(Editors note: He's been rolling, feeling, turning, moving, and running. And you know that you can't stop him burning. Now he's back after a long absence to show you the way. Let's have a big round of applause for occasional Fraters contributor Man From Silver Mountain.)
John Hinderaker of Power Line fame is usually pretty solid in his analysis, particularly on legal issues. However, his defense of the Supreme Court's controversial decision in the Kelo v. City of New London case is inconsistent with the conservative principles that he usually espouses. Craig Westover has already taken him to task, and I will add my own two cents on what I believe to be an issue of creeping government intrusiveness.
Hinderaker begins by framing the debate quite adequately:
THE SUPREME COURT'S DECISION in Kelo v. City of New London has sparked a great deal of comment, most of it critical. Conservatives, in particular, have denounced Kelo's holding that economic development projects are a "public use" that municipalities and other government units can use eminent domain to carry out. George Will's analysis was representative:
The question answered yesterday was: Can government profit by seizing the property of people of modest means and giving it to wealthy people who can pay more taxes than can be extracted from the original owners? The court answered yes.
Unfortunately, he then opts for a straw man argument.
Many conservatives seemed to enjoy waxing populist over the decision; Pfizer, Inc. was a popular target. Pfizer-bashing started at the top. Justice Thomas, writing in dissent, said that the majority held, "against all common sense, that a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation, is for a 'public use.'" Justice O'Connor, also dissenting, echoed the theme: ". . . any boon for Pfizer or the plan's developer is difficult to disaggregate from the promised public gains in taxes and jobs." And the Washington Times editorialized:
City officials sought to lure Pfizer there to build a $300 million research facility with the understanding that the surrounding parcels of land could be developed into an upscale complex of residences along with a marina, hotel and conference center. . . .The city argues that because Pfizer can pay more taxes, and because it can provide more jobs, it will make better use of the Ft.Trumbull properties than the ordinary people who currently own them.
Justices Thomas and O'Connor's comments are hardly Pfizer bashing. Such an accusation against two Supreme Court Justices is spurious. Further, this argument fails to refute the point of Kelo critics: Kelo is ripe for abuse, potentially allowing powerful interests conspiring with local government to take from the less powerful. Hinderaker continues:
In fact, however, Pfizer has little or nothing to do with the New London project. In February 1998, Pfizer announced that it would build a global research and development headquarters on a site in New London that was then used as a garbage dump. It was after Pfizer's announcement that the city decided to embark on a redevelopment project that would include land near Pfizer's. Pfizer completed construction of its research and development headquarters four years ago; its project was in no way contingent on the city's separate redevelopment efforts. Pfizer--whose spokesman noted that the company's role in the New London condemnation case has become an "urban legend"--has no involvement in the Kelo case, no interest in the property at issue, and has never supported either side in the controversy.
In reality, the New London economic development project is similar to efforts that hundreds of towns and cities have made to revitalize aging or depressed neighborhoods. Focused on a 90-acre area called Fort Trumbull that is comprised of both publicly and privately owned land, the project includes a typical mix of public and private uses: a pedestrian "riverwalk," a waterfront hotel and conference center, marinas for recreational and commercial uses, a new Coast Guard Museum, new residences, and an industrial park to which the city hopes small biotechnology companies will be lured by Pfizer's nearby research facility. The city created the New London Development Corporation ("NLDC") to carry out the Fort Trumbull project, and, as is usual in such cases, gave the NLDC powers of eminent domain to acquire the necessary parcels of land. The NLDC was able to negotiate purchase agreements with most landowners, but a few refused to sell and ultimately commenced the litigation that reached the Supreme Court.
The plaintiffs clearly would have their land taken and given to another private party. Whether or not that party is Pfizer is irrelevant. Note that the city wanted to use eminent domain to create an industrial park within an area Hinderocker describes as a "mix of public and private uses . . . to which the city hopes small biotechnology companies will be lured." So the city will take someone's private riverfront property in the hope that they can develop it better than private industry would. Next Hinderaker makes the main point of his argument (emphasis mine):
Fort Trumbull is such a typical mixed-use municipal development project that it is a little hard to understand the significance that commentators have given to the Court's decision. The issue before the Court was phrased very broadly by the majority: "We 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." Thus, if the minority had prevailed, no municipality in America could condemn any property in order to carry out an "economic development" project. This would have the practical effect of making such projects virtually impossible.
His last two sentences suggest a collectivist mentality. First of all, I don't buy the argument that such developments would be impossible. Certainly, the larger the scope of the project, the less likely governments would find all parties willing to engage. However, even if Hinderocker is right and all economic development projects became impossible, so what? There is no constitutional right for cities to engage in economic development projects. In fact, such projects are often (some would say always) wasteful uses of public resources. Hinderaker then tries a red herring argument:
It is noteworthy, however, that the Supreme Court held long ago that a governmental unit can use its eminent domain power to relieve "urban blight" (see Berman v. Parker, 348 U.S. 26, 1954). That principle was not challenged by any party in the Kelo case or by the Kelo dissenters (with the possible exception of Justice Thomas). So, had the dissenters been in the majority, a city would be powerless to carry out a redevelopment project in a neighborhood that is only depressed--like Fort Trumbull--but if it waited until the neighborhood is actually blighted, a redevelopment project would be permissible. Permissible, but probably too late. It is not obvious how this result would represent an advance for either individual rights or public policy.
The suggestion that if the city waited until the area became blighted it could condemn and seize property is indeed true, but once again irrelevant. The area is not blighted and no one claims it is. To suggest that it is on it's way to becoming blighted is a false premise. He next attempts to discredit the argument against seizing private property to transfer to another private entity:
MANY CRITICS of the Kelo decision have said that it authorizes seizing the property of one person merely to give it to another. Apart from any misunderstanding of Pfizer's role, this can only be because, once the NLDC acquires title to the Fort Trumbull property, it will be conveyed to a developer, Boston's Corcoran Jennison, to carry out the project. Some hostility to the Kelo decision seems to be based on the belief that Corcoran Jennison may profit from its work--an odd concern, one might have thought, to be expressed by conservatives. But New London's use of a private developer highlights an important point: there is no doubt that the city (or the NLDC) could use its eminent domain power in support of the Fort Trumbull project if it planned to retain ownership of the land and administer the project itself. If the project were publicly owned, no one could question that the associated condemnation proceedings would be in support of a "public use." But are the rights of Americans any less imperiled by condemnation in support of publicly-owned projects? And, as a matter of policy, if a city wants, for example, to create more housing, does it make any sense to force it to pursue the long-discredited practice of building public housing projects, rather than facilitating the use of private capital and private management to achieve the same end?
Here I believe he misrepresents conservatives arguments (though maybe not that of some liberals). The proposed transfer of the developed property to new ownership clearly represents taking from one private entity to give to another. It would not matter if the developer were the city itself or a third party. Next, Hindercker presents a hypothetical extension of Kelo:
There have, in fact, been development projects in recent years that have strained the Fifth Amendment's "public use" requirement to near, and perhaps beyond, the breaking point. In a number of instances, cities have condemned thriving businesses to clear space for a company to erect its corporate headquarters. Such transactions--very different from anything at issue in Kelo--can perhaps be characterized as seizing property from one individual or business to give it to another.
Even here, though, it is possible to sympathize with the affected municipalities. Suppose a large company whose headquarters are located in an urban area needs more space--say, a whole city block. Lacking powers of eminent domain, it has only two choices. It can negotiate with each landowner on the block and try to buy all of the individual parcels. This, however, is often difficult or impossible; once it becomes known that the company is buying land for its corporate headquarters, any individual landowner can block the project by refusing to sell. Occasionally such "holdouts" are motivated by sentimental attachments, but usually they simply want to extort an unreasonable sum from the corporate buyer. (It is interesting that in her Kelo dissent, Justice O'Connor stressed that: "Petitioners are not hold-outs; they do not seek increased compensation. . . ." Yet the majority opinion notes that "[t]en of the parcels [at issue] are occupied by the owner or a family member; the other five are held as investment properties." If petitioners had won their case, the value of those investment properties would have skyrocketed.)
Is he saying that a large company has the right to take what does not belong to it, just because it can curry favor with a city council? A company does not have the constitutional right to the perfect corporate headquarters. Further, Hinderaker goes on to suggest that a potential seller of investment property should have less rights than someone who owns for more sentimental reason. Does the law recognize different title of land based on the reason for or length of ownership? I think not. This paragraph displays a scary indifference to property rights. Next, Hinderaker takes the argument to its logical conclusion.
Faced with the difficulty of assembling an adequate real estate package at a reasonable cost, our hypothetical company has one obvious alternative: buy a cornfield remote from any city, and erect a "campus" rather than a high-rise building. Rather than accept the loss of a major employer and taxpayer under these circumstances, it is not surprising that some cities have chosen to cooperate in development projects that put the city's eminent domain power at the disposal of a private company.
This is exactly the situation that the SC minority feared. A powerful interest wants to use its influence to pressure a city to take and redistribute a private individuals property. The city, afraid of losing tax base tramples the rights of the weak to curry favor with the strong. As an aside, if our hypothetical company is located in an industrial center, the nearest cornfield may be too far anyway. Hinderocker then talks up the success of economic development projects:
Today most significant development projects involve multiple uses and cooperation between public and private entities. While such projects can no doubt be subject to various abuses, they can also be enormously successful and of great public benefit--to take just one example, consider the spectacular renovation of Baltimore's inner harbor. Moreover, two factors minimize the danger that economic development projects pose to individual rights. First, they are carried out in the glare of publicity. Nothing in local government attracts more scrutiny or more criticism than such projects. Second, the Fifth Amendment requires that anyone whose property is taken for a public use be fairly compensated, and in practice, most takings are compensated generously. Thus, while condemnation can undoubtedly impose hardship on individuals, it is unlikely to result in gross injustice.
The value of such projects is debatable. Hinderaker is correct negative publicity and generous compensation are two factors likely to prevent such takings from being grossly unjust. However, the Kelo ruling makes gross injustice more likely than before. Hinderaker makes some good points in closing on other threats to property rights:
The principal threats to property rights lie elsewhere. In particular, regulatory actions often severely limit what an owner can do with his property. Unlike urban development projects, such regulations are often adopted in forums that are remote from, and unresponsive to, the political process. And what an owner generally hopes for in such situations is to be covered by the Fifth Amendment's guarantee of compensation for the loss of use of his property, which is automatic in the case of a condemnation.
So it is a good thing that the Kelo decision has focused attention on the erosion of property rights; but, despite the critical consensus that has formed among conservatives, it is far from clear that the case was wrongly decided.
However, I suggest that the outrage from both left and right suggests that Kelo was indeed wrongly decided.
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