Eminent Domain

Eminent domain, in many ways, allows our government to function and our communities to improve. The principle of eminent domain permits the government to seize private property for public purpose, such as for road expansion or the building of schools or hospitals. The property owner need not give consent for the seizure to occur, though the government is required to justly compensate the owner for lost value. Though many people may bristle at the idea of their property being taken by the government, most realize that such a power is necessary for the development of our society.

However, such a power is not unbridled, for very good reason. The Fifth Amendment of the US Constitution includes the clause that “nor shall private property be taken for public use without just compensation.” Ellen Frankel Paul of the Cato Institute, a Libertarian think tank, writes that this clause "is not a grant of power to government; rather it is a limitation—indeed, two limitations—placed upon the power of eminent domain, a power that everyone at the time of the drafting of the Bill of Rights considered an inherent attribute of government. Following the logic of the Fifth Amendment, government can take property only if it adheres to two restrictions. First, the taking has to be for a public use; consequently a taking that simply takes property from one owner and sells it or distributes it to another private owner would clearly fall afoul of this public use proviso. Second, the divested property owner must be paid 'just compensation.'"

When the government exercises its right of eminent domain, this seizure is known as a "taking." (Please note that the term in this case denotes a physical taking, which is to be treated very differently from a regulatory taking.) There are several different types of takings that are permitted under the principle of eminent domain. Total takings occur when the government physically seizes an entire property; when only a portion of a property is needed, it is classified as a partial taking. Temporary takings occur when a property is only needed for a definite period of time, and it can be difficult for property owners to successfully seek compensation in such instances. A governmental body can also demand an easement, or right of way, through a property. In this case, the original owner still owns all of the land, but the government has certain rights with the easement area. Usually, easements are used to run utility lines or sewer pipes under a property.

Peggy Kirk Hall of Ohio State University explains that the concept of eminent domain can be traced to feudal Europe hundreds of years ago, where the monarchy owned all of the land in a state. When the United States was developed, the framers of the Constitution recognized the importance of the ultimate governmental right to land, but placed restrictions on this power, as represented by the Fifth Amendment. To exercise the right of eminent domain, the government must demonstrate that the property is needed for legitimate public use, that the seizure is absolutely necessary due to lack of reasonable alternatives, and that the property owner is properly compensated. However, governmental bodies and citizens are often at odds as to whether all three criteria have been met in particular eminent domain cases. For example, where is the fine line on the definition of "public use?" When has the government truly exhausted all possible alternatives? And how much compensation is considered "just?" The resolution of these issues has brought about a great deal of debate and ensuing court cases.

 

Public Use

"Public use" is usually defined in very broad terms which allow for a variety of government ventures; a common definition includes acting in the name of "public health, safety, interest, and convenience." Generally, eminent domain is invoked to build new roads, schools and other public buildings. However, the term "public use" has also been employed to seize private land for other purposes, such as community parks or entertainment centers. On occasion, these uses seem highly questionable to most reasonable parties. For example, in Coatesville, PA, a family is fighting the seizure of their property (a 48-acre farming tract and several family homes) upon which Coatesville would like to build a $250 million "funplex" containing a golf course, go-karts, ice skating, and bowling. Also situated on the property would be a privately owned hotel. The city has argued that the center is part of a "revitalization" effort which will bring increased tax revenue and jobs. The Saha family and their supporters from around the country have fought for over five years to save their property, but it appears that the city may win in the end. Visit the Saha family website for more details.

"Revitalization" is often used as an inappropriate government excuse to take private land. In Port Chester, a suburb of New York City, a local man bought, renovated, and successfully rented out four buildings, only to learn that the city was seizing his property to build a supermarket and parking lot on the land. Even worse, the property owner had missed his right to appeal the decision because he failed to see a tiny notice in the newspaper. The details in this case are particularly suspicious because the government took property from a private individual to give it to a private company, part of a disturbing trend in eminent domain practice.

Sometimes areas that could hardly be considered "blighted" are being targeted for private redevelopment. In Lakewood, Ohio, the city condemned a series of colonial homes with small backyards and no garages to make way for upscale condominiums. Dana Berliner, senior attorney for the Institute for Justice, said that excuses of increased tax revenue are not sound reasoning to seize private property. "Practically every house in the entire country would produce more jobs and taxes as an office building, and everybody's small business would produce more jobs and taxes if it were removed and turned into a Costco. If that's all it takes, then your house or business can be up for grabs as soon as some private business interest takes a fancy to it."

In 1954, the Supreme Court ruled in Berman v. Parker that efforts of "urban renewal" were enough to justify the use of eminent domain, even when the seized property was then sold to private companies. In his majority opinion, Justice Douglas used the phrase "public purpose," much more vague than "public use" and subject to fewer limitations. "Public use" had been held to mean that the public had a right of access to the taken property, even if the property was owned by a private company. "Public purpose" can be interpreted much more broadly to mean public benefit, such as an increased tax base and more jobs. It is under this logic that governmental bodies can seize private property to build a supermarket or funplex.

In 1984, the Supreme Court found the 1967 Hawaii Land Reform Act to be constitutional in Hawaii Housing Authority v. Midkiff. In an effort to redistribute land in Hawaii which was severely concentrated in the hands of large landowners, the Act allowed the state to condemn such land and redistribute it among those living on the property who had been leasing the land from the large property owner. Property rights advocates were outraged by the decision, worried that the ruling would lead to bizarre happenings such as tenants in apartment buildings demanding that the property be condemned from the landlord and redistributed among tenants.

However, the tide may be changing. In 1981, the Michigan Supreme Court issued a decision which validated Detroit's decision to destroy an entire neighborhood, including homes and businesses, in favor of building a General Motors plant on the site. This ruling was in clear accordance with the disturbing findings of the US Supreme Court in Berman, if one assumes that the public benefits in some way from the building of a GM plant. Here, one can see the subtle distinction between the differentiation between "public use" and "public purpose" established in Berman. (While the public cannot use the GM plant, the city and its residents would benefit from jobs and income.) However, in July 2004, the Michigan Supreme Court essentially reversed this decision in another case by rejecting their previous notion that “a private entity’s pursuit of profit was a ‘public use’ for constitutional takings purposes simply because one entity’s profit maximization contributed to the health of the general economy.”

For more information about these cases, please see Ellen Frankel Paul's paper here.

The Institute for Justice, a libertarian law firm, released in April 2003 a report entitled "Public Power, Private Gain." The comprehensive report examines the last five years of eminent domain developments across all fifty states with legislative updates for each. The report is full of descriptions of governmental abuses of eminent domain power, with some stunning examples such as those discussed above. The report declares that between 1998 and 2002, 10,000 properties across the country were either taken or threatened with eminent domain to be given to other private parties.

The Institute for Justice found that in 40 percent of eminent domain challenges brought in the past five years, the courts have found in favor of the property owner. Encouragingly, several state legislatures have passed protective legislation for property owners against the threat of eminent domain, and several other states are considering such legislation. Please see here for the full report.

In recent years in Pennsylvania, several bills have been proposed in the state legislature which would have offered property owners greater rights when faced with an eminent domain threat, including limiting the government's power to sell to a private company, and also limiting the overuse of the "blight" reasoning for redevelopment. While these did not pass, a provision was signed into law in 2002 which requires the developer of a taken property to obtain permission from the condemning agency before transferring property ownership to a private company.

Thankfully, these bizarre cases discussed above are more the exception than the rule. In most cases, the government acts in the legitimate public interest to take private land. But when the government is acting in favor of private development interests, communities must rally in support of the besieged property owner and demand a fair application of the eminent domain principle.

 

Just Compensation

The owner of a property seized through eminent domain is eligible for the "fair market value" of the property or portion of property affected, as well as money for any damage sustained to the remaining piece of property because of the taking. In some cases, the owner may receive additional compensation, such as for lost revenue from a business previously operating on the site. The property owner is not eligible for financial compensation for claims of inconvenience, stress, or psychological suffering, or, in most cases, for legal costs incurred from fighting the taking. In some scenarios, it is better for the property owner financially to have the property condemned rather than sold for tax purposes, though this of course varies on a case-by-case basis.

 

Agricultural Lands and Eminent Domain

Eminent domain practices are not treated equally across all types of properties. In Pennsylvania, greater pause is generally given by the government when seeking to condemn productive agricultural properties, recognizing their incredible value to the state. In Pennsylvania, the Agricultural Lands Condemnation Approval Board (ALCAB), composed of the Director of the Office of Policy and Planning, the Secretaries of Environmental Protection, Transportation, and Agriculture, and two working farmers appointed by the governor, serves as a review board when the government invokes eminent domain over agricultural lands for transportation or waste disposal purposes. Though the state has the right to condemn agricultural lands for transportation or waste disposal, it must first demonstrate to ALCAB that there are no other feasible alternatives, and that it is necessary to destroy the agricultural land. In an important 1999 Commonwealth Court decision, White v. Pennsylvania Department of Transportation, the Court ruled that PennDOT must have ALCAB approval before taking and condemning farmland in the Agricultural Security Area (ASA), which promotes farming in Pennsylvania through a series of incentives. However, the Court also found that PennDOT may begin testing for planning purposes on agricultural property without ALCAB approval, provided that PennDOT compensates the property owner for any damage incurred.

While one can recognize the importance of pursuing sensible transportation improvements in Pennsylvania, it is disturbing that acres of carefully preserved farmland, the result of so much time and effort, can be so quickly obliterated by a new or expanded roadway. Indeed, this is one of the most pressing issues facing preservationists in the eminent domain debate.

 

Rights of the Property Owner

When facing the prospect of losing land because of eminent domain, most property owners are unsure of their rights and the methods available for best protecting themselves and their property. Our very strong recommendation is that you start by hiring a lawyer. In all likelihood, you are going to need one.

It is crucial for the property owner to be involved in the process from as early a stage as possible, and to suggest and promote alternatives which would not result in the taking of his or her land. It is extremely important to go to every meeting regarding the project or proposal and demand written notification of any and all future meetings. The governing body or agency may not be willing to provide such notification (and may legally be required to do nothing more than post an obscure notice in a local paper) but it is worth asking for and it certainly paints them in a harsher light in the courts and in the press if they refuse. While we are on the subject of the press, use it. Government officials are only willing to take a limited amount of “heat” and may be willing to back off if the fire gets too hot.

If the government insists on using eminent domain, the property owner has the right to legally challenge this decision and you should discuss your options with your attorney as they will vary from state to state.

Once it has been established that the use of eminent domain is “necessary”, the owner should be physically present for the appraisal of the property to ensure that he or she is being treated fairly by the appraiser and being offered a fair price. The owner has the right to challenge the amount of compensation offered. The compensation offer may be accepted, negotiated, or refused, though refusal may simply bring the owner more trouble and costs if the outcome remains unchanged. It is absolutely essential that the property owner educate his or herself as to their rights regarding their property so that he or she does not unjustly lose it. This is an area fraught with technicalities and governing bodies are well versed in using those technicalities to THEIR, not your, benefit.

That said, not all and probably not even most, exercises of eminent domain are hostile. Often the property owner can get a “good deal” from the entity trying to acquire the land and may be able to negotiate terms that are very favorable, inclusive of moving costs, tax benefits or other incentives in some cases. However, even in the case of a “friendly” condemnation be very careful and become very knowledgeable about the process. Remember that the government may be friendly but they are not your friend and it is their interests, not yours, that they are trying to advance.

 

Links

Please see our other sections on these related topics:

Regulatory Takings

Property Rights

 

Internet Links

Pennsylvania's Eminent Domain Statute - See this website for the text of Pennsylvania's statute on eminent domain; please note that the links provided on the page for Section IV are broken and we have notified the webmaster. This is a great site to use when researching Pennsylvania law and we highly recommend it.

Institute for Justice - This website of the libertarian law firm offers information on property rights topics, as well as
ways to seek legal assistance.

"Public Power, Private Gain" - A very interesting, very extensive report from the Institute for Justice, detailing five years of eminent domain developments from 1998-2002, with full analyses for each of the fifty states.

Castle Coalition - Formed by the Institute for Justice, this project informs and unites individuals concerned about or victim to eminent domain abuses.

Save our Farm - Visit the Saha family website for more information about their fight against eminent domain use.

"Public Use, a Vanishing Limitation on Governmental Takings" - This paper by Ellen Frankel Paul of the Cato Institute explains the significance of several important court cases to eminent domain practice.