Property rights and eminent domain

Hands off our homes
Aug 18th 2005 | ARDMORE, PENNSYLVANIA
From The Economist print edition

A Supreme Court ruling that allows the government to seize private property has set off a fierce backlash that may yet be as potent as the anti-abortion movement

IF YOU ever doubted the importance of the Supreme Court, consider the fuss about Kelo v New London. The five-to-four ruling by the court on June 23rd, apparently giving the government the power to bulldoze homes on flimsy grounds, has set off fiery protests across the country.

Americans used to believe that their constitution protected private property. The Fifth Amendment allows the state to seize it only for “public use”, and so long as “just compensation” is paid. “Public use” has traditionally been taken to mean something like a public highway. Roads would obviously be much harder to build if a single homeowner could hold out forever or for excessive compensation. The government’s powers of “eminent domain” have also been used to clean up “blighted” slums.

Findlaw.com posts the Supreme Court’s ruling in Kelo v New London. Castle Coalition and the Institute for Justice campaign against eminent-domain abuse. The Save Ardmore Coalition wants to prevent an eminent-domain seizure in its town. Grover Norquist is president of Americans for Tax Reform.

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Kelo was about something different, however. A private developer in New London, Connecticut, wanted to raze some perfectly nice waterfront homes to build an office block and some posh apartments. The owners didn’t want to sell. The city decided to force them to, calculating that the new development would create jobs and yield more taxes.

The Supreme Court took the city’s side. Rejecting “any literal requirement that condemned property be put into use for the …public”, Justice John Paul Stevens said it was enough that the seizure should serve some vaguely defined “public purpose”—such as those new taxes. This had nothing to do with slums or roads: instead, it massively expanded the government’s power of eminent domain.

The backlash began immediately. Dissenting justices such as Sandra Day O’Connor (who retired last month) pointed out what extraordinary powers the court had just granted the government. “The spectre of condemnation hangs over all property,” she wrote. “Nothing is to prevent the state replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.”

If people can be evicted to make way for others who might pay more taxes, added Clarence Thomas, the court’s only black justice, it is not hard to predict who the most likely victims would be. “Urban renewal”, he noted, has sometimes been nicknamed “negro removal”.

Seven days later, by a ten-to-one margin, the Republican House of Representatives passed a motion disagreeing with the court. A constitutional amendment to overrule Kelo is before the House, while a bill that would have a similar effect is before the Senate. Delaware, Alabama and Texas have already passed laws restricting the government’s power to grab private property. Legislators from two dozen other states have either proposed similar bills, or promised to do so.

Meanwhile, a grass-roots movement has arisen to keep other people’s hands off private homes. Libertarian groups such as the Institute for Justice, which were campaigning against eminent-domain abuse before Kelo, report an upsurge in support, both moral and monetary.

Property grabs on behalf of private developers have been common for some time: the Institute for Justice documented some 10,000 threatened or actual cases between 1998 and 2002. Several cities, including New York, claim that without eminent domain they could never have cleaned up their shabby centres; you could not have created the big spaces that modern retailers wanted at Times Square without forcing small shops to sell.

Since Kelo, the law may have shifted in favour of the men with the bulldozers, but public opinion has swung sharply the other way. Polls suggest that 90% of Americans disapprove of the kind of seizures allowed by Kelo. Such is the anger that some developers say they are shunning even the kind of eminent-domain seizures that would have been legal before Kelo.

Property-owners fighting against local government have been buoyed by the backlash. In the town of Ardmore, Pennsylvania, for example, a small group of businessfolk received letters last year informing them that their shops were to be demolished to make way for a new development including apartments and a parking garage.

Their story is typical of the cavalier fashion with which eminent domain has been used, even before Kelo. Ardmore is part of the township of Lower Merion: its board of commissioners had decided that Ardmore’s central thoroughfare needed sprucing up. They had some federal funds to build a new railway station, and they decided it would be nice if more commuters could live nearby so they could walk to the station. But instead of offering to buy out the people whose businesses would have to be demolished, they simply told them they would have to move.

“It was devastating,” says Eni Foo, whose Chinese restaurant is on the list. “I’ve been in the United States since 1963. I came as a graduate student and stayed because I love America. I always believed America [respected] individuals’ rights.”

The local government had declared the area “blighted”. But a brief walkabout reveals that it is no more blighted than the potato you ate for lunch. A couple of shop fronts are a bit tatty, but otherwise it looks fine. Indeed, the district has been officially designated “historic”, since much of it was built in the 19th century. The condemned properties include a second-hand shop that supports the local hospital, a club for veterans of foreign wars and Scott Mahan’s stationery shop, which has been in his family since 1926.

“I’m not an activist,” says Mr Mahan, “but the more I read about it, the angrier I got. If they were going to do it the American way, they’d negotiate with everyone until everyone was happy. But using eminent domain is totally different.”

Mean streets

Those who are uprooted under eminent domain must be given fair compensation. But if they have no choice but to sell, it may be hard to determine what a fair price for their property is. Developers who know the sellers have to sell will surely be tempted to “lowball” their offers.

The question is not whether the development plan is good or bad. (Some say it will make Ardmore prettier and less congested; others that it will make it uglier and more yuppified.) What matters is whether the plan represents such a pressing public good that it is reasonable to use the state’s vast coercive power to execute it. For most Americans, Interstate-95 passes muster, but yuppie condos don’t.

The merits or otherwise of the Ardmore plan have been obscured by the protests it has provoked. The “Save Ardmore Coalition” now has 1,000 members—not bad for such a small town. Its members have linked up with national groups such as the Institute for Justice. And since Kelo, state and national politicians have started to take an interest. The Pennsylvania legislature is considering a bill to curb the abuse of eminent domain. Mr Mahan is going to testify.

Lower Merion’s board appears to be retreating. Matthew Comisky, its president, admits that it was a mistake to send out those letters summarily telling shopkeepers they were to be evicted. He says that no final decision has been made as to whether to invoke eminent domain. The plan must first undergo an environmental audit, he says, and the board will not be able to vote on a final plan until next year. He denies that the protests have prompted the board to change tack, but admits that the protestors “have done a good job of publicising themselves.”

Small-government conservatives hope that Kelo will prove to be a tipping point. “Twenty years from now, people will look back at Kelo the way people look back at Roe v Wade [the 1973 Supreme Court decision that barred the states from banning abortion],” says Grover Norquist of Americans for Tax Reform, a lobby group.

Before Roe, state legislatures were legalising abortion one by one, without provoking much protest. Roe galvanised pro-lifers by suddenly making (fairly unrestricted) abortion legal everywhere in America, and by doing so in a way that many still regard as illegitimate. The majority judges decided that the constitution contained a “right to privacy” which, though not mentioned anywhere in the text, allowed any woman to abort her foetus in the first trimester.

The Kelo ruling was less convoluted, but its opponents think it equally unconstitutional. Mr Norquist calls it both “outrageous” and “manna from heaven”, since the property-rights movement it spawned will be at least as electorally significant as the anti-abortion movement. It will be worth 3-5% of the vote, he predicts.

Meanwhile, it has trebled Mr Comisky’s workload. Since he also has a full-time day job as a lawyer, this means he hardly sees his family. “Last night I put my son to sleep at 9pm and got up 3am,” he says. He adds that he will not seek re-election when his term expires.

World Bank Plays Down Diesel Rules

By JEFFREY BALL
Staff Reporter of THE WALL STREET JOURNAL
June 23, 2004; Page A15

The World Bank plans to recommend that developing countries hold off on mandating a cleaner diesel fuel being adopted in the U.S. and Europe, putting the international lender at odds with U.S. environmental regulators.

The World Bank doesn’t have any official authority over a nation’s environmental rules. But because it lends money for projects throughout the developing world, its advice holds great influence there.

The World Bank’s report, scheduled to be released next week, concludes it would be too expensive for many developing countries to mandate diesel fuel that is as low in sulfur as the blend U.S. and European regulators are demanding. For now, the bank says, less-esoteric cleanup strategies will deliver more bang for the buck — moves such as inspecting vehicles periodically to make sure they are being kept in good repair.

“There are a lot of countries that, if they think this is the magic bullet and they invest in this, they’re going to be grossly disillusioned,” said Todd Johnson, a senior environmental specialist at the World Bank and one of the authors of the report. The World Bank agrees it is important for developing countries to move toward lower-sulfur fuels, but for many of those countries, going as far and as fast as the U.S. is “not really a very realistic recommendation,” he said.

At the U.S. Environmental Protection Agency, Margo Oge, director of the agency’s office of transportation and air quality, said the World Bank report “threatens to undermine the efforts” of developing countries where regulators are pushing for U.S.-style sulfur limits, including Mexico, China, India and Thailand. “It does raise the question: Why are these developing countries moving forward when the bank is advising them to do something significantly different?” she added.

At issue are efforts in developing countries to curb air pollution, particularly in big cities. Sulfur occurs naturally in crude oil, but when it is burned in an engine, it can contribute to respiratory problems in people and to acid rain. Sulfur-heavy diesel fuel also hobbles a new generation of cleaner-diesel vehicles that auto makers are rolling out.

The U.S. has mandated that diesel fuel average no more than 15 parts per million of sulfur by 2006, a tiny fraction of the averages of several hundred parts per million in the U.S. and several thousand parts per million in much of the developing world.

One of the major clean-air goals of the EPA has been to encourage developing countries to follow the U.S.’s lead. Diesel vehicles typically get about 30% better fuel economy than comparable gasoline-powered models, so the EPA figures they could help cut U.S. oil dependence and curb global warming. Burning fuel in an engine produces carbon dioxide, the main suspected global-warming gas.

The World Bank’s stance is supported by the oil industry, in which industry groups say the new U.S. sulfur limits will be too expensive. The World Bank is offering “a realistic view of how air-pollution problems should be addressed in developing countries,” the International Petroleum Industry Environmental Conservation Association, a London industry group, said in written comments on a draft report in April.

The final version of the World Bank report recommends that a top clean-air priority for developing countries should be removing lead from gasoline.

Then, the World Bank suggests, developing countries should reduce the sulfur level of diesel fuel to 500 parts per million and lower “as soon as possible.” In parts of the developing world where that is “very difficult in the near term,” and where lowering it to 2,000 to 3,000 parts per million “is relatively inexpensive,” the report recommends “immediately moving to this level.”

Environmental activists echoed the EPA’s criticisms. “The bank’s guidelines give cover to any policy maker who wants to do nothing,” said Richard Kassel, senior attorney for the Natural Resources Defense Council, a New York environmental group.

Write to Jeffrey Ball at jeffrey.ball@wsj.com

Green Groups Move To Clean Up China
New Generation of Activists Emerges as Country Faces Strains of Economic Growth

By PETER WONACOTT
Staff Reporter of THE WALL STREET JOURNAL
June 14, 2004; Page A13

HEFEI, China — When Wen Bo was a college student, he put up a handmade poster on his college campus warning that the “Earth is in Crisis.” He then spent the rest of a June afternoon trying to raise environmental awareness at a local police station.

“They had never heard of Earth Day,” Mr. Wen says of the plainclothes police who detained him. The police grilled the student toting a poster with the suspicious-sounding slogan on the anniversary of the government’s June 4 Tiananmen Square crackdown, but the interrogation had an upside: “It was a great opportunity to publicize our cause,” he says.

By PETER WONACOTT
Staff Reporter of THE WALL STREET JOURNAL
June 14, 2004; Page A13

HEFEI, China — When Wen Bo was a college student, he put up a handmade poster on his college campus warning that the “Earth is in Crisis.” He then spent the rest of a June afternoon trying to raise environmental awareness at a local police station.

“They had never heard of Earth Day,” Mr. Wen says of the plainclothes police who detained him. The police grilled the student toting a poster with the suspicious-sounding slogan on the anniversary of the government’s June 4 Tiananmen Square crackdown, but the interrogation had an upside: “It was a great opportunity to publicize our cause,” he says.

Mr. Wen hasn’t missed many opportunities since that encounter back in 1991. An energetic evangelist for the environment, the 32-year-old is at the forefront of a new generation attempting to clean up China. Mr. Wen, who dresses in T-shirts and baggy hiking pants, dashes around the country helping to organize and fund fledgling groups — from farmers in China’s far west seeking to stop the desert sands encroaching on their land to Chinese sailors trying to protect sea life.

“Ordinary citizens have outlets that we didn’t before,” Mr. Wen says. “You can be a bird watcher and an environmentalist.”

The swelling number of groups speaks both to the country’s problems and to how the political system gradually is opening to new voices. Some see these activists as helping to shape China’s future, as the government seeks to respond to the strains of economic growth.

“They are pushing the envelope slowly but surely,” says Elizabeth C. Economy at the Council of Foreign Relations in Washington, the author of a new book on China’s environmental challenges called “The River Runs Black.” She adds: “It is an extraordinary transformation.”

It arrives at a critical time not only for China but for the world. Thanks to booming demand for energy and a burgeoning car population, China is the world’s second-biggest producer of so-called greenhouse gases — the emissions widely believed to speed global warming by trapping the sun’s rays in the Earth’s atmosphere. Experts expect China to surpass the U.S. as the No. 1 producer by 2030. Some of China’s proposed dam projects threaten the flow of rivers into Southeast Asia. Wealthy urbanites fixing up their homes are fueling a timber trade that China’s environmentalists claim is destroying forests in Siberia, Indonesia and Myanmar.

By official count, China has more than 2,000 nongovernmental environmental groups, up from virtually zero a decade ago. Many have registered as companies to avoid heavy-handed government control, and some skirt registration, operating beneath official radar.

The government’s more accommodating stance is a big shift from the experiences of China’s earlier environmentalists. Journalist Dai Qing spent the late 1980s speaking out against the proposed Three Gorges Dam, and then was jailed when the government clamped down on its critics following the 1989 massacre of democracy protesters at Tiananmen Square. The completed project attracts contention from a new generation of China’s environmentalists. One problem: long belts of garbage float along the reservoir, interfering with ship navigation, according to the government-run Xinhua news agency.

“We used to be tools of the state — no independent thought,” says Ms. Dai, who still is tailed occasionally by state security agents. “People are more open now and, increasingly, they want more out of life than fashionable clothes and fancy cars.”

China’s new green groups inhabit a wide spectrum. Green Student Organizations, or Green SOS, is a nationwide network of students established in 2001 that offers environmental information and training via the Internet. Snowland Great Rivers and Environmental Protection Association, founded by two Tibetans, seeks to protect the mountain origins of many of China’s biggest rivers. And in a sign of how notions of social consciousness can spread beyond environmental causes, young lawyers in Shanghai recently started a volunteer network called Grassroots Community. It offers legal assistance not only to environmental victims but also to workers and those with medical issues.

This new generation of activists has showed a willingness to heed prescribed boundaries. Zhang Jianyu, program manager in China for U.S.-based group Environmental Defense, has polished his lobbying skills trying to solve pollution problems. He works with central and local governments promoting emissions trading — a system that has local governments set pollution quotas for factories. Companies can sell credits if they generate less than their allotted share of pollutants, or buy them if they want to expand. Mr. Zhang, who recently returned to China after attending graduate school at Stanford University and Carnegie Mellon University, sometimes obliges requests of officials to write recommendations for sons and daughters who want to study in the U.S.

“If you have to solve a problem in China, you need to work with the government,” he says.

To some, China’s rising wealth and widening liberties mean environmental issues carry less of a political edge than in the past. Last year, several Chinese environmental groups organized an Internet campaign opposing a government plan to build 13 hydropower projects on the Salween River, which flows into Myanmar and Thailand. Top leaders thus far have withheld final approval, according to Water Ministry officials. Zhong Min of Greenroots Power says the petition wasn’t about politics.

“This is a beautiful river,” says Ms. Zhong, sipping an iced coffee at Starbucks in Shanghai. “We didn’t want to see it destroyed.”

Mr. Wen’s brand of environmentalism also has taken a less confrontational approach. The son of two machine-tool workers in the northeast city of Dalian, Mr. Wen grew up fascinated with the high-profile brand of environmental activism practiced by Greenpeace. After watching news clips of the group’s Rainbow Warrior ship plying the open seas, Mr. Wen and his schoolmates christened a rubber raft of the same name and paddled down a dirty canal. As a college student in the early 1990s, Mr. Wen wrote to Greenpeace headquarters — and then several offices in Europe — offering to set up a branch in China.

“He was obsessed with Greenpeace,” says Wu Changhua, a reporter for China Environmental News at the time who helped Mr. Wen find the group’s address.

Greenpeace wouldn’t arrive in mainland China until nearly a decade later in 2000, at which time Mr. Wen would help set up the office. In the meantime, he began to realize that what China really lacked were homegrown groups. In 1996, he founded Green Student Volunteers, a network of 100 or so student environmental groups that would hold meetings and share information. Mr. Wen went on to study in India and South Korea, and worked in the U.S. at several environmental organizations.

Mr. Wen now works through a Colorado-based organization called Global Greengrants Fund. Because he is a master networker but no policy wonk, the job plays to his strengths, those who know him say. As Chinese coordinator, Mr. Wen visits private environmental groups and often awards them small donations of cash, helping them surmount obstacles to survival in China.

On a recent trip to Anhui, Mr. Wen attended a forum for student groups across the province, one of the least developed in eastern China. As he walked into a classroom at the Water Conservancy and Hydraulics Institute, 60 pairs of eyes adjusted to the sight of the clean-cut activist with a shy grin.

Mr. Wen, wearing a blue Greenpeace T-shirt emblazoned with a fish bone, blinked under the fluorescent lights. Then, without notes, he began a 90-minute rundown of China’s environmental problems, from dams to illegal wildlife trade to its anything-goes economic growth. “The Western media likes to refer to China as the ‘world’s factory,’ but really we have become the world’s kitchen,” Mr. Wen said. “We make the goods and send them overseas, and all the chicken bones and grape pits are left with us.”

That model of development is visible in Anhui. Like cities across China, the province capital, Hefei, is scarred by half-completed buildings and a mostly empty industrial zone on the city’s outskirts. Factory haze shrouds the city. At Anhui’s premier tourist site, one of China’s most famous mountains, Huangshan, fabled pine trees are drying up and dying. They have been replaced by plastic replicas. Environmentalists blame the many hotels on the mountain that are sucking up the ground water. (See related article.)

After the talk that evening, students flocked around Mr. Wen — including some who appeared smitten. “I didn’t realize Professor Wen was so … young,” one female student said. “We worship him,” her friend added.

At dinner that night, some students complained that school authorities were holding them back. They have organized across universities via the Internet. Some groups are eager to investigate river pollution; others want to organize citywide recycling campaigns. But university officials ask students to keep close to campus.

Officials’ nervousness about losing control of the groups became apparent when the students had to move their environmental forum off campus. The reason echoes Mr. Wen’s early brushes with politically sensitive police: big student gatherings were banned ahead of the June 4 Tiananmen anniversary. But the forum took place anyway at a nearby hotel, and even some local environmental officials attended the opening ceremony.

In between his tips on fund raising — “coffee mugs sell well … music concerts draw big crowds … be transparent with your finances” — Mr. Wen delivered his own green gospel to the young crowd. “This generation has a huge responsibility,” he told the students. “This is our time for a major contribution.”

Write to Peter Wonacott at peter.wonacott@wsj.com