New York Times
February 23, 2005

Justices Appear Reluctant to Increase Land-Use Oversight

By LINDA GREENHOUSE
 

 

WASHINGTON, Feb. 22 - Hearing arguments in two highly charged property rights cases, the Supreme Court appeared reluctant on Tuesday to endow federal courts with increased authority over the land-use decisions of state and local governments.

With only seven justices on the bench - Chief Justice William H. Rehnquist is ill and Justice John Paul Stevens was stranded in Florida after his flight to Washington was canceled - it was perhaps riskier than usual to extract likely decisions from the flow of the arguments.

Justice Sandra Day O'Connor, who was presiding by virtue of seniority, announced at the start of the session that the two absent justices "reserved the right" to participate in the cases.

Nonetheless, it appeared likely that the property rights advocates who had shepherded a case from New London, Conn., to the court as part of a nationwide litigation campaign against what they call "eminent domain abuse" would come away disappointed, if not empty-handed.

Scott G. Bullock, a lawyer with the advocacy group Institute for Justice, argued on behalf of seven property owners that New London's plan to demolish their homes and turn a faded commercial neighborhood into prime office and development space violated the Constitution's requirement that governmental "taking" of private property serve a "public use."

Fostering private economic development is not a public use, Mr. Bullock maintained, even if the development has incidental public benefits like improving the tax base. The Connecticut Supreme Court upheld the plan.

The justices were not unsympathetic to the homeowners' plight, but several said they saw no way of adopting Mr. Bullock's position without overturning decades of precedents that had endorsed the use of eminent domain for slum clearance, rail lines and public utilities. "The rationale for this is essentially the rationale for the railroads, the public utilities, and so on: there isn't another practical way to do it," Justice David H. Souter said.

The day's second case, from Hawaii, presented the property issue in a somewhat different light. The state was appealing a federal appeals court's decision to block a state law that limited the rent that oil companies could charge to the independent gasoline dealers who lease their stations. The appeals court said that the rent cap amounted to an unconstitutional "taking" of property; it found that the law did not make sufficient economic sense because the state could not demonstrate through expert testimony that it would result in lower retail gasoline prices.

The decision, by the United States Court of Appeals for the Ninth Circuit, alarmed state and local governments across the country, many of which filed briefs warning that the appeals court's analysis placed in jeopardy residential rent control and many ordinary economic regulations.

Hawaii and its supporters argued that there was no modern precedent for subjecting a state's economic regulation to searching judicial scrutiny by the federal courts.

Quite clearly, the justices got the message well before the argument began. While their questions in the New London case were probing and energetic, the justices appeared in the Hawaii case, Lingle v. Chevron USA, Inc., No. 04-163, to be almost going through the motions of hearing out the two sides as preparation for the inevitable conclusion that the Ninth Circuit had overstepped its bounds.

They had few questions for Hawaii's attorney general, Mark J. Bennett, or for Edwin S. Kneedler, a deputy United States solicitor general, representing the federal government, which entered the case on Hawaii's side. The case "goes to the heart of the role of courts in our democratic society," Mr. Kneedler said, adding that courts were ill equipped to make the sort of "predictive judgments" on which the Ninth Circuit based its evaluation of the likely effects of the rent law.

Craig E. Stewart, a San Francisco lawyer representing Chevron, which had sued the state to block the law, received a grilling. Why should it matter to a court, Justice Stephen G. Breyer wanted to know, whether the government had "a very good reason or a barely adequate one" for a regulation. "That has nothing to do with whether they ought to pay compensation," Justice Breyer added.

When Mr. Stewart said that courts could assess whether a regulation would efficiently carry out a stated goal, Justice Souter suggested that a maximum rent of $5 per apartment would be "fine with you because it's an extraordinarily efficient way of relieving rent."

Justice Souter added, "If the test is so unhelpful, why use the test at all?"

In the New London case, Kelo v. City of New London, No. 04-108, the justices appeared to find equally alarming the logical consequences of the property owners' position that economic development was not a constitutionally appropriate public use. Mr. Bullock, the plaintiffs' lawyer, offered a fallback position: the government's use of the property as planned had to be "reasonably foreseeable" and according to "minimum standards," like a construction schedule.

Even Justice Antonin Scalia, by far the most sympathetic among the justices to Mr. Bullock's position, would not follow him down that path. "Isn't that changing the test for 'public use' to 'efficient public use'?" Justice Scalia asked, adding, "You want us to sit here and evaluate the prospects of each condemnation, one by one?"

Wesley W. Horton, a lawyer from Hartford representing New London, forcefully argued that economic development was an appropriate public use and that there was "no principled basis for the court to make what is really a value judgment" about the merits of any particular development plan. "The essence of federalism" is to let different state courts come to different conclusions, Mr. Horton said.

When Justice O'Connor asked him whether it would be acceptable for a city to take a Motel 6 by eminent domain and replace it with a Ritz Carlton to get more tax revenue from the property, Mr. Horton firmly said yes. When Justice Breyer asked him whether a taking should at least have to meet a test of "reasonableness," he said no, adding that the city was, after all, not simply appropriating the property but paying fair market value for it.

How to measure the value - the city has placed $1.6 million in escrow - is a question that is not before the court. But several justices suggested that the longstanding rule, that the eminent domain price reflects the current market and not any expected appreciation from the project itself, was unfair in this context and should be revisited, perhaps in a future case.