Property Seizures and the New London Tea Party

Homeowners' attorney Scott Bullock talks about the Supreme Court's Kelo v. New London decision and America's brewing revolution against eminent domain abuse.

Few events in the last 25 years have prompted a national uproar over a specifically libertarian issue. Fewer still have produced as much outrage as the U.S. Supreme Court's June ruling in Kelo v. City of New London. By a vote of 5 to 4, the Court declared that the Connecticut city and its quasi-governmental development corporation could take the well-maintained homes and businesses of people in the city's Fort Trumbull neighborhood (including a grandmother who has lived in the same house since her birth in 1918) to make room for an expansion by pharmaceutical giant Pfizer. Since the decision, the city has given the owners a raspberry by charging them back rent on their own property. (Reason has been covering the New London case for several years now and the larger issue of eminent domain for even longer. For our past articles, see our online archives at reason.com.)

Gone is the need for cities to prove a property is "blighted" before it can be seized. Gone too is the Fifth Amendment's requirement that private property be taken only for "public use"; New London plans merely to hand the land over for a new development that it expects to generate more jobs and property taxes than the current owners. While the justification for using eminent domain was often flimsy before Kelo, the decision opens a new era in eminent domain abuse. (See "Like Undermining Motherhood and Apple Pie," page 28.)

The news media, state governments, legal scholars, attorneys, real estate agents, and homeowners across the country have reacted with shock and indignation. Bills curbing eminent domain powers have been introduced in both houses of Congress and more than half of all state legislatures. According to The Wall Street Journal, the public and political reaction has begun to worry city planning officials, who "are growing increasingly concerned that the backlash will block more projects, potentially causing big losses for developers and canceling long-planned projects."

Scott Bullock, a senior attorney at the D.C.-based Institute for Justice, represented the property owners in Kelo. Founded in 1991, the institute has successfully represented homeowners targeted for eminent domain condemnations in Arizona, Ohio, New Jersey, and other states, and is currently fighting property seizures around the country. Speaking with Web Editor Tim Cavanaugh about the Kelo decision and its explosive aftermath, Bullock remained defiant, and optimistic about the prospects for homeowners in New London and throughout the United States.

Reason: What do you think is sparking the public outrage over Kelo?

Scott Bullock: It was an outrageous decision. It was rather shocking that a majority of the Supreme Court would permit this type of abuse. We're in an America where, as former Justice Sandra Day O'Connor pointed out in her dissent, church property can be taken for a Costco, a farm can be turned into a factory, and a neighborhood can be leveled for a shopping mall. Most people cannot believe that this can happen in this country and that the Supreme Court gave sanction to that with their decision.

Reason: Since the decision, Justice O'Connor has retired; Chief Justice William Renquist is pretty ill. Those are two of the dissenters right there. Do you have any predictions about how a change in the Supreme Court composition will affect property rights?

Bullock: Well, I don't know. These things are always hard to predict. Look at how Justice Anthony Kennedy voted against his own track record of supporting property rights. But this is also a case where you could have a member of the Court who might be from the left but come to a very different decision from what some of the more liberal members of this Court decided.

Reason: At the moment the confirmation hearings for Judge John G. Roberts haven't begun. Assuming he gets approved, which way do you think Supreme Court Justice Roberts will lean?

Bullock: I don't know. I have not read anything he's written on public use. I know he's written some articles on just compensation. I know when he was in private practice he represented a planning agency. But I don't have any idea, based on his prior writings or decisions, how he would rule on the Public Use Clause of the Constitution. Justice O'Connor, in one of her shining moments on the Supreme Court, left a great legacy for future justices to aspire to in interpreting the Public Use Clause. Hopefully in the not too distant future we'll get another case before the Court; and when one of the justices who ruled in favor of the government in Kelo retires, there will be another justice on the Court who we hope will adopt the position of Justice O'Connor and the other dissenters.

Reason: What forms has the post-Kelo backlash taken?

Bullock: One of the forms it's taken, in addition to overwhelming public support for the property owners and outrage at what the Court has done, is the legislative proposals that have been either introduced or promised in 30 states. That's still counting, because a number of state legislatures are out of session and something will happen when they get back. After years of neglect, there's finally significant interest from legislatures either to prohibit this type of taking or at the very least to provide greater protections for property owners.

Reason: What types of proposals are we talking about?

Bullock: We have them all posted on our website, ij.org. Some are very substantive–for instance, simply prohibiting takings just for economic development, and also reforming the states' blight laws so they're not used as a backdoor way to accomplish the goal of transferring property between private owners. Other proposals are frankly cosmetic changes that would not really do much about the problem. The challenge for activists in the coming months is to make sure there are substantive changes, rather than just politicians claiming credit. Alabama was a great first step. That's a state that has prohibited the type of takings that was permitted in the Kelo decision. But there's still a loophole in Alabama law that allows takings for blight, and they have a rather broad definition of blight.

Reason: How much of an education process do you think there's been in the public about eminent domain issues? For example, the idea that the Kelo plaintiffs are going to have to accept a "fair market value" based on circa 2000 property values is surprising news to many people, yet that's standard procedure in eminent domain takings.

Bullock: This has really been a wakeup call–not only that the government can take your property but how incredibly unfair the process is in so many states, including Connecticut. That includes the definition of fair market value.

It's also the fact that landowners, if they want to challenge the taking of their property, have to go out and hire a lawyer. And lawyers will often take a case for property owners who want to sell, because they're guaranteed a certain percentage of whatever amount they're able to get. But if you want to hold onto your home or your small business, and you've got to go out and pay a lawyer out of pocket, the cost of defending against an eminent domain action quickly exceeds the value of the property. That's one of the reasons people who want to hold onto their property find it economically impossible to do so. That's a huge club governments have against property owners.

Reason: The news that the New London Development Corporation (NLDC) is now trying to charge the homeowners back rent on their property–on the grounds that it has belonged to the city since 2000–was shocking. How can the city claim to be entitled to rent when they didn't have the title free and clear?

Bullock: Actually–and this is another example of the unfairness of this process–when an eminent domain action is filed, including those for private development, once the government deposits the money in the court's account, title immediately transfers to the condemning body. So the title in New London has been held by the condemning authorities since the year 2000. And that's true in most state laws. Under Connecticut law, the government can then charge rent to the home-owners. In New London, the Dery family owned its home for more than 100 years, and they've been mortgage-free since the 1950s, and the NLDC told them they owed $450 a month, per house, for the supposed privilege of just staying in their home.

We worked out an agreement that the homeowners would not have to pay rent, and that situation did not turn on who won or lost the case. The fact that the NLDC would now go back and try and make that argument is unbelievably outrageous. We think it's a frivolous argument and will gain no traction in court.

Reason: You had that agreement in writing prior to the case?

Bullock: Yeah, the agreement sets out all the terms of the case. We gave up certain things, and they gave up certain things. Initially this agreement was only supposed to last a couple months–with the option of the court's extending it–until the trial of the case. We agreed to an expedited trial in exchange for that concession. The courts kept extending the agreement, not allowing them to charge rent, not allowing them to evict the homeowners. So as I said, if they go back and try to charge rent, we'd recommend to the property owners that they countersue on the grounds that this is a frivolous action.

Reason: Although there's a nationwide backlash against eminent domain generally, in the specific case of New London it seems like the homeowners are toast. Is there anything going on now–in the Connecticut legislature, for example–that might save them from being displaced?

Bullock: We think they're going to hang onto their homes.

Reason: Well, the attorney for the plaintiffs has to be optimistic by profession.

Bullock: No, we really do think they're going to win. There is so much support for the property owners. They're American heroes.

Reason: But are they New London heroes?

Bullock: Oh, there's overwhelming support for them in New London. The only people who support the Kelo decision are those who stand to benefit from it–city officials and developers. And throw in a couple of editorial pages and clueless academics. The homeowners have overwhelming support not only in New London but throughout Connecticut. Gov. M. Jodi Rell has said she wants to see if there's a way to keep the property owners there and will work toward that solution. The legislature called on the New London city government, and they reluctantly agreed to a moratorium, so none of the property owners can be removed while the legislature considers changes in the eminent domain laws. So there's real momentum in Connecticut, not only to change the laws but to protect homeowners in the Fort Trumbull neighborhood.

Reason: Would an ex post facto law work, after the Supreme Court has decided the case?

Bullock: There are ways of just permitting the people to stay, even without a legislative change. There's plenty of land in Fort Trumbull to do significant development while keeping these people in their homes. And a law could affect the Fort Trumbull owners, depending on how it's worded.

Reason: There are bills in the U.S. House and the Senate regarding eminent domain. What do you know about them?

Bullock: A lot of the effort on the Hill has been on bills that prohibit federal funding for projects that use eminent domain for private economic development, or for cities that use it. Cities that did this would lose all their federal funding. We think it's clearly within Congress' power to do that. It's clear that Congress cannot rewrite a constitutional interpretation; they tried to do that a couple years ago with regard to religious freedom, and that was overturned by the Supreme Court, which has final say on the Constitution. But Congress is certainly within its rights to use its spending authority to discourage cities from using eminent domain.

Reason: Do you think these bills stand a chance?

Bullock: I do, but it's not going to be easy. Although there's overwhelming public support for this, there's also an effort by both local officials and developers either to defeat the laws or to make the changes insignificant. Those are powerful forces on the other side. Developers and business interests have a lot of influence on politicians; so do local officials, whom politicians rely on to turn out the vote. So it certainly will be a hard-fought battle. There's a lot of effort from people who gain from eminent domain abuse. We'll be pulling out all the stops to make sure there are real changes, not only in the legislatures but in the state courts, to make sure the state precedents remain in effect. Remember that even the Supreme Court's Kelo majority admitted that state courts are free to interpret their own [constitutional] provisions in a manner that's more protective of property rights.

Reason: Kelo has largely been seen as clearing the way for seizures for private economic development, but that's not really unprecedented. Even railroads were private endeavors. So was Kelo really something new, or did the decision just affirm the status quo?

Bullock: It's very different from something like a railroad. A railroad typically follows a very narrow strip of land. Railroads and utilities are what are known in the law as common carriers. So even though they might be privately owned, they're really the equivalent of public bodies because everybody, the public, has an equal right to them. Everybody has a right to the utility line. And they're very tightly controlled by public officials, so they're really the equivalent of public bodies; that's why the court upheld them.

Here we're talking about ordinary private uses of land–taking somebody's home for a Costco, taking church property to give to another private owner. That's why this opinion is so sweeping and it's so far removed from even what the courts did in the railroad cases, or even in the situations involving blight. Because even in those cases, the government had to show that there was some type of harmful condition to that land before it was justified for condemnation. Here the Court said whatever land the developers happen to desire is up for grabs.

Reason: Some defenders of the decision argue that the government went through a planning process in this case, that this is part of a well-developed plan.

Bullock: The idea that having a plan and going through a planning process protects property owners in any way is completely disconnected from reality. I mean, every development in this country has to go through a process, has to be announced, has to have hearings. To think that this provides any protection for property owners who face the loss of their homes and small businesses is nonsense. And it shows how some members of this Court and some defenders of this policy don't understand how these things really pan out in the real world.

Reason: Speaking of defenders of this decision, what do you make of august bodies like The New York Times defending Kelo as "a welcome vindication of cities' ability to act in the public interest"?

Bullock: Of course it was disappointing, but not entirely surprising. They have editorialized in favor of eminent domain abuse in the past. To their credit they admitted in that editorial that they have been the beneficiaries of eminent domain–their new headquarters is built on land that was taken from private owners. And as I said before, the only people who support this decision are those who stand to gain from eminent domain abuse: city officials, some business interests, and The New York Times.

Reason: How much reaction have you seen from the political left, given that all the dissent on Kelo came from the conservative wing of the Court?

Bullock: There seems to be a division between the elite left opinion and the grassroots. You've seen a lot of left-leaning Web commentary in reaction to articles that tried to defend the Kelo decision. Many people who consider themselves on the political left are very opposed to eminent domain abuse. This definition really cuts across political lines. The first person in the Senate to denounce the decision was John Cornyn, the conservative Republican from Texas. The first person to do so in the House was Maxine Waters of Los Angeles, one of the most liberal Democrats in Congress. Ralph Nader has always been very critical of eminent domain abuse, and we've always worked with people on the left on this issue.

It has been disappointing to see some in the elite left supporting this. The American Prospect had an article defending the decision, but I don't think that's true of most people on the left, who reflect the consensus that this was a terrible decision and one that's going to impact the poor and those of modest means most directly and profoundly.

Reason: We keep hearing about the backlash as a "new Boston Tea Party" and so on, but that kind of talk is cheap. Has there been any real momentum against eminent domain, in the sense that it will actually keep anybody from losing his or her house?

Bullock: That is yet to be seen. We're moving very aggressively in state courts to protect property owners. We need to harness the outrage this decision has provoked and turn it into productive activism. It will be a very hard-fought battle, given the power of the other side. But in the long run you'll see some real good come out of this terrible decision. People realize there's a dire need to change the laws in their states and across the country.

Reason: What has been happening to I.J. and others who fight these issues? What sorts of new interest have you seen from the public?

Bullock: The support has been overwhelming. We've been swamped with phone calls and people asking what they can do. We've really been heartened by the support we've received, and that's true in New London as well.

Reason: Are these people putting their money where their mouths are?

Bullock: Yeah, absolutely. We've received significant financial support. We've launched a campaign called Hands Off My Home, with a commitment of $3 million, and raised a good portion of that money, to make sure this doesn't happen to others. And that will be through state court litigation, legislative changes, and education of the public and property owners. We're going to commit as much time and as many resources as we can to make sure the constitutional rights of people are respected.