On June 23, 2005, the Supreme Court ruled in the controversial, landmark case of Kelo v. City of New London. By a 5-4 majority, it affirmed the city’s right to seize private land as part of an economic development plan—a redefinition of the Takings Clause of the Fifth Amendment.
The Takings Clause states that “private property [shall not] be taken for public use, without just compensation.” Throughout the 20th century, this power was employed to support urban works and infrastructure projects. For example, governments could seize property to build a road or a power line because the projects would benefit the overall populace, even if a few individuals suffered.
Before Kelo, this process of eminent domain had been limited to direct government ownership, excluding property transfers to private corporations. With Kelo, the question of whether economic gain, resulting from a “taking” for corporate interests, constituted “public use” finally came under Supreme Court scrutiny.
City planners sought to transfer land to the New London Development Corporation, a private nonprofit organization, which in turn would develop the land as a new facility for Pfizer. With the local economy in shambles, officials argued that attracting a major corporation to the area would increase tax revenue and provide jobs. As the NLDC slowly accumulated land in the Fort Trumbull neighborhood, seven holdouts refused to leave.
Led by Susette Kelo, these homeowners argued that the city’s actions were unconstitutional because the selling of private land to private developers, in the hopes of rippling economic gains, did not comply with the Takings Clause. In other words, the use of this land by private corporations, who would benefit from the government action, could not be categorized as “public use.”
Writing for the majority, Justice John Paul Stevens acknowledged that the government “may not take the property of A for the sole purpose of transferring it to another private party B,” but it may indeed seize land for another private party if “future ‘use by the public’ is the purpose of the taking.” A clear example would be the transfer of land to a “railroad with common carrier duties,” where the public has direct access to land or services as a result of eminent domain.
Still, the Court in Kelo faced a new situation, one in which land would not directly be devoted to public use but would be taken with the intent of delivering economic rejuvenation for the broader public. In response, Stevens cited the Supreme Court of Connecticut, which found “that there was no evidence of an illegitimate purpose in this case,” such as special benefits to Pfizer or another organization. While a private entity might benefit from the taking, he explained, the intent of the government was not “to benefit a particular class of identifiable individuals.”
Stevens also dismissed the notion that the land must be directly opened to the public to serve a “public use,” and noted that, in any case, part of the land would provide public access to the city waterfront. Ultimately deferring to the city’s judgment of public needs, he argued that “economic development is a … long accepted form of government,” and that New London should be given latitude to improve their city through their “carefully formulated” plan.
In her dissent, Justice Sandra Day O’Connor criticized the abandonment of a “long-held, basic limitation on government power.” Highlighting the sweeping nature of the majority opinion, she argued that “all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded.”
O’Connor adopted a textualist approach to the case: She argued that “government may compel an individual to forfeit her property for the public’s use, but not for the benefit of another private person,” and that the legislature must not be the sole decider of what constitutes public interest. By permitting a broad exercise of the takings power, she explained, the Court would be sacrificing a vital limitation on government interference with private property—a constraint that Alexander Hamilton considered “one of the ‘great obj[ects] of Gov[ernment].’”
Although they lost at the high court, the homeowners in New London—symbolized by Susette Kelo’s quaint “pink house”—were ultimately victorious in the court of public opinion.
As public outrage has filtered up through state legislatures, politicians have responded. Since Kelo, more than 40 states have enacted stricter laws governing eminent domain, thereby challenging the Court’s decision. Critics of the practice have pointed to the still-undeveloped lot in Fort Trumbull as a symbol of government overreach.