If I had an adamant opinion about the Supreme Court’s decision today to extend eminent domain by determining that “economic development” qualifies as “public use” and its implications for city planning, I would certainly be posting that right now. But it’s only been about eight hours since they released their opinion, and if I could come up with a well thought out opinion on such a complicated issue that fast, I’d probably be on the Court itself. I have been further convinced that these are nine of the smartest and most well-read people on the planet, though.

So instead of that adament and definitive opinion, I’ll just outline some of the issues I was thinking about as I read through Stevens’ opinion and the dissenting remarks of O’Connor and Thomas. (Kennedy also wrote a concurring opinion.)

I’ll do it below the fold though.One of the taglines from the majority’s opinion was this: “Promoting economic development is a traditional and long-accepted function of government.” This is probably why some libertarians are a wee bit riled up about this opinion. From that perspective, promoting economic development is the last thing government should be doing.

However, it is written into the common law and the Constitution that the government can take property after paying fair market value if it’s used for something that will be publicly owned or privately owned but available for the public’s use. Given that the government is granted this power, you might think that libertarians would be satisfied that what was previously a government action, improvement of lands for the public good, which is extended to economic development by this opinion, is now being outsourced to private companies that respond to markets.

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There is, however, the potential for market failure here in that the collective action of the property owners has the ability to distort what the typical fair market value of their property might be. The individual properties will be of little value to the developers if all of the property cannot be obtained, making the last property to be bought worth much more than market value to the developers. According to the dissent, though, “Petitioners are not hold-outs; they do not seek increased compensation, and none is opposed to new development in the area.” They simply disagree that the land is being used for the public good. Thus what is perhaps the strictest libertarian perspective that the government should not be involved at all and that private developing companies should negotiate the sale of whatever land they need for a project could be derailed because of this distortion in the market.

The dissent (which I think I might be leaning towards at this point) also had this barb to throw:

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The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more.

And just in case you were wondering how this is relevant to Gristmill, this was in the Thomas dissent:

Though use of the eminent domain power was sparse at the time of the founding, many States did have so-called Mill Acts, which authorized the owners of grist mills operated by water power to flood upstream lands with the payment of compensation to the upstream landowner.

(Emphasis added.)

More to come; hopefully it will be more targeted and focused on what impact this has on city planning.