Hawaii Housing Authority v. Midkiff

Facts

After extensive hearings in the mid-1960's, the Hawaii Legislature found that the State and Federal Governments owned almost 49% of the State's land, while another 47% was in the hands of only 72 private landowners. On Oahu, 22 landowners owned 72.5% of the fee simple titles (full ownership of the land). The legislature concluded that this concentration skewed the residential fee simple market, inflated land prices, and injured the public tranquility and welfare. The landowners resisted a plan forcing them to sell their leased land. They pointed to significant federal tax liabilities and said those taxes were the main reason they had leased rather than sold. So the legislature enacted the Land Reform Act of 1967. It created a way to condemn residential tracts and transfer the fees simple to existing lessees. The legislature intended condemnation to make the sales involuntary and the federal tax consequences less severe. Under the Act, when 25 eligible tenants, or tenants on half the lots in a tract, whichever was less, applied, the Hawaii Housing Authority (HHA) could hold a hearing and decide whether acquisition would effectuate the Act's public purposes. If it so found, it could acquire the owners' full interest and sell the titles to tenants who applied. In practice the lessees supplied all the money for the awards. In April 1977 HHA held a hearing on some of the landowners' lands and made that finding.

Issues

1. Did the District Court abuse its discretion by not abstaining from deciding the case under the Pullman or Younger abstention doctrines?
2. Does the Public Use Clause, applied to the States through the Fourteenth Amendment, bar Hawaii from taking land from lessors, with just compensation, and transferring title to lessees in order to reduce the concentration of fee simple ownership?

Holding

Abstention was not required. Hawaii's use of eminent domain to transfer fee title from lessors to lessees, to correct market deficiencies the legislature determined were attributable to land oligopoly, is a rational exercise of that power. It does not violate the Public Use Clause, assuming just compensation is paid.