Kelo at the Crossroads of Constitutional and Administrative Law

For twenty years, the Supreme Court’s broad account of the public-use requirement of the Fifth Amendment under Kelo v. City of New London has been the target of constant criticism for its excessive deference to government acquisitions of land. The Court’s recent Loper Bright decision marks the rejection of a similar deferential approach in administrative law. There is no good reason for these differential levels of scrutiny to survive in the move from administrative to constitutional law, especially when the same objective—the protection of property rights—is at play in both contexts. The very fears of government abuse that drove the rejection of deference in Chevron v. NRDC also apply with equal force to Kelo, whose account of public use is vulnerable to the same abuse. The best institutional design in both contexts is to ensure that both private and public actions maximize, to the extent humanly possible, human welfare, which means that both errors in judgment—too much deference and too little—have to be included in the mix. That objective cannot be achieved by ignoring government abuses of excessive condemnations like those in Kelo, to concentrate solely on abuses by private parties in land use and development, especially when the risk of government abuse is at least as great or greater than that of private abuse. Thus, it is, as it were, not conceivable that a sound account of the phrase “public use” could follow the current practice and validate any government action that offers “any conceivable” justification to reject private challenges. As a first approximation, these two kinds of error carry equal weight, and thus call for adoption of a standard of intermediate scrutiny in public-use cases, which is in line with the rejection of Chevron deference.

Accordingly, that balance is best struck by allowing the state to take private property by and for the use of the public, and also to enact laws and regulations to control serious holdout problems generated by unique physical conditions. But the flabby rational-basis test should not bless any government scheme that orders a simple transfer between private parties, as in Hawaiian Housing Authority v. Midkiff, Kelo, and more recent cases like Brinckmann v. Town of Southold, and Bowers Development LLC v. Oneida County Industrial Development Agency. Yet the Supreme Court took a discreet pass in Bowers by denying certiorari. In so doing, it confirmed its relative indifference to the issue, given its recent preference of worrying more about structural issues than substantive ones, so that over time the movement back to discretion is likely in practice to get stronger in both areas.