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Saturday, June 25, 2005
Regulation, Public Use, and Just Compensation
Kelo | Posted by Eric Claeys at 08:52 PM
This is probably my last post, but Marty's questions about just compensation provide an excellent place to frame the disagreement between the two sides in this discussion. I think there is some room for Marty's suggestion about just compensation, though I bet in circumstances narrower than Marty would like, and with compensation higher than Marty would like.
Let me start where Marty starts, with the observation that "the Constitution does not require the state to provide 'just compensation' when one is victimized by a thief." For those of us who start where Justice Thomas starts, that's not the happiest analogy. Rather, when a private property owner suffers a theft, the law gives her the right to elect damages or an injunction for return of the property. That injunction protects a huge range of rights for the owner--the right to say no, the right to bargain, &c. Our beef is this: When Walmart convinces a city council to order eminent domain, the city extinguishes the injunction and all the secondary rights the injunction protects. They're part of constitutional "private property." (This is where Richard Epstein's argument in Takings starts.)
Sometimes, those secondary rights consist of the community values Marty and Nicole have been writing about. Economic-development eminent domains then can extinguish built-up social capital in close communities, as the Mirror of Justice folks have been writing about. But the owner often exercises the right to say no or to bargain because the owner has other, equally valuable, investment plans for the property. Even if public opinion doesn't respect owners who are investors and not little old ladies, sound property theory should. When eminent domain is easy to get, its use discourages lots of little investments in property than matter at least as much as to the local economy as a targeted development project.
As I've explained at length in an article (cited by Justice Thomas!), if one subscribes to more or less this critique, the conclusions for takings law are as follows:
1. The only time the ousted owner should get just compensation is when the public uses the property. The owner breaks even on the payment and does a little better on the fact that, as a member of the public, she gets expanded access to public facilities.
2. In a few narrow situations, in which owners really have the whiphand over someone trying to assemble a large project, it should be appropriate to force off the objecting owner by paying just compensation plus a bonus. But there has to be a real necessity here--the kind that occurs when a dam builder can't build the dam without the permission of all the fellow riparians. The modern debate over urban development is far too loose on this point. Costcos and developers can build a functioning facility around a couple of holdouts. In Kelo, the city condemned a couple of the petitioners' facilities even though it exempted an Italian cultural club right next door to those petitioners. So I agree with Marty for air-pollution disputes, dams, irrigation projects, and rail lines, but not for condo projects or Costcos. (Also, as I've explained in scholarship, the proper substantive and doctrinal hook for this principle is regulatory-takings law, not public use or just compensation.)
3. In those cases where the forced sale is appropriate because of the intractable hold-out, the ousted owner should be made whole not only with just compensation, and not only for subjective losses and investment losses not ordinarily covered by just compensation. The owner should also be guaranteed a profit.
For the libertarians, the question of principle is this: If an assembly is going to be so valuable to society that it ought to trump ordinary principles of freedom and consent, then shouldn't society make sure that freedom & consent really are obstacles, and in those cases shouldn't it let the owner who loses the right to object share in the wealth created?
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Comments
Thank you, sir.
For many years I (in my small, layman way) have argued that "just compensation" is market value plus epsilon - perhaps 200% of market value. Otherwise, the lure of profit is just too tempting for developers and influenced city officials.
Posted by: Richard R at June 25, 2005 09:57 PM
This reminds me of The Old West , when wealthy unscruplous landowners pushed away and bought up the poor mans properties , only time has renvented itself into taking of the property legally . What does this judge stand to gain by allowing this to happen ?
Posted by: gina at June 25, 2005 10:21 PM
The problem with Kelo is pure and simple: it’s called theft. What’s needed is getting rid of eminent domain. A population that allows taxation will over time lead to an outright taking of property. If your income tax or property tax can be raised what’s the limit, if a majority through some government officials wants more money?
Posted by: Steve Bartin at June 25, 2005 10:28 PM
Share in the Wealth???
But didn't Justice Stevens state that the New London Development Plan would not "benefit a particular class of identifiable individuals"?
When did the Board of Directors and Shareholders of Pfizer become so difficult to identify?
Posted by: Alan at June 26, 2005 05:05 AM