Have you talked to you city councilperson or state legislator about E.D.?
No, not that E.D., although we will bring up Viagra maker Pfizer.
Rather, I am referring to eminent domain, the state's power to seize private property for public use. The concept looks, sounds, and feels very Big Brotherish. It seems to fit better in a medieval monarchy or a World War era dictatorship. But eminent domain is very much a part of sovereign power in the United States. Its foundation is in the Fifth Amendment to the Constitution, which provides that a person shall not be "deprived of . . . property, without due process of law" and that "private property [shall not] be taken for public use, without just compensation." So while this language seems to generally prohibit government taking of private property (a "taking"), it actually works to permit takings, so long as the property owner receives due process and just compensation in the action.
Why the out-of-the-blue eminent domain discussion? E.D. has been on my mind because of three scenarios.
1.) Post-Kelo Irony: The 2005 Supreme Court decision in Kelo v. City of New London set the stage for the firestorm of E.D. debate in the last five years. While some legal scholars believe that Kelo is a logical extension of the Court's prior eminent domain precedent, this particular case sparked public outcry in the name of private property rights. And maybe the circumstances warranted that. Briefly, the case arose out of New London's plans to redevelop its sliding Fort Turnbull neighborhood. Plans for the revitalization of the neighborhood - including a waterfront hotel, restaurants, shopping, and marinas- were anchored to some degree by a new research and development facility for pharmaceutical giant Pfizer. When some existing property owners balked at selling to the development authority (a public entity), the city exercised its eminent domain powers to acquire the properties.
What distinguished the New London acquisitions from more typical E.D. cases is the purpose - economic redevelopment rather than more traditional public buildings, roads, etc. The real rub of the case is that the eminent domain powers were used to essentially transfer property from one private owner to another. That fact, no doubt, further fueled the ire of the landowners who stood to lose their homes to the government plan. The property owners challenged the city's authority to take their property for economic development. The case went all the way to the U.S. Supreme Court, where, in a close 5-4 decision, the Court held that economic redevelopment was a valid "public use" under the Takings Clause of the Fifth Amendment.
But that ruling should not be considered as wide-sweeping as my statement makes it appear. The justices, particularly swing-voter Justice Kennedy, relied on the fact that New London had formulated a "carefully considered" plan for its redevelopment of Fort Turnbull and that the prospective economic benefits would not be minimal. Thus, while there would certainly be some incidental private benefit to the new developers, such as Pfizer, the public benefit of Fort Turnbull's revitalization justified the economic development takings.
Nearly five years later, the story lives on thanks to Pfizer's September announcement that it will close its New London facility in the wake of its merger with Wyeth. What happened to New London's "carefully considered" plan that apparently won the day in 2005? Very few of the other pieces of the plan have fallen into place in the last half decade, so Pfizer's announcement is, in effect, a grand slap in the face. The news, no doubt, validates, at least in the minds of the Kelo plaintiffs, their resistance of New London's acquisition for the project. It will almost certainly further galvanize property rights advocates who fight the use of eminent domain in the name of property owners.
What interests me is whether Pfizer's departure and the seeming failure of New London's plan will change judicial scrutiny in eminent domain cases. Only time will tell. I should note that, in the wake of Kelo, 43 states enacted legislation designed to restrict eminent domain powers. Regardless, leading scholars and practitioners believed that, generally speaking, a comprehensive plan backed by data and studies would allow a government entity to justify use of eminent domain powers, so long as it fit within permissible statutory schemes. My question is whether the failure of New London's redevelopment plan will heighten the scrutiny with which such plans are reviewed. Will governments seeking to effect an economic development taking be required, at least to some degree, to guarantee or predict success? Further consider the tough economic market, particularly for real estate, and governments could find a tough row to hoe for redevelopment and urban renewal projects.
(A corollary issue is whether we even want judges making such decisions. Their role is to decide legal issues, not to make judgments about data, research, and projections that government officials spend months, years, and careers ruminating and scrutinizing. I am going to sidestep my soapbox here, but this is certainly worth some thought.)
A final note before I leave Kelo. A sequel recently went to the Supreme Court for appeal. The Goldstein case arose from similar circumstances, this time in Brooklyn. The Atlantic Yards project will house a new arena for the New Jersey Nets, office buildings, high-rise apartments, and a hotel. Homeowners challenged the city's authority to acquire their property via eminent domain and transfer ownership to the project's developer, Bruce Ratner, also owner of the Nets. The Supreme Court declined to hear the appeal. Technically, that decision has no precedential value, but it does indicate that the Court is not ready to reopen the economic development takings issue. Given that three new justices have come to the Court since Kelo (C.J. Roberts, along with Justices Alito and Sotomayor), it will be interesting to see the result if another eminent domain case does find its way to the Court in the near future.
2.) RTD's use of eminent domain for FasTracks light rail expansion: The Regional Transportation District, the governmental entity that operates the Denver-metro area transit system, has been in the news as well. RTD is empowered to use eminent domain to acquire property necessary for the operation of the local buses and light rail. The district has garnered negative headlines in the last two years because of its exercise of that power as part of the FasTracks project, which aims to expand light rail service to more of the metro area. Some homes and several local businesses have been impacted as RTD has sought to acquire property necessary for the new rail lines and related infrastructure.
Opponents cried foul on the moves, claiming that they were economic development takings, rather than actually necessary for transit infrastructure. And those claims were not entirely inaccurate. Transit-oriented development (TOD) is an element that RTD and other transit proponents hope to incorporate into the rail expansion. TOD aims to incorporate commercial and residential elements into the communities surrounding transit. Ideally, instead of a gigantic park-and-ride lot, a transit stop features some nearby living options and necessary commercial services. At the least, perhaps there is a coffee shop or small grocer on the ground level of a parking deck. Regardless of the form, obviously RTD will not be operating the Starbucks that goes in next to fair booth.
Capitalizing on the anti-E.D. sentiment that has been growing since Kelo, state lawmakers attempted to pass a bill that restricted RTD's eminent domain authority to stations, parking, and maintenance facilities. The bill ultimately died in committee, but it - and the rest of the property rights resistance RTD is facing - illustrates that governments will endure strict public scrutiny, even if they ultimately face no legal scrutiny. Use of the eminent domain power must be judicious, strategic, carefully executed and cleverly publicized in order to avoid a property rights maelstrom.
3.) Eminent domain of wind rights: Finally, the following case from Minnesota came to my attention. There, a government-owned public utility is seeking to use eminent domain to acquire the "wind rights" necessary to establish a wind farm. The utility owns the property on which the farm will sit. But state law requires any wind farm owner to obtain the wind rights of adjacent property in order to ensure free flow of wind into the farm turbines. As the second linked article indicates, some private wind farm owners have succeeded despite this regulatory twist. The current case is intriguing because the use of eminent domain to acquire such rights is unusual. It is also interesting because the state, through its utility, is seeking to promote renewable energy sources. As one commentator suggests, maybe there are better ways to advocate for alternative energy. Regardless of its shrewdness, he also notes that, even under a narrow interpretation, the acquisition of these wind rights is probably a constitutionally permissible taking. I will be interested to see how this scenario is ultimately resolved.
I suppose my fascination with eminent domain is that it directly pits sovereign authority against private property rights, a concept whose role cannot be underestimated in this country's founding, settlement, and expansion. While affirming private property rights and a person's right to due process and just compensation, the doctrine also recognizes that private property rights are far from absolute. And rightly so, I think. What good is government authority if it must yield to private interests? As I said before, I do believe sovereign powers like eminent domain require careful consideration and judicious exercise. I am certainly not advocating for abuse of power. But I am advocating for a government's right to make assessments of and decisions about what best promotes the health of its community - socially, economically, philosophically, environmentally. While controversial and often tough to swallow, tools like eminent domain are necessary to make those decisions reality.
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