Eminent domain issue back in states’ hands

In June, the U.S. Supreme Court gave local governments the green light to take private property through eminent domain for economic development purposes. While the fight over the practice is settled with the federal judiciary, it is just beginning to heat up at the state level. “Nothing in our opinion precludes any state from placing further restrictions on its exercise of takings power,” Justice John Paul Stevens wrote in the ruling, Kelo v. New London.

Supporters of the decision, including the Washington-based National Association of Counties (NACo), praised the justices but added a note of caution for local governments considering the practice. “One of the results is going to be, perhaps, that eminent domain will be used less than before just because of the additional scrutiny that is going to be attached to its use,” says Ed Ferguson, NACo’s director of county services. “I think state legislatures throughout the country are going to be looking at the process, the issue of compensation, and the definition and what constitutes a public use under state law.” NACo reaffirmed its position by filing a brief as a “Friend of the Court” in favor of the ruling.

Sam Staily, director of urban and land use policy for the Los Angeles-based Reason Public Policy Institute, agrees. He says the Supreme Court ruling’s only test of public use is whether a majority on the city council approves of using eminent domain. “What has happened in the federal ruling is defining public use as anything that can be public benefit,” he says.

A number of state supreme courts, including Connecticut, Kansas, Maryland, Minnesota, New York and North Dakota, already had ruled that eminent domain could be used for economic development. And several others — Arkansas, Florida, Illinois, Kentucky, Maine, Montana, South Carolina and Washington — limited taking powers, with the exception of blight removal, before the ruling was handed down.

Earlier this year, Utah banned the use of eminent domain for economic development at a time when Ogden was in the midst of a battle in which downtown homeowners refused to sell their homes, blocking city plans for a Super Wal-Mart. In anticipation of the Kelo ruling, the Nevada legislature passed more stringent guidelines on the use of eminent domain, including a requirement that two-thirds of a redevelopment area be blighted. In addition, if seized land in the state is not redeveloped within 15 years, it must be offered to the original owner at the original price.

This year, few legislators will be in session long enough to pass new legislation to frame the federal ruling. In a July special session Texas lawmakers in the House and Senate introduced companion versions of a constitutional amendment that would prohibit seizures based on economic development alone. The House refused to negotiate with the Senate, and the legislation is dead for now. Also in July, Minnesota legislation was introduced in a special session to prohibit government from using eminent domain powers to take private property for other private economic development purposes.

Missouri Gov. Matt Blunt issued an executive order to create a nine-member eminent domain task force to study its use, analyze state laws and recommend changes. And in Connecticut, where the Kelo case originated, Gov. Jodi Rell supports a special legislative session to discuss the issue and has asked that all municipalities halt eminent domain proceedings until the general assembly has acted. “This issue is the 21st century equivalent of the Boston Tea Party: the government taking away the rights and liberties of property owners without giving them a voice,” the governor wrote in a statement released July 11. “But this time it is not a monarch wearing robes in England we are fighting — it is five robed justices at the Supreme Court in Washington.”

With the exception of special sessions, most state legislatures will not convene again until January of next year. Meanwhile, local governments without state restrictions are free to follow the Supreme Court’s decision when considering the taking of private property to boost the economies of their jurisdictions. “Eminent domain ought to be a tool of last resort,” Ferguson says. “Counties should be as transparent as possible.”