A property case even more important than Kelo v. City of New London (2005) began to wend its way toward the Supreme Court a few weeks ago. The new case is Starr International Company, Inc. v. United States, and unless the Supreme Court repudiates the lower courts, the case will lay down a strange principle: that the government can unlawfully deprive shareholders of their ownership and control as long as it does not seize their shares.
Ilya Somin discusses at Liberty Law Talk his book The Grasping Hand: Kelo v. City of New London & the Limits of Eminent Domain. The book provides in part a fascinating account of the plight of the New London homeowners who challenged their city's attempt to seize through eminent domain their homes for use in private development. In addition, Somin gives us a serious study of the eminent domain power, and he discusses why we need to reclaim a more restricted understanding of its legitimate use as opposed to the private to private takings blessed by the Court in Kelo and…
Count me as a part of that population that rejoiced over the outcome in the Hobby Lobby case. It was a relief that the Green family, owners of the Hobby Lobby craft stores, and the Hahns, owners of Conestoga Wood Specialties, were delivered from the mandates of Obamacare; the mandates that compelled these families to cover abortifacients in the medical care they funded so generously for their employees. Justice Alito also did a notable service in making clear that a “corporation” is an association of “human persons”: Every association is directed to a purpose; and there is no principle that determines that this kind of corporation, alone among all other associations, may not be committed to moral and religious purposes, apart from the making of money.
Last Monday my post celebrated Uber, the car service summoned by phone apps, arguing that this disruptive technology promotes efficiency, helps the environment, and reduces inequality. Some commenters nevertheless suggested that taxis should be compensated for the loss of value to their business caused by Uber.
I do not believe compensation is warranted as a matter of law or policy. First, unless the localities had given taxi services an express contractual or charter right to be the exclusive carriers, permitting entry by Uber would not violate the Contract Clause. That proposition is as as venerable as the Charles River Bridge case where the Taney Court held that a new bridge could be built over the Charles River despite a previous state charter granted to a bridge building company for the same river. Economists have thought this case important to American economic development, because it impeded the establishment of state sanctioned monopolies.
The modern Supreme Court presumes that when it comes to the regulation of private economic conduct, Congress can do entirely as it pleases. To be sure, exceptions exist for economic transactions that overlap with real or imagined provisions of the Bill of Rights, such as campaign finance (freedom of speech), employment discrimination (equal protection), or the procurement and sale of contraceptives and abortions (pick your favorite clause). Outside those enclaves, the sky is the limit. (Don’t say “Takings Clause”: it ain’t worth the parchment it’s written on.)
Over at the Originalism Blog, Mike Ramsey recently had an interesting post on the Supreme Court case (Arkansas Game and Fish Commission v. United States) holding that a temporary flooding of land can be a taking. The case also stated that state government property can be private property under the Takings Clause. The Court based this conclusion on a 1893 precedent.
Mike argues that state owned property is not private property and therefore the decision cannot be justified on originalist grounds. I am sympathetic with his conclusion, but I am not sure he is right from an originalist perspective. As I have been trying to argue in recent posts, determining the original meaning is complicated.
First, originalist conclusions turn on how language was used at the time, and I can imagine a plausible usage that would render state owned property to be private. Perhaps private property meant not property own by nonstate actors. Instead, perhaps it meant the type of property owned by nonstate actors in contrast to the type of property held by states. Thus, ownership of a piece of land in fee simple would be private property, even if owned by a state, but a state’s control over the oceans or the air or oyster beds would not. Those latter types of property are public property as opposed to private property. I don’t know if this was a meaning of private property at the time of the Constitution, but it might have been.
My work on takings law reflects my strong disposition for free markets, and my concern that expansive interpretations of eminent domain powers lead to crony capitalism and other abuse. I believe that the Supreme Court’s facile equation of “public use” with “public benefit” in Kelo v. City of New London (2005) is particularly pernicious. So, I start out from the same premises as my George Mason colleague Todd Zywicki. The Fifth Amendment to the U.S. Constitution explicitly conditioned the federal government’s condemnation power, and those restrictions subsequently were made binding on the States. “[N]or shall private property be taken for public…
Professor Zywicki is right: Kelo is one of the most publicly-maligned decisions in recent Supreme Court history. But it is altogether more debatable whether the hostility was deserved. Professor Zywicki offers a straightforward economic account and critique of eminent domain. He argues that the fair market value standard is inadequate to compensate people for their subjective…