The American experience with eminent domain—and its possible lessons for others

This week, the Volokh Conspiracy hosted a guest-blogging symposium with posts by contributors to my new book Eminent Domain: A Comparative Perspective (co-edited with Iljoong Kim and Hojun Lee). My last post about the book includes links to a free version of the Introduction to the volume, and to posts by other contributors.

In addition to co-editing the volume, I also wrote the chapter on eminent domain in the United States. In this post, I summarize key elements of the American experience with condemnation, building on my chapter in the book and my earlier work on the history of takings in the US.

The United States has the reputation of being a nation with a strong commitment to property rights and constitutional limits on government power. In some ways, that reputation is well deserved. But, in some other key respects, it is undercut by our painful history of eminent domain abuse.

The Fifth Amendment and nearly all state constitutions mandate that government may only take private property for a "public use." Almost from the very beginning, there has been conflict between advocates of the "narrow" and "broad" interpretations of this rule. The former allows takings only for publicly owned projects (such as a public road), or private ones that have a legal duty to serve the entire public, such as a public utility. Under the broad view, virtually anything that might benefit the public in some way qualifies as a public use.

The narrow view predominated throughout most of the first century or more of American constitutional history. But the broad view eventually triumphed in the mid-twentieth century, culminating in cases like Berman v. Parker (1954).

As a result, state and federal courts upheld large-scale "blight" and "economic development" takings that forcibly displaced hundreds of thousands of people, most of them poor, politically weak, or members of racial and ethnic minorities. Often, these takings also destroyed more economic value than they created, wiping out homes and small businesses, and destroying neighborhood "social capital." Such abuses persist to the present day, though on a considerably smaller scale than at the height of "urban renewal" takings in the 1950s and 1960s.

The Supreme Court reaffirmed the broad view in its controversial 2005 decision in Kelo v. City of New London, which ruled that it is permissible to take property from one private owner and give it to another simply because it might lead to greater "economic development" in the area. But Kelo was a close 5-4 decision that turned out to be enormously controversial, generating a massive political backlash. In the aftermath, many states enacted eminent domain reform laws limiting takings, and several state supreme courts ruled that economic development takings violate their state constitutions.

Although a win for the broad view, Kelo ended up destroying the seeming consensus behind it. In the wake of Kelo, the narrow view commands greater legitimacy than at any time in decades, and the debate over the proper scope of the eminent domain power continues with no end in sight. In recent years, controversy has erupted over takings for pipelines. An unusual coalition of property rights advocates on the right and environmentalists on the left has won a series of legislative and judicial victories seeking to limit pipeline takings. The alliance recalls the similarly cross-ideological reaction against Kelo, which also brought together some strange bedfellows.

The debate over public use is far from the only controversy surrounding eminent domain in the US. Another longstanding problem is the tendency to undercompensate owners of condemned property. The Supreme Court has long held that owners must get "fair market value" compensation. This, unfortunately, fails to account for the "subjective value" that many attach to their land over and above its market value. For example, a person who has lived in the same neighborhood for many years may value the social ties she has formed there; a small business may have a network of clients that would be hard to replicate elsewhere. Even worse, studies show that owners often don't even get the fair market value compensation that the law requires. That is particularly likely for owners who are relatively poor and lacking in political clout. Donald Trump's claim that owners of condemned property stand to make "a fortune" is—to put it mildly—belied by the evidence.

In the chapter, I also discuss controversies over the delegation of eminent domain power to private firms, and the procedural rules governing takings. These issues are less high-profile than public use and compensation. But they divide experts nonetheless.

I also warn that we should be wary of overly sweeping generalizations about the use of eminent domain in America. Because most takings are done by state and local governments, the federal system leads to enormous variation. Some states—such as New York—are notorious for the egregious abuses they allow. Others impose much tougher restrictions on takings, including going well beyond what is required by the federal Supreme Court's interpretation of the Fifth Amendment. Some states also give owners compensation that goes beyond the fair market value minimum mandated by federal jurisprudence.

Defenders of the status quo argue that this variation is healthy, reflecting the variations in local conditions that exist in a nation as large and diverse as the US. Federal courts, they contend, lack the local knowledge possessed by state officials. But it could be that stronger enforcement of federal constitutional protections for property owners would result in far more effective utilization of local knowledge than giving state governments a free hand. Property owners tend to have greater knowledge of their land and better incentives to use it wisely than government officials do—even local ones.

The US experience with eminent domain is a complex story that Americans themselves disagree about. Its possible relevance for debates in other countries is an even more complex question that observers in those nations must ultimately decide for themselves. But I tentatively suggest that the modern history of eminent domain in America is a cautionary tale. Even a nation with a strong tradition of judicial review and respect for property rights managed to lose its way on these issues, allowing the government to condemn property in ways that inflicted enormous economic and social harm.

The US experience suggests that a strong legal system and a cultural commitment to property rights are not, by themselves, sufficient to prevent large-scale eminent domain abuse. We also need more specific institutional safeguards that directly limit the power to condemn private property.

Exactly what form those safeguards should take may vary. I have argued that reinvigorating the narrow view of public use is likely the best strategy for the US. But we should consider other approaches, as well. And what works in the US may not always be the optimal strategy elsewhere. The contributions to Eminent Domain: A Comparative Perspective show that the United States is just one particularly prominent example of a set of challenges that beset many nations. Hopefully, the American experience can help others find better ways to protect property rights. In the meantime, Americans themselves should work to build on the real, but still incomplete, progress we have made since Kelo.