You Are Not Your House (because the government can take it)

Brief thoughts on Kelo v. City of New London,
finally decided yesterday:

(Full opinion here)

The reason the case went before the Supreme Court was the debate over the limitations of the public use doctrine. Remember, exercise of eminent domain power under the takings clause requires both 1) just compensation and 2) that the property is taken for a public use. The issue of just compensation is a dicey one, as calculation of fair market value is by no means an exact science. But the courts have always left those decisions to the legislature in order to prevent the judiciary from becoming a group of property appraisers.

Throughout the twentieth century the judiciary has also deferred to legislative views of public use. The two most major instances of this were the Midkiff and Berman decisions. Midkiff upheld a legislative plan by the state of Hawaii to break up the large feudal landholdings that dominated the state in order to revive the housing market. Berman involved a Washington D.C. taking of a blighted neighborhood in which over half the residential units had been abandoned. The question in Kelo was whether or not the public use doctrine would extend to the city of New London’s plan to take homes in a residential neighborhood and transfer the property to businesses for a development that would bring in greater tax revenues.

In the majority opinion written by Justice Stevens, the Court ruled that the public use doctrine could be so extended, provided that the transfers of property taking place were part of an economic development plane. In his concurrence, Justice Kennedy opined that such an economic development plan would be subject to rational basis review. That is, so long as such a plan could be rationally conceived as an economic development plan, the judiciary should be deferential to such a legislative determination.

What’s interesting to note is just how different the majority and minority conceptions of the public use doctrine actually are. As my esteemed Con Law professor, Marty Margulies used to say, a rational basis test is essentially a “freak out test.” So according to the majority, unless a legislature has gone over the edge, the courts should defer to the legislative view of public use. And as the dissent argued, this just about makes the public use doctrine useless.

On the dissenting side, O’Conner looks to distinguish Midkiff and Berman, by noting that “the extraordinary, precondemnation use of the targeted property inflicted affirmative harm on society--in Berman through blight resulting from extreme poverty and in Midkiff through oligopoly resulting from extreme wealth.”

Justice Thomas on the other hand, would look to overrule both Berman and Midkiff outright. His dissent outlined the history of government takings in the United States, making it clear that the founders never intended the transfer of property from one private individual to another to be considered a public use.

What’s amazing is how far apart Thomas is from the majority, and how O’Conner’s dissent forges what could have been a very reasonable middle ground, per her usual style. Neither Thomas, nor the majority would consider the property as it exists before the transfer in determining whether or not the public use doctrine was satisfied. But this is seemingly an important part of the equation.

Whatever the case, the lonely libertarian fears this is a dangerous precedent. More thoughts on this later.