Property Wrongs

One of the most important Supreme Court rulings of the last few years was not about church-state issues, affirmative action, or even the war on terrorism. It was about real estate -- 15 houses located in a forlorn part of southeastern Connecticut called New London.

On its face, the case, Kelo v. New London, which was decided earlier this year, was a victory for New London and other flailing cities that have tried to remake tired, depleted neighborhoods into glittering urban showplaces using the power of eminent domain. Kelo held that local governments looking for redevelopment sites that might require condemnation could look throughout a municipality, rather than restricting their search to blighted areas most likely to be inhabited by poor and minority residents. In affirming that middle-class residents, not just the poor, should share the often intensely felt costs of urban improvement, the case was actually rather progressive.

But now, several months after the June 2005 ruling, it seems clear that Kelo was a pyrrhic victory -- for cities desperately trying to stem the tide of people, jobs, and tax dollars flowing to the suburbs, for the idea that everyone has a stake in redevelopment, and for those who believe that one of the central tasks of government is to balance individual rights with community health, safety, and prosperity. Conservative strategist Grover Norquist has deemed the Kelo decision “manna from heaven” for the property-rights movement, and predicted, “20 years from now, people will look back at Kelo the way people look back at Roe v. Wade,” as an unpopular decision that galvanized the losing side and created a decades-long legal and cultural battle. For the property-rights movement, the Kelo loss could turn out to be better than a win.

In 1998, when it embarked on its redevelopment plan, the tiny city of New London was dying. It lost 30 percent of its residents between 1960 and 1998. About 1,800 of the town's 23,860 remaining residents were unemployed. Federal military base closings in 1996 had taken one of the town's major employers, the Naval Undersea Warfare Center, which had once employed 1,500 people at a waterfront site in a neighborhood called Fort Trumbull. In February 1998, in the first bit of economic good news in years, the Pfizer pharmaceutical company announced it would build a new research facility next to the same neighborhood.

Over almost two years, the city explored how to build an economic revival in Fort Trumbull that would reach the rest of the city. The final redevelopment plan that the City Council approved would remake 90 acres of Fort Trumbull, and included new roads and infrastructure, a museum, a marina, and a riverwalk alongside office towers, shops, and condominiums. All told, it would bring between 1,200 and 2,300 jobs to the city. Two Connecticut courts agreed that this plan was not conceived to benefit Pfizer or any private developer. This is the public purpose that the Supreme Court upheld in Kelo: a redevelopment project that would create hundreds of jobs, new public amenities, and a chance for a city to reverse its long, grim decline. The decision was the latest in a long line of cases in which the court upheld the notion that government has the right, sometimes even the duty, to intervene in the economy.

Opponents of the decision have complained that Kelo allows cities to blithely take one person's property and transfer it to the highest bidder. That is simply false. As the court wrote in Kelo, “[I]t has long been accepted that the sovereign may not take the property of A for the sole purpose of transferring it to another private party B, even though A is paid just compensation. ... [T]he City would no doubt be forbidden from taking petitioners' land for the purpose of conferring a private benefit on a particular private party.” The Kelo case was not about a town selling out hardworking families and little old ladies to a rapacious corporation. It was about a desperate place trying to keep itself and its citizens afloat.

Although a paper victory, Kelo has created a massive backlash and ultimately may be a practical defeat for many cities. Just days after the decision, the Institute for Justice, a libertarian law firm that represented Susette Kelo and her neighbors, launched a $3 million campaign to change state and local condemnation laws. In the legislative sessions that convene in January, legislators in almost half the states will consider new laws that forbid eminent domain for the purpose of economic development. Proposed federal bills, including a Senate appropriations rider and a bill that passed the House 376 to 38 in November, would also prevent state and local officials from using federal funds for economic development projects that use eminent domain.

But the property-rights movement is not stopping at eminent domain. They want to extend the electric unpopularity of Kelo to cripple governments' ability to protect the environment, endangered species, the rights of neighboring landowners, and the community. Their argument is simple: There is no difference between government's condemning your property through eminent domain and government's regulating your use of your own property, for example by forbidding land owners from building on sensitive wetlands, which control floods and filter flowing water, or destroying the habitat of endangered species or the species themselves. As Bill Moshofsky, the president of Oregonians in Action, a leading property-rights group, wrote last summer, “Regulations that reduce the value of public land to provide public benefits are no different than taking private land for roads, public buildings or wildlife preserves. Yet the courts have required compensation for every foot of land taken for roads, buildings, or preserves, and no compensation for land taken by regulations.”

This argument muddles two different lines of constitutional inquiry. The Constitution's fifth amendment states, “[N]or shall private property be taken for public use, without just compensation.” The condemnations at issue in the Kelo case, like all condemnations, were clearly takings of private property and required compensation. By contrast, regulations that leave property in the hands of the owner but limit what he or she can do with it rarely constitute takings. The difference has been long recognized in American law: We have a right to own property, but not an unlimited right to do whatever we want with it. Our exercise of our property rights has a tremendous effect on our neighbors' property and their rights. Courts recognize this complicated intertwining. The property-rights movement, by contrast, ignores it.

The property-rights movement is already using the Kelo decision to frame the debate over the Endangered Species Act (ESA), arguing that changes in the law are necessary to shore up property rights under attack by the court. “Americans have clearly seen, through the recent Supreme Court ruling in Kelo v. New London, that local governments can now take private property for any scheme they can devise. However, the precedent for such cavalier disregard for property rights comes directly from the ESA,” fumed an article by activist Tom DeWeese of the American Policy Center. Republican Congressman Richard Pombo from California has tried repeatedly since his election to Congress in 1992 to gut the act. At a rally last fall, he said about Kelo, “This may be the court decision that makes American realize we are losing those rights” to private property.

A few days after the Kelo decision came down, a draft summary of Pombo's Endangered Species Act “reform” bill was leaked to environmental groups. The draft would have required the federal government to pay property owners when protections for endangered species would have reduced the value of a portion of their property by more than half. In other words, if an endangered toad lived on one acre of a 10-acre ranch, and the value of that single acre fell by more than 50 percent, the owner would have a claim against the federal government.

Predictably, Pombo's draft bill was savaged by environmentalists. But it was also attacked by his usual property-rights allies, furious that the compensation standards did not go far enough. One said the bill “should be renamed Kelo 2.” A letter signed by 80 property-rights and conservative activists, including Paul Weyrich and Phyllis Schlafly said that with Kelo, “Such blatant disregard for property rights and the Fifth Amendment sent shockwaves throughout the nation.” The 50 percent compensation provision, they said, was “wholly insufficient” and a “weak acknowledgement of property rights.”

Pombo apparently was swayed. The final version of the Threatened and Endangered Species Recovery Act (TESRA) enables an owner to receive 100 percent of the fair market value of “foregone uses” of her property that would harm endangered species. This is an invitation for unscrupulous landowners to file specious claims. They might build a shopping mall, for example, but are forbidden from doing so by the Endangered Species Act, and force the government to pay up. The bill flew from introduction to passage by a 229 to 193 vote in the House in just 10 days in September.

You can expect more of these post-Kelo efforts going forward. By likening regulations that protect the environment, the rights of other landowners, and the community to the unpopular Kelo condemnations, property-rights extremists intend to continue their decades-long project of delegitimizing government regulation of property. Progressives can, and do, disagree about the merits of New London's project. But they should be clear that the Kelo case is being used to fuel a fight not over eminent domain, but over the legitimacy of government's ability to do what has always done -- balance the rights of individuals with the communal good.

Jennifer Bradley is an attorney at Community Rights Counsel, a public interest law firm that represents state and local governments. She co-authored an amicus brief submitted to the Supreme Court in the Kelo case. The opinions expressed here are her own.

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