The problem with pretext.

• Author: Blais, Lynn E.
• Position: Economic development's public use requirement - Fordham Urban Law Journal Symposium

"It is a familiar principle of constitutional law that [the Supreme Court] will not strike down an otherwise constitutional statute on the basis of an alleged illicit legislative motive." (1)

Introduction I. A Brief History of Public Use, including Kelo II. The Kelo Aftermath III. The Power of Pretext? A. The Origins of Pretext in Eminent Domain B. Pretext in its Contemporary Form--Kelo IV. The Problem With Pretext A. Unconstitutional Motive B. Pretext and Public Use C. Additional Considerations--Pleadings and Remedies Conclusion INTRODUCTION

When the Supreme Court granted certiorari in Kelo v. City of New London (2) in September of 2004, many thought it signaled the Court's interest in recognizing a limiting principle inherent in the public use requirement that would rein in the expansive assertion of eminent domain powers by state and local governments undertaking economic development projects. (3) The

Kelo case starkly revealed the vulnerability of private landowners to the seemingly unfettered authority of local officials to condemn private property for what appeared to be mostly private gain. The petitioners in Kelo were homeowners, neighbors, and ordinary folks like you and me--only more so. One of the petitioners, Wilhelmina Dery, had been born in her home in New London nearly ninety years before, and all of the petitioners had "poured their labor and their love into their homes." (4) Yet the City of New London planned to take these homes against the owners' wishes so that Pfizer and other private companies could use the property for their own private development purposes. (5) If any case provided a perfect vehicle for the Court to announce that the Fifth Amendment had some teeth, this seemed surely to be it.

Alas, it was not to be. In the end, the Kelo Court said mostly what it had been saying all along, namely, that the concept of public use was expansive and encompassed projects undertaken purely for economic development purposes, and that the judiciary had little role in policing the legislature's determination that a proposed use satisfied the public use requirement. (6) But the Court did introduce a new idea into the mix. It suggested that if the legislature was asserting a public purpose for the taking of private property as a "mere pretext," and the true purpose for the taking was to bestow a private benefit, then that condemnation would violate the public use requirement. (7)

This Article addresses the problem with pretext. Part I contains a brief history of the public use requirement and the Kelo Court's rejection of the claim that economic development does not constitute a public use. Part II summarizes the widespread but essentially ineffectual political fallout from Kelo and the consequent return of public use challenges to the courts. Part III explores the argument that pretext may serve as a limiting principle in public use cases. Lastly, Part IV explains the problem with pretext.

1. A BRIEF HISTORY OF PUBLIC USE, INCLUDING KELO

   By the early twentieth century, the Supreme Court had long made clear its unwillingness to second-guess legislative determinations of public use. (8) That judicial restraint was tested and solidified in the wake of the urban renewal renaissance that followed World War II. (9) In Berman v. Parker, (10) which upheld the condemnation of a profitable business as part of a sweeping urban renewal plan for the District of Columbia in 1954, the Court emphasized that "the concept of the public welfare is broad and inclusive," and "within the power of the legislature to determine...." (11) Thus, according to the Court, "when the legislature has spoken, the public interest has been declared in terms well-nigh conclusive" and "[t]he role of the judiciary in determining whether that power is being exercised for a public purpose is an extremely narrow one." (12) In Hawaii Housing Authority v. Midkiff, (13) the Court reiterated its unwillingness to substitute the judiciary' s views of public use for those of the legislature, and embraced an extraordinarily deferential version of rational basis review for claims that a proposed use did not satisfy the public use requirement. (14) The Midkiff Court said that "deference to a legislature's 'public use' determination is required 'until it is shown to involve an impossibility'" (15) and "the Court ... will not substitute its judgment for a legislature's judgment as to what constitutes public use 'unless the use be palpably without reasonable foundation.'" (16)

   After Midkiff, it was clear that the Public Use Clause of the U.S. Constitution would not impose a significant impediment to state and local efforts to condemn private property. (17) The Court had made clear that public use is a concept broad enough to embrace a wide range of public purposes, and that courts should apply extreme deference to any legislative determination that a particular use serves a public purpose. As a consequence, urban revitalization efforts intensified. Public-private redevelopment partnerships, which had long been used for urban renewal purposes, became even more popular, and the scope of redevelopment projects expanded beyond slum clearance and urban renewal to urban revitalization and redevelopment. (18)

   In light of this extraordinarily deferential judicial review in federal courts, property owners looked to state constitutions to fill the perceived gap left by Berman and Midkiff. In a series of influential decisions, several state supreme courts responded by interpreting state constitutions to demand heightened judicial scrutiny of public use determinations, at least when private property was being condemned for economic development purposes or for transfer to other private parties. (19)

   The Supreme Court's grant of certiorari in Kelo suggested that the Court was poised to revisit its public use holdings in light of the proliferation of condemnations in public-private urban redevelopment projects and the skepticism of state courts about those condemnations. (20) Some scholars expressed cautious optimism that the Court would finally discern limitations on condemnation authority in the Public Use Clause. (21) But the decision in Kelo proved a huge disappointment to those who thought the Court would, and should, recognize constitutional limits on the power to condemn property for economic development. (22)

   Instead of reining in the breadth of prior public use jurisprudence, the Kelo decision powerfully reaffirmed its prior broad interpretation of the Public Use Clause in two important ways. First, the Court reaffirmed its longstanding holding that the concept of public use is expansive and accommodates the reality that "the needs of society have varied between different parts of the Nation, just as they have evolved over time in response to changed circumstances." (23) Second, the Court re-emphasized the primacy of the legislative role in determining public use, and affirmed the extraordinary degree of deference to which these legislative determinations are entitled. (24) The Court grounded both of these conclusions in "more than a century [of] public use jurisprudence," thus suggesting that the trend lines were long and not likely to deviate. (25)

   Nevertheless, Kelo was not a total loss. The Court took pains to emphasize the federalism aspects of the decision, pointing out that the Federal Constitution is not the only, nor the most obvious, place where limits on the power to use eminent domain can be found. (26) The Court suggested that other--more appropriate--sources of limitations on this power are state constitutions and state statutes. (27) Moreover, the Court implied that the Federal Constitution remained an important constraint on "pretextual" condetonations--that is, condemnations that were said to be for a public purpose but were really intended to benefit private parties. (28) Justice Kennedy made this point more directly in his concurrence. According to Justice Kennedy, "[t]he determination that a rational-basis standard of review is appropriate does not, however, alter the fact that transfers intended to confer benefits on particular, favored private entities, and with only incidental or pretextual public benefits, are forbidden by the Public Use Clause." (29)

   Thus, Kelo could be read to represent the end of public use claims. The Kelo Court seemed intent on closing the federal courthouse doors to public use challenges and pointed the way to other avenues for seeking relief from the expansive exercise of eminent domain (that is, state referenda, state legislatures, and state courts). (30) At the same time, however, the Court appeared to suggest that there was one more chapter to public use claims--a chapter in which pretext plays a leading role.

2. THE KELO AFTERMATH

   The public response to Kelo was immediate and powerful, and it played out in the state arenas identified in the Kelo decision as being the appropriate fora for relief. The political fallout from Kelo has been well documented, most recently and thoroughly by Professor Ilya Somin, another participant in this symposium, (31) and there is no need for this Article to retread that ground. (32) As Professor Somin demonstrates, the Kelo decision was followed by widespread public outrage that encouraged private property rights advocates to seek political solutions to the problems of excessive economic development condemnations. (33) This outrage fostered a remarkable measure of success, at least by one measure: In just a few years, a large majority of states adopted statutes or amended their constitutions to limit the exercise of eminent domain. (34) As Professor Somin observes, "[t]he Kelo backlash probably resulted in more new state legislation than any other Supreme Court decision in history." (35)

   Unfortunately, the political victories proved almost as disappointing as Kelo itself. Almost across the board, the eminent domain reforms fail to impose meaningful limitations...