Is Your Stuff Yours? The Answer Isn’t So Simple

On Tuesday, the U.S. Supreme Court will be faced with the following question: Under what conditions, if any, can the government take property from you or your business for the public good? Although the question sounds straightforward enough, its answer will have profound, complex -- and terribly important -- consequences for the future of American social policy.

Under current law, the government can take your house or land. In order to do so, it must merely show that the property is being taken for a legitimate “public use,” and it must pay a fair compensation. That’s the law of “eminent domain.” It can also, under certain circumstances, take money out of your business or limit the amount of money you can take out of your business, if it has a good, publicly beneficial reason to do so.

But although these are the rules under which our government has operated for the last 85 years, they’re not making everyone happy. In the first of two obscure cases coming before the court on Tuesday, Kelo vs. City of New London, the city of New London, Conn., took property from homeowners in order to build an economic development area that was presumably going to give the city desperately needed funds. The homeowners said the government might have had the right to take the land if it had become a slum, or if it was in some way blighted, but not for a purely profit-making enterprise -- even if they were provided fair compensation. The owners argued that the community they had lived in for many years, with their friends and family surrounding them, and the property itself, could not be replaced by dollars. Why, the landowners argued, should they arbitrarily and capriciously be singled out to help the entire community get income? The Connecticut Supreme Court, however, upheld the city’s right to take the land.

In the second case, Lingle vs. Chevron, Chevron challenged a Hawaii law limiting the maximum rent that oil companies could collect from dealers who leased company-owned service stations. The state had passed the law in order to hold down gasoline prices, but the federal appeals court agreed with Chevron that the rent control regulations were unconstitutional because the government had no right to, effectively, “take” rent that dealers had been prepared to pay to Chevron.

Chevron, in its brief before the Supreme Court, argued that the government could not arbitrarily take from the company profits that would otherwise be shared by its stockholders.

Why, Chevron asked, should one class of citizens lose out to another class? Why should corporate stockholders (much like the property owners in the Connecticut case) be arbitrarily and capriciously made to pay to solve society’s problem? Wouldn’t it make more sense, Chevron asked, for the entire community to pay?

At the heart of the issue in both cases is a little-known sentence in the 5th Amendment to the Constitution known as the “Takings Clause” that says, “Nor shall private property be taken for public use, without just compensation.” The Takings Clause is the part of the Constitution that gives rise to the government’s power of eminent domain.

But in recent years, conservatives have taken issue with that interpretation. The clause, in the view of University of Chicago Law School professor Richard Epstein and some of his judicial and academic colleagues, has been misinterpreted to justify virtually any governmental “interference” with the owner’s right to possess, use and dispose of property. Epstein and his colleagues say that, on the contrary, the clause is meant to protect property owners and should be used to strike down regulations that interfere with the profit of an individual or corporation. That might mean regulations allowing the government to take your house -- or environmental regulations that are costly to businesses or health and safety standards that businesses find onerous. Even minimum-wage laws could be deemed unacceptable under this theory.

If Epstein and his allies are victorious, it will be the culmination of a long-standing conservative battle to constitutionally undermine the New Deal administrative state.

In the 1980s, Edwin Meese, Ronald Reagan’s attorney general, urged his department to present “takings” cases to courts that he believed would be sympathetic to the restricting regulation. Today, with the strongly pro-corporate Rehnquist court in place, the Bush administration sees another chance to create an unfettered free market.

But these arguments go back even further than Reagan, resurrecting a battle waged before the court between 1890 and 1916. That was a period of strikes and sweatshops, low wages and long hours, tenement living and economic tumult. As a result of new progressive forces and the beginning of unionism, dozens of states passed legislation to regulate sanitary conditions as well as to reform working conditions and reduce work hours.

But the court was having none of it. In 1905, in a 5-4 decision in the case of Lochner vs. New York, the court ruled that New York’s attempt to regulate hours of labor in bakeries was unconstitutional because the law “necessarily interfered with the right of contract between the employer and the employee.” Justice Rufus Peckham wrote that the 14th Amendment of the U.S. Constitution guaranteed a company’s right to purchase and sell labor on any terms management could bargain for.

Lochner and its overbroad anti-regulatory attitude was later rejected. But these days, justices Clarence Thomas and Antonin Scalia are inching back to those legal concepts.

The rest of the court is not quite in agreement yet, but the continued appointment of irresponsibly pro-business judges could bring us there.

Do we really want to allow the court to obstruct socially desirable legislation in the name of the property rights of corporations?

The Takings Clause could give the Supreme Court a powerful new weapon to severely restrict government attempts to work for the public good -- and we should be very wary about how that weapon is wielded.