Public use in the dirigiste tradition: private and public benefit in an era of agglomeration.

• Author: Eagle, Steven J.
• Position: Fordham Urban Law Journal Symposium

ABSTRACT

This Article analyzes the development of eminent domain law, focusing on the U.S. Supreme Court and the New York Court of Appeals' approach to the requirement that takings be for "public use." It asserts that the Supreme Court's public use doctrine is conceptually incomplete. In applying that doctrine and its own precedents, the Court of Appeals acts in the State's tradition of dirigisme, and subordinates constitutional protections for private property to centralized development. Its recent Goldstein and Kaur opinions, uncritically supporting development for economic agglomeration, are the culmination of this approach.

The Article also discusses implications for public policy arising from condemnation for transfer for private redevelopment, as hastened by government efforts to stimulate agglomeration. These include a lack of transparency, secondary rent seeking, possibilities of corruption resulting from crony capitalism, and the inefficient use of public and private recourses.

TABLE OF CONTENTS Abstract Introduction I. Dirigisme and New York II. Takings and Public Use Law A. Takings Law B. Public Use C. Maximum Deference in Goldstein and Kaur III. Vitiation of Public Use in Theory and Practice A. Kelo Demonstrates the Need for a Limiting Principle B. The Unsatisfactory Adoption of Pretextuality 1. Why Should Motive Matter? 2. The Assumptions Underlying Pretext are Counter factual 3. The Manichean Distinction Between Public and Private Benefit 4. Practical Objections to Pretextuality C. Vitiating the Public Use Clause--Goldstein and Kaur 1. The Court of Appeals Regards "Public Use" as Redundant 2. An Open-Ended View of "Blight" 3. Pretext in Goldstein and Kaur D. Meaningful Scrutiny and Procedural Roadblocks 1. Public Use and "Meaningful" Judicial Scrutiny 2. Pretext Defenses and Discovery 3. The Role of Twombly and Iqbal IV. Goldstein, Kaur, and Public Policy Problems A. Penn Central, Henry George, and Agglomeration Economics 1. Penn Central in the Court of Appeals: A Georgist Turn 2. Penn Central as Precursor to Agglomeration 3. Agglomeration and Public Policy B. Urban "Blight" as a Metaphor for Contagious Illness C. Underutilization D. The Information Problem and Information Paradox 1. Government Disclosure is Cheap and Private Information is Expensive 2. Crony Capitalism and Urban Revitalization E. Government, Property, and Coordination F. Agglomerate Proliferation G. Redevelopment Does Not Embody Superior Knowledge Conclusion INTRODUCTION

This Article is about dirigisme, the "policy of state direction and control in economic and social matters," (1) as it relates to state control of land use. It also is about the Public Use Clause, its evasive conceptualization by the U.S. Supreme Court, and the New York Court of Appeals' reflexive application of the Supreme Court's public use cases. As the French proverb would put it, the Court of Appeals' abrogation of its duty, together with an underlying policy that takes us down the path of inefficient land use and crony capitalism, is worse than a crime--it is a blunder.

The U.S. Supreme Court's decision in Kelo v. City of New London (2) makes clear that the exercise of eminent domain no longer is constrained by traditional concepts of use by the public and the prevention of harm. The New York Court of Appeals had reached that conclusion over forty years earlier, by Cannata v. City of New York. (3) However, the majority in Kelo expressly assured that courts would confront abuses of eminent domain when and if they arise.

In Williamson County Regional Planning Commission v. Hamilton Bank, (4) the Supreme Court implicitly assured that federal courts would review claims that state and local governments took private property in violation of the Fifth Amendment's Takings Clause, although those claims first would have to be "ripened" in state court. (5) Yet, as it turns out, the doctrine of collateral estoppel means that the very act of ripening a case for federal judicial review precludes its merits from being considered by the federal court. (6) As Professor Thomas Roberts observed, the landowners "understandable reaction" is that this "perpetrates a fraud or hoax." (7) "Ironically, an unripe suit is barred at the moment it comes into existence. Like a tomato that suffers vine rot, it goes from being green to mushy red overnight. It is never able to be eaten." (8) Roberts was not troubled by this apparent bait-and-switch, being dismayed only by the fact that it "is surprising to those who are misled by the language of ripeness, which suggests that the state law suit is merely preparatory to a federal suit." (9)

The State of New York has a tradition of strong government in many areas, including land use regulation and takings. (10) The New York Court of Appeals has a tradition of deference to legislative and administrative actions. (11) Recent decisions by the Court of Appeals in Goldstein v. New York State Urban Development Corp., (12) and Kaur v. New York State Urban Development Corp., (13) together with a U.S. Court of Appeals for the Second Circuit decision in the related Goldstein v. Pataki case, (14) forebode that the Supreme Court's assurances in Kelo that courts will confront eminent domain abuse will prove as evanescent as the Williamson tomato that turns from green to mushy red.

Ultimately, Goldstein and Kaur represent a continuation of the late Chief Judge Charles D. Breitel's declaration in Penn Central Transportation Co. v. City of New York (15) that the State commands "the accumulated indirect social and direct governmental investment" that provided most of its value to physical property. (16)

1. DIRIGISME AND NEW YORK

   Dirigisme has long antecedents in New York law and policy, dating to the philosophical underpinnings of the State's constitution and law. (17) It is perhaps best associated with the economic policies of New York's Alexander Hamilton, who was convinced of the need and desirability of government involvement in the state and national economy. (18) Hamilton wanted a "government that would actively participate in the economy, regulating it and creating monopolies as it saw fit[, seeking] not to create an economy based on free enterprise, but one based on regulation and government intervention." (19) Despite Hamilton's untimely death, his economic philosophy survived and prospered, and was put to almost immediate use in the State's support for the Erie Canal. (20) Hamilton's successors such as DeWitt Clinton saw great potential economic benefits in completing the massive infrastructure project, and when private attempts to finance and construct the Erie Canal failed, they were eager to step in and direct the development in the direction they saw fit. (21) A successor to Governor Clinton, William H. Seward, declared:

   [I]t is not only the right but the bounden duty of the legislature to adopt measures for overcoming physical obstructions to trade and commerce in this state, and for furnishing to each region, as far as reasonable, practicable facilities of access to the great commercial emporium of the Union, fortunately located within our own borders. (22) In addition to sparking enthusiasm for major internal improvements, the Erie Canal significantly altered the development of New York law.

   Despite the previous century's insistence on natural rights, of which property ownership was one, American citizens began to realize that this interpretation of property rights would impede the country's ability to expand and prosper economically. To achieve this new economic development, it was necessary for private individuals to sacrifice their property for the canal. (23) The requisition of private land by canal contractors produced a broader definition of "public use" as well. (24) In the area of education, another form of infrastructure or capital, the French tradition of dirigisme was actually imported from New York. The State early administered "Regents Examinations," a precursor to what much later became commonplace standardized testing. (25) Since 1784, the Regents have presided over the University of the State of New York, and "are responsible for the general supervision of all educational activities within the State." (26) It "is the nation's most

   comprehensive and unified educational system." (27) While it traces its antecedents to a 1784 statute establishing the Regents as a corporation empowered to govern Columbia College (now University) and subsequently established colleges, the provenance of the University of the State of New York is even more fascinating.

   This unique university was not a single institution of higher learning as at Paris or Oxford. Rather, it served largely as a way of governing schools, colleges and universities in a centralized, secular system of state control. In addition, it controlled admission to higher education through the regents examinations given to secondary school children. This type of university had been advocated unsuccessfully in France for over two hundred years. (28) It is "no mere coincidence" that Napoleon's University of France (1808) took similar form. (29) "If France may claim to have given New York the ideal of a symmetrical state system of learning, New York may claim to have returned to France the practical form of such a system, in its all-inclusive university corporation." (30)

   This Article is not about dirigisme in education, but rather about the conflict between the duty of New York courts to enforce the State's guarantees of private property rights (31) and its deference to centralized control of ownership and direction of land use. The New York and Federal constitutions both state: "Private property shall not be taken for public use without just compensation." (32) The courts of New York have generally interpreted this provision quite broadly in favor of the government, a trend continued since my last review a dozen years ago, in connection with the Court of Appeals' 1997...