Eminent Domain

The Evolution of the Fifth Amendments Taking Clause

Mary Ann Watts 10/17/2012 PARL 2000 Prof. Riley

Watts 2

Eminent Domain is the power of the government to take private property for a public purpose, even if the property owner objects.1 This power is enumerated by the Fifth Amendment of the United States Constitution; which reads, in part, No person shall be. deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.2 Commonly referred to as the Takings Clause, it does not grant the government a new power; but rather implies the recognition of an established governmental power to take private property for public use.3 Condemnation is the process by which the government takes land using eminent domain and may be exercised only when all four elements of the Takings Clause are proven by the government: (1) private property (2) must be taken (3) for public use (4) and with just compensation.4 Historically, these elements have been interpreted broadly by the courts. While real property is the focus of this paper, it should be noted that private property which is subject to eminent domain can include land, fixtures, leases, as well as all kinds of tangible and intangible property, including but not limited to easements, personal property, contract rights, and trade secrets.5 Takings by a governmental entity can take many forms aside from the actual seizure of personal property. They can, for example, occur when the government imposes land regulations such as those relating to riparian rights, zoning, or airspace infringement.6 The court held in United States v. Dickinson, "Property is taken in the constitutional sense when inroads are made upon an owners use of it to an extent that, as between private parties, a servitude has been acquired either by agreement or in course of time.7
1 2

Nolos Plain-English Law Dictionary. U.S. CONST. amend. V. 3 United States v. Carmack, 329 U.S. 230, 67 S.Ct. 252, 91 L.Ed. 209 (1946). 4 Fed. R. Civ. P. 71.1 governs proceedings to condemn real and personal property by eminent domain. 5 Types of Takings, http://www.law.cornell.edu/wex/takings 6 Id. 7 331 U.S. 745 (1947).

Watts 3

The Public Use Clause, on its face, may seem the most simple of the elements to interpret; however its definition is arguably the most elusive of the four. Generally, there are two conceptions of public use: narrow and broad. The narrow view requires that after the taking, either the government retains ownership of the property or the general public has the right to use it. The broad view, now widely accepted, expands public use to include nearly any taking that results in some public advantage or benefit.8 The final element, just compensation, while not clearly defined, is generally accepted to be fair market value on the date the property is appropriated.9 Though all of these elements have been subject to litigation, the Supreme Courts recent decision in Kelo v. City of New London has placed focus on the Public Use Clause, specifically public takings for economic gain.10 In Kelo, the court held that a city can allow a private developer to use the power of eminent domain to condemn well-kept private houses to further economic development. To better understand how this satisfies the Public Use Clause of the Fifth Amendment, a brief history of public takings is required. Eminent domain case law in the United States predates the writing of the Constitution. Colonists implemented eminent domain in early statutes known as Mill Laws. Analogous to modern day common carrier laws, (which permit public takings for private companies that provide services to entire communities such as utility providers,) Mill Laws initially followed the narrow view of public use in that mills constructed on land seized by the authority of eminent domain were accessible to the general public. However, Mill Laws were later expanded to the broad view, conferring the right of eminent domain to private companies under the guise that
8

See Charles E. Cohen, Eminent Domain After Kelo v. City of New London: An Argument for Banning Economic Development Takings, 29 HARV. J.L. & PUB. POL'Y 491 (citations omitted) [Hereinafter COHEN] (discussing narrow and broad views). 9 Kirby Forest Industries, Inc. v. United States, 467 U.S. 1 (1984). 10 545 U.S. 469 (2005).

Watts 4

they would improve the greater good of society.11 Other takings threatened owners of underdeveloped urban lots with forfeiture if they failed to develop their land within prescribed time periods or in a manner determined by law None of these takings resulted in actual use by the public. Instead, they were intended to advance communities needs for economic development and population growth.12 Unlike federal eminent domain governed by the Takings Clause of the Fifth Amendment, the colonial, and subsequent early state takings, were not required to provide just compensation to land owners when seizing land. It was not until the landmark case of Chicago, B&Q Railroad v. Chicago in 1897 that the provisions of the Takings Clause were expanded to the states.13 In B&O, the Supreme Court ruled the Takings Clause was incorporated against the states by virtue of the Due Process Clause contained in the Fourteenth Amendment.14 The definition of public use was further expanded in the wake of the Great Depression. Facing the deterioration of entire neighborhoods, programs were implemented to eliminate slums and blight or to foster commercial development.15 While some early courts held that these takings did not satisfy public use because the property was eventually returned to private citizens, the majority trend was for courts to uphold these takings under the public advantage approach to the public use rule.16 The Housing Acts of 1937 and 1949 granted municipalities federal funds to implement eminent domain to remove urban blight.17

11 12

See COHEN at 501-502. Id. At 503, (Emphasis added). 13 166 U.S. 226 (1897). 14 U.S. CONST. amend. XIV (No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.). 15 See COHEN at 510. 16 Id. 17 Id.

Watts 5

As the increase in urban development swelled, in 1954 the Supreme Court heard Berman v. Parker, a case which helped shape modern eminent domain law.18 The case hinged on a comprehensive plan by the Washington, D.C. Planning Commission (authorized by Congress) to redevelop an area which had been deemed to be blighted. Under the terms of the plan, part of the property taken would be leased or sold to private entities to facilitate the project.19 The appellants objected to the taking on the grounds that their property, on which a non-blighted department store was located, was not slum housing and could not be taken simply to beautify the neighborhood. They further argued that taking their property under eminent domain and conferring it upon another private entity was not a public use under the Fifth Amendment. In its unanimous decision, the court held that the comprehensive development plan to eliminate blight was a benefit to the public welfare; that it was within the scope of police power and therefore a public purpose. As such, they reasoned, the use of private developers did not violate the public use requirement. Once the object is within the authority of Congress, the right to realize it through the exercise of eminent domain is clear. For the power of eminent domain is merely the means to the end.20 On the issue of taking non-blighted property, Justice Douglas opined, Once the question of the public purpose has been decided, the amount and character of land to be taken for the project and the need for a particular tract to complete the integrated plan rests in the discretion of the legislative branch.21 Critics have contended that through its broad ruling, the court in Berman had, in effect, eliminated the public use requirement from the Takings Clause. Despite these criticisms, the

18 19

348 U.S. 26 (1954). See COHEN at 511. 20 Berman, at 32-33. 21 Id. at 35-36.

Watts 6

court followed Berman in its ruling thirty years later in Hawaii Housing Authority v. Midkiff.22 In Midkiff, eminent domain was used to break up a land oligopoly which was viewed as contrary to public welfare. Almost all of the privately owned land in the state was held by seventy-two private owners, who leased land to many homeowner tenants. The legislation enacted a scheme to condemn much of the land, pay compensation to the owners, and then sell the fee interests to the present tenants.23 Writing for the majority, Justice OConnor opined, The public use requirement is thus coterminous with the scope of a sovereigns police powers. While noting a purely private taking could not withstand the scrutiny of the public use requirement; the court asserted that any taking rationally related to a conceivable public purpose satisfies this requirement.24 The court further followed Berman in declining to pass judgment on the merits of the condemnations. Judicial deference is required because in our system of government, legislatures are better able to assess what public purposes should be advanced by an exercise of the taking power.25 We now return to Kelo. In 2000, the City of New London, Connecticut and the New London Development Corporation (NLDC), a private nonprofit development corporation established by the city, approved a development plan to revitalize its downtown and waterfront areas. This plan included a $300 million research facility to be built by Pfizer, Inc., as well as other commercial and residential areas. Under the plan, the NLDC would own the land in the development area and enter into ground leases with various private developers, who would then develop the parcels in accordance with the plan.26

22 23

467 U.S. 229 (1984). See COHEN at 512. 24 Midkiff at 245 and 241. 25 Id. at 244. 26 See COHEN at 517.

Watts 7

The land owners, including lead plaintiff, Susette Kelo, sued the City of New London and the NLDC; maintaining that the Connecticut and United States Constitutions prohibited the use of eminent domain by private entities since it would not constitute a public use. They argued that a public benefit is not equivalent to a public use and asserted, If nothing more is required to constitute a public use than listing expected tax revenue and job growth that might result from private development, then there is scarcely any private use or business for which the power of eminent domain could not be used.27 The petitioners also argued that without a bright-line rule nothing would stop a city from transferring citizen As property to citizen B for the sole reason that B will put the property to a more productive use and thus pay more taxes.28 They attempted to distinguish Berman and Midkiff as permitting transfers to private parties only in specific circumstances, (to eliminate blight or to dismantle a land oligopoly, respectively.) Finally, they contended that if the taking did satisfy a public use, it was still unconditional because there should be a reasonable certainty that the expected public benefits will actually accrue.29 The Court, in a 5-4 decision, rejected all of the petitioners claims, noting that [t]here is no allegation that any of these properties is blighted or otherwise in poor condition; rather, they were condemned only because they happen to be located in the development area.30 The court cited Midkiff in finding that the Citys development plan was not adopted to benefit a particular class of identifiable individuals.31 Nor did the court accept that the transfer of the condemned properties to private individuals upon condemnation somehow diminished the public character of

27 28

Brief of Petitioners at 9-10, Kelo v. City of New London, 125 S. Ct. 2655 (2005) (No. 04-108) (Emphasis added). Kelo v. City of New London, 545 U.S. 469, 486-487 (2005). 29 Id. at 487-488. 30 Id. at 486. 31 Id. at 478

Watts 8

the taking.32 The court held that claims should not be made in isolation, but rather follow Bermans deference to the legislature as to judgments on whether the Citys development plan serves a public purpose, and that the area must be planned as a whole for the plan to be successful.33 The request for a bright-line ruling to require a reasonable certainty was deemed to be an even greater departure from our precedent impos[ing] a significant impediment to the successful consummation of many such plans.34 In her dissent, Justice OConnor stated, Today the Court abandons [a] long-held, basic limitation on government power. Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded.35 She distinguished Berman and Midkiff as having a direct effect of correcting harm specific situations, apart from a broad claim of economic development. Despite the public outcry over the Kelo decision, only minimal Federal legislation has ensued. First, in 2005, the House of Representatives passed the Property Rights Protection Act (PRPA) but it failed in the Senate. The Act has been reintroduced several times, most recently in 2012, where it stalled in senate judiciary committee.36 If adopted, PRPA would eliminate any state or local governments power to condemn property through the eminent domain power if the locality used the property at issue for economic development at any point in the future and if the state or political subdivision receives Federal economic development funds during any fiscal year in which it does so.37 Second, Congress imposed limitations on eminent domain by amending a 2005 appropriations bill for the Transportation, Treasury, and Housing and Urban
32 33

Kelo, 545 U.S. 469, at 482 Id. at 481, citing Berman at 35. 34 Id. at 477-479. 35 Id. at 494. 36 See The Library of Congress Bill Summary and Status, http://thomas.loc.gov/cgi-bin/bdquery/z?d112:h.r.1433 37 See Marc Mihaly & Turner Smith, Kelo's Trail: A Survey of State and Federal Legislative and. Judicial Activity Five Years Later, 38 ECOLOGY L. Q. 703, 724-725 [Hereinafter MIHALY].

Watts 9

Development departments, the judiciary, and the District of Columbia, collectively called the Bond Amendment.38 Lastly On June 23, 2006, President Bush issued Executive Order 13406, entitled Protecting the Property Rights of the American People. The order states: It is the policy of the United States to protect the rights of Americans to their private property, including by limiting the taking of private property by the Federal Government to situations in which the taking is for public use, with just compensation, and for the purpose of benefiting the general public and not merely for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken.39 These federal efforts largely follow Kelo, therefore having little impact on eminent domain law. States, however have implemented a wide variety of limitations beyond Kelo. Although approximately forty states have enacted post-Kelo legislative limitations, only fourteen state legislatures enacted laws that either ban or significantly restrict condemnation for economic development. Laws that ostensibly ban economic development takings can in fact permit them through exemptions for blight or community development condemnations.40 In Ohio, a moratorium on public takings was issued by the General Assembly on condemnation of private property for the primary purpose of economic development in nonblighted areas.41 It also commissioned a Legislative Task Force to Study Eminent Domain and its Use and Application in the State.42 These efforts had little effect due to Ohios broad blight exemptions, allowing condemnation if the affected property meets any two of seventeen different conditions, including, [f]aulty lot layout in relation to size, adequacy, accessibility, or usefulness; [e]xcessive dwelling unit density and [a]ge, and obsolescence.43

38 39

Mihaly at 725. Id. at 726. 40 Id. 41 An Act to Establish, until December 31, 2006, a Moratorium on Eminent Domain, S.B. 167 2, Ohio Gen. Assem. (Ohio 2005). 42 S.B. 167 2, Ohio Gen. Assembly (Ohio 2005). OHIO REV. CODE ANN. 1426. 43 OHIO REV. CODE ANN. 1.08, 303.26.

Watts 10

In 2006, the Ohio Supreme Court handed down a unanimous decision in favor of private property owners in City of Norwood v. Horney.44 The court said that although economic factors may be considered in determining whether private property may be appropriated, the fact that the appropriation would provide an economic benefit to the government and community, standing alone, does not satisfy the public-use requirement of section 19, article I of the Ohio Constitution.45 As The United States continues to grapple with eminent domain cases on federal and state levels, the courts must weigh the best interests of individuals against those of the municipalities, states, and the country as a whole. In the light of the recent economic downturn, pressure is brought to bear on politicians to create jobs and make neighborhoods safe. Indeed, political aspirations and pressures on John G. Rowland, the Republican governor of Connecticut who instigated the Kelo takings, drove him to pursue the economic development project in New London, a city where Democrats outnumbered Republicans more than four to one among registered voters.46 Ironically, Pfizer backed out of New London, and the economic development plan never came to fruition. The promise of 3,169 jobs and $1.2 million in local tax revenues to the City of New London ended up developing nothing the site where Susette Kelos house once stood still remains an empty lot. Whether this failure was due to the Great Recession, faulty planning, a combination of these, or even as the result of the long, protracted lawsuit will no doubt remain the topic of debate for generations.

44 45

853 N.E.2d 1115 (Ohio 2006). Norwood at 1123. 46 See Jeff Benedict, Little Pink House: A True Story of Defiance and Courage, New York: Grand Central Pub, 2009. Print.