No Land Grab

NOT RESTRICTED TO REAL PROPERTY

A good measure of the incomprehension of the scrutiny regime, can be taken by reading the California Legislative Analyst’s discussion of Proposition 90. Section 3, Paragraph 8 of the initiative states: “Except when taken to protect public health and safety, ‘damage’ to private property includes government actions that result in substantial economic loss to private property. Examples of substantial economic loss include, but are not limited to, the downzoning of private property, the elimination of any access to private property, and limitations on the use of private air space. ‘Government action’ shall mean any statute, charter provision, ordinance, resolution, law, rule or regulation.” Proposition 90 contains many definitions, but it does not define “property.” The Legislative Analyst does not note the absence of a definition, nor of course is there any analysis of the extension of the proposition to non-real property situations. Nor is the section of itself restricted to real property. Of course, modernly, property under the Fourteenth Amendment is regarded as “property interest” and is vast indeed. It is not even clear whether proponents of Proposition 90 knows this. But everyone will know it soon enough, once Proposition 90 passes, as it is expected to do.

Opponents of Proposition 90 consider the Proposition a “stealth” initiative because it contains the Paragraph 8 clause in addition to restrictions of eminent domain to public use. But that is not the real grounds of concern. Such anti-Kelo initiatives run into problems—not solutions—because they attempt to restrict eminent domain with respect to generalities, rather than with respect to facts. Proposition 90 is illustrative in this regard. We never get a definition of what “public use” is, only of what it is not. Section 3, including the proposed new Constitutional language, states: “(1) ‘Public use’ shall have a distinct and more narrow meaning than the term ‘public purpose’; its limiting effect prohibits takings expected to result in transfers to nongovernmental owners on economic development or tax revenue enhancement grounds, or for any other actual uses that are not public in fact, even though these uses may serve otherwise legitimate public purposes. (2) Public use shall not include the direct or indirect transfer of any possessory interest in property taken in an eminent domain proceeding from one private party to another private party unless that transfer proceeds pursuant to a government assignment, contract or arrangement with a private entity whereby the private entity performs a public use project. In all eminent domain actions, the government shall have the burden to prove public use.” The confusion here is compounded by the Supreme Court’s finding, in Kelo itself, that the term “economic development” has no logical content whatsoever, it doesn’t distinguish between one kind of eminent domain use and another. So it is unclear that Proposition 90 “hides” something in its restriction of eminent domain, because that restriction is in itself problematic.

No, the cause for concern for opponents of Proposition 90 is that Section 8 applies in situations which have nothing to do with eminent domain. Section 8 is not “hidden” by the eminent domain reform—the point is that it doesn’t necessarily have anything to do with eminent domain reform. It is a freestanding assault on the scrutiny regime. Consider this very brief discussion of a few interest currently considered “property interests” under the Fourteenth Amendment:

Beyond employment the Court found “legitimate entitlements” in a variety of situations. Thus, because Ohio included within its statutes a provision for free education to all residents between five and 21 years of age and a compulsory–attendance at school requirement, the State was deemed to have obligated itself to accord students some due process hearing rights prior to suspending them, even for such a short period as ten days. “Having chosen to extend the right to an education to people of appellees’ class generally, Ohio may not withdraw that right on grounds of misconduct, absent fundamentally fair procedures to determine whether the misconduct has occurred.” The Court is highly deferential, however, to dismissal decisions based on academic grounds. The most striking application of such due process analysis, to date, is Logan v. Zimmerman Brush Co., in which a state antidiscrimination law required the enforcing agency to convene a factfinding conference within 120 days of the filing of the complaint. Inadvertently, the Commission scheduled the hearing after the expiration of the 120 days and the state courts held the requirement to be jurisdictional, necessitating dismissal of the complaint. The Court held that Logan had been denied due process. His cause of action was a property interest; older cases had clearly established causes of action as property and, in any event, Logan’s claim was an entitlement grounded in state law and it could be removed only ‘for cause.’ That property interest existed independently of the 120– day time period and could not simply be taken away by agency action or inaction. Beyond statutory entitlements, the Court has looked to state decisional law to find that private utilities may not terminate service at will but only for cause, for nonpayment of charges, so that when there was a dispute about payment or the accuracy of charges, due process required the utility to follow procedures to resolve the dispute prior to terminating service.

Currently, there is no awareness at any level that the “Kelo plus” initiatives have implications for these types of cases.

NOT RESTRICTED TO FAIR MARKET VALUE

Most anti-Kelo proposals try to capture, for the party subject to a taking, some of the enhanced value expected from the government purpose for the property. Proposition 90 is no different in this regard. The new Constitutional language in Section 3 attempts to give force to this concept: “(5) If a public use is determined, the taken or damaged property shall be valued at its highest and best use without considering any future dedication requirements imposed by the government. If private property is taken for any proprietary governmental purpose, then the property shall be valued at the use to which the government intends to put the property, if such use results in a higher value for the land taken. (6) In all eminent domain actions, ‘just compensation’ shall be defined as that sum of money necessary to place the property owner in the same position monetarily, without any governmental offsets, as if the property had never been taken. ‘Just compensation’ shall include, but is not limited to, compounded interest and all reasonable costs and expenses actually incurred. (7) In all eminent domain actions, ‘fair market’ value shall be defined as the highest price the property would bring on the open market.” This definition necessarily brings us back to the issue of “public use,” because the initial determination of “public use” also included the way government “valued” the property. From the point of view of the scrutiny regime, this means that compensation and government purpose are mutually exclusive.

But that is not the meaning if we are not viewing things from the perspective of the scrutiny regime. In the new Constitutional epoch, the valuation section, coupled with Section 8, gives rise to the question, does the law maintain property? It’s simple enough, but does that eliminate all ambiguities? By no means. One of the first things to notice about the new Constitutional doctrine is that disputes are now being fought out along new lines. Instead of arguing about government purpose, or whether—at the level of intermediate scrutiny, for example—a law furthers an important government purpose, we are now arguing about what, in fact, is property. This inquiry was basically forbidden by the scrutiny regime, which left that determination to the political process and ratified what the political came up with in terms of a factual finding.

The interaction of the two dimensions of the “Kelo plus” initiatives, makes that impossible. It appears to make government chase its tail, but that’s fine with public opinion, as long as government does not operate on facts public opinion considers important. When government does feel it can break out of a circular argument and make a case of having an impact on an important fact, then determination becomes an inquiry into facts. This is the new Constitutional doctrine in application. All unawares, we are getting our first marching orders from the new Constitutional regime.