Supreme Court Strikes Major Blow to Property Rights

by on June 23, 2005

I know everyone in the high-tech world is waiting for the Grokster and Brand X decisions to be handed down but, in my opinion, the most important decision of this Supreme Court term was handed down today in the property rights / eminent domain case of Kelo v. New London. The result was an unmitigated disaster for property rights.

The 5-4 decision (which went the wrong way thanks to Justice Kennedy) basically said that under the banner of “economic development,” the State may take private property whenever it wishes. This is a disastrous result for small land owners in particular since they will no longer have any reasonable protection from local governments who seek to re-zone certain communities to appease various special interests. But I should also point out that this decision, the third bad decision for property rights this term, could also come back to haunt communications and media companies, and others in the high-tech sector. That’s because this Court has just made it infinitely easier for the State to use various “public use” rationales for taking property of any variety. We’ve spent that last decade fighting about the rights of telecom and cable companies in the battle over forced access, and decisions like Kelo won’t make it any easier for those companies to defend the property right they are entitled to in the networks they develop.

Anyway, I could go on at length about what a disaster this decision is, but I will instead just cut-and-paste some of the remarkably powerful wording that Justice O’Connor used in her dissent, which was joined by Chief Justice Rehnquist, Justice Scalia, and Justice Thomas. At least these four justices still appreciate the importance of the Constitution, the Fifth Amendment, and property rights.

From O’Connor dissenting statement in Kelo:
> “Today the Court abandons this long-held, basic limitation on government power. 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, i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public in the process.” (p. 1, dissenting statement)

> “In moving away from our decisions sanctioning the condemnation of harmful property use, the Court today significantly expands the meaning of public use. It holds that the sovereign may take private property currently put to ordinary private use, and give it over for new, ordinary private use, so long as the new use is predicted to generate some secondary benefit for the public, such as increased tax revenue, more jobs, maybe even aesthetic pleasure. But nearly any lawful use of real private property can be said to generate some incidental benefit to the public. Thus, if predicted (or even guaranteed) positive side-effects are enough to render transfer from one private party to another constitutional, then the words for public use do not realistically exclude any takings, and thus do not exert any constraint on the eminent domain power.” (p. 8-9, dissenting statement)

“The specter of condemnation hangs over all property. 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.”
(p. 10-11, dissenting statement)

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