic development." The Court ruled that "economic development" by private parties is a "public use" of the condemned property and therefore such takings are permissible.

Kelo stimulated a broader political backlash than any other Supreme Court ruling in American history. As I documented in this article, the decision was opposed by at least 80% of the general public and was condemned by politicians and activists from across the political spectrum. It also led 42 states and the federal government to enact new laws purporting to restrict eminent domain power - a more extensive legislative response than that generated by any other Supreme Court decision.

The third anniversary of Kelo is an excellent opportunity to assess the state of property rights today. On the whole, I think there has been considerable progress over the last three years, even if not as much as some hoped. The cause of property rights is ultimately better off with the Kelo decision than it would have been without it. In this post, I explain why Kelo, severely flawed as it is, was an improvement over what came before. In followup posts, I will briefly summarize progress in protecting property rights at the state level, and consider the new political alliances for property rights that Kelo made possible.

As I explained in this 2007 Supreme Court Economic Review article, Kelo leaves property owners almost completely unprotected against takings. As such, it was definitely a defeat for property owners. Moreover, the Court also misapplied early twentieth century "substantive due process" cases to falsely claim that there was a 100 years of precedent supporting its conclusion that virtually any taking is permissible under the Public Use Clause of the Fifth Amendment (see pp. 240-44 of the SCER article).

Nonetheless, Kelo was a significant improvement over Hawaii Housing Authority v. Midkiff (1984) and Berman v. Parker(1954), the Court's two previous important Public Use decisions. These two cases had held that any governmental purpose could be a "public use" justifying condemnation so long as it was "rationally related to a conceivable public purpose." By contrast, the Kelo majority opinion imposed a slightly stricter (though still extremely permissive) test on economic development takings and Justice Kennedy's concurring opinion held out the prospect that some takings could be invalidated if there was too much "favoritism" towards private parties (these aspects of Kelo are analyzed in great detail on pp. 227-240 of my SCER article).

Far more important than the majority's insignificant new protections for property owners is the sheer fact that Kelo was a close 5-4 decision in which the dissenters argued that "economic development" takings that transfer property to private parties are categorically banned by the Fifth Amendment. This marks a sea change from the "anything goes" approach unanimously adopted in Midkiff and Berman. Ironically, Justice Sandra Day O'Connor - the author of the Court's ultra-permissive opinion in Midkiff - also wrote the principal dissent in Kelo. In her Kelo dissent, O'Connor event went so far as to repudiate what she somewhat misleadingly called the "errant language" she herself had written back in 1984.

Before Kelo, most experts believed that the Public Use Clause was essentially dead as a meaningful restriction on eminent domain. Since 2005, the issue is once again very much alive. Kelo probably won't be overturned in the near future. But the Court's permissive approach to public use is no longer cast in stone, as most experts believed it was before Kelo.

UPDATE: I have corrected the typo in which I accidentally indicated that Midkiff was decided in 1954 rather than 1984.

Cornellian (mail):
Even first year law students can (or at least should) be able to tell the difference between Due Process Clause cases and public use cases.

And yet when that first year student asks why the deprivation of property jurisprudence runs along two parallel tracks depending on whether it's a due process or takings case, the courts, the bar and the academy are all at a loss to give a convincing explanation.

Far more important than the majority's insignificant new protections for property owners is the sheer fact that Kelo was a close 5-4 decision in which the dissenters argued that "economic development" takings that transfer property to private parties are categorically banned by the Fifth Amendment.

A reading of the Fifth Amendment as penumbral as it is popular.
6.23.2008 2:01am
Vernunft (mail) (www):
I don't think you know what penumbras are.
6.23.2008 2:26am
J. Aldridge:
Sen. Howard opposed Rep. Bingham's attempt to add the takings clause to the 14th Amendment.

Wonder why fools today think it is a federal matter?
6.23.2008 2:45am
Lior:
Did O'Connor really serve on the court for fifty years? Surely she didn't author an opinion in 1954 and then a dissent in 2005?
6.23.2008 2:48am
Some_3L (mail):
A google search shows that Hawaii Housing Authority v. Midkiff was decided in 1984, not 1954.
6.23.2008 3:36am
John Herbison (mail):
Kelo stimulated a broader political backlash than any other Supreme Court ruling in American history.


Huh?? To be sure, Kelo was an abomination which spawned a considerable backlash, but Dred Scott v. Sanford led, at least indirectly, to the bloodiest war in American history. United States v. Nixon led to the only presidential resignation in American history.

Roe v. Wade is probably the single greatest factor giving rise to the decades long, current day culture war, although the reaction to Schempp v. Abingdon Township School District and Lawrence v. Texas contributed to that as well. Neither should the backlash against Brown v. Board of Eduction, Heart of Atlanta Motel and Swann v. Mecklenburg County be discounted. The Kelo backlash never required engagement of the National Guard.

Professor Somin, hyperbole does not become you.
6.23.2008 3:54am
tvk:
Ilya, this might appear somewhat snarky, and I can only preface it by saying that I don't mean it to be. But you repeatedly quote the high percentage of the public that disapproves of Kelo. At the same time, as you have frequently noted, the public is exceedingly ignorant. In my mind, this general ignorance makes the public opinion polls on Kelo unreliable because they likely reflect nothing more than a knee-jerk reaction: "taking people's homes—bad." If you frame the question somewhat differently, e.g. "Are you willing to pay higher taxes and have reduced job opportunities as the price of curtailing eminent domain condemnation of property belonging to politically powerless or unpopular owners (i.e. other people)?" I'm not sure the opposition to eminent domain will be nearly as strong.
6.23.2008 4:41am
Public_Defender (mail):

Kelo leaves property owners almost completely unprotected against takings.


"Almost completely unprotected"? Hogwash. Government still has to pay property owners for their property at a rate determined by a jury of their peers. That's a heckuva lot of protection.

You make a lot of very reasoned (if democratically unpopular) arguments against government interference with property rights. You don't have to get this shrill.

The reality is that most people are willing to accept some restriction on their property rights in order to have some control over noxious property uses by others.
6.23.2008 7:09am
Bob Ewing (mail) (www):
Susette Kelo, the lead plaintiff in Kelo v. City of London, is organizing a one-day online donation drive today (Monday, June 23) to help draw national attention to property rights and end eminent domain abuse.

As Ilya mentions, today is the three-year anniversary of the infamous U.S. Supreme Court Kelo decision that ruled Susette's house, and every house in America, can be bulldozed for private development projects.

She is mobilizing activists nationwide to join her newly created Susette Kelo Liberty Club, where members simply pledge to make a special one-day small-dollar donation for private property rights. Pledges are made here: http://www.ij.org/KeloDay/

Every dollar raised by Susette today will go directly to fighting eminent domain abuse.
6.23.2008 9:32am
Stacy (mail) (www):
What about the wave of state/local legislation that was predicted at the time as a part of the public backlash? Did that ever really happen?

"The reality is that most people are willing to accept some restriction on their property rights in order to have some control over noxious property uses by others."

Different issue (and different SCOTUS cases) There's a huge distance between regulating what kind of use a property can be put to, and forcing people to sell their homes for a very dubious "fair market value". And FWIW not everyone actually understands how zoning protects their interests. At least one friend of mine, who is an extremely knowledgeable and intelligent person (and a political libertine) just plain doesn't see how having a gas station or a slaughterhouse next door would be a financial hit for him. HE wouldn't care, if it were him looking at the house, so why would anyone else...
6.23.2008 9:32am
David M. Nieporent (www):
"Almost completely unprotected"? Hogwash. Government still has to pay property owners for their property at a rate determined by a jury of their peers. That's a heckuva lot of protection.
False on two fronts. First, it obviously isn't a "heckuva lot of protection," because if a property owner was willing to accept such an amount, the government wouldn't need to use eminent domain at all.

Second, it costs a substantial amount of money to bring a proceeding to challenge an eminent domain seizure -- money that isn't recoverable. (Isn't inherently recoverable; a state statute may provide for attorney's fees in such an action.) So a property owner is protected only against substantially below market offers.
6.23.2008 9:44am
David M. Nieporent (www):
Wonder why fools today think it is a federal matter?
Probably because "fools today" don't buy your ludicrous theory that a purported congressional committee report retroactively interprets the constitution, particularly when the person you keep citing as the author of that report is on record as saying exactly the opposite of what you claim he said.
6.23.2008 9:45am
Dave S (mail) (www):
As with Public_Defender, I also take issue with the notion that property owners are "almost completely unprotected." The compensation element still creates a significant hurdle. Also, the condeming authority isn't just a jury of the homeowner's peers; rather, the "taker" is invariably democratically vulnerable (this obviously assumes that they are vulnerable to the condemnees -- which is, admittedly, not often the case).

It's difficult to say how effective these hurdles are, but I think we can use the occurrence of takings as a relatively reliable proxy for that information. Based on Dana Berliner's 2003 study, Public Power, Private Gain: A Five-Year, State-by-State Report Examining the Abuse of Eminent Domain, showed recounted 10,282 cases of actual or "threatened" takings across all fifty states and the District of Columbia during a five year period. While this number is not insignificant, it is approximately forty properties per state per year. This amounts to a tiny fraction of properties in each state -- and this number includes "threatened" as well as actual takings. I don't know that the facts bear out the assertion that homeowners are "almost completely unprotected."

Of course, I could be wrong about the cause of these numbers -- it could be a result not of the checks of compensation, public use, and democracy, but some other "check."
6.23.2008 9:46am
J. Aldridge:
David M. Nieporent said:

"Probably because "fools today" don't buy your ludicrous theory that a purported congressional committee report retroactively interprets the constitution, particularly when the person you keep citing as the author of that report is on record as saying exactly the opposite of what you claim he said."

That is what you and one other keeps harping but yet have not shown any evidence that in fact that is the case. Why was Sen. Howard forced to resort to the clause "The United States shall guarantee to every State in this Union a Republican Form of Government" for authority to impose upon the State of Mississippi the right of colored children to attend public schools in the year 1871?

Maybe because he knew the 14th amendment granted no such authority?
6.23.2008 10:15am
Javert:

"Almost completely unprotected"? Hogwash. Government still has to pay property owners for their property at a rate determined by a jury of their peers. That's a heckuva lot of protection.

Maybe for the "compensation" that a property is forced to accept, but certainly not for the taking.
6.23.2008 10:56am
robc:
Stacy,

2 things:

1. political libertine? I dont think that word means what you think it means. Larry Craig is a "political libertine". :)

2. While your friend may not care what is next door, but some of us do care (I have a small, empty lot next to my new house, I hope nothing gets built there), but believe in property rights enough to oppose opposing things. I bought my house with the full risk of something I dont want being built next to me (because of current zoning laws, that is restricted to a shotgun house way to close to my house and my current neighbors house). There is (or shouldnt be, anyway) a guarantee that your property value will be protected for all eternity. If I dont want property around me being used for a purpose I dont want, I should buy it (which is what Im trying to do with the empty lot).
6.23.2008 11:02am
Javert:
Ilya,

You mentioned Midkiff and Parker as "the Court's two previous important Public Use decisions." Do you see Strickley (1906) as a third, in that the Court allowed a taking from one private party (Strickley) to benefit another private party (Highland)?
6.23.2008 11:04am
Javert:
corr at 9:56: insert "owner" after "property"
6.23.2008 11:08am
Stacy (mail) (www):
robc: "
1. political libertine? I dont think that word means what you think it means. Larry Craig is a "political libertine". :)
"

Heh, well my point (which I articulated poorly) was supposed to be that my friend has views that would explain his notion that the person next door should be able to do whatever they want, but that from talking with him on numerous occasions the real explanation seems to be that he just doesn't get that someone nextdoor or down the street could use their property in ways that could harm him. He is very political, and is also definitely a libertine by any accepted definition of that word...

"2. While your friend may not care what is next door, but some of us do care (I have a small, empty lot next to my new house, I hope nothing gets built there), but believe in property rights enough to oppose opposing things. I bought my house with the full risk of something I dont want being built next to me (because of current zoning laws, that is restricted to a shotgun house way to close to my house and my current neighbors house). There is (or shouldnt be, anyway) a guarantee that your property value will be protected for all eternity. If I dont want property around me being used for a purpose I dont want, I should buy it (which is what Im trying to do with the empty lot)."

I can see this explanation RE property value alone, but that's not the only consideration. Zoning was originally a reform that guaranteed middle and lower class people a place to live that wasn't right next to a smokestack industry, meatpacking plant, the red light district etc. Not coincidentally, it also ended a plague of litigation based on such juxtapositions. There's a good argument to be made that zoning protected everyone's economic interests (in addition to their health and wellbeing) by removing the risk that your nice picket-fenced neighborhood will be invaded by a porn shop, or that your smooth-running factory will be dragged into expensive litigation by a johnny-come-lately homeowner.
6.23.2008 12:27pm
Javert:

I can see this explanation RE property value alone, but that's not the only consideration. Zoning was originally a reform that guaranteed middle and lower class people a place to live that wasn't right next to a smokestack industry, meatpacking plant, the red light district etc.

The consideration is that zoning, as a type of collectivist central planning, violates the individual's right to the use of his property.

If you don't want your neighborhood "invaded by a porn shop," then move into one that has restrictive covenants -- which are a voluntary, uncoerced contract. Or buy the property and use it as you please.

If we had property rights, the "johnny-come-lately" would have no legal basis for such a lawsuit.
6.23.2008 2:11pm
Ilya Somin:
Even first year law students can (or at least should) be able to tell the difference between Due Process Clause cases and public use cases.

And yet when that first year student asks why the deprivation of property jurisprudence runs along two parallel tracks depending on whether it's a due process or takings case, the courts, the bar and the academy are all at a loss to give a convincing explanation.


You are confusing the regulatory takings cases (where such parallel tracks really do persist) with public use (where they don't). The early 20th century cases dealt with these issues under the Due PRocess Clause only because the Fifth Amendment was not (yet) believed by the Supreme Court to have been incorporated against the states. So the Due Process Clause was the only available tool for property ownes to challenge state government takings.
6.23.2008 2:19pm
Bob Koss (mail):
For those interested in how the Kelo decision is working in New London. Barren land.
6.23.2008 6:58pm
TDPerkins (mail):

That's a heckuva lot of protection.


Yes. And law enforcement is filled with a new professionalism.

Say, could you use a bridge?

Yours, TDP, ml, msl, &pfpp
6.23.2008 9:32pm