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Federalism, the Baltimore Colts, and the Limits of Eminent Domain:

Property law scholar Gideon Kanner has an interesting article in the Los Angeles Daily Journal on the 25th anniversary of the Baltimore Colts' midnight move to Indianopolis. As Kanner points out, the Colts' precipitous departure was caused by the team owner's fear that the city of Baltimore would use eminent domain to condemn the team and thereby prevent it from moving. This fear was precipitated by a then-recent California state court decision ruling that the City of Oakland's effort to condemn the Oakland Raiders in order to prevent them from moving was a permissible "public use" under the state constitution.

As Gideon points out, the Colts were able to foil Baltimore's plan simply by leaving before the city could act. More generally, cities around the country have made little effort to condemn mobile businesses or nonprofit organizations, despite the fact that eminent domain jurisprudence in many states is permissive enough that such efforts would likely survive judicial scrutiny. Why haven't state and local governments sought to condemn mobile assets? The answer is clear: businesses would quickly flee any jurisdiction that started using eminent domain in this way. The example of the Colts is telling. Moreover, other firms would forego the opportunity to move into the area in the first place.

For these reasons, condemning mobile assets is a losing proposition for state and local governments - even if courts will let them do it. Federalism and interjurisdictional competition protect property rights in movable goods with relatively little need for judicial intervention. By contrast, there is little similar protection for property rights in land and other static assets. A landowner might be able to flee a jurisdiction with harsh policies; but he can't take the land with him. For this reason, decentralized federalism is less likely to provide effective protection for property rights in immobile goods. Thus, judicial intervention, including that of federal courts, may be necessary. I discuss this point at greater length in this article (pp. 221-23). Once we understand the distinction between mobile and immobile property and the special vulnerability of the latter, there need be no contradiction between support for decentralized federalism and support for federal judicial protection for landowners' property rights.

David Friedman (mail) (www):
I've long argued that immobile resources, most notably land, provide the limit to Thibaut competition. A local government can expropriate up to the full value of all immobile resources without any constraint via competition with other local governents, for the reason you mention.

I have an old unfinished article in which I tried to use changes in land value to answer the question of whether government spending is good or bad--whether, on net, a dollar of taxation produces more or less than a dollar of benefit. If it's good, then land values should go up with (local) government spending, since they will, in effect, capitalize benefit net of cost, all other values being set, via competition, on the broader market. If bad, they should go down.
4.3.2009 5:13pm
Commentor (mail):

"decentralized federalism is less likely to provide effective protection for property rights in immobile goods"


In fact, isn't the most permissive public use doctrine that set out by the federal courts? In other words, don't the states provide at least as much protection for private immobile property as the federal government?
4.3.2009 5:25pm
Dave hardy (mail) (www):
On mobile assets: why should escape from the jurisdiction matter? So long as the jurisdiction's court can establish personal jurisdiction, why can't the jurisdiction take non-realty assets located elsewhere? It may seem unsporting, perhaps exceptionally nasty, but I can't identify a constitutional bar to it.
4.3.2009 6:32pm
DCP:

This is why I live in a van down by the river
4.3.2009 6:47pm
David Walser:
This reminds me of something that happened at the end of my father's career as an airline pilot. His company had a contract to transport equipment and people to the diamond mines in Angola. The Angolan government, as part of negotiating the contract renewal, threatened nationalizing the airline. My father's last assignment for the airline was to organize the rest of the pilots in Angola and to fly out of the country all of the planes, spare parts, and other company assets. They left during the night and flew under the radar. He retired, on schedule, the following month.
4.3.2009 7:29pm
Noah David Simon (mail) (www):
I agree, but people really need to be made aware of communication company use of their property. I'm willing to bet if I regulate the NYC cell phone market that I will still have takers for using public property in ways that are more competitive then the monopolistic and counter technology evolving system then we have now. Socialist Scandinavia is kicking our asses in innovation! I'm all for the free market as long as it truly isn't grabbing assets from the people. btw those Ravens are a pretty good franchise.
4.3.2009 8:02pm
Soronel Haetir (mail):
I would argue that at least some of the tech barrier we face is simply the scale of the US. Some areas of the US are served very well, other areas are far behind. When you have less overall area to be concerned about it's far easier to upgrade service everywhere.
4.3.2009 8:11pm
Splunge:
This isn't totally true. While the value of land is indeed quite powerfully due to its location, the ultimate value to the state is often a question of its improvements -- and the value of those usually depends substantially on the skill and capital resources of the owner.

Indeed, this is obvious, with the "redevelopment" efforts that have crept in around eminent domain usage, efforts to attract more skilled and capital-rich owners, who will add more value to the land, dispossessing poorer owners who are not adding much to the tax base.

These people can, of course, flee the jurisdiction, taking their talent and money elsewhere, and I would guess this is what keeps eminent domain usage -- also known as "theft" -- to something of a dull roar, and in any event rarely used against wealthy owners who have improved the land in such a way as to generate tons of tax revenue.
4.3.2009 8:20pm
David Welker (www):

Once we understand the distinction between mobile and immobile property and the special vulnerability of the latter, there need be no contradiction between support for decentralized federalism and support for federal judicial protection for landowners' property rights.


To the extent that "decentralized federalists" believe that the Bill of Rights should not have been incorporated against the states, then there is still some tension here. To the extent that they believe that the powers of states should be maximized, again there is still some tension.

I don't see how the distinction between mobile and immobile property, which is not found in the Constitution to my knowledge, changes anything.

Of course, it is perfectly possible to design a logically consistent system that provides some powers to the states and some powers to the federal government.

However, there is also tension between the goal of maximizing the power of the states (which I am not sure it the goal of "decentralized federalists" a creature I had not heard of before now) and anything that lessens that power, such as federal judiciary enforcement. Right? That you think that such enforcement is particularly justified in a particular context does not change the fact that there is a tension. Someone else might think that enforcement is particularly justified in some other context (and you might disagree). How exactly are we going to determine when such arguments that a particular intervention is "especially justified" should fly or not, except with respect to our own values? It seems to me that what is going on here, especially with the aid of such extra Constitutional concepts as mobile property versus immobile property, is the reading of one's own values into the Constitution.

Finally, it is quite clear that the purpose of our Constitution is to empower the Federal government at the expense of the states, not maximize the power of the states. After all, if you wanted to maximize the power of the states, you would not have moved away from the Articles of Confederation in the first place. To the extent that this animal known as the "decentralized federalist" denies that basic fact, they are advocating for their own normative values rather than seeking to uphold the Constitution as it actually exists.

In contrast, if "decentralized federalists" are merely "federalists" (something we should all be) there never was any contradiction to begin with. Clearly, the Constitution reserves some powers to the Federal government, some powers to the States, and some powers to both. Of course, one problem that has existed since the beginning is that the exact contours of those powers have been and remain uncertain.
4.3.2009 9:56pm
Gump:
I want to hear someone talk about what Dave Hardy said. My understanding of Personal Jurisdiction and long arm stuff is pretty 1L.


I also think living in a van down by the river is a solution.
4.3.2009 10:52pm
Splunge:
I can't believe a lawyer named Gideon has a blog with the domain name gideonstrumpet.info.

I mean, the rest of us sometimes refer to lawyers as strumpets...
4.3.2009 11:31pm
theobromophile (www):
I could be way off base, but I would assume that eminent domain takings are used against land and things, not against people, and therefore it would be in rem jurisdiction. You get the owner via the asset, not the asset itself.

The relevant clause of the Fifth Amendment states:
...nor shall private property be taken for public use without just compensation.

That indicates that eminent domain is limited to property (even in a broad sense), not people, and, maybe, jurisdiction should follow. A lesser issue is with legal neatness: if you use in personam jurisdiction, a state could theoretically condemn out-of-state assets that are in the possession of state residents, which starts to make not much sense. More than that, getting jurisdiction over the people (and presumably condemning them) brings up Fifth and Fourteenth Amendment due process issues, and, if you wanted to stretch it, Thirteenth Amendment issues.
4.4.2009 12:08am
theobromophile (www):
Actual blog post: I get that courts have interpreted the Takings Clause to include seizures of such assets, and read "public use" broadly enough to include these types of actions, but it just blows my mind. It seems as if the Founders (and those who wrote similar clauses into their state's constitutions) were trying to avoid a result like this.

Yes, I understand that with the money that municipalities give to sports teams (building arenas, tax breaks, etc), they have a very vested interest in their success. The solution, however, isn't to condemn and seize the team as one would a parcel of land for a public park, but to not give them the money in the first place.
4.4.2009 12:11am
Kirk:
The solution ... [is] to not give them the money in the first place.
Isn't the horse quite a few furlongs down the road already?
4.4.2009 1:27am
Kazinski:
I was born in Oakland, I grew up in the East Bay, I bought my first TV in 1981 to watch the OAKLAND Raiders play the Redskins in the Superbowl. I was devastated when Al Fucking Davis moved the Raiders to Los Fucking Angeles two seasons later. I was pinning my hopes on the imminent domain scheme for several months afterword.

Now they're dead to me. It's only been 27 years or so, maybe when a little time has passed, I'll be able to gain some perspective. Or better yet when Al Davis dies.

(I don't know how Ilya is on profanity, but if he follows EV's policy of tolerating when it is necessary I should be OK.)
4.4.2009 3:30am
Tatil:

(I don't know how Ilya is on profanity, but if he follows EV's policy of tolerating when it is necessary I should be OK.)

:) With an endnote like this, I doubt he will take your post, especially if he follows football at all...
4.4.2009 11:52am
Tatil:
I meant to say "I doubt he will take down your post." Sorry...
4.4.2009 11:53am
BZ (mail):
Oh, I thought Kaz's profanity was just in the best style of the Oakland Raiders, the only team in football that could make Warren Sapp frown.
4.4.2009 2:02pm
neurodoc:
Kazinski, are you clairvoyant? If not, how did you know in 1981 that the Raiders would play the Redskins in the 1983 Super Bowl?
4.4.2009 5:16pm

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