Helping to End Eminent Domain Abuse

Six years ago, the United States Supreme Court effectively gutted property rights protections in the Fifth Amendment.  A pending bill in the United States House could help to address some of the damage caused by the Court.

In Kelo v. City of New London, the Court held that the government can seize private property from one private citizen and transfer the property to another private citizen for economic development.  If a home would generate more tax revenue as a mall, then the government can seize the home.

The Fifth Amendment of the United States Constitution states "nor shall private property be taken for public use, without just compensation."  This language is supposed to limit the government's power to take private property except for a "public use." 

However, for decades, the term "public use" has been effectively deleted from the United States Constitution, and instead replaced by "public purpose" or "public benefit."  These terms are judicial creations that drastically broaden when the government can seize private property. 

Yet, even with these terms, it was not a given that the Court would allow these economic development takings that were at issue in Kelo.  By allowing these takings, the Court has rendered the "public use" limitation virtually meaningless and gutted the Fifth Amendment.

As would be expected, some states took action to provide stronger property rights protections for their citizens.  The federal Constitution acts as a floor on rights that a state may not go below, but states can exceed the floor by providing greater rights.

Eight states have passed constitutional amendments since Kelo and many other states have passed statutory changes, all with varying levels of protection.  Regardless, the federal government must play a role in protecting property rights.

If freedom of speech were gutted as severely as the Fifth Amendment has been, Congress would not hesitate to take immediate action.  They would even consider passing a constitutional amendment. 

The idea that Congress should defer to each state in order to protect the federal constitutional right of freedom of speech would be laughable.  The same arguments apply when it comes to protection from eminent domain abuse.

Further, the federal government helps to make these economic development takings a reality by providing economic development funds to state and local governments.  Without those funds, many of these takings wouldn't occur.

The United States House is currently considering the "Private Property Rights Protection Act."  This bill would be an important step in ensuring that all Americans, not just those in some states, have protection from eminent domain abuse.

First, the bill would prohibit the federal government from engaging in economic development takings.  Second, it would deny federal economic development funds for two years to any state or local government that engages in economic development takings.

There are significant challenges in properly crafting a prohibition on economic development takings that doesn't permit the government to engage in end-runs.  For example, the bill doesn't allow the taking of property for economic development.  This type of language forces a court to examine the intent behind the taking.  Is the taking for economic development or is it for another reason, such as a legitimate public use?

Courts generally provide significant deference to the government when it seizes property and the real reason for a taking can be difficult to ascertain.  As a result, so long as any legitimate reason for seizing property is identified, the taking will be allowed regardless of whether it appears to be motivated in large part by economic development reasons. 

This is why the bill wisely puts the burden of proof on the government to show that a taking is not for economic development.  By doing so, it makes it far more difficult for the government to seize property using a legitimate public use as a pretext for taking the property for economic development.

The bill also doesn't solely rely on the government to enforce the law, as often is the case with laws that withhold federal funds.  There is a private right of action allowing property owners to challenge the takings and possibly triggering the denial of federal funds to states and local governments.

In 2005, the House overwhelmingly passed this legislation in a bipartisan manner 376-38.  Unfortunately, it died in the Senate.  Congress once again has a chance to make it clear that no matter what state you live in or how much money your property generates, you will be protected from eminent domain abuse.

Daren Bakst, J.D., LL.M. is Director of Legal and Regulatory Studies at the John Locke Foundation, a North Carolina-based think-tank.