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Washington-Just four years ago, property rights advocates celebrated the Rehnquist Court’s “sensible view” of the takings clause, in the words of one advocate, and their opponents decried the court’s “increasingly expansive reading” of that clause, in the words of another. Now they are singing each other’s songs. A trio of property rights decisions, two of which were issued last week, dramatically demonstrated what a difference one term can make in the development of this complex area of the law. In all three rulings, the high court handed victory to government officials who sought to regulate business through rent caps, promote economic development by condemning private property, and prevent property owners from litigating claims in both state and federal courts. And it did so with a hefty dollop of deference to government policy choices. “The Rehnquist Court, it seemed to me, had been fashioning a takings clause that was more, rather than less, protective of private property,” said constitutional law scholar Douglas Kmiec of Pepperdine University School of Law. “But these cases all march in the opposite direction.” Not “opposite” but “correct” direction is how John Echeverria of Georgetown University Law Center’s Environmental Law & Policy Center sees it. “The results this term are clearly an indication that the takings advocates have overreached,” he said. “One has a sense after this term that the court really has command of its takings jurisprudence.” Taking command By far the most anticipated-and now most controversial-ruling of the three takings challenges was the one with the most dramatic story to tell. In Kelo v. City of New London, No. 04-108, the justices were asked whether economic development, in itself, was a “public use” within the meaning of the takings clause. The takings clause of the Fifth Amendment states that private property shall not “be taken for public use without just compensation.” The New London city council in 1998, out of concern about a deteriorating tax base, gave approval to the New London Development Corporation to prepare a development plan for the city’s Fort Trumbull area that would complement a new research facility to be built by Pfizer Inc. The city estimated the plan would create jobs and as much as $1.2 million in property tax revenue. Susette Kelo and other families represented by the Washington-based Institute for Justice own 15 homes located on two parcels in the development plan. Their neighborhood is not a blighted area. The homeowners challenged in state court and lost condemnation actions filed by the development corporation. In the high court, a 5-4 majority rejected the homeowners’ request for a bright-line rule that economic development is not a public use. The majority, led by Justice John Paul Stevens, also refused to adopt their argument that at a minimum there must be a reasonable certainty that the public benefits used to justify the takings will actually be realized before government can exercise its power of eminent domain. Stevens wrote that for more than a century, the court’s public use jurisprudence has afforded legislatures “broad latitude” in determining what public needs justify the use of the takings power. Promoting economic development, he wrote, is a traditional function of government. There is no principled way, he added, of distinguishing economic development from the other public purposes that the court has recognized, even where, as here, it may benefit individual, private parties. Justices Sandra Day O’Connor and Clarence Thomas, writing separate dissents, said that nearly all real property is now susceptible to condemnation. Thomas said the takings clause is most naturally read to authorize takings for public use only if the public or government actually uses the taken property. State battles The majority opinion did note that states are free to impose restrictions on eminent domain power for public use pursuant to their own constitutions and statutes. And that is where the eminent domain battle will shift now, said Kelo’s counsel, Scott Bullock of the Institute for Justice. “Many state supreme courts are once again looking at some previously broader eminent domain decisions in favor of governments and overturning them,” he said, noting recent rulings by the Michigan and Illinois supreme courts. “That trend will continue and certainly it’s something we will fight very hard for in the state courts,” he added. “It’s going to be a harder fight and it’s going to be longer. All 50 states have public use provisions. I think we will also see a growing grassroots revolt.” Amy Boulris of Miami-based Brigham Moore, who litigates eminent domain challenges, said Florida already provides greater property rights protection than the baseline in Kelo. Arizona, she said, is giving heightened scrutiny to government claims of public use. “Abuses of eminent domain are much more frequent, but state courts and state legislatures are doing a good job.” But David Snyder of Philadelphia’s Fox Rothschild, co-chairman of the firm’s eminent domain group, said, “I haven’t seen legislatures hit this head-on yet. That may in fact happen. On other hand, it’s the legislature that oftentimes enacts the resolution allowing the power of eminent domain. For projects such as in Kelo, it involves a tremendous amount of planning and financing, so presumably that’s not done without a significant amount of publicity and work by a local municipality before it goes down the eminent domain path.” And state court judges are not as independent as federal judges, said Tim Sandefur of the Pacific Legal Foundation, adding, “They often are influenced by elected officials, and elected officials like redevelopment projects.” The Kelo majority did suggest that it was persuaded that the project here was a public use because of the city’s comprehensive, inclusive planning that took place before any developer was in sight, said Georgetown’s Echeverria. This helped to distinguish the city’s purpose from one that was only to benefit a private, not public, use, he said. “The public planning process was divorced from the question of who might benefit from the use of eminent domain and that is not always the case with the use of eminent domain,” he added. But Bullock and Sandefur scoffed at that suggestion of a limit on the eminent domain power. “There’s a plan in every eminent domain case I’ve ever seen,” said Bullock. “The developer can’t just show up and start plowing. To think that provides any substantive check on abuse is preposterous.” No two bites The high court last week also ruled in San Remo Hotel v. San Francisco, No. 04-340. The San Remo Hotel challenged as an unconstitutional taking a $567,000 fee charged by San Francisco for converting its residential rooms into tourist rooms. Under Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, federal takings claims are not ripe until a final state court judgment denying compensation. A federal court dismissed the takings claim after finding it was not ripe because San Remo had not sought compensation under state law. After San Remo filed and lost its state suit, it returned to federal court. But the 9th U.S. Circuit Court of Appeals ultimately held that the federal claims were closely analogous to the state claims and were issue-precluded because of the state court ruling. In another ruling by Stevens, the high court held it would not create an exception to the full faith and credit statute to open federal courts to taking claims where the federal constitutional issue had already been decided by a state court. In a concurring opinion, Chief Justice William H. Rehnquist suggested the court should revisit Williamson County because the Constitution did not require taking claims to be heard in state courts. “To those of us who are property rights attorneys, it’s very important to be able to take federal takings claims to federal court,” said Meriem Hubbard of the Pacific Legal Foundation. “Our state of California does not afford much protection for property rights. With all other civil rights claims, you can go directly to federal court. So the question is: Why can’t I go to federal court on a federal takings claim? Why is it different?” The Williamson County ripeness directive had already redirected most of these claims to state court, said Pepperdine’s Kmiec, but it was always understood if you preserved federal issues and claims, you could come back. “Justice Stevens says, ‘We don’t know why you assumed that. State courts are perfectly capable of opining on the meaning of the federal Constitution.’ “ And in Lingle v. Chevron U.S.A., No. 04-163, decided in May, the justices unanimously jettisoned a 25-year-old takings test favored by business and property rights advocates. [NLJ, May 30.] The test essentially told courts to examine whether a government action substantially advanced a legitimate state interest. In Lingle, the government action was Hawaii’s cap on rent that an oil company can charge dealers that lease its service stations. “The fact that Lingle so totally closed the door on examining the means-ends nexus is going to mean the federal court at least is not a very favorable venue in which to raise takings claims,” said Kmiec. “Certainly San Remo slams the door.” The three takings decisions represent a “sizable recalibration or redirection of thinking” by the justices, said Kmiec. “The cases could be idiosyncratic,” he said. “They all have very unique and difficult facts. But they also presented an opportunity for the court to build on its jurisprudence, but they have chosen-as in the commerce clause area with the medical marijuana decision-to pull back. “They decided to be far more deferential to political decision-makers,” he concluded. But Echeverria said the takings clause has always been a relatively narrow provision. “Based on history and precedent, it’s hardly remarkable the Supreme Court came down on the government’s side in all three cases.” Kelo, he said, followed directly from long-standing precedent on public use. As a practical matter, he said, the notion that takings claimants should be able to litigate their claims twice, as they sought in San Remo, was “pretty ridiculous.” And in Lingle, the court tossed a statement of law that had long been recognized as an error in takings jurisprudence. “The interesting constitutional challenges to come are going to focus on the equal protection and due process clauses,” said Echeverria, adding, “My sense is property rights claimants are going to rely less and less on the takings clause, particularly after this term.”

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