THE U.S. SUPREME COURT HAD AN IDEAL opportunity this past summer to bring greater clarity and certainty to the contentious property rights arena. Instead, it handed down two decisions that dealt a serious blow to property rights and set the stage for years of ongoing conflict and uncertainty.
On June 20, the court announced its decision in San Remo Hotel v. City and County of San Francisco, which effectively precludes a property owner from bringing a federal takings claim into federal court. Three days after this paradoxical ruling, the court made headlines with its decision in Kelo v. City of New London, Conn., which seems to give local governments unlimited power to condemn private property for the “public purpose” of promoting economic development.
DOUBLE FAILURE It is very disappointing that the court failed to clear up property rights law when it had the rare chance to do so. The late Chief Justice William Rehnquist's concurring opinion in San Remo and Justice Sandra Day O'Connor's dissenting opinion in Kelo point to the fundamental issues that the court failed to clarify.
Rehnquist wrote: “In an appropriate case, I believe the Court should reconsider whether plaintiffs asserting a Fifth Amendment takings claim based on the final decision of a state or local government entity must first seek compensation in state courts.”
In her Kelo dissent, Justice O'Connor—who was joined by Rehnquist and Justices Antonin Scalia and Clarence Thomas—made it clear she believes that the seemingly unlimited eminent domain powers granted to local governments by the ruling will benefit private citizens with the means to exploit such power.
O'Connor wrote: “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.”
With the Supreme Court abdicating its responsibility “to enforce properly the Federal Constitution,” Justice O'Connor stated that property owners must now turn for protection to the states, “who may or may not choose to impose appropriate limits on economic development takings.”
Public reaction to Kelo was largely negative, and within a few weeks of the ruling, lawmakers in more than half of the states had already introduced legislation aimed at preventing eminent domain abuse.
CONTENTION AHEAD So this is where property rights law stands today.
San Remo basically dodges the issue and leaves for another day the question of whether a property owner asserting a Fifth Amendment takings claim can have that claim heard by a federal court. It could be years—perhaps decades—before an appropriate test of this question comes before the Supreme Court.
And Kelo has left it to state courts, and perhaps to the voters themselves, to protect property owners from the exceedingly broad power of condemnation now granted to local governments.
The Supreme Court had the opportunity to significantly clarify property rights law. Instead, it gave two decisions that will yield uncertainty and years of contention in state and federal courts and in legislative bodies at all levels of government.
President, NAHB Washington, D.C.