Louisiana Supreme Court Upholds an Anticompetitive Taking

Date: February 02, 2018

Related Content: Legal - Blog State Louisiana

This week the Louisiana Supreme Court handed-down a long awaited decision in St. Bernard Port, Harbor & Terminal District v. Violet Dock Port, Inc., which we have discussed previously. At issue was a controversial exercise of eminent domain—which we think the U.S. Supreme Court may ultimately need to take-up. Indeed, this may provide the best opportunity yet for the Supreme Court to consider the limits of Kelo v. City of New London decision.

In St. Bernard Port, the St. Bernard Harbor & Terminal District, seeks to take a private company’s property—but not for a traditional use like expansion of a highway, or construction of a bridge. Instead, the port authority seeks to expand its existing operations by taking land owned by the Violet Dock company along the Mississippi River. Not only is the government taking this land to further its own public enterprise, but (more perniciously) the taking will eliminate private competition.

On its property Violet Dock had berths, which it contracted for use with the U.S. Navy for mooring vessels. And the company had begun to move into cargo operations, which placed Violet Dock in direct competition with the public port service. The NFIB Legal Center argued in a brief that the government could not use eminent domain to eliminate private competition.

Interestingly, the Louisiana Supreme Court agreed in principle that it is unconstitutional for government to use eminent domain to eliminate private competition with public enterprise. But, nonetheless the court upheld this act of eminent domain upon concluding that the primary purpose of the taking was to expand the public port authorities’ operations—not to safeguard a monopoly on port services. Unfortunately, this logic could justify any condemnation eliminating private competition merely by framing the taking as advancing a public enterprise.

The trouble is that an act eliminating competition is necessarily co-extensive with the public authority’s goal of furthering its public enterprise. Even the infamous Kelo decision said that government cannot take private property simply by pronouncing some ostensibly legitimate public use. So even though expansion of a public enterprise constitutes a generally valid public use, a taking should be understood as unconstitutional if the authority is knowingly eliminating private competition. But, in rejecting that formulation the Louisiana Supreme Court further stretched the Kelo decision in a manner effectively opens the door for pretextual takings. For this reason, the case is a good vehicle for the Supreme Court to reconsider whether Kelo was rightly decided in the first place.

With all that said, it is worth noting a silver-lining here. As Robert Thomas explains over at Inversecondemenation.comSt. Bernard Port was at least a win for small business on the question of just compensation. Indeed, while we vigorously dispute St. Bernard Harbor’s power to take Violet Dock’s property, we think its imperative that the company receive full and fair compensation to cover their loss.

Related Content: Legal - Blog | State | Louisiana

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