Eminent Domain

What is eminent domain?

Eminent domain allows a government (federal, state, or local) to seize private property only if it can show that the taking is necessary to serve broad public interests. For example, a seizure of land is allowed only if doing so helps the government provide public goods such as railroads, highways, or schools. A common example of eminent domain is taking land to build national parks, like Yellowstone National Park. Eminent domain is used in smaller cases, such as when a local government seizes part of a person’s front yard to widen a public road for public safety.

What is the legal basis for eminent domain?

The Fifth Amendment of the U.S. Constitution contains the Takings Clause, which asserts that private property can be taken for public use if the owner is given “just compensation.” The requirement for just compensation is a vital component of eminent domain. Generally, the standard is that any compensation should reflect fair market value.

Federal courts have interpreted the Takings Clause to permit the government to seize property if it can show that doing so will contribute to an increase in the general public welfare. Originally, this clause was only applied at the federal level. However, in 1987, the Supreme Court expanded the exercise of eminent domain when it ruled that the Fourteenth Amendment implied that the clause is applicable at the state and local levels.

What legal challenges have been directed at eminent domain?

A series of court cases have defined what is allowed and not allowed under eminent domain, including how to determine just compensation and what activities meet the public use requirements.  Generally, just compensation means the fair market value for the entirety of a property being seized, as well as compensation for damages to any remaining private property. The government agency involved in the decision is responsible for surveying the land and appraising the fair market value. This appraisal is then the basis for a just compensation offer. Fair market value is often determined based on the sale of similar properties. If a price cannot be agreed upon with the owner, the government agency may initiate a condemnation lawsuit, which is a procedure to settle real estate disputes. If the property owner finds the compensation estimate to be insufficient, they may challenge the estimate in court. In the 1982 Loretto v. Teleprompter Manhattan CATV Corp decision, the Supreme Court ruled that the government must provide just compensation even if the land area is small and the land seizure will not significantly affect the owner’s economic interests.

Regarding public use, the Supreme Court has held that the government can appropriate land if it will increase general public welfare. For example, the Berman v. Parker decision (1954) permitted the District of Columbia to transfer ownership of buildings to private developers for renovation. This case held that the government can appropriate private property even if it is transferred to private individuals rather than a public agency. In Kelo v. City of New London (2005), the Supreme Court also ruled that the federal government could use eminent domain to expropriate private land for development by private individuals or companies. However, in response to the Supreme Court’s decisions, many states modified their eminent domain policies to say that private economic development was not enough to justify eminent domain.

What restrictions exist on eminent domain?

There are few restrictions on using eminent domain beyond the requirements to provide just compensation and demonstrate that seized property furthers public well-being. For example, the government has the right to seize a person’s home to build a park so long as the park furthers public welfare and the owner is paid at a fair market value.  

States are allowed to place additional restrictions on the use of eminent domain. For example, some states have established additional rules concerning processes for communicating with property owners. The California state courts have also ruled that the state must notify property owners at the beginning of the eminent domain process and present owners with an assessed land value.

What are the benefits of eminent domain?

Eminent domain has played a vital role in developing the country’s infrastructure. The takings clause has been used to facilitate the development of transportation services (including roads and railroads), supply water, and construct public buildings. For example, in United States v. Great Falls Manufacturing Company (1884), the Supreme Court allowed the state to use eminent domain to construct an aqueduct that provided several cities with drinking water. States have also used eminent domain to support urban renewal by improving underutilized or environmentally compromised land. Additionally, eminent domain has been used to support energy development, such as by allowing companies to engage in fracking or extend oil pipelines.

What are the arguments against eminent domain?

Some legal observers have argued that federal and state governments have abused their eminent domain power. Specifically, the criticism is that eminent domain is being used to transfer property from one private owner to another under the justification of improving general welfare. Moreover, the public use justification has been expanded to allow the government to take land if the seizure results in increased tax revenues or employment.

Critics have also argued that government assessments of a property’s value fail to capture its emotional or cultural significance to a community. Furthermore, eminent domain has been identified as contributing to transforming city neighborhoods from low-value to high-value real estate. Many cities have condemned the residences of low-income individuals under the economic development justification. However, the government’s assessed values of low-income, owner-occupied housing in economically prosperous communities often do not account for the difficulty of finding affordable, alternative housing in that area. The result is that low-income residents must relocate to even poorer areas of the city or out of the city completely. Additionally, some argue that just compensation should start with fair market value and then add other costs, such as relocation and litigation.