America’s founders enshrined property rights in our Constitution, not just because they thought it would provide a strong blueprint for a free market but because they saw ownership as an essential human right.
Thus, the final draft of James Madison’s Fifth Amendment has no wiggle words or loopholes. It states unequivocally that private property shall not “be taken for public use, without just compensation.” And yet despite this clear guidance, courts are expanding what can be considered public use, steadily eroding protections in takings law. In 2005, the Supreme Court ruled that property can be taken from one private owner and given to another private owner. In 2018, the Court of Appeals for the Federal Circuit took an even bolder step, ruling that private property can be taken and destroyed without compensation.
Takings law began to veer in this disastrously wrong direction with Kelo v. City of New London, in which homeowner Susette Kelo sued when the city of New London, Conn., targeted her house. The city’s intent was to use its eminent domain power to condemn property for “economic development,” in other words, to transfer it from one private owner to a private developer, who would presumably make better use of it than she did.
When the Court ruled 5-4 in favor of the city, Justice Sandra Day O’Connor wrote a prophetic dissent: “Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms.”
The majority maintained that such a “parade of horribles” was not likely since the Takings Clause permits “the government to do what it wants so long as it pays the charge.”
In envisioning “horribles,” perhaps the majority failed to imagine the U.S. Court of Appeals for the Federal Circuit. In a more recent case, this court upheld a compact between powerful municipalities and airlines, enforced in law by Congress, to demolish a competitor’s air terminal without any compensation whatsoever.
By way of background, Southwest Airlines, which operated out of Love Field Airport’s main terminal in Dallas, had lobbied to lift the Wright Amendment, which restricted its flights to benefit the Dallas/Fort Worth Airport. Investors in a smaller Love Field facility, the Lemmon Avenue Terminal, had poured millions of dollars into their investment in the belief that it had great long-term value. This would be especially true once Southwest’s campaign succeeded in lifting the Wright Amendment.
The Wright Amendment Reform Act, or WARA, of 2006 did pass, but the Lemmon Avenue Terminal ended as the odd man out. A government-sanctioned cartel of the cities of Dallas, Fort Worth, and two Fortune 500 airlines, Southwest and American, persuaded Congress to bless the outright condemnation of the Lemmon Avenue Terminal under the guise of “public use.” The city of Dallas demolished it.
The Court of Federal Claims correctly found that WARA destroyed the investors’ property rights “for the sole benefit of the signatories” of the compact and awarded damages. But the Federal Circuit Court overturned this decision, ruling that the Love Terminal investors were due no compensation because their property was not earning money before WARA was enacted.
Before the ruling, savvy investors had continued to pour millions of dollars into the empty terminal because they knew its true worth in the coming, deregulated environment. But the city of Dallas had an economic logic of its own. By removing the Lemmon Avenue Terminal, Dallas could charge a premium for gate access at Love Field’s Main Terminal, which it owned. Thus, the city promoted its own financial interest while harming its constituents with reduced competition in air service. The Federal Circuit Court ruling allowed Dallas and airline lobbyists to destroy a new source of competition, using the very legislation that otherwise would have given the terminal immense value.
The absurdity of equating private development with public use was obvious to Susette Kelo. The insidious effects of this equation resonate in this latest ruling, eliminating the public use requirement for eminent domain. When any tangential benefit can be pointed to as a public use, every case can potentially be considered public use. As Justice O’Connor had predicted, Kelo has transformed the doctrine of public use into a flexible weapon in the hands the politically connected.
Instead of clarifying takings law, Kelo and Love Terminal Partners create a roadmap for government-assisted elimination of rivals without the bothersome requirement to compensate them. The investors in the Love Field case recently filed a Petition for a Writ of Certiorari, giving the Supreme Court justices one last chance to stop this parade of horribles before it hits Main Street.
Zhonette M. Brown is general counsel with the Mountain States Legal Foundation, a nonprofit, public-interest legal foundation based in Lakewood, Colo.
