Koontz oral argument: what do state and local governments think the Takings Clause protects?

January 10, 2013 | By JONATHAN WOOD

In Koontz, governments across the country argue that the Takings Clause only applies to real property and not to demands for money.  But that argument can’t be squared with the text of the Takings Clause which reads:

nor shall private property be taken for public use, without just compensation.

As you can see from its text, the clause protects property owners from government conduct in two ways.  First, it ensures that private property can only be taken for a “public” — and not a private — use.  Second, if government takes property for a public use, the owner is entitled to payment, “just compensation,” for that taking.  Nevertheless, this latest attempt to limit the Takings Clause to real property, follows all-too-many cases where state and local governments have attempted to whittle away both of these protections.

At the behest of state and local governments, the Supreme Court has already read the public use protection almost entirely out of the Constitution.  In Kelo v. City of New London, the Supreme Court mistakenly interpreted the meaning of “public use” to include wholly private uses.  There, the government took someone’s family home in order to give the property to a large pharmaceutical company.  The Court held that this blatant private transfer of property was “public” because the company might increase the government’s tax base.

As if that erosion of the “public use” protection wasn’t enough, since Kelo, local governments have tried to expand the Court’s holding.  For example, in the Willets Point Case, the city of New York argued that it could take a 61 acre area of Queens near Citi Field (a baseball stadium) even though the city didn’t have a development plan for the properties.  We don’t know if this strategy would have succeeded because the government withdrew the case when it was on appeal.  But last year, the city “remedied” this problem by coming up with a development plan.  It struck a deal to redevelop the area with — and I’m sure you saw this coming — the owners of the baseball team.

The author of the Supreme Court’s opinion in Kelo has since acknowledged that the decision was based on an embarrassing error.  This error is also the subject of an amicus brief filed on behalf of numerous organizations supporting another case that PLF has asked the court to review: Iligan v. Ungacta.  That case asks whether the Takings Clause permits the government to take property from one person to give it to members of the local mayor’s family for their sole private use.  The courts below held that this constituted a perfectly legal “public use” under Kelo.

Since the courts refuse to enforce the public use requirement, property owners are left with “just compensation” as their only protection.  But if the government has its way in Koontz, this too will be a dead letter.  In an amicus brief, the governments of California, Alabama, Connecticut, Hawaii, Illinois, Louisiana, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Mexico, New York, Oregon, Rhode Island, Tennessee, Utah, Vermont, and Washington deny that the Takings Clause is implicated by demands of money:

[The] Court’s unconstitutional conditions analysis ‘began with the premise that, had the government simply appropriated the easement in question, this would have been a per se physical taking.  In contrast, as five justices made clear in Eastern Enterprises, governmental requirements that parties pay money do not trigger takings concerns.

But as explained in a previous post, exempting these extortionate demands would render the “just compensation” protection meaningless.  Machiavellian bureaucrats could simply demand that a property owner pay the government enough money so that the government could seize the real property and compensate the owner with her own funds.  As PLF explained in our opening brief, the government’s position is also inconsistent with the language of the Takings Clause.

[T]he Takings Clause broadly protects “private property,” not just interests in real property.  Under Nollan and Dolan, the Takings Clause allows some uncompensated exactions of property in the permit process, but only if the exaction bears an “essential nexus” and “rough proportionality” to the adverse impact of the proposed land use.  Since the Takings Clause makes no distinction among the different kinds of property that government may exact in the permit process, there is no reason why the limitations in Nollan and Dolan also should not apply with equal force to all property, both real and personal.

Hopefully, the Court will take this opportunity to reiterate the importance of holding government within constitutional bounds, rather than adding the Takings Clause to the list of constitutional protections that it has read out of the Constitution.