Public Ruses

Abstract

The Fifth Amendment's public use requirement - a dead letter for decades - has recently been resurrected by the Michigan Supreme Court, overruling Poletown, and by the United States Supreme Court, granting certiorari in Kelo v. City of New London. At issue in these cases is the government's ability to condemn property from one private property owner and retransfer it to another, usually with a justification of more-or-less indirect economic benefits to the community. This Essay first argues the legitimacy of these government actions exists on a spectrum from true public uses, to public ruses that primarily benefit private interests but have some benefit to the public, to naked transfers that appear to be nothing but giveaways. This Essay argues, however, that the key to resolving these condemn-and-retransfer cases is not injunctive relief but instead a flexible approach to compensation. In particular, the Essay proposes valuing property taken for a public ruse using the government's own economic assumptions about this effect of the condemn-and-retransfer scheme, thus increasing compensation for the property owner and also increasing the government's incentive to make realistic economic predictions. For naked transfers, the Essay proposes gain-based compensation in order to put the government to the test that the condemnation will actually create some surplus public benefit. Ultimately, liability rule protection provides a better solution than property rule protection for condemn-and-retransfer cases.

Keywords: Takings, Property, Public Use, Kelo