Saving Private Development: Rescuing Louisiana from Its Reaction to Kelo

• Author: Jennie Jackson Miller
• Pages: 632-679

Page 632

The author would like to thank Professor John Devlin and Chancellor Emeritus John Costonis for their invaluable feedback, and her husband, Edward, for steadfastly feigning interest in eminent domain law.

I Introduction

The U.S. Supreme Court's 2005 decision in Kelo v. City of New London, Connecticut¹ sent shockwaves through state legislatures across the nation. The decision allowed a Connecticut municipality to use eminent domain to redevelop a non-blighted residential area in partnership with a private developer.² Though the decision was hardly the earth-shaking result that many unfamiliar with existing law believed,³ public outcry was swift. Since Kelo, forty-seven state legislatures have considered legislation to redefine their eminent domain laws.⁴

Historically, Louisiana state and local governments have displayed caution in exercising their expropriation powers.⁵ Yet, Louisiana reacted to Kelo with three rigid constitutional amendments that would be difficult to repeal if found unworkable. One of Louisiana's amendments (hereinafter "Amendment 5"),⁶which passed by popular vote on September 30, 2006,⁷ (1) forbids government from taking property "for predominant use by" or "transfer of ownership to any private person or entity"; (2) narrowly defines "public purpose" as either "a general public right to a definite use of the property," a public ownership of land designated for specific enumerated uses, or a removal of a threat to public health or safety; and (3) forbids government from considering economic development, tax revenues, or any incidental Page 633 benefit to the public in determining whether the taking is for a public purpose.⁸ Amendment 5, in conjunction with two other amendments passed along with it,⁹ ranks as one of the most aggressive reactions to Kelo taken by any state;¹⁰ it changes current Louisiana law drastically¹¹ and comes at a time when vast devastation remains across South Louisiana following Hurricanes Katrina and Rita.¹²

Amendment 5 is poorly drafted. It fails in its mission to protect property owners because it includes contradictory and overbroad exceptions yet succeeds in constraining one of the most basic and essential functions of government: economic development.¹³ Economic development is an essential policy of government because stimulating the economy increases the public's wealth. If the provisions in Amendment 5 are interpreted wrongly, Louisiana's economic future could suffer. The amendment has the potential to quash the government's Takings Power in many instances where it would be necessary and good for the state, such as during the hurricane recovery effort.

This Comment argues that Amendment 5's purpose is to codify Justice O'Connor's dissenting opinion in Kelo. Justice O'Connor contended that eminent domain should not be used for a purely economic purpose when property is transferred to a private person because the sovereign would in effect be taking property from one party for transfer to a higher taxpayer.¹⁴ She did not, however, support depriving government of its ability to involve private parties in remedying affirmative harms in the community. This Page 634 Comment concludes, then, that Amendment 5's "predominant use" provision should be read to limit the purpose of the taking, not its mechanism; that the "threat to public health or safety" exception should be applied broadly; and that the "economic development" and "incidental benefits" limitations should be read narrowly. These recommendations would satisfy concerns raised by Justice O'Connor without greatly affecting Louisiana's economic future.

Part II of this Comment details the historical and legislative contexts in which Amendment 5 was drafted. It discusses the history of the Takings Power under the Federal Constitution, the Kelo decision, and the subsequent reaction to Kelo by other states. Part II(D) then discusses the parallel history under the Louisiana Constitution and supporting statutes leading up to the drafting of Amendment 5. Part III discusses the text of Amendment 5 and its potential effects on property rights, economic development, and on current hurricane recovery efforts. Finally, Part IV analyzes the issues mentioned in Part III and recommends sound judicial interpretations for the several provisions of the amendment that would protect property owners without inhibiting hurricane recovery plans or other well-planned economic development efforts in Louisiana's future.¹⁵ Page 635

II Background

A History of the Federal Public Use Clause

1. The Founding and Purpose of Eminent Domain

For centuries, government has exercised the power of eminent domain to take privately-owned property for the greater good.¹⁶ It is, in essence, government's power to compel the sale of property at a fair price when the sale is in the interest of the public.¹⁷ This power has long been considered inherent in and necessary to a sovereign's existence¹⁸ and paramount to all private rights, because the right of the individual must not supersede the needs of the whole.¹⁹

When property is needed for the greater economic good, eminent domain is the tool the sovereign uses to combat the "holdout."²⁰ The holdout is the individual property owner who sits on the site of a planned public project and, realizing his sudden bargaining power, resists sale in an effort to gain a higher-than- market price for his property.²¹ This tactic effectively puts money in the pocket of the individual when it should be spent on the public at large. For example, a sovereign may need land to build a road. Landowners in the path of the planned road could hold out sale until the government has paid exorbitant sums for the needed land. Public funds are in this way transferred unnecessarily to Page 636 private pockets in the interest of public need. Eminent domain prevents this scenario.

2. The Limitations on Eminent Domain

Because the eminent domain power is inherent and necessary for a sovereign, it requires no constitutional recognition.²² Thus the power is not granted by the Federal Constitution but is limited in the Fifth Amendment Takings Clause, which states, "private property [shall not] be taken for public use, without just compensation."²³ The clause invokes two requirements: (1) that the taking serves a "public use," and (2) that just compensation is paid to the owner.²⁴ This section explores the question: what is "public use" in federal law?

An early constraint to public use was recognized in Calder v. Bull, where Justice Chase opined that "a law that takes property from A and gives it to B: It is against all reason and justice, for a people to entrust a Legislature with SUCH powers; and, therefore, it cannot be presumed that they have done it."²⁵ This reasoning suggests that public use must involve use by more than a single private party but does not expound further on the requirement.²⁶ A look at subsequent federal case history reveals three applications of public use that have been found constitutional: "public ownership," "use by the public," and a third more recent, but generally accepted application, "public purpose."²⁷ Page 637

a Traditional Public Uses

The oldest and most established public use application is "public ownership."²⁸ That is, the government may take land from a private citizen and convert it to publicly-owned property such as a road, a school, or a park.²⁹ This application requires that ownership of the property be transferred to the public.

In the nineteenth century, a second public use application developed when private entities called "common carriers" began stepping in to perform certain functions in place of government.³⁰Under this "use by the public" application, the government takes property and transfers it to these common carriers, such as railroad or utility companies, who then convert it to property available for use by the public, in such forms as railroads, oil pipelines, or electrical infrastructure.³¹ Although the property must be made available to the public, the common carriers maintain ownership. This public use application may be characterized as a public right to physical access to the property for a specific utility.³²

The first major problem with the "use by the public" application revealed itself in the Mill Acts cases,³³ in which private mill owners were given authority to flood upstream properties (after paying just compensation) in the interest of creating dams.³⁴The Mill Acts were essential to manufacturers dependent on water power and beneficial to the public in effect, but did not fit the existing public use test because the public did not physically use the flooded property.³⁵ These and later cases illustrated the Page 638 shortcomings of such a narrow public use interpretation to accommodate the "evolving needs of society."³⁶ Thus, in the following century, the traditional public use restrictions gave way to a third, broader limitation, referred to as...