On June 23rd, 2005, the U.S. Supreme Court upheld government efforts to use the power of eminent domain to seize private property for economic development purposes. In Kelo v. City of New London, a small band of property owners challenged New London, Connecticut's authority to seize their homes and businesses for the sole purpose of redeveloping the land to generate higher tax revenues.
In 2000, New London officials targeted a 90-acre section of the city for redevelopment to clear the way for new offices and luxury apartments to complement a recently completed Pfizer, Inc. research facility. A group of 15 property owners, including lead plaintiff Suzette Kelo, refused to sell their properties, prompting the city to condemn these owners' lots. The owners subsequently sued the city for misusing its eminent domain power, arguing that economic development did not qualify as a "public use."
The Supreme Court sided with the city in the 5-4 decision, which effectively made private property rights a non-issue for local governments as long as they follow proper legal procedures. In a stinging dissent, Justice Sandra Day O'Connor wrote, "Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms."
The Kelo decision generated a tremendous amount of media coverage and provoked a sense of outrage across wide swaths of the American populace. For example, a Quinnipiac University poll taken in Connecticut found that 89 percent of respondents opposed the taking of private property for private uses, even if it promotes the "public good." Similarly, a Wall Street Journal/NBC News poll taken just weeks after the Kelo decision found that survey respondents cited "private-property rights" as the current legal issue they care most about.
Federal and state governments have responded swiftly to the Kelo decision. As of April 2006:
- Twelve states (Alabama, Georgia, Idaho, Indiana, Kentucky, Michigan, Ohio, South Dakota, Texas, Utah, West Virginia, Wisconsin) enacted legislation to prohibit the use of eminent domain for economic development. Delaware also passed eminent domain legislation, but it ties the exercise of eminent domain to planning and does not limit the scope of "public use."
- Eminent domain legislation introduced in the 2006 legislative session was still active in 25 other states, including California, Colorado, Connecticut, Florida, and New York. Legislation introduced in Mississippi, Virginia, Washington, and Wyoming failed to pass in the 2006 session. In addition, New Mexico's Gov. Bill Richardson vetoed an eminent domain reform bill passed by the state legislature.
- The U.S. House of Representatives passed the Private Property Rights Protection Act of 2005 (H.R. 4128) in late 2005, which would prevent state and local governments from exercising the power of eminent domain for economic development purposes if they receive federal funding, as well as prohibit the federal government from condemning property for economic development. Also, the House approved H.R. 3058, an amendment to a Treasury, Transportation, and Housing and Urban Development Appropriations bill that would deny federal funds to any state or local project involving the use of eminent domain on economic development grounds. Several Senate bills covering eminent domain reform have also been introduced.
- By an overwhelming 365-33 margin, the U.S. House of Representatives passed a resolution expressing disagreement with the majority in the Kelo decision.
Though the Kelo decision cast a dark cloud over the landscape by exposing how frail the protection of private property rights has become, the silver lining is that popular support for private property rights protection has surged since the Kelo ruling, with efforts at all levels of government to restrict the power of eminent domain to a more limited set of uses. Prior to Kelo, there was little recognition among average citizens of the power of government to take land from one owner and give it to another. Perhaps the biggest irony of Kelo is that, despite the Court's ruling, it has led to a greater awareness of eminent domain abuse and a strengthening of private property protections across the country.
Leonard Gilroy is a certified planner and policy analyst at the Reason Foundation. He is the author of the new study, "Statewide Regulatory Takings Reform: Exporting Oregon's Measure 37 to Other States," which can be found online at www.reason.org/ps343.pdf. An archive of Gilroy's research and commentary is here and Reason Foundation's eminent domain research and commentary is here.