Bar Journal - Summer 2007
The Kelo Backlash: Have We Gone Too Far in Restricting the Exercise of Eminent Domain?
By: Elizabeth E. J. Nickerson
Winter 2000, Fort Trumbull Area, New London, Connecticut. New London uses its eminent domain power to take private property from homeowners and give it to private developers in order to bring prosperity to a city on the brink of total economic decay.1 Summer 2005, United States Supreme Court, Washington, D.C. In Kelo v. New London, the Court holds New London’s exercise of eminent domain was valid under the Fifth Amendment. Winter 2006, Concord, New Hampshire. The legislature amends two statutes and proposes a constitutional amendment, to make sure what happened in New London cannot happen in the Granite State.
Kelo was the culmination of decades of broadening of the government’s power of eminent domain. It served as a wake-up call to the states that had no idea how broad the doctrine had become. Public outcry arose, as legislatures scrambled to avoid Kelo-type takings in their states.
New Hampshire was no exception. People in New Hampshire live by the famous words of General John Stark, “Live free or die.”2 New Hampshire citizens strongly protect their private property rights. It was quite a shock to many that Justice Souter, New Hampshire resident and land owner, joined the Kelo majority. As a gesture of disapproval towards Justice Souter’s vote, a well-known political activist and developer even suggested, with some public support, that Justice Souter’s Weare, New Hampshire, home on Everett Lake was ripe for a taking in order to build a hotel.3
In Kelo’s wake, the New Hampshire legislature followed its sister states by passing amendments to its eminent domain procedure4 and redevelopment acts5. In addition, it proposed and adopted a new amendment to the state Constitution limiting what constitutes a public use. Considering that public use analysis in New Hampshire was already more narrowly drawn than federal law, however, these changes were unnecessary.
This article will review federal eminent domain public use analysis. It will then discuss Kelo and its effect on federal case law. The article will distinguish New Hampshire’s public use analysis from federal law. Finally, it will discuss the “Kelo backlash” in New Hampshire, focusing on the new constitutional amendment.
Ultimately, this article concludes that since New Hampshire public use analysis would have forestalled Kelo-type takings, the state acted hastily in enacting a new amendment which not only stops Kelo-type takings, but also stops some unequivocally legitimate eminent domain takings.
II. What is Eminent Domain?
The Founding Fathers, and the Framers of the Constitution, revered personal liberties and private rights. Protecting private property ownership secures liberties and rights because it provides a line in the sand which the government may not cross.6 Eminent domain is one of the limited circumstances where the government may cross that line between private ownership rights and public necessity. 7 The power is so strong, that it may only be constitutionally and validly exercised if the land will be put to a public use and the government justly compensates the land owner.8
Government’s central function is to maintain stability and promote peace.9 In order to carry out these functions, the government requires certain powers. 10 Those powers are loosely grouped under the heading of “police powers.” Rather than being constitutionally enumerated, these powers are limited by the Constitution. 11 Currently there are three such inherent powers: taxation power, police power, and eminent domain power.12 Although each power helps the government to carry out its central functions, each differs in the limitations on its use.
Taxation power enables government to force citizens to pay its operating expenses. Taxation operates equally on each person, because each citizen bears the burden of paying into the governmental pot in order to pay for expenditures on the public’s behalf.13 Eminent domain is different from this power because it operates against particular land owners who happen to stand in the way of a government project.14 Just compensation equalizes the burden of eminent domain because it compensates the land owner for the unequal loss he suffered.15
Police power is the power of the government to enact laws which restrict land owners’ uses of their property for public health, safety and welfare.16 An example of such a law is one which prohibits septic systems within a certain radius of a well. Such a law restricts a private property owner’s use of his land since it may bar him completely from developing it. The government must be able to enact this type of law in order to protect the health and safety of its citizens.17 Such regulations differ from the exercise of eminent domain power because it is assumed that the property owner subject to those regulations is receiving a benefit in exchange for the restriction since it protects his health, safety and well-being.18 Furthermore, no public use is made of the property; police power restrictions act on private use of the property.19
Eminent domain is the power of the government to take private property when the public need requires it.20 Unlike taxation and police power, which are obviously necessary for government to function, eminent domain, at first glance, appears unnecessary and intrusive. Consider, however, that without being able to take private property without the consent of the owner, one or two land owners could thwart an entire government project such as a public highway. If the government required consent from each landowner prior to building a highway, the costs would become prohibitive and one holdout owner could stop the entire project. 21
However, this power, although necessary, is limited by the Constitution so that government may only exercise eminent domain when the land taken is put to a public use, and when the land owner is justly compensated.22 The public use requirement of the Fifth Amendment stops the government from taking private property from one land owner and giving it to another private landowner.23 Public use is a term of art which refers specifically to the Fifth Amendment requirement.
The term has been subject to considerable judicial scrutiny. Originally, the courts utilized a very narrow definition of public use whereby it meant use by the public. More recently, that narrow definition has been widened, and public use has been held to be synonymous with public purpose or benefit. 24 In modern analysis, when the Court is called upon to scrutinize a public use case, it looks first to whether there is a public benefit or purpose gained by the taking, and if so, then it declares a valid public use. Basically, in current Court parlance, public use has come to be interchangeable with public purpose or benefit. Broadening the definition of public use to mean public purpose or benefit allows the government to cross the line between private and public property ownership more often and for less important reasons.
Federal courts give great deference to the legislative determination that the use to which taken property is being put is public. 25 Once a public use has been found, the government may use whatever means it chooses to gain the benefits for which the land has been taken.26 Ancillary private benefits are permissible, even if the land may not be taken for primarily private benefit.27 Takings that will result in future public uses have also been allowed.28
Exercise of the eminent domain power requires the involvement of more than one governmental branch.29 First, the legislature decides how a public project will be carried out, and if the project requires land to be taken. 30 Generally, the legislature will attempt to buy the land first, and if that is not possible, will then seize it via eminent domain. 31 Second, the executive branch will act to negotiate the seizure of the land. 32 The legislative plan may be carried out by either a government agent under the executive branch, or by a private party using statutorily delegated eminent domain power.33 When a utility company exercises eminent domain in order to erect utility poles, it is acting under a statutory delegation of eminent domain power. Erection of utility poles is for the public benefit, and since a private utility company has special expertise in erecting utility poles, the legislature may determine that a delegation of eminent domain is appropriate. Finally, the judicial branch may review the validity of a declared public use.34
III. Eminent Domain, Public Use, and the Supreme Court
The United States Supreme Court first began interpreting the public use requirement of the Fifth Amendment in the late nineteenth century in Kohl v. United States.35 Prior to this time, the public use requirement had not been under Supreme Court scrutiny because the federal government had not exercised its eminent domain powers.36 In Kohl, Congress enacted a statute delegating power to the Treasury to either purchase or condemn land in Cincinnati for a government office building.37 Since government must be able to carry out its required functions, Kohl determined that it must be able to take land using eminent domain or it would be dependent on states or private individuals to do its necessary tasks.38 Therefore, the Kohl Court found, the public use requirement must be interpreted narrowly to allow the government to take land only when it will actually be used by the public.39 Some examples of valid public uses given in Kohl were forts, armories, light houses and post offices.40
Since Kohl was decided, the public use requirement has broadened significantly.41 The first of the Mills Acts42 cases, Head v. Amoskeag Manufacturing Co., is often cited in later cases as evidence that the public use requirement has long been broadly defined as public purpose or benefit rather than strictly as use by the public.43 However, Head cannot be cited for that proposition, because it did not hold that broad public benefits will suffice to meet the public use requirement. Instead, Head held that since prior Mills Act takings were found to be valid under the public use requirement, that this Mills Act taking was also valid, even though the prior cases were decided based on the public’s use of the mills, not general economic benefits gained from creating water power for private mills as in Head.44 It must also be kept in mind that the type of taking involved in Head was highly contested, and that there was by no means a consensus about its validity, so that it cannot be used as historical evidence that public use has always meant public benefit.45
A. Kelo’s Public Use Predecessors
Broadening of the public use requirement began soon after Kohl, based on two lines of cases decided in 1896.46 The first line began with Fallbrook Irrigation Dist. v. Bradley. In Fallbrook, California passed an act allowing a corporation to assess land owners a fee to create a system to irrigate millions of acres of arid land.47 When one land owner objected to the assessed fee and refused to pay, the corporation took her land and sold it to pay her fee.48 States are allowed to take land without a hearing in this manner, but only as long as the taking meets the public use requirement.49 Fallbrook found that there was a public use because the water in the irrigation scheme was open to the public.50 However, the court in Fallbrook did not stop there. In further dicta, it said that even if the entire public was not able to use the water, the public benefit and purpose associated with a scheme that would make millions of arid and unusable acres fertile farmland was enough to meet the public use requirement. 51
Fallbrook illustrates the difference between a narrow public use and a broad public purpose. Fallbrook’s holding found a valid taking because the water in the irrigation ditches was actually used by the public. This is an example of the traditional, narrow kind of public use, where the taken land is used by the public. In contrast to this, the dicta refers to a broad, modern type public use. A broad public use is synonymous with public purpose, which is much broader than the narrow type of use held valid in Fallbrook. Public purpose means that the use to which the taken land will be put confers some sort of general benefit, although the public is not actually able to use it. Although Fallbrook’s holding governed a narrow, traditional public use, it is cited for the dicta’s language which stated that public benefit or purpose is enough to meet the public use requirement.
Clark v. Nash relied on Fallbrook to find a public use where an irrigation scheme took land to build an irrigation ditch for the sole use of a neighboring property owner.52 Clark did not further analyze whether this particular irrigation scheme would be open to the public, instead relying on the Fallbrook dicta to hold that the public in general would benefit from the irrigation ditch even if the recipient of the water was a private individual.53
Finally, Strickley v. Highland Boy Gold Min. Co. cited Clark for the proposition that if the general public welfare is served by the taking, then the public use requirement is met. 54 Otherwise, Strickley held, if every piece of condemned land had to be actually used by the public, then the needs of society could not be adequately met because there are frequently times when land must be taken for the public welfare when it will not be used by the public.55 Courts continue to cite this line of cases for the proposition that a broad public purpose is enough to satisfy the public use requirement.56
The second line began with United States v. Gettysburg Electric Ry. Co. In Gettysburg Electric, the federal government enacted a statute to take land for the purpose of erecting monuments remembering the Battle of Gettysburg.57 The case clearly held that erecting war monuments was a public use because such monuments are of national character and importance, and it is as much within the powers of government to erect memorials for dead soldiers in the form of monuments as it is in the form of cemeteries.58 Gettysburg Electric painstakingly analyzed the similarities between monuments and cemeteries for dead soldiers prior to finding a public use. However, Gettysburg Electric stated in dicta that when the legislature declares a use to be public, the court will uphold its determination unless it is unreasonable. 59 Despite the actual holding in Gettysburg Electric, the case continues to be cited for the proposition of legislative deference. 60
After Gettysburg Electric and Strickley, public use cases have been continually litigated. Instead of employing the in-depth analysis of the earlier cases however, the Court tends to base its holdings on citations to the propositions that a general public purpose suffices to meet the public use requirement, and the legislature is entitled to great deference in determining a valid public use.61 Contributing to this laxity in analysis is the fact that the just compensation portion of the Fifth Amendment has generally received more judicial review than the public use requirement.62 Finally, public use analysis is often conclusory based on former cases which have found the particular use to be public.63
The more modern court has joined the two lines of cases. The formal convergence occurred in Berman v. Parker. Berman considered one of many Redevelopment Acts, this one in Washington, D.C. Generally, such statutes were passed in order to redevelop city areas that had become slums with blighted64 and unsafe conditions. The statute was designed to take land from slum area landholders, and sell it to private developers who would then redevelop the entire area in a safe, healthy and non-blighted fashion. 65 However, the land taken under the redevelopment statute at issue in Berman was not blighted; it was a prosperous general store. The case turned on whether a statute could be used to take land which was perfectly safe when its declared public use was to take blighted land to create safe housing. Would the public use requirement still be met? Berman held that it was.
First, the Court found that the role of the judiciary in determining whether the exercise of the eminent domain power was for a public use is extremely narrow, and that the public welfare is a broad and inclusive concept. 66 Second, the Court went on to indicate that taking land of an unsafe and blighted nature and redeveloping it served the public welfare, and therefore constituted a public purpose which met the public use requirement.67 Finally, the Court showed great deference to the fact that the legislature had determined, in the Redevelopment Act, that the taking facilitated a public purpose in that it made the community safer, cleaner and more attractive. 68 Berman held that the Court would not question such legislative determinations if it appeared the plan enacted under the statute was reasonably sure to achieve the public purpose the legislature determined. 69 In reaching its holding, Berman relied on both the general public purpose found to have met the public use requirement in Fallbrook, as well as the legislative deference relied on in Gettysburg Electric.
After Berman, Hawaii Housing Authority v. Midkiff further developed modern public use analysis. In Midkiff, Hawaii devised a statutory scheme in order to break up a land oligopoly which forced most island residents to be tenants of the few land owners. 70 The scheme functioned by allowing tenants to purchase their leasehold from their landlord at a forced state auction.71 Thus, the state was taking the land owner’s land, at the request of his tenant, and forcibly selling the land to the tenant, a private party. It seems inconceivable that such a use was public, because the public had no rights to use the taken land, and even the Berman type of public benefit to protect health and safety seemed lacking. However, relying on the legislative deference established by Berman, Midkiff held that breaking up a land oligopoly was a valid public use. Since the legislature had stated the public would benefit from re-allocating a scarce resource which would result in decreasing the perpetual poverty level of the state, the Midkiff Court held that the taking satisfied the public use requirement because it served a legislatively declared public purpose.72
Midkiff laid the final stone upon which the Kelo decision rests because the Court stated two further propositions. First, once the public benefit is established, the means chosen to effectuate the taking are acceptable as long as the legislature could have rationally believed they would promote the desired objective.73 Second, even if the land was being transferred from one private party to another, it would not fail public use analysis because only the purpose of the taking matters, and not the status of the party who is using the taken land.74
B. Kelo’s Public Use Analysis
It had been 20 long years since the Court had occasion to decide a public use requirement case,75 and Kelo was one of first impression. The Court had never before been asked to consider whether a legislature could validly take land from private parties and give it to different private parties solely for the extremely broad purpose of bringing economic prosperity to a community.76 The Kelo Court relied on precedent to hold that the Connecticut legislature could take land from private home owners and give it to private corporations to further the public purpose of providing potential economic benefits to a depressed city.77 Kelo illustrated how broad the public use requirement had become, so that a legislatively-defined public purpose automatically satisfied the public use requirement.78 It was by no means a decision upon which all the justices agreed, however. Four justices joined the majority opinion, one justice wrote a separate concurrence, and four justices dissented.
By late 1990, decades of economic decline had led the state of Connecticut to determine that New London was a distressed municipality.79 The Fort Trumbull area of New London once housed the Naval Undersea Warfare Center, an employer of 1,500. 80 When the Navy closed the center in 1996, the Fort Trumbull area’s unemployment figures became double the state’s figures. 81 Due to the massive unemployment, people also began a mass exodus, leaving the Fort Trumbull area with but 24,000 residents by 1998, its lowest occupation rate since 1920. 82 When New London got the news that international pharmaceutical company, Pfizer, Inc., had decided to build a $300 million research facility next to the Fort Trumbull area, it quickly sprang into action. 83
The state had already authorized New London to spend $15 million obtaining land to create an office park in the Fort Trumbull area, and also gave the city’s Development Corporation eminent domain power where the residents were not willing to sell, in the hopes that potential businesses would seek to move in. 84 Pfizer proved the state right, and the New London Development Corporation began buying property in the Fort Trumbull area. 85 The property was to be given to private corporations to ensure the development of the area in an economically beneficial manner.86 Residents of Fort Trumbull who did not look forward to seeing their homes become part of a massive office park, and marina area, with all the attendant commercial trimmings, refused to sell their homes. 87 This forced the NLDC to exercise the eminent domain power to take their homes. 88 Those unhappy homeowners brought suit alleging the statute was unconstitutional because it violated the public use requirement. 89
The Kelo Court considered whether the taking under the Fort Trumbull area revitalization scheme met the public use requirement because private land was given to private corporations in order to achieve the general public purpose of economic benefit to the area.90 Based on Berman and Midkiff, the Court held that the economic benefits to be gained by the public by virtue of the redevelopment scheme met the public use requirement.
The Court looked to the legislative determination of a public purpose. 91 Announcing that public use jurisprudence favors giving legislatures broad latitude in determining what public needs require using eminent domain, the Court reiterated its policy of legislative deference towards findings of public uses. 92 The Connecticut legislature had found that a carefully designed economic redevelopment plan would benefit the public welfare by increasing employment, tax revenue and decreasing economically depressed properties. 93 The Court held it would not second guess the legislature’s decision, so long as the takings seemed reasonably likely to bring about general public benefits.94 Kelo found that the redevelopment plan was reasonably likely to generate increased tax revenue and employment opportunities because it encouraged businesses to relocate to the Fort Trumbull area, which would provide appreciable benefits to the public. 95
Further, the Court gave two reasons why there was no logical reason to invalidate broad economic benefits as a public use. 96 First, the Court was not able to question legislative discretion concerning important economic developments for the area because promoting economic development is one of the traditional functions of government. 97 Second, the Court was not able to distinguish increased tax revenue and employment opportunities from establishing a well-balanced community98 or promoting normal functioning of the residential land market99 which had been held valid in prior cases. 100
As the last word, however, the Kelo majority left the door open for states to more narrowly construe the public use requirement.101
Justices O’Connor and Thomas wrote separate dissents concluding that the Connecticut legislature’s plan was actually a taking for private use in violation of the Fifth Amendment. Justice O’Connor reasoned that if incidental public benefits, like those in Kelo could fulfill the public use requirement, than the words “public use,” would be superfluous because any so-called public use could fill the bill.102 She stated first that the public use clause requires a direct public benefit, even if it means the land taken is eventually given to private parties.103 She then distinguished Berman and Midkiff, which both directly benefited the public by removing harmful land uses from Kelo because there was no such harmful use involved in Kelo, and therefore no corresponding direct public benefit which the public use clause requires.104 Most importantly, Justice O’Connor determined that under the majority’s decision, almost any taking could be rationalized because putting private land to an economically different private use would almost always create some general economic benefit to the area.105
Justice Thomas also found the majority opinion problematic, but for a different reason. According to Justice Thomas, the majority opinion was based on questionable dicta announced in Strickley and Gettysburg Electric.106 Justice Thomas also found the majority’s reliance on Berman and Midkiff unsound because both were mistakenly decided on eminent domain grounds, rather than police power grounds.107 Finally, Justice Thomas, like Justice O’Connor, reasoned that if the public use requirement is not read narrowly, then the protections granted under the Fifth Amendment to private property ownership would be undercut.108
C. Kelo Backlash
Despite the fact that Kelo was the next logical step in public use analysis, popular reaction across the country was extremely negative.109 Disapproval was so great that legislatures around the country began enacting legislation to stop Kelo-type takings in a reaction that became known as the “Kelo backlash.”110 States attempted to tighten their public use requirements by enacting legislation that either defined public use or takings, or more narrowly defined blight.111 The concern about Kelo-type takings was so prevalent that 28 states enacted such legislation.112
In New Hampshire, 93 percent of people in a survey conducted by the University of New Hampshire opposed Kelo.113 In response to Kelo, the New Hampshire legislature proposed an amendment to the eminent domain procedure act defining public use more stringently,114 and in addition, proposed a constitutional amendment to be submitted for public vote in the November 2006 general election.115 In order to understand why the legislature may have overreacted, it will be helpful to review eminent domain law in New Hampshire.
IV. Public Use Requirement in New Hampshire
New Hampshire’s public use requirement is not as broad as that of the federal system. The New Hampshire Supreme Court has historically construed public uses narrowly, and its modern analysis continues to more narrowly limit public uses than the federal courts.
A. Historic New Hampshire Public Use Analysis
Historically, the NH Supreme Court has found public uses in a number of different areas. In Concord Railroad v. Greely, the Court found that land takings for railroads meet the public use requirement, because as a common carrier, the railroad served the public even if it was owned and operated by a private company.116 Petition of Mount Washington Road Company found the legislative grant of power to create a turnpike road under a private corporate charter was valid because the public were going to be the actual users of the road.117 Even though the company could charge a toll for traveling on the road, the use was still public because the private gain was ancillary to the primary purpose of establishing a road for public travel.118 Great Falls Manufacturing Co. v. Fernald held that under the New Hampshire Mill Act, a taking whereby a private company flooded the land of his neighbor in order to build a dam was a public use because developing water power promotes the public welfare in the form of economic benefit.119
More importantly, the Fernald Court held that the legislature was able to extinguish private rights standing in the way of the development of natural water power because the resulting economic gains from the added water power would benefit the state, and as such, are a public use.120 Fernald held that general public benefit was sufficient to meet the public use requirement, just as Fallbrook’s dicta had stated. However, where Fallbrook was followed by later cases to sustain takings where the only public use was a broad public benefit, Fernald was met with vigorous argument. 121 In order to still the argument, the Court took up the question of economic benefits again in Rockingham County Light and Power Co. v. Hobbs.122 After Rockingham County Light, New Hampshire analysis significantly diverged from the broadening federal eminent domain public use analysis.
The Court in Rockingham County Light limited Fernald by stating that its reasoning and holding could not be extended to other public use cases. 123 Most importantly however, Rockingham County Light ensured that New Hampshire public use analysis would remain narrow by explicitly stating that a broad public benefit, like that found to be a public use in Fernald, would not satisfy the public use requirement outside of the flowage rights context. 124 The Court in Rockingham County Light found that the general rule is not, as Fernald seemed to hold, that public use means the same thing as general public advantage, benefit or state welfare. 125 Rather, the Rockingham County Light decision determined that public use is much closer to use by the public than general public benefit. 126 Therefore, the Court in Rockingham County Light held that private companies may only receive taken land if they perform a task so necessary and essential to the public, like erecting utility lines, that the company is actually a quasi-public entity.127
After Rockingham County Light, the next important type of public use involved redevelopment. Velishka v. City of Nashua and Nashua Housing Authority held that a redevelopment taking satisfied the public use requirement. Velishka held that blighted property taken and sold to be redeveloped was a public use because it replaced the unsafe homes in the area which had been causing danger to the public.128
First, the Court looked at the legislative determination, and stated that while legislative determinations are entitled to weight, they do not magically make an unconstitutional taking constitutional.129 Then, Velishka found slum conditions endanger the public safety and welfare. 130 Because of the grave safety concerns where slum conditions exist, taking the land to redevelop it into an area safe for habitation, travel and recreation meets the public use requirement. 131
Second, the Court found that an integral part of the redevelopment scheme was selling the land to private developers in order to ensure the land did not revert back to being a health hazard. Third, the Court held that once the land is sold, the public use continues regardless of who buys it because the buyer does not alter the purpose for which the land was taken. 132 Finally, Velishka held the legislature may validly take land that is not blighted in order to redevelop an entire area because history has shown that in order to get rid of slums, the entire area must be leveled.133
Recall that Berman, like Velishka, concerned a taking for redevelopment. Briefly, the Court in Berman found a public use where a prosperous general store was condemned under a redevelopment act because the legislature had found the taking necessary to the public safety. 134 The Court held that public use was a broad and inclusive concept, and as long as the legislature’s plan carried out under a redevelopment act was reasonably sure to achieve the public purpose declared in the act, of increasing public health and safety, then the taking met the public use requirement.135 Since the legislative plan in Berman was reasonably sure to provide increased benefits to the public by removing a slum area, the public use requirement was satisfied, the Court held, even though the condemned land itself was not harming the public.136
So how is Berman different from Velishka? The result and the holding are basically the same, but the difference rests on the judicial scrutiny afforded the legislative determination. In Berman, the United States Supreme Court stated its broad policy of legislative deference and the narrow role of the judiciary in examining public use determinations. Unlike Berman, the New Hampshire Supreme Court in Velishka announced a policy of not allowing legislative deference to stand in the way of judicial scrutiny of public uses.137 Thus, while the holdings in both cases were the same, New Hampshire’s Velishka Court retained the power of meaningful judicial scrutiny of legislative determinations regarding public use.
B. Modern New Hampshire Public Use Analysis
More recent public uses have included public dumps,138 airport navigation rights139 and public parking garages.140 Merrill v. Manchester, decided in 1985, announced the modern New Hampshire public use test.141 The test has two prongs. First, the Court determines whether the taking will primarily benefit a private person or use or if it serves a public purpose.142 Then, the Court does a balancing test to determine if there is a net public benefit from the proposed taking.143 The net benefit consists of balancing the benefits of the taking and the change of the use of land involved against the social costs of losing the property in its current use.144
In Merrill, the City of Manchester sought to take 23 acres of forested land and three acres of land in current use within an industrially zoned area for the development of an industrial park. 145 The ostensible public use was the general public benefit of allowing the development of currently vacant land into economically productive space.146 According to the Merrill test, however, this did not meet the public use requirement. In balancing the public benefit against the social cost involved, the Court found that the Merrill taking was unconstitutional because there was no valid public use.147 The Court announced that the primary reason for the taking must be a public use, but it did not do any analysis of this point, because the public benefit did not exceed the social costs of taking the property.148 In Merrill, the public benefits were so few that the Court could not identify such benefits with any certainty. 149 Instead, the only public benefits arose from the possible construction of an industrial park.150 As far as the social costs were concerned, the Court determined that they heavily outweighed any future public benefits. Merrill found that society greatly benefits from beautiful, open spaces like the property the city was attempting to take. 151 Not only did society benefit, but the legislature had clearly stated its policy of preserving such open spaces. 152
How does Merrill’s two pronged test differ from Kelo’s public use test? Under Merrill, the Court must scrutinize the primary reason for the taking, and whether net public benefits accrue from the taking. Kelo’s test does not require judicial scrutiny. Rather, it allows wide legislative deference to supersede in-depth judicial scrutiny. Also, under Merrill, the net public benefit analysis carefully weighs the actual benefits and costs inherent in the taking. Under Kelo, if it appears from the legislative determination that general public benefits will accrue from the taking, that, alone, is sufficient to find a public use. The Court need not actually analyze the benefits to be gained from the taking.
Would the Kelo taking have survived the Merrill test? No. First, the primary benefits under Kelo appear to go to the private corporations gaining the land because any public benefits are uncertain. Indeed, such public benefits may not ever be realized because it is uncertain how much tax revenue or how many jobs will be created. Second, will the net public benefit be positive? The answer to that question again seems to be no. The public benefits are uncertain in Kelo. On the social cost side, there is the devastation of losing family homes, the loss of economic value to the land owners who had put substantial funds into their houses and the subsequent uncertainty of land ownership rights. In the balance, the social costs weigh heavily against the potential public benefits that might result from the private development. Thus, under NH’s public use test, the Kelo taking would have been invalid.
C. Kelo Backlash in New Hampshire
In response to Kelo, New Hampshire followed the lead of its sister states in enacting legislation to stop Kelo-type takings. First, New Hampshire amended its Eminent Domain Procedure Act.
The Eminent Domain Procedure Act dictates how land may be taken.153 Under the statute, land may be taken by a condemnor for a public use, in accordance with the Constitution.154 The statute sets out the proper procedure and requirements for notice to the condemnee,155 preliminary steps to an action being taken,156 methods of challenging the taking,157 and payment of compensation.158 Following the 2006 amendment in response to Kelo, the statute also defines public use.159 Public use is defined as: 1) use of the property by the general public or the government; 2) use of the property by a public or private utility or common carrier; 3) removal of structures unfit for human habitation, abandoned property or public nuisances; and 4) private use occupying an incidental area within a public use where the condemnation was not for the purpose of allowing that private use.160
The legislature did not stop at defining public use. It also went on to state explicitly that public use would not encompass public benefits accruing from private economic development.161 The language in the statute seems to completely bar a Kelo taking since Kelo announced that economic benefits from redevelopment alone were sufficient to establish a public use.162
Unfortunately, the legislature was not paying attention to what the left hand was doing while the right hand was amending the Eminent Domain Procedure Act. The legislature also amended the Redevelopment Projects Act. Under this Act, taking property due to blighted conditions for the purpose of economically revitalizing a municipal area was declared to be a public use.163 Despite the Eminent Domain Procedure Act’s definition of public use, designed solely to stop Kelo-type takings,164 the Redevelopment Projects Act made it possible for such takings to occur in New Hampshire because it allowed economically motivated takings in some cases.
Concurrent with the proposed amendments to the Eminent Domain Procedure Act and the Redevelopment Act, a constitutional amendment was proposed concerning eminent domain and the public use requirement.165 The new constitutional amendment to the New Hampshire Bill of Rights reads: “No part of a person’s property shall be taken for eminent domain and transferred directly or indirectly, to another person if the taking is for the purpose of private development or other private use of the party.”166 The amendment was quickly brought to the ballot for public vote: it was proposed on January 4, 2006, and put on the ballot for the November 8, 2006 elections.167 Voters passed the amendment with far more than the necessary 2/3 vote to pass a constitutional amendment: 86 percent voted to approve it.168 The amendment promises to more stringently guard the rights of private property ownership, as it does not allow any property to be taken if the intent is to benefit a private party.
D. Future New Hampshire Public Use Analysis
In order to determine how the amendment changes New Hampshire public use analysis, consider some public uses formerly questioned because the land was being given to private corporations. For instance, would a taking be allowed if the land was being used for building a turnpike road benefiting a private corporation? For building a railroad? For developing utility lines? The amendment appears to forestall these takings because in each case, the taking’s primary purpose was to give the land for private development.
Consider first the turnpike road. The land was taken from a private party, and given to a private corporation to develop a turnpike road so the corporation could make money from the tolls. The taking’s purpose was to allow private development of the land into a road for the main benefit of profit to the corporation, even if the road allowed public travel. The amendment would stop this type of public use because the primary purpose was to allow private development, and the secondary purpose was to allow public travel. Stopping this type of private-public partnership would be detrimental because the government cannot build every road, especially in a small state such as New Hampshire, where the public desires the least amount of government involvement possible, and the state does not have the equipment and manpower necessary to build every required road.
The same considerations apply for both railroads and utilities, both private corporations aiming at earning profits but serving a necessary function. Where would the state be without utilities? Or without railroads? Both enhance the public good by bringing business, development and power to the state. But under the new amendment, because it prohibits the taking of land for the purpose of private development, the state would be prohibited from making such beneficial private sector partnerships
Consider another public use New Hampshire has allowed: redevelopment. Redevelopment satisfies New Hampshire public use analysis when the purpose of the redevelopment is to rid the public of unsafe municipal conditions. Under the new amendment’s strong language, even such takings, where the purpose of the taking is to give the land to private developers who will rebuild the slum areas, would be precluded.
In order to understand the difference between current New Hampshire case law, and the new constitutional amendment which took effect December 12, 2006,169 but which has yet to be interpreted, let us consider the new analysis as applied to a redevelopment case already decided in New Hampshire. The taking at issue in Anderson v. McCann involved the Manchester Housing Authority taking slum land in the city and giving it to private developers in order to build a hotel, retail mall, and underground parking facility.170 Anderson considered the validity of the public use behind the taking because the land was being sold to private corporations to build private facilities under exceedingly advantageous contract terms.171 The Anderson Court held that redeveloping slum land to remove dangerous road conditions, employ hundreds of persons and increase tax revenues for the city was a valid public use.172 The public benefits to be gained in the redevelopment greatly outweighed the social costs involved, so that the redevelopment was a valid public use despite the fact that the property was sold to private developers. 173
Under the recently passed amendment, Anderson-type takings are forbidden. Despite the public benefits from the taking, the fact that the sole reason the land was taken was to sell it to a private developer for redevelopment would be enough to stop the project and its public benefits. Even if slum conditions existed, the city would be unable to sell the taken land to private developers to clear the area and promote the public welfare by building clean, and safe housing. It is to the public benefit that cities can work with private developers since the cities often lack the resources and ability to carry out such comprehensive and necessary redevelopment plans like the one in Anderson.
Eminent domain is essential to government functioning, but it requires limitations in order to protect the delicate balance between private property ownership and public needs. In Kelo the scales tipped too far in favor of the government. In response, the states hurried to protect private property rights and restore the balance. However, sometimes such hastily enacted legislation proves as harmful as the Court interpretation it intended to rescind.
New Hampshire’s new amendment is an example of hastily enacted legislation. Part 1, Article 12-a reins in the government’s eminent domain power. Unfortunately, this response to Kelo, with its exceedingly broad public use analysis that tips the scales too far in favor of the government, the amendment pushes the balance too far in the opposite direction. Eminent domain sometimes requires the government to partner with private companies to get the job done, but the amendment stops such takings and precludes the public benefits that might have followed. In the end, the amendment was an unnecessary step because New Hampshire case law already protects private property rights more stringently than the analysis provided by the United States Supreme Court under the public use requirement.
Instead of hastily acting, the legislature could have, and should have, waited for its own Court to analyze an attempted Kelo-type taking under New Hampshire law. Both the historical and modern lines of analysis strongly suggest that New Hampshire’s Court would have invalidated such a taking. Unfortunately, the legislature did not wait, and the resulting constitutional amendment may have gone too far in restricting the government’s ability to exercise its eminent domain power. Only time and experience will determine whether the amendment too greatly impairs the state’s ability to rebuild economically struggling communities.
1. Kelo v. New London, 545 U.S. 469, 475-476 (2005).
2. Freedom is exceedingly important to the citizens of New Hampshire. This is nowhere as evident as in the New Hampshire Bill of Rights, which contains 37 articles protecting numerous private rights.
3. Freestar Media, Press Release, Monday June 27, 2006, http://www.freestartmedia.com/hotellostliberty2.html (Accessed Feb. 27, 2007).
4. N.H. Rev. Stat. Ann. § 498-A(2006).
5. N.H. Rev. Stat. Ann. § 205 (2006).
6. Jennifer Nedelsky, Private Property and the Limits of American Constitutionalism: The Madisonian Framework and Its Legacy 207-208 (University of Chicago Press 1990) (Security in private property ownership provides protection for liberties because it defines the line between what the state may control and touch, and what the state must leave alone. Private property is also a concrete means of controlling your life and expressing yourself.)
7. Christian M. Orme, Student Author, Kelo v. New London: An Opportunity Lost to Rehabilitate the Takings Clause, 6 Nev. L. J. 272, 272 (2005) (Although it is necessary to take land for the needs of society, the power of eminent domain conflicts with the fundamental right of private property ownership.)
8. U.S. Const. amend. V, Public Use Clause and Just Compensation Clause “nor shall private property be taken for public use without just compensation.”
9. Richard A. Epstein, Takings: Private Property and the Power of Eminent Domain 108 (Harvard University Press 1985).
10. Kohl v. United States, 91 U.S. 367, 371 (1876) (stating that it has never been seriously contended that the power of the U.S. government does not include eminent domain because that power is essential to the independent existence and operation of the government); see also Jacques B. Gelin and David W. Miller, Federal Law of Eminent Domain 2 (Michie Company 1982).
11. Gelin, Federal Law at 2.
12. Henry E. Mills, A Treatise Upon the Law of Eminent Domain 1 (Fred B. Rothman and Co. 1982) (originally published 1879) (Mills wrote that in 1879 there were seven such powers. However, the modern conception of the inherent powers of government construes the powers more narrowly so that several of Mills’ powers are grouped together into the three modern powers.)
13. Id. at 2.
15. Id. at 1,2.
16. Epstein, Takings at 111.
18. Mills, A Treatise at 7.
20. Id. at 1.
21. Kohl, 91 U.S. at 371.
22. U.S. Const., amend. V, Public Use Clause and Just Compensation Clause “nor shall private property be taken for public use without just compensation.”
23. Mills, A Treatise at 24.
24. Nichols on Eminent Domain, vol. 2A, § 7.02(3) (Matthew Bender 2006).
25. Jan G. Laitos, Law of Property Rights Protection: Limitations on Governmental Powers, § 12.02[B], 12-6 (Aspen Publishers 2001 and Supp. 2007); see also, Mills, A Treatise at 12.
26. Gelin, Federal Law at 15-16.
27. Laitos, Law of Property at 12-5.
28. Nichols on Eminent Domain, vol. 2A, § 7.01(8) (Matthew Bender 2006).
29. Gelin, Federal Law at 5.
33. Gelin, Federal Law at 16, 18 (stating that the power must be delegated to subsidiary political bodies in order to be exercised by them, and that “there is no limitation on the entity to which the delegation may be made so long as the power is exercised for a public use.”); see also Mills, A Treatise at 79 (stating that the sovereign must act through its agents to use eminent domain power).
34. Peter J. Loughlin, New Hampshire Practice Series, vol. 14, § 816 (Lexis 2004).
35. Kristi M. Burkard, Current Public Law and Policy Issues: No More Government Theft of Property! A Call to Return to a Heightened Standard of Review After the United States Supreme Court Decision in Kelo v. City of New London, 27. Hamline J. Pub L. & Pol’y 115, 122, n. 25 (2005).
36. Kohl, 91 U.S. at 373.
37. Id. at 374-375.
38. Id. at 371.
39. Id. at 374-375.
40. Id. at 371.
41. Burkard, Current Public Law at 122.
42. The Mills Acts were first enacted to allow riparian mill owners to flood land of their neighbors without consent in order to provide necessary grist mills. Later in the 19th century, the same Mills Acts allowed riparian commercial corporations to flood land of their neighbors without consent in order to put up textile mills.
43. Kelo, 545 U.S. at 513-514 (Thomas, J., dissenting).
47. Fallbrook Irrigation Dist. v. Bradley, 164 U.S. 112 (1896).
48. Id. at 151.
49. Id. at 157-158.
50. Id. at 163-164.
51. Id. at 160-161.
52. Clark v. Nash, 198 U.S. 361, 367-368 (1905).
54. Strickley v. Highland Boy Gold Min. Co., 200 U.S. 527, 529-530 (1906).
56. See e.g. Kelo, 545 U.S. at 478-479.
57. United States v. Gettysburg Electric Railway Co., 160 U.S. 668, 681-682 (1896).
58. Id. at 682-683.
59. Id. at 680-681.
60. Kelo, 545 U.S. at 513-514 (Thomas, J., dissenting).
62. Brett D. Liles, Reconsidering Poletown: In the Wake of Kelo, States Should Move To Restore Private Property Rights, 48 Ariz. L. Rev. 369, 370 (2006).
63. See e.g. Appeal of Cheney, 130 N.H. 589, 595 (1988) (summarily stating redevelopment has already been declared a public use, so unless the plaintiff can show otherwise, it is a public use in this case as well).
64. Berman v. Parker, 348 U.S. 26, 32-33 (1954) (defining blight as miserable and disreputable housing conditions which are an ugly sore on the community; ruining it the way an open sewer ruins a river).
65. Id. at 28-29.
66. Id. at 32-33.
69. Id. at 33-34.
70. HI Housing Authority v. Midkiff, 467 U.S. 229, 232-233 (1984).
72. Id. at 240-241.
73. Id. at 242-243.
74. Id. at 244.
75. Kelo, 545 U.S. at 497-498 (O’Connor, J. dissenting).
77. Kelo, 545 U.S. at 483-484.
78. Id. at 485-486.
79. Id. at 472-473.
86. Id. at 473-474.
91. Id. at 482-483.
93. Id. at 473-474.
94. Id. at 478-479.
95. Id. at 484-485.
98. Berman’s public use.
99. Midkiff’s public use.
100. Kelo, 545 U.S. at 484-485.
101. Id. at 488-489 (“We emphasize that nothing in our opinion precludes any states from placing further restrictions on its exercise of the takings power.”)
102. Kelo, 545 U.S. at 494-495 (O’Connor, J. dissenting).
103. Id. at 497-498.
104. Id. at 499-500.
105. Id. at 501-502.
106. Kelo, 545 U.S. at 514-515 (Thomas, J., dissenting).
107. Id. at 518-519.
108. Id. at 509-510.
109. Wikipedia, Kelo v. City of New London, http://en/wikipedia.org/wiki/Kelo_v._New-London, (Accessed March 19, 2007) (In fact, most people saw Kelo from the dissent position and felt that it was a taking for private purposes.)
110. Timothy Sandefur, The Backlash So Far: Will Americans Get Meaningful Eminent Domain Reform?, 2006 Mich. St. L. Rev 709, 711 (2006).
112. National Conference of State Legislatures, Eminent Domain, 2006 State Legislation, http://www.ncsl.org/programs/natres/emindomainleg06.htm (Accessed March 19, 2007) (detailing different action taken by state legislatures in response to Kelo, listing also: 24 states adopted statutory amendments; 4 states proposed constitutional amendments; and 2 states proposed statutory amendments later vetoed).
113. Garry Rayno, State House Dome: Eminent Domain, House Districts on Ballot, Union Leader (Oct. 8, 2006).
114. See N.H. Sen. 287-FN, 159th Leg., 2d Year (January 4, 2006) (proposed on the floor 1/4/2006 and signed by the governor 6/23/06).
115. See N.H. H. CACR30, 159th Leg., 2d Year (January 4, 2006) (proposing constitutional amendment to add art. XII-a to the N.H. Constitution Part 1st after art. XII, proposed on the floor 1/4/06 and passed by public vote on 11/7/06).
116. 17 N.H. 47, 56-57 (1845).
117. 35 N.H. 134, 140-141 (1857).
119. 47 N.H. 444, 460-461 (1867).
120. Fernald, 47 N.H. at 461.
121. Id., 47 N.H. at 461.
122. 72 N.H. 531, 536-537 (1904).
126. 72 N.H. 531, 536-537 (1904).
128. Velishka v. City of Nashua and Nashua Housing Authority, 99 N.H. 161, 166-167 (1954).
129. Id. at 165.
130. Id. at 164-165.
132. Id. at 166.
133. Id. at 166-167.
134. Berman, 348 U.S. at 32-33.
135. Id. at 33-34.
137. As early as 1817, in Trustees of Dartmouth v. Woodward, New Hampshire adopted a policy of deference to the legislature in public use cases. 1 N.H. 111, 114 (1817). Unlike in the federal cases, New Hampshire refined this deference early on to make sure that the Court did not adopt a policy of blind deference. Id. Instead, the Court stated that while it is within the peculiar ability of the legislature to determine what laws are appropriate for guarding the public interest, and it is not expedient for the Court to make such determinations in the legislature’s stead, that the Court would not therefore turn a blind eye to unconstitutional action. Id at 115.
138. Rumney v. Banel, 118 N.H. 786 (1978).
139. Appeal of City of Keene, 141 N.H. 797 (1997).
140. Club Jolliet, Inc. v. Manchester, 110 N.H. 172 (1970).
141. Merrill v. Manchester was the first case to clearly set out the test in the two prong format, despite the fact that cases had long been applying the same analysis. 127 N.H. 234 (1985).
142. Merrill, 127 N.H. at 236.
143. Petition of Bianco, 114 N.H. 83, 86 (1998). .
144. Merrill, 127 N.H. at 237 (stating the balance as “the benefits of the proposed project and the benefits of the eradication of any harmful characteristics of the property in its present form reduced by the social costs of the loss of the property in its present form.”)
145. Id. at 236.
146. Id. at 238-239
147. Id. at 240.
149. Id. at 238.
153. N.H. Rev. Stat. Ann. § 498-A:1.
154. N.H. Const. pt. 1, art. XII.
155. N.H. Rev. Stat. Ann. at § 498-A:8.
156. Id. at § 498-A:4.
157. Id. at § 498-A:9-a.
158. Id. at § 498-A:11.
159. Id. at § 498-A:2.
160. Id. at § 498-A:2, VII.
162. Kelo, 545 U.S. at 483-484.
163. N.H. Rev. Stat. Ann. § 205:1.
164. N.H. Special H. Comm. To Study Eminent Domain, Final Committee Report, 159th Leg., 1st Year 1-3 (Sept. 6, 2005). In the report, the committee announced its main purpose was to ensure that Kelo-type takings would not happen in New Hampshire.
165. N.H. CACR30.
166. N.H. Const. pt. 1, art. XII-a.
167. N.H. CACR30 docket (Aug. 15, 2006), found at http://www.gencourt.state.nh.us/ie/billstatus/billdocketpwr.asp (Accessed on Feb. 27, 2007).
168. USA Today, N.H. Voters Opt to Curb Eminent Domain; Smaller House Districts Also At Stake, http://www.usatoday.com/politicselections/vote2006-11-08-initiatives_x.htm (Accessed March 19, 2007).
169. Gov. John H. Lynch, N.H. Procl. (Dec. 12, 2006) (available at http://www.sos.nh.gov/Concon%20Proclamation.pdf).
170. Anderson v. McCann, 124 N.H. 249, 250 (1983).
172. Id. at 251.