Property Rights Three Years After Kelo, Part II - The State of the States:

Since Kelo was decided exactly three years ago, a remarkable 42 states have enacted new eminent domain reform laws - a more extensive legislative response than that generated by any other Supreme Court decision. By my count, at least five state supreme courts have issued decisions limiting takings under their state constitutions, including two (Ohio and Oklahoma) which held that Kelo-style "economic development" condemnations are forbidden under their state public use clauses.

How much real progress has been made in protecting property rights in the states? Not nearly as much as many people hoped, but a lot more than probably would have occurred without Kelo.

I. State Legislation.

I have discussed state post-Kelo legislation in great detail in this article. The article covers all state post-Kelo reforms, except for California's recently passed Proposition 99, which I criticized here, and in several entries in this series of posts.

To briefly summarize my findings, 35 state legislatures have passed eminent domain reform laws since Kelo, and eleven states (including California's Prop 99) have enacted such reforms by referendum (a few states have done both). However, 21 of the 35 laws enacted by state legislatures only pretend to limit takings and don't impose any real restrictions Kelo-like condemnations. The same is true of four of the 11 reforms enacted by referendum. The most common subterfuge is to ban takings for "economic development" but allow them to continue under another name as "blight" condemnations, utilizing a definition of "blight" broad enough to cover virtually any property.

Moreover, many of the states that have enacted effective reforms are ones that rarely or never engaged in economic development takings anyway. For example, the state of South Dakota has enacted one of the strongest post-Kelo laws in the entire country. But in the years preceding Kelo, South Dakota did not initiate even one blight or "economic development" taking. By contrast, many of the states with the worst records on property rights have enacted ineffective legislation or none at all. These states include California, New York, New Jersey, and Texas. For reasons I advance in the article, the most compelling explanation for this pattern is that most voters lack the knowledge necessary to tell the difference between effective reforms and purely symbolic ones. Survey evidence shows that no more than 13% of Americans both know whether their state has enacted eminent domain reforms since Kelo, and know whether those reforms are likely to be effective or not.

That said, a number of states with extensive records of eminent domain abuse have enacted strong reform laws, with Florida (which adopted the strongest reform in the entire country) and Indiana being the best examples. Moreover, as I explain in the paper, reforms enacted by citizen-initiated referendum initiatives have generally proven far stronger than those enacted by state legislatures (though Proposition 99 - drafted by pro-condemnation interest groups, is an important exception). Thus, the Kelo backlash has led to some important progress in state eminent domain legislation.

It is highly unlikely that any of these states would have moved to curtail eminent domain were it not for Kelo. In the decade prior to Kelo, only one state (Utah) had passed a reform law forbidding economic development takings.

II. Developments in State Courts.

Since Kelo, at least five state supreme courts have banned or limited economic development takings under their state constitutions. Two of these, Ohio and Oklahoma, held that Kelo-like condemnations are categorically forbidden under their states' constitutions. The Ohio case, City of Norwood v. Horney, is particularly important because it addresses blight takings as well as pure economic development condemnations. Significantly, no state supreme court has gone the other way in recent years, with the exception of the Connecticut Supreme Court's narrow 4-3 ruling in Kelo itself.

It is difficult to say whether these state court rulings are a reaction against Kelo or not. Unlike in the case of state legislative developments, recent state supreme court decisions forbidding or restricting economic development takings are a continuation of a preexisting trend. In then ten years prior to Kelo, the supreme courts of Michigan, Illinois, Montana, and South Carolina all held that economic development takings violate their state constitutions, with Kansas being the only state supreme court that ruled the other way during that time. The 2004 Michigan case (which I analyzed in this article), was especially significant because it overruled that court's notorious 1981 Poletown decision, which had upheld the forcible displacement of some 4000 people in Detroit so that General Motors could acquire land for a new factory.

All told, eleven state supreme courts now forbid economic development takings under their state constitutions, and nine of them reached this conclusion before Kelo. However, it is significant that the Supreme Court's ruling in Kelo did not influence state supreme courts to interpret their state constitutions in the same way. Back in the 1950s, the Supreme Court's decision in Berman v. Parker, which held that "blight" condemnations are permissible under the Fifth Amendment's Public Use Clause, helped convince state courts to rule the same way under their state constitutions (as nearly all did). As a result, hundreds of thousands of people were forcibly displaced by "urban renewal" and blight takings during the 1950s and 60s (a history summarized on pp. 268-71 here). By contrast, the Ohio and Oklahoma supreme courts have both repudiated Kelo as a potential guide in interpreting their state constitutions and no other state supreme court has embraced it.