Relevant Facts: Following years of decline, the City of New London purchased property from willing sellers in a distressed part of the municipality. The City then sought to acquire remaining properties from unwilling sellers through the use of eminent domain, and offered property owners compensation.
Issue: Does the stated goal of economic development fall within the definition of public use within the Takings Clause of the 5th Amendment? (As an alternative: Does a taking whereby a municipality acquires property for transfer to another private entity with the stated public objective of improved economic conditions constitute a valid public use under the Takings Clause?)
Holding: Economic development is a valid public policy objective and legitimate rationale for employing eminent domain, notwithstanding subsequent transfer to another private entity or individual.
Reasoning: The court recited long precedence of economic development as valid public purpose, and valid within the meaning of the Takings Clause. To the extent this case differed from others in that private property was taken for a public use to be executed by a third party (another private entity) the Court determined this went to the means of effectuating a valid purpose, not the validity of the underlying purpose itself. Justice Stevens, writing for the majority, made clear that courts have a limited role in reviewing eminent domain cases. Indeed, the Court specifically limited its role to determining the validity of public use, declining to second-guess legislative judgments about the nature and scope of planned redevelopment.
The majority opinion was three-fold. First, the Court held that the public use requirement was not literal. The Constitution requires neither public access nor public ownership to constitute a valid public use. Second, the Court held that the City’s determination that the area in question was significantly blighted, and in need of revitalization, was entitled to considerable deference. Federal courts are ill-equipped to make, or second-guess, such judgments. Finally, the Court refused suggestions to adopt a bright line rule regarding economic development and public use. Citing a long history of valid public interest in economic development (and re-development) the Court determined that eminent domain was a legitimate means to pursue this long-established, valid objective. The Court concluded that there was no principled way to distinguish economic development goals from other objectives in acceptable use of eminent domain authority.
Dissent: Justice Kennedy concurred in the decision, writing separately to point out that takings where the governmental entity transferred property to another private individual or entity could create a constitutional concern where favoritism was involved, but concluding that a presumption of invalidity was not necessary to protect against such a danger. Justice O’Connor dissented, highlighting the distinct between public purpose and public use, and urging adoption of a standard that required current use to be harmful before eminent domain could ultimately be wielded to transfer property to new, private owners. Justice Thomas dissented, arguing the Court should limit use of eminent domain to cases in which the public would actually be able to use the property taken.
Conclusion: The Court refused the opportunity to adopt a clearer, narrower definition of public domain for application in eminent domain cases. Economic development takings are consistent with public use under the Takings Clause, and there is no specific limitation on subsequent transfer to private ownership.