Those of you who are students of eminent domain and the public use requirement know that in Berman v. Parker, 348 U.S. 26 (1954), the Court (in)famously held, "when the legislature has spoken, the public interest has been declared in terms well nigh conclusive."
Not only was the Court in Berman signalling that it was washing its hands of the Public Use Clause, but that case also -- less overtly -- revealed a shift from examining the use the property was to be put, to the purpose for which the property was being acquired, or as the above quote highlights, where a taking furthers the public interest. (A shift that, if you missed it, the Court confirmed in Midkiff where it held the eminent domain and police powers are "coterminous," and both are reviewed under the deferential rational basis standard.)
If that wasn't clear enough, the majority in Kelo hammered the point home, expressly equating New London's use of eminent domain to take property, with zoning used to regulate property's uses in Euclid:
Those who govern the City were not confronted with the need to remove blight in the Fort Trumbull area, but their determination that the area was sufficiently distressed to justify a program of economic rejuvenation is entitled to our deference. The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including—but by no means limited to—new jobs and increased tax revenue. As with other exercises in urban planning and development,12 the City is endeavoring to coordinate a variety of commercial, residential, and recreational uses of land, with the hope that they will form a whole greater than the sum of its parts. To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.---------------------12. Cf. Village of Euclid v. Ambler Realty Co., 272 U. S. 365 (1926).
But not only was Berman a shift from use to purpose, but also, as a consequence, shifted the time frame and actions scrutinized under the Public Use Clause. As John Ross put it in "The Despotic Power" episode of Bound by Oath:
In the past, the test concerned how the property was put to use after if was taken. But now [after Berman] courts began to hold that a taking itself could be a public use. Meaning, that the clearing of a slum itself was the public use, and, if property was put to private use afterwards, that didn’t matter. According to Wendell Pritchett, a law professor at the University of Pennsylvania, this shift was a dramatic expansion of the power of eminent domain.
With that in mind, take a look at the Nevada Supreme Court's recent decision in Mass Land Acquisition, LLC v. First Judicial District, No. 2024-85983 (Oct. 17, 2024), where it held that the Nevada Constitution's provision barring takings where the property is transferred to another private owner only prohibits takings where the government transfers property it has taken to a private owner, and doesn't prohibit a private delegee of the eminent domain power from taking it for itself.
First, the backstory. In the wake of Kelo, the people of Nevada comprehensively amended their state constitution to reform eminent domain practice. These reforms included such things as requiring disclosure of appraisals, eliminating future dedications from being considered as offsetting just compensation, inclusion of costs as part of compensation, and requiring a jury to resolve public use disputes. The first part of these constitutional amendments defined "public use" -
Public use shall not include the direct or indirect transfer of any interest in property taken in an eminent domain proceeding from one private party to another. In all eminent domain actions, the government shall have the burden to prove public use.
Nev. Const. art. 1, § 22(1).
Mass Land objected under this provision to the taking of an easement for a natural gas pipeline by Sierra Pacific Power, a private entity which has been delegated the power of eminent domain and operates as a public utility. Sierra Pacific sought immediate occupancy (quick take). After the trial court rejected Mass Land's objection that this isn't a public use under the constitutional definition, Mass Land asked the Nevada Supreme Court for a writ of mandamus or prohibition.
It argued that the taking of its property so that it ended up being owned by Sierra Pacific fell within the constitutional prohibition noted above: Mass Land's private private property was transferred by eminent domain "to another" private party, Sierra Pacific. Owned by A, then transferred to B by eminent domain. Game, set, match .... right?
The Nevada Supreme Court didn't see it quite as simply. It denied the writs, concluding that the Nevada Constitution only prohibits the use of eminent domain when a government condemnor takes property from A by eminent domain, and then subsequently transfers it to B, a different private owner. The "transfer" referred to isn't the transfer of ownership of the property by eminent domain, but rather the post-taking transfer of the condemned property to a private third party.
It doesn't matter that the situation here fits within the literal language of the constitution, because section 1 "prohibits taking private property for purposes of transferring the property to another private party for their use, protecting Nevadans from takings like the one that occurred in Kelo."
This section does not prohibit a regulated public utility that 'has the power of eminent domain," from taking property for a natural gas pipeline, a statutorily recognized public use.
Slip op. at 3-4 (citations omitted).
Did you catch the assumption the court made? The same as the U.S. Supreme Court made in Berman. There, as here, the court viewed the public use requirement not by asking who owned it before and who owned it afterwards and whether that transfer was accomplished by eminent domain. Rather, the court assumed the public use inquiry is one of motive and purpose, and if those are indeed public then it really doesn't matter what the ultimate use is, or even who ends up owning the property as a result of the taking -- even where the state's organic law plainly appears to prohibit it. This assumption allowed the court to validate this taking, yet it would be required to invalidate a taking where an actual government took Mass Land's property and then transferred it to Sierra Power. Same, but different.
Also, the court reaches another conclusion that isn't necessarily compelled by the text of the constitution. It held that section 1 only prohibits the condemnor from taking property and then transferring it to a third party; the provision does not prevent the condemnor from taking and then keeping it. The court focused on the term "transfer," and concluded that this language is "clear on its face," and means taking then transferring to another, and not simply transferring by eminent domain the ownership of property from its former owner to the condemnor:
Article 1, section 22(1)'s private-party transfer prohibition does not prohibit a private party to whom the power of eminent domain has been delegated from taking private property for public use. The use of the pasttense word "taken" in the same sentence as "transfer" contemplates that the exclusion refers to property that has already been taken through eminent domain and that is then subsequently transferred, directly or indirectly, to a private party. Although NV Energy's taking an easement across Mass Land's property results in the conveyance of a property interest from one private party (Mass Land) to another (NV Energy), the private-transfer exclusion is not triggered because the exclusion only applies to transfers that occur after the property has been taken by eminent domain. The exclusion in article 1, section 22(1) would be implicated if NV Energy took the property, then transferred it to another private party for their private use.2 But here, no subsequent transfer to a private party followed the taking, and NV Energy took the property for a natural gas pipeline, a statutorily recognized public use.
Slip op. at 11.
According to the court, reading the constitution any other way would torpedo the legislature's ability to delegate the power of eminent domain to private parties, and would thereby render another constitutional amendment adopted at the same time -- which defined "the government" as including private entities delegated eminent domain power -- superfluous.
We're not completely in agreement with this rationale, because the ratifiers could have been making a distinction between takings by government in which it keeps the property, and takings by a private "investor-owned" entity in which it keeps the property, intending only to nix the latter. After all, it it shouldn't be hard to see that that the bad thing that section 1 could be aimed at it the ultimate ownership, and not the mechanics of the transfer. But the court viewed the amendment solely as a reaction to Kelo, which the court saw as enraging the public only because New London took Kelo's property "for purposes of transferring it to a private developer as part of an economic redevelopment plan." Slip op. at 13-14. That may have been a part of it, but wasn't a large part of the public reaction to Kelo a rejection of the idea that Ms. Kelo's and her neighbors' properties were going to be owned by another private owner?
And even if mechanics and process is the focus, a self-dealing A-to-B transfer by eminent domain by a private actor seems at least as bad -- and likely worse -- than the government-as-middleman procedure endorsed by Kelo and Berman, and now this decision. Justice Stevens' Kelo majority and its reliance on Euclid leans heavily on procedure as the proxy for public purpose and intent. If the system seems to be functioning, then courts won't ask questions. But there's no indication in the Mass Land opinion about what procedures, if any, were present here that mirror the "carefully formulated" plan that "benefits the community" as in Kelo.
Perhaps the oddest analytical approach the Nevada court undertakes here is on page 13, where it concludes that because the delegation statute was adopted before the constitutional amendment, the statute must be protected. We thought it was the other way around.
We suppose we understand the impulses motivating the court here. Accepting the property owner's arguments would require a change in the way that eminent domain is implemented by private delegees of the power. And that could result in a lot of hassle for the way that things have always been done, and make it harder when private entities take and then keep the private property of another.
But maybe that was the point of the constitutional change?
Mass Land Acquisition, LLC v. First Judicial District, No. 2024-85693 (Nev. Oct. 17, 2024)
