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A Report Card on Post-Kelo Eminent Domain Reforms

James W. Ely Jr. is Milton R. Underwood Professor of Law and Professor of History at Vanderbilt University. A legal historian and property rights expert, he is the editor (along with the late Kermit L. Hall) of the Second Edition of The Oxford Guide to United States Supreme Court Decisions, as well as the author of The Guardian of Every Other Right: A Constitutional History of Property Rights, The Fuller Court: Justices, Rulings and Legacy and Railroads and American Law. He has served as an editor of both editions of The Oxford Companion to American Law. In the post below Ely looks at eminent domain reform.

Since World War II the Supreme Court has only infrequently addressed the constitutional rights of property owners. For the most part these cases, although of considerable interest to scholars, have passed beneath the radar screen of the public. The decision in Kelo v. City of New London (2005) was a conspicuous exception to this pattern, arousing widespread public dismay and disapproval. Eminent domain reform remains a matter of keen public interest. In 2008 California and Nevada voters adopted ballot initiatives dealing with eminent domain. In early 2009 the Governor of Texas urged further restrictions on taking private property for economic development purposes. In these remarks, I wish to focus on the legislative and judicial response to Kelo. To what extent have reform advocates been able to take advantage of Justice Stevens’s invitation to fashion restrictions on the exercise of eminent domain for economic development purposes?

The story at the federal level can be quickly told. The Supreme Court is unlikely to revisit the issue of “public use” and economic development takings in the foreseeable future. Lower federal courts have treated Kelo virtually foreclosing any room for a “public use” challenge to the exercise of eminent domain. Although the House of Representatives expressed its disagreement with Kelo by a large margin, there has been no effective congressional action to halt economic development takings. Nor is any such move likely in the present political climate. The Bush administration never demonstrated much sustained interest in the question. Neither of the 2008 presidential candidates prominently called for eminent domain reform. Consequently, for the immediate future any serious effort to check eminent domain abuse will take place at the state level.

In sharp contrast to the muted reaction at the federal level, there has been a great deal of activity in the states. This has taken the form of legislation, constitutional amendments, and decisions by state courts. It is not always easy to ascertain, however, whether this outpouring of legislation and judicial rulings amounts to meaningful limitations on the use of eminent domain or merely hortatory fluff.

By some estimates, 43 states have enacted new laws or adopted constitutional amendments aimed at preventing Kelo-type takings. Most of these reform measures have focused primarily on tightening the definition of “public use” to exclude economic development projects. It bears emphasis that 7 states, including Hawaii, Massachusetts, New Jersey, and New York, have not enacted any laws limiting the exercise of eminent domain for economic development purposes. Among the jurisdictions that have passed such laws, the efficacy of these measures varies widely. Some appear to constitute genuine reform. Others afford virtually no additional protection for property owners and seem calculated to placate public opinion rather than to reign in the exercise of eminent domain.

Let us look first at the characteristics of legislation that provide substantially increased protection for property owners. The experience of Florida is instructive. In 2006 Florida legislators adopted a sweeping reform of eminent domain. The measure sharply curtailed the power of a condemning authority to convey property to a private entity. It further declared that eminent domain may not be utilized “for the purpose of abating or eliminating a public nuisance”, or “for the purpose of preventing or eliminating slum or blight conditions.” To eliminate any doubt, the statute stated that “the prevention or elimination of a slum area or blighted area . . . and the preservation or enhancement of the tax base are not public uses or purposes for which private property may be taken by eminent domain ….” Florida voters reinforced these limitations on eminent domain by adopting a constitutional amendment that prevents exceptions to the ban on transfers of acquired property to private parties unless passed by a three-fifths majority in the legislature. In short, Florida is among the states that have enacted sweeping bars to both economic development and blight takings.

At the other end of the spectrum, however, are state laws that do little to reign in eminent domain. The most common problem with post-Kelo reform laws is the failure to curtail blight takings. Under the banner of urban renewal, local governments made expansive use of eminent domain in the 1950s and 1960s to eliminate blighted areas. To the popular mind “blight” suggests a dilapidated neighborhood which poses health and safety risks. In fact, loose definitions of blight in many jurisdictions would allow government to acquire practically any property for redevelopment. Indeed, some states define blight in terms of any condition that impedes economic growth. Such a malleable concept of blight opens the way for government to circumvent legislative restrictions on private economic development takings. Some scholars contend that the notion of “blight” has lost any coherent meaning, and has become simply a pretext to justify eminent domain. As the distinction between slum removal and economic development grows progressively more fuzzy, it is essential that any legislation seeking to curtail economic development takings must also tighten the definition of blight.

Another problem with post-Kelo reform laws that purport to exclude economic development from the definition of “public use” is that in fact they leave open significant loopholes. Thus, a number of states, including Connecticut, Maine, and West Virginia, have enacted laws which halt economic development takings only if private advantage or enhancement of tax revenue is the “primary” or “sole” reason for the condemnation. Qualifiers such as “primary” mean that the prohibition will be easy to evade. Motives are notoriously difficult to assess. Local governments can readily assert that the takings at issue was designed to benefit the public.

Although the state legislative response to Kelo has been decidedly mixed, several state supreme courts have struck down the exercise of eminent domain for economic development purposes by private parties. For example, the Ohio and Oklahoma supreme courts have specifically rejected the reasoning in Kelo and construed their own state constitutions to afford greater protection of property owners against eminent domain.

Supreme Court rulings sometimes have the effect of putting long-ignored issues back in the spotlight. Perhaps the most significant impact of Kelo could be heightened public recognition of the need to safeguard property rights. One result of Kelo has been to restore the rights of property owners to public debate. This development may ultimately bear more fruit.

Recent Comments

  1. MikeB

    Speaking as someone actually fighting eminent domain in federal court with Houston-based Spectra Energy, I can confirm that it amounts to legal plunder under the badge of government.

    Ultimately, power corrupts; and the power of eminent domain in the hands of government — which is transferred to a business — creates a sense of entitlement; and it creates an atmosphere ripe for abuse.

    As you know, nowadays, eminent domain has less to do with projects for the “public good,” and everything to do with the financial good of publicly held companies.

    In Bedford County, Pennsylvania (about 2 hours from Washington), property owners are being hauled into federal court by Spectra Energy, backed by the power of the Federal Energy Regulatory Commission.

    The “public good” argument is that this is an underground natural gas storage site (bring gas from somewhere else for a fee, store it for a fee, then send it to the northeast via pipelines and charge another fee).

    What goes missing is that the landowners’ property is sitting on top of the gas-rich Marcellus Shale; but they can’t develop that because Spectra Energy wants to use the Oriskany sands layer (which lies just beneath the Marcellus) for its underground gas storage facility.

    This site is said to be “critical,” but Pennsylvania has more underground natural gas storage sites than any other state in the continental US, according to the Dept. of Energy.

    Further, in its most recent motion, Spectra Energy asked that the federal judge exclude evidence that would argue “economic loss to the landowner” for fear that the jury would be “confused, misled and distracted … waste time.” (From p. 7 of the motion: Case 3:08-cv-00154-KRG, Document 59).

    Here is the great conundrum in eminent domain: property owners possess the key asset that companies and government covet — the land. But they are treated as obstacles in this process rather than as key stakeholders.

    For info & a landowner video:

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