Tomorrow’s Argument in Kelo v. City of New London

Tomorrow’s first argument is one of the most highly anticipated property rights cases in years – Kelo v. City of New London and New London Development Corporation, No. 04-108. The case asks whether a city’s use of its eminent domain power to condemn private land in order to promote economic development meets the “public use” requirement of the Fifth Amendment’s takings clause. Thirty-eight separate amici have weighed in on the issue.

In 1998, after Pfizer announced that it was building a global research facility in New London, Connecticut, respondent New London Development Corporation (“NLDC,” a private, non-profit corporation) prepared a proposal for a 90-acre redevelopment along the city’s waterfront (near the Pfizer facility). The proposed redevelopment included a waterfront hotel, marinas, public walkways, housing, office space, and (possibly) a new U.S. Coast Guard museum. NLDC estimated that the redevelopment would generate approximately $680,000 to $1,250,000 in property tax revenues and increase employment in a city whose unemployment rate was twice the state average. Respondent City of New London approved the development plan in January 2000, and delegated its eminent domain power to the NLDC so that it could seize the land required for the redevelopment project. Beginning in November 2000, respondent NLDC exercised that power to seize petitioners’ homes.

Petitioners are the owners of fifteen homes located on the proposed site. They filed suit in December 2000 under Connecticut law and 42 U.S.C. 1983 claiming that the seizures were unconstitutional since the development did not constitute a valid “public use” as required by the Fifth Amendment.

After a bench trial, the judge granted injunctive relief to the four petitioners who owned homes on a parcel slated for the as-yet-undefined purpose of “Park Support,” but upheld the condemnation actions against the three petitioners whose homes sit on the parcel slated for 90,000 square feet of office space.

The Connecticut Supreme Court reversed in part, upholding all the condemnation actions in a 4-3 decision. Relying largely on two Supreme Court precedents (discussed below), the majority held that “municipal economic development can be, in and of itself, a constitutionally valid public use” and that “private benefit from such economic development is * * * secondary to the public benefit that results from significant economic growth and revitalized financial stability in a community.” The three dissenters agreed that private economic development could be a valid reason for exercising the power of eminent domain, but disagreed that there was a reasonable assurance that “the anticipated economic development will result in a public benefit” in this case. In reaching the conclusion that economic development can be a valid “public use,” the Connecticut court noted that its decision was in tension with opinions from many other state courts, including Arkansas, Florida, Kentucky, Maine, New Hampshire, South Carolina, Washington, and (arguably) Illinois.

While the Supreme Court has not previously addressed the issue of whether economic development can justify a taking, it has adopted an extremely deferential approach to the Public Use Clause. The Court noted in Berman v. Parker (1954) that there is very little room for courts to become involved in scrutinizing legislative public use determinations: “Subject to specific constitutional limitations, when the legislature has spoken, the public interest has been declared in terms well-nigh conclusive. In such cases the legislature, not the judiciary, is the main guardian of the public needs to be served by social legislation * * * .” Similarly, in Hawaii Housing Auth. v. Midkiff (1984) (upholding Hawaii’s Land Reform Act of 1967, which allowed the state reduce the concentration of land ownership by seizing land held by lessors and transferring it to lessees), the Court made clear that it “will not substitute its judgment for a legislature’s judgment as to what constitutes a public use ‘unless the use be palpably without reasonable foundation.’” It did not matter in Midkiff that the land in that case was being given to a private party; it was enough that the seizure was for a public purpose: “[W]here the exercise of the eminent domain power is rationally related to a conceivable public purpose, the Court has never held a compensated taking to be proscribed by the Public Use Clause.”

Petitioners argue that neither Berman nor Midkiff is applicable, since both of those rulings turned on “facts of independent public significance” about the undesirable use of the lands at the time they were seized (in Berman, Congress’ desire to remove “slums” from Washington, DC, and in Midkiff, Hawaii’s desire to destroy an oligopolistic pattern of land ownership). Petitioners also argue that eminent domain for economic development must be rejected since it “has no limiting principle” because “the ‘public uses’ of greater tax revenue and employment are achieved only through the success of private parties.” While they argue for a “bright-line rule that the possible increase in taxes and jobs does not qualify as a public use,” they also ask in the alternative for a ruling that these seizures are not justified because there is no “reasonable certainty that the condemnations will result in those public benefits.”

Respondents New London and NLDC, relying largely on the Supreme Court cases discussed above, argue for deferential review of their exercise of eminent domain. They assert that such deference is warranted because (1) courts are ill-suited to make the type of economic predictions inherent in such a decision and (2) the primary purpose of the takings clause is “to assure compensation for any affected property owners should the government choose to exercise its eminent domain power,” not to “act as a substantive restraint on government behavior.” Additionally, they argue that petitioners’ fear that the public use requirement will be undermined is unfounded since transaction costs and the political accountability of local governments will act as practical checks against abusive exercises of eminent domain for economic development. Finally, while they reject petitioners’ proposed “reasonable certainty” test (quoted above), they argue that even under heightened scrutiny this taking is constitutional because “the facts demonstrate that there is more than a reasonable likelihood that the projected benefits of the MDP will come to pass and that the proposed takings are therefore necessary to the economic rejuvenation of New London.”

The opinion of the Connecticut Supreme Court can be accessed here.
Petitioners’ opening and reply briefs can be accessed here and here.
Respondent’ brief can be accessed here.

Arguing for Petitioners will be Scott G. Bullock of the Institute for Justice in Washington, D. C.
Arguing for Respondent City of New London will be Wesley W. Horton of Hartford, Connecticut.