Government Businesses Can’t Simply Take Over Property They’ve Been Unable to Buy

For many years, Violet Dock Port had owned and operated a docking facility that stretched along a mile of the Mississippi River in St. Bernard Parish, Louisiana. As a private business, Violet was in economic competition with the local Port Authority, which also owns and operates riverfront property.

In 2007, the Port Authority took an interest in Violet’s land and tried to negotiate a purchase, but those negotiations failed. If this had been a normal negotiation between two private market participants, the Port Authority would have had only two options at that point: improve its offer or walk away. But instead it decided to appeal to its status as a public agency and claim that it required Violet’s land for “public use.” Invoking Louisiana’s eminent domain power to complete the deal by force, the Port Authority took over Violet’s business and eliminated its competition.

Violet has challenged this taking in state court, and the case has now reached the Louisiana Supreme Court. Cato has joined the National Federation of Independent Business Small Business Legal Center, Southeastern Legal Foundation, and Louisiana Association of Business and Industry on an amicus brief urging the state supreme court to strike down this taking under both the federal and Louisiana constitutions.

Under both constitutions, private property can only be taken by eminent domain if it is for a true public use. But a taking that is solely for the purpose of eliminating private competition is not a legitimate “public use.” There is nothing public-minded about destroying a private-sector business for the benefit of a public enterprise, and no reason to believe that such an agglomeration will help consumers or the economy. Indeed, the state’s economic arguments are dangerously broad because they could apply just as much to a private company that wished to eliminate competition.

Allowing this taking to stand would incentivize politically powerful corporate interests to lobby for the forcible transfer of property from smaller firms—solely for the purpose of eliminating competition.

Beyond the issue of “public use,” the Louisiana Constitution also specifically speaks to exactly what happened here. It declares that “no business enterprise or any of its assets shall be taken for the purpose of operating that enterprise or halting competition with a government enterprise.” The lower court implausibly interpreted this clause to not apply to the Port Authority because of a separate clause granting general eminent domain power to public ports. But as we point out in our brief, that ignores the core interpretive principle that the specific takes precedence over the general.

The lower court’s reasoning could effectively write an important property protection out of the state constitution entirely, by subordinating it to every general grant of government authority. For each of these reasons, the Louisiana Supreme Court should reverse the lower court in St. Bernard Port & Terminal District v. Violet Dock Port, Inc. and reject this taking.

If the port authority wants to make a deal with its competitors, it should do so the old fashioned way: by making them an offer they can refuse.