View in your browser.

For years a diligent group of North Carolina state representatives has been trying to add an eminent domain clause to the North Carolina Constitution. Their latest attempt, HB 3, was filed on January 14th. Thanks to their perseverance — and thanks also to recent changes in the makeup of the General Assembly — it appears they may at last succeed in getting their proposal before the voters. Whether it will turn out to have been worth the wait, however, is far from clear. In its current form the proposed amendment does not appear to add much to the woefully inadequate protections against eminent domain abuse that are already in place.

A national campaign to stop eminent domain abuse began in 2005 in response to one of the most unpopular Supreme Court decisions in living memory: Kelo v. City of New London. At issue in that case was the condemnation of fifteen well-maintained and well-loved homes in New London, Connecticut, belonging to Susette Kelo and her neighbors. Pursuant to an economic development plan approved by the City, the homes were taken by a private developer for future use as a site for offices, parking, and retail stores. The homeowners challenged the taking, arguing that, as a transfer from one private party to another, it exceeded the scope of the eminent domain power as defined by the "Takings Clause" of the Fifth Amendment: "Nor shall private property be taken for public use without just compensation." The Court rejected their challenge, holding that, while the Takings Clause might forbid transfers from one private party to another "for the purpose of conferring a benefit on a particular private party," it did not forbid such transfers when they served a "public purpose." The Court went on to declare that the question of whether this or any particular taking actually served a public purpose was not one it should attempt to answer. Instead it would follow its long-established practice of "affording legislatures broad latitude in determining what public needs justify the use of the takings power." In the final paragraph of its opinion the Court acknowledged "the hardship that condemnations may entail, notwithstanding the payment of just compensation," and it invited eminent domain reform at the state level, saying, "We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power."

The Kelo decision was widely reported and widely deplored, and in the years that followed many states accepted the Supreme Court’s invitation and added "further restrictions" on the takings power to their constitutions. To help them do so, property rights advocates developed guidelines and model amendments. While the details varied, all of them encouraged states to specifically forbid takings for economic development and narrowly specify when property could be taken on account of blight. Many of them also recommended that states define full compensation in generous terms and stipulate that the question of whether a use is public or private is something that should be decided in a court of law and not a matter for legislative determination.

The Castle Coalition, for example, offered this model amendment:

With just compensation paid, private property may be taken only when necessary for the possession, occupation, and enjoyment of land by the public at large, or by public agencies.  Except for privately owned public utilities or common carriers, private property shall not be taken for private commercial enterprise, for economic development, or for any other private use, except with consent of the owner.  Property shall not be taken from one owner and transferred to another, on the grounds that the public will benefit from a more profitable private use.  Whenever an attempt is made to take property for a use alleged to be public, the question whether the contemplated use is truly public shall be a judicial question, and determined as such without regard to any legislative assertion that the use is public.

And the John Locke Foundation offered another:

Private property shall not be taken except for a public use. Private property shall not be taken and an interest in that property transferred from one private party to another private party, unless the transfer is to a common carrier or public utility for the use of the public generally or the transfer is clearly unrelated to the reason for the taking. Public use may include the taking of property to address blight only when the physical condition of the specific parcel of property poses a concrete threat to health or safety.

Just compensation shall be paid to property owners and shall include loss of business good-will, relocation costs, reasonable attorneys fees, and other costs necessary to put the property owners in the same position they would have been in had their properties not been taken. If demanded, a jury shall determine just compensation. Condemnors shall prove by clear and convincing evidence that a taking is for a public use and that compensation is just.

Few states provided constitutional restrictions that were as clear and complete as property rights advocates would have liked, but North Carolina’s immediate neighbors did better than most. In 2006 South Carolina amended its constitution by adding the following language:

Except as otherwise provided in this Constitution, private property shall not be taken for private use without the consent of the owner, nor for public use without just compensation being first made for the property. Private property must not be condemned by eminent domain for any purpose or benefit including, but not limited to, the purpose or benefit of economic development, unless the condemnation is for public use.

For the limited purpose of the remedy of blight, the General Assembly may provide by law that private property constituting a danger to the safety and health of the community by reason of lack of ventilation, light, and sanitary facilities, dilapidation, deleterious land use, or any combination of these factors may be condemned by eminent domain without the consent of the owner and put to a public use or private use if just compensation is first made for the property.

Five years later Virginia voters chose to add this language to their state’s constitution:

That the General Assembly shall pass no law whereby private property, the right to which is fundamental, shall be damaged or taken except for public use. No private property shall be damaged or taken for public use without just compensation to the owner thereof. No more private property may be taken than necessary to achieve the stated public use. Just compensation shall be no less than the value of the property taken, lost profits and lost access, and damages to the residue caused by the taking. The terms "lost profits" and "lost access" are to be defined by the General Assembly. A public service company, public service corporation, or railroad exercises the power of eminent domain for public use when such exercise is for the authorized provision of utility, common carrier, or railroad services. In all other cases, a taking or damaging of private property is not for public use if the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development, except for the elimination of a public nuisance existing on the property. The condemnor bears the burden of proving that the use is public, without a presumption that it is.

Now, compare these examples to the amendment that has just been proposed in the NC House, which states in full:

Private property shall not be taken by eminent domain except for a public use. Just compensation shall be paid and shall be determined by a jury at the request of either party.

It is hard see how this adds anything at all to the Fifth Amendment’s "Nor shall private property be taken for public use without just compensation," and it is especially disappointing in view of the fact that many previous versions of the amendment included the phrase, "Public use does not include the taking of property for the purpose of thereafter conveying an interest in the property to a third party for economic development."

HB 3’s sponsors are not oblivious to these concerns. In addition to the proposed constitutional amendment, the bill makes changes to statutory provisions pertaining to condemnations, replacing the phrase "public use or benefit" with "public use." The sponsors believe that, because these changes occur in the same bill as the proposed amendment, North Carolina courts can be relied upon to interpret the latter in a way that will prohibit economic development takings and similar abuses. However, if one considers the precedent set by the US Supreme Court in Kelo, and the contempt that so many jurists have shown for legislative intent, it is hard not to see this as a case of hope triumphing over experience.

In Kelo v. City of New London, the Supreme Court invited the states to take measures of their own to prevent eminent domain abuse. North Carolina has been very slow to accept that invitation, but it appears we may finally do so this term. Unfortunately, compared to recommendations that have been made by property rights advocates (including the John Locke Foundation) and compared to the constitutional amendments that have been adopted in other states (including South Carolina and Virginia), the eminent domain amendment that appears in HB 3 is much too weak in its present form. Let us hope it grows in strength as it makes its way through committee.

Click here for the Legal Update archive.

You can unsubscribe to this and all future e-mails from the John Locke Foundation by clicking the "Manage Subscriptions" button at the top of this newsletter.