The Government’s Buying, Even if You’re Not Selling

Please pull out your Number Two pencils for a multiple choice question. Which of the following is within the power of the government: (a) condemning a run-down factory that poses a danger to the community, (b) taking a portion of a person’s property for purposes of widening an existing road, (c) forcing a business in a popular area to sell its property to the government, and then transferring that property to a private developer for use in a project? If you answered “all of the above,” you win the smiley face sticker.

The above acts are made possible through the State’s power of eminent domain. Eminent domain is an action of the State to seize private property regardless of the owner’s consent. Even in the largely undeveloped nation of the 18th century, the Founders understood that such power might sometimes be necessary, but determined to place limitations on the action. Consequently, a portion of the Fifth Amendment to the Constitution provides, “nor shall private property be taken for public use, without just compensation.”

In 1897, the Supreme Court determined that these limitations applied, not just to the federal government, but to the States as well. And as the power of eminent domain has been exercised by governments, courts have been called upon to examine the meaning of the “Takings Clause.” One area of much discussion is when a government action constitutes a “taking” such that the government must pay compensation to the landowner. It is plain that when the State takes title to property, the clause has been triggered and the government must compensate the landowner, but what about situations where the owner retains the property, but his rights are restricted? Perhaps the most important case on this point is Lucas v. South Carolina Coastal Council. David Lucas purchased lots in the Wild Dunes development at Isle of Palms. When the State enacted regulations regarding the use of coastal lands, Lucas claimed that it effectively prevented him from building on the land and so, he should be compensated by the State. Though it did not definitively decide Lucas’s case, the Supreme Court held that, while the government may restrict property rights without triggering eminent domain (such as zoning), when the government action deprives an owner of all economically valuable use, the act constitutes a taking and the State must pay compensation.

The most contentious arguments have focused on the first few words of the Takings Clause – “nor shall private property be taken for public use . . . .” A 1954 case began to push the boundaries of the term, presenting the question of whether the Congress could seize a run-down residential area in Washington, D.C., and thereafter convey the property to a private entity for redevelopment. The Court upheld the action, emphasizing the public good served by the taking. Later, in 1984, the Court considered a taking of large tracts of land by the State of Hawaii. This taking was based on the fact that, of the land not owned by the State, 47% was in the hands of 72 private landowners. The State sought to re-distribute the land, and the Court unanimously held that it had the power to do so.

Perhaps the most important case of eminent domain was heard in 2005. The City of New London, Connecticut, was hoping to revitalize the town and put together a redevelopment plan centered on a $300 million Pfizer research center. The hope was that the project would bring new retail and restaurants, a new museum, and new jobs. Residents who would lose their homes under the plan, challenged the State’s power. The Court ruled 5-4 in favor of the City. The author of the Hawaii opinion, Justice Sandra Day O’Connor, felt the Court had crossed a line: “[a]ny property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including larger corporations and development firms.”

Has the doctrine of eminent domain been stretched too far? The evicted residents of New London certainly think so.