Kelo v. New London – Oral Argument – February 22, 2005

Media for Kelo v. New London

Audio Transcription for Opinion Announcement – June 23, 2005 in Kelo v. New London

del

Sandra Day O’Connor:

We will now hear argument in the case of Kelo vs. City of New London.

Mr. Bullock.

Scott G. Bullock:

Justice O’Connor, and may it please the Court:

This case is about whether there are any limits on government’s eminent domain power under the public use requirement of the Fifth Amendment.

Every home, church or corner store would produce more tax revenue and jobs if it were a Costco, a shopping mall or a private office building.

But if that’s the justification for the use of eminent domain, then any city can take property anywhere within its borders for any private use that might make more money than what is there now.

Ruth Bader Ginsburg:

Mr. Bullock, you are leaving out that New London was in a depressed economic condition, so this is distinguished from the case where the state has no particular reason for wanting this, but the critical fact on the city side, at least, is that this was a depressed community and they wanted to build it up, get more jobs.

Scott G. Bullock:

Well, Your Honor, it’s important to point out in the first place that chapter 132 of the statutory section at issue here applies to every city within the State of Connecticut, not those that are simply depressed.

And there is a fundamental difference between an area like what was at issue in Berman, an area that actually had problems and a city that has certain problems.

Every city has problems.

Every city would like to have more tax revenue, but that cannot be a justification for taking property–

Ruth Bader Ginsburg:

But you concede that on the facts, more than tax revenue was at stake.

That is, the community had gone down and down and the town wanted to build it up.

Scott G. Bullock:

–It is a desire to try to improve the economy through tax revenue and jobs.

That is certainly the case.

But that cannot be a justification for the use of eminent domain because if the trickle down effects of economic development are a justification, then there really is no limit on the–

Antonin Scalia:

You don’t concede, or do you, that elevating a city from a depressed to prosperous is a better justification than elevating a city from prosperous to more prosperous?

Scott G. Bullock:

–That is not… that is correct, Your Honor.

We do not concede that.

And chapter 132 again applies to not so prosperous cities and prosperous cities.

Ruth Bader Ginsburg:

The line you draw is between blight, which Berman says was a legitmate public use, blighted conditions okay, but depressed conditions, not so that’s the line we would draw–

Scott G. Bullock:

Yes, Your Honor.

We think that that is a line that this Court has drawn that is area specific that focuses on the conditions in a particular area.

And the condemnations in Berman removed the problematic areas.

It removed the blight.

Sandra Day O’Connor:

Oh, but Berman spoke, in the opinion, said that the determination of the legislature about these things is virtually conclusive, that there is only the narrowest, narrowest role for the judiciary.

What kind of standard are you proposing we should get into here to second guess the public use aspect?

Scott G. Bullock:

Your Honor, it is clear that eminent domain power is broad, but there has to be limits, and that’s what we are really talking about here.

Sandra Day O’Connor:

Well, have we ever in any case from this Court said that the limit has been exceeded?

Scott G. Bullock:

In a few cases from earlier in this century, Your Honor, the Missouri Pacific case, the Thompson versus Consolidated Gas case, but this Court has recognized for over 200 years that there are limits on eminent domain power, that they cannot be used for private takings.

Scott G. Bullock:

And that has been a consistent strain throughout this Court’s jurisprudence–

Stephen G. Breyer:

Justice Douglas says there that as long as it’s an objective within Congress and legislature’s legitimate grant of power, they can do it, I mean, as long as there’s a… so why does there have to be a limit within that broad limit?

Scott G. Bullock:

–Well, Your Honor, the limit is that there cannot be takings for private use.

Stephen G. Breyer:

Of course, there can’t, purely.

But there is no taking for private use that you could imagine in reality that wouldn’t also have a public benefit of some kind, whether it’s increasing jobs or increasing taxes, et cetera.

That’s a fact of the world.

And so given that fact of the world, that is law, why shouldn’t the law say, okay, virtually every taking is all right, as long as there is some public benefit which there always is and it’s up to the legislature.

Scott G. Bullock:

Your Honor, we think that that cuts way too broadly.

Stephen G. Breyer:

Because?

Scott G. Bullock:

Because then every property, every home, every business can then be taken for any private use.

Stephen G. Breyer:

No.

It could only be taken if there is a public use and there almost always is.

Now, do you agree with that, or do you not agree with my last empirical statement?

Scott G. Bullock:

Well, again, the eminent domain power is broad, but there has to be limits.

Stephen G. Breyer:

Now, that’s, of course, my question.

The question is, if you agree with the empirical statement that there almost always is some public benefit attached, then my question is, why must there be a limit within that broad framework?

Scott G. Bullock:

Well, Your Honor, I think with public… with just having a simple public benefit, then there really is no distinction between public and private uses.

And that is what we call upon this Court to state, for instance, in the Berman case and in the Midkiff case, which we think are really the outer limits of government’s eminent domain–

Sandra Day O’Connor:

But do you think those were correctly decided or do you take issue with the decision in those two cases?

Scott G. Bullock:

–We think that those decisions can be consistent with ruling in favor of Petitioners in this particular case, Your Honor, because–

Sandra Day O’Connor:

But you take the position that a city that is suffering from enormous lack of jobs and depression, economic depression, that there is no public use purpose for taking land to enable the creation of jobs?

Scott G. Bullock:

–That is correct, Your Honor.

We do not–

David H. Souter:

Well, let’s assume that the city instead of taking the property by eminent domain simply used its, its own… some of its own regular tax income to buy up the property, and assembled parcels of land with the purpose of selling them to an industrial developer to raise the tax base and hence ultimately to raise taxes.

Would you say just within the meaning of general understanding of proper governmental purposes that the city was acting in a way that had no legitimate public purpose?

Scott G. Bullock:

–Well, Your Honor, I think the question goes to whether or not the government could use its police power to acquire property and then sell it to a private developer.

David H. Souter:

Well, I’m not interested in the label.

I’m just saying if the government says we need to increase the tax base because we have a depressed city, so we are going to take some of our tax money now, and we are just going to buy up property that people are willing to sell to us, and we are going to assemble parcels.

And when we get a big enough one, we are going to sell them to a developer for industrial purposes.

And that will, that will raise the tax base.

David H. Souter:

Is there anything illegitimate as a purpose for governmental spending in doing that?

Scott G. Bullock:

No, Your Honor.

We do not believe that that would be… it’s not a public use.

David H. Souter:

Why isn’t there a public purpose here?

Scott G. Bullock:

Well, Your Honor, because this case affects the eminent domain power, which is regulated by the Fifth Amendment–

David H. Souter:

No, but we are talking about… I mean, I realize that, but I mean, I thought your point was that it was use of eminent domain power for an improper purpose.

And you characterize that purpose as conveying property to private owners.

Well, in my example, the same thing is going on except that it’s not using the eminent domain power.

If the purpose in my example is a proper public purpose, why isn’t it a proper public purpose when the government does it by eminent domain?

What changes about the purpose?

Scott G. Bullock:

–Your Honor, because of the public use restriction of the Amendment.

That’s what we really–

Antonin Scalia:

Mr. Bullock, do you equate purpose with use?

Are the two terms the same?

Does the public use requirement mean nothing more than that it have a public purpose?

Scott G. Bullock:

–No, Your Honor.

Antonin Scalia:

That’s your answer to Justice Souter.

David H. Souter:

But if that is your answer then the slum clearance cases have got to go the other way.

Scott G. Bullock:

I’m sorry–

David H. Souter:

If that is your answer, then I suppose the slum clearance cases were wrongly decided.

Scott G. Bullock:

–Well, your Honor, this Court did hold in Berman and Midkiff that the police power and eminent domain power are coterminous.

That was a holding especially of this Court’s opinion in Midkiff.

And there are certain amici that have been filed in this case, amicus briefs filed in this case that have called upon this Court to reexamine that.

And of course, this Court is free to do that.

David H. Souter:

But you are saying we don’t have to reexamine it, but I think your adoption of Justice Scalia’s approach puts you in a difficult… I think you’re moving in the direction of saying we really have got to overrule the prior cases.

Scott G. Bullock:

Your Honor, I think under a… perhaps an original understanding of the takings clause, there was a difference between public use and public domain.

David H. Souter:

Just for the moment, what about my question?

And you can get into history, if you want to, and I tend to be interested in that, but my immediate concern is, if you give the answer that you have just given, doesn’t it jeopardize the precedent of the slum clearance cases?

Scott G. Bullock:

Your Honor, I don’t think so, because of the caveat in Berman and Midkiff that eminent domain cannot be used for private uses.

And that is what is really at issue here.

Scott G. Bullock:

What I think is the focus of–

Anthony M. Kennedy:

But that’s what they were being used for in Berman and… everybody knows that private developers were the beneficiaries in Berman.

Scott G. Bullock:

–Your Honor, I believe the justifications focused upon the removal of the offensive conditions in Berman, that the public purpose, if you want to call it that, was served once the blight was removed, the public purpose was served once the oligopoly was broken up.

Anthony M. Kennedy:

As I understand, you’re testing… you want me to make a distinction between blight which is a permissible governmental use, governmental objective and economic revival, which isn’t?

Scott G. Bullock:

Under the eminent domain authority, Your Honor, we think that–

Anthony M. Kennedy:

Is that the line you want me to draw.

Scott G. Bullock:

–Yes.

And we think that that is a line–

Anthony M. Kennedy:

Well, suppose an economist or even the judge might say, well, it’s very clear that if this economic depression continues for another five years we are going to have blight.

Blight is in the eye of the beholder, I know that.

Scott G. Bullock:

–Exactly.

And I think that that is really one of the dangers of the majority opinion here is that it puts any property up for grabs.

Under the blight statutes, they actually have to… governments have to meet a certain objective criteria to satisfy that this is actually a blighted area.

Anthony M. Kennedy:

Why isn’t it an objective criteria to say that we are going to have economic revival, avoid economic downturns?

Scott G. Bullock:

Well, Your Honor, because, I think… to get back to the decisions in Berman and Midkiff, what this Court I think focused on there is that the public use or the public purpose was direct and immediate.

It was served directly by the condemnations and it was immediately served by the removal of the blight and the breaking up of the oligopoly.

In economic development condemnations, the only public benefits that come about, if they come about at all, are completely dependent upon private parties actually making a profit.

And that those profits then somehow–

Anthony M. Kennedy:

That’s the same thing that is true in the railroads in the west.

Scott G. Bullock:

–But–

Anthony M. Kennedy:

Precisely the description you gave applied to the railroads in the west.

Scott G. Bullock:

–Well, Your Honor, those were justified under I think the line of cases that held that those were really essential for land assembly for instrumentalities of commerce.

They were–

Stephen G. Breyer:

And this seems to be really essential for the purpose of developing industrial property to increase the tax base.

The argument is, and I don’t know of any reason to doubt it, that doing it seriatim by voluntary acquisition and sale doesn’t work.

So the rationale for this is essentially the rationale for the railroads, for the public utility line condemnations and so on.

There isn’t another practical way to do it.

And there is a public benefit at the end, and that ought to qualify it as a public use.

Scott G. Bullock:

–Your Honor, there are many ways to do economic development without condemnation.

It happens every single day in this country.

Scott G. Bullock:

And in the states that prohibit the use of eminent domain simply for private business development, those states do make the distinction between blighted areas and simply their communities wanting to take advantage of more tax revenue.

Ruth Bader Ginsburg:

–Even though in Berman, there was a department store that was not blighted, and it was permissible because the whole area was to be improved to raze that department store, even though it wasn’t contributing in any way to blight.

Scott G. Bullock:

Yes, Your Honor.

But the Court in Berman held that there were certain properties that even though they might have been nonblighted, it was essential to have those properties in order to remove the blight from the area that was at issue.

So there was the ability of government to get certain properties even though they might have been nonblighted.

Here–

Sandra Day O’Connor:

Mr. Bullock, would you articulate the test that you would propose the Court adopt.

Some amici and others have argued that we should use the substantially advances test, so called test from regulatory takings.

What tests do you articulate?

Scott G. Bullock:

–Well, for our bright line rule, Your Honor.

Sandra Day O’Connor:

Yes.

Scott G. Bullock:

The test should be that the government cannot take property simply so that the new owners can put it to ordinary private uses of land.

That’s really the test.

And the–

Sandra Day O’Connor:

Well, that’s not what’s asserted here, of course.

Here the city says, we are doing this for purposes of enhancing economic development of a very poor city.

Scott G. Bullock:

–True, Your Honor, but–

Sandra Day O’Connor:

So what do we do with that alleged purpose?

What is your test?

Scott G. Bullock:

–Well, the test, Your Honor, for–

Sandra Day O’Connor:

Is it no economic development purpose?

Scott G. Bullock:

–Yes.

Yes.

When it’s only justified in order to gain the secondary benefits from ordinary private uses of land, and the way that businesses always make use of their land to try to make money or to try to make a profit.

That’s our bright line rule.

But for our second test, if this Court accepts that economic development can be a public use, then we advocate a test of reasonably foreseeable uses and minimum standards in order to counter the dangers posed by such private involvement in the use of eminent domain power.

Stephen G. Breyer:

The latter.

I mean, I understand the former.

That’s a big retreat and it comes to me now you’re getting to what I think is a possible realm of reason here.

But the second part now you said and minimum standards.

Stephen G. Breyer:

What minimum standards?

Scott G. Bullock:

Well, the dissent in the Connecticut Supreme Court talked a lot about minimum standards that should be in place in order to ensure that public benefits actually come about.

Those could be such things as a commencement date for the project, a construction schedule, financial eligibility for the developers, there’s a number of different things.

Stephen G. Breyer:

No, I mean, are you advocating particular ones?

Scott G. Bullock:

Not particular ones, just the standard actually be in place and we think that the dissent provides some good guide posts for establishing–

Antonin Scalia:

Isn’t that in effect changing the test from public use to efficient public use?

I mean, what’s… you know, if I condemn land for a public utility and the public utility turns out to be very inefficient, has the condemnation been invalid?

Scott G. Bullock:

–No.

Your Honor.

Antonin Scalia:

Do you want us to sit here and evaluate the prospects of each condemnation one by one?

Scott G. Bullock:

No, Your Honor, what we are advocating for, and utilities of course are justified, have long been justified under a separate line of cases, common carrier regulations.

But what we are talking about are certain minimum standards in place at the time of condemnation to try to have some type of reasonable certainty that the public benefits are to come about so we are not talking about ongoing oversight.

We are simply talking about minimum standards at the time of the, at the time of the condemnation.

David H. Souter:

I take it there isn’t, but maybe there is, there isn’t any question in this case that the city was acting in good faith and did… and I presume still does… intend to convey it to developers who will, will actually proceed to develop a project.

Is there a question about that?

Scott G. Bullock:

A question of whether or not the procedure–

David H. Souter:

Yeah, in other words, I can understand perfectly well, why we would want to draw a distinction between the use of the eminent domain power that takes a parcel of property from private person A and simply then reconveys it to private person B without any particular object in mind except that the city likes B, you know, the mayor is a Democrat and B is a Democrat.

That kind of thing.

So I can understand the need for some distinction between that case and what we’ve got here.

The question is when you say there have to be minimum standards, I guess, is do we have a problem historically or in this case about the good faith of the taking so that we need the minimum standards to make sure that we are not getting into the first example?

Scott G. Bullock:

–Yes, Your Honor.

And there is a number of reasons why there has to be reasonably foreseeable uses–

David H. Souter:

Is there a reason in this case?

Is there some doubt here?

Scott G. Bullock:

–Well, it goes to the doubt about whether or not the public benefits will actually come about in this case.

The takings here are really for speculative purposes, pure speculative purposes.

And that’s where the minimum standards come into play to ensure–

Sandra Day O’Connor:

But do you really want courts to be in the business of trying to weigh the evidence to see if the utility will be successful or the hospital will be successful or the road will be well constructed?

I mean, what kind of a test are you proposing?

Scott G. Bullock:

–Your Honor, our test is limited really to the condemnations that are completely dependent upon the private businesses actually being successful, and that those benefits coming about so it would not affect utilities or anything like that.

Scott G. Bullock:

But at a minimum, this Court should require that the government actually name a use.

Sandra Day O’Connor:

Does the record tell us anything about how often takings by eminent domain for economic development occur in this country?

Is it frequent?

What are we dealing with?

Scott G. Bullock:

It is, it is frequent, Your Honor.

There’s no… we do not know of any study that looks specifically at condemnations for economic development, but after the Michigan court’s decision in Poletown, they became commonplace.

And you had properties… business that were being condemned for casinos, other homes that were taken for automobile manufacturers.

And the Michigan Supreme Court saw that as a disaster.

And overturned that.

Anthony M. Kennedy:

In all of those cases, I think the economic feasibility or economic success test would have been easily met.

I mean, what you’re doing is trying to protect some economic value/But I think it’s pretty clear that most economists would say this development wouldn’t happen unless there is a foreseeable chance of success.

Let me ask you this, and it’s a little opposite of the particular question presented.

Are there any writings or scholarship that indicates that when you have property being taken from one private person ultimately to go to another private person, that what we ought to do is to adjust the measure of compensation, so that the owner… the condemnee… can receive some sort of a premium for the development?

Scott G. Bullock:

There may be some scholarship about that.

This Court has consistently held that the property owner is simply entitled to just compensation of the appraised value of the property.

Of course, the property owner–

Anthony M. Kennedy:

And you have to prescind the project when you fix the value.

Scott G. Bullock:

–I’m sorry?

Anthony M. Kennedy:

You have to prescind the project… you have to… you have to ignore the project when you determine the value.

The value is a willing buyer and a willing seller, without reference to the project.

Scott G. Bullock:

Yes, that is right.

And so they simply get the–

Anthony M. Kennedy:

But what I am asking is if there has been any scholarship to indicate that maybe that compensation measure ought to be adjusted when A is losing property for the economic benefit of B.

Scott G. Bullock:

–I believe there has been some scholarship about it, but we think it’s vital that there be a public use requirement.

Stephen G. Breyer:

Can I ask you about the standard.

Go back for a second.

Scott G. Bullock:

Yes.

Stephen G. Breyer:

I gather that the Iowa courts have a standard that includes whether there is a reasonable likelihood that the intended public use will take place.

Now, is that the standard you’re advocating?

Scott G. Bullock:

It’s similar to our reasonable foreseeability test that we set forth in our brief that this Court actually talked about in the Vester case as well, and a number of the other state cases that are cited in our brief that establish that there has to be a use for the property and that that use has to be reasonably perceived.

Stephen G. Breyer:

Is there a lot of disagreement about this?

Scott G. Bullock:

No, there’s not.

Stephen G. Breyer:

I mean, it seems to me you might… whether there is a reasonable assurance that there will in fact be the public use which the state uses as the justification for taking the property.

Is that going to help you that much?

Scott G. Bullock:

I think it will provide important minimal standards of protection for–

Stephen G. Breyer:

Well, I mean, I don’t see how this Court could get into the business of saying you have to have this by a particular day or you have to have 14 witnesses.

I mean, we couldn’t impose that sort of thing, could we?

Scott G. Bullock:

–Your Honor, I think just the standard needs to be in place.

Stephen G. Breyer:

There needs to be a reasonable assurance.

Scott G. Bullock:

Exactly.

Or at the very least, a reasonable foreseeability as well, which is at a minimum that is not even in place in this particular case.

And the majority of state courts that have looked at this, that is a–

Stephen G. Breyer:

Well, they might well need it here.

Scott G. Bullock:

–Not in this case, Your Honor.

Ruth Bader Ginsburg:

But do you do that area by area?

I mean, one of the points you made, this is divided into what, seven areas?

Scott G. Bullock:

Right.

Sandra Day O’Connor:

And there’s some scheduled to be developed first, you say that your clients lived in parcels that are not likely to be developed soon, if at all.

So when making this determination, is development reasonably likely, do you have to do it parcel by parcel or can it be with the whole–

Scott G. Bullock:

No, Your Honor.

We believe it should be done where the property is actually being condemned.

And we think that that is the proper–

Ruth Bader Ginsburg:

So it’s not the area development but this house, will there be… is it reasonably likely that there will be development in that particular plot.

Scott G. Bullock:

–In this particular parcel, that is correct, Your Honor, and that has been supported by really just about every condemnation decision–

David H. Souter:

Let me ask you, I’m sorry, I’ll make this a quick question.

Why do you think it is necessary, given your position, why do you think it’s necessary to adopt the test you’ve just articulated as distinct simply from a good faith requirement.

So that if somebody objected and offered to prove bad faith, that would be in effect a defense for the taking?

Scott G. Bullock:

–Your Honor, because that does not really provide any protection to property owners.

The intent to benefit a private party, and the intent to benefit the public are really one and the same in these types of condemnations.

And we believe it is imperative at a minimum because the condemnations are dependent upon private parties even being successful that there has to be reasonable foreseeable uses.

Scott G. Bullock:

And also, if this Court so chooses, minimum standards in place to ensure that those benefits actually go to the public.

I would like to reserve the remainder of my time.

Sandra Day O’Connor:

–Very well.

Mr. Horton.

Wesley W. Horton:

Justice O’Connor, and may it please the Court: The principal purpose of the takings clause is to provide for just compensation.

Now, I want to very briefly state two reasons why you do not want to make a–

Sandra Day O’Connor:

Well, but it has to be for a valid public use.

Wesley W. Horton:

–Yes, it does, Your Honor.

Sandra Day O’Connor:

Okay.

Wesley W. Horton:

I completely agree with that, but if the primary purpose of the takings clause is not to regulate legislative determinations of that, but it seems to me that what the opposition is asking for is two tests.

One for Berman and Midkiff and National Railroad, and another test for Kelo.

There is no principle basis for a court to make what is really a value judgment about whether a long term plan to revive an economically depressed city is a public use of a higher or lower rank constitutionally–

Stephen G. Breyer:

But he doesn’t… he doesn’t, his second test does not adopt that.

The second test which he was arguing at the end is just that there has to be a reasonable assurance that the public use, and it could include all those things, will in fact take place.

Wesley W. Horton:

–Yes, Justice Breyer.

And I noted his remark because that’s actually in concession because that’s the test the Connecticut Supreme Court imposed.

And they have–

Stephen G. Breyer:

That may be, but what do you think of that test?

Wesley W. Horton:

–I don’t, I don’t agree.

I don’t think it’s necessary to do that, because if you have that test, you have to say, well, what do I do about, about other areas than this.

Berman is an excellent example of that, because as Justice Ginsburg said, Mr. Berman’s property was not blighted.

You needed to take Mr. Berman’s property in order for the economic development that was going to occur later on.

And the question is, was it reasonably assured that the economic development… in fact, some of the other side’s amicus briefs say that that worked out terribly down there, and all it was was discriminating against the poor and, and poverty stricken people and it didn’t accomplish any goal–

Antonin Scalia:

Mr. Horton, what, what difference does it make that, that New London was in an economic depression?

Would it not be fully as much, under your theory of a public use, for a city to say, yes, we are not doing badly, but we could do better.

Let’s attract some high tech industry here.

You can’t possibly draw a line between depressed cities and undepressed cities, can you?

Wesley W. Horton:

–I would not draw a line.

Antonin Scalia:

You wouldn’t.

And you wouldn’t ask us to do it either.

Wesley W. Horton:

I would not ask… I have a backup argument that you do not need to reach that issue here in light of the facts of this case.

But I… to be candid with you, my view is that the test you have is… there is no principle–

Antonin Scalia:

Any city can do it.

And in the hypothetical that Justice Souter gave earlier where, you know, you couldn’t take it from A and give it to B, because B is a good Democrat, you could take it from A and give it to B if B is richer, and would pay higher municipal taxes, couldn’t you?

Wesley W. Horton:

–Yes, Your Honor.

But I have a caveat on that.

If you’re talking about one property, you’re very likely to have a Willowbrook versus Oleck problem about discrimination, you know, intentional discrimination against somebody else’s property.

Antonin Scalia:

No.

I just want to take property from people who are paying less taxes and give it to people who are paying more taxes.

That would be a public use, wouldn’t it?

Sandra Day O’Connor:

For example, Motel 6 and the city thinks, well, if we had a Ritz-Carlton, we would have higher taxes.

Now, is that okay?

Wesley W. Horton:

Yes, Your Honor.

That would be okay.

I… because otherwise you’re in the position of drawing the line.

I mean, there is, there is a limit.

I mean–

Anthony M. Kennedy:

Well, if that, if that’s so then the occasional statements that we see in the writing that you can’t take from A to give to B is just wrong?

Wesley W. Horton:

–No.

I don’t agree with that.

A good example is… well, there is Missouri Pacific.

Anthony M. Kennedy:

You think you can’t take from A to give to B, that there is some substance and force to that proposition?

Wesley W. Horton:

There is some force to it.

I certainly wouldn’t–

Antonin Scalia:

Let me qualify it.

You can take from A to give to B if B pays more taxes?

Wesley W. Horton:

–If it’s a significant amount.

Obviously, there is a cost–

Antonin Scalia:

I’ll accept that.

You can take from A and give to B if B pays significantly more taxes.

Wesley W. Horton:

–With that–

Antonin Scalia:

You accept that as a proposition?

Wesley W. Horton:

–I do, Your Honor.

Anthony M. Kennedy:

But without the addition, I’d please like an answer to your question.

Wesley W. Horton:

I’m sorry.

Anthony M. Kennedy:

There are statements in our cases that say you cannot take from A just to give to B.

Wesley W. Horton:

Yes.

Anthony M. Kennedy:

Do you agree that there is substance to that proposition and that that proposition is correct?

Wesley W. Horton:

Yes, Your Honor.

I do.

And to–

Anthony M. Kennedy:

But isn’t that exactly what happened in Berman?

Wesley W. Horton:

–Your Honor, in Berman, the… what has–

Anthony M. Kennedy:

Isn’t that exactly what always happens unless it’s for a firehouse or a school?

Wesley W. Horton:

–Your Honor, my position is that purely taking from one person to give to another that shows no public benefit other than just giving from… taking from one person to another would not be a public use.

A good example is the Missouri Pacific case.

The one case in 200 years of this Court’s jurisprudence where you have, in fact, struck such a taking that was not a regulatory taking.

I would also point out that there are a few cases around the country where it does not include Justice Scalia’s hypothetical about additional taxes.

An excellent example of that is the case the other side has cited from New Jersey.

Casino Properties versus Bannon, where the Trump Association just wanted a parking lot that was next door.

There was no assembly problem.

No problem putting small parcels together.

There was no talk in the case about taxes or more taxes or more jobs or anything.

It… the trial judge there didn’t say it was just for a public purpose… a private purpose, but he said it was overwhelmingly just for the Trump organization’s… so, I mean, if you include Justice Scalia’s hypothetical about more taxes, then I say that’s sufficient, as long as you get over–

Ruth Bader Ginsburg:

Is that what the Connecticut Supreme Court that we are reviewing said, you… you are arguing, it seems to me, for something that goes beyond what was adjudicated in this case.

I mean–

Wesley W. Horton:

–Yes.

Ruth Bader Ginsburg:

–It was a finding, a finding before to be a fact in the trial court that this development was going to be primarily for the benefit of the citizens of New London, and not for the benefit of Pfizer or the private developer.

Wesley W. Horton:

Yes, Your Honor.

I agree with that and that is why I say my backup position is you don’t need to determine whether you go beyond economic depression of a city in this particular case.

Antonin Scalia:

Is that a factual finding?

You consider that a factual finding?

Wesley W. Horton:

I think it’s a mixed question of fact and law–

Antonin Scalia:

Well, that this is primarily for the benefit of the city of New London, not for the benefit of a–

Wesley W. Horton:

–I consider that–

Antonin Scalia:

–In the eye of the beholder, to whom do you think this does greater benefit to, not a factual finding.

Sandra Day O’Connor:

When, when there is no condemnation to acquire property for the direct use of the public, as for a public right of way, or a utility path or something, where it’s purely economic development, is there any reason why we shouldn’t draw a clear line and say that isn’t a public purpose.

Let them go out and deal with… buy it on the market, on the open market.

What’s the matter with that?

Wesley W. Horton:

–Well, for one thing we have in this case, and this comes back to the point about this particular case, is a severe assembly problem.

We have 115 properties we are talking about on this 90-acre plot, and there is 32 acres that come from one place, from–

Sandra Day O’Connor:

Well, let’s look at the specifics here.

Pfizer is already in place.

That’s happened.

Wesley W. Horton:

–Yes, Your Honor.

Sandra Day O’Connor:

So what are these parcels of the people now before us going to be used for?

Wesley W. Horton:

Yes, Your Honor.

First of all, it’s a long range plan.

If I could have, if I could have the chart, please, if I may show you Your Honor.

The… we are out on a peninsula here, and here is Pfizer down here, which at the time of the taking was almost completed.

They moved in a month afterwards.

Up here is an old state… old fort from the 19th century that the state agreed to turn into a state park as part of an overall plan.

The overall plan is this whole thing.

Now, parcel one is going to be a hotel, is planned for a hotel.

Parcel two was planned–

Sandra Day O’Connor:

Let’s talk about the litigants.

Wesley W. Horton:

–Yes.

Sandra Day O’Connor:

Before us today.

Wesley W. Horton:

Yes.

That’s right.

Wesley W. Horton:

They are in parcel 3 and they are in parcel 4-A.

Now, the… it’s to be developed in phases.

The first phase is one and two.

The next phase is then three and four, A, and there is also a marina–

Sandra Day O’Connor:

What’s planned for 3 and 4-A?

Wesley W. Horton:

–What’s planned for 3 is that it’s going to be office space.

And the expectation is there is going to be a demand for class A office space, which is the best quality office space in this area by 2010.

And the expectation is that it will attract the sorts of offices that will feed on the Pfizer.

They spent $300 million on a site here.

In addition, I may point out, this is the Amtrak line going along here.

The only way you can get to parcels 1 and 2 is to go right by parcel 3 or go right by parcel 4-A.

This is a waste water treatment facility.

Parcel 4-A is for park support or marina support.

Now, it isn’t more definitive, but obviously, one possible use is for parking here because you’ve got a waste water treatment facility here.

You’ve got the park here.

You’ve got the marina here and you’ve got the other parcels here.

It’s not like we are talking, as in Berman, you’re talking about something that’s in the parcel.

And in Berman, they said it’s not for the court to decide where the boundary lines ought to be.

It seems to me that’s another point, Justice O’Connor.

It’s not like parcel 3 is already–

Stephen G. Breyer:

Well, can’t the courts at least… can’t the courts, could the courts… do you object to this, and I’m not advocating it, I want your reaction.

Wesley W. Horton:

–Yes, Your Honor.

Stephen G. Breyer:

Could the courts, under this clause, at least review what you’ve just said for reasonableness?

I mean, look at the reasonableness of a claim that this is for… basically for a public use.

Look at the reasonableness of the claim that we should do it this way, rather than excusing the people who don’t want to sell their houses no matter what and doing it a little bit differently.

Reasonableness is a concept that’s already in the Constitution in terms of what the legislature can do, but I’m thinking of the stronger kind of reasonableness review that you might have in an administrative action.

Now, is, Overton Park, if you want a case.

Is that a possible kind of review that you might find appropriate here?

Wesley W. Horton:

No, Your Honor, if what you’re defining as reasonableness is being higher than rational basis.

Because in that situation, you’re applying a higher standard for a taking where we are paying for it than you would be for–

Stephen G. Breyer:

Well, the reason that you would apply a somewhat higher standard is because the rational basis, with tremendous deference, applies to the power of Congress to act in an economic area in the absence of a particular constitutional provision designed to protect a minority from the actions of the majority.

And if you read that public purpose doctrine, a section here as having that in mind, you might want a somewhat higher level of review.

Now, that’s the whole thing spelled out.

I’m not advocating it.

But I am putting it forward to get… to get your reaction.

Wesley W. Horton:

–Your Honor, that same type of remark could be made about rational basis equal protection review.

Stephen G. Breyer:

Oh, and indeed with equal protection, we very often do have a somewhat higher standard of review.

Wesley W. Horton:

Ah, yes, Your Honor, but the point here is that you should not have a higher standard of review because we are paying for it.

It would be ironic to have a higher test than for example in a regulatory taking or even the same test.

You have a test in Nollan and Dolan, for example, which is an exactions case.

So that’s to say–

Antonin Scalia:

Mr. Horton, you’re paying for it, but you’re also taking property from somebody who doesn’t want to sell it.

Does that count for nothing?

Yes, you’re paying for it, but you’re giving the money to somebody who doesn’t want the money, who wants to live in the house that she’s lived in her whole life.

That counts for nothing?

Wesley W. Horton:

–No, of course not, Your Honor.

Antonin Scalia:

Well, then, let me ask… would, would the reasonableness standard, if the project is indeed reasonable, and there is genuine prospect that all of these good things that you’re talking about will happen, why wouldn’t private money come in to further the project?

Why is it necessary to condemn it if it’s so reasonable.

Why couldn’t you, you… now, you say there is a holdout for one part, parcel.

Couldn’t the city fund a private purchase of that parcel?

Say, you know, we’ll make funds available out of our general tax revenue to somebody who wants to come in and put together this system?

Of course, that person has to buy out property owners, but we’ll, we’ll give you money to buy them out at high prices.

Wesley W. Horton:

Your Honor, there are some plaintiffs who are not going to sell at any price.

They want to stay there.

You’ve got a severe assembly problem in this case and it’s not as though you can say, well, go somewhere else.

You have a situation where you’ve got the Pfizer plant that is being built there.

You’ve got the state park that’s there.

You’ve got this Naval underseas facility that just came on the market.

That’s the only place anything is going to work and it’s… and it’s five to six square miles of town.

I mean, there is no other place to go.

Ruth Bader Ginsburg:

How much, how much of this was voluntarily sold, is that correct?

Wesley W. Horton:

The large share of it was, but of course, that’s because there is always in the background the possibility of being able to condemn it.

I mean, that obviously facilitates a lot of voluntary sales.

And if, if this is not… if this is not… let me put it this way.

I mean, there is going to be a more severe holdout problem.

Stephen G. Breyer:

That may be.

Now, that’s why I’m back to reasonableness.

You see, we are told in the briefs that the people who often might hold out, might be doing so to get more money, but it might also be because they are poor, they are not well connected politically, and their only hope is to go to a court and stop this thing.

So you’d give them two weapons.

Weapon one is you have to pay them.

That’s correct.

Compensation.

And weapon two is they can put you to a test of being reasonable.

That might be quite a deferential test, so you might have every leg up.

But they at least could catch the instances where this is really not reasonable to do to them what you’re doing to them that they don’t want.

Wesley W. Horton:

I have two responses to that, Your Honor.

First of all, that applies to all sorts of takings.

If I’m building a road, let me give you an example of the Rindge case that Your Honors decided in the 1920s.

That was the road to nowhere.

It was a road that went through a farm to the county line.

And the other county had no intention at that point of building a road, but Your Honors said, well, they might get around to it at sometime so it’s a good idea to build it now.

We had a similar situation in Hartford.

There is supposed to be a ring road around Hartford, and the state condemned all this land for a ring road around Hartford.

Well, one little bit of it was done and then just this, this year, in very low print in the last page of the newspaper, we see about the state getting around to selling the land because they didn’t, they didn’t do it.

I mean, this can happen in the railroad case is a good example.

The railroad case.

The one Your Honors decided.

If it’s… being a common carrier makes all the difference, then how come the ICC just didn’t order the Boston & Maine to fix the railroad?

You know.

Why?

Wesley W. Horton:

You know, you didn’t look to make a–

Antonin Scalia:

Common carriers are subject to state regulation to a degree that private companies are not.

They must, they must treat all comers alike.

I mean, I don’t think the public utility cases are at all comparable to condemning land in order to get a new company to move in and pay more taxes.

I just don’t think it’s similar.

Wesley W. Horton:

–Well, I would like to point out that the… there is a difference, the whole point is about having a test about reasonable assurances about whether something is going to happen and that’s where the railroad case makes a difference.

Antonin Scalia:

I agree with you on that.

Wesley W. Horton:

That’s the only point I was making, Your Honor.

I didn’t mean to go further than that.

But coming back to Justice Breyer’s point, you made a point about poor people.

And I’d like to point out, unless you’re going to overrule Berman, you know, poor people and minorities are more likely to be vulnerable in the blight cases than in this case.

I mean, this is a good example.

Economic development can take place anywhere in town.

Blight happens in one area of town where the poor and the minorities are likely to live, and in fact, this very case, we have got middle class people.

There is no blight that’s been alleged in the condemnation papers.

The other thing is if you stick to blight, this is the problem you’re going to have.

You’re going to end up making a blight jurisprudence because… because what’s going to happen is the cities are going to say, we can only do this by blight, so they are going to have marginal definitions of blight.

Florida, for example, says property is blighted if it’s vacant.

Is that blight?

I mean, you’re going to have a big headache in that–

Stephen G. Breyer:

No, I’m accepting that you can’t make that kind of a distinction.

That’s where I’m focusing on a test that would possibly apply only where you transfer property from one private person to another, but still wouldn’t make those distinctions of blight or not blight.

Wesley W. Horton:

–Yes.

But I mean, the other thing is, are you going to make… would the Court make a distinction between a case where the city is doing the developing itself, and another case where the city gives it to a private person.

I’d like to point out, my client is going to keep the property.

It’s… it’s going to be leased to a developer.

It’s not going to be sold to the developer.

So I mean, if this developer builds a building on this property, and then doesn’t comply, they are in big trouble.

Anthony M. Kennedy:

It does seem ironic that 100 percent of the premium for the new development goes to the, goes to the developer and to the taxpayers and not to the property owner.

Wesley W. Horton:

Well, that’s an interesting point.

Wesley W. Horton:

A question was raised earlier about the other side about whether there should be–

Anthony M. Kennedy:

The compensation measures.

Wesley W. Horton:

–The compensation measures.

Exactly.

By the way, the answer to your question is if there is some… if there is some scholarly articles on that, I’m not aware of it either.

But I would point out that’s something, you know, in terms of social costs and things like that, that is something that this Court might or might not wish to consider in a just compensation case, but I don’t think it should affect whether you take the property or not.

It seems to me that is… I’m not taking a position on that one way or another, but it seems to me that’s… you have to assume in this case that there is going to be just compensation.

Anthony M. Kennedy:

On that point, just in Connecticut, if the property owner goes to the jury and receives more than the state offered, does the state also have to pay those attorneys’ fees?

Wesley W. Horton:

Under… under state law?

Anthony M. Kennedy:

Under Connecticut law, if the property owner is offered $100 but goes to the jury and gets $200, does the property owner have to pay the attorneys’ fees or does the state pay the attorneys’ fees?

Wesley W. Horton:

The state does not pay attorneys’ fees, Your Honor.

Everybody pays his own attorneys’… and likewise, the other way, if it’s lower amount than what was put in than, you know, it’s not as though the state gets attorneys’ fees back.

It works both ways.

David H. Souter:

Mr. Horton, what do you think is the reason that there are not a lot of examples of the sort that I think one of Justice O’Connor’s hypotheticals raised, in which the, I don’t know, the Econoline Motel gets condemned so that the Ritz can be built, thereby increasing tax revenue and so on, kind of parcel by parcel augmentations to the tax base and so on.

Why aren’t there a lot of examples like that?

Wesley W. Horton:

I think there is two good reasons for it, and that it’s a theoretical more than a practical problem.

First of all, you’ve got all sorts of transaction costs when you, when you go through eminent domain, as opposed to doing things voluntarily.

So you are not going to do things… yes, as a practical matter, to take Justice Scalia’s earlier example, for one piece of property because of the transaction costs involved.

I mean, you’re never going to make up… unless it’s to, you know, to favor the governor’s friend or something like that, as you say.

David H. Souter:

In which case we have a different–

Wesley W. Horton:

In which case you have a different problem.

The Willowbrook versus Oleck test.

David H. Souter:

Okay.

So we have transaction costs.

Wesley W. Horton:

Transaction costs, but that is a serious problem.

And the other thing, there is the democratic process, Your Honor.

I mean, especially if the taxpayers are paying for something and you know, they are getting a bad reason or run around about the reason, you know, that’s subject to review.

It seems to me democracy can make good decisions and… or bad decisions under the Constitution, but the important thing is that when it’s paid for, it’s not like regulatory takings which are, you know, the taxpayers don’t see that until it’s too late.

You know, in this type of taking, the taxpayers are seeing up front what’s going on.

Stephen G. Breyer:

That’s true.

Stephen G. Breyer:

But now, put yourself in the position of the homeowner.

I take it, if it’s a forced sale, it’s at the market value, the individual, let’s say it’s someone who has lived in his house his whole life.

He bought the house for $50,000.

It’s worth half a million.

He has 450,000 profit.

He pays 30 percent to the government and the state in taxes, and then he has to live somewhere.

Well, I mean, what’s he supposed to do?

He now has probably 350,000 to pay for a house.

He gets half a house because that’s all he is going to do, all he is going to get for that money after he paid the taxes, or whatever.

And I mean, there are a lot of… and he has to move and so forth.

So going back to Justice Kennedy’s point, is there some way of assuring that the just compensation actually puts the person in the position he would be in if he didn’t have to sell his house?

Or is he inevitably worse off?

Wesley W. Horton:

Well, I mean, first of all, the… in Connecticut, fortunately, we have relocation loans which are involved here.

And they are available in this case.

There was, it wasn’t clear from our brief whether they were loans or not, and it is correct that they are loans.

The other side pointed out that that was for all projects in the state.

That’s not true, you know, I mean, there is $10 million involved in relocation funds.

David H. Souter:

–But the loans don’t make him whole.

Isn’t–

Wesley W. Horton:

That’s true.

David H. Souter:

–I mean, what bothered Justice Breyer I guess bothers a lot of us.

And that is, is there a problem of making the homeowner or the property owner whole?

But I suppose the answer to that is that goes to the measure of compensation which is not the issue here.

Wesley W. Horton:

Yes.

And that’s, and I had said that earlier.

But another point when I was talking about roads is that applies to… that could apply to any type of case.

It doesn’t just apply to a case like this.

Antonin Scalia:

And that would really overrule a bunch of prior cases and really throw condemnation law into chaos.

Wesley W. Horton:

Yes.

And Justice Scalia, a question you… or actually it was a comment you had made about public use versus public purpose.

Wesley W. Horton:

And that would not only overrule… and my opposing counsel said there is a difference between the two.

And when pressed by Justice Souter… and I would point out, that’s just overruling cases going back to Berman.

That’s overruling two decisions by–

Stephen G. Breyer:

What is the remedy?

Let’s repose the problem to which I want to remedy then.

And maybe this isn’t the right remedy.

But the remedy that they are saying, and I’m really repeating it, is an individual has a house and they want to be really not made a lot worse off, at least not made a lot worse off just so some other people can get a lot more money.

Now what, what is the right… is there no constitutional protection?

If this isn’t the right case, what is?

Wesley W. Horton:

–Well, the right case is in the just compensation concept, but going to your, your point, if this were here as just compensation, I would say in terms of just compensation, in deciding what the fair market value is today, you can certainly take into account the economic plan that’s going into effect.

You know–

Anthony M. Kennedy:

Really?

I thought that that was a fundamental of condemnation law that you can not value the property being taken based on what it’s going to be worth after the project.

That’s just–

Wesley W. Horton:

–Well–

Anthony M. Kennedy:

–Unless Connecticut law is much different from any other state.

Wesley W. Horton:

–I may have misspoken on that subject, Your Honor.

Antonin Scalia:

But you know, in any case–

Wesley W. Horton:

I–

Antonin Scalia:

–What this lady wants is not more money.

No amount of money is going to satisfy her.

She is living in this house, you know, her whole life and she does not want to move.

She said I’ll move if it’s being taken for a public use, but by God, you’re just giving it to some other private individual because that individual is going to pay more taxes.

I… it seems to me that’s, that’s an objection in principle, and an objection in principle that the public use requirement of the Constitution seems to be addressed to.

Wesley W. Horton:

–But as I say, Your Honor, if public use and public purpose are the same thing, which they are unless you’re going to overrule Holmes’ decisions from 1905 and 1906.

Antonin Scalia:

It wouldn’t the first of Holmes’ decisions to be overruled.

Ruth Bader Ginsburg:

Well, I think you’d have to take some substantial chunks of language out of Berman as well, because Justice Douglas spoke very expansively in that case.

Wesley W. Horton:

Plus I think Holmes was right when he said that to say that the public actually has to use the property is not an appropriate meaning of the phrase, so I would not think you’d want to revisit that case, even if you want to revisit some other of Holmes’ decisions.

But the… I guess the best answer I have, Justice Breyer, to your question, after I, after I misspoke is simply to go back to the point that the time at which you consider what just compensation is, is in the just compensation proceedings.

And while I misspoke about what the test was, and I apologize for that, certainly this Court can consider if social costs should be taken into account at that time.

Wesley W. Horton:

I’m not saying they should.

I haven’t thought that through as can you obviously see by my misanswering the question, but it seems to me because my primary answer is that you don’t look at that now.

Anthony M. Kennedy:

Well, of course, the tax code does have special provisions for involuntary sales and reinvestments.

Wesley W. Horton:

Yes, it does.

Anthony M. Kennedy:

The tax hypothetical is not quite accurate.

Wesley W. Horton:

Yes.

Antonin Scalia:

Mr. Horton, I’m not proposing that the state has to use the property itself.

I’m simply proposing that its use not be a private use which has incidental benefits to the state.

That is not enough to justify use of the condemnation power.

Wesley W. Horton:

Well, I don’t think–

Antonin Scalia:

You can give it to a private entity, you can give it to a railroad, to some public utility.

But the use that it’s put to by that railroad and public utility is a public use.

That’s why it’s a public utility.

It’s quite different to say you can give it to a private individual simply because that private individual is going to hire more people and pay more taxes.

That, it seems to me, just washes out entirely the distinction between private use and public use.

Wesley W. Horton:

–Well, I don’t agree, Your Honor, because I think, you know, I think if a person is without a job and if a person is not able to get basic services that they need from the town because the town can’t afford it, that’s just as important as a trains running on time or eliminating blight.

And Justice Breyer, I thought of another answer to your question that has to do with this case.

And that is even on a higher test, we win because the Connecticut Supreme Court applied a higher test in this case.

And just… I would say that in this case, the essence of federalism is to let various courts make various decisions about what they consider an important public purpose.

It may be different in Utah from the way it is in Connecticut, and it’s different in Florida, and I don’t think this Court should be having a new jurisprudence for this area and having two separate tests, and maybe having a test that even approaches the Nollan Dolan test where you certainly want to discourage people from taking these actions.

And so it seems to me the four words I think that this Court should consider… and I’m not going to tell you the four words since my red light is on.

Thank you, Your Honor.

Sandra Day O’Connor:

Mr. Bullock, you have three and a half minutes.

Anthony M. Kennedy:

Mr. Bullock, do you know those four words?

Scott G. Bullock:

I wish I did.

I could respond to it if I… if I actually did.

Your Honors, first of all, just a couple of matters regarding the Connecticut Supreme Court’s decision.

The Connecticut Supreme Court did not apply the test that we suggest in our case, they explicitly, the majority explicitly declined to apply heightened scrutiny in this, in this instance.

I think the key to understanding their argument is the answer to the question of, can you take a Motel 6 and give it to a fancier hotel?

Their answer is yes.

Scott G. Bullock:

And that’s what’s really at stake here.

These condemnations are taking place throughout the country.

A city in California condemns the 99 cents store in order to give it to Costco.

Now, were they giving enormous benefits to Costco?

Of course they were.

But they did so because they wanted to get the tax revenue, and that’s the problem with these types of condemnations, the desire to help a private party and the desire to help the public are really one and the same.

The public only benefits if the private party is successful.

All right, the NLDC is a private body.

It has a private board of directors, and it is leasing land to a private developer for 99 years at $1 a year.

That is private ownership of land.

Also, Your Honors, there is no severe assembly problem in this particular case, and in many other development situations.

The NLDC and the city have 32 acres that was given to them by the Federal Government for them to do as they wish.

And our homeowners who have lived there a long time and wish to hold on to their properties do not object to that development going on.

It is within the rights of the city and the NLDC to do so.

Also, Your Honor, the Rindge case that was cited by the Respondents, they actually knew what was going to go on in that, in that case.

They knew what the use was going to be.

And finally, Your Honors, the Respondents talk about the effect that this may have upon poor people.

Not all neighborhoods, not all poor neighborhoods are blighted.

But the one thing that all poor neighborhoods share in common is that they don’t produce much in the way of tax revenue, so you’re going to put poor neighborhoods and working class neighborhoods like the ones that exist in Fort Trumbull in jeopardy if the Court affirms the decision below.

And that’s why so many organizations that are concerned about the rights of senior citizens and the rights of minorities and poor folks like legal services corporations have joined in our side to support the property owners in this case.

If there is no further questions, Your Honors, I will close.

Thank you.

Sandra Day O’Connor:

The case is submitted.