The Supreme Court Has an Opportunity To Correct Its Kelo Eminent Domain Error
A New York case revives concerns about seizing private property to benefit favored developers.
The U.S. Supreme Court may soon overturn one of its worst decisions in recent memory—a ruling that justified government stealing property from its owners to pass it to better-connected private parties. On Friday, the court will decide whether to consider a New York case that could upset the precedents set by Kelo v. New London, an eminent domain battle that prompted books, a movie, and state-level legal reforms. While Kelo was a loss for anybody who wants to set boundaries around government power, the court could take the opportunity this week to set things right with Bowers v. Oneida County Industrial Development Agency.
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Kelo Abandoned Basic Limitations on Government Power
In dissenting to the majority's 2005 decision in Kelo allowing the taking of a house owned by Susette Kelo by the city government of New London, Connecticut to transfer it to a favored developer, Justice Sandra Day O'Connor quoted Calder v. Bull (1798): "[A] law that takes property from A. and gives it to B: It is against all reason and justice, for a people to entrust a Legislature with such powers; and, therefore, it cannot be presumed that they have done it."
"Today the Court abandons this long-held, basic limitation on government power," O'Connor added. "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—i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process."
That dissent was joined by Chief Justice William H. Rehnquist and Justices Clarence Thomas and Antonin Scalia. Also agreeing with the dissenters were a great many Americans horrified that the Supreme Court had signed off on the confiscation of private property so long as a potential new owner could show spiffy plans for the confiscated parcels and promise greater tax revenue. It wouldn't even have to be a fulfilled promise—Susette Kelo's house remained undeveloped when financing for the project fell through.
The response to Kelo included books, a movie—Little Pink House—and a wave of state-level court decisions and legislative efforts intended to rein-in the abuse of eminent domain.
Most States Have Reformed Eminent Domain—but Not New York
"Since Kelo v. New London, 47 states have strengthened their protections against eminent domain abuse, either through legislation or state supreme court decisions," notes the Institute for Justice (I.J.). Of course, not all the reforms were created equal. I.J. grades the various efforts, with states like Florida getting an "A" grade and Connecticut—where the Kelo case occurred—lagging with a "D." A 2009 study found that "states with more economic freedom, greater value of new housing construction, and less racial and income inequality are more likely to have enacted stronger restrictions, and sooner" on eminent domain.
And then there's New York. I.J. gives that state an "F" because it failed to even attempt reform. In 2009, that state's highest court conceded "it may be that the bar has now been set too low" as it approved seizure of private property for redevelopment. "But any such limitation upon the sovereign power of eminent domain as it has come to be defined in the urban renewal context is a matter for the Legislature, not the courts." The legislature never acted.
So, it's no surprise that Bowers v. Oneida County Industrial Development Agency comes from the Empire State. Nor is it a surprise that the circumstances seem so familiar.
"Bryan Bowers and his business partner Mike Licata purchased property across the street from a new hospital in Utica, New York," according to Andrew Wimer of I.J., which represents the plaintiffs in the case. "The property was taken through eminent domain by the Oneida County Industrial Development Agency (OCIDA) and given to their potential competitors to be used for parking."
That is, local officials used eminent domain to favor one private party over another in a raw case of crony capitalism that violated private property rights and free market principles.
An Opportunity To Overturn a Bad Decision
In arguing for the Supreme Court to take the case, Bowers and I.J. point out that "lower courts disagree about how to implement Kelo's caveats about development plans and identified private beneficiaries. The result…is a patchwork of conflicting rules." In particular, they say, New York applies minimal scrutiny to eminent domain cases even when the grounds for seizing property are obviously bogus. "New York's courts have long held that evidence of pretext is legally irrelevant in takings cases." Bowers and company also urge the court to "consider whether Kelo should be overturned" given that four justices have publicly called for reconsidering or overturning that decision.
In an amicus brief filed in support of Bowers, the Cato Institute and Ilya Somin of George Mason University explicitly argue that the Supreme Court "should overrule Kelo because it is deeply at odds with the text and original meaning of the Public Use Clause and is also marred by other errors." Emphasizing America's strong history of respect for private property, they argue that "an interpretation of the Public Use Clause that gives government a near-blank check to take property for transfer to private parties is deeply at odds with this commitment to the protection of property rights."
Ironically, while establishment defenders of the powers-that-be cheered the Kelo decision—The New York Times editorialized that it was "a welcome vindication of cities' ability to act in the public interest"—it so shocked Americans that it breathed new life into efforts to restrain government's ability to seize homes, businesses, and land. Far from the "setback to the 'property rights' movement" that the Times' editorial board celebrated in 2005, it reignited interest in protecting private property.
That revived interest resulted in reforms to eminent domain in many states and localities. It alerted the public that takings of private property are often corrupt, performed by politicians to reward friends and allies. And it reminded us that property rights are inextricable from other protections for our liberty.
"The Court has elsewhere recognized 'the overriding respect for the sanctity of the home that has been embedded in our traditions since the origins of the Republic,'" Justice Thomas commented in his own dissent to Kelo. "Something has gone seriously awry with this Court's interpretation of the Constitution. Though citizens are safe from the government in their homes, the homes themselves are not."
On Friday, March 21, the Supreme Court is scheduled to decide whether to hear Bowers' case—and potentially to reconsider the mistake it made with Kelo.
