The Supreme Court’s endorsement of a broad definition of “public
use” that validates takings for virtually any “public purpose” has led to serious abuses. In many cases, the takings it authorizes inflict severe harm on the poor and politically weak, while simultaneously failing to produce the economic benefits that supposedly justified the use of condemnation in the first place. In this chapter, I focus specifically on the harm caused by economic development takings like that upheld in Kelo and the closely related “blight” takings. Thanks to Kelo, the former have gotten greater public attention in recent years; but the latter have actually caused far greater harm. At least in the modern era, when they have affected hundreds of thousands of people, these are the most significant uses of eminent domain that are authorized by the courts’ endorsement of an extremely broad view of public use but would not be permitted by a narrow one. Most other modern takings either affect far fewer people, fall within the narrow definition of public use, or both.1
The use of eminent domain for private economic development projects does have a possible economic rationale: the need to overcome holdout problems. But that admittedly genuine problem can often be overcome by market actors, without resorting to government coercion. Moreover, real-world economic development and blight condemnations usually go far beyond what might be necessary to forestall holdouts.
The harm caused by economic development and blight condemnations is of great importance for public policy. It strengthens the case for restricting or banning such takings, regardless of whether they are constitutional. But it also has significance for constitutional theory. The real-world effects of eminent domain may be irrelevant from the standpoint of originalist theories of constitutional interpretation of the sort considered in chapter 2. But they help generate a strong case against Kelo under several influential variants of “living Constitution” theory.
Judges and legal scholars who believe that constitutional judicial review should be used to protect poor and minority populations who lack leverage in the political process, that it should follow common law principles, or that it must reflect liberal moral values, should pay close attention to the ways in which these objectives are undermined by a broad interpretation of public use. “Popular constitutionalists” who believe that constitutional interpretation should be influenced by public opinion and popular political movements also have good reason to oppose Kelo.
Economic Development Takings
Authorizing the use of eminent domain for economic development takings creates the potential for serious abuses, a risk greater than with most other types of takings.
Opening the Door for Interest Group Infl uence
The main danger posed by “economic development” takings is the possibility that this rationale can be used to condemn virtually any property for transfer to a private commercial enterprise. As the Michigan Supreme Court explained in County of Wayne v. Hathcock,
[The] “economic benefit” rationale would validate practically any exercise of the power of eminent domain on behalf of a private entity. After all, if one’s ownership of private property is forever subject to the government’s determination that another private party would put one’s land to better use, then the ownership of real property is perpetually threatened by the expansion of plans of any large discount retailer, “megastore,” or the like.2
Courts in other states that forbid economic development takings have reached the same conclusion.3
Those decisions may slightly overstate the case, but their basic logic is sound. Economic development can rationalize virtually any taking that benefits a private business because any such entity can claim that its success might “bolster the economy.”4 It may be possible to limit the scope of the development rationale by requiring that the economic benefit gained exceeds some preset minimum size.5 Yet this amounts simply to saying that any taking benefiting a sufficiently large business enterprise can qualify. Moreover, this rationale actually creates perverse incentives to increase the amount of property condemned for any given project.6
Even some of the defenders of the economic development rationale recognize that it is nearly limitless. At the Kelo oral argument, as we saw in chapter 1, New London’s counsel Wesley Horton admitted that the theory would allow the displacement of any property owner so long as the city believes that the taking might lead to higher tax revenue.7 During that same argument, Justice Stephen Breyer, who ultimately voted to uphold the Kelo takings, stated that “there is no taking for private use that you could imagine in reality that wouldn’t also have a public benefit of some kind, whether it’s increasing jobs or increasing taxes, et cetera. That’s a fact of the world.”8 Almost any condemnation that benefits a large business at the expense of a smaller competitor, a residential owner, or a nonprofit organization, could be rationalized on the grounds that there would be a “significant” increase in tax revenue.
In addition to the direct cost of harmful transfers to influential interest groups, opening the door to economic development takings also creates what economists call “secondary rent-seeking costs.”9 These are the expenses that interest groups and property owners incur in lobbying the government for and against the use of eminent domain, which may become substantial in situations where the availability of the economic development rationale enables an extremely wide range of groups to potentially acquire condemned land.
From a social point of view, the expenditure of resources on such lobbying is pure waste, because it does not create any productive value. Indeed, much of the resources spent on lobbying might achieve nothing but countering similar expenditures by opposing interest groups, who all covet the same land.10 This risk is exacerbated in situations where the new owners of the condemned property are not required to compensate the previous owners themselves, because the compensation is paid for by taxpayers.11 In such cases, interest groups have an incentive to spend even more on lobbying than they might otherwise, because a successful lobbying effort would enable them to acquire new property at far below market value.
Lack of Binding Obligations to Deliver the Promised Economic Benefi ts
The danger of abuse created by the economic development rationale has been exacerbated by courts’ failure to require new owners of condemned property to actually provide the economic benefits that justified condemnation in the first place. The lack of a binding obligation creates incentives for public officials to rely on exaggerated claims of economic benefit that neither they nor the new owners have any obligation to live up to. Courts in a number of jurisdictions have held that property cannot be condemned without assurances that it will be employed only for public uses that are precisely specified in advance.12 Unfortunately, decisions permitting economic development takings depart from this principle.
The controversial 1981 Poletown decision upheld the massive condemnations in Detroit primarily, if not solely, because of the “clear and significant” economic benefits that the resulting General Motors factory was expected to provide for the city.13 Indeed, the majority suggested that if the benefits were not so great, “we would hesitate to sanction approval of the project.”14 This fact renders all the more dubious the court’s failure to require either the city or GM to ensure that the expected benefits would actually materialize.
Yet, as Justice James Ryan emphasized in his dissenting opinion, the court failed to impose even minimal requirements of this kind.15 City of Detroit v. Vavro, a 1989 Michigan Court of Appeals decision interpreting Poletown, confirmed Ryan’s view, holding that “a careful reading of the Poletown decision reveals that . . . a binding commitment [to provide the economic benefits used to justify condemnation] is unnecessary in order to allow the city to make use of eminent domain.”16
The Poletown condemnations dramatically illustrate the danger of taking inflated estimates of economic benefit at face value. The City of Detroit and GM claimed that the construction of a new plant on the expropriated property would create some 6,150 jobs.17 The estimate of “at least 6,000 jobs” was formally endorsed by both Detroit Mayor Coleman Young and GM Chairman Thomas Murphy.18 Yet neither the city nor GM had any legal obligation to actually provide the six thousand jobs or the other economic benefits they had promised.
The risk inherent in this arrangement was apparent even at the time. As Justice Ryan warned in his dissent, “there are no guarantees from General Motors about employment levels at the new assembly plant.... [O]nce [the condemned property] is sold to General Motors, there will be no public control whatsoever over the management, operation, or conduct of the plant to be built there.”19 Ryan pointed out that “General Motors will be accountable not to the public, but to its stockholders”; it would therefore make decisions as to the use of the property based solely on stockholder interests, not those of the city.20 “[O]ne thing is certain,” Ryan emphasized, “[t]he level of employment at the new GM plant will be determined by private corporate managers primarily with reference, not to the rate of regional unemployment, but to profit.”21 Justice Ryan’s warning was prescient. The GM plant opened two years late; and by 1988—seven years after the Poletown condemnations—it employed no more than 2,500 workers.22 Even in 1998, at the height of the 1990s economic boom, the plant still had only 3,600 workers, less than 60 percent of the promised 6,150.23
The Poletown court’s failure to impose any binding obligations on the new owners of property was not idiosyncratic. The same problem is evident in other states that permit economic development takings, including Connecticut with respect to the Kelo case.24 Like Connecticut, other states that allow economic development condemnations also fail to require either the government or the new owners to actually provide the promised public benefits.25 Thus, Poletown and Kelo highlight a systematic shortcoming of the economic development rationale generally. It is not an idiosyncratic problem confined to Connecticut and pre- Hathcock Michigan.
Why would such a systematic failure arise? There are two plausible explanations. First, requiring a binding commitment to the creation of specific economic benefits for the community might severely constrain the discretion of the new owners, thereby possibly leading to inefficient business practices. For example, if GM had been required to ensure that at least six thousand workers were employed at the Poletown plant, it might have been forced to forgo efficient labor-saving technology. Courts and public officials may well be reluctant to intrude so severely on the new owners’ business judgment. The same point applies to requiring businesses to produce a set quantity of other economic benefits to the community such as some amount of investment or additional tax revenue. Requiring owners to invest X dollars or employ a specific number of workers, for example, might lead to inefficient and wasteful overinvestment, and deter cost-saving innovations.
While this is a serious problem with requiring binding commitments, it also provides a strong argument against permitting economic development takings in the first place. If there is no effective way to ensure that the promised economic benefits of condemnation are actually provided, this circumstance strengthens the argument that private economic development projects should be left to the private sector.
A second possible explanation is that many judges may have an unjustified faith in the efficacy of the political process and thus may be willing to allow the executive and legislative branches of government to control oversight of development projects. For example, the Poletown majority emphasized that courts should defer to legislative judgments of “public purpose.”26 Whatever the general merits of such confidence in the political process, it is misplaced in situations in which politically powerful interest groups can employ the powers of government at the expense of the relatively weak.27
In the absence of any binding obligations to deliver on the promised economic benefits, little prevents municipalities and private interests from using inflated estimates of economic benefits to justify condemnations and then failing to monitor or provide any such benefits once courts approve the takings, and the properties are transferred to their new owners.
Localities and businesses can sometimes circumvent the public use requirement simply by overestimating the likely economic benefits of a condemnation. Municipalities may overestimate intentionally, or they may simply take a private business’ inflated estimates at face value. Both business interests and political leaders dependent on their support have tremendous incentives to overestimate the economic benefits of condemnation. Courts are in a poor position to second-guess seemingly plausible financial and employment estimates provided by officials. Even if governments and businesses do not engage in deliberate deception, there is a natural tendency to overestimate the public benefits and the likelihood of success of projects that advance one’s own private interests. Such selfinterested self-deception may even have a genetic basis.28 Whether corporate and government leaders deliberately lie or honestly believe that “what is good for General Motors is good for America,” the outcome is likely to be the same.
Ignoring the Costs of Condemnation
An especially striking aspect of the Poletown decision was the majority’s failure to even mention the costs imposed by condemnation on the people of Poletown or the city of Detroit as a whole. This problem, too, is not confined to Michigan’s Poletown-era jurisprudence; it also arises in other states that permit economic development takings.
The Poletown case dramatically illustrates how the promised economic benefits of condemnations often fail to materialize and are outweighed by the massive costs. Not only did the new GM plant create far fewer jobs than promised, but the limited economic benefits the plant did create were likely overwhelmed by the economic harm the project caused the city.
According to estimates prepared at the time, “public cost of preparing a site agreeable to . . . General Motors [was] over $200 million,”29 yet GM paid the city only $8 million to acquire the property.30 Eventually, public expenditures on the condemnation rose to some $250 million.31 In addition, we must add to the costs borne by the city’s taxpayers, the economic damage inflicted by the destruction of up to six hundred businesses and fourteen hundred residential properties.32 Although we have no reliable statistics on the number of people employed by the businesses destroyed as a result of the Poletown condemnation,33 it is quite possible that more workers lost than gained jobs as a result of the decision. If we assume, conservatively, that the 600 eliminated businesses employed an average of slightly more than four workers, the total lost work force turns out to be equal to or greater than the 2,500 jobs created at the GM plant by 1988.34 Even if we assume that the 600 figure is too high and the true number of eliminated businesses was closer to the range of 140 to 160 estimated by some other sources,35 it would still take only an average of 17 to 18 jobs eliminated per business to offset the gains created by the new plant. And this calculation does not consider the jobs and other economic benefits lost as a result of the destruction of numerous nonprofit institutions such as churches, schools, and hospitals. Even if we consider the Poletown condemnation’s impact in narrowly economic terms, it is likely that it did the people of Detroit more harm than good.
The failure of the Poletown takings to produce any clear net economic benefit for the city has significance beyond the case itself. In Poletown, the magnitude of the economic crisis facing Detroit and the detailed public scrutiny given to the city’s condemnation decision led the court to conclude that the economic benefit of the taking was unusually great.36 The court even went so far as to say that, “[i]f the public benefit was not so clear and significant, we would hesitate to sanction approval of such a project.”37 If the claimed “public benefit” of even so “clear” a case as Poletown ultimately turned out to be a mirage, it seems unlikely that courts will do better in weighing claims of economic benefit in more typical cases where the evidence is less extensive and less closely scrutinized.
Other states that continue to permit economic development takings also give little or no consideration to the harm they cause. In Kelo, the Connecticut Supreme Court conceded that the plaintiff property owners in the case would suffer serious harm if forced out of their homes and businesses.38 In addition, tens of millions of dollars in taxpayer money had been allocated to the development project, without any realistic prospect of a return that rises above a tiny fraction of that amount.39 Yet the state supreme court refused to consider the significance of those massive costs, claiming “the balancing of the benefits and social costs of a particular project is uniquely a legislative function.”40
Contrary to the Connecticut court, the political process often cannot be depended on to give due consideration to the “social costs” of economic development takings; such condemnations generally benefit the politically powerful, while the costs tend to fall on the poor and politically disadvantaged.
Nonmonetary Costs of Economic Development Takings
In addition to the economic costs to communities and homeowners, economic development takings also inflict major nonfinancial costs on their victims by destroying communities and forcing residents to relocate to less desired locations. As famed urban development scholar Jane Jacobs explained in her classic 1961 account,
[P]eople who get marked with the planners’ hex signs are pushed about, expropriated, and uprooted much as if they were the subjects of a conquering power. Thousands upon thousands of small businesses are destroyed....
Whole communities are torn apart and sown to the winds, with a reaping of cynicism, resentment and despair that must be seen to be believed.41
Scholars from a wide range of ideological perspectives have reinforced Jacobs’s early conclusion that development condemnations inflict enormous social costs that go beyond their “economic” impact, narrowly de-fined.42 They are particularly severe in the cases of people who are elderly or have lived in a given community for a long time, as witness the travails of the elderly residents of Fort Trumbull, discussed in chapter 1.43
Why the Danger of Interest Group “Capture” Is Unusually High
Economic development takings are not the only exercises of the eminent domain power vulnerable to capture by interest groups seeking to use the powers of government for their own benefit—“rent-seeking” as it is known in the academic literature. Indeed, interest-group capture of government agencies and rent-seeking are serious dangers for a wide range of government activities.44 However, there are three major reasons why economic development takings are especially vulnerable to this threat: the nearly limitless applicability of the economic development rationale, severe limits on electoral accountability caused by low transparency, and time horizon problems.
As we have seen, the economic development rationale for takings can potentially justify almost any condemnation that benefits a commercial enterprise. Such a protean rationale for the use of eminent domain exacerbates the danger of interest group capture by greatly increasing the range of interest groups that can potentially use it. It also increases the range of projects that those interest groups can hope to build on condemned land that is transferred to them; any project that might increase development or produce tax revenue could be acceptable. Both factors tend to increase the attractiveness of economic development condemnations as a means of making political payoffs to powerful interest groups.
Interest group manipulation of economic development takings might be curtailed if public officials responsible for condemnations face credible threats of punishment at the polls after they approve condemnations that reward rent-seeking. Unfortunately, such punishment is highly unlikely for several important reasons.
First, the calculation of the costs and benefits of most development projects is extremely complex, and it is difficult for ordinary voters to understand whether a particular project is cost effective or not. Studies have repeatedly shown that most voters have very little knowledge of politics and public policy.45 Most are often ignorant even of basic facts about the political system.46 Such ignorance is not an accident or a consequence of “stupidity.” It is in fact a rational response to the insignificance of any one vote to electoral outcomes; if a voter’s only reason to become informed is to ensure that he or she votes for the “best” candidate in order to ensure that individual’s election to office, this turns out to be almost no incentive at all because the likelihood that any one vote will be decisive is infinitesimally small.47 Ignorance is likely to be an even more serious problem in a complex and nontransparent field such as the evaluation of economic development takings.
While the same danger may exist with some traditional narrow public use takings, they usually at least produce readily observable benefits such as a road or a bridge—public assets that can be seen and used by the average voter. Moreover, these benefits usually become apparent as soon as the project in question is completed. By contrast, the supposed public benefit of economic development takings is a generalized contribution to the local economy that the average citizen often will not even notice, much less be able to measure.
Second, even if voters were much better informed, democratic accountability for economic development takings would often still be inadequate. Unlike with most conventional takings, the success or failure of a project made possible by economic development condemnations is usually apparent only years after the condemnation takes place. Even then, it may only become clear after considerable investigation and analysis. In the Poletown case, the GM factory did not even open until 1985, four years after the 1981 condemnations and two years behind schedule.48 And not until the late 1980s did it become clear that the plant would produce far less than the expected six thousand jobs.49
By that time, public attention had moved on to other issues, and in any event many of the politicians who had approved the original condemnations might no longer be in office. Given such limited time horizons, a rational, self-interested Detroit political leader might well have been willing to support the Poletown condemnations even if he or she anticipated that the expected benefits would eventually fail to materialize. By the time that became evident to the public, he could be out of office in any event. In the meantime, he could benefit from an immediate increase in political support from General Motors and other private interests benefiting from the taking.
Third, the victims of economic development and blight condemnations tend to be poor and politically weak, which sharply curtails their ability to resist. In many cases, they are low-income, racial minorities, or both.50 In areas where private-to-private condemnations are common, racial minorities constitute 58 percent of the population (compared to 30 percent in the United States as a whole), and adults with a less than a high school level of education are 34 percent (compared to 19 percent nationally).51 In other cases, as in Kelo, they are not poor but still have far less political influence than the developers and other well-organized interest groups who benefit from takings. As a general rule, local governments are unlikely to target the property of the wealthy and influential for these kinds of takings, because they wish to avoid a difficult political struggle. But they rightly believe they can more easily overcome the resistance of the poor or politically weak. Such would have been the result in the Kelo case itself but for the unusual intervention of the Institute for Justice.52
Some claim that abusive condemnations will be constrained by the power of property owners over local governments. Because property owners are the dominant interest in many localities,53 they may be able to use their political power to prevent abusive economic development condemnations. However valid with respect to other functions of local government, this argument is flawed when applied to economic development takings. Because of their nontransparent nature and the general problem of political ignorance, property owners are unlikely to be able to determine which development condemnations serve their interests and which do not. Moreover, even in situations where voters do understand the trade-offs involved, the relevant variable is not the political power of property owners generally, but the power of those who are targeted for condemnation. As in Poletown, these are likely to be poor, politically unorganized, or both.
The political weakness of most of the property owners targeted by economic development and other private-to-private takings undercuts claims that lack of resistance to many such takings proves that they are justified or at least do not inflict substantial harm.54 Many owners capitulate simply because they believe—often correctly—that resistance is futile. As we saw in chapter 1, many of the Fort Trumbull owners chose not to fight the condemnation of their land for precisely that reason. Even those who did persist might well have given up much earlier, if not for the unexpected involvement of the Institute for Justice.55 Resistance may also be uncommon because condemning authorities target people who are unlikely to have the influence to fight back effectively, while avoiding initiating condemnations against those who do. The NLDC’s decision to exempt the influential Italian Dramatic Club while proceeding against less powerful landowners is an example of this phenomenon.
Public reaction against abuses of eminent domain has at some points in history led to the imposition of tighter political constraints on takings,
including the use of eminent domain by railroads and mining interests in the nineteenth century.56 But the persistence of harmful economic development and blight takings on large numbers of people for many decades on end suggests that such political checks work far too slowly, when they work at all.
Blight Takings
Although the Kelo case focused public attention on the dangers of pure “economic development” takings, far more people have been harmed by blight condemnations, takings ostensibly intended to alleviate dangerous conditions and social pathologies that plague urban neighbhorhoods. Since the beginning of large-scale blight removal programs in the 1930s and 1940s, hundreds of thousands of people have been forcibly displaced by such takings. Blight condemnations pose two dangers. First, over the years the concept of “blight” has been expanded so far that, in many states, almost any area can be declared blighted and thereby open to condemnation. Second, even condemnations in genuinely “blighted” areas often cause far more harm than good, inflicting tremendous suffering on the poor and politically weak.
Expansion of the Defi nition of Blight
The concept of “blight” has turned out to be highly susceptible to creative expansion. Early blight cases upheld condemnations in areas that closely fit the layperson’s intuitive notion of “blight”: dilapidated, dangerous, disease-ridden neighborhoods. In Berman v. Parker, the 1954 case where the Supreme Court upheld the constitutionality of blight takings, the neighborhood in question was characterized by “[m]iserable and disreputable housing conditions.”57 According to studies cited by the court, “64.3% of the dwellings [in the area] were beyond repair, 18.4% needed major repairs, only 17.3% were satisfactory; 57.8% of the dwellings had outside toilets, 60.3% had no baths, 29.3% lacked electricity, 82.2% had no wash basins or laundry tubs, [and] 83.8% lacked central heating.”58
In more recent decades, many states expanded the concept of blight to encompass almost any area where economic development could potentially be increased. In the 2001 West 41st Street Realty case, a New York appellate court held that the Times Square area of downtown Manhattan was sufficiently “blighted” to justify the condemnation of land needed to build a new headquarters for the New York Times!59
In the 2003 case of City of Las Vegas Downtown Redevelopment Agency v. Pappas, the Nevada Supreme Court held that downtown Las Vegas is blighted, thereby permitting condemnation of property for the purpose of building a parking lot servicing a consortium of Las Vegas ca-sinos.60 The court concluded that an area suffers from “economic blight” if there are “downward trends in the business community, relocation of existing businesses outside of the community, business failures, and loss of sales or visitor volumes.”61 In two recent controversial decisions, the New York Court of Appeals—that state’s highest court—ruled that a neighborhood can be declared blighted and subject to condemnation if there is “room for reasonable difference of opinion as to whether an area is blighted” in the sense of suffering from “economic underdevelopment” or “stagnation.”62 It reached this conclusion despite the fact that the clause of the New York state constitution authorizing blight condemnations applies only to “substandard and unsanitary areas.”63 The two rulings upheld the condemnation of substantial amounts of property based on extremely dubious evidence of blight, for takings that benefited a firm controlled by powerful developer Bruce Ratner in one case, and Columbia University in the other.64
Virtually any neighborhood, no matter how prosperous, occasionally suffers “downward trends in the business community, . . . business failures, and loss of sales or visitor volumes.”65 Similarly, it is hard to find any area in the country where there is no room for “reasonable disagreement” about whether it is underdeveloped. If Times Square and downtown Las Vegas qualify as “blighted,” it is difficult to think of any place that would not. A sufficiently expansive definition of blight is essentially equivalent to authorizing economic development takings. Almost any large commercial enterprise can argue that condemning land for its benefit might help improve “trends in the business community.”66
While these cases may seem extreme, they are not aberrations but the culmination of a widespread trend toward expansion of the definition of blight. In 1997, a St. Louis suburb declared a “thriving shopping mall” blighted because it was “too small” and especially because it lacked a Nordstrom’s.67 Officials in the affluent city of Coronado, California, went even further and declared the entire jurisdiction blighted in 1985.68 Similarly broad blight designations have been adopted in many other urban and suburban communities.69 Overall, as one study concludes, the concept of “’blight’ has lost any substantive meaning” and has become a mere “legal pretext” enabling local governments to attract funding and dispose of property as they see fit.70
In the aftermath of Kelo, some states have enacted tighter definitions of blight, and five have completely abolished blight takings that transfer property to private parties.71 But, as we shall see in chapter 5, broad definitions of blight still persist in many parts of the country.
Condemnations in Genuinely Blighted Neighborhoods
The second danger posed by the blight exception is perhaps even more serious. Even in cases where the condemned property really is blighted under a narrow definition of the term, condemnation of property often serves the interests of developers while actually causing harm to the area’s residents. Indeed, condemnations in truly blighted neighborhoods have probably caused far more harm than either Poletown-style economic development condemnations in nonblighted areas or condemnations driven by dubious expansions of the definition of blight.
Large-scale condemnations to alleviate blight began in the 1920s and 1930s, and greatly expanded with the “urban renewal” programs of the 1940s and 1950s. Early and mid-twentieth-century urban planners believed that they were essential to the promotion of economic growth and the alleviation of urban pathologies, such as poverty, crime and threats to public health.72
Some leading early planning advocates also viewed poor minorities who moved to urban areas in large numbers in the early twentieth century as “invaders” who helped spread social pathology.73 Many analogized blighted neighborhoods to diseases that could be excised by expert-led government intervention in much the same way as expert doctors perform operations to excise diseases.74 Such medical analogies were used to justify eliminating poor neighborhoods entirely through the use of eminent domain rather than improving them through piecemeal reforms. As New York City Comptroller Joseph McGoldrick put it in 1944, “[w]e must cut out the whole cancer and not leave any diseased tissue.”75
The Supreme Court embraced such analogies in its landmark decision in Berman v. Parker, which approvingly cites “experts [who] concluded that if the community were to be healthy, if it were not to revert again to a blighted or slum area, as though possessed of a congenital disease, the area must be planned as a whole.”76
The results produced by these supposedly enlightened applications of planning expertise were far from healthy themselves. Blight takings displaced hundreds of thousands of people and inflicted enormous social and economic costs, with comparatively few offsetting benefits.77 Legal historian Wendell Pritchett concludes that the use of eminent domain in “urban renewal programs uprooted hundreds of thousands of people, disrupted fragile urban neighborhoods and helped entrench racial segregation in the inner city.”78 By 1963, over 600,000 people had lost their homes as a result of urban renewal takings.79 The vast majority ended up living in worse conditions than they had experienced before their homes were condemned,80 and many suffered serious nonpecuniary losses as well.81 More recent blight condemnations have inflicted similar harms on communities and poor property owners.82
The sheer scale of forced relocations driven by “urban renewal” condemnations dwarfs the harms inflicted by economic development condemnations in nonblighted areas. While Poletown’s displacement of some 4,200 people was regarded as extreme compared to other economic development takings,83 it is worth noting that the blight condemnation upheld in Berman was part of a redevelopment plan that forcibly displaced over 5,000 people,84 and this fact evoked little outrage or surprise among contemporary observers. Wendell Pritchett points out that “none of the briefs in Berman even mentioned the fact that the project would uproot thousands of poor blacks.”85 Sociologist Herbert Gans estimates that, altogether, some one million households were displaced by federally sponsored urban renewal condemnations between 1950 and 1980.86 Assuming that the average household size was equal to the 1962 national average of 3.65 persons,87 that means that federally sponsored urban renewal condemnations forcibly relocated over three million people. New York City forcibly displaced some 250,000 people between 1946 and 1953 alone.88
This history points to a serious flaw in the logic endorsed by the Michigan Supreme Court in Hathcock: that in blight cases the disposition of condemned property is irrelevant because “the act of condemnation . . . itself . . . was a public use,”89 a claim later also endorsed by Justice Sandra Day O’Connor in her dissent in Kelo.90 As Herbert Gans pointed out, the key flaw in urban renewal condemnations is precisely the fact that “redevelopment proceeded from beginning to end on the assumption that the needs of the site residents were of far less importance than the clearing and rebuilding of the site itself.”91 As a result, the residents of blighted neighborhoods suffered massive harm, while their former homes were converted to commercial or residential uses that primarily benefited developers and middle-class city residents.92 In the Berman case, for example, only about 300 of the 5,900 new homes built on the site were affordable to the neighborhood’s former residents.93
Gans and other reformers recommend that redevelopment programs be redesigned so as to create “benefit” for “the community as a whole and for the people who live in the slum area; not for the redeveloper or his eventual tenants.”94 But such recommendations are flawed because they assume that benefiting local residents and “the community as a whole” is the real purpose of blight takings in the first place. In reality, such condemnations often deliberately target poor and minority property owners for the purpose of benefiting politically powerful development interests and middle-class homeowners who are expected to move in after the redevelopment process is completed.
So many poor African Americans were dispossessed by urban renewal condemnations in the 1950s and 1960s that urban renewal came to be known as “Negro removal” in many places.95 Famous African American writer and political activist James Baldwin stated that “urban renewal . . . means moving the Negroes out. It means Negro removal, that is what it means.”96 Urban elites sometimes deliberately focused urban renewal condemnations on the poor and African Americans.97 Between 1949 and 1963, 63 percent of all families displaced by urban renewal condemnations were nonwhite.98 Between 1949 and 1973, some two-thirds of the people displaced under takings sponsored by the Urban Renewal Act of 1949 were African American.99 Hispanic groups, such as Puerto Ricans, were also commonly targeted.100
Today, blight takings are nowhere near as common as in the era of large-scale urban renewal projects in the 1950s and 1960s. Events such as the urban riots of the late 1960s led to a curtailment of urban renewal programs.101 Some defenders of Kelo therefore claim that abusive condemnations have largely been eliminated.102 But blight takings are still relatively frequent and still tend to target the poor and racial minori-ties.103 In the late 1990s and early 2000s, the era immediately preceding Kelo, urban development projects involving residential displacement had become more common than at any time since the 1960s.104
These patterns led the NAACP and the Southern Christian Leadership Conference to file an amicus brief urging the Supreme Court to forbid economic development takings in Kelo.105 The brief emphasized that economic development takings disproportionately target the minority poor, and cited various recent examples.106
There may still be an economic rationale for using condemnation as a means of alleviating blight. It may sometimes be the case that the elimination of blight involves a collective action problem, since no one property owner in a blighted neighborhood will have a strong incentive to make major improvements on his or her own property unless others in the area do the same. If a single owner is the only one to make improvements, he is unlikely to recoup their full value because the value of the property will still be dragged down by virtue of its location in a generally dilapidated area. On the other hand, if all or most of the other owners make improvements on their holdings, the first owner can reap the benefits of increased land values in the area even if she does nothing to improve her own tract. Yet even in these situations, the fact that some centralized coercion may be desirable does not mean that the use of condemnation is the proper solution to the problem. Local governments have numerous other tools to deal with these sorts of problems, including the application of nuisance law, enforcement of housing codes, and the use of tax abatements or subsidies to incentivize improvement of dilapidated properties.107
The use of eminent domain is likely to be inferior to less coercive policies because it requires dispossession of the current residents of “blighted” neighborhoods, and it carries a much more severe risk of interest group “capture.” Even if condemnation may be theoretically justified in some cases of blight, the interest group dynamics involved suggest that real-world blight condemnations are more likely to be driven by the needs and interests of politically powerful developers and middle-class residents than those of the politically weak citizens of blighted neighborhoods.
Many of the same flaws undermine claims that the use of eminent domain for transfer to private parties is needed to address the dangers posed by vacant and abandoned property in deteriorating urban neighborhoods, an issue emphasized in an important recent work by sociologist Debbie Becher.108 She estimates that some 92% of the lots taken by eminent domain in Philadelphia between 1992 and 2007 were vacant, and mostly located in “distressed” or “devastated” neighborhoods (though she still found hundreds of takings targeting occupied lots as well).109
When private developers need to acquire vacant lots for their projects, it should not be difficult for them to do so through voluntary transactions. If the current owners have no plans to use the lots themselves, but are saddled with expenses for property taxes or maintenance, they may actually be eager to sell for any reasonable price, if only to get rid of a tax liability.110
If the owners are delinquent on their taxes, or endangering public health and safety, local governments have many other tools for acquiring the delinquent property or forcing the owner to repair dangerous condi-tions.111 In addition to imposing penalties on owners of delinquent property, local governments can also foreclose on them; while foreclosure procedures in some states are difficult and cumbersome, there are a variety of ways to improve them.112 Such reform is surely preferable to trying to combat tax delinquency by giving government broad power to condemn property in “blighted” areas regardless of whether it is delinquent or poses a health risk or not. Moreover, eminent domain processes are also procedurally complex, and many defenders of economic development and blight condemnations argue that vulnerable property owners should be protected by making the procedures even more elaborate.113
Finally, it should also be emphasized that vacant lots are not necessarily either abandoned or harmful. In some cases, owners of vacant lots are holding on to them as an investment or waiting until it becomes more clear what the best use of the particular lot is.114 Premature construction of facilities that turn out not to be economically viable is wasteful, and may impede neighborhood development rather than further it.
The ultimate long-term solution to blight is economic growth. As neighborhoods become wealthier, their residents can more easily afford to improve dilapidated buildings and repair infrastructure. Fewer lots will be left vacant, as there are more economically viable uses for them. Recent research in development economics shows that the security of property rights is crucial to long-term development because insecurity deters investment for fear that the owners will lose the fruits of their efforts.115
In sum, even in areas where there is “real” blight—perhaps especially there—the condemnation process is likely to cause more harm than benefit and to be abused for the benefit of private interests at the expense of the poor and politically weak.
The Holdout Problem
The most common argument for economic development and blight takings is that they are necessary to facilitate economic development in situations where large-scale projects require assembling a large number of lots owned by numerous individuals. If the coercive mechanisms of eminent domain cannot be employed, it is claimed a small number of “holdout” owners could either block an important development project or extract a prohibitively high price for acquiescence.116 As renowned property scholar Michael Heller puts it, without eminent domain, “[t]he United States lacks a good, fast way to assemble land for needed economic development.”117
For example, let us assume that a group of fifty contiguous properties with separate owners are each worth $100 if dedicated to their current uses ($5,000 in all), but they would be worth a total of $50,000 (an average of $1,000 each) if combined into a single large development project in order to build a factory. There would thus be a net social gain of $45,000 ($50,000 - $5000) from combining the properties into a single tract.
But if the owners of the separate properties know that a developer is trying to buy them all up in order to build the factory worth $45,000 more than the current use of their lands, any one of them could try to hold out and refuse to sell unless the developer gives them, say, $5000. It would be rational for the developer to accede to this demand if it were made by only one owner; in such an eventuality the developer still makes a net gain of about $40,100.118
But if all fifty current owners (or even just ten of them) resort to the same strategic gambit, the project will be blocked. In that scenario, payments to the owners will equal or exceed the project’s expected profit. In theory, then, holdouts could block many socially valuable assembly projects.
Some defenders of economic development takings contend that holdouts exacerbate the problem of sprawl.119 Since there are more potential holdouts in densely populated urban areas, if developers are not allowed to use eminent domain to overcome them, they will have incentives to build in suburban and rural areas, thereby increasing sprawl.
In analyzing holdouts, it is important to distinguish between “strategic holdouts”—those who refuse to sell because they hope to obtain a higher price—and “sincere dissenters” who genuinely value their land more than the would-be developer does.120 The former are attempting to take advantage of the developers’ assembly problem in order to raise the price, as the above example illustrates.
The latter, by contrast, are not attempting to get a better price but are instead unwilling to sell because they genuinely place a high enough value on their property that they prefer to keep it rather than accept any payment that the buyer is willing to offer. For example, the resisting property owners in Kelo and Poletown repeatedly indicated that their objective was to keep their homes rather than to obtain a higher price from the condemning authority.121 As New London lawyer Wesley Horton noted at the Kelo oral argument, “there are some plaintiffs who are not going to sell at any price. They want to stay there.”122
In a situation where there are sincere dissenters, transferring their property to a developer would actually lower the overall social value of the land because, by definition, the dissenters value it more than the developer does. An ideally efficient policy would, therefore, enable developers to prevent strategic holdouts but not allow them to override the wishes of sincere dissenters.
This is true even if the dissenters are motivated by unusual “idiosyncratic” preferences, which are sometimes described as distinct from more common types of sincere dissenters.123 If a sincere dissenter refuses to sell at the price offered by would-be developers because she attaches some unusual idiosyncratic value to the property in question, leaving the land in her hands is still the most efficient result. From an economic standpoint, it does not matter why the current user values the land more than a potential purchaser does, only that the former does in fact value it more. Indeed, one of the main benefits of private property is precisely that it enables owners to pursue their own personal values, even if those values are different from those of most other members of the community.
As is suggested by the existence of numerous large development projects that did not rely on eminent domain, much development can proceed without fear of holdouts either because local property owners are unlikely to attempt the strategy or because developers can build around them if they do, without undermining their overall project. Even large and complex development projects can usually go forward despite having to build around a small number of dissenters.124 Cases where a proposed project is genuinely impossible without forcibly removing every preexisting owner are extremely rare.125 In many cases, “the ‘holdout argument’ is often used as a bargaining tactic for invoking eminent domain rather than the result of a true assessment of the strategic importance of the parcel of property” - a reality dramatically demonstrated by the willingness of developers to proceed with projects where the use of eminent domain was prevented by judicial or political resistance, despite claims that a holdout problem existed.126
It is highly likely that there was no genuine holdout problem blocking the Fort Trumbull development plan at issue in the Kelo case, as illustrated by the New London Development Corporation’s willingness to build around the politically connected Italian Dramatic Club.127 In an amicus brief focusing on this issue, prominent University of Chicago Law School property scholar Richard Epstein pointed out that “holdouts were a complete nonproblem” in Fort Trumbull because property already owned by the government in the area was more than large enough to contain all the new facilities expected to be built under the NLDC’s plan.128
Some defenders of eminent domain point to “architectural holdouts”— people who refuse to sell properties that ultimately become surrounded by a development project—as a justification for the need to expel such recalcitrants by force.129 But these cases actually prove the opposite point. Rather than showing that eminent domain is needed to prevent holdouts from blocking valuable projects, such stories demonstrate that many such projects can proceed even if a few sincere dissenters refuse to sell. These stories thereby weaken the rationale for using eminent domain to clear away property owners who refuse to sell to developers. It turns out that these projects actually did not need to acquire 100 percent of the land demanded by their developers in order to succeed.
And if the project can proceed without acquiring the land of every single owner in the area, there is little risk, if any, that a small number of strategic holdouts can scuttle the project by refusing to sell unless they get an exorbitant share of the project’s expected profits. Indeed, the fact that the holdouts refuse to sell even after it became clear that the development project would proceed despite their refusal, is a strong indication that they were not strategic holdouts at all. They were, in fact, sincere dissenters. If so, allowing them to stay in place not only respects their property rights, but is actually the economically efficient course of action. By refusing to sell even though there is no prospect of becoming a strategic holdout, sincere dissenters show that they genuinely value the land in question more than the developer does.130
Sincere dissenters could potentially block economically efficient assembly projects in situations where the would-be purchaser must offer the same price to every existing owner in an area and is thereby unable to pay a premium to buy out the sincere dissenters, even though the purchaser genuinely values the land more than they do.131 But this problem can be overcome if the purchaser is willing and able to offer different prices to different owners.
Some development projects do require acquisition of 100 percent of the land in a given area. In such situations, where holdouts could be a genuine problem, private developers have tools for dealing with holdout problems without recourse to government coercion. For reasons Lloyd Cohen points out, holding out is not a simple strategy: “The successful holdout requires accurate information and a high degree of negotiating, bargaining, and bluffing skills.”132 The would-be strategic holdout needs to first know that there is an assembly project going on and then be able to bargain effectively with those undertaking the project. Developers seeking to prevent holdout problems must therefore either deprive potential holdouts of the “accurate information they need” or take away their ability to “negotiate, bargain, and bluff.”133
Fortunately, there are at least two common strategies that can help achieve these objectives. The first—secret assembly—stymies potential holdouts by depriving them of information. The second—precommitment— undercuts the would-be holdout’s ability to bargain. In both cases, developers are able to prevent strategic holdouts but cannot victimize sincere dissenters.
Secret Assembly
In many cases, developers can negotiate with individual owners in secret or use specialized “straw man” agents to assemble the properties they need without alerting potential holdouts to the possibility of making a windfall profit by holding the project hostage.134 Secret assembly prevents holdouts by denying them knowledge of the existence of a large assembly project. It also allows the developer to buy out potential sincere dissenters who value their property more than other landowners in the area, because the assembler can pay different prices to different owners.
The major drawback of secret assembly is the possibility of detection. As soon as potential holdouts learn that the land in the area is being bought up as part of a large assembly project, they have the information that they need to engage in strategic bargaining. However, empirical evidence suggests that this is not as serious a problem as might be thought.
Even high-profile property owners undertaking major projects have routinely used secret assembly successfully. For example, the Disney Corporation resorted to it to assemble the land needed to build Disney World in Orlando, Florida, in the 1960s.135 Disney has also made effective use of the same strategy to acquire land for a major new theme park in Virginia.136 Others who have successfully used secret assembly include Harvard University, which has repeatedly used it to acquire property for major projects in the Boston area,137 and locally prominent developers in Las Vegas, Providence, and West Palm Beach, among others.138 If even high-profile developers such as Disney and Harvard can successfully utilize secrecy without their plans being discovered in time for holdouts to take advantage of the information, then lesser-known developers—who are less apt to be closely watched by the public and the press—should be able to do so with at least equal prospects of success.
As Daniel Kelly points out in an important article, the use of secrecy to prevent holdouts has a major advantage over eminent domain. Condemnation “may force a transfer where the existing owners actually value the land more than the private assembler.”139 By contrast, secrecy “eliminates the risk of erroneous condemnations” because it relies on “voluntary transactions, which ensure that every transfer is mutually beneficial (and thus socially desirable).”140 Many property owners attach “subjective value” to their land over and above its fair market value, for example those with strong social ties in a particular neighborhood. Secret assembly allows such people to refuse to sell unless and until they are offered enough compensation to fully offset their losses. It thereby enables developers to prevent strategic holdouts but does not allow them to ignore the wishes of sincere dissenters.
The limitations of the secret assembly strategy help explain why eminent domain should, in at least some cases, be available for traditional public uses such as government-owned facilities and private common carriers, even though it should not be used to transfer land to private developers. Unlike a private developer, government often cannot operate in secrecy because of the need for open deliberation and transparency in public administration.141 Private developers also have an advantage in keeping their purposes secret, because they can usually act more quickly than governments, thus leaving less time during which their plans might be discovered by potential holdouts.142 Moreover, secrecy in government, even if feasible, might pose a heightened risk of corruption.143 These points are important because many commentators have long assumed that the “holdout rationale applies equally to both takings for the government and takings for private parties.”144
A slightly different rationale can justify the use of eminent domain for private common carriers such as railroads and public utilities. In order to build a railroad or power line that connects Point A to Point B, the developer must acquire properties that connect with each other in a narrow, relatively straight line between the two points. Moreover, he or she cannot leave out even a small stretch of the distance, lest there be a break in the resulting railway or power line, rendering the whole useless. Other things equal, it is reasonable to assume that it is much more difficult to conceal the true purposes of such an unusual pattern of acquisition than those of the acquisitions for projects such as Disney’s or Harvard’s. The logic is similar to that which justifies the use of eminent domain to acquire land to build publicly owned roads.145 Furthermore, because of the highly regulated nature of public utilities, their acquisition processes may often require public openness for some of the same reasons as those of government. Therefore, common carriers and public utilities may need to utilize eminent domain, while ordinary developers probably will not.
Even in the case of roads and other infrastructure facilities that require the acquisition of rights of way along a predetermined route, it is possible that private developers can effectively use secret assembly and other noncoercive means to overcome assembly problems in at least some cases, as economist Bruce Benson showed in a 2005 article.146 Even in this classic scenario, which is particularly conducive to potential holdouts, the need for condemnation may be overstated. If so, that fact strengthens the case for secret assembly as a superior alternative to condemnation in cases where private parties seek to acquire property for economic development.
Precommitment Strategies
A second mechanism by which developers can prevent holdout problems without recourse to eminent domain is by means of “precommitment” strategies or “most favored nation” contract clauses. The developers can sign contracts with all the owners in an area where they hope to build, under which they commit themselves to paying the same price to all, with, perhaps, variations stemming from differences in the size or market value of particular properties. By this means, the developer successfully “ties his hands” in a way that precludes him from paying inordinately high prices to the last few holdouts.147 Precommitment strategies work because they prevent the would-be holdout from being able to “negotiate, bargain, and bluff.”148 Any such attempt at bargaining or bluffing can be met with the response that the buyer is unable to accept the holdout’s terms because doing so would render the entire project unprofitable by requiring an equally hefty payout to all the other sellers.
In some respects, a precommitment approach is even better than secrecy, because it can potentially be utilized even by assemblers that must operate openly such as government agencies and public utilities. But precommitment may be a more difficult strategy to implement effectively because it requires that the buyer predetermine a set price for each lot to be purchased in advance of beginning the assembly process. This increases the likelihood of making a mistake such as offering too low a price as a result of underestimating the value the seller attaches to the land. Furthermore, empirical evidence on the use of precommitment strategies is much sparser than that for secrecy. The literature on them has not so far revealed real-world examples of successful use of this strategy for major development projects comparable to the effective use of secrecy by Disney, Harvard, and others.
Implications
Between them, secrecy and precommitment provide alternatives to eminent domain that render it largely unnecessary for use in private economic development projects. They also help explain why private assembly projects can and should be distinguished from the assembly of land for government use or for common carriers and utilities.
In addition to overcoming the holdout problem, secret assembly and precommitment strategies also undercut other, less well-known justifications for using eminent domain for private development. For example, it is theoretically possible that eminent domain is needed to overcome high transaction costs of contacting individual owners and negotiating with them.149 In practice, however, the transaction costs of eminent domain are likely to be just as high as those of negotiation. The use of eminent domain still requires the government to contact the present owners, and often also to go through various procedural requirements—some of them potentially time-consuming—before the land can be taken.150
Eminent domain for private projects has also been defended on the ground that it is necessary to promote projects that create benefits for the community that might not be taken account of by private developers acting on their own. For example, some development projects might provide public goods for the community that no individual developer has an incentive to produce on their own, because once they are created, area residents can enjoy them even without paying to defray the costs of production.151
But negotiation, secret assembly, and precommitment strategies can be used to acquire land for such projects just as readily as for other types of private development. If the government concludes that private developers are not undertaking enough of these projects because they are failing to internalize some of their benefits to the community, it can simply offer to subsidize them. The government can most efficiently provide public goods by subsidizing their production, rather than by using eminent domain.152 Subsidization from general tax revenue avoids the risk of inefficient transfers inherent in the use of condemnation, and also insures that the cost of producing the good is borne by the entire community that benefits from it, rather than arbitrarily concentrated on the preexisting owners of condemned property.
The availability of these alternatives to eminent domain also undercuts claims that condemnation for economic development is needed to combat sprawl.153 Developers who have an assembly project in an urban area can use secret assembly to forestall strategic holdouts. In cases where greater population density is correlated with a greater number of sincere dissenters who genuinely value their land more than the developer does, this suggests that it would be more efficient for developers to build in less dense areas, where there are fewer competing uses of property, and fewer people will be displaced.
As Robert Bruegmann shows in an important book, sprawl has beneficial as well as negative aspects. It enables people to enjoy greater privacy and autonomy, and diminishes housing costs.154 Low-density living also helps mitigate some environmental problems associated with high-density areas such as local air pollution and damage to coastal environ-ments.155 Another advantage is channeling new development toward locations where it destroys less subjective value and displaces fewer existing land uses.
To the extent that some areas still suffer from excessive sprawl, governments have numerous other tools for mitigating the issue, such as offering subsidies or tax breaks for development in denser areas. If diminishing sprawl truly benefits the community as a whole, as advocates claim, it makes sense to impose the costs on the entire community rather than arbitrarily concentrate them among victims of eminent domain. Spreading costs is also likely to be more efficient than eminent domain, because it is less likely to destroy subjective value concentrated in particular properties that might be condemned. Cities can also greatly reduce sprawl by cutting back on the rigid zoning restrictions that massively inflate housing and real estate prices in many northeastern and West Coast urban areas.156
It is impossible to categorically rule out the possibility that there might be socially beneficial economic development projects that can only succeed through the use of eminent domain. We can, however, conclude that such projects are likely to be extremely rare, in light of the fact that even major projects undertaken by prominent corporations and universities successfully rely on secret assembly.
In theory, we should still allow the use of eminent domain for those rare efficient development projects that cannot utilize secrecy or precommitment to prevent strategic holdouts.157 Unfortunately, however, there is no way of confining the use of the economic development rationale to those rare circumstances. Once the prospect of economic development or blight alleviation is allowed to justify takings, it can and will be used by powerful interest groups to facilitate projects that fail to provide economic benefits that justify their costs, could have been undertaken without resorting to coercion, or both.158 The political power of the beneficiaries of condemnations is likely to be a far more potent determinant of the decision to condemn than any objective economic analysis of holdout problems.
Public Use and the Living Constitution
The evidence on the real-world effects of a broad interpretation of public use has important implications for the status of Public Use Clause under “living Constitution” theories of constitutional interpretation. Although constitutional theorists who adhere to the living Constitution school of thought tend to also endorse the Court’s decisions in Berman and Kelo, there is in fact a strong living Constitution case against these outcomes.
There are many different variants of living Constitution theory. Not all of them are at odds with a broad interpretation of public use. But several of the most influential versions of living Constitution theory do cut against it. These include John Hart Ely’s “representation-reinforcement” theory,159 theories that claim that judges should use common law and other flexible interpretative methods to adapt the Constitution to take account of modern conditions,160 and Ronald Dworkin’s theory that the Constitution should be interpreted in accordance with liberal principles “so as to make its history, all things considered, the best it can be.”161 The same is true of “popular constitutionalism,” the idea that constitutional interpretation should be influenced by popular political movements.162
Representation- Reinforcement
Representation-reinforcement theory suggests that the judiciary should usually be deferential to the democratic process, except in cases where judicial intervention might actually strengthen democratic control of government. Obvious examples of such representation-reinforcing judicial intervention are decisions protecting freedom of speech or the right to vote, without which democracy cannot work. But representationreinforcement theorists also argue that courts can intervene to protect groups that are unable to effectively protect themselves in the political system.163 Representation-reinforcement theory builds on the famous footnote 4 of United States v. Carolene Products (1938), where the Supreme Court suggested that stronger judicial intervention is warranted in cases where it is needed to protect “discrete and insular minorities” whose political weakness “tends to seriously curtail the operation of those political processes ordinarily to be relied upon to protect minori-ties.”164 The classic example is that of unpopular racial or religious minorities, or groups such as gays and lesbians.165 But, in principle, the same point applies to judicial review of laws targeting other politically weak or unpopular groups. As Ely pointed out, it extends to all of “society’s habitual unequals, notably racial minorities, but also aliens, ‘illegitimates,’ and poor people.”166
As we have seen, blight and economic development takings disproportionately target the poor and racial minorities, and other politically weak groups.167 Even those victims who are not poor or racial minorities are, at the very least, usually people with little influence over local and state government, a point missed by critics who argue that the people like the Kelo plaintiffs do not deserve judicial protection under representationreinforcement theory, because they were neither poor nor members of historically oppressed minority groups.168 Judge Richard Posner, for example, argues that judicial intervention to enforce public use limitations on takings is unnecessary because “[p]roperty owners and the advocates of property rights are not a helpless, marginalized minority.”169 While this may be true of property owners in general, it is not true of most of those who are targeted for condemnations that transfer property to private interests.170
Wealthy and politically connected property owners rarely suffer from economic development and blight takings, because politicians and developers are usually savvy enough to avoid targeting them. Similarly, the political power of the press as a whole will not prevent government from violating free speech rights if such violations usually target segments of the press that are politically unpopular or have little lobbying power. Just as the power of the press does not obviate the need for judicial enforcement of the First Amendment, the political power of property owners cannot substitute for judicial review of economic development and blight condemnations.
Moreover, in at least one important respect, victims of eminent domain are actually less able to use the political process to protect themselves than are other politically weak minorities. If they have the right to vote, the latter can at least try to form new political coalitions at the next election and seek to elect candidates more favorable to their interests. By contrast, victims of eminent domain are often forced to leave the communities where they live, if their homes are taken. The same is often true of small business owners, whose loss of their businesses often forces them to move as well.
People who are forced to leave the jurisdiction that condemned their property cannot continue to vote in local elections and thereby forfeit most of their power to use the political process to protect themselves. By the time the next election happens, they are no longer around to try to “vote the bastards out.” They can still potentially seek intervention by the federal or state government from their new location. But, for politically weak groups, trying to influence a higher-level government is likely to be even more difficult than influencing a lower-level one.
In addition, the ability of victims of eminent domain to use the political process is further undermined by the economic and psychological trauma of forced displacement.171 People who have suffered these effects often have little time, resources, and energy to devote to political activity, since they are understandably focused on trying to recover from their ordeal and start news lives elsewhere. As Justice Clarence Thomas put it in his Kelo dissent “[i]f ever there were justification for intrusive judicial review of constitutional provisions that protect ‘discrete and insular minorities,’ . . . surely that principle would apply with great force to the powerless groups and individuals the Public Use Clause protects.”172
Even strong advocates of representation-reinforcement theory would not necessarily want courts to intervene any time that a politically weak group has suffered a defeat in the political process. In that event, judges might have nearly unlimited power to reverse legislative decisions they do not approve of. But the situation is different when a weak minority is targeted in a way that might plausibly be connected to an enumerated constitutional right.
John Hart Ely’s influential work emphasized the need for courts to aggressively enforce provisions of the Constitution that can plausibly be interpreted as representation-reinforcing.173 He even specifically described the compensation requirement of the Fifth Amendment as one of them, because it is a “protection of the few against the many.”174 The Public Use Clause contained in the same amendment can be described in much the same way. It too protects the politically weak few against the predations of both “the many” and narrow interest groups more powerful than themselves.
Representation-reinforcement theory does not necessarily require judicial protection for all politically weak minorities. Violent criminals, for example are a small, politically weak minority group. But few would advocate strong judicial scrutiny of laws that disadvantage them, because nearly everyone assumes that their political weakness is in some sense deserved.
Perhaps courts should only show special solicitude for underrepresented minorities if their weakness is undeserved.175 In the case of politically weak victims of eminent domain, it is hard to see any good justification for their powerlessness relative to developers, government planners, and others who promote blight and economic development takings. This is especially true in light of the fact that their weakness is often in part the result of poverty or racial minority status.
If we assume that the correct interpretation of “public use” is at least somewhat ambiguous, representation-reinforcement theory therefore counsels in favor of interpreting it in a way that would give greater protection for property rights.
Common Law Constitutionalism
Common law constitutionalism is a strain of living Constitution theory that has attained greater prominence in recent years, thanks in large part to the important work of David Strauss.176 The core idea of common law constitutionalism is that judges should treat constitutional law much as they have traditionally approached the common law: making decisions by paying close attention to precedent, while also adjusting that precedent to take account of new information and changing social conditions. Numerous judges who do not fully endorse common law constitutionalism still use this methodology in many of their rulings.
Common law constitutionalism’s general deference to precedent initially strengthens the case for adhering to the broad interpretation of “public use.” After all, the Supreme Court has followed that approach since 1954, when it decided Berman v. Parker.177 But common law constitutionalism also allows courts to reverse or narrow precedents, in some circumstances, just as judges often do in ordinary common law cases.178 David Strauss, the leading academic advocate of the theory, argues that precedent can be overruled in cases where an old rule has become “unworkable” (in the sense of creating internal contradictions in the rule) and in cases where courts purporting to apply the old rule have over time deviated from it.179
The ultra-broad definition of public use adopted in Kelo and other similar cases fits at least one of these two criteria. It is unworkable in the sense of being internally contradictory. Between Berman and Kelo, the Supreme Court adopted a deferential approach to public use issues but also repeatedly reiterated the idea that condemnations, which do not serve a genuine public purpose, are unconstitutional. As the Court put it in Hawaii Housing Authority v. Midkiff, its “cases have repeatedly stated that ‘one person’s property may not be taken for the benefit of another private person without a justifying public purpose.’ ”180 Justice John Paul Stevens’s majority opinion in Kelo similarly noted that “the City [of New London] would no doubt be forbidden from taking petitioners’ land for the purpose of conferring a private benefit on a particular private party.”181
Unfortunately, the Court’s adoption of the broad definition of “public use,” combined with broad deference to the government’s claims that a public benefit will actually be achieved by a particular taking, renders this constraint on condemnations unworkable. As we have seen, virtually any taking transferring property to a private party can be justified as promoting “economic development,” especially if the government is not even required to prove that the promised development will actually occur. Therefore, the rule adopted in cases, such as Berman, Midkiff, and Kelo, is self-defeating. It makes it virtually impossible for courts to enforce the requirement that takings cannot be constitutional “without a justifying public purpose.”182
Recognizing this problem would not necessarily require the Supreme Court to jettison the broad definition of public use entirely. It could instead adopt the approach advocated by Justice Sandra Day O’Connor in her Kelo dissent, which rejects private-to-private economic development takings but permits blight condemnations in areas that are genuinely blighted. From the standpoint of maintaining precedent, this would enable the Court to narrow the scope of Berman and Midkiff without overruling them entirely.183 But the economic development rationale for takings would, at the very least, have to be rejected, since it permits almost any taking that transfers property to a private business and thus makes it impossible to enforce any meaningful limits on the range of purposes for which property may be condemned.
The Court could, of course, have attempted to solve this problem by ruling that the Public Use Clause imposes no substantive constraints on takings at all, as advocated by Justice Stevens after his retirement from the Court.184 But that would be a radical break with centuries of precedent and therefore inimical to the common law approach so long as there is a reasonably viable alternative.185
Common law courts also often overrule precedent when they conclude that experience shows that a rule is pernicious or has harmful effects. As Strauss puts it, the “common law process” can take account of “the lessons of the past.”186 When it comes to economic development and blight condemnations, the courts can look to decades of experience in which such takings have inflicted great harm on the poor and politically weak, while producing little of the prosperity that supposedly justified them in the first place.
Finally, common law constitutionalist courts can consider the growing number of state supreme court decisions that had invalidated economic development takings under their state constitutions.187 State supreme court decisions are not binding precedent for federal courts. But common law courts often take account of relevantly similar decisions in other common law jurisdictions. American common law courts routinely cite relevant precedents from Britain, Australia, and other common law countries. The U.S. Supreme Court has even sometimes cited foreign decisions in constitutional cases, and common law constitutionalism supports this practice.188 The strong trend of state decisions striking down economic development takings and repudiating Kelo as a guide to the interpretation of state public use clauses is at least relevant for federal judges seeking to apply common law constitutionalism.
Ronald Dworkin’s Moral Theory of Constitutional Interpretation
The late Ronald Dworkin’s moral theory of constitutional interpretation is one of the most influential versions of living Constitution theory. Dworkin argued that constitutional interpretation should be influenced by moral considerations, though not completely determined by them. Where the constitutional text and history are relatively ambiguous, the Dworkinian judge will be guided by “the best available interpretation of American constitutional text and practice as a whole,” taking into consideration “justice and fairness and the right relation between then.”189 He or she relies on a “moral reading” of the Constitution that “brings political morality into the heart of constitutional law.”190
The Dworkinian jurist would rely less on such moral considerations in cases where the text and history of the Constitution is clear and un-ambiguous.191 But, as we saw in chapter 2, the broad interpretation of “public use” adopted by the Supreme Court in Kelo is, at the very least, far from clearly correct. Dworkin argued that judges should use moral reasoning to interpret constitutional rights that are broadly worded in “abstract moral language,” among which he specifically included those rights protected by the Bill of Rights.192 The term “public use” occurs in the Bill of Rights and certainly uses “abstract moral language.” A Dwor-kinian judge would therefore give consideration to moral theory in determining its meaning. He or she seeks to interpret the Constitution “so as to make its history, all things considered, the best it can be.”193
There are many different conceptions of justice that a Dworkinian judge could potentially rely on in addressing ambiguous elements of the Constitution. Dworkin himself discussed libertarian, utilitarian, egalitarian, and equal opportunity conceptions of justice with respect to property rights.194
Given the empirical record of economic development and blight condemnations, there is a strong case for overruling Kelo and Berman v. Parker under any of the four. This is fairly obviously true under a libertarian conception, which urges strong protection for property rights regardless of the wealth of the owner. A utilitarian conception of justice, which requires government to maximize the happiness and welfare of its citizens, would also condemn such takings, since they usually inflict far more harm than they create benefit. Moreover, much of the harm is inflicted on the poor, who can less easily bear the loss of property than the affluent. Egalitarian and equal opportunity conceptions of justice require the government to either seek to equalize the material wealth of their citizens or provide them with relatively equal starting points for pursuing economic opportunities.195 Blight and economic development takings are inimical to either of these approaches, because of their tendency to victimize the poor and racial minorities, thereby reducing their chances of either attaining the same standard of wealth as the average middle-class white American, or attaining equal opportunity.
Dworkin cautioned readers that a jurist applying his theory should “refuse to substitute his judgment for that of the legislature when he believes the issue in play is primarily one of policy rather than principle, when the argument is about the best strategies for achieving the overall collective interest through goals like prosperity or the eradication of poverty.”196 Such policy considerations relating to “overall collective interests” are part of the issue at stake in the debate over public use. But they are only a part. These kinds of takings also impinge on the rights of poor and politically weak minority groups.
As Dworkin recognized, some parts of the Constitution were adopted in part to ensure “the protection of individuals and minorities against the will of the majority.”197 The Public Use Clause and the Takings Clause are clearly examples of this type of provision. Moreover, in practice, enforcement of public use limitations on takings is likely to primarily benefit poor and politically weak minority groups. In some of his work, Dworkin emphasized the need to protect the poor against government policies that reduce the resources available to them, even in some cases where such redistribution promotes overall societal welfare.198
There is a strong Dworkinian case for interpreting the Public Use Clause to ban blight and economic development takings. The Dworkin-ian judge might, however, be open to other kinds of takings that transfer property to private parties, especially if the latter can somehow be distinguished from economic development takings in a way consistent with the text and history of the Public Use Clause.
Popular Constitutionalism
Popular constitutionalism is a relatively new theory that has attracted considerable attention over the last decade. It holds that constitutional interpretation is, and often should be, influenced by public opinion and popular political movements, such as the civil rights movement, the women’s rights movement, the gay and lesbian rights movement, and the gun rights movement.199 Some scholars discuss popular influence over constitutional interpretation as a purely empirical matter, holding that constitutional interpretation in the courts has been influenced by political movements, regardless of whether that influence is beneficial or not.200 But others contend that such influence is normatively desirable for a variety of reasons, including ensuring the legitimacy of the Constitution, adjusting its meaning to changing circumstances, and others.201 Such normative popular constitutionalists are not always clear on how strong a popular movement must be before it can legitimately influence constitutional interpretation. And few if any of them would argue that popular opinion should be the only factor that courts take into account in deciding constitutional questions.
If popular opinion should be given any significant weight in judicial decision-making at all, there is a strong popular constitutionalist case for reversing Kelo. It is difficult to find any modern Supreme Court decision that attracted popular opposition as broad as that aroused by Kelo, which has been consistently opposed by over 80 percent of the public.
Compared to other popular constitutional movements, the anti- Kelo movement stands out for the breadth of its support. Most popular constitutionalist movements draw primarily on one side of the political spectrum and stimulate bitter opposition on the other. For example, the feminist and gay rights movements drew primarily on the political left and were opposed by most conservatives, while the gun rights movement has the opposite valence.202 Most recently, the Tea Party movement has emerged as a popular constitutionalist movement on the political right, which has drawn skepticism from moderates and forceful opposition from the left.203
By contrast with these examples, opposition to Kelo cuts across conventional political lines, with groups as varied as the libertarian Institute for Justice, the popular conservative talk-show host Rush Limbaugh, leftwing presidential candidate Ralph Nader, and the NAACP all uniting in opposition to it.204 Public opinion polls show overwhelming opposition to economic development takings among liberals and conservatives, Democrats and Republicans, blacks and whites, women and men, and nearly every other significant demographic or political subset of the pop-ulation.205 Moreover, the breadth of opposition has held steady even years after Kelo, so it cannot be considered merely a knee-jerk reaction in the immediate aftermath of the case.206 If there was ever a case where popular constitutionalist movements can legitimately influence the outcome, this should be it.
It is possible that public opposition to Kelo was in part the result of ignorance. For example, as we shall see in chapter 5, voters may well have been ignorant of the fact that Kelo was largely consistent with previous Supreme Court precedent. But if ignorance vitiates the force of public opinion on constitutional issues, that is not so much a defense of Kelo as a critique of popular constitutionalism more generally. Political ignorance on numerous political issues—both constitutional and otherwise— is ubiquitous.207
A popular constitutionalist could still defend Kelo based on the theory that popular opinion can sometimes be outweighed by other considerations. It is also fair to observe that public opinion on blight takings is far less clear than that on pure economic development takings; though the opposition to the latter surely also implies opposition to blight takings based on extremely broad definitions of “blight” that make the blight rationale just as expansive as the economic development one. But whatever weight popular movements should have in constitutional deliberation, in this case it comes down firmly in favor of overruling Kelo.
Other Variants of Living Constitutionalism
Not every version of living constitutionalism cuts against Kelo. For example, some living constitutionalists would prefer to abjure judicial review entirely and leave constitutional interpretation entirely to the political process.208 A less-sweeping version of this approach is the “Thayerian” idea that judges should defer to the legislature in constitutional cases except in cases where the unconstitutionality of the challenged law is so clear that it is “not open to rational question.”209 Others counsel extraordinary deference to precedent, including even extremely dubious precedent.210 But such sweeping theories have consequences that go well beyond Kelo, many of which are unwelcome to most living constitutionalists. For example, Thayerian deference would have required the Supreme Court to defer to the legislature in such canonical cases as Brown v. Board of Education,211 since the unconstitutionality of racial segregation in public education was far from unequivocally certain in 1954. In the years immediately after it was decided, Brown was seriously questioned not only by segregationists, but even by such leading liberal jurists and legal commentators as Judge Learned Hand and Columbia Law School Professor Herbert Wechsler.212 Similarly, broad deference to precedent would cut against a wide range of Supreme Court decisions endorsed by most living constitutionalists, including the Warren Court’s decisions promoting racial equality and protecting the rights of criminal defendants, and more recent decisions protecting gays and lesbians against government repression and discrimination.213
Bruce Ackerman’s theory of “constitutional moments” might also support the result in Kelo.214 Ackerman contends that the meaning of the Constitution can legitimately be modified by the action of strong popular supermajorities validated by congressional legislation and presidential support as well as by the formal amendment process of Article V of the Constitution. He argues that such a constitutional moment occurred during the New Deal era of the 1930s, as well as at the time of the enactment of the Reconstruction Amendments in the years immediately after the Civil War (which he contends should be understood as being outside the standard formal amendment framework, because the procedures mandated by Article V were not fully followed).215
Because of the central role that Ackerman’s theory assigns to the New Deal period, it might well validate the broad view of public use endorsed by the Supreme Court in Berman v. Parker. Most of the justices who decided Berman were New Deal Democratic appointees, and there is little doubt that their position reflected the dominant view among New Deal jurists.216 Under Ackerman’s approach, changes in constitutional meaning that enjoyed sufficient broad support during the New Deal period must be adhered to, even if they go against the preexisting meaning of the Constitution. It is more than plausible to argue that the transformation in the meaning of public use was just one of the many changes validated by the New Deal revolution in constitutional doctrine. This is probably the most intuitive and straightforward application of Ackerman’s theory to public use.
But the implications of constitutional moment theory for public use are not completely unequivocal. While there is no doubt that judges and other legal elites moved toward a broad interpretation of public use during the New Deal period, it is not clear that the change enjoyed supermajority support from public opinion or even that most of the public was aware of it. And Ackerman’s theory requires broad, supermajority popular support to legitimate constitutional change outside the Article V process, not just elite support.217 There must be “mobilized popular deliberation.”218
Unlike some of the other changes in constitutional doctrine that occurred during the New Deal period, public use was not a major issue in national political campaigns at the time, nor was it a major focus of nationwide public debate.219 Thus, it is possible that New Deal-era changes in public use doctrine do not fit the criteria of Ackerman’s theory.
One could argue that the public understood the New Deal as sweeping away all judicial enforcement of “economic” rights and that public use was implicitly included, even if not much explicitly discussed. But that assertion would require proof that the public really did understand New Deal constitutional change in such an expansive way.
It is also possible that Ackerman’s theory leaves room for judicial enforcement of at least a relatively narrow definition of public use because of the harmful impact of the broad definition on racial minorities and the poor. In his most recent book, Ackerman argues that the New Deal transformation in constitutional law should be understood in conjunction with the civil rights revolution of the 1950s and 1960s, which led to a new understanding that policies that undermine the dignity and equality of vulnerable minorities are unconstitutional or at least constitutionally suspect.220 On this interpretation of Ackerman’s theory, judicial enforcement of public use constraints on takings can be viewed as part of what Ackerman considers the civil rights era’s “intergenerational synthesis” of the New Deal era’s removal of judicial constraints on government economic regulation with the preexisting Constitution’s emphasis on protecting individual rights against government intrusion and the Fourteenth Amendment’s antidiscrimination provisions.221 That synthesis involves protection of vulnerable minority groups against government oppression, and also of privacy rights and dignitary interests.
Economic development and blight takings often both target politically weak minorities, and undermine the dignity and privacy of those forcibly expelled from their homes and small businesses. To adapt a point made by Justice Clarence Thomas in his Kelo dissent, if searching a home can infringe constitutionally protected privacy rights, the same is surely true when the government decides to destroy the home and force its residents to move elsewhere.222
This interpretation of Ackerman’s theory might not justify invalidation of all broad-public use takings, only those that expel people from their homes, target vulnerable minorities, or both. Takings aimed at churches and small businesses might also be covered, since such properties are often integral to the dignity of their owners and have high “subjective value” that goes beyond their market value.223 But this approach would lead to the invalidation of most blight and economic development takings of the kind at issue in Berman and Kelo.
Ultimately, the implications of Ackerman’s theory for public use are ambiguous. They depend crucially on whether the New Deal approach to public use accumulated broad enough public support, and whether in-tergenerational synthesis might justify enforcing a narrower definition of public use, assuming that the broad one really was properly adopted during the 1930s.
Because there are so many different variants of living Constitution theory, it is certainly possible to find some that can justify Kelo. Thayer-ian deference clearly would, and Ackerman’s theory might potentially do so, depending on how it is interpreted. But it is still noteworthy that some of the most influential variants of living constitutionalism cut against it, including several that have had a major influence on both judicial and academic opinion.
Conclusion
Blight and economic development takings authorized by a broad interpretation of public use have inflicted great harm on vulnerable poor, minority, and politically weak groups. They also often undermine economic development more than promote it.
These aspects of blight and economic development takings contribute to a strong living Constitution case for overruling Kelo. That case encompasses several of the most influential variants of living constitutionalism, and deserves serious consideration from scholars and judges who either reject originalism or at least believe that it should not be the only basis of constitutional interpretation.
Having considered the problem of public use from both originalist and living Constitution points of view, we are now ready to examine the Kelo decision itself. The ruling has many shortcomings that should trouble originalists and living constitutionalists alike.
The Kelo Decision
elo was the first major U.S. Supreme Court public use case since
Hawaii Housing Authority v. Midkiff, over twenty years before. It came at a time when most experts believed that public use was largely dead as a meaningful constraint on takings. Kelo was a painful defeat for property owners in that it upheld the “economic development” rationale for condemnation and advocated broad judicial deference on public use issues.1 On the other hand, Kelo did signal a slight tightening of judicial scrutiny of public use relative to the previously dominant rule that the public use requirement is satisfied so long as “the exercise of the eminent domain power is rationally related to a conceivable public purpose.”2 Far more importantly, the fact that four justices not only dissented but actually concluded that the economic development rationale should be categorically forbidden shows that the judicial landscape on public use has changed.3 Support for a virtually limitless definition of public use can no longer be portrayed as the consensus view of the federal judiciary.
Justice Stevens’s Majority Opinion
The opinion of the Court written by Justice John Paul Stevens was in many ways unsurprising in light of Berman v. Parker (1954) and Hawaii Housing Authority v. Midkiff.4 Like those earlier precedents it emphasized the need to maintain the Court’s “policy of deference to legislative judgment in this field.”5 The majority rejected the property owners’ argument that the transfer of their property to private developers rather than to a public body required any heightened degree of judicial scrutiny.6 It also refused to require the city to provide any evidence that the takings
were likely to actually achieve the claimed economic benefits that provided their justification in the first place.7 On all these points, the Kelo majority chose not to “second-guess the City’s considered judgments about the efficacy of the development plan.”8
Though the majority position on these issues was doctrinally consistent with previous Supreme Court decisions, the factual circumstances of Kelo were considerably different from those of the earlier cases. For the first time, the Supreme Court upheld the condemnation of nonblighted residential property for transfer to private interests solely on the ground that the resulting transfer might increase economic development. While this result was consistent with preexisting doctrine, it nonetheless made explicit a threat to ordinary middle- and working-class homeowners that in the earlier cases seemed merely latent.
The majority also justified its emphasis on deference by relying on cases from “the late nineteenth” and early twentieth centuries that supposedly “embraced the broader and more natural interpretation of public use as ‘public purpose.’ ”9 As we shall see, these Progressive-era precedents did not purport to apply the Public Use Clause but instead addressed challenges to takings based on nineteenth- and early twentieth-century doctrines of economic substantive due process under the Due Process Clause of the Fourteenth Amendment.10
Despite the broad theme of deference and the extensive reliance on Berman and Midkiff,11 Stevens’s majority opinion nonetheless departs from near-total deference in three ways. First, references to Midkiff’s ul-tradeferential statement that takings will be upheld if they are “rationally related to a conceivable public purpose”12 are conspicuous by their absence. Nor did the Kelo majority rely on the almost equally broad Midkiff claim that the scope of public use is “coterminous with the scope of a sovereign’s police powers.”13
Second, Stevens’s opinion emphasizes the importance of the fact that the New London takings were part of a “comprehensive” development plan.14 Stevens distinguished between such condemnations and a “one-to-one transfer of property, executed outside the confines of an integrated development plan.”15 The latter scenario, Stevens notes, “raise[s] the suspicion that a private purpose was afoot” and might potentially be unconstitutional.16
Even if we interpret the majority opinion as requiring that economic development condemnations be part of a “comprehensive” development plan, this rule fails to impose any meaningful constraints on the condemnation powers of local governments. Since Stevens also emphasized that courts should not “second-guess” either “the efficacy” of development plans or condemning authorities’ “determinations as to what lands [they] need to acquire,” it will almost always be possible for officials to concoct a plan to justify almost any condemnations they might wish to undertake.17 As Scott Bullock, one of the attorneys for the Kelo plaintiffs, notes, “nearly all condemnations for transfer to private parties occur pursuant to development plans and within designated redevelopment areas.”18 Indeed, 99 Cents Only Stores v. Lancaster Redevelopment Agency, the case cited by Stevens as an example of a pure “one-to-one transfer,”19 actually struck down a taking that the government justified as necessary to implement a redevelopment plan.20
Finally, Stevens held out some small hope for property owners in noting that pretextual takings, where the official rationale for the taking is a pretext “for the purpose of conferring a private benefit on a particular private party” are unconstitutional.21 This could potentially be interpreted as a meaningful constraint on takings, though its exact meaning is far from clear. The question of what qualifies as a pretextual taking has bedeviled lower courts in the wake of Kelo, with many being willing to give at least some teeth to this restriction on eminent domain.22
The Kelo majority’s limited withdrawal from the ultradeferential approach adopted in Berman and Midkiff represents at least a small concession to increasing skepticism about the use of eminent domain. A future Court could potentially give some real teeth to this element of Kelo by imposing substantive standards on the quality of development plans, by requiring cities to present at least some real evidence that condemnation is indeed necessary to achieve the claimed public benefits of the plan, or by adopting a robust pretextual takings doctrine. Even in combination, these steps would fall well short of eliminating abusive economic development takings. But it is nonetheless significant that Kelo leaves the door to meaningful judicial scrutiny of public use slightly ajar, whereas Berman and Midkiff had virtually slammed it shut.
Justice Kennedy’s Concurrence
Justice Kennedy’s concurring opinion echoes the majority in emphasizing that public use issues should generally be considered under a “deferential standard of review.”23 Unlike the majority opinion, Kennedy seemingly reiterated Midkiff’s highly deferential “rational-basis test.”24 But he also held out the prospect of more stringent judicial review of public use in two different ways. First, he suggested that rational basis review should not be interpreted as requiring virtually complete deference to government determinations of public use. Second, and perhaps more radically, he left open the possibility that some takings should actually be presumed invalid.
Kennedy emphasizes that “[t]he determination that a rational-basis standard of review is appropriate does not . . . alter the fact that transfers intended to confer benefits on particular, favored, private entities, and with only incidental or pretextual public benefits, are forbidden by the Public Use Clause.”25 He contends that deference to condemning authorities might be relaxed if there is “a plausible accusation of impermissible favoritism to private parties.”26 In such cases, courts must “treat the objection as a serious one and review the record to see if it has merit.”27
Under Kennedy’s approach, a court should “strike down a taking that, by a clear showing, is intended to favor a particular private party, with only incidental or pretextual public benefits.”28 This is intended to be rational basis review with at least some real bite, a point that Kennedy drives home by analogizing his approach to cases that use the Equal Protection Clause of the Fourteenth Amendment to strike down “classification[s] that [are] clearly intended to injure a particular class of private parties.”29 These cases struck down classifications that would have been upheld under a straightforward application of the standard ultradeferential rational basis test.
Furthermore, Kennedy holds open “the possibility that a more stringent standard of review than that announced in Berman and Midkiff might be appropriate for a more narrowly drawn category of takings . . . in which the risk of undetected impermissible favoritism to private parties is so acute that a presumption (rebuttable or otherwise) of invalidity is warranted under the Public Use Clause.”30 Kennedy is careful to note that such a presumption of invalidity will not be triggered merely by the fact that the condemnation is justified on the basis of promoting “economic development,” and he refuses to engage in “conjecture as to what sort of cases might justify a more demanding standard.”31 Even so, Kennedy’s approach holds out the possibility of more stringent judicial review of public use in some types of cases.
The true meaning of Kennedy’s opinion is extremely difficult to judge. Although he was the swing voter in a 5-4 decision, he signed on to the
majority opinion and did not merely concur in judgment. This makes it difficult to tell to what extent there really is a difference between his view and that of the other four justices in the majority.32 Furthermore, Kennedy is vague in his explanation of what would count as “a clear showing [that a condemnation] is intended to favor a particular private party, with only incidental or pretextual public benefits.”33 And, as already noted, he refused to explain what circumstances, if any, would trigger a “presumption of invalidity.”34 Finally, as we shall see, it is far from clear that even the most careful inquiries into government motives can succeed in curbing eminent domain abuse.35
The long-term significance of Kennedy’s opinion is highly conjectural. This is particularly true in light of the fact that two of the four Kelo dissenters (Chief Justice Rehnquist and Justice O’Connor) have departed the Court, replaced by Justice Samuel Alito and Chief Justice John Roberts. Two members of the Kelo majority—Stevens and David Souter— have also retired and been replaced. We can no longer be certain if Justice Kennedy is still the Court’s median voter on public use issues. These essential caveats notwithstanding, Justice Kennedy’s opinion, perhaps more so than the majority, leaves open the door for a retreat from judicial deference on public use issues. Whether a future Court will choose to enter that door remains to be seen.
Assessing the Kelo Majority
While Kelo represents a modest advance over the extreme deference to government power established in Berman and Midkiff, it still has significant flaws. These include failure to take into account defects in the political process underlying takings, misinterpretation of relevant precedents, and an excessive confidence in judicial ability to ferret out on a case-by-case basis takings characterized by impermissible “favoritism” to private parties. These flaws are, to a large extent, also shared by Justice Kennedy’s concurring opinion.
Deferring to a Flawed Political Process
Deference to the political process is the central theme of Kelo, as of Berman and Midkiff before it. This stance has several major shortcomings. Perhaps most important, it fails to come to grips with the many defects of the political processes underlying economic development takings. These flaws make it likely that the condemnation process will be captured by interest groups, with the result that numerous takings might be undertaken whose costs greatly outweigh their benefits.36 Perhaps the most striking aspect of the Court’s stance is not that it came down on the side of deference, but that it failed to even consider the possibility that flaws in the political process might justify a stronger judicial role.
The Court’s advocacy of deference might be more defensible if it had concluded, as do a few scholars, that the text and original meaning of the Public Use Clause simply do not place any substantive limits on the scope of eminent domain.37 Justice Stevens, as we have seen, ultimately adopted this view after his retirement.38 Yet the Kelo majority, like the Berman and Midkiff courts before it, still endorsed the long-standing view that the Public Use Clause does impose constraints on takings. It emphasized that “the City would no doubt be forbidden from taking petitioners’ land for the purpose of conferring a private benefit on a particular private party.”39 At the same time, it also concluded that the judgment as to whether a particular taking is purely private is almost completely left up to the government, in order to “afford legislatures broad latitude in determining what public needs justify the use of the takings power.”40 The Court’s position gives state and local governments the power to determine the scope of an individual right guaranteed by the Bill of Rights, with little or no judicial scrutiny.
This approach would be understandable if there were little or no reason to expect government to overreach or to be “captured” by private interests seeking to benefit from the use of the eminent domain power. In fact, however, there is good reason to expect problems of this type.41
At the very least, there is no reason to expect government to be able to police itself in the public use field better than it does with respect to most other individual constitutional rights. As James Ely notes, “among all the guarantees of the Bill of Rights, only the public use limitation is singled out for heavy [judicial] deference.”42 In his dissent, Justice Thomas rightly emphasized that the Court’s approach is in serious tension with its much more aggressive stance in enforcing other constitutional rights such as the Fourth Amendment right to be free from “unreasonable” searches and seizures.43 As Thomas put it, the Court is willing to second-guess legislative judgments “when the issue is only whether government may search a home,” yet is unwilling to question “the infinitely more intrusive step of tearing down . . . homes.”44
The Court’s deferential approach on public use also directly conflicts “with its handling of the other major constitutional check on eminent domain, the just compensation requirement.”45 In this field, the Court has consistently refused to defer to legislative judgment and has forced government to pay “fair market value.”46 Yet it is difficult to understand why a government that can be trusted to determine when property should be condemned cannot also be trusted to determine what constitutes “just compensation” under the Fifth Amendment. The difference cannot simply be a matter of deference to legislative expertise. The question of determining how much compensation should be paid is often no less complex than that of public use. Neither is a field where the judiciary is likely to have greater technical competence than the legislature.47
The Kelo Court’s ultradeferential approach to public use issues has been defended on two interrelated grounds: the need to give latitude to superior legislative expertise, and respect for federalism and the diversity of local conditions. Thomas Merrill, a leading academic defender of the Kelo decision, contends that “lawyers and judges are not particularly good at anticipating the ways in which reconfigurations of ownership rights may produce significant public benefits,” and argues that “politically accountable actors” are likely to perform this role better.48 Justice Stevens’s majority opinion claims that “the needs of society have varied between different parts of the Nation,” thereby justifying “a strong theme of federalism, emphasizing the ‘great respect’ that we owe to state legislatures and state courts in discerning local public needs.”49 Neither legislative expertise nor federalism, however, can justify the extreme divergence between the Court’s treatment of the Public Use Clause and its approach to other constitutional rights.
There is no doubt that economic development takings and other condemnations sometimes involve complex policy issues on which judges have little expertise. It is likely that legislative and executive officials also have greater expertise than judges on such traditional constitutional questions as whether or not a given search is “reasonable,” as required by the Fourth Amendment; whether or not a particular type of speech should be restricted because that is the only way to promote a compelling state interest; and whether and to what extent racial or gender classifications are necessary to advance important public values. All of these involve complex issues hotly disputed by both experts and members of the general public. On all of them, legislatures and executive officials are likely to have greater expertise than judges. Yet that does not prevent federal courts from strongly enforcing the First, Fourth, and Fourteenth Amendments. It is difficult to see why superior legislative expertise justifies differential treatment of the Public Use Clause.
The federalism rationale for deference has similar weaknesses. It is certainly true that land use and eminent domain policies often depend in part on diverse local conditions that are better understood by state and local officials than federal judges. But the federal judiciary enforces numerous other constitutional rights that similarly constrain government policies that vary on the basis of local conditions on which state officials might have superior expertise. For example, the Supreme Court has recognized that the reasonableness of a search under the Fourth Amendment often depends on “the facts of a particular case in light of the distinctive features and events of the community” on which local judges and “law enforcement officers” may have specialized “expertise.”50
Often, local officials and police have far greater knowledge about “the distinctive features and events of the community” relevant to the constitutionality of a particular search than federal judges. Indeed, the “reasonableness” of a search may depend on local conditions to an even greater degree than public use decisions do. Whether a search is reasonable may depend on conditions that vary from day to day and house to house. Yet federal judges routinely address these issues and do not simply defer to the views of local law enforcement authorities. Similar variations in local conditions are relevant to a wide range of constitutional rights, including freedom of speech, and freedom of religion, among others.51
In each of these cases, the courts exercise nondeferential judicial review in the face of the admittedly superior expertise of the legislature because that expertise may be used in ways that violate constitutional rights. Legislative expertise has little value if it is used to benefit the politically powerful at the expense of the poor and weak rather than to advance the public interest, as often happens with blight and economic development takings.
By barring certain categories of takings, judicial enforcement of the Public Use Clause can also give greater scope to a form of expertise that often outstrips that of the legislature: the local knowledge of property owners themselves, who often understand their land and its potential uses better than government policy makers do. Where courts strike down takings for violating the Public Use Clause, it is not judges but property owners who determine the ultimate disposition of the land in question. Even if judges know less about the relevant issues than government officials do, property owners are likely to know more, both because they are more familiar with their land and because they have stronger incentives to acquire relevant information and use it effectively.52
These points apply just as readily to the idea that federal courts should defer to state courts on public use questions, as to deference to state and local legislatures. Federal courts do not defer to state courts with respect to other constitutional rights that relate to complex local issues, including Fourth Amendment rights against searches and seizures. State courts, like state legislatures, will sometimes fail to effectively protect federal constitutional rights. In such cases, federal courts must intervene. Moreover, it is far from clear that state judges necessarily have significantly greater expertise on constitutional property rights issues than federal judges.53
In addition, nondeferential judicial enforcement of the Public Use Clause need not require much specialized expertise on the part of judges. If judges either enforce a ban on economic development takings or adopt the narrow view of public use more generally, they need not opine on the question of whether a particular taking will result in long-term economic benefits or not. They need only determine whether the taking in question is an economic development condemnation or whether it is a transfer of property to a private party that does not have a legal obligation to serve the public. The answers to these questions will not always be completely obvious.54 But there is no reason to believe that these rules are more difficult to apply than many other legal rules and standards routinely administered by federal courts.
Finally, the federalism rationale for Kelo rings hollow as a defense of the deferential approach to public use more generally. If taken seriously, it implies a higher level of scrutiny for condemnations undertaken by the federal government. Yet few if any defenders of Kelo have ever advocated such a two-tier approach to the Public Use Clause. Indeed, Berman v. Parker, the leading prodeference Supreme Court precedent—upheld a taking by the District of Columbia, which is under federal jurisdiction.
Ferreting out Favoritism?
Both the Kelo majority and Justice Kennedy’s concurring opinion exhibit excessive confidence that courts can ferret out “improper” favoritism to private interests, while still maintaining a highly deferential posture. Justice Stevens’s majority opinion claims that the risk of favoritism in economic development takings can be eliminated or at least minimized so long as the taking in question is part of an “integrated development plan.”55 Justice Kennedy asserts that undue favoritism can prevented so long as “[a] court confronted with a plausible accusation of impermissible favoritism to private parties . . . treat[s] the objection as a serious one and review[s] the record to see if it has merit, though with the presumption that the government’s actions were reasonable and intended to serve a public purpose.”56
Neither approach is likely to work well. The requirement of having an “integrated development plan” is especially unlikely to fulfill its purpose, as nearly all economic development takings are initiated as part of some sort of plan; this was even true of the case that Stevens’s opinion cites as a paradigmatic example of impermissible favoritism.57 Even if the jurisdiction in question did not initially intend to adopt a plan, after Kelo it would surely choose to do so in order to insulate itself from legal challenge. Since the Kelo majority specifically indicates that courts should not “second-guess” the plan’s quality or likelihood of it actually achieving its goals,58 even a very poorly designed plan is likely to pass muster.
The requirement of an integrated development may potentially stymie an extremely poor local government that cannot afford to put together even a rudimentary plan or an extremely incompetent one that does not think to do so even after Kelo. But it is unlikely that any significant number of dubious condemnations will be prevented.
Justice Kennedy’s approach at first glance seems more promising. Since he would require courts to investigate the possibility of favoritism in a relatively nondeferential way, there is at least some chance that courts acting as he recommends might uncover abuses in cases where they have occurred. Yet Kennedy’s model suffers from two important shortcomings: the possibility that favoritism is much more difficult to detect than he seems to suppose and the difficulty of dealing with cases where motives are mixed. In the real world, the pursuit of public and private benefit is often much more closely intertwined than Kennedy assumes.
The history of the Kelo case itself casts serious doubt on Kennedy’s assumption that courts can effectively ferret out illegitimate motives. The Connecticut trial court, all seven justices of the state supreme court, and both the majority and dissenting justices in the U.S. Supreme Court all concluded that the takings arose from the New London authorities’ desire to promote economic development, not from interest group lobbying by Pfizer or other private interests.59
Unfortunately, this assumption turned out to be flawed. While New London Development Corporation officials really did believe that the takings would benefit the city, it is also the case that they were undertaken in large part because of lobbying by Pfizer. As we saw in chapter 1, Pfizer played a major role in planning the taking, and the condemnation of the properties owned by the Kelo plaintiffs was undertaken in response to its demands. The full extent of Pfizer’s role was only revealed by an investigative reporter after the case was over.60 The significance of these revelations about Pfizer’s influence over the New London condemnation decision extends well beyond their implications for the Kelo case itself. Despite almost five years of litigation, massive coverage by both national and local media, and detailed judicial review by both state and federal courts, the extent of Pfizer’s role was not fully appreciated until it was too late.
This history strongly suggests that timely exposure of favoritism toward private interests will be even less likely in ordinary economic development takings cases. Such cases are likely to receive little or no public scrutiny, and, of course, few will be reviewed by state or federal supreme courts. Moreover, most property owners are likely to be represented by counsel with considerably less commitment, skill, resources, and experience than the Institute for Justice lawyers who provided pro bono representation for Susette Kelo and the other New London owners. Although the Institute for Justice lawyers were able to uncover a great deal of the evidence pointing to Pfizer’s role in the New London condemnations, it is likely that the less skilled and experienced lawyers who litigate most eminent domain cases will be less successful.
Justice Kennedy’s framework might trip up an occasional foolish or incompetent local government that makes the mistake of admitting improper motives. But it is far less likely to foil more skillful officials and developers.
Even more fundamentally, Justice Kennedy’s approach is unlikely to be effective because it assumes an unrealistically clear separation between public and private interests. Almost any new commercial development will provide at least some benefit to the local economy in the form of increased employment or additional tax revenue for local government. Local officials can always cite such benefits as their “true” motivation and label any benefit to private parties incidental. Such assertions will not always be disingenuous. Like most people, local government officials and the private interest groups they promote are likely to genuinely believe that policies that serve their political and economic self-interest also advance the public good.
Kennedy’s opinion is vague as to how much favoritism for private interests has to be found before a court can declare the resulting condemnations unconstitutional or even what kind of evidence is necessary to trigger a less deferential form of judicial scrutiny than that applied by the majority.61 Some passages suggest that the sort of evidence eventually revealed by The Day might have been sufficient to at least trigger “a more demanding standard” of scrutiny.62 For example, Kennedy states that his endorsement of the majority opinion was in part based on the purported fact that “[t]he identity of most of the private beneficiaries [of the condemnations] were unknown at the time the city formulated its plans,”63 an assertion undermined by the revelations about Pfizer’s crucial role in the initiation of the project. But it is not clear whether this factor alone would be enough to cast doubt on a taking in Kennedy’s eyes. Be that as it may, it is likely that even very detailed judicial scrutiny of the motivations behind economic development takings will fail to ferret out numerous instances of favoritism.
We may not know the precise nature of Justice Kennedy’s “as-yet-undisclosed” thinking, as Justice O’Connor called it,64 unless and until the Supreme Court takes another public use case. Because Kennedy chose to endorse the majority opinion rather than concur in judgment only, his concurring opinion technically has no legally binding effect.65 But his view might turn out to be crucial if he continues to be the Court’s swing voter on public use issues. It has also already had some influence on lower courts attempting to apply the Kelo pretext standard.66 New London’s counsel Wesley Horton may be right to believe that Kennedy’s concurrence is “the important opinion to follow.”67 For these reasons, it is vital that we understand the Kennedy opinion’s significant shortcomings.
Conflation of “Substantive Due Process”
Precedents and Public Use
The majority opinion in Kelo is in large part based on a claim of adherence to precedent. “For more than a century,” the Court asserts, “our public use jurisprudence has wisely eschewed rigid formulas and intrusive scrutiny in favor of affording legislatures broad latitude in determining what public needs justify the use of the takings power.”68 Justice Stevens’s majority opinion repeatedly cites late nineteenth and early twentieth century cases to support the proposition that “when this Court began applying the Fifth Amendment to the states at the close of the nineteenth century, it embraced the broader and more natural interpretation of public use as ‘public purpose.’ ”69 Academic defenders of Kelo have echoed the claim that it is required by a century of precedent.70 An influential amicus brief in support of New London written by prominent legal scholars Thomas Merrill and John Echeverria on behalf of the American Planning Association also emphasized this point.71
Unfortunately, the majority’s claim that the Court “began applying the Fifth Amendment to the states at the close of the nineteenth century” is simply wrong.72 The nineteenth and early twentieth century cases cited by Justice Stevens and others as support for extreme judicial deference under the Public Use Clause in fact addressed public use challenges under the “Lochner- era” doctrine of “substantive” due process stemming from the Due Process Clause of the Fourteenth Amendment.73 The period takes its name from the Court’s much-reviled 1905 decision in Lochner v. New York, which used the Due Process Clause to strike down a New York law restricting the hours that bakers could work;74 though it is important to recognize that the idea of using the Due Process Clause to protect economic rights long predated Lochner and that Lochner was not considered an especially important or novel ruling when it was decided.75
The Kelo majority cites the 1896 case of Fallbrook Irrigation District v. Bradley as the first instance where the Court expansively defined public use as “public purpose.”76 But the Fallbrook decision itself unequivocally states that the constitutional issue raised in the case “is based upon that part of the fourteenth amendment of the constitution which reads as follows: ‘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.’ ”77 The opinion specifically indicates that the Fifth Amendment “applies only to the federal government.”78
The other early cases cited by Stevens are exactly the same.79 Without exception, they address Fourteenth Amendment substantive due process challenges to takings and do not so much as mention the Fifth Amendment Public Use Clause.80 And even in regards to the Due Process Clause, the cases did not reflect so complete a deference as the Kelo majority claims. In Clark v. Nash (1905), the Court specifically noted that “we do not desire to be understood by this decision as approving of the broad proposition that private property may be taken in all case[s] where the taking may promote the public interest.”81 In a 1901 decision involving the application of the Takings Clause in the District of Columbia, the Court emphasized that taking cases involving the application of the Due Process Clause to state governments were governed by a different set of doctrinal rules from those that apply in Fifth Amendment takings cases.82
Although not as deferential as Berman, Midkiff, and Kelo, the early twentieth century Due Process Clause takings cases did leave broad discretion to state governments. This should not be surprising. It was consistent with the Court’s approach to other Due Process Clause cases during the same period. This included economic liberties cases, in which the Court upheld most forms of labor and regulatory legislation, and was even praised by some Progressives for what they considered to be its generally positive record, until it became somewhat more aggressive in the 1920s.83
Justice Stevens’s misinterpretation of nineteenth and early twentieth century precedents was perhaps understandable in light of the fact that Justice Thomas committed the same mistake in his dissenting opinion. Thomas accepted the majority’s claim that Fallbrook and its progeny adopted a broad interpretation of public use and merely argued that such a broad interpretation was not needed to address the facts of those cases, which actually involved traditional public uses where the condemned property was either owned by the government or open to use by the public as a matter of right.84 Both Stevens’s majority opinion and Thomas’s dissent simply ignore the fact that these cases were brought on the basis of substantive due process because the Supreme Court of that era rejected the idea of incorporation of the Bill of Rights against the states.85
Stevens’s and Thomas’s mistake may have been due to the modern tendency to read our acceptance of incorporation back into precedents that date from an era when the idea of incorporation was rejected by the Supreme Court majority.86 Nonetheless, both the text of these early opinions and more recent historical scholarship show that they were part of the early twentieth-century doctrine of Fourteenth Amendment economic due process.87
To his great credit, Justice Stevens later admitted what he calls this “embarrassing to acknowledge” error in a November 2011 speech, the year after he retired from the Supreme Court in 2010.88 Justice Stevens came to recognize that the early twentieth-century cases cited as precedents in his opinion “were Fourteenth Amendment substantive due process cases.”89 He still continues to believe that the Court got the result in Kelo correct, because he now endorses the theory that the Public Use Clause does not impose any substantive constraints on takings at all.90 That theory, however, really does go against centuries of precedent and has other weaknesses as well.91
The Kelo majority’s mistaken reliance on early substantive due process precedent does not by itself prove that the ruling was wrong, or even that it lacked a basis in precedent. After all, the Court still derives precedential support for its decision from the sweeping language of Berman and Midkiff, which could be used to uphold almost any condemnation.92
Even so, the Court’s error is significant for several reasons. First, the majority justices themselves thought the early cases important enough to devote a considerable amount of space to analyzing them and to emphasize the resulting claim that Kelo rests on “more than a century” of Supreme Court precedent.93 Second, precedent-minded jurists and commentators might be less willing to endorse the result in Kelo, if they recognize that its true precedential basis relies mainly on broad, largely unsupported statements in two comparatively more recent decisions.
Third, Stevens’s reliance on Lochner-era precedents undercuts possible concerns that a reversal of Kelo would somehow lead to a revival of Lochner-era economic “substantive due process” jurisprudence.94 Exactly the opposite is true. It was the Kelo majority that extended the reach of Lochner-era due process precedents by mistakenly applying them to the Public Use Clause of the Fifth Amendment. A decision reversing Kelo could help establish a clearer distinction between public use and due process cases, and thereby prevent the latter from exercising any undue influence on the former. In recent decades, the Supreme Court has aggressively enforced many other parts of the Bill of Rights against state governments—including the just compensation requirement of the Takings Clause—without thereby somehow reviving Lochner. Repudiating Kelo and its reliance on Lochner-era decisions poses even less danger in this regard than judicial enforcement of other parts of the Bill of Rights. Finally, the serious flaws in the Court’s application of precedent are significant in their own right, given that we rely on the Court to properly apply precedent in a wide range of constitutional and statutory fields.
The Dissents
The dissenting opinions by Justice Sandra Day O’Connor and Justice Clarence Thomas ultimately reached the correct conclusion: that economic development takings are unconstitutional. Both made some good points. But both also had notable weaknesses. Overall, however, they are valuable challenges to the previously dominant conventional wisdom on public use.
Justice O’Connor’s Lead Dissent
The principal dissent in Kelo was written by Justice O’Connor, a striking development in light of her earlier authorship of the Court’s opinion in Midkiff, possibly the most deferential of all the Court’s public use deci-sions.95 Even more striking is the fact that O’Connor and the other dissenters not only would have invalidated the New London takings, but would categorically forbid all private-to-private condemnations undertaken for the purpose of “economic development.”96 It was somewhat surprising that four justices were willing to take such a position despite the availability of narrower grounds for striking the New London takings, such as the lack of proof that the claimed benefits of the condemnations would ever be realized, the rationale embraced by the dissenting justices in the Connecticut Supreme Court.97
O’Connor’s main argument is the claim that allowing economic development condemnations forecloses the possibility of any meaningful limits on the scope of condemnation. Because it is always possible to claim that transferring property from one owner to another would increase economic production, “[t]he 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 fac-tory.”98 Wesley Horton’s oral argument concession had clearly made an impression on O’Connor, and not the one he wanted to create.99
O’Connor went on to conclude that “[u]nder 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.”100 This concern is well founded. It is indeed possible to use the prospect of economic development to justify virtually any taking that transfers property to a private business.101
Unlike the majority, O’Connor emphasized that the political processes that control condemnation are often defective and she expressed concern that “the fallout from this decision will not be random” but will instead sanction takings that victimize “those with fewer resources” for the benefit of “those with more.”102 This was a valid concern, amply supported by the sad history of blight and economic development takings.103
The most difficult challenge Justice O’Connor faced was the need to distinguish the Court’s earlier highly deferential public use decisions, including her own opinion in Midkiff, which she did not wish to overrule. Despite her admission that the Court’s decision was in part based on Midkiff and Berman, O’Connor contends that the Kelo majority “significantly expands the meaning of public use.”104 This argument is difficult to credit in light of the fact that the majority’s definition of public use is actually slightly narrower than O’Connor’s own expansive statement of the concept in Midkiff.105
O’Connor acknowledged that the Kelo majority opinion in “a sense . . . follows from errant language in Berman and Midkiff.”106 She therefore explicitly repudiated Midkiff’s statement that the scope of public use is “coterminous with the scope of a sovereign’s police powers” and Berman’s holding that legislatures could use eminent domain to accomplish any “object” otherwise within their authority.107 Strangely, she did not also reject—or even refer to—the Midkiff “rational basis” standard, despite the discussion of it in Justice Kennedy’s concurring opinion. Instead O’Connor sought to distinguish Berman and Midkiff because
In both these cases, the extraordinary, precondemnation use of the targeted property inflicted affirmative harm on society—in Berman through blight resulting from extreme poverty and in Midkiff through oligopoly resulting from extreme wealth. And in both cases, the relevant legislative body had found that eliminating the existing property use was necessary to remedy the harm . . . Thus a public purpose was realized when the harmful use was eliminated. Because each taking directly achieved a public benefit, it did not matter that the property was turned over to private use.108
This emphasis on eliminating harmful preexisting uses may have been borrowed from Michigan Supreme Court’s effort to distinguish permissible blight condemnations from impermissible “economic development” takings in County of Wayne v. Hathcock, the then-recent 2004 case that overruled the notorious 1981 Poletown decision.109
Unfortunately, O’Connor’s effort to distinguish Berman and Midkiff in this way runs into significant problems. The most obvious is that Berman and Midkiff were decided on the basis of reasoning that went well beyond simply allowing the government to use private-to-private takings to eliminate “affirmative harms.” Both also endorsed a general policy of judicial deference on public use issues. Moreover, this was not just “errant” language, as O’Connor claimed in her Kelo dissent. Evidence from the justices’ conference notes strongly suggests that the justices who decided Berman and Midkiff, including O’Connor herself, were well aware that these decisions would have the effect of almost completely eliminating federal judicial review of public use issues.110 O’Connor’s thinking on public use issues had clearly changed between 1984 and 2005 to a greater extent than she was prepared to admit, perhaps even to a greater extent than she herself realized.111
O’Connor’s difficulty in distinguishing Berman and Midkiff is not necessarily fatal. O’Connor could have justified the same result while acknowledging that Berman and Midkiff really did endorse judicial deference even in cases that do not involve remediation of “affirmative” harm. She could have argued that the Court should repudiate the reasoning of Berman and Midkiff without also overruling the results of the two cases.
A more serious flaw in Justice O’Connor’s position is that the distinction between remediation of affirmative harm and promoting economic development may not be logically coherent. It is not true that the objectives of a blight taking or a taking intended to remedy a supposed oligopoly in the housing market are achieved merely by eliminating the preexisting “harmful use” of the property, thereby rendering the later ownership of the land by a private owner “irrelevant.”
Blight can only truly be eliminated if the new owner uses the condemned land in a way that promotes beneficial development. The history of blight condemnations shows that this often fails to occur.112 Similarly, the housing shortage supposedly caused by an oligopoly in Midkiff could only be eliminated if the new owners of the land used it to increase the housing stock available to potential homebuyers. In reality, the main beneficiaries of the Midkiff condemnations turned out to be affluent real estate speculators and tenants, and the price of housing did not fall.113 Moreover, in distinguishing blight takings, Justice O’Connor did not make clear how dilapidated an area must be before it qualifies for Berman-style judicial deference. If it need only meet the extremely broad definitions of blight enshrined in the laws of many of the states,114 there is virtually no meaningful difference between blight takings and economic development takings. In my view, the most plausible interpretation of O’Connor’s reasoning is that takings based on an expansive definition of blight are also unconstitutional.115 But the opinion is somewhat ambiguous on this point.
Ultimately, Berman, Midkiff, and Kelo all involved situations where the use of eminent domain was rationalized by claims that the transfer of property to a new private owner would benefit the community more than preexisting uses did. Distinguishing between them is more difficult than Justice O’Connor’s opinion lets on.
This is not to say that O’Connor’s position is completely untenable. Many state supreme court rulings (including Hathcock) and state laws effectively distinguish between blight condemnations under a relatively restrictive definition of blight and economic development takings.116 The Supreme Court could certainly have adopted the same approach in its interpretation of the federal Public Use Clause. Doing so would have required limiting Berman to cases where the condemned area is indeed “blighted” in the narrow sense of the term indicating a serious threat to public health and safety.
There remains the problem of explaining why courts should interpret the Public Use Clause to distinguish between the benefits of blight alleviation and those of economic development. The simplest solution would be to cut the Gordian knot and overrule Berman completely, an approach that would be consistent with originalism and several versions of living constitution theory.117 But if O’Connor and the other dissenters were unwilling to completely overrule a long-established precedent, such as Berman, they could instead have recognized that it was unsound to begin with, but then suggested that it was too well-established to completely reverse. Midkiff might be treated similarly, though the more recent date of the decision and the fact that it dealt with a highly unusual situation would make it easier to overrule outright without trampling on settled expectations.
If Berman were treated as a mistaken decision that nonetheless cannot be overruled completely because of respect for precedent, then the blight-economic development distinction might be defended as a reasonable compromise between the need to avoid overruling Berman and the need to give the Public Use Clause at least some meaningful teeth.
This compromise would leave some difficult questions unanswered. Most notably, what if any other “affirmative harms” are great enough to justify the kind of extreme judicial deference that is given to blight takings under Berman? But that issue could have been left to case-by-case determination by future decisions, as often happens when a Supreme Court decision resuscitates protection for a constitutional right that was previously neglected. For example, Brown v. Board of Education famously invalidated state-mandated segregation in public education, but without making clear whether state-mandated racial segregation in other contexts was also unconstitutional.118
Because the Supreme Court had virtually abdicated enforcement of the Public Use Clause for so many years, it is unrealistic to expect that any one decision would fully resolve all the issues raised by an effort to revitalize the clause. The revival of judicial review in this area would necessarily have to proceed incrementally. It is difficult to say whether Justice O’Connor’s particular approach is the best way of proceeding. But, as state experience shows, it is at least reasonably plausible.
Justice Thomas’s Solo Dissent
Justice Thomas’s dissent was a much more thoroughgoing attack on the majority than O’Connor’s. Like O’Connor, whose dissent he also joined, Thomas emphasized the danger that economic development takings could target virtually any property and expresses concern that areas inhabited by the poor and minorities are likely to be disproportionately affected.119 “Allowing the government to take property solely for public purposes is bad enough,” he wrote, “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.”120
Yet, Thomas was prepared to go much farther than O’Connor in reconsidering precedent, including overruling Midkiff, Berman, and other cases endorsing a broad definition of public use. He “would revisit our Public Use Clause cases and consider returning to the original meaning of the Public Use Clause: that the government may take property only if it actually uses or gives the public a legal right to use the property.”121
Much of Thomas’s argument is based on a detailed analysis attempting to show that the original meaning of “public use” encompassed only condemnations that resulted in actual ownership by the state or a legal right of the public to use the condemned property.122 Far from being the aberration described by O’Connor, in Thomas’s more accurate account Kelo “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.”123
In my view, Thomas reached the correct conclusion to a greater extent than either the majority opinion or O’Connor.124 Unlike the majority, Thomas gave serious consideration to the text and original meaning of the Public Use Clause. He also refused to apply the clause in a highly deferential way that is radically divergent from the way other constitutional rights are treated.
“Something has gone seriously awry with this Court’s interpretation of the Constitution,” he emphasized, if judges need not defer to government in scrutinizing decisions to search a home but must be ultradeferential in considering decisions to tear down the home and evict its residents.125 Unlike O’Connor, he fully recognized the problematic nature of Berman and Midkiff, and the continuity between those decisions and Kelo. His opinion is impressive in its willingness to return to first principles and consider the possibility that the Supreme Court’s public use jurisprudence went badly wrong long before Kelo. As Wesley Horton puts it, Thomas’s opinion “holds together much better than O’Connor’s dissent.”126 But Thomas also relies on a relatively narrow range of sources and sometimes fails to adequately address opposing views.127
Thomas appropriately begins with the text of the Public Use Clause and endorses the narrow interpretation of public use, stating that “[t]he most natural reading of the Clause is that it allows the government to take property only if the government owns, or the public has a legal right to use, the property.”128 But he recognizes that the broader view of public use is also linguistically plausible and that, at the time of the Founding, the word “use” was sometimes employed in the broader sense of “convenience” or “help.”129 In preferring the narrow interpretation, Thomas notes that Article I of the Constitution twice utilizes the word “use” in the narrow sense in outlining Congress’s powers to impose duties and imposts, and raise and support armies.130 But it is possible that the Constitution could use the same word in different senses in different contexts, especially since the Bill of Rights was drafted years after the original Constitution.
Similarly plausible but not definitive is Thomas’s point that “the phrase ‘public use’ contrasts with the very different phrase ‘general Welfare’ used elsewhere in the Constitution.... (“Congress shall have Power
To . . . provide for the common Defence and general Welfare of the United States”); preamble (Constitution established ‘to promote the general Welfare’). The Framers would have used some such broader term if they had meant the Public Use Clause to have a similarly sweeping scope.”131 If the framers of the Fifth Amendment had the broad interpretation of “use” in mind, they may not have felt the need to use a “broader term,” such as general welfare, which itself was understood more narrowly at the time of the Founding than today.132
Thomas’s textual analysis is therefore plausible but far from conclusive. He might have done better to point out that a literal meaning is more likely to fit public understanding than a metaphorical one.133
In addressing the history and original meaning of public use, Thomas recognized that practice was not always consistent with a narrow interpretation of the term, noting the examples of takings for private roads and mill acts.134 But he gives only a brief and cursory discussion of these practices, before concluding that they were aberrations.135 He gives almost no consideration to the various nineteenth-century state supreme court decisions that endorsed a broad conception of public use. He also cited only a few of the many state court decisions that endorsed a narrow one.136 In fairness, at the time Kelo was decided, scholars had not yet done a comprehensive survey of the positions of all the nineteenth-century state supreme courts on public use questions.137
Perhaps Thomas’s most important omission is the lack of any systematic discussion of the understanding of public use at the time the Fourteenth Amendment was enacted in 1868, the point at which the Public Use Clause presumably first became applicable against state governments. As discussed in chapter 2, this history is important to understanding the original meaning of public use as applied against the states.
In addition, Thomas uncritically follows Justice Stevens’s majority opinion in accepting the idea that deferential early twentieth-century Supreme Court opinions applying “substantive due process” analysis to takings by state governments were genuine public use opinions.138 In some instances, he even interprets those cases as being more deferential than they actually were. For example, Thomas describes the Court’s 1905 decision in Clark v. Nash as endorsing the view that any “public purpose” qualifies as a “public use.”139 While Clark did indeed interpret the Due Process Clause to allow a wider range of takings than the narrow view of public use, it also emphasized that it was not endorsing the view that eminent domain can be used to pursue any “public interest.”140
Overall, Thomas’s opinion gets several important points right. But in some instances he undercut the force of his argument by failing to give sufficient consideration to opposing views. In others, he did so by making unnecessary concessions.
Conclusion
Although the decision was an important defeat for property rights advocates, Kelo nevertheless represented progress relative to the Court’s previous ultradeferential public use jurisprudence. Even Justice Stevens’s majority opinion was less deferential than Berman and Midkiff had been. Justice Kennedy’s key swing-vote concurring opinion holds out the promise that economic development takings might yet be constrained in the future, albeit with little clarity as to the circumstances where this might occur. The dissents by O’Connor and Thomas represent major challenges to post-New Deal public use orthodoxy, even if both also have notable analytical drawbacks. As Julia Mahoney put it in an early assessment of the decision, “[w]hen confronted with Kelo, with its obvious implications for the property rights of millions of Americans, all the Justices retreated from the near total deference model.”141
The majority’s retreat was modest and grudging. Nonetheless, the extreme closeness of the decision severely undercut the previously dominant view of the Public Use Clause, under which most jurists simply assumed that the ultradeferential Berman- Midkiff approach was unquestionably correct. Informed observers now had to admit that there was a serious debate over the proper interpretation of public use, one in which the validity of post-New Deal orthodoxy could no longer be taken for granted. As we shall see in chapter 7, many state court judges greeted Kelo with skepticism and refused to use it as a guide to the interpretation of their state public use clauses. Some instead endorsed a position resembling that of the Kelo dissenters.
Most Supreme Court decisions affect society primarily in their role as legal precedents that must be followed by lower courts. Few pay attention to them other than legal professionals. As the next chapter describes, Kelo turned out to be a dramatic exception, generating a broader public backlash than any other recent Supreme Court ruling.