Public outcry: Kelo v. City of New London - a proposed solution.

• Author: Woodyard, William

1. INTRODUCTION II. THE FACTS III. THE MAJORITY OPINION IV. DISSENTING OPINIONS V. THE PUBLIC AND MEDIA REACTION TO KELO VI. POST-KELO STATE EMINENT DOMAIN LEGISLATION VII. EMINENT DOMAIN: ORIGIN AND LEGAL DEVELOPMENT VIII. THE U.S. SUPREME COURT'S STANDARDS FOR JUDICIAL REVIEW FOR STATE ACTION UNDER EQUAL PROTECTION IX. "INTERMEDIATE SCRUTINY" FOR EMINENT DOMAIN "IN ECONOMIC REDEVELOPMENT CASES X. CONCLUSION Trust, but verify. (1)

1. INTRODUCTION

   On June 23, 2005, the United States Supreme Court delivered an opinion concerning eminent domain in the usually mundane and tranquil area of real property law. (2) The public reaction to this decision was anything but mundane and tranquil. (3) Instead, the reaction was more like an explosion of outrage. Why was the public reaction to the Kelo v. City of New London decision so extreme, was it legally justifiable, and could the Supreme Court have fashioned its opinion in such a manner that the public outcry would have been avoided or at least muted? These are the primary questions the following discussion addresses and, hopefully, resolves. However, to begin, this Article briefly presents and explains the facts of the case and the holding of the Supreme Court.

2. THE FACTS

   In the latter decades of the twentieth century, the city of New London, Connecticut experienced so much "economic decline" that one of that state's agencies designated it as a "distressed municipality" in 1990. (4) A few years later, in 1996, federal authorities closed the Naval Undersea Warfare Center, which had been located in the Fort Trumbull area of town, a move costing New London over 1500 jobs. (5) By 1998, New London had an unemployment rate nearly twice as high as the rest of Connecticut and the city's population had ebbed to a level last seen in 1920. (6)

   Understandably, state and local authorities began seeking ways to stimulate the local economy, especially in the old Fort Trumbull area, and in due course, utilized the New London Development Corporation (NLDC) to do so. (7) In 1998, state officials approved issuance of bonds to begin funding NLDC projects and the Pfizer Company announced a plan to spend $300 million building a facility adjacent to the Fort Trumbull site. (8)

   Consequently, the NLDC continued planning, held neighborhood meetings, and received intermediate approvals from city and state authorities. (9) The development plan subsequently produced contained seven parcels in the Fort Trumbull area dedicated to the following proposed uses: a waterfront conference hotel, restaurants, shopping, marinas, a river walk, new residences, a United States Coast Guard museum, research and development office space, parking, office and retail space, and "water dependant commercial uses." (10)

   In January 2000, the city approved the development plan, made the NLDC "its development agent in charge of implementation," and gave the NLDC the power to both purchase land and use the power of eminent domain to acquire property "in the City's name" if necessary. (11) Thereafter, the NLDC purchased most of the land in the development area by negotiation, but resorted to eminent domain after unsuccessful negotiations with nine property owners who were then subject to a condemnation suit filed in November 2000. (12) Taken together, the nine owners held fifteen separate properties in the development area (some for residential use and others for investment), but there was "no allegation that any of these properties [was] blighted or otherwise in poor condition; rather, they were condemned only because they happen[ed] to be located in the development area." (13) In fact, one owner was born in the house where she had lived for nearly ninety years, and her husband had resided there with her over the course of their sixty-year marriage. (14) The next month, in December 2000, the property owners in question asked the New London Supreme Court to prohibit the NLDC from taking their land arguing that this action "would violate the 'public use' restriction of the Fifth Amendment," and received an order from the trial court prohibiting some of the takings, but permitting others. (15)

   Predictably, both sides appealed to the Supreme Court of Connecticut. In a divided opinion, the court held that "all of the City's proposed takings were valid," noting that under a Connecticut statute, "taking of land, even developed land, as part of an economic development project is a 'public use' and in the 'public interest'" and finally holding "that such economic development qualified as a valid public use under both the Federal and State Constitutions." (16)

   An appeal to the U.S. Supreme Court followed, and, in what may well prove to be a very important passage, the U.S. Supreme Court elected to comment on the viewpoint of the minority in the Connecticut Supreme Court by stating,

   The three dissenting justices would have imposed a "heightened" standard of judicial review for takings justified by economic development. Although they agreed that the plan was intended to serve a valid public use, they would have found all the takings unconstitutional because the City had failed to adduce "clear and convincing evidence" that the economic benefits of the plan would in fact come to pass. (17) Then, to clearly focus on the issue before the Court, the majority opinion stated, "[w]e granted certiorari to determine whether a city's decision to take property for the purpose of economic development satisfies the 'public use' requirement of the Fifth Amendment." (18)

3. THE MAJORITY OPINION

   The majority opinion of the Supreme Court was written by Justice Stevens and joined by Justice Kennedy, who also wrote a concurring opinion. (19) Four members of the Court dissented, including Justice O'Connor (who authored a dissenting opinion), Chief Justice Rehnquist, and Justices Scalia and Thomas. (20) The Court's majority began by reciting well settled, black letter law that the government is not allowed to take land from one private owner "for the sole purpose of transferring it to another private party ... even though [the first owner] is paid just compensation." (21) Next, in what is likely the most important key to the majority's thinking, the Court wrote:

   Nor would the City be allowed to take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit: The takings before us, however, would be executed pursuant to a "carefully considered" development plan. The trial judge and all the members of the Supreme Court of Connecticut agreed that there was no evidence of an illegitimate purpose in this case. (22) This comment by the Court is critical because it offers insight into the level of review, or scrutiny, the Court actually gave to the local government's use of eminent domain. While the Court stated that the issue was whether the local government's action satisfied the "public use" requirement of the Constitution, the more interesting, sub rosa question is how the Court decided this issue. This includes the standard of review through which the Court analyzed the city's action, whether or not the Court expressly identified the level of review exercised.

   Once the Supreme Court expressed the view that the city was not engaged in some sort of a sham, it more clearly explained the rationale it used for evaluating the city's actions, even though the Court did not actually label the review process itself, by stating:

   Those who govern the City were not confronted with the need to remove blight in the Fort Trumbull area, but their determination that the area was sufficiently distressed to justify a program of economic rejuvenation is entitled to our deference. The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including--but by no means limited to--new jobs and increased tax revenue. As with other exercises in urban planning and development, the City is endeavoring to coordinate a variety of commercial, residential, and recreational uses of land, with the hope that they will form a whole greater than the sum of its parts. To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment. (23) Next, the majority opinion specifically rejected the suggestion that the Court adopt a "bright-line rule," which would hold that "economic development does not qualify as a public use," and discussed several of the Court's precedents in which it approved the use of eminent domain to transfer property from one private owner to another. (24) These cases included facilitating "agriculture and mining" interests, changing "a blighted area into a 'well-balanced' community through redevelopment," "breaking up a land oligopoly," and "eliminating a 'significant barrier to entry in the pesticide market."' (25) Once the majority was satisfied that ample precedent existed for the proposition that, under certain circumstances, the "public use" requirement could still be met even when a city transferred property from one private party to another pursuant to condemnation, the opinion returned to further illuminate the analytical process underlying the majority's policy choice.

   To do this, two arguments made by the property owners were set up, and then knocked down. First, the Court wrote:

   It is further argued that without a bright-line rule nothing would stop a city from transferring citizen A's property to citizen B for...