November 10, 2009
Kelo's next twist: Pfizer to close New London facility
This is going to get some serious attention among eminent domain watchers. Pfizer just announced plans to close its R&D headquarters in New London, Connecticut. You will recall that Pfizer's facility was a major factor in the redevelopment plan at issue in Kelo v. City of New London. The Hartford Courant has the story and video:
Pfizer Inc. will shut down its global research and development headquarters in New London within two years, transplanting most of the 1,400 employees working there to its vast laboratory complex in Groton, the most dramatic fallout yet from the pharmaceutical giant's recent merger with Wyeth.
Now, the Pfizer facility was not on the same land as Susette Kelo's condemned home. But the announcement of Pfizer's plans was part and parcel of the overall redevelopment plan that the economic development corporation issued, which the U.S. Supreme Court found persuasive in justifying the "economic development" taking of property as within the meaning of the Public Use Clause. From Part I of Justice Stevens' majority opinion:
In January 1998, the State authorized a $5.35 million bond issue to support the NLDC's planning activities and a $10 million bond issue toward the creation of a Fort Trumbull State Park. In February, the pharmaceutical company Pfizer Inc. announced that it would build a $300 million research facility on a site immediately adjacent to Fort Trumbull; local planners hoped that Pfizer would draw new business to the area, thereby serving as a catalyst to the area's rejuvenation.
It looks as though the rejuvenation hasn't materialized, and now the would-be catalyst is packing up and leaving. The corporation's use of eminent domain in the Fort Trumbull area was intended to complement the jobs and taxes generated by Pfizer with a major redevelopment that was to include mixed-use projects, a marina, a waterfront conference center, and other good-sounding things. But apparently very little if any of that development has taken place. To be fair, the redevelopment was probably hindered by both the pending litigation and now by the economy. Either way, it looks like Pfizer (which makes Viagra among other pharmaceuticals) will not be taking advantage of the government's use of "e.d." in New London to fight "e.d." everywhere. [As Foghorn Leghorn would say, "that's a joke, son!"]
This news will probably become Exhibit A in any future fights against the use of eminent domain in redevelopment projects. Exhibit B will be Poletown, the Detroit neighborhood that was condemned for economic development purposes in 1981 at the behest of General Motors; at its peak the plant delivered about half of the promised 6,000 jobs and much of the former neighborhood land is unused. Some critics estimate that the Poletown effort cost $300 million. The Michigan Supreme Court reversed the Poletown holding on economic development takings just prior to Kelo in County of Wayne v. Hathcock, 471 Mich. 445 (2004).
1) This is one more nail in the coffin for economic development takings as a political issue. The post-Kelo backlash was as profound as it was surprising to those already familiar with the Berman and Midkiff precedents. With over forty states ostensibly renouncing the use of eminent domain for "economic development," the concept is anathema politically. The backlash--with support from across the political spectrum--seemed to have resonance mostly in arguments about property rights and/or equity. With the evident failure of New London's comprehensive redevelopment plan, opponents can add efficiency and effectiveness to their quivers.
2) That doesn't necessarily mean, however, that local governments won't be able to use eminent domain in redevelopment projects. Some states don't have anti-Kelo laws, as the Atlantic Yards controversy shows, and others have reforms that have wide "blight" loopholes or otherwise lack teeth, as Somin discusses in The Limits of Backlash: Assessing the Political Response to Kelo. While no one wants to say they are doing an "economic development taking" anymore, that doesn't mean that local governments won't be willing or able to justify condemnation as part of a project to revitalize an area.
3) The persuasiveness of comprehensive redevelopment plans to justify eminent domain may be challenged in the future. In takings litigation, courts are very deferential to legislative judgment and police powers, and the Kelo majority was obviously influenced by the comprehensive nature of the master plan. I don't see any big changes in judicial review as a result--it's a longstanding corollary of rational-basis review that the government doesn't have to have the best plan, it just has to be . . . rational. But the arguments will have more force in light of the New London story; perhaps more people will advocate for Justice Kennedy's concurring opinion argument for some sort of more "demanding" scrutiny.
4) Politicians and planners might be more cautious about hitching their redevelopment wagons to one big private entity. I'm as enticed as anyone by the idea of revitalizing a downtown/waterfront/etc. with a grand scheme that involves jobs, tax revenues, public-private partnerships, mixed-use development, walkable urbanism, transit, and the creation or enhancement of public space. But if the plan is based around promises from Pfizer, or GM, the incoming sports team, or any other single private entity or group, then the whole plan risks failure if the private actors decide to go elsewhere (even if it's because of litigation or the economy). When these plans fail to deliver, both the eminent domain power and the public fiscal resources are wasted.
UPDATE: Ilya Somin has some further analysis of the issue and of this post over at the Volokh Conspiracy. I think he is right: economic development takings will probably continue as long as the balance of power favors government actors (with the legal power) and private corporations (with the money) over individual property owners. I said above that politicans and planners "might" be more cautious, but I should have said that they should be more cautious; like Somin, I don't trust that they will do so. On the politics of the issue, I'd suggest that at least in the face of informed opposition, proponents of economic development takings ought to be more circumspect in the future.
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