Government Power to Take Property Backed by Top Court
June 23 (Bloomberg) --
Local governments have broad power to take over private property to
make way for shopping malls, office parks and sports stadiums, the
U.S. Supreme Court ruled.
The court said government agencies can constitutionally take
property in the name of economic development -- and even transfer it
to another private party -- as long as the landowner receives
compensation. The 5-4 ruling, which split the court largely along
liberal-conservative lines, came in a case involving land near a
Pfizer Inc. plant in New London, Connecticut.
``Promoting economic development is a traditional and long accepted
function of government,'' Justice John Paul Stevens wrote for the
majority in Washington. He said the justices ``decline to second-
guess the city's considered judgments about the efficacy of its
development plan.''
The ruling is a setback for property-rights advocates angered by
what they say is an increasingly common practice, now used thousands
of times a year.
``Any property may now be taken for the benefit of another private
party, but the fallout from this decision will not be random,''
Justice Sandra Day O'Connor said in dissent. ``The beneficiaries are
likely to be those citizens with disproportionate influence and
power in the political process, including large corporations and
development firms.''
Joining O'Connor's opinion were three conservatives, Chief Justice
William H. Rehnquist and Justices Antonin Scalia and Clarence
Thomas.
Kennedy Opinion
Justice Anthony Kennedy, often a swing vote, joined liberals
Stevens, Stephen Breyer, David Souter and Ruth Bader Ginsburg in the
majority.
Kennedy wrote separately to say that the court might give more
exacting scrutiny to government land seizures in other cases, such
as those that involve ``the risks of undetected impermissible
favoritism of private parties.''
The Institute for Justice, a Washington-based group representing
seven property owners in the Connecticut case, had urged the high
court to put new restrictions on government ``eminent domain''
power.
``The decision is an open invitation for the abuse of eminent domain
by government and private developers,'' said Dana Berliner, an
attorney for the group.
New London wants to raze a residential neighborhood to make room for
a five-star hotel, luxury condominiums and office buildings near the
Pfizer research facility. The city says it is trying to reverse
decades of economic decline.
Hotel and Condos
The case was one of the most closely watched disputes in the court's
2004-05 term, which is scheduled to end Monday. The justices still
must rule in cases involving online piracy of copyrighted songs and
movies, high-speed Internet access and Ten Commandments displays on
public property.
The end of the term also might be the occasion for a retirement
announcement from Rehnquist, 80, who is battling thyroid cancer.
The Connecticut case centered on the U.S. Constitution's takings
clause, which requires government agencies to pay compensation when
they take over private property ``for public use.'' The property
owners argued that the public-use prong requires more than simply
the possibility of economic revitalization.
The justices ruled in 1954 that government agencies can condemn
blighted property as long as they compensate the owners. Thirty
years later, the court said governments could take over property to
break up an oligopoly on land ownership.
Pfizer Plant
The latest question concerned bids to take over property that isn't
blighted and doesn't involve an oligopoly.
New London's development plan, enacted in 2000, calls for the
takeover of 115 homes and small businesses in the 90-acre Fort
Trumbull neighborhood adjacent to the Pfizer facility. The city also
set up a private entity, the New London Development Corporation, to
manage the project.
The plan coincided with the decision by Pfizer, the world's largest
drugmaker, to open a new research headquarters in New London. Pfizer
isn't directly involved in the litigation, and its property wasn't
at issue in the high court case.
A handful of property owners refused to sell their property and
instead sued. The Connecticut Supreme Court, in a divided opinion,
said the city and development corporation were acting legally.
Stevens said the New London plan ``unquestionably serves a public
purpose.'' He said there is ``no principled way to distinguish
economic development from the other public purposes that we have
recognized.''
The case is Kelo v. City of New London, 04-108.
To contact the reporter on this story:
Greg Stohr in Washington at gstohr@....