Policy Position

Eminent Domain

in Government Regulation

Introduction

Eminent domain refers to the government’s power to take land from property owners who are unwilling to sell it voluntarily.

The Takings Clause of the Fifth Amendment to the U.S. Constitution (“Nor shall private property be taken for public use without just compensation”) was traditionally thought to restrict the use of eminent domain to cases in which the land was needed by the government for its own use, e.g., roads, military bases, and other public facilities, or for use by a “common carrier,” i.e., a private company like a railroad or utility that is obliged to serve the public.

That’s why the country was shocked, in 2005, when – in Kelo v. City of New London – the U.S. Supreme Court upheld the City of New London’s use of eminent domain to take working class citizens’ homes and give the land to a private corporation for “high-end” commercial development.

The issue in Kelo was whether New London’s use of eminent domain to transfer property from one private party to another for the sake of economic development violated the Takings Clause.  The court held that, while the Takings Clause might forbid a transfer from one private party to another “for the purpose of conferring a benefit on a particular private party,” it does not forbid such a transfer when it serves a “public purpose” like promoting economic development. It also held that the question of whether a specific taking serves a public purpose is not one federal courts should attempt to answer. Instead, state and local governments should be allowed to determine for themselves “what public needs justify the use of the takings power.” At the end of the opinion, the court added, “We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power,” and many states have responded to that invitation by taking steps to protect their citizens from eminent domain abuse under state law.

In response to Kelo, most states took steps to protect their citizens from this kind of eminent domain abuse, but North Carolina still hasn’t done so.

Key Facts

  • With the notable exception of North Carolina, Southeastern states have led the way when it comes to eminent domain reform. Almost all of them have adopted highly effective measures to prevent eminent domain abuse, and the measures adopted by Florida and Virginia are generally regarded as the best in the country.
  •  In both Florida and Virginia, the reform process began with legislatively enacted statutory changes designed to prevent eminent domain abuse. Significantly, however, in both states, the voters later approved constitutional amendments that supplemented the statutory protections with specific, constitutional restrictions on takings in which property is transferred from one private party to another for the sake of economic development.
  •  Unfortunately, despite the persistent efforts of several members of the N.C. House of Representatives, the General Assembly still has not taken steps to protect North Carolinians from the kind of eminent domain abuse the U.S. Supreme Court authorized in Kelo. It has not added suitable restrictions on the use of eminent domain to the North Carolina General Statutes, and it has not given voters an opportunity to add such restrictions to the North Carolina Constitution.

Recommendations

  1.  Amend the North Carolina General Statutes and the North Carolina Constitution to provide protections against eminent domain abuse that are at least as effective as the ones adopted by Florida and Virginia. Ideally, as amended, the General Statutes and the Constitution will:
    • State that private property may be taken only for public use and with just compensation.
    • Stipulate that the question of whether a taking complies with the public-use requirement must be decided by a court without deference to any legislative or administrative determination.
    • Define “public use” in a way that forbids transfers from one private party to another for the sake of economic development and permits such transfers only when the property is needed by a common carrier or public utility to carry out its public mission or, in cases of blight, when the physical condition of the property poses an imminent threat to health or safety.
    • Define “just compensation” in a way that ensures that property owners are reimbursed for all losses and costs, including loss of access, loss of business goodwill, relocation costs, and reasonable attorneys’ fees.

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