States pass laws to limit eminent domain

Since the U.S. Supreme Court’s Kelo v. New London decision last June, state and federal lawmakers have been scrambling to restrict local officials’ authority to use eminent domain for economic development. Meanwhile, local officials are working to protect their authority, arguing that eminent domain is an important tool to address blight.

Eminent domain has long been used to forcefully acquire land for public projects, such as roads, schools and parks. But since the Court ruled that the U.S. Constitution permits using eminent domain for economic purposes that provide public benefits, it has been under scrutiny. Under the ruling, New London, Conn., can use eminent domain to acquire land in an aging neighborhood for a mixed-use development.

Since the decision, eight states have passed bills that restrict local governments’ use of eminent domain. And at least 42 states considered legislation on the issue this session, according to the Washington-based National Conference of State Legislatures (NCSL).

So far, the eight bills that have been approved have several variations, with some tightly restricting eminent domain while others are making the process more open, according to Larry Morandi, director of NCSL’s Environment, Energy and Transportation Program.

One type of bill restricts eminent domain’s use for economic development, to generate tax revenues or to transfer private property to another private entity. “That is the most restrictive we’ve seen and is similar to what passed in Texas and Alabama last year,” Morandi says.

Other bills define what local governments can use eminent domain for, rather than what they cannot use it for. “I expect a lot of language modification to state what is the sole purpose or primary purpose of the project,” Morandi says. “That is what it all boils down to — what is the primary purpose.”

Members of Congress also are working to curb some uses of eminent domain. A bill sponsored by Sen. John Cornyn, R-Texas, that would limit eminent domain to public projects, is working its way through the Senate and has 32 official supporters. “It is my intention to have property rights legislation debated and passed out of the Senate this year,” Cornyn says.

The Arlington, Va.-based Institute for Justice, which argued the Kelo case to the Supreme Court, is working with states to craft restrictive legislation. “I’m hopeful given the amount of disgust and anger about the Kelo decision that there will be substantive reforms,” says Steven Anderson, coordinator of the Castle Coalition at the Institute for Justice. “But there are very powerful entities on the other side that are working hard to make sure nothing happens.”

Among them is the League of Minnesota Cities. Gary Carlson, a lobbyist for the group, says eminent domain for economic purposes is “infrequently used.” Of more than 800 cities in Minnesota, Carlson says only a few have used eminent domain for roads in the last five or six years. In some larger cities, “they are in the lifecycle of having to redefine themselves and having to do it for redevelopment purposes,” he says.

Carlson says Minnesota cities’ concern is the extra costs that may be necessary to acquire property for economic development projects should an eminent domain restriction pass in the state. “The Minnesota Department of Transportation has estimated that, under the bill, projects like roads would cost an additional $14 million because of increased attorney fees and increased compensation to landowners,” Carlson says.

The League of Minnesota Cities proposed a bill that would make eminent domain proceedings more open. “We hope that bill will receive hearings and will be a part of the discussions,” Carlson says.
— Meredith Preston, Washington correspondent

Enacted legislation

• Alabama: Prohibits eminent domain use for retail, commercial, residential or apartment development; for purposes of generating tax revenue; or for transferring private property to another private party. Allows an exception for blight.

• Delaware: Restricts eminent domain use to a recognized public use.

• Idaho: Prohibits eminent domain use for a public use that is a pretext for transferring the property to another private entity, or for promoting economic development.

• Indiana: Defines public use and redefines blighted areas. Requires payment of compensation at a specific rate of fair market value.

• Ohio: Moratorium until Dec. 31, 2006, on eminent domain use for economic development purposes that would ultimately result in a property transfer to another private party in an area that is not blighted.

• South Dakota: Prohibits eminent domain use to transfer private property to another private entity or to be used primarily to generate additional tax revenue.

• Texas: Prohibits eminent domain use to confer a private benefit on a private party or for economic development purposes, with certain exceptions.

• Utah: Requires approval by the governing body of a local government before eminent domain may be exercised for a public use. Requires a written notice to be sent to the affected landowner at least 10 days before the public hearing where the proposed taking will be considered. Expands the definition of public use to include bicycle paths and sidewalks adjacent to paved roads, while limiting the use of eminent domain for certain recreational purposes.

SOURCE: National Conference of State Legislatures.