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Pinedale Online > News > December 2006 > Eminent Domain: Kelo case made history
Eminent Domain: Kelo case made history
Stikes a blow to property rights
by Cat Urbigkit
December 4, 2006

In June 2005, the United States Supreme Court issued a far-reaching ruling involving the government’s right to condemn private property for private economic development projects.

In that case, Kelo v. New London, private homeowners had refused to sell their properties to the city of New London, Connecticut, for destruction to make way for a hotel, shopping and housing complex to be built by a private developer. The Supreme Court, in a case with huge implications across the country, ruled on a 5-4 vote that the city had the right to seize the property against the homeowner’s will, even though the area was not blighted.

The homeowners argued that the taking of their properties would violate the "public use" restriction in the Fifth Amendment's Takings Clause, but the nation’s highest court ruled that the taking of the property qualifies as an allowable "public use" because “promoting economic development is a traditional and long accepted governmental function.”

The Fifth Amendment to the United States Constitution states that "private property [shall not] be taken for public use, without just compensation."

Judges in the majority ruling were John Paul Stevens, Anthony Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.

Justice Sandra Day O’Connor vigorously dissented from the majority decision. She wrote, “Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.”

The lawsuit involved nine resident or investment owners of 15 homes in the Fort Trumbull neighborhood of New London, Connecticut, along the banks of the Thames River. For example, Wilhelmina Dery lives in a house on Walbach Street that has been in her family for over 100 years. She was born in the house in 1918; her husband, petitioner Charles Dery, moved into the house when they married in 1946. Their son lives next door with his family in the house he received as a wedding gift, and joins his parents in this suit.

In February 1998, Pfizer Inc., the pharmaceuticals manufacturer, announced that it would build a global research facility near the Fort Trumbull neighborhood. Two months later, New London's city council gave initial approval for the New London Development Corporation to prepare the development plan at issue here.

The NLDC is a private, nonprofit corporation whose mission is to assist the city council in economic development planning. It is not elected by popular vote, and its directors and employees are privately appointed. Consistent with its mandate, the NLDC generated an ambitious plan for redeveloping 90 acres of Fort Trumbull in order to "complement the facility that Pfizer was planning to build, create jobs, increase tax and other revenues, encourage public access to and use of the city's waterfront, and eventually 'build momentum' for the revitalization of the rest of the city."

In its majority opinion, the court noted: “The city has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including – but by no means limited to – new jobs and increased tax revenue. As with other exercises in urban planning and development, the city is endeavoring to coordinate a variety of commercial, residential, and recreational uses of land, with the hope that they will form a whole greater than the sum of its parts.”

The court noted that while there is nothing to stop a city from transferring citizen A's property to citizen B for the sole reason that citizen B will put the property to a more productive use and thus pay more taxes, “Such a one-to-one transfer of property, executed outside the confines of an integrated development plan, is not presented in this case.” The court noted that such an unusual exercise of government power “would certainly raise a suspicion that a private purpose was afoot,” such a hypothetical case “can be confronted if and when they arise.”

The court concluded: “In affirming the city's authority to take petitioners' properties, we do not minimize the hardship that condemnations may entail, notwithstanding the payment of just compensation. We emphasize that nothing in our opinion precludes any state from placing further restrictions on its exercise of the takings power. Indeed, many states already impose "public use" requirements that are stricter than the federal baseline. Some of these requirements have been established as a matter of state constitutional law, while others are expressed in state eminent domain statutes that carefully limit the grounds upon which takings may be exercised.”

Justice Sandra Day O’Connor wrote a dissenting opinion sharply at issue with the majority opinion. She wrote: “Today the court abandons this 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--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. To reason, as the Court does, that the incidental public benefits resulting from the subsequent ordinary use of private property render economic development takings "for public use" is to wash out any distinction between private and public use of property--and thereby effectively to delete the words "for public use" from the Takings Clause of the Fifth Amendment.”

O’Connor maintained that economic development takings are unconstitutional.

She wrote: “In moving away from our decisions sanctioning the condemnation of harmful property use, the Court today significantly expands the meaning of public use. It holds that the sovereign may take private property currently put to ordinary private use, and give it over for new, ordinary private use, so long as the new use is predicted to generate some secondary benefit for the public--such as increased tax revenue, more jobs, maybe even aesthetic pleasure. But nearly any lawful use of real private property can be said to generate some incidental benefit to the public. Thus, if predicted (or even guaranteed) positive side-effects are enough to render transfer from one private party to another constitutional, then the words "for public use" do not realistically exclude any takings, and thus do not exert any constraint on the eminent domain power.”

O’Connor concluded: “The specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”

She also offered criticism for the part of the decision looking to state courts for resolution to the issue. O’Connor noted: “The Court suggests that property owners should turn to the States, who may or may not choose to impose appropriate limits on economic development takings. This is an abdication of our responsibility. States play many important functions in our system of dual sovereignty, but compensating for our refusal to enforce properly the Federal Constitution (and a provision meant to curtail state action, no less) is not among them.”

Justice Thomas authored his own dissenting opinion, noting the court’s view was to hold, “against all common sense, that a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation, is for a ‘public use.’ “

Thomas called the court’s decision “far-reaching, and dangerous.”

Thomas advocated reconsideration of the high court’s rulings on public use. He noted: “I do not believe that this Court can eliminate liberties expressly enumerated in the Constitution and therefore join her dissenting opinion. Regrettably, however, the Court's error runs deeper than this. Today's decision is simply the latest in a string of our cases construing the Public Use Clause to be a virtual nullity, without the slightest nod to its original meaning. In my view, the Public Use Clause, originally understood, is a meaningful limit on the government's eminent domain power.”

Thomas added: “The consequences of today's decision are not difficult to predict, and promise to be harmful. So-called "urban renewal" programs provide some compensation for the properties they take, but no compensation is possible for the subjective value of these lands to the individuals displaced and the indignity inflicted by uprooting them from their homes. Allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities. Those communities are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful.”

Related Links
In-depth story coverage of Eminent Domain by Cat Urbigkit:
Eminent Domain Debate Looms
Public Reaction to Kelo Decision
President Bush Executive Order on Property Rights
Existing Eminent Domain Law in Wyoming (66.5K PDF)
Proposed Eminent Domain Law in Wyoming (137K PDF)

Pinedale Online > News > December 2006 > Eminent Domain: Kelo case made history

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