Does a city's taking of private property under its eminent domain power and transferring it to private developers as part of a comprehensive economic development plan satisfy the 'public use' requirement of the Fifth Amendment's Takings Clause?

The city of New London, Connecticut, designated a distressed municipality in 1990, suffered decades of economic decline. In 1996 the federal government closed the Naval Undersea Warfare Center in the Fort Trumbull area, eliminating over 1,500 jobs, and by 1998 the city's unemployment rate was nearly double the state's and its population was the lowest since 1920. After Pfizer Inc. announced a $300 million research facility adjacent to Fort Trumbull, state and local officials reactivated the New London Development Corporation (NLDC), a private nonprofit, to plan economic revitalization. In 2000 the city council approved an integrated plan for 90 acres of Fort Trumbull, including a waterfront hotel and conference center, residences, a Coast Guard museum, research and office space, and marina and park support, projected to create over 1,000 jobs and increase tax revenue. The council authorized the NLDC to purchase property or acquire it by eminent domain. The NLDC bought most of the land from willing sellers, but nine petitioners, including Susette Kelo and Wilhelmina Dery, who owned 15 properties in parcels 3 and 4A, refused to sell. None of their properties was blighted or in poor condition; they were condemned only because they lay within the development area. The NLDC initiated condemnation proceedings in November 2000.

In December 2000 the petitioners sued in the New London Superior Court, claiming that the takings violated the Fifth Amendment's public use restriction. After a 7-day bench trial, the Superior Court granted a permanent restraining order prohibiting the taking of the parcel 4A properties (park or marina support) but denied relief as to the parcel 3 properties (office space). Both sides appealed to the Supreme Court of Connecticut, which held, over a dissent, that all the proposed takings were valid. It upheld the takings under the state's municipal development statute, held that economic development qualifies as a public use under the Federal and State Constitutions, and reversed the trial court as to parcel 4A. Three justices dissented, arguing for a heightened standard requiring clear and convincing evidence that the economic benefits would materialize. The United States Supreme Court granted certiorari.

(Stevens, J.)

Yes. The city's taking of private property under a carefully considered economic development plan satisfies the Fifth Amendment's public use requirement.

A state may not take property from A solely to transfer it to private party B, nor take property under the mere pretext of a public purpose. But the Court long ago rejected any literal requirement that condemned property be put to use by the general public. Since the late 19th century the Court has read 'public use' as 'public purpose.' Fallbrook Irrigation Dist. v. Bradley, 164 U.S. 112 (1896); Strickley v. Highland Boy Gold Mining Co., 200 U.S. 527 (1906).

The Court has defined public purpose broadly and deferred to legislative judgments in this field. Berman v. Parker, 348 U.S. 26 (1954), upheld a comprehensive redevelopment plan that included condemning a non-blighted department store and conveying land to private developers. Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984), upheld transferring land from lessors to lessees to break up a land oligopoly, holding that it is the taking's purpose, not its mechanics, that matters. Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984), likewise upheld a scheme whose most direct beneficiaries were private parties.

New London's plan serves a public purpose. It is an integrated, comprehensive plan adopted after thorough deliberation to revitalize a distressed city with new jobs, increased tax revenue, and recreational and waterfront improvements. Promoting economic development is a traditional and long-accepted government function, and no principled way exists to distinguish it from the other public purposes the Court has recognized. The incidental benefit to private parties does not defeat a public purpose. The trial court and every Connecticut justice found no illegitimate purpose of favoring a particular private party.

The Court declined to adopt a bright-line rule against economic development takings or to require a 'reasonable certainty' that the benefits will accrue, since courts should not second-guess the wisdom of takings or the choice of project boundaries. States remain free to impose stricter public use limits. The judgment of the Connecticut Supreme Court is affirmed.

Concurrence (Kennedy, J.) A taking is reviewed for rational relationship to a conceivable public purpose, but this deferential review is meaningful. A taking intended to favor a particular private party, with only incidental or pretextual public benefits, violates the Public Use Clause, and a court faced with a plausible accusation of favoritism should treat it seriously and examine the record. Here the trial court conducted a careful inquiry and found the plan was not primarily motivated by benefiting Pfizer or any private party. The plan addressed a citywide depression, the benefits were not de minimis, most beneficiaries were unknown when the plan was formulated, and elaborate procedures facilitated review. A more stringent standard may be warranted for narrower categories of takings where the risk of undetected favoritism is acute.

Dissent (O'Connor, J.) The Court effectively deletes the words 'for public use' from the Fifth Amendment. Under the Court's rule all private property is vulnerable to being taken and transferred to another private owner who might use it more profitably, since nearly any lawful use generates some incidental public benefit. Berman and Midkiff involved takings that eliminated a harmful use of property, blight and land oligopoly, which directly achieved a public benefit. Here the homes inflict no social harm. The majority answered that its cases support no such harmful-use limit, since the Berman store, the mining and agriculture lands, and the Monsanto trade secrets were not harmful and the public purpose depended on future use. The Court's purported limits are illusory. The purpose test cannot separate private benefit from incidental public benefit in economic development takings, and the requirement that property be upgraded is meaningless. Beneficiaries will likely be those with disproportionate political influence, and victims those with fewer resources. The Court abdicates its duty by deferring to the States.

Dissent (Thomas, J.) The Public Use Clause, originally understood, permits takings only when the government owns, or the public has a legal right to use, the property. Text, structure, the common-law background distinguishing nuisance from eminent domain, and early state practice support this actual-use reading. The Court's public purpose standard, from Fallbrook and Clark v. Nash, and its extreme deference to legislatures, from Gettysburg Electric, rest on dicta and were wrongly conflated with the police power in Berman and Midkiff. The public purpose test cannot be applied in a principled way, and its consequences fall disproportionately on poor and minority communities, as the history of urban renewal shows. These cases should be reconsidered.