The State of Post-Kelo Reform - A Reply to Bert Gall:

In my previous post, I put up a critique of my paper on post-Kelo eminent domain reform by Bert Gall, an attorney with the Institute for Justice. IJ has done outstanding work protecting property rights in both the legal and political arenas, and I am sorry to have to disagree with them. However, I do not believe that the "Kelo Backlash" has been as effective as Bert claims, nor do I agree that his arguments refute my paper. In this post, I will address his claims that the Kelo backlash headed off a preexisting trend towards an increase in eminent domain abuse and that most post-Kelo laws have been effective. His more specific critique of my analysis of the Wisconsin and South Carolina reform laws is probably of lesser interest to VC readers, and I may address it in a later separate post if time permits.

I. Did the Kelo Backlash Head off a Preexisting Negative Trend in Eminent Domain Law?

Bert argues that "[e]ven 'weak' reforms have helped hold the line against a Kelo-driven worsening of state laws." I agree with Bert that, in most states, pre-Kelo eminent domain law was a terrible deal for property owners. However, there is little evidence that things were getting worse after Kelo than they had been before. Bert claims that the Kelo decision itself emboldened state and local governments to condemn more property than previously. However, Kelo did not give condemning authorities more discretion than they enjoyed under previous US Supreme Court precedent. Before Kelo, the leading case in this field was Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984), which allowed government to undertake any condemnation that was "rationally related to a conceivable public purpose," without any need to prove that the "purpose" would actually be achieved. Midkiff, 467 U.S. at 241. It is difficult to imagine a more permissive rule than this one, and in fact Kelo did not establish a more permissive new standard. Indeed, as I argue in this article, Kelo may have very slightly increased protection for property rights relative to the virtual blank check for takings endorsed in Midkiff.

That doesn't prove that Kelo was rightly decided, as some of the decision's defenders claim. Consistency with precedent is no virtue if that precedent itself is deeply flawed, as Midkiff was; in Kelo, the Supreme Court wasted an opportunity to cut back on the abuse of constitutional property rights sanctioned by its earlier mistaken holdings. For that, the decision deserves severe criticsm. However, Kelo did not begin a new negative trend that the political backlash against it somehow headed off.

As evidence that Kelo did lead to a new negative trend, Bert claims that the decision caused an increase in condemnations, citing this IJ study. The study claims that Kelo opened the "floodgates" to new condemnations, and does indeed document a large number of dubious post-Kelo takings. However, its methods rely heavily on press accounts for data, and it is likely that abusive condemnations received far more press coverage after Kelo focused attention on the issue than before. I suspect that the new IJ study reflects increased press coverage of eminent domain abuse more than an increase in the incidence of abuse itself. Since Kelo did not give state and local governments any more power than they had before, this is a more likely explanation than Bert's argument. It is theoretically possible that state and local officials expected the property owners to lose in Kelo and therefore were restraining themselves until their side won an unexpected victory. However, prior to Kelo, most experts expected the government to win, and the most surprising aspect of the decision was not the outcome but the narrowness of the 5-4 margin.

In sum, if Bert wants to demonstrate the effectiveness of post-Kelo reform, he must prove that the new laws have meaningfully restricted the pre-Kelo powers of condemning authorities. The new laws almost certainly did not prevent a Kelo-inspired trend towards greater use of condemnation, because there was probably no such trend in the first place.

II. Do Post-Kelo Reform Laws Effectively Restrict Eminent Domain?

As I explain in my paper, some of the post-Kelo reform laws do indeed effectively curb the power of condemning authorities. By my count, some 15 states have enacted post-Kelo reform laws that I categorize as "effective" in the sense that they either ban Kelo-style "economic development" takings or significantly restrict them relative to preexisting law (see Table 4 in my paper). On the other hand, some 20 states and the federal government have enacted ineffective reforms that impose virtually no new restrictions on the power to condemn property, and 14 have enacted no reforms at all. Bert claims that:

17 reforms narrow the definition of "blight," or in the cases of Florida and South Dakota, eliminate “blight” condemnations for private development – an important change since, in most states, Kelo-style takings occur through the use of "blight” designations. Also, 17 reforms require “blight” to be designated on a property-by-property basis rather than an area-wide one . . . Moreover, several reforms shift the burden of proof in condemnation actions from owners to condemning authorities.

Because Bert doesn't identify the states he has in mind (with the exception of Florida and South Dakota), it is difficult to assess these claims or even to tell whether he is actually disputing my conclusions or not. Florida and South Dakota did indeed pass two of the most sweeping post-Kelo reform laws in the country, and I point this out in my paper (pg. 26). It is also true that many post-Kelo reform laws "narrow" the definition of "blight"; "blight" designations are a prerequisite to one type of often-abused condemnation. However, a "narrower" definition of blight is not a meaningful restriction on eminent domain if the new definition is still broad enough to encompass virtually any property. As I discuss in detail in my paper (pp. 15-20), in some 15 states that have passed post-Kelo reforms, the new definition of blight is either exactly the same as the old or still broad enough to render virtually any property the government might choose to seize "blighted." Similarly, requiring blight to be designated on a "property by property" basis has little value if virtually any property can still be so designated. Shifting the burden of proof to the government will have little effect if what the government needs to prove is extremely easy to demonstrate. Under the broad definitions of blight retained in many state post-Kelo laws, all that the government need show is that the area in question is an obstacle to "sound growth" or a "social or economic liability," both of which can be said for virtually any property if the government has a proposed use for the property that might increase growth or otherwise benefit the local economy.

Bert also argues that if several states now considering new post-Kelo reform measures pass effective laws, the situation will greatly improve. That may well be true, but many effective post-Kelo reforms have either been watered down or completely rejected by state legislatures in the past. It would be unwise to count our chickens before they hatch, which is why I restricted my analysis to laws that have actually been enacted. Finally, Bert notes that three of the four states with the most private-to-private condemnations between 1998 and 2002 have passed effective reforms. This is true, in so far as it goes, and I noted it in in my paper (Table 5, pg. 13). However, one of those three states (Pennsylvania) has significantly watered down its reform by exempting condemnations taking place in Philadephia and Pittsburgh for the next five years; these are the cities where most of Pennsylvania's Kelo-like takings in fact occur (ibid., pp. 27-28). Michigan's new law to a large extent builds on a 2004 earlier court decision that had already forbidden "economic development" takings (though it does make improvements in other areas). Thus, these two laws represent only modest improvements, though they are significant enough to count as "effective" under the generous coding rules I adopted in my paper. Even more importantly, as I summarized in Table 5 of the paper, 14 of the 20 states that, according to an IJ study, had the highest incidence of abusive condemnations in 1998-2002 have adopted ineffective reform laws or none at all. The same is true of 15 of the 20 states with the largest numbers of "threatened" condemnations (ibid., pg. 44).

III. Areas of Agreement.

I end on a more positive note. Bert and I probably agree on more than we disagree. Depending on how one interprets his statements, it is possible that we actually agree on the quality (or lack thereof) of post-Kelo laws in the vast majority of states. Bert also has not disputed my criticism of the flawed reforms enacted by the federal government, such as President Bush's ineffectual executive order on takings. Finally, we agree that Kelo was a terrible decision and that property rights advocates should pursue both legislative and judicial remedies for the situation. Pre-Kelo federal public use law was so bad that there was nowhere to go but up; and the same was true in many states. And we have indeed moved up since Kelo. At the same time, there has been a lot less progress than many expected in the wake of Kelo's massive unpopularity across the political spectrum. My paper documents this shortfall, and tries to explain it.

My friends at IJ worry that reform advocates might give up the fight if it seems hopeless. In my view, we should be at least equally concerned that people will give up because they wrongly assume that the problem has been solved by "reforms" that actually have little or no effect.