• In 2005, the U.S. Supreme Court upheld a Connecticut city’s use of eminent domain to transfer property from one private owner to another for the sake of economic development
  • While most states — including almost all the states in the Southeast — took effective steps to protect their citizens from eminent domain abuse under state law, North Carolina still hasn’t done so
  • A recently introduced bill gives the N.C. General Assembly an opportunity to correct that omission and put comparable protections in place in North Carolina

For readers unfamiliar with the phrase, “eminent domain” refers to the government’s power to take private property without the owner’s consent. For centuries, it was generally assumed that this power could be exercised only when the property in question was needed by the government for its own use, e.g., for roads, military bases, and other government facilities, or for use by a “common carrier,” i.e., a private company like a railroad or utility that is obliged by law to serve the public.

It was also generally assumed that these restrictions were implicit in the Fifth Amendment to the U.S. Constitution, which states, “Nor shall private property be taken for public use without just compensation.” In 2005, when the U.S. Supreme Court handed down its opinion in Kelo v. City of New London, the American public was shocked to discover that both of those assumptions were wrong.

New London, Connecticut, sought to condemn and demolish 15 well-maintained and well-loved homes and give the land to a private corporation for high-end commercial development. Susette Kelo and her neighbors challenged the taking as a violation of the Fifth Amendment. Their property wasn’t being taken for public use, they said; it was being taken for use by a private corporation.

The case received a great deal of media attention, and public sympathy was overwhelmingly on the side of the homeowners. Nevertheless, when it finally reached the U.S. Supreme Court, the court sided with the city. It held that, while the Fifth Amendment 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 declared, moreover, that the question of whether this or any taking serves a public purpose is not one that the federal courts should attempt to answer. Instead, the courts should defer to state and local governments and give them “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: “We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.”

Most states responded by adding new restrictions on the use of eminent domain under state law, and North Carolina’s neighbors in the Southeast did particularly well in that regard. Almost every state in the region put in place highly effective measures to prevent eminent domain abuse, and the measures put in place by Florida and Virginia are regarded as the most effective in the country.

Unfortunately, despite the persistent efforts of many members of the N.C. House of Representatives, North Carolina still hasn’t done so, and North Carolinians remain exposed to the kind of eminent domain abuse that the U.S. Supreme Court authorized in Kelo.

Last week, Reps. Dennis Riddell (R-Alamance), Destin Hall (R-Caldwell), Dean Arp (R-Union), and John Blust (R-Guilford) sponsored a new eminent-domain reform bill that gives the General Assembly a chance to redeem itself. House Bill 310 (HB 310) would add the following declaration to the North Carolina State Constitution:

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 would also amend the General Statutes by replacing “public use or benefit” with just “public use.”

Despite its sponsors’ good intentions, in its present form HB 310 doesn’t do enough to protect North Carolina property owners. As noted above, the Fifth Amendment to the U.S. Constitution already imposes a “public use” requirement, and — according to the N.C. Supreme Court — the “Law of the Land” clause of the N.C. Constitution does too. As Kelo demonstrated, however, it’s all too easy for a court to interpret “public use” to mean “any public purpose at all, including the promotion of economic development.”

It’s hard to imagine today’s N.C. Supreme Court interpreting it that way, but the ideological make-up of the court can change. State and local authorities will always be tempted to transfer land from private property owners to well-connected developers and industrialists, and there is nothing in the current bill to prevent some future court from allowing them to do so.

At a minimum, the bill should be amended to include a clarifying phrase like the one that appeared in previous versions:

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.

Even better would be a bill that provides all the protections recommended in the eminent domain reform section of Locke’s “Policy Solutions” guide. In addition to a constitutional declaration that private property may be taken only for public use and only with just compensation, we need:

  • A specific prohibition on transfers from one private party to another for the sake of economic development
  • A definition of “public use” that permits transfers from one private party to another only when the property is needed by a common carrier or public utility to carry out its mission, or, in cases of blight, when the physical condition of the property poses an imminent threat to health or safety  
  • A stipulation that courts must decide for themselves whether a taking complies with the public-use requirement without deference to any other authority
  • A definition of “just compensation” that ensures owners are made whole for all losses and costs, including loss of access, loss of business goodwill, relocation costs, and reasonable attorney’s fees 

The members of the N.C. House who have been working so long and so diligently to protect us from eminent domain abuse deserve our gratitude. Let us hope they finally succeed in putting effective protections in place.

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