Policy Position

Eminent Domain

in Government Regulation
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Introduction

The U.S. Supreme Court shocked the country in 2005 when—in Kelo v. City of New London—it upheld the use of eminent domain to force working-class citizens out of their homes so that the land could be given to a private corporation for “high-end” commercial development. 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.
Our failure to adequately protect the property rights of our citizens is one of the primary reasons why, when it comes to regulatory freedom, North Carolina languishes in the bottom third of states, both nationally and regionally. If we truly want to be “first in freedom,” we must take decisive steps to prevent eminent domain abuse under state law.

Key Facts

  • 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 of the Fifth Amendment to the U.S. Constitution (“Nor shall private property be taken for public use without just compensation”).
  • The Court held that, while the Clause might forbid transfers from one private party to another “for the purpose of conferring a benefit on a particular private party,” it does not forbid such transfers when they serve a “public purpose” like promoting economic development. It also held that the question of whether a taking serves a public purpose is not one federal courts should attempt to answer. Instead, state and local governments need to 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.”
  • In the years since Kelo, most states have taken steps to protect property owners from eminent domain abuse under state law, and states in the Southeast have done particularly well. Almost every state in the region has adopted highly effective measures. The measures adopted by Florida and Virginia are generally regarded as the best in the country.
  • North Carolina has yet to do anything in response to Kelo, despite the fact that our state constitution is the only one that does not deal explicitly with eminent domain.
  • With admirable diligence, several members of the N.C. House of Representatives have tried repeatedly to add an eminent domain clause to the Constitution and to make the sections of the General Statutes that deal with eminent domain more restrictive, but without success.
  • Their most recent attempt consisted of a proposed constitutional amendment stating: 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.
  • Unfortunately, this would have merely echoed the language of the Fifth Amendment, which—as the Supreme Court demonstrated in Kelo—can be interpreted in a way that makes it ineffectual.

Recommendations

Provide protections against eminent domain abuse under North Carolina state law that are as effective as the ones provided by Virginia and Florida. Ideally, these will include a constitutional amendment that:

  1. States explicitly that private property may only be taken for public use and with just compensation.
  2. Stipulates 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.
  3. Defines 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.
  4. Defines just compensation in a way that ensures that property owners are reimbursed for all of their losses and costs, including loss of access, loss of business goodwill, relocation costs, and reasonable attorneys’ fees.

Data

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