U.S. Supreme Court Now Considering Whether To End Eminent Domain Abuse

John Kramer
John Kramer · September 8, 2004

Washington, D.C.—Homeowners and small businesses nationwide may not realize it, but the next three weeks may well decide whether their properties will be made safe from the unholy marriage of convenience between tax-hungry governments and land-hungry developers.

Between now and the first Monday in October, when it begins its 2004-05 term, the U.S. Supreme Court is expected to decide whether to hear its first case examining whether government’s eminent domain power may be used not for a public use (such as for a road) or even for a public “purpose” (such as for blight clearance), but for corporate welfare: to take one person’s home or small business so a bigger business can make more money off that land.

The case arises out of New London, Conn., where 15 perfectly fine (non-blighted) homes are being threatened with eminent domain to make way for a private development project that promises to bring in more jobs and collect more taxes for the City. The proposed development that destroyed a middle-class neighborhood initially included such items as a private health club and now includes a luxury hotel, high-end condos and private office space. Nationwide, more than 10,000 examples of threatened or actual eminent domain abuse have been documented in 41 states in just a five-year period from 1998 to 2002.

State Supreme Courts Divided

Because they lack clear U.S. Supreme Court guidance, state supreme courts remain divided on the issue of eminent domain abuse. This past July, the Michigan Supreme Court unanimously reversed a 23-year-old precedent known as Poletown, which had allowed local governments to take people’s homes and small businesses so it could hand them over to General Motors. In March 2004, however, the Connecticut Supreme Court (in part, based on the Poletown precedent) narrowly approved this use of government force in the New London case. In 2003, the Kansas Supreme Court approved the taking of private property for a Target distribution center. Of the 15 state supreme courts that have ruled on the issue of private-to-private eminent domain abuse, eight have ruled that the government’s power should not be used to benefit private developers in this way, seven have ruled that such private-to-private takings are permitted.

“There is chaos at the state level when it comes to eminent domain law,” said Dana Berliner, an IJ senior attorney who litigates this issue and authored the first-ever national study on eminent domain abuse. “What rights you enjoy to your property depend entirely on the state in which you live. Arizonans are safe in their property but Connecticut residents are virtually powerless against politically powerful developers, and in states like New Hampshire, there is no consistent interpretation of the law. In the confusion, people are losing their most precious possession—their homes.

Berliner said, “The bottom line is this: homeowners and small businesses will not be safe until the High Court issues a clear ruling that will end eminent domain abuse once and for all. The New London case offers the first opportunity to do that.”

Scott Bullock, a senior attorney at the Institute for Justice, which represents the New London homeowners for free, said, “This is corporate welfare at its worst. America’s founders would be shocked to see this awesome power of government abused in this way.”

Despite the Michigan Supreme Court’s reversal in Poletown, the world is no safer for homeowners, as the New London case demonstrates, where the justification of more jobs and increased tax revenue for the City is driving the private development.

Bullock said, “If jobs and taxes can be a justification for taking someone’s home or business, then no property in America is safe because anyone’s home can create more jobs if it is replaced by a business and any small business can create greater taxes if replaced by a bigger one. We have to restore the meaning of public use to what everyone once understood the term to mean—something the public would own and use, such as a road. Economic development is not a public use.”

“This is a uniquely good case for the Court to consider,” said Bullock. “It doesn’t force the Court to reconsider its earlier eminent domain precedents, but rather offers a clear and new legal question: does the Constitution allow takings of nice homes for economic development? It involves a purely constitutional issue without other case-specific, factual complications or procedural inconveniences. And it has been 50 years since the Court has addressed the use of eminent domain for private redevelopment.”

The Connecticut Supreme Court went well beyond any U.S. Supreme Court precedent thus far; it makes it virtually impossible for the owner of even a well-maintained home or small business to defend his or her property from politically powerful developers and local governments seeking the promise of more jobs and taxes.

“The Chicken Littles of the developers’ world will claim the sky is falling if the Supreme Court takes up this case and that all development will stop, but that’s nonsense,” said Chip Mellor, president of the Institute for Justice. “You can look at nearly every building ever constructed in this country, and it wasn’t built because of eminent domain; it was built because of private negotiation. And that will continue even if the Supreme Court takes up this case and ends this abuse of government power. The Court should restore some meaningful check on the abuses of eminent domain authority and provide some guidance to government officials, property owners and lower courts in reviewing condemnations for private economic development.”

Bully Tactics by Big Government

The New London homeowners have faced continual harassment at the hands of the New London Development Corporation—the private development corporation that’s been given the City of New London’s power of eminent domain. The harassment began the day before Thanksgiving 2000 when the NLDC had the local sheriff post eviction notices on the homeowners’ doors. The harassment has continued through this summer when the NLDC issued “back rent” notices on these homeowners—some of whom have owned their homes outright since 1958—claiming they owed the NLDC between $47,000 and more than $300,000 on their small properties.