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'Despotic Power' in the Decade Since Landmark Eminent Domain Ruling

WASHINGTON – An attorney for the organization that represented homeowners in a controversial U.S. Supreme Court case that made it easier for governments to appropriate property and hand it over to another private entity for economic development purposes said the ruling continues to pose a threat to all landowners and called on lawmakers to address the potential abuse of eminent domain.

Dan Alban, an attorney for the Virginia-based Institute for Justice, told the House Judiciary Committee that studies show that the outcome of the Kelo v. City of New London case, decided by the high court 10 years ago, “disproportionately impacts minorities, the less educated and the less well-off” and provides the government with “despotic power.”

“The Kelo case demonstrated that a majority of justices sitting on the Supreme Court believed the U.S. Constitution provides very little protection for the private property rights of Americans faced with eminent domain abuse,” Alban said. “Indeed, the court ruled that it is acceptable to use the power of eminent domain when there is a mere possibility that something else could make more money than the homes or small businesses that currently occupy the land.”

The ruling, Alban told lawmakers, poses a threat to the rights of American property owners, particularly those who are disadvantaged and lack the financial resources and political connections to fight back. While the decision resulted in substantial public outcry, federal legislation to combat what he characterized as the “abuse of eminent domain” has yet to be adopted.

“The federal government should not be complicit in an abuse of power already deemed intolerable by most states,” he said. “Congress should take action to prevent federal dollars from being used to fund projects that abuse the power of eminent domain by taking property from one private person to give to another. Congress should not be sending scarce economic development funds to projects that abuse eminent domain and strip hard-working, tax-paying home and small business owners of their constitutional rights, particularly when these projects may ultimately fail.”

The Kelo case involved the efforts of the city of New London, Conn., to use its right of eminent domain to transfer land from one private owner to another private owner to further economic development. Several homeowners in the Fort Trumbull neighborhood, including Susette Kelo, filed suit against the city, maintaining that its actions violated the “Takings Clause” of the Fifth Amendment to the Constitution.

New London wanted the property to develop a $300 million research center for Pfizer, Inc., the giant pharmaceutical corporation, along with office buildings, luxury condominiums, hotels, a conference center and upscale retail stores. The homeowners asserted the use of eminent domain did not constitute the sort of public use necessary to take the land.

But in a 5-4 decision, written by former Justice John Paul Stevens, the court sided with the city, asserting that the court “long ago rejected any literal requirement that condemned property be put into use for the general public.”

The city subsequently gained control of the property but, ironically, the development never occurred.

“Let New London be a lesson -- after $80 million in taxpayer money spent, years tied up in litigation and ten years after the disastrous U.S. Supreme Court ruling, the Fort Trumbull neighborhood where Susette Kelo’s little pink house once stood is now a barren field that is home to nothing but feral cats,” Alban said.

The developer balked and abandoned the project. Pfizer closed its plant and left New London.

“Eminent domain sounds like an abstract issue but it affects real people,” Alban said. “Real people lose the homes they love and watch as they are replaced with luxury condominiums. Real people lose the businesses they count on to put food on the table and watch as they are replaced with shopping malls. And all this happens because local governments prefer the taxes generated by condos and malls to modest homes and small businesses.”

Federal law, he noted, allows federal funds to be used to support condemnations for the benefit of private developers.

“By doing so, it encourages this abuse,” Alban told lawmakers. “Using eminent domain so that another richer, better-connected person may live or work on the land you used to own tells Americans that their hopes, dreams and hard work do not matter as much as money and political influence. The use of eminent domain for private development has no place in a country built on traditions of independence, hard work and the protection of property rights.”

Alban found a sympathetic ear in the person of Rep. Bob Goodlatte (R-Va.), the committee chairman, who said the nation’s founders understood the importance of property rights, providing protections throughout the Constitution.

“However, despite the Constitution’s robust protections for private property rights, today federal, state, and local governments trample on Americans’ property rights every day in countless ways,” he said. “Local governments exact exorbitant fees from developers in exchange for permits; increasing federal and state regulations prohibit Americans from using their property as they traditionally have and, after Kelo v. City of New London, the government is free to seize homes, small businesses, and family farms and transfer the land to others for private economic development.”

The decision, Goodlatte said, allows governments to “take the property of any individual for nearly any reason.”

“Cities may now bulldoze homes, farms, churches, and small businesses to make way for shopping malls or other developments,” Goodlatte said. “Hopefully, this Congress we will finally be able to enact legislation to reverse the harmful effects of the Kelo decision. No one should have to live in fear of the government snatching up their home, farm or business so that another richer, better-connected person may live or work on the land they used to own.”

Goodlatte emphasized that eminent domain abuse is not the only troubling aspect regarding property rights. A process referred to as regulatory takings -- where the government restricts the use of an individual’s property -- also wrongfully deprives owners of their property, he said.

“Unfortunately, in the vast majority of regulatory takings cases, the property owner ends up receiving no compensation for the taking,” Goodlatte said. “In fact, according to one study, property owners prevailed in less than 10 percent of all regulatory takings cases.  These are troubling statistics given the fundamental nature of property rights under our Constitution.”

Another witness, John Echeverria, a law professor at the University of Vermont, offered a different view, asserting that Congress should not insert itself into the issue.

“Eminent domain is obviously an important governmental power the exercise of which – even when accompanied by just compensation as mandated by the Constitution – can severely intrude on the personal lives of citizens and the operations of private businesses,” Echeverria said. “Yet the eminent domain power is as old as the republic and is essential to achieve many important public objectives.”

“While virtually everyone would prefer that the government not take private property – just like everyone would prefer not to have to pay taxes to the government – the judicious use of eminent domain is a useful, indeed, essential tool for promoting the nation’s long term economic health and vitality,” he said.