The Kelo Backlash
What the Supreme Court touched off with its eminent domain decision.
Aug 21, 2006, Vol. 11, No. 46 • By JONATHAN V. LAST
A year ago, before the Supreme Court issued its decision in Kelo v. New London, the abuse of eminent domain was practically invisible. Today it's a hot-button issue in nearly every state in the Union--not least in Ohio, where the state supreme court last month unanimously blocked the city of Norwood's attempt to clear out a middle-class residential neighborhood to make way for a private developer to build condominiums, offices, and retail space.
It's worth revisiting the oral argument in City of Norwood v. Joseph P. Horney et al, which took place before Ohio's high court on January 11. One exchange in particular captures the passions stirred by the controversy over eminent domain.
Attorney Timothy Burke, arguing for the city, explained that the neighborhood could be taken and handed over to the developer because it was deteriorating owing to a "diversity of ownership"--that is, lots of people owned their own homes. Asked by one of the justices why the city government alone should be allowed to control property ownership, Burke replied, "These are the folks who live there. They've lived there all their lives, they've walked those neighborhoods, they've seen how it has changed. They've made a decision." Another justice interjected, "Counselor, couldn't the same argument be made for the homeowners?"
The packed courtroom erupted in laughter. And then applause. After the arguments were concluded, one of the justices could be heard over an open mike asking his colleagues, "Is this as big a crowd as we've ever had?"
In the Kelo case in June 2005, the U.S. Supreme Court held, 5-4, that it was permissible for the government to seize property by eminent domain not just for "public use," as the Constitution specifies, but for "public purpose," including potential economic gain. Kelo, that is, legitimized the government-imposed transfer of property from one private party to another, so long as the new owner claimed--he need not guarantee or provide any third-party evidence in support of this claim--that he could generate more tax revenue than the current owner. The Kelo decision attracted much attention and prompted state governments to rebuild protections the Supreme Court had obliterated.
Since Kelo, 25 states have enacted legislation attempting to reform the use of eminent domain, some with more success than others. (Five state legislatures have not been in session.)
Florida, Georgia, South Dakota, and South Carolina passed the strongest reforms, although each took a different approach. In Florida, Gov. Jeb Bush signed a bill mandating that property seized via eminent domain cannot be transferred to another private owner for ten years. Georgia's reform, signed by Gov. Sonny Perdue, stipulated that economic development was not a "public use" and that for a property to be considered "blighted" it must be a danger to the public's health or safety.
South Dakota's new law went even further, outlawing the use of eminent domain "for transfer to any private person, nongovernmental entity, or other public-private business entity." South Carolina's legislature passed an amendment to the state constitution that--if endorsed by the voters this November, as expected--will outlaw economically motivated takings. The Institute for Justice, which has led the fight against eminent domain abuse, counts 14 states as having passed serious property-rights protections.
Other states have adopted weaker reforms. A new law in Iowa, for instance--enacted over the veto of Gov. Tom Vilsack--limited the conditions in which blight could be declared and put the onus of justifying the designation on the government. The Ohio senate passed a bill that put a moratorium on the taking of non-blighted property for the purpose of economic development through the end of 2006 and established a legislative task force to look at the state's eminent domain laws. Kentucky has redefined "public use," but also expanded the definition of "blight"--making its reform something of a wash.
Six states--including California and New Jersey, where eminent domain abuse is rampant--have reform legislation pending. But in most of these states, the odds of reforms being enacted are relatively poor.
Other states have actually moved in the opposite direction. Vermont governor Jim Douglas signed a law that purports to limit eminent domain takings, but includes loopholes so broad as to be effectively meaningless. Delaware governor Ruth Ann Minner signed legislation that reinforces the language in Kelo, making it harder for residents to find protection even in the local courts.