A Brief Look Back at 2005

The 2004-2005 docket of the Supreme Court yielded several decisions on a range of "hot button" issues, from public display of the Ten Commandments, to jurisdiction over medical marijuana, to the execution of the mentally retarded. But perhaps the most intriguing of the public controversies resulted from a usually dry area of constitutional law - eminent domain. In a five to four decision, the Court ruled in Kelo v. New London that a local economic development plan satisfied the public use restriction of the Fifth Amendment's takings clause. Almost immediately, the case created a ripple effect through the American political landscape.

Within seven days, the U.S. House of Representatives had voted to deny federal funding to any state or local economic development plan which employed eminent domain. House Majority Leader Tom Delay called the ruling a "George Orwell novel of a court decision." However, Republicans concerned with protecting property rights found themselves voting alongside liberal Democrats who worried that the expansion of eminent domain left poor people at risk of having their homes seized. Within a month, more than two dozen state legislatures, from Texas to Connecticut, responded by considering restrictions on their own eminent domain powers. Weeks later, several senators opined at great length their displeasure of the decision at the confirmation hearing of Judge John Roberts. A columnist for the Sacramento Bee noted sarcastically, "Finally, a U.S. Supreme Court opinion on which liberals, conservatives and libertarians should be able to agree."

All of my liberal friends were outraged by Kelo, and all of them were shocked to hear that I strongly supported the decision. It is not that I view property rights as insignificant; rather, I agree with the Court because economic development is such a vital part of what state and local governments do. It has become a part of the social contract, as important a priority as building roads and schools (purposes for which eminent domain is clearly legitimate).

Economic development can often be a cutthroat battle to offer the best incentives in the hopes of creating the best jobs in a particular state or county. State governments will offer tens of millions of dollars in tax rebates and even direct payments to win a single new factory or office. Why do states and localities do this? Part of the reason is because everyone else is doing it. But economic development incentives are also a tool to provide for the needs of a community. Economic development contracts can spruce up a city marred by blight or reinvigorate a rural county left behind in the march towards globalization.

In the 1798 case Calder v. Bull, the Supreme Court stated famously, "A law that takes property from A. And gives it to B: It is against all reason and justice for a people to entrust a Legislature with SUCH powers." Justice Salmon Chase reasoned this situation cannot be considered a rightful exercise of legislative authority" because it is "contrary to the great first principles of the social compact." Justice O'Connor cites Calder in her dissent in Kelo as reflecting the Founders view on this subject.

In actual practice, early American courts took a distinctly different path. Martin Horwitz, in his excellent book The Transformation of American Law, writes, "What dramatically distinguished nineteenth century law from its eighteenth century counterpart was the extent to which common law judges came to play a central role in directing the course of social change. Especially during the period before the Civil War, the common law performed at least as great a role as legislation in underwriting and channeling economic development."

One example Horwitz cites is a series of eminent domain cases that provide strong precedent for Kelo. In the 1820-30s, several state courts allowed eminent domain to be exercised by owners of grist mills. In order to build a mill over a river, downstream land would have to be flooded, and eminent domain would be used to compensate the owners of the flooded land. These state court opinions valued economic progress above property rights; Horwtiz describes property as an "instrumental right" a right that must be used to some other end. Since a mill was more beneficial to the community than surplus farm land, eminent domain was justified to help build it.

Justice Thomas cites the Mill Act cases in his dissent in Kelo in his attempt to fashion an originalist case against the majority. He dismisses the Mill Act cases, writing, "Those early grist mills 'were regulated by law and compelled to serve the public for a stipulated toll and in regular order,' and therefore were actually used by the public. They were common carriers -- quasi-public entities. These were 'public uses' in the fullest sense of the word, because the public could legally use and benefit from them equally." That seems like a silly distinction to me because every business provides a service or good that the public could purchase on equal terms. Common carriers in the nineteenth century were normally described as toll roads, railroads, inns, and other public accomodations. A grist mill seems like an ordinary business, not a common carrier.

In light of this, I firmly believe that economic development is a public purpose. My support of the Kelo decision is a reflection of my personal experience in state politics. I remember watching Governor Warner delivering one of his State of the Commonwealth addresses. He got a standing ovation when he announced the biggest job creation in a rural part of the state in the past 30 years. Do you know how many jobs were going to be created? 300. That seems pretty small. 300 jobs in a big city are created or evaporate on a daily basis. But in Martinsville and Henry County, Virginia, 300 jobs meant a better chance of economic survival. It doesn't get any more public than that.