Questioning the Reach of Eminent Domain

By Alexandra B. Klass
From the Cato Institute
Wednesday, July 9, 2008 7:32 PM

The 2005 Supreme Court decision in Kelo v. City of New London brought unaccustomed public attention to eminent domain law. The issue of what constitutes a public use for purposes of eminent domain authority permeated the media, dinner conversations, state and federal legislative sessions and even highway billboards.

The public was shocked and angered to learn that city officials could condemn a private home and use its land to build a new corporate headquarters, and that a state could replace "any Motel Six with a Ritz Carlton," as Justice Sandra Day O'Connor noted in her dissenting opinion. Although the Supreme Court had upheld similar seizures long prior to Kelo, the public had now taken notice, was not happy, and wanted to make sure government officials could not knock on the doors of the nation's citizens with the same authority.

In many natural resource-rich areas of the country, however, the knock on the door is less likely to come from a government official than from a mining, oil or gas company representative. Since the early 20th century, state constitutions and legislative enactments in the interior west have given broad authority to natural resource developers to exercise the power of eminent domain directly to promote development of coal, oil, gas and other natural resources.

Natural resource development takings have much in common with the Kelo-type economic development takings. Both types of seizures grant the condemning authority the right to displace private property interests in the name of economic development that will benefit the public at large.

The history behind this broad authority for natural resource developers reflects the history and culture of the region. In the late 19th century, states in the interior west were in the process of creating their economies and their first state constitutions. State founders were less concerned with preservation of private property rights and more focused on developing their natural resources as quickly as possible by encouraging private mining, oil and gas development, forestry and other industry. As a result, the new states' constitutions often included explicit provisions declaring that private parties could exercise the power of eminent domain in furtherance of mining, irrigation, forestry or manufacturing. Other states created the same power by statute. This allowed private industry to obtain private property in furtherance of natural resource development without any need for state or local governmental officials to participate in the eminent domain action. Both state supreme courts in the region and the U.S. Supreme Court reviewing challenges to such authority gave great deference to state delegations of such authority, focusing on the role natural resource development played in the states' prosperity.

Following those decisions, for much of the rest of the 20th century, the public use clause of the Fifth Amendment was far from a hot topic. Then came Kelo in 2005.

The public, legislative and judicial reaction to Kelo was significant and swift. Throughout the country, the public, state legislatures, and state courts were quick to narrow what constitutes a public use as a matter of state law. As of August 2007, 42 states had enacted post-Kelo reforms, some of which limited significantly the ability of state or local government to engage in the type of economic development takings the Court found constitutional in Kelo.

Interest groups and others pushing eminent domain reform, however, make virtually no mention of the fact that natural resource development takings exist at all. This type of eminent domain authority granted directly to private industry is rarely, if ever, questioned as part of the recent initiatives to rethink the concept of "public use." By focusing only on government takings and ignoring private takings, legislators and interest groups have clouded the issue by framing it as one solely of government abuse of eminent domain authority. Instead, eminent domain is only one legal mechanism by which society allocates property rights. Such allocations should change as times and circumstances change.

Although natural resource development is still a significant economic driver in the interior west, it now also competes with recreation, tourism, conservation, residential development and high-tech industry. These changes call into question the continued per se public use designation for natural resource development. In order to balance the competing economic, social and environmental interests that currently exist in the Interior West, states should put in place a process similar to that used for government economic development takings that requires a hearing, public notice and comment, and local government decision-making (subject to judicial review) to determine whether any particular private taking is a public use. For those states that undertake such an effort, it will allow state legislatures and state courts to engage in a legislative and judicial consideration of public use that better reflects the growing economic, cultural and social diversity of the region.

Alexandra B. Klass is associate professor of law at the University of Minnesota Law School.

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