The Volokh Conspiracy - 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.

	[Todd Zywicki, October 17, 2005 at 11:30am] Trackbacks 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.