Eminent domain

Eminent domain is the inherent power of the state to seize a citizen's private property, or rights in private property, without the owner's consent. The property is taken either for government use or by delegation to third parties who will devote it to "public use." The most common uses of property taken by eminent domain are public utilities, highways, and railroads. Some states require that the government body offer to purchase the property before resorting to the use of eminent domain.

The term expropriation as used in the law of eminent domain is not to be confused with situations in which private property is seized by revolutionary governments from its former owners and confiscated without payment. It should also be differentiated from forfeiture which is an uncompensated seizure of contraband from criminals and its confiscation by the government.

The term "condemnation" is used to describe the act of a government exercising its power of eminent domain to transfer title to private property from its rightful owner to itself. It is not to be confused with the same term that describes a declaration that real property, generally a building, has become so dilapidated as to be legally unfit for human habitation due to its physical defects. This type of condemnation of buildings (on grounds of health and safety hazards or gross zoning violation) usually does not deprive the owners of the title to the property condemned but requires them to rectify the offending situation or have the government do it for them and bill them for the cost.

Condemnation via eminent domain indicates the government is taking the property or an interest in it, such as an easement. In most cases the only thing that remains to be decided when a condemnation action is filed is the amount of just compensation, although in some cases the right to take may be challenged by the property owner on the grounds that the attempted taking is not for a public use, or has not been authorized by the legislature, or because the condemnor has not followed the proper procedure required by law.

The exercise of eminent domain is not limited to real property. Governments may also condemn personal property, such as supplies for the military in wartime, franchises, as well as intangible property such as contracts, patents, trade secrets and copyrights.

History

The first case of eminent domain in English law is called the "Saltpeter Case" or the "King's Prerogative in Saltpeter Case." The English King needed saltpeter for munitions and took a saltpeter mine from a private individual. The private party sued the King and the court established the right of the sovereign to take "private property for public use" without liability for trespass but requiring payment of compensation for the taken saltpeter. When the Colonies became the United States and the English Common Law was adopted as the law of the new nation, this principle was recognized. Contrary to popular belief, the Fifth Amendment to the Constitution did not establish this right in the US, as it was already inherent in common law. The Fifth Amendment limited the right of eminent domain by requiring that takings be for "public use" and that "just compensation" be paid for the taken property. The term eminent domain is used primarily in the United States, where the term was derived in the mid-19th century from the legal treatise, De Jure Belli et Pacis, written by the Dutch jurist Hugo Grotius in 1625, who used the term dominium eminens and described the power as follows:

"... the property of subjects is under the eminent domain of the state, so that the state or he who acts for it may use and even alienate and destroy such property, not only in the case of extreme necessity, in which even private persons have a right over the property of others, but for ends of public utility, to which ends those who founded civil society must be supposed to have intended that private ends should give way. But it is to be added that when this is done the state is bound to make good the loss to those who lose their property."

Allodial vs Feudal Title

"Allodial title" is the title to land generally held in freehold, by an individual or group that is sovereign on that land. Thus, in English Law, only the Monarch holds allodial title. All others are tenants of the sovereign through their feudal vassalages. Sovereigns generally gain allodial title either by grant of another sovereign to such title, or through Right of conquest. In this respect, while colonial American land grants were typically feudal grants in fee-simple, the victory of the American cause in the Revolutionary War is considered an act of conversion to allodial title, such that the King was no longer the sovereign of the colonies. However, the new holders in this case are the several states that engaged in the revolution, and it is upon this basis that the practice of fee-simple titles is continued in the United States. This is an issue of dispute by some constitutionalist and property rights groups, with some individuals occasionally attempting to patent allodial titles to their land. Some states, notably Nevada, have instituted an Allodial Title Program in which property owners can purchase allodial title to their land essentially by paying an amount discounted from the sum of all future property taxes for the term of the owner's life expectancy.

United States

In the United States, the Fifth Amendment to the Constitution requires that just compensation be paid when the power of eminent domain is used, and requires that the property be taken for "public use."These requirements are sometimes called the takings clause.

The original judicial construction of "public use" was relatively strict: it required that the land be used by the public, the common example being military installations, government buildings and public roads, as well as railroads and public utility facilities. The term "public use" became interpreted more expansively in Berman v. Parker (1954), in which the U.S. Supreme Court reviewed an effort by the District of Columbia to raze properties that were primarily--but not entirely--blighted, in order to transfer their sites to private redevelopers who would construct condos, private office buildings and a shoppping center. The Supreme Court ruled against the owners of non-blighted properties within the area sought to be seized on the grounds that the project should be judged on its plans as a whole, not on a parcel by parcel basis. The Court held that the term "public use" encompassed a broader notion of public benefit than simply providing government facilities, railways and other utilities commonly used by the public. The elimination of blight was held to be such a clear responsibility of government, that it justified the use of the eminent domain power. Hawaii Housing Authority v. Midkiff (1984) arose from the Hawaii legislature's determination that private ownership of land on the Island of Oahu was concentrated in so few hands as to form an oligopoly, causing the private market in land to malfunction. In response, the Hawaiian government proposed to increase the number of owners by, among other things, granting full ownership rights to those who previously used land as a tenancy. Again, while on its surface the case involved a transfer of land from one private party to another, the Court held that the elimination of an oligopolistic market in land was a sufficient public benefit justifying the redistributional takings.

The U.S. Supreme Court has largely given the public use requirement an expansive interpretation and has allowed takings of private property for reconveyance to other private parties, or in some cases by private parties directly, on the theory that the new owners will put the taken land to more lucrative uses that are likely to generate more tax revenues. This is known as "economic redevelopment." It uses eminent domain to enable acquitre and then convey land to commercial development or redevelopment to increase tax revenues. The Supreme Court's decision in Kelo v. City of New London, 545 U.S. 469 (2005), affirmed the majority decision of the Connecticut Supreme Court and allowed such takings, was heavily publicized in the media. This increased awareness of eminent domain post-Kelo, inspired a great public outcry. Several states have enacted or are considering state legislation that would drastically restrict the state's own power of eminent domain. The Supreme Courts of Illinois, Michigan (County of Wayne v. Hathcock)(2004)[1], and Ohio (Norwood, Ohio v. Horney)(2006) have recently ruled to disallow such takings under their state constitutions.

The protesters maintain that the Kelo judicial approach favors wealthy redevelopers at the expense of lower middle class individual home owners, and encourages profligate municipal expenditures in support of dubious private projects that sometimes fail to achieve the promised public benefits.

Most courts have held the fair market value of the condemned property to be the constitutionally required "just compensation." Its determination is a judicial question, and it is usually determined in a trial by jury, on the basis of the parties' appraisal testimony. Some states (Connecticut, New York and Rhode Island) do not use juries. There, condemnation awards are made by judges. Critics contend this damages personal property rights.

Public use

The current Supreme Court understanding dates back to 1984 when Justice O'Connor held in Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984) that Hawaii's redistribution of land was constitutional. One must understand what the High Court had held as "public"; for local government in zoning cases as in Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926) and in city urban renewal projects like in Berman v. Parker, 348 U.S. 26 (1954) public use was quite expansive. O'Connor tried to craft an opinion which allowing for the state's actions, tried to limit incentives for expansive views of public use. The current rule on public use upholding the eminent domain power of state government was generally affirmed by Kelo v. City of New London, 125 S. Ct. 2655 (2005), though the justices recognized that the several states have the authority to pass statutes or state constitutional amendments further restricting eminent domain by either defining public use narrowly in their states or by granting property owners more rights than the federal Constitution if they so chose. Many have taken up the challenge, with Alabama, New Hampshire, and several other states passing temporary statutes as well as constitutional amendments to restrict eminent domain strictly to uses in which the property will be owned by a government entity. One such amendment was approved in Florida's 2006 statewide elections.

Economic argument of hold outs

Supporters contend that seizures of private property are necessary to the improvement of communities when transactions costs prevent private parties from agreeing on the most efficient use of land. Opponents point out that over a period of 200 years, American city-dwellers created large land assemblages and major structures without the coercive power of eminent domain, which they never got to use for urban redevelopment until the 1950s. Critics also point out that even successful redevelopment revives only limited areas (such as downtowns), leaving other city areas in decline. Moreover, with the ongoing migration of the past half-century from cities to suburbs, it is inevitable that cities lose population and jobs, resulting in blighted areas that cannot be revived by taking more low and moderate cost city housing thus driving more people out to the suburbs.

Eminent domain has driven the development of railroads and defense infrastructure, permitting the construction of many otherwise impossible connections. In the 20th century, it was used to construct World War II and Cold War defense installations. From the early 1950s on, more than 42,000 miles of roads of way were acquired by eminent domain to build the Interstate Highway System. Ports, airports, and government buildings have also been constructed on land appropriated through eminent domain.

More recently, eminent domain has come to be used for private purposes (such as shopping malls), which has led to the current controversy. In some cases, the non-government entities using eminent domain have been community groups trying to take control of planning and development. Such is the case of the Dudley Street Initiative, a community group in Boston, Massachusetts, which attained the right to eminent domain and has used it to claim vacant properties for the purpose of "positive community development."In other cases, well connected firms persuade local governments to take property (sometimes that of their competitors) and turn it over to them. The controversy is further fired up by the courts defining the "just compensation" promised by the Constitution so narrowly that displaced home-owners and businesses are not fully compensated for their demonstrable economic losses, which are sometimes deemed "noncompensable."This is particularly controversial in cases where business properties are taken, the owners are not compensated for lost business, and the taken land is turned over to another business at no cost.

Back in 1798, Justice Samuel Chase in Calder v. Bull (3 U.S. 386) held that it was preposterous for the government to take one person's property with no restriction and give it to another private party for their own profit. Indeed, it was this very lack of restrictions on Donald Trump's use of the land that he sought in Coking vs. C.R.D.A that caused New Jersey Superior Court Judge Richard Williams to rule against Mr. Trump and Atlantic City. But journalists in the Coking case referred to this as a victory on a "technicality", rather than one of principle, and while today, many still adhere to this traditional view, which they see as morally sound, most courts have not lent much support to it.

Private economic use of properties acquired through eminent domain

Since the Supreme Court's Kelo decision, more than 5,783 properties have been threatened or condemned by local governments. Some of the examples cataloged in Dana Berliner's Opening the Floodgates follow:[2]

In March 2005, officials in Garfield Heights, Ohio, called for the seizure of 52 homes and 13 undeveloped properties. The 52 homes were blighted, according to city's development plan, because they were too old and too small. The next month, the City engaged a private developer who hopes to build Bridgeview Crossing, a shopping center that will be anchored by a Lowe's and a Target.

In July 2005, the city of Oakland, California, evicted two auto repair and supply businesses in order to replace them with 1,000 new condos and apartments as well as with a Sears tire and auto shop.

In December 2005, the city of Riviera Beach, Florida, approved a plan to to acquire 283 properties and displace one thousand renters in order to build luxury housing and a marina. The city attempted to get the plan started before Florida eminent reform legislation went into effect.

In January 2006, the city of Baltimore, Maryland planned to seize 75 properties for the Charles North development project. Seven of those properties had been sold in 2005 to investors who planned to redevelop the land. The city also decided to acquire the 90-year-old Parkway Theater while it was under active restoration.

In September 2006, city of Burlington, Iowa, officials voted unanimously to demolish all 72 properties in a 23.7-acre neighborhood known as "The Manor." The affordable housing would be replaced by a commercial development yet to be determined by the city.

In September 2006, the City Council members of Auburn, Washington voted unanimously to approve a Community Renewal Plan, which labels blight as anything that impedes economic development. 490 properties are currently under threat, including 248 homes, a hospital, a church, several banks and restaurants as well as a Masonic temple.

In January 2007, the Supreme Court of the United States declined to hear the case of Bart Didden against the village of Port Chester, New York. Didden owned a property in the village's urban renewal district that he hoped to develop into a CVS pharmacy. The village's chosen developer demanded that Didden and his business partner either pay $800,000 not to have their land condemned or enter into a 50-50 partnership with the developer, whose plans called for a Walgreens pharmacy on the site.

On November 26, 2006, a private landmark restaurant called the Metro Diner in Tulsa, Oklahoma was closed as a result of eminent domain. The private University of Tulsa wanted the land for its own development and forced the diner to close.

Long Branch, New Jersey, a city with six redevelopment zones, three of which are part of the 12-acre beach front project. The city wishes to replace the Victorians and beach bungalows currently on the site with condominiums and townhouses. 140 properties were condemned before Kelo and the city hopes to condemn 63 more properties to complete the project.

Also, Atlantic Yards project in Brooklyn, New York, promoted by mayor Michael Bloomberg, will be a private use project, yet it will involve eminent domain appropriation of 68 private homes and businesses.

Nuisance law

When a property owner's use is improper, the state under its broad police power may ban it as in "Hadacheck v. Sebastian", 1915, in which Justice McKenna held that an owner of a brickyard business was not entitled to compensation because the zoning laws in Los Angeles prohibited his use because it was a nuisance.

Safeguards against government action

The Fifth Amendment to the U.S. Constitution requires that property may only be taken for "public use", and upon payment of "just compensation."But the U.S. Supreme Court has diluted the meaning of "public use" to such an extent that virtually anything that a local condemning authority declares to be "public use" will be accepted by the Supreme Court and the lower federal courts. Some state courts disagree and in recent years the courts of Illinois, Michigan, Oklahoma, South Carolina and Pennsylvania have taken the position that the taking of private land for so-called "economic redevelopment" -- i.e., for re conveyance of the taken land to private companies for the construction of private, profit-making enterprises such as shopping malls, factories, office buildings and even gambling casinos does not meet the "public use" limitation under the state Constitution.

Property-rights advocates contend that abuses of the exercise of these powers in the past require substantial additional safeguards to protect the people from having their homes and businesses taken for what are obviously private, not public, uses.

Federal statutes (and their state counterparts) require relocation assistance programs to be administered by the various states in order to receive Federal participation in the costs of the improvements (often 80%), and further require full certification that the public process and benefits were offered to the claimants and that the benefits were actually paid to the correct claimants and displacees. However, the benefits payable under the Act provide only partial compensation to the displaced loaners (for example $20,000 is the maximum payable under the Act for the destruction of a business), and the Act does not allow the owners to sue to enforce its provisions.

The use of eminent domain has slowed nationwide as the full build-out of the Interstate System approaches and reflects the fact that needs in the future will be for mostly projects of a local nature such as schools, roads, and other local improvements. The extensive use of eminent domain for such purposes as economic development are currently under attack in many jurisdictions and there is a movement to pass state statutes to limit this use. Seven out of nine states that had such initiatives on the ballot in the 2006 election, have adopted laws or state constitutional amendments limiting or eliminating the use of eminent domain for "economic redevelopment" that does not eliminate slums or blight, and only finances redevelopment by private profit-making entities.

As of January 2007, 34 states had enacted some kind of legislation reforming eminent domain laws, while 13 had failed to enact any legislation regarding eminent domain (three state legislatures did not hold sessions in 2006). Seventeen of those thirty-four states either prohibited the use of eminent domain for private development purposes or substantially strengthened their definitions of blight, while the other seventeen increased eminent domain protections.

Governor Richardson of New Mexico became the first governor to veto eminent domain reform legislation resulting from this recent surge in public interest.

Bush Executive Order

On June 23, 2006 - on the one-year anniversary of the Kelo decision (see above), President George W. Bush issued an executive order stating in Section I that the Federal Government must limit its use of taking private property for "public use" with "just compensation", which is also stated in the constitution, for the "purpose of benefiting the general public." He limits this use by stating that it may not be used "for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken."

However, during the Bush administration, the U.S. Supreme Court has diluted the meaning of "public use" to such an extent that virtually anything that a local condemning authority declares to be "public use" will be accepted by the Supreme Court and the lower federal courts, effectively nullifying anything the President's executive order stated.

Examples

• Controversy on the Delaware: A Look Upstream at the Tocks Island Dam Project
• United States v. Carmack
• U S v. Gettysburg Electric Railway Company (160 U.S. 668) January 27, 1896
• Norwood, Ohio v. Horney

Additional reading

• Wikipedia's article on eminent domain
• Dana Berliner, Opening the Floodgates; Eminent Domain Abuse in a Post-Kelo World, Institute for Justice, June 2006. Available online [3].
• Redevelopment Wrecks; 20 Failed Projects Involving Eminent Domain Abuse, Institute for Justice, June 2006. Available online [4].
• Myths and Realities of Eminent Domain Abuse, Institute for Justice, June 2006. Available online [5].
• Steven Greenhut, Abuse Of Power: How The Government Misuses Eminent Domain, Seven Locks Press, June, 2004, trade paperback, 312 pages, ISBN 1-931643-37-7
• Joshua U. Galperin, A Warning To States, Accepting this Invitation May be Hazardous to Your Health (Safety and Public Welfare): An Analysis of Post-Kelo Legislative Activity. 31 Vermont Law Review 663 (2007).
• Eminent Domain Abuse Survival Guide, Castle Coalition, Available online [6].
• Dana Berliner, Public Power, Private Gain, Institute for Justice, April 2003. Available online [7].
• A.J. Hazarabedian, California Eminent Domain Handbook, California Eminent Domain Law Group, June 2005. Available free online [8].
• John Ryskamp, The Eminent Domain Revolt: Changing Perceptions in a New Constitutional Epoch, New York: Algora Publishing, 2006.
• Just Compensation, A Monthly Report on Condemnation Cases, Gideon Kanner, Editor, Published monthly since 1957.
• Property Owners' Rights Handbook: Your Rights and Remedies Under the Eminent Domain Law, Sullivan, Workman & Dee, LLP, 2005. Available online [9].
• Bulldozed: 'Kelo,' Emiment Domain and the American Lust for Land, Carla T. Main, Encounter Books, August 2007.