A case has been submitted to the U.S. Supreme Court that gives the justices the opportunity to stop governments from taking private property and giving it to a “favored” competitor, and then hiding the process under the guise of “economic development.”
The Pacific Legal Foundation, which repeatedly has won property rights cases in the U.S. Supreme Court, has submitted a friend-of-the-court brief asking the high court to take the case and stop the abuse.
The case is seen as an opportunity to clarify the 2005 Kelo decision in which a Connecticut city was allowed to condemn a middle class neighborhood and turn it over to a private developer in the name of “economic growth.”
PLF Senior Attorney Brian Hodges argued the Takings Clause of the Fifth Amendment promises the government will not take private property “unless it is for a valid public use and the owner is fully compensated.”
“According to the Supreme Court, the city’s plans to attract wealthier residents provided the general public with economic benefits sufficient to constitute a ‘public use’ of the condemned properties,” PLF explained.
Concerns immediately was raised about governments using “eminent domain powers to transfer the property of one private owner to another for ‘economic development’ purposes, without limitation,” the legal team said.
Kelo itself provided no answers, except that governments were not supposed to be allowed a “purely private taking.”
“At issue in Violet Dock Port, Inc., LLC v. St. Bernard Port, Harbor, and Terminal District, is a government decision to condemn Violet Dock Port’s port facility and transfer it to a private competitor. The Louisiana Supreme Court concluded that the Port District’s economic development rationale qualified as a ‘public use’ despite evidence indicating that the economic development rationale was a pretext for a forbidden private taking,” PLF said.
Violet Dock Port was a privately-owned 75-acre, industrial port facility fronting the Mississippi River in St. Bernard Parish, Louisiana. It was to berth and service ocean-going ships for the U.S. Navy as well as other commercial operations.
But in 2010, as the port was reinvesting its profits for improvements to facilitate cargo operations, the St. Bernard Port, Harbor & Terminal District expropriated the entirety of the port’s property and improvements, driving the company out of business, PLF explained.
The port sought to spur economic activity by building a bulk cargo facility to be operated by a separate, private company, Associated Terminals, which would take over the port’s contracts with the Navy. Associated Terminals was a competitor to Violet Dock Port, with a facility located six river miles away.
When the port objected to the expropriation, the Louisiana Supreme Court said it was a “public use.”
“Ostensibly justified as an economic development measure, the taking here transferred a profitable port facility form one private company to another,” the foundation told the Supreme Court in its request that the case be heard.
“Fears that eminent domain can and will be abuse for private gain in the post-Kelo ‘economic development’ context have proved well-founded. Governments (as well as quasi-public entities imbued with the eminent domain power) regularly take private land to give it to particular private parties for alleged economic reasons.”
What’s missing, PLF said, is “a firm constitutional barrier against pretextual takings.”
“As it stands now, governments have a strong incentive to use eminent domain to reward favored developers, donors, and other private parties by giving them land owned by others for the transferee’s private benefit.”
The evidence shows that the recipient of the property “had participated extensively in the plans leading up to the Port District’s condemnation action, specifically targeting Violet Dock’s land. The private benefits are obvious and paramount – the transferee company acquired a profitable port facility for its own economic gain,” said the brief.
PLF argued that a “rule that allows private takings to occur without scrutinizing the government’s economic rationale will encourage interest groups to lobby the government to condemn private property because it is cheaper to do so that negotiating with property owners for their land.”
“The Constitutions’ Framers were hostile toward this type of naked preference because they feared ‘that government power would be usurped solely to distribute wealth or opportunities to one group or person at the expense of another.'”