James Madison once averred, in a National Gazette Essay dating back to 1792, that

Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own [emphasis added].

Indeed, the Founding Fathers placed a remarkable emphasis on what Alexander Hamilton described as one of the “great objects of Government.” In the primitive years of our country, Justice Paterson in Vanhorne’s Lessee v. Dorrance declared, “The right of acquiring and possessing private property, and having it protected, is one of the natural, inherent and inalienable rights of man.” Similarly, Justice Samuel Chase famously avowed in Calder v. Bull that an act taking property from A and giving it to B “is against all reason and justice” and therefore prohibited by the Constitution. The Supreme Court’s recent ruling in Kelo v. New London, however, marks a regrettable abdication of this fundamental duty by essentially granting government the ability to seize private property and give it to private industry whose use of the land has incidental benefits for the public.

Eminent domain is the ability of the government to seize private land as it sees fit. Stemming from English Common Law, it had long been recognized as a right of government. The Fifth Amendment to the U.S. Constitution (remember that thing called the Bill of Rights?), however, does not grant government the right of eminent domain, but curtails it. In fact, the Takings Clause of the Fifth Amendment states “nor shall private property be taken for public use, without just compensation [emphasis added].”

For years, this clause was interpreted to allow government to condemn private property only for the construction of publicly owned, government-run projects, such as highways, ferries, canals, roads, hospitals, schools, and military bases. At the very most, it was expanded to include vital public, albeit privately owned, utilities, which are heavily regulated by government, such as the railroads, gristmills, or power utilities. The case at hand, however, has further stretched these historical limits.

New London, Connecticut had long been in an economic decline. As conditions worsened through the 1990s, unemployment rates skyrocketed, doubling those of the state. The city government received a boon when Pfizer announced plans to build their $300 million research and development headquarters downtown. To build on this momentum, the city planned to build new commercial centers and a hotel in the immediate vicinity of the Pfizer building and add new recreational facilities and aesthetic beauty to the area. In order to do so, the city invoked eminent domain to seize the land of residents who were unwilling to sell. The landowners sued the city, claiming that condemnation of land for purposes of economic development and increased tax revenue violates the “public use” clause of the Fifth Amendment. (In fact, some of the land was seized for “park support,” which respondents conceded was vague and “offered that the parcel might eventually be used for parking”)

The Supreme Court ruled, in a 5-4 decision (Justices O’Connor, Thomas, Scalia, and Chief Justice Rehnquist dissenting), that “public use” is equivalent to “public purpose.” Since “promoting economic development is a traditional and long accepted governmental function,” there is no way of distinguishing it from other public purposes that Court has granted in the past. But in a borderline case of “economic development,” the Court should err in favor of protection of property.

The majority takes immense pleasure in pointing towards the development plan of New London as justification of careful thinking. Yet much of the takings occurred before the development plan was put into place. Richard A. Epstein, professor of law at the University of Chicago, notes that there was “no binding contract that says this project will be built for these dollars at this time.” Even if such plans were finalized prior to condemnation, they hardly serve as judicial indicators since they can easily be manipulated.

Supporters of the Court’s decision will reference precedents such as Hawaii Housing Authority v. Midkiff or Berman v. Parker, but these cases were distinct. In the latter case, for example, the Court affirmed the ability of government to take land to fix a blighted neighborhood. The crucial difference between Berman and Kelo, however, is that the pre-condemnation use of targeted property in Berman inflicted harm on society – through blight from extreme poverty. Thus, the action of taking the property had the direct public benefit. No such claim, that the [waterfront residential] property in question was of harm to society, was made by New London.

Even so, the crux of the problem lies in the implications of the Court’s ruling. The Court reasoned that passing private property to private companies is justified because the public will benefit from the influx of jobs and [property] tax revenue that the new commercial areas will induce. Under this rationale, however, any private property can be upgraded to better serve a city – to provide more revenue in taxes and benefit the public (for example, replacing a Motel 6 with a Ritz Carlton). This logic places residential areas at particular risk as virtually any commercial business can better serve “community interests.” Justice O’Connor astutely observes that “under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded.”

The ruling has eliminated any distinction between private and public use of property by arguing that incidental public benefits from private use of property is justification for condemnation. In effect, the Court has eliminated the words “public use” from the Fifth Amendment.

And because this implication virtually nullifies the practical meaning of the Fifth Amendment and intentions of the founding fathers, the Court’s decision cannot be correct.

A second, subtler consequence is the effect on the potential just compensation landowners can receive. Epstein remarks that government pay for land is already “often considered minimal – particularly that the value is likely to improve significantly once redevelopment occurs.” Now that corporations know that they can fall back on invoking eminent domain if a price cannot be negotiated, they will be less inclined to make competitive offers for land.

Undoubtedly, the court ruling will increase the frequency of condemnations. Even though blatant abuses of eminent domain will likely be struck down by courts and many states have further prohibitions on its use, there is good reason to believe that the ruling will induce a significant increase in condemnations. A 2003 study by the Institute of Justice found that between 1998 and 2002, state and local governments seized or threatened to take more than 10,000 houses and small businesses for private development projects. Regardless of the frequency, the victims will likely be those with fewer resources and political connections. This power has cemented another route for those with disproportionate influence and power in the political process to strengthen their hold and cement their elite status in society.

Perhaps of more concern is an afterthought in the majority opinion that property owners should turn to state Courts and legislatures to set limits on the use of eminent domain. While it is true that states can and do impose their own restrictions on the abuse of such power, it does not relieve the Supreme Court of its duty to preserve and enforce constitutional liberties and rights. Anything less would be a blatant abdication of duty.

While the ruling may hold the aforementioned implications, one must be wary of the media’s fervor to blow the case out of proportion. And although it does erode the distinction between private and public use of property, a future scenario may very well provide a practical limit to the invocation of eminent domain. Regardless, it’s the most we can hope for.