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Erosion of a Different Kind PDF Print E-mail
Written by Steve Dittmer   
Tuesday, 04 October 2005
AFF Sentinel Vol.2, #47

What Happened To Our Private Property Rights?

In the last Sentinel, we mentioned that private property rights began suffering a long, slow erosion to the government's power of eminent domain a long time ago.

The first ten amendments to the U.S. Constitution, the Bill of Rights, served to spell out limitations for government power and inviolable rights of its citizens. The Fifth Amendment, in part, said, "nor shall private property be taken for public use, without just compensation."

Even the majority opinion in this case agrees that it has long been held that the government "may not take the property of A for the sole purpose of transferring it to another private party B," even if A is paid just compensation. However, the government may do so if the transfer is for a "public use."

Much of the difficulty centers around the definition of "public use." It seems the Supreme Court in critical cases has too often focused on the general good for the public, ignoring or negating the rights of the original citizen and property owner. Just as hard to fathom has been the court's fixation with whether or not anybody knew the exact identity of the buyer at the time of the transaction, as if that should really have some bearing on the original property owner's rights.

In general, public use was interpreted most often as a use with public utility, like a road, or a common carrier, like a railroad. But in their zeal to foster economic development, state legislatures in certain cases stretched the definition, and state courts allowed the interpretations.

Often, such events do not have any effect beyond that state and damages are to its citizens. But if the case gets appealed and ends up at the Supreme Court level, those precedents can affect the whole country.

The Nevada Supreme Court allowed an expansion of the "public use" definition in 1876. The court reasoned that mining was one of the few economic activities in that arid state and even the state's agricultural interests would have few people to sell to if it were not for mining companies and their employees (Dayton Gold & Silver Mining Co.).

In 1906, the Supreme Court upheld a Utah court's decision to allow a mine to put an aerial bucket line over private property it did not own (Strickley v. Highland Boy Gold Mining Co.). The "public welfare" of the state, "should not be made impossible by the refusal of a private owner to sell the right to cross his land."

In 1915, the Court said that states can take into account their special conditions of wetlands or desert, and if their plan for reclamation or irrigation promotes the public interest, "there is nothing in the federal Constitution" which prevents them from planning or exercising the power of eminent domain (O'Neill v. Leamer).

In 1954, the Supreme Court upheld a redevelopment plan targeting a blighted area of Washington D.C. While much of the area's housing was beyond repair, a department store in the area was not blighted. The court decided that this owner's private property rights were not as important as the redevelopment plan for the whole area (Berman v. Parker). The Court ignored the store owner's pleas that the taking was "taking from one businessman for the benefit of another businessman," holding that the survival of the redevelopment plan was more important.

More startling yet was the case of Hawaii Housing Authority v. Midkiff in 1984. Concerned that too much land on the island of Oahu was either government land or owned by one of 72 private landowners, the state decided to break things up. The legislature transferred fee title of the land from the private lessors to lessees for compensation "to reduce the concentration of land ownership." The Ninth Circuit court of appeals ruled against the Hawaii court, calling the taking "a naked attempt on the part of the state of Hawaii to take the property of A and transfer it to B solely for B's private use and benefit." The Supreme Court allowed the land grab to stand, concluding that, "the state's purpose of eliminating the `social and economic evils of a land oligopoly' qualified as a valid public use."

In a classic liberal stance, the court added, "It is only the taking's purpose, and not its mechanics," that matters in determining public use. In other words, the end justifies the means, and private property rights be damned.

Still another case involved intellectual private property rights. Also in 1984, the Court ruled that the EPA could consider the data - including trade secrets - submitted by a prior pesticide applicant in evaluating a later application, as long as the second applicant paid just compensation. The court acknowledged that the "most direct beneficiaries" of these provisions were the subsequent applicants but that "sparing applicants the cost of time-consuming research eliminated a significant barrier to entry in the pesticide market and thereby enhanced competition (Ruckelshaus v. Monsanto.) Translation: the EPA can let your competitors buy your hard- earned research knowledge whether you want to sell or not, without the hassle of finding it out themselves. The Court apparently did not consider the dampening affect on innovation and competition if the fruits of R&D efforts cannot be protected from competitors.

With such precedents, is there hope for private property rights?

Next time: The Dissenting Opinion Reveals Outrage and Hope

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Last Updated ( Saturday, 24 June 2006 )
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