On July 23, 2018, the U.S. House of Representatives unanimously passed the Private Property Rights Protection Act of 2017 (H.R. 1689). Sponsored by Wisconsin Congressman F. James Sensenbrenner, Jr. and California Congresswoman Maxine Waters, the Act intends to address Kelo v. City of New London, the controversial 2005 U.S. Supreme Court decision that affirmed the right of a city to use the power of eminent domain to take and transfer property from one private party to another for the “public purpose” of economic development.
Kelo built on more than a half century of Supreme Court precedent defining “public use” to include a “public purpose” and held that such a transfer satisfied the Fifth Amendment’s “takings clause,” which provides that no person’s “private property [may] be taken for public use without just compensation.” According to Justice Stevens’ 5-4 majority opinion, “[p]romoting economic development is a traditional and long accepted function of government. There is, moreover, no principled way of distinguishing economic development from the other public purposes that we have recognized.”
The Kelo decision produced stinging dissents by Justices O’Connor and Thomas. Justice O’Connor wrote that the Court had abandoned the long-held basic limitation on government power that a law that takes from A and gives to B is “against all reason and justice.” And she reasoned that:
“Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.”
Justice Thomas reasoned similarly:
“Today’s decision is simply the latest in a string of our cases construing the Public Use Clause to be a virtual nullity, without the slightest nod to its original meaning. In my view, the Public Use Clause, originally understood, is a meaningful limit on the government’s eminent domain power. Our cases have strayed from the Clause’s original meaning, and I would reconsider them.”
Kelo also sparked a nationwide backlash in the press and in more than 40 state legislatures that adopted various forms of legislation to reform their own eminent domain laws to prevent similar takings. But Kelo reform has yet to occur at the federal level.
H.R. 1689, which is similar to bills the House passed in 2005, 2012, and 2014 but that ultimately failed in the Senate without ever receiving a vote, would “remedy” Kelo at the federal level by denying federal “economic development” funds for a two year period to state or local governments that exercise the power of eminent domain for economic development purposes involving “private to private” takings. The Act would also prohibit federal agencies from engaging in such practices, give private property owners the right to bring legal actions seeking enforcement of the Act, eliminate states’ constitutional immunity to such suits, and obligate the U.S. Attorney General to bring an action to enforce the Act if after a 90-day period the relevant government entity is still violating the Act or has not cured its violation.
While H.R. 1689 would be a powerful new law that would indeed add an important layer of property rights protection, it would also be an imperfect solution to an issue the vast majority of states have largely already addressed. In fact, the Act has at least one potentially gaping loophole that would continue to allow potential abuses of the power of eminent domain. For example, the Act creates an exception for “private to private” takings “to an entity, such as a common carrier, that makes the property available to the general public as of right, such as a railroad or public facility.” This broad “common carrier” exception could also be interpreted to include such questionable “public uses” as sports stadiums.
In addition, H.R. 1689 potentially would infringe principles of federalism recognizing that state and local governments are best suited to resolve the complex, technical, and legal questions related to land use and zoning. The U.S. Supreme Court itself has repeatedly emphasized the “great respect” it owes to state legislatures and state courts in discerning local public needs.
If the past is any indication of the future, however, there is little reason to be optimistic about the prospects of H.R. 1689 becoming law. Even if the Senate were to act on and eventually pass the Act, there is little reason to think Donald Trump would sign it given his own history of eminent domain abuse and unfettered affection for Kelo. As Trump stated in a widely cited Fox News interview with Neil Cavuto in 2005 discussing the then-recent decision, “I happen to agree with it 100 percent.”
Questions? Please contact Bryan W. Wenter, AICP of Miller Starr Regalia.
For more than 50 years, Miller Starr Regalia has served as one of California’s leading real estate law firms. Miller Starr Regalia has expertise in all types of real property matters, including full-service litigation and dispute resolution, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, exactions, title insurance, environmental law, and land use. Miller Starr Regalia attorneys also write Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. For more information, visit www.msrlegal.com.