The Encyclopedia of Libertarianism

Eminent Domain/Takings

Eminent domain refers to the legal power of a government or a private entity to which government has delegated this power to forcibly take private property from its owners. Under American law, the government’s power to seize property is limited, most notably by the U.S. Constitution and state constitutions. The Takings Clause of the 5th Amendment of the U.S. Constitution reads, “nor shall private property be taken for public use without just compensation.”

In the case of Boom Co. v. Patterson, the U.S. Supreme Court, in 1879, decided that eminent domain is an inherent power of government, “an attribute of sovereignty.” However, this power was rarely exercised by the federal government until after the Civil War. Prior to the war, it was state governments who exercised their authority to seize private property—usually to build canals, harbors, highways, and other infrastructure. Many scholars have argued that governments would not have been able to complete such projects without this power of eminent domain. From the 1870s, however, the federal government has commonly made use of this power.

The Takings Clause and the doctrine of eminent domain are meant to restrict government’s ability to take property to situations where seizure of the property is for public use. That is, government could confiscate property from a private owner only if the government planned to use the property for a public purpose whose goal was to benefit the whole citizenry. In such cases, governments were obligated to pay just compensation to each owner for the loss of their property. Just compensation has traditionally been interpreted to mean “fair market value.”

When exercising eminent domain powers, the government was required to offer to purchase the private property for a fair price. If the owner accepted the offer, title to the property was formally transferred to government. However, if the offer was rejected and if subsequent good-faith negotiations did not lead to a voluntary sale, the government customarily began condemnation proceedings to force the transfer of title. In condemnation cases, private owners possessed the right to be notified of the taking and to respond or object to government evidence regarding the property’s value. Whether property was condemned or transferred voluntarily, each private owner retained the right to just compensation.

In some situations, a government, whether state, local, or federal, has taken actions that clearly infringe the rights of a property owner to use and enjoy that property. If the government offers no compensation for this interference, property owners could sue the government for what was known as an “inverse condemnation” in order to compel the government to pay fair compensation for its taking.

When a government regulates and thus interferes with the use, development, and enjoyment of private property, courts have only rarely required it to pay owners for the losses that result from such regulatory (as opposed to physical) takings. Such takings often occur as a result of environmental, historic preservation, and zoning regulations. Courts are more likely to order compensation for a regulatory taking if the regulation has reduced the value of the property to near zero. Such a regulation would be considered to constitute a full, as opposed to a partial, taking. An example of the Supreme Court’s reasoning in a case involving a regulatory taking can be found in the 1992 case of Lucas v. South Carolina Coastal Council. However, most regulatory takings are uncompensated, which means that private owners must bear almost all the costs of the regulatory action that, presumably, benefit many.

Granting any government the power to take private property for any use, even with compensation, is deeply problematic. The reasons are numerous. First, private property is an extremely effective bulwark against government tyranny. If politically powerful individuals can legally take property for public use and if the politically powerful can determine what uses are “public,” then we can expect these interpretations to be quite broad. It is predictable that the politically weak will be more likely targets of eminent-domain actions than will the politically well connected.

This notion was particularly true following the Court’s 5–4 decision in Kelo v. City of New London, that government entities possessed the authority to transfer land holdings from one private owner to another if it were thought that the transfer would further economic development. Justice Sandra Day O’Connor recognized this problem in her dissenting opinion to the case:

The beneficiaries [of eminent domain] are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms. As for the victims, the government now has license to transfer property from those with fewer resources to those with more. The Founders cannot have intended this perverse result.

Justice O’Connor is surely right that the Founding Fathers did not intend government to have the legal power to take property from one private citizen and give it to another for the latter’s enrichment, as was the case in Kelo. The restrictions of the Takings Clause, and similar restrictions in state constitutions, are evidence of attempts by the Framers and their successors to limit such redistributive actions.

Second, eminent-domain powers make the tenure of private citizens in their own property insecure and, therefore, less valuable. Third, government officials who pay “just” compensation are unable to take the subjective value of private property into account. As a result, private owners may be forced to transfer property at a price far below that which the owner would accept in a voluntary exchange. Given that American courts have traditionally been extremely deferential to legislatures when determining whether a use is public, governments now possess expansive powers to transfer property from the private to the public domain or, recently, from one private owner to another—powers that threaten individual liberty.


Further Readings

DeLong, James V. Property Matters: How Property Rights Are under Assault—and Why You Should Care. Albany: State University of New York Press, 1993.

Epstein, Richard A. Takings: Private Property and the Power of Eminent Domain. Cambridge, MA: Harvard University Press, 1985.

Pipes, Richard. Property and Freedom: How through the Centuries Private Ownership Has Promoted Liberty and the Rule of Law. New York: Knopf, 1999.

Sandefur, Timothy. Cornerstone of Liberty: Property Rights in 21st Century America. Washington, DC: Cato Institute, 2006.

Siegan, Bernard H. Property and Freedom: The Constitution, the Courts, and Land-Use Regulation. New Brunswick, NJ: Transaction, 1997.

Originally published .