Kelo v. New London and the Backlash That Rewrote State Law

Some Supreme Court decisions take years to sink in. Kelo v. City of New London took about as long as a bad cup of coffee takes to cool. On June 23, 2005, the Court told the country that a city could take a family's home, hand the land to a private developer, and call it "public use" because the new project might produce more tax revenue. By lunchtime, talk radio was on fire. By the weekend, people who had never agreed on anything were agreeing that this was a lousy idea.

I have rarely seen a ruling unite the country so quickly in disgust. Liberals read it as a bulldozer for the powerful. Conservatives read it as an assault on the Fifth Amendment. Rural landowners read it and wondered whether their farms were next. And the political reaction that followed turned out to be one of the most successful property-rights campaigns of the past half-century, even though the Court itself never changed its mind. Let me tell you how it happened.

The Fifth Amendment, in one sentence

Start with the text. The last clause of the Fifth Amendment says: "nor shall private property be taken for public use, without just compensation." That is it. Two conditions. The taking must be for public use, and the owner must be paid just compensation. The compensation half has been fairly settled for a long time: you get the fair market value of what was taken. The fight in Kelo was about the first half. What counts as "public use"?

For most of American history, the answer was simple. A road, a school, a courthouse, a military base, a post office: the public uses the thing. Everyone understood what that meant. The trouble began when courts started reading "public use" as "public purpose," and then reading "public purpose" very generously. In 1954 the Supreme Court, in Berman v. Parker, upheld a plan to clear a blighted area of Washington, D.C., and the Court said the legislature's judgment about public welfare deserved great deference. In 1984, in Hawaii Housing Authority v. Midkiff, it upheld a Hawaii program that took land from large landowners and transferred it to tenants to break up what the legislature saw as an unhealthy concentration of ownership. Each decision stretched the clause a little further.

Fort Trumbull

Now meet the neighborhood. Fort Trumbull is a small waterfront area of New London, Connecticut, a city that had been losing jobs and population for years. In the late 1990s, the pharmaceutical company Pfizer announced plans to build a research facility next to the neighborhood. The city, hoping for a revival, approved a development plan through a private nonprofit called the New London Development Corporation. The plan envisioned offices, a hotel, residences, and other uses that would, supporters hoped, create jobs and bring in tax revenue.

The plan needed land, and the land had houses on it. Most owners sold. A handful refused. One of them was Susette Kelo, who had restored a little pink house and lived there. The city's response was condemnation, a legal process that forces a sale at a price a court sets. The owners sued, arguing that taking their homes for a private development was not a "public use." Connecticut's Supreme Court sided with the city, and the U.S. Supreme Court agreed to hear the case.

Notice something about the facts. The city did not claim the homes were blighted or unsafe. It did not claim that the owners were violating any law. The homes were being taken because the plan's authors thought the land could be put to a more profitable use. That was the entire argument.

The ruling

In Kelo v. City of New London, the Court ruled five to four for the city. Justice Stevens wrote the majority opinion, joined by Justices Kennedy, Souter, Ginsburg and Breyer. The majority said that the city's plan was a carefully considered development plan, that promoting economic development was a traditional function of government, and that the Court should defer to the judgment of local legislatures about what counts as a public purpose. Justice Kennedy added a separate concurrence saying that a taking whose real aim was to benefit a particular private party would still be invalid, and that courts could look for that kind of pretext.

The dissenters were Chief Justice Rehnquist and Justices O'Connor, Scalia and Thomas. Justice O'Connor wrote the main dissent, and it contains one of the most quoted lines in modern property law: "Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory." Her point was that if the possibility of higher tax revenue is enough, then the clause protects nobody except people who are already powerful. The dissent warned that the benefits of such a rule would flow to citizens with disproportionate influence and power in the political process, and the burdens would fall on those with less. Justice Thomas wrote a separate dissent arguing that the original meaning of "public use" was far narrower than the Court had made it.

Here is the thing worth noticing. The five justices in the majority were the Court's more liberal members plus Justice Kennedy, and the four dissenters were the more conservative ones. So you might think that this was a standard left-right split. But the public reaction did not follow that line. In the Kelo case, groups as different as the NAACP and AARP had filed briefs on the homeowners' side, warning that the poor, the elderly and minority neighborhoods tend to be the ones whose property gets condemned for the benefit of better-connected developers. That is why the backlash cut across party lines.

The steelman: why the majority said what it said

I want to be fair to the opinion, because it is not a stupid opinion. The majority had three real arguments.

1. Precedent. Berman and Midkiff had already moved the Court away from a strict reading of "public use." Having said that a legislature may take property to eliminate blight or break up land oligopolies, it was hard to draw a line that rejected economic redevelopment but allowed those.
2. Judicial modesty. Cities know their own problems. A court in Washington, D.C. is poorly placed to second-guess a local plan and decide which jobs are worth the taking.
3. Compensation. The owners would be paid fair market value, and states could limit the power if they wished. Justice Stevens expressly said that nothing in the decision prevented states from placing further restrictions on the exercise of eminent domain.

That last point turned out to be the opening the backlash walked through. The Court said, in effect, that the Constitution would not stop the taking but your legislature could. And so people went to their legislatures.

The answers to the majority

The dissenters and the critics had their own answers, and I think they were stronger.

First, the "public use" clause means something, or it means nothing. If any taking that might raise revenue qualifies, then the limit is a dead letter, because virtually any private use might generate more taxes than a family home. The clause says "public use," not "public benefit" and not "possible private profit."

Second, the people with the most to gain from this kind of power are not poor families but developers and city officials who like big projects. The threat of condemnation also hangs over every negotiation, which gives the buyer an enormous advantage even when no taking occurs. When the alternative to selling is a lawsuit, you take what you are offered.

Third, "just compensation" is not always just. Market value does not include the value of a place you have lived in for forty years, the cost of moving, or the fact that you did not want to sell. It is a payment for the asset, not for the home.

What happened to Fort Trumbull

Here is the part that ought to be printed on the wall of every city planning office. The homes were not saved by the Supreme Court. Susette Kelo lost her case, and the houses were eventually taken, though one of them, hers, was moved to another site in New London rather than demolished. But the redevelopment the city had sold to the courts did not materialize as promised. The land where the homes had stood stayed largely empty for years, and Pfizer later closed its New London operation. The project that justified the taking never delivered the jobs and the tax revenue that were supposed to make the whole thing worthwhile.

I am not saying this to gloat. I am saying it because the argument for deference to local governments rested on the assumption that the plans were sound. A plan that turns out to be a vacant lot makes the dissenters' warning look like prophecy.

The backlash

Now for the part that makes Kelo a political story. Within days, legislators in Washington and in the statehouses started filing bills. In Congress, the House passed the Private Property Rights Protection Act in November 2005, but it never became law. The real action was at the state level, because that is where the vast majority of condemnations happen. Over the next few years, most states changed their laws or their constitutions in some way. The reforms took different forms: some states banned the use of eminent domain for private economic development; some narrowed the definition of "blight"; some required higher approval thresholds or longer notice; some required more compensation, such as extra payment for homes. Michigan, which had already reversed its own controversial 1981 Poletown ruling in a 2004 decision, County of Wayne v. Hathcock, amended its constitution in 2006. Florida voters amended their constitution too.

The strength of these laws varies widely, and I want to be straight about that. Some state reforms are real, with bright lines and teeth. Others are mostly cosmetic: they ban "economic development" takings but leave an exception for "blight" so broad that a city can declare almost any neighborhood blighted. If you own property, the details of your state's law matter far more than the headline. The place to check is your state legislature's website and the statute on eminent domain. Do not assume.

The president's order

The executive branch weighed in too. On June 23, 2006, the anniversary of the decision, President George W. Bush signed Executive Order 13406, "Protecting the Property Rights of the American People." The order directed that the federal government use its eminent domain power only for public use, "for the purpose of benefiting the general public and not merely for the purpose of advancing the economic interest of private parties to be benefited by the taking," with limited exceptions.

I think it was a sound move, and I also think it is a limited one. An executive order governs only federal agencies, and the federal government rarely condemns property for economic development; that is overwhelmingly a state and local activity. The order set a good example. It did not protect a single family in New London, and it is a policy that a later president can revise.

The lessons

So what do we take from the Kelo saga? I count four.

1. The Constitution is only as strong as the people who defend it. The Court gave up a protection, and citizens took it back through legislatures.
2. The Fifth Amendment is still a live issue. It is not a museum piece. Its words matter to ordinary people who face a bulldozer.
3. Federalism works when people use it. Fifty states produced fifty experiments. Some produced strong protection, some weak, and voters can compare.
4. Protections remain thin in places. Check your state. A family with a farm near a growing town should not assume the law will protect it. The same question arises when a pipeline company comes calling, which is why A Survey Crew Is on Your Land, So Here Is Your Pipeline Playbook is worth reading before anybody shows up with a clipboard.

The takings clause also covers more than outright seizures. When government regulates land so heavily that it wipes out its value, the question changes from "public use" to "has the government effectively taken it?" That body of law, and the cases that shaped it, are laid out in The Takings Clause in Four Cases Every Landowner Should Know. And if you want to understand how a justice's reasoning in an opinion like Kelo is built, How to Read a Supreme Court Opinion Without a Law Degree will teach you to read the dissent first. For the bigger picture of how Republican presidents have shaped the Court that decided cases like this, see How Republican presidents have done picking Supreme Court justices since 1953.

The bottom line

• The Court did not save the homes, but the people did. Kelo lost at the Supreme Court and won in the legislatures, which is how self-government is supposed to work.
• "Public use" means something. If your state allows a city to take your home so that a developer can build something more profitable, that is a choice your legislature made, and your legislature can unmake it.
• Read your state's eminent domain law. Look for a ban on private economic development takings, a narrow definition of blight, and a real compensation standard. Weak laws are common.
• Show up when a development plan comes to your town. Public hearings on redevelopment are where the future list of condemnations is written. Ask who benefits, who is guaranteed to be paid, and what happens if the project never gets built.
• Support the property-owner, whoever the owner is. The next family at risk may be farmers, a church, a small shop or a mobile-home park. The principle protects all of them or none of them.