Eminent Domain Ruling Sparks A Backlash

(from Maine Townsman, November 2005)
By Jeff Austin, Legislative Advocate, MMA State & Federal Relations

On June 23, 2005 the Supreme Court released its decision in the Kelo v. City of New London, Connecticut case upholding the right of the City to take occupied homes by eminent domain so that a private company could build a new research and development facility on the site.

The 5-4 Kelo decision has sparked a backlash rarely seen outside the realm of hot-button social issues such as flag burning, school prayer and abortion. Justice O’Connor’s dissent laid the objection out clearly:

To reason, as the Court does, that the incidental public benefits resulting from the subsequent ordinary use of private property render economic development takings ‘for public use’ is to wash out any distinction between private and public use of property – and thereby effectively delete the words ‘for public use’ from the Takings Clause of the Fifth Amendment.

This article will discuss the Kelo case, the legal history of eminent domain in Maine and what the future may hold.

Origins of Kelo – Military Base Closing

The origins of the Kelo case lay in the last round of military base closings. In 1996, the City of New London lost the Naval Undersea Warfare Center. For this city of 25,000 residents, the loss of 1,500 good jobs was a big blow. As a result, the future of New London’s Fort Trumbell area was in doubt. The city and state established a redevelopment authority (the “NLDC”) and immediately began an intensive effort to manage the closure.

In what appeared to be great news, a replacement for the base was found. Pfizer, the world’s largest pharmaceutical company, agreed to build a $300 million research facility and bring approximately 1,000 jobs back to the Fort Trumbell area. With the research facility as the anchor, the NLDC created a far-reaching 90-acre plan that included uses such as a state park, the Pfizer plant, housing, a Coast Guard museum, marinas, parking, a river walk, a hotel and conference center and retail/commercial space.

However, that 90-acre plan included more than just the former naval base; it included Wihelmina Dery’s home.

Mrs. Dery was born in her home in 1918. She has lived in the house her entire life and 60-year marriage to her husband Charles. The home was not alleged to be run-down or blighted.

Mrs. Dery was one of several people who owned property within the footprint of the redevelopment plan. The NLDC was able to reach agreements with most of the private property owners who were affected by the plan. However, the Derys and 14 other property owners (including the lead plaintiff Susette Kelo who had moved to the area in 1997) would not agree to sell their properties. In November 2000, the NLDC began the eminent domain proceedings that culminated in the Kelo decision.

History of Eminent Domain

“Eminent domain” is an anglicized version of a Latin phrase “dominium eminens,” which is credited to a 17 th century Dutch attorney. Translated, the phrase means “supreme lordship.” Eminent domain refers to the power of a sovereign government to take private property for public use. While the phrase may only date to the 17 th century, the practice by sovereigns of taking private property can be traced to the Old Testament. As a matter of political science, the documented right of the government to take property can be found as far back as the Magna Carta.

One of the most important clauses of the Magna Carta (1215) that would have the longest lasting effect was Article 39 according to which:

"No free man shall be arrested, or imprisoned, or deprived of his property, or outlawed, or exiled, or in any way destroyed, nor shall we go against him or send against him, unless by legal judgement of his peers, or by the law of the land."

In the United States, eminent domain is primarily governed by Supreme Court interpretation of the Fifth Amendment’s “takings clause,” which reads: “nor shall private property be taken for public use, without just compensation.”

Maine’s Constitution has a very similar provision. Article I, Section 21 of the Maine Constitution reads, “private property shall not be taken for public uses without just compensation, nor unless the public exigencies require it.”

The phrases that have received the most scrutiny and judicial interpretation are “public use” and “just compensation.” 1 For purposes of Kelo, the issue was the meaning of the term “public use.”

What is a Public Use?

The exact scope of the phrase “public use” has been litigated many times. In a 2002 case involving a Department of Transportation taking, the Maine Law Court summarized the issue as follows:

“The distinction between a public and a private use to a large extent depends on the facts of each case. As a general rule, property is devoted to a public use only when the general public . . . has a right to demand and share in the use. The public has to be able to be served by the use as a matter of right, not as a matter of grace of any private party.” [Blanchard v. DOT, 798 A.2d 1119 (2002) quoting three other cases.]

The constitutional guarantee surrounding the acknowledged right of ownership of private property necessarily implies from its mere declaration that private property cannot be taken through governmental action for private use, with or without compensation, except by the owner’s consent. [Paine v. Savage, 126 Me. 121, 123, 136 A. 664, 665 (1927); Haley v. Davenport, 132 Me. 148, 149, 168 A. 102, 103 (1933). ]

By in large, the courts in Maine have had a more narrow interpretation of “public use” than have other jurisdictions.

For example, in 1870, the people of Jay attempted to entice a sawmill based in Livermore Falls to move to Jay by offering the mill a favorable loan raised with town taxes. The power to tax and spend has its own “public use” test, which is broader than the public use test for eminent domain. The Law Court in 1872 struck down this plan, even under the more liberal “public use” test for taxation. “If [the sawmill] were to saw for the public without compensation, or grind all grists brought to their mill without toll, the saw-mill and the grist-mill might be deemed public.” Since the mill was going to continue as a private operation, spending funds to locate the mill within the town was not a permissible public use. [Allen v. Jay, 60 Me. 124 (1872).]

Later that same year, the court penned what is probably the most well-known Maine quote on eminent domain:

This exercise of the right of eminent domain is, in its nature, in derogation of the great and fundamental principle of all constitutional governments, which secures to every individual the right to acquire, possess, and defend property. As between individuals, no necessity, however great, no exigency, however imminent, no improvement, however valuable, no refusal, however unneighborly, no obstinacy, however unreasonable, no offers of compensation, however extravagant, can compel or require any man to part with an inch of his estate. The constitution protects him and his possessions, when held on, even to the extent of churlish obstinacy. [Bangor & Piscataquis RR Co. v. McComb, 60 Me. 290 (1872).]

However, not long after, in a case involving the creation of a railroad spur that would be for the sole benefit of a single private business, the railroad’s use of eminent domain was upheld. The court explained the case by asking if there were not some middle ground between public use and private use.

There must be enterprises occupying such middle ground on this question, so near to the boundary line between public use and private use, that it may be difficult to say on which side of the line the facts would place them. . . . It is not deniable that a scheme may be more profitable to private owners than it is valuable to the public, and still be a public enterprise.” [Farnsworth v. Lime Rock Railroad Company, 83 Me. 440 (1891).]

Yet, Maine’s highest court had not abandoned its generally strict interpretation of “public use.” In the 1920’s the state passed a statute which authorized the lumber industry to trespass over private property to get to timberland, so long as the owner of the private property was compensated. While the court acknowledged the “indirect” public benefit from a healthy logging industry, it nevertheless struck down the law.

Lumber operations as carried on in this State are clearly private enterprises conducted upon private capital for private gain. Promotion of their successful operation undoubtedly indirectly benefits the public at large, but nevertheless they are but private enterprises. The power of eminent domain cannot rest merely on public benefit of this character. [Paine v. Savage, 126 Me. 121 (1927).]

The Court thus had to balance its line of cases that eminent domain may not be used for private gain, even if there is an indirect public benefit, and the line of cases that recognized some public uses will involve private gain.

Urban Renewal

This balancing act really came to a head in the mid-twentieth century with the advent of urban renewal. Urban renewal was the process by which cities around the country sought to remove blighted urban areas and redevelop them so that the blight did not return. The urban renewal statutes typically allowed for the redevelopment to be done by private parties.

The constitutionality of Maine’s urban renewal statute was challenged in 1954. The Court found that the Legislature had divided urban renewal into two parts: “first the clearance of the blighted area . . . and second the redevelopment of the cleared area, under restrictions designed to prevent the recurrence of the blight or slum.” [Crommett v. City of Portland, 150 Me. 217 (1954).]

The Court held that employing eminent domain for the first part, the clearance of blighted areas, was not unconstitutional. The legislature had determined as a matter of policy that blight imperiled the health, safety and morals of the general public and the Court refused to second guess that finding. Accordingly, the Court held that the removal of blight serves “great public purposes” and that there is “no element of private use.”

The court then faced the tougher question regarding the redevelopment of the cleared land. The court observed that “taken alone” redevelopment was not a constitutionally permissible public use despite the indirect public benefits. However, the court said that in an urban renewal context the redevelopment aspect is but a “secondary or minor” purpose underlying the urban renewal statute.

Yet, redevelopment was essential to the success of urban renewal. That is, tearing down a tenement slum where drug dealing and other socially destructive behavior takes place only accomplishes half the goal. Something has to replace that slum so that the vacant lot itself doesn’t become the breeding ground for future problems. Accordingly, preventing the return of blight is a public good and doing so by a variety of means, including selling the property to private individuals for their private use, is constitutional.

The U.S. Supreme Court reached a similar conclusion that same year in a case involving urban renewal in the nation’s capital. “We cannot say that public ownership is the sole method of promoting the public purposes of community redevelopment projects.” [Berman v. Parker, 348 U.S. 26 (1954).]

Maine Statutes

The power of eminent domain rests with the state. The state has extended the right to many entities, including municipal governments. Typically, the Legislature extends the right for a specific purpose: cemeteries [13 MRSA §1181], schools [20-A MRSA §16101, roads [23 MRSA §2021], dumps [30-A MRSA §3351, and sewers [30-A MRSA 3402]. However, it also extends the right for more general purposes: urban renewal [30-A MRSA §5108], community development [30-A MRSA §5201] and public uses which promote “health, welfare and improvement.” [30-A MRSA §3101]

The state has placed conditions and restrictions on its grant to municipalities of the power of eminent domain. For example, a cemetery may not be enlarged by means of eminent domain in such a way that the boundaries of the cemetery come within 100 feet of a home or 200 feet of a source of drinking water. Further, the general eminent domain power of municipalities may not be used to take a residential property occupied by the owner. The municipality can take occupied residential property pursuant to the urban renewal statute, but only if its in a designated slum or blighted area and only for the purposes of the demolition and removal or rehabilitation and repair or redevelopment of the property.

Municipal Eminent Domain In Practice

This fall, MMA conducted a survey of its members on the exercise of their eminent domain powers. The survey focused on the actual or proposed use of eminent domain since 2000 and, if used, the purposes for which the takings were made.

The response was very high; 328 municipalities responded to the survey. The response rates from the larger communities were fairly consistent with those from the smaller communities; thus, there should have been no skewing of the results based upon the size of the responding municipality.

Overall, 312 municipalities (96.3%) indicated that they neither used, nor attempted to use, eminent domain in the past five years. Three communities either began eminent domain proceedings and then settled (Lewiston) or presented eminent domain proposals which were rejected by town meeting (Topsham, Wayne).

Thirteen municipalities indicated that they had had some eminent domain activity since 2000 (Bangor, Brewer, Brunswick, Gorham, Harpswell, Lisbon, Old Orchard Beach, Portland, Saco, St. Albans, South Portland, Yarmouth, York.) The dominant reason for the takings were road projects. Eight of the thirteen who responded that they had used eminent domain indicated that their sole use was for a road project. Often the taking was minor. For example, both Gorham and Harpswell took existing ways but paid only $1 as just compensation.

The second most common reason for a taking was to “quiet title.” Property that is taken by eminent domain clarifies ownership for purposes of a title search at a registry of deeds. Bangor, St. Albans and Yarmouth used eminent domain to clarify municipal ownership and resolve any potential title disputes.

Probably the most interesting response was from Yarmouth. Yarmouth negotiated an arms length purchase of four acres of open space. Eminent domain was not needed and the transaction occurred without problem. However, a neighbor to the space later claimed to be the true owner of the four acres; he asserted he had acquired title by adverse possession. Yarmouth settled that case. Then in attempt to make sure no more “owners” came knocking on Town Hall’s door, Yarmouth filed a taking to clear the title.

Without further analysis, it is fairly clear why eminent domain is so sparingly used in Maine – there is plenty of land here. Eminent domain is typically employed in places where space is tight and there are very high value locations. For Maine, the southern and coastal communities come closest to fitting that description. But even in those areas of Maine, the takings are rare and typically for road projects.

No examples were given where occupied residential property was taken. Further, no takings were described which were clearly on behalf of a private developer. Thus, Maine appears not to have had anything like the Kelo situation, at least in the past five years.

Post–Kelo: State and Federal Legislation

The political response to Kelo has been loud and, despite the 5-4 nature of the decision, bipartisan.

Maine legislators filed nine different anti-eminent domain bills prior to the deadline for the upcoming legislative session; two made it through legislative council. The contents of those bills are not yet known.

Federal legislators have been falling all over themselves filing anti-Kelo amendments to various pieces of federal legislation for several months. The most important is HR 4128, recently adopted by the House of Representatives. It passed overwhelmingly (376-38; supported by both Maine Representatives Tom Allen and Mike Michaud) and has the backing of the White House.

The bill prohibits, by threat of loss of federal economic development funds, the use of eminent domain for purposes of “economic development.” Economic development is defined to mean for use by a commercial for-profit enterprises, for the expansion of tax revenues or for job creation. Thus, public uses (roads) and quasi-public uses (utilities) remain permissible. In addition, urban renewal-type takings that reduce “harmful uses of land provided such uses constitute an immediate threat to public health and safety” are also permitted.

The Senate passed an amendment to the Transportation and Housing and Urban Development Appropriations bill. That bill prohibits the use of eminent domain for economic development where economic development is defined as projects primarily benefiting private parties.

Future of Eminent Domain

It seems fairly clear that something is going to be done at least federally and possibly at the state level to limit the use of eminent domain. The issue is the scope of that limitation. Takings for roads and schools will probably continue unimpeded, but takings that benefit private research institutions or professional stadiums may get limited. The discussion will likely center on the urban renewal-type projects.

One of the primary reasons for the near unanimous anti-Kelo reaction was the fact that it involved the taking of occupied residential property – the City was not taking a vacant warehouse or an open field, it was taking someone’s home. Yet, the federal legislation is not limited to cases involving occupied residential property.

A potential outcome of this anti-eminent domain fervor is that it could spread to the other government function that has a “public use” test — taxing and spending. Historically the courts have had a looser interpretation of the public use test for taxing and spending. Thus, tax reimbursement programs and “jobs bonds” that direct public tax dollars to private enterprises have generally been upheld as providing public benefits.

Will the courts continue to draw a distinction between taking real property (land and buildings) and taking other forms of property (income) when employing a public use test? The1872 Jay grist mill case referenced above could be once again in Maine’s future. In that decision, Justice Appleton wrote:

Some distinction has been sought to be made between the right to seize specific articles of property for public use, and obtaining money through the ordinary forms of taxation, and we sometimes have a justification under the taxing power of the government. I am not able to perceive the soundness of the distinction.”

The interesting question for the future is: Will judges and legislators continue to see the soundness of that distinction?

FOOTNOTE

The other issue that is often contested is the meaning of the word “taken.” These cases fall under the heading of regulatory takings cases. That is, cases where the sovereign does not take the property but regulates its usage (e.g. wetland protection, building height limitation, prohibition of dynamite blasting in a residential neighborhood after 11p.m.). However, the courts have mostly found the right of the sovereign to enact restrictions on land use legislation exists in the so-called police powers of the government, not in its “supreme lordship.”