KELO v. NEW LONDON

The 2005 case of Kelo v. New London is the most recent “public purpose” eminent domain case to reach the Supreme Court since Midkiff, which was decided over twenty years earlier than Kelo.  That being the case, Kelo became hotly debated and drew numerous supporters on each side of the fence.  Those on the side of the City of New London included many developers and big businesses.  The plaintiff’s supporters included the AARP, NAACP, The Libertairing Insitute for Justice, Martin Luther King’s Southern Christian Conference, and many more advocacy groups.  Over forty amicus curiae briefs were filed in the case, with about twenty-five of them on behalf of the plaintiffs. 

One of the briefs, signed by the AARP, NAACP and MLK Christian Conference, set forth numerous facts indicating that the eminent domain power has frequently been used against politically weak groups that have high concentrations of minorities and elderly citizens.  Kelo v. New London is a case that has sent shockwaves through the country and has prompted numerous states to enact new legislation in response to the decision. 

A. Background

            The plaintiffs in this case were a group of homeowners residing in an area of New London known as Fort Trumbull.  The city had been struggling with a continually decreasing tax base and population, which had led to hard economic times.  The City of New London had created the New London Development Corporation (NLDC), whose mission was to stimulate economic development in the area.  In 1998, the NLDC prepared an economic development plan for the area that included condominiums, hotels and a conference center.  The overall goal was for the pharmaceutical giant, Pfizer, to build a new plant in Fort Trumbull.  The NLDC stated that its goals for the new development plan were to create jobs, increase tax revenue, encourage public use of the city’s waterfront, and ultimately build momentum for the revitalization of the rest of the city.  The development plan was approved by the city council in 2000 and the NLDC was authorized to acquire properties within the new development area.

At the time, Fort Trumbull consisted of about 90 acres, including 115 residential and commercial lots.  The NLDC offered to purchase all 115 lots; however, the owners of 15 of these properties did not wish to sell their land.  Of the 15 properties, ten were owned by permanent occupants, and five were owned by investors.  The corporation then voted to use the power of eminent domain to acquire the properties of those holdout owners.  The City of New London chose to exercise its right to use the eminent domain power.  The city ordered the NLDC, a private entity acting as the city’s legally appointed agent, to condemn the 15 holdout owners’ properties.  When the NLDC attempted to use the eminent domain power to condemn these properties, the owners brought an action challenging the condemnations.  These owners were the plaintiffs in this case.  The lead plaintiff was a woman named Susette Kelo, who owned a small home on the Thames River in the development area.

B. The Connecticut Courts

The plaintiffs first sued the city of New London in the Connecticut courts, arguing that the city had abused its eminent domain power in condemning their properties.  Kelo and the other owners argued that private economic development, which was the stated purpose of the NLDC, did not qualify as a “public purpose.”  Therefore, the eminent domain power being asserted by the city did not meet the requirements of the Fifth Amendment.  The trial court agreed with the plaintiffs and prohibited the taking of the properties by eminent domain.

The case was then appealed to the Supreme Court of Connecticut by the NLDC.  That court determined that the use of eminent domain for purposes of economic development did not violate the public use requirement of the Fifth Amendment and the state constitution.  The court found that economic projects which create public benefits like new jobs, increased tax revenues, and urban revitalization, satisfy the public use requirement and therefore justify the use of the eminent domain power.  The court also held that the delegation of the eminent domain power to the NLDC was constitutional since the NLDC was the statutorily authorized agent of the City of New London and was not acting in furtherance of its own self interests.  The plaintiffs then petitioned for a writ of certiorari to the United States Supreme Court, and their petition was granted.

C. Issue Presented

Does the Fifth Amendment’s public use requirement provide protection from the eminent domain power for individuals whose property is being condemned, not to eliminate slums or blight, but for the sole purpose of economic development that will possibly increase tax revenues, create new jobs in the community and improve the local economy?

D. The United States Supreme Court

The Supreme Court, in a 5–4 decision, found for the City of New London.   The Court found that the NLDC development plan served a public purpose and therefore constituted a public use under the Takings Clause of the Fifth Amendment.  The Court held that the plan had not been adopted to benefit only a particular class of identifiable individuals.  Although the owners’ properties were not blighted, the city’s determination that a program of economic rejuvenation was justified was entitled to deference.  There was no basis for exempting economic development from the broad definition of “public purpose.”  The Court declined to require a reasonable certainty that the expected public benefits would, in fact, occur in the future.

The Court cited its prior decision in the Berman case, stating that the concept of public welfare is broad and inclusive.  The values it represents are spiritual as well as physical, aesthetic and monetary.  It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced and carefully patrolled.  In the Berman case, Congress and its authorized agencies made determinations that take into account a wide variety of values.   The Court in Kelo felt that it was not in their authority to reappraise these values which had previously been determined.  The Court stated that it is for those who govern to decide what is in the public’s best interest and that there is nothing in the Fifth Amendment which stands in the way of that determination.

            The Court’s decision attempted to pre-empt criticism of the possibility that the decision would be abused for private purposes by arguing that “the hypothetical cases posited by petitioners can be confronted if and when they arise. They do not warrant the crafting of an artificial restriction on the concept of public use.”   The Court also recognized that condemnation of property would cause hardships on many citizens and that the individual states were free to impose restrictions on the use of the eminent domain power by local authorities.

E. Concurring Opinion

            Justice Kennedy joined the majority opinion of the Court and added a few more observations in his concurring opinion.  Kennedy agreed with the Court that a presumption of invalidity is not warranted for economic development takings in general, or for the particular takings at issue in the Kelo case.  However, he does not rule out the possibility that a more stringent standard of review than those announced in Berman and Midkiff might be appropriate for a more narrowly drawn category of takings.  Kennedy stated that there may be private transfers in which the risk of undetected impermissible favoritism of private parties is so severe that a presumption of invalidity is warranted under the Public Use Clause.

F. Dissenting Opinions

Justice O’Connor wrote the dissent, joined by Justices Rehnquist, Scalia and Thomas.  The dissent suggests that allowing these types of takings often results in land being taken from the impoverished and given to the wealthy.  They stated that “any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random.  The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms.”  The dissenting four justices also argued that the decision of the majority eliminates any distinction between private and public use of property, thus effectively eliminating words ‘for public use’ from the Takings Clause of the Fifth Amendment.

Justice Clarence Thomas wrote a separate dissent in which he voiced a rare point of agreement with liberal groups that had sided with the property owners Kelo.   He pointed out that urban renewal has historically resulted in the displacement of minorities, elderly people and those of lower socio-economic standing.  Justice Thomas believes that “Losses will fall disproportionately on poor communities. Those communities are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful.”  He believes that the decision in this case will further the plight of those already struggling at the lower end of the economic spectrum. “Regrettably, the predictable consequence of the Court's decision will be to exacerbate these effects,” he wrote.

G. Conclusion of the Case

            Kelo stands for the proposition that local governments may force private property owners to sell their lands and make way for private economic development when officials decide that those developments would benefit the public, even if the property is not blighted and the new project’s success is not guaranteed.  Much of the public reaction to the decision has been negative, prompting many state legislatures and the U.S. Congress to draft legislation restricting the use of eminent domain for certain purposes.  The decision has also prompted attempts by governments and developers to take property using the eminent domain power, which has been broadened since the Kelo decision was reached.