takings

Murr v. Wisconsin: When the Government Redefines Property Rights in Order to Avoid Paying Just Compensation

In 1960, the Murr family purchased a 1.25-acre lot (Lot F) in a subdivision on the St. Croix River in Wisconsin. They built a recreation cabin on the lot. Three years later, the family decided to purchase an adjacent 1.25 acre lot (Lot E) as an investment. The family did not build on Lot E, and the parents later gave their children the property. When the children began to look into selling Lot E, the government said that they couldn’t. Why?

A Million Homes Taken Since Kelo

It has been just over a decade since the Supreme Court decided in Kelo v. New London that local governments can take private property by eminent domain under a very broad reading of “public use”.  Cato held an event earlier this year to examine the legal impact of Kelo, featuring remarks from George Mason Law Professor Ilya Somin based upon his recent book, The Grasping Hand.  Not only has Kelo spawned widespread public backlash, but its also given birth to renewed interest by legal scholars.  As an economist, I am a little more interested in the direct impact on families.

Unfortunately, I have had no luck finding a database of all U.S. takings.  The American Housing Survey (AHS), conducted by the Census Bureau every two years, does, however, offer some estimates.  For survey respondents who moved within the previous year, the AHS asks respondents the “main reason” for leaving their previous unit.  One option offered is “government displacement”. For the survey years since Kelo, the average has been 109,000 households who state that government action displaced them from their previous home.  If that average holds for non-survey years, then a good estimate is that just over a million households have been displaced by government action since Kelo

The Grapes of Wrath: California Raisins Are Back at the Supreme Court

When Marvin Horne told the United States Raisin Administrative Committee (yes, there’s a raisin administrative committee) that he wasn’t going to turn over nearly 30 percent of his crop to the government in exchange for nothing, he probably didn’t expect his case would go to the Supreme Court—twice. That little act of civil disobedience was thirteen years ago, and the Hornes now stand on the precipice of vindicating an important constitutional right—the Fifth Amendment right not to have your property taken without just compensation—as well as putting a wrench in the gears of what Justice Elena Kagan called “the world’s most outdated law.”

Like much of our agricultural policy, the Raisin Administrative Committee (RAC) is a relic of New Deal-era cartelization schemes. Trying to understand the logic behind American agricultural policy is like trying to find the logic in a Marx Brothers movie—it can’t be done and you’re better off just sitting back and laughing at the antics. Yet our agricultural policy has real-world effects on farmers like the Hornes, who are subject to the whims of the RAC as it tries to stabilize the price and supply of raisins. Sometimes the RAC pays for the raisins it takes, and sometimes not. In 2002-2003, the RAC offered far less than the cost of production for 47 percent of the Hornes’ raisins, and in 2003-2004 they offered nothing for 30 percent of the raisins. The Hornes had had enough, and they refused the order, arguing the seemingly simple point that the confiscation would be a taking without just compensation under the Fifth Amendment.

Supreme Court to Government: Stop Railroading Property Owners

Today, in Marvin M. Brandt Revocable Trust v. United States, the Supreme Court rebuked another attempt by the Obama administration to adopt a novel and extreme litigating position that was contrary to well-established precedent. Eight justices agreed with Cato’s amicus brief, holding that the United States does not retain a property interest in former railroad lands that are no longer used by railroads. Although this may seem like an arcane issue for Cato to be involved in, the case actually resembles a typical takings case, but this time the government tried to define a property right out of existence rather than pay compensation to the owners.

To be fair to the Obama administration, this case began in 2006, and both Republican and Democratic administrations have been litigating similar cases for some time. Brandt is a best seen as an example of how governments of all stripes will find the path of least resistance to accomplish its goals, including defining a property right out of existence to avoid paying for it.

Building Housing That Some People Can’t Afford Isn’t Racist

“Disparate impact” theory holds someone liable for discrimination for a race-neutral policy that statistically disadvantages a specific racial group — say, blacks score lower on a firefighter-promotion test than whites — even if that negative “impact” was neither foreseen nor intended. The application of this theory has been fraught with controversy, to say the least, but it comes up again and again, in contexts ranging from employment to education to voting.

While disparate impact claims have sometimes been sustained under the federal Fair Housing Act (which makes it unlawful to deny housing on the basis of race) since the 1970s, the Supreme Court has only recently agreed to decide whether these claims are lawful. Two years ago, the Court was about to hear such a case, Magner v. Gallagher, when the Justice Department, led by now-Labor Secretary Tom Perez, pressured the city of St. Paul, Minnesota to settle it. The same sort of political pressure is now being brought to bear on Mount Holly Township, New Jersey; supporters of disparate impact theory simply don’t think that it can survive legal scrutiny.

The current case involves a redevelopment plan for a blighted Mount Holly neighborhood (“the Gardens”) that would transform the neighborhood into mid-range single-family dwellings. (Thus far, the township has acquired 259 of 329 properties through various financial incentives, without yet resorting to eminent domain.) The Gardens’ residents sued, arguing that the redevelopment plan violated the FHA because a majority of them would not be able to afford the new homes.

The district court dismissed this argument, holding that the redevelopment plan affected Gardens residents equally, without regard to race, and was tied only to economic considerations. The court of appeals reversed that ruling, holding that the residents’ association had set out a case of discrimination under the theory of disparate impact because a majority of the affected residents were non-white.

Cato has now joined the Pacific Legal Foundation and four other public-interest organizations on an amicus brief arguing not only that disparate impact claims are impermissible under the text of the FHA, but that such claims force unconstitutional actions when applied to governments. Before putting race-neutral policies into effect, government agencies would have to determine whether a particular racial group would be disproportionately impacted and take steps to remedy that difference. By mandating an equality of ends — as opposed to an equality of opportunity — disparate impact liability encourages the adoption of discriminatory quota systems.

The Constitution Protects Even Old-Timey Property Rights

In the 19th Century, when railroads were being built across the West, the federal government granted significant land and benefits to the railroad companies. The Great Railroad Right-of-Way Act of 1875 allowed the government to give railroad companies easements to build tracks — that is, a right to use sections of another’s property without legally owning it. The Brandt family eventually acquired land in Wyoming that came with pre-existing railroad easements.

In 2001, the owner of the easement formally abandoned all claims to it, presumably returning the property to the Brandts. But the government wanted that land. In 2006, it sued for title to the former easement land on the theory that the government retained a residual claim to it after the railroad abandoned it. The Brandts argue that the government has no such right and that taking their land requires just compensation under the Fifth Amendment’s Takings Clause.

Although this may seem like a small, unique problem, the scope of the Old West’s railway system was huge and those old easements criss-cross the land of thousands of property owners. In 1983, Congress amended the National Trails System Act to allow the government to take abandoned railroad easements and turn them into land for public recreation and “railroad banking.” Landowners have been fighting the taking of their property under the Trails Act ever since, claiming, as here, that the government’s original grant to the railroads contained no residual right of possession for the government.

Indeed, two federal courts of appeals, the Seventh and Federal Circuits, have held that the government didn’t retain any residuary rights. In the Brandts’ case, however, the Tenth Circuit held otherwise. This circuit split is untenable. Over 5,000 miles of abandoned track has been taken by the government since the Trails Act, and about 10,000 property owners are currently fighting in federal courts to hold onto their property.

Of course, given the possible benefits of not having to pay compensation to landowners, the government has responded to these claims by being aggressively litigious, reaching into its endless war-chest of taxpayer-provided resources to challenge the landowners on every tiny point. As the Federal Circuit said, the government’s behavior is “puzzling” in that it is “foregoing the opportunity to minimize the waste both of its own and plaintiffs’ litigation resources, not to mention that of scarce judicial resources,” but also by advancing arguments “so thin as to border on the frivolous.”

Using Eminent Domain to Personally Benefit the Mayor Is Unconstitutional

One of the biggest dangers of not providing adequate constitutional protections for private property is that public officials can misuse their power to take property for private gains. Government actors, after all, have an incentive to act in a way that maximizes political gains and minimizes costs, so without adequate protection from the courts, they can be expected to use eminent to take private property for political (or even personal) benefit.

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