The Judiciary and Eminent Domain:

The Case of Kelo v. City of New London

the purpose of this lesson

• is to analyze an important Supreme Court case that brings into sharp focus an issue regarding economic freedom.

• You will be asked to consider under what circumstances a local government may acquire land from private owners.

In a market economy, who owns most of the property?

• In a market economy, most resources are owned by individuals and businesses, not by government.

What is private property ownership?

• Private ownership means that people and businesses are able to obtain, use, and transfer property as they see fit.

What are some key advantages of private ownership of property?

• Private ownership provides incentives for people to take care of their property because, with proper care, it can gain in value, benefiting its owner.

Why is enforcement of private ownership so important?

• If private property could be taken from owners without their consent, the threat of loss would of discourage people from investing in their property—their homes and businesses—or caring for it.

• Private owners need to have confidence that their rights will be protected by the courts or they will not make productive uses of their property.

If Private Ownership is so Important, then why are

governments permitted under certain circumstances, and following legal procedures, to acquire private land for a public use?

Identify the “due process of law” clause and the “takings” clause in The Fifth Amendment to the U.S Constitution

• Amendment V• No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall any person be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation [italics added].

Introduction

• Property rights and their enforcement are fundamental to the operation of a market economy. Private property rights are protected by the Fifth Amendment to the U.S. Constitution in its “due process of law” clause.

• However, the “takings” clause of the Fifth Amendment also provides the basis for eminent domain. Eminent domain is the power of government to take private land for public use.

• Traditionally, eminent domain has made it possible for local governments to acquire private land for public projects like road construction, bridges, and parks.

Did the U.S. Supreme Court rule correctly in a case involving a fundamental economic

freedom?

• In the case of Kelo v. City of New London (2005), the Supreme Court ruled that it was proper for private property to be taken for the use of a private company. This ruling has been very controversial.

1. What was the redevelopment plan proposed by New London

officials?• The community of New London, Connecticut, with a

population of about 24,000, was hurt in 1996 when the Naval Undersea Warfare Center, an employer of more than 1,500 people in the area, was closed.

• City leaders responded with a redevelopment plan to help get the community back on its feet. They wanted to develop 90 acres of waterfront land for construction of new office buildings, upscale housing, a marina, and other facilities near a $300 million research center being built by Pfizer, a large pharmaceutical company. The plan was expected to generate hundreds of jobs and well over $500,000 in additional tax revenues.

2. Who objected to the plan?

• Most property owners in the area slated for redevelopment agreed to the city’s offer to purchase their home, and their homes were torn down.

• However, 15 home owners, holding1.5 acres, refused to go along. Some had lived in the area for many years. Others had just remodeled their homes. These homeowners challenged the takeover effort in court. Connecticut Supreme Court upheld the city's plan.

• The homeowners appealed, and the case ultimately landed in the U.S. Supreme Court.

3. What did the U.S. Supreme Court rule in the case of Kelo v. City of New London?

• In a 5-4 decision, on June 23, 2005, the U.S. Supreme Court ruled that local governments may force property owners to sell their property in order to make way for private economic development when local government officials believe that such development would benefit the public. Local governments, according to this decision, could take such actions even if the property is not rundown and even if the success of the new development is not certain.

Reporter 1: Justice Stevens, can you tell us the basis for your ruling?• Justice Stevens: Of course. I wrote the opinion

for the majority on the Court. We cited other court cases in which the "public use" clause in the Fifth Amendment has been interpreted to include not only such traditional projects as parks, bridges, or highways, but also slum clearance. We concluded that a "public purpose" such as creating jobs in a depressed city is constitutional and satisfies the requirements of the Fifth Amendment.

Reporter 2: Justice O’Connor, is that how you see it?

• Justice O’Connor: With all due respect to my colleagues on the Court, I must respectfully but emphatically disagree. I agree with the opponents of this ruling who argued that using the power of government to forcibly take land from one private owner and give it to another private owner, even with fair compensation, violates the Fifth Amendment to the Constitution.

Reporter 3: What say you Justice Stevens?

• Justice Stevens: While I dislike disagreeing with my esteemed colleague, Justice O’Connor, I think that she and her colleagues in the minority in this case are not correct. I believe that the Court should not second-guess local governments when the question is whether a given course of action serves a public purpose. Promoting economic development is a traditional and long-accepted function of local government.

Reporter 1: Justice O’Connor? Do you have a response?

• Justice O’Connor: I wrote in the dissenting opinion that this ruling by the majority favors the most powerful and influential people in society and leaves small property owners little recourse. This is not what the Founders intended in writing the Fifth Amendment. I wrote the following: the "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 factory." This is an abuse of eminent domain by local government.

Reporter 2: Justice Stevens, Justice O’Connor makes an important point. And many Americans, I believe, would tend to

agree with her.

• Justice Stevens: The Supreme Court is not influenced by public opinion polls. We do our best to interpret documentary evidence in the context of earlier rulings. This decision affirms the right of state and local governments seeking to use eminent domain for urban revitalization, a legitimate public purpose. Absent such efforts, many city centers have decayed.

Reporter 3: Justice O’Connor, do you have any additional thoughts?

• Justice O’Connor: I am sympathetic to the problems facing city leaders who wish to improve blighted areas. Nonetheless, these leaders have to work within the rules of private property ownership. If they wish to acquire private land and use it for what are essentially private purposes, they must do it the old fashioned way. They should provide the land owners with persuasive offers to sell voluntarily, or they should look elsewhere.

1. Should political officials be able to take property from some private owners and transfer it to others if

they think that doing so will promote the public good?

Explain your answer.

Did the U.S. Supreme Court rule correctly in a case involving a fundamental economic

freedom?

Extended assessment

1. Which part of the Fifth Amendment in the U.S. Constitution authorizes the

use of eminent domain?

A. The “takings” clause

B. The “leavings” clause

C. The “domain” clause

D. The Pfizer clause

2. In the case of Kelo v. City of New London, the U.S. Supreme Court ruled

that the• A. property ownership rights of the 15 home

owners outweighed the eminent domain powers of the local government.

• B. "due process of law" clause in the Fifth Amendment protected the home owners who had taken the case to court.

• C. taking private property to foster economic development satisfied the "public use" requirement in the Fifth Amendment.

• D. statute of limitations had run out on the New London home owners’ appeal to the courts.

3. If this case had made it to the U.S. Supreme Court after the Court ruled on Kelo v. New London, how do you think

the Court would have ruled?

• In 2001, city officials in New Rochelle, New York, announced plans to develop a 308,000 square foot Ikea furniture store. City officials wanted to use eminent domain to clear the 16 acres needed for the new store.

• Clearing the area would mean condemning much of the City Park neighborhood, – razing 26 local businesses employing 400 people, – razing two churches – and the homes of 160 residents.

• Ikea contended that the new store would generate $4.2 million in local sales and property taxes, as well as 350 jobs.

• Opponents argued that the plan was an abuse of the power of eminent domain and a violation of the Fifth Amendment to the U.S. Constitution.

• Ikea ultimately abandoned its plan after community groups launched a campaign against it.

4. What is an alternative to the use of eminent domain when

potential business owners and city officials wish to acquire

private property for new development?

What are the advantages of the alternative?