Today in 1984: SCOTUS upholds Hawaii land redistrubution eminent domain plan

May 30, 2014

Today in Legal HistoryA lot of people are uncomfortable with the government seizing property from private parties, regardless of the reasons for doing so.

And it makes even more people even more uncomfortable when the government seizes private land and directly transfers it back to other private parties, rather than making public use of it.

Case in point: Kelo v. City of New London, a 2005 Supreme Court case that upheld a city’s use of eminent domain to seize private property to use for a private redevelopment project to boost the city’s ailing economy.  Kelo was received very negatively by the general public, and continues to be regarded poorly today.

Interestingly, though, another Supreme Court case, decided over 20 years before Kelo – and one that involved private property takings on an even grander scale than Kelo – was met with little public outrage, despite the fact that the private property taken by the government was directly transferred to other private parties.

That case, Hawaii Housing Authority v. Midkiff, was decided 30 years ago today, on May 30, 1984.

Midkiff’s takings involved a regime by the state of Hawaii to redistribute private land to break up the state’s longstanding land ownership oligopoly.

This “longstanding land ownership oligopoly” stemmed from the state’s feudalist past, and, despite several reform attempts, persisted well into the 20th Century.  For example, in the mid-1960’s, after extensive hearings, the Hawaii Legislature discovered that, while the state and federal governments owned almost 49% of the state’s land, another 47% was in the hands of only 72 private landowners.  Furthermore, the legislature also found that 18 landholders owned more than 40% of this land and that on Oahu, the most urbanized of the Hawaiian islands, 22 landowners owned 72.5% of the fee simple titles.

The legislature’s solution to this problem was the Land Reform Act of 1967, which compelled the large landowners to break up their estates. To avoid significant federal tax liabilities, the legislature opted to create a mechanism for condemning residential tracts and for transferring ownership of the condemned properties to existing lessees (who already owned homes on the land owned by the large landowners), rather than simply transferring the properties directly.  The condemnations made the property transfers involuntary.

Under the scheme, tenants living on single-family residential lots within developmental tracts at least five acres in size were entitled to ask the Hawaii Housing Authority (HHA) to condemn the property on which they lived.  Once enough tenants filed these applications, the HHA holds a hearing to determine whether state acquisition of the property will “effectuate the public purposes” of the Act.  If it determines that the public purposes would be served, it arranges for the condemnation and transfer of the property, with compensation for the land being determined by trial or negotiations.

Some landowners weren’t happy with the plan, so when some of their lands were targeted for sale, they filed suit, challenging the constitutionality of the law.

The landowners lost at the trial court level, but prevailed at the court of appeals.  The Supreme Court agreed to review the case.

The Court ruled unanimously in favor of the state of Hawaii (with Justice Marshall taking no part in the decision), upholding the constitutionality of the land redistribution plan.  The Court found that, as it had previously stated on numerous earlier cases, one person’s property may be taken for the benefit of another private person so long as it is rationally related to a conceivable public purpose.

The Court found that Hawaii has such a public purpose justifying its takings scheme:

The land oligopoly has, according to the Hawaii Legislature, created artificial deterrents to the normal functioning of the State’s residential land market and forced thousands of individual homeowners to lease, rather than buy, the land underneath their homes.

Why was there so little outcry against Midkiff, which involved a government takings program far vaster than that at issue in Kelo?  For one, there has been a rise in general distrust of government among the populace between Midkiff and Kelo.  But, perhaps more significantly, as noted in an earlier Today in Legal History installment, Kelo’s property transfer was, generally speaking, from poor to rich, whereas Midkiff’s transfers were the other way around.

Still, Midkiff’s holding – upholding a takings program that literally reshaped the land ownership map of Hawaii through involuntary transfers – is still significant.  And, given the high level of government distrust found today among certain ideologies, particularly among some sitting Supreme Court justices, it’s somewhat unlikely that the Court would have reached the same result were Midkiff decided today.