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From: IMLA [info@imla.org]
Sent: Thursday, July 21,20051 :59 PM
To: Attorney
Subject: Updated Anti-Eminent Domain Legislation
l0 lnte~ational Municipal Lawyers
_AssoclallOll____ _ __'._
The National League of Cities has just passed along word that Senator Bond withdrew his
amendment to the Appropriations Bill, stating that he would reintroduce it when the bill
comes to the floor. We are still not in possession of the amendment's text, though certain
Senate staff sources indicate the amendment may read something like this -- "no federal
fimds may be usedfor any project that exercises eminent domain for a non-public use." If
this is the language, it is an interesting choice, because Kelo says that economic
development is a "public use."
IMLA and NLC expect that this is just the beginning of a long legislative battle. We will
keep the membership apprised of developments.
We thank everyone who mobilized to place calls to the Senate and hope we can count on
your continued support.
Attached is a short paper written by John Echeverria of the Georgetown University
Environmental Law & Policy Institute, which you may find interesting.
IMLA Legal Staff
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07/2l/2005
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Georgetown Environmental
Law & Policy Institute
The Myth That Kelo Has Expanded the Scope of Eminent Domain
John D. Echeverria
July 18, 2005
In the wake of the Supreme Court's June 23,2005, decision in Kelo v. City of
New London, some have contended that the Court's decision expanded government
authority to condemn private property for economic development. For example, a story
in The Washington Post states, "The ruling greatly broadened the types of projects for
which government may seize property to include not only bridges and highways but also
slum clearance and land redis-tribution." The idea that Kelo expanded the law of
eminent domain is simply incorrect.
r. The Law Before Keto
In the modern era prior to Kelo, there were basically four Supreme Court cases
dealing with the use of eminent domain for economic development. In each of these
cases the Court, applying a deferential standard, upheld the use of eminent domain
because the taking was found to serve a legitimate public purpose and the owner received
just financial compensation.
National R.R. Passenger Corn. v. Boston & Maine Corp., 503 U.S. 407 (1992),
involved an Interstate Commerce Commission order requiring one railroad to transfer a
rail line to a second railroad. The ICC issued the order because the first railroad had
neglected to maintain a portion of the line which carries the Amtrak "Montrealer"
through New England, and it believed the second railroad would do a better job of
maintaining the line. The Court unanimously rejected the first railroad's objection that
the taking was not for a public use because the use of the rail line would not physically
change. The Court said it could not "strike down a condemnation... so long as the taking
is rationally related to a conceivable public purpose." In this case, Justice Kennedy said,
"there can be no serious argument that the ICC was irrational in determining that the
condemnation will serve a public purpose by facilitating Amtrak's rail service. That
suffices to satisfY the Constitution...."
GEORGETOWN UNIVERSITY LA W CENTER
600 New Jersey Avenue, N.W. Washington, D.C. 20001 (202) 662-9850 (202) 662-9005 (fax) gelpi@law.georgetown.edu
Hawaii Housing Authoritv v. Midkff, 467 U.S. 229 (1984), involved a challenge to a
Hawaii statute designed to deal with the problem that a very few owners held most of the
private land in the state. The statute required owners of large holdings, under certain
conditions, to sell residential lots to individual citizens so that they could own their own
homes. The unanimous Court, in an opinion by Justice O'Connor, recognized that the
Constitution does not permit a compensated taking "for no reason other than to confer a
private benefit on a particular private party." However, the Court said it had an
obligation to uphold the use of eminent domain where it is "rationally related to a
conceivable public purpose." Under that standard, Justice O'Connor concluded that the
Hawaii statute was constitutional. "Regulating oligopoly and the evils associated with it
is a classic exercise of a State's police powers."
Ruckleshaus v. Monsanto, 467 U.S. 986 (1984), involved a takings challenge to the
Federal Insecticide, Fungicide, and Rodenticide Act. The Act authorizes the
Environmental Protection Act to rely on trade secret data submitted by a prior pesticide
applicant in considering the application of a subsequent applicant, subject to payment of
compensation to the first applicant. While it acknowledged that subsequent applicants
permitted to exploit confidential business information in this fashion were the "most
direct beneficiaries," the Court had no difficulty concluding that this use of the eminent
domain power served a public use.
Finally, Berman v. Parker, 348 U.S. 26 (1954), involved a major urban
redevelopment project in southwest Washington, D.C. that displaced numerous
homeowners, renters, and small businesses. The owner of a non-blighted department
store in the redevelopment area challenged the taking as not being for a public use. The
Court unanimously rejected the challenge, reasoning that the eminent domain power can
be exercised to achieve any legitimate legislative objective. "Subject to specific
constitutional limitations, when the legislature has spoken, the public interest has been
declared in terms well-nigh conclusive.... This principal admits of no exception merely
because the power of eminent domain is involved." The Court also rejected the argument
that eminent domain can only be used to eliminate "slum" properties. "It is within the
power of the legislature to determine that the community should be beautiful as well as
healthy, spacious as well as clean, well-balanced as well as carefully patrolled."
These modern decisions are consistent with a long line of Court decisions stretching back
to the 19th century. Indeed, if anything, the older decisions even more emphatically
uphold the power of government to take and retransfer property, upon payment of just
compensation, in order to promote economic development. To cite a few examples, in
Head v. Amoskeag Manufacturing. Co., 113 U.S. 9 (1984), the Court authorized a
manufacturing company to build a mill pond that flooded upstream landowners so that it
could produce hydropower to drive a manufacturing facility. In Strick ley v. Highland
Bav Gold Mining Co., 200 U.S. 527 (1906), the Court approved condemnation of a right
of way over private property so that a private mining company could operate an aerial
bucket line to its mine. And in Fallbrook Irrigation District v. Bradley, 164 U.S. 112
(1896), the Court upheld condemnation so an irrigation district could build an irrigation
ditch across neighboring private property.
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II. The Law After Kelo
In light of the state of the law prior to Kelo, it is incorrect to suggest that Kelo
broke new ground and expanded government's power of eminent domain. If anything,
Kelo moved the law in the direction of /IIore restrictions, not fewer restrictions, on the
use of eminent domain for economic development.
The Court affirmed a decision by the Connecticut Supreme Court upholding use
of eminent domain to assemble over 100 separate parcels within a 90-acre area
characterized by high vacancy rates, significant disinvestment and neglect. The City of
New London has lost a substantial portion of its population and suffers an employment
rate twice the state average. Seeking to take advantage of the economic spark generated
by the decision of the Pfizer company to construct a major new facility on an adjacent
site, the city sought to implement a comprehensive redevelopment of the area for
residential, commercial, office, and recreational purposes.
The Court said that New London's redevelopment plan easily met the public use
test. "It would be incongruous," the Court said, "to hold that the City's interest in the
economic benefits to be derived from the development of the Fort Trumbull area has less
of a public character than any of... [the] other interests" endorsed in prior cases.
Applying its deferential standard for local legislative judgments about how and when to
deploy the eminent domain power, the Court also rejected plaintiffs' novel argument that
it should demand a "reasonable certainty" that the redevelopment program would actually
succeed.
Significantly, none of the dissenters in Kelo made a strong argument that the
majority opinion departed from longstanding precedent. Justice O'Connor acknowledged
that her position was inconsistent with the language, if not the specific holdings, of
Berman and Midkiff. She suggested that those decisions could be distinguished on the
ground that eminent domain had been used to address an "extraordinary,
precondemnation condition of the targeted property [that] inflicted affirmative harm on
society." But, in reality, nothing in the analysis or facts of those cases - much less the
full body of relevant Supreme Court precedent - supports a sharp distinction harm-
preventing and benefit-conferring government action. Furthermore, as Justice Scalia
observed in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), this
difference is often "in the eye of the beholder," making it a weak potential basis for
distinguishing action that serves a legitimate public use.
Justice Thomas argued, based on the language and original understanding of the
phrase public use, that eminent domain should be used only when the public will own the
property or have a legal right to use it. But this constitutional analysis is fundamentally
flawed. Dictionaries (modern and old) include public "advantage" among the definitions
of public use, meaning that actions which serve a legitimate public purpose fit
comfortably within the language "taking for a public use." Moreover, other scholarly
examinations of the constitutional history indicate the drafters intended the phrase
"public use" to impose few, if any, constraints on the eminent domain power. See, e.g.,
Mathew P. Harrington, '''Public Use'" and the Original Understanding of the So-Called
'Takings' Clause," 53 Hastings LJ. 1245 (2002). Justice Thomas acknowledged that his
position required overruling over a century of Supreme Court precedent. This candid
statement confirms that Kelo does not expand the eminent domain power.
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Even as it followed well-settled precedent in Kelo, the Court placed new limits on
the use of eminent domain for economic development purposes. First, the Court
emphasized that New London was seeking to implement a "carefully considered
development plan" for the area based on "thorough deliberation," including several
public hearings and explicit approvals by the city council. The Court indicated that
while it approved this type of carefully considered redevelopment program, it would not
necessarily uphold "a one-to-one transfer of property, executed outside the confines of an
integrated development plan." The Court's virtual mandate that future exercises of
eminent domain proceed in accord with a comprehensive, carefully considered plan
represents an important new limit on the eminent domain power.
Second, the Court strongly suggested that it is critical that the developer chosen to
implement the development be bound to carry out the redevelopment and serve as the
public's agent. Opponents of redevelopment projects sometimes suggest that property is
being turned over to private developers without strings, with the public benefiting solely
through enhanced tax revenues and a general increase in economic activity. In fact, in
Kelo the city will retain title to the property and lease the property to the redeveloper on a
long-term basis. An enforceable agreement binds the developer to provide specific
facilities and services in accord with the city's development plan. Public welfare and
private profit are no doubt inextricably linked - as in anv effective public/private
partnership - but there is no question that firm controls are in place to ensure the public
interest will be protected.'
Finally, the limits placed on the eminent domain power in Kelo are underscored
by Justice Kennedy's concurring opinion. Because his fifth vote was necessary to make
a majority in Kelo, Kennedy's concurring opinion is likely to be especially influential in
determining how courts interpret and local jurisdictions apply the decision. Although the
judicial standard is deferential, Justice Kennedy said, courts should review exercises of
eminent domain using a "meaningful" rational basis standard. He also echoed the
concerns about one-to one transfers, stating that there might be categories of eminent
domain in which "a presumption (rebuttable or otherwise) of invalidity" might be
warranted. He identified a set of factors that justified upholding use of eminent domain
in this case, suggesting that the absence of these factors might lead to a different outcome
in another case. These factors included that "[t]his taking occurred in the context of a
comprehensive development plan," the plan was meant to address "a serious city-wide
depression," the "economic benefits of the project cannot be characterized as de
minimis," the identities of project beneficiaries "were unknown at the time the city
formulated its plans," and the city followed various "procedural requirements" that
facilitated review of the project's bonajides.
In sum, while Kelo, in line with prior precedent, upheld the city's use of eminent
domain for economic development purposes, the decision represents a change in the
direction of less, not more, deferential judicial examination of the use of the eminent
domain by state and local governments.
I The Court also suggested in a footnote that the traditional measure of just
compensation, based on fair market value, might not be an appropriate measure of
compensation when government takes private property for economic development
purposes. The Court said that this issue, while "important," was not raised by the Kelo
litigation.
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