Everything You Need to Know About Eminent Domain

The History of Eminent Domain

Eminent domain has a fairly simple definition: the power of government (legally known as “the sovereign”) to take property from private individuals, businesses, and non-governmental entities. The taking of property is known in some states as an acquisition, while eminent domain is frequently called condemnation. Although it is sometimes thought that this concept originated with the founding of our country, it actually has existed long before that. Historically, the power of eminent domain was exercised by the ruling class, or royalty, which was known as the sovereign or sovereignty.

The innovation to the power of eminent domain, which was produced by the founding of the United States, was the creation of two conditions upon the exercise of that power. These are found in the 5th Amendment to the Constitution. The first requires that the taking must be for a public use. The second condition requires that just compensation be paid to the former owner in an amount equal to value of the property taken. While the federal constitution only applies to the “taking of property”, many state constitutions expanded owner rights by requiring the payment of just compensation for “damage” to property, as well.

What is “Public Use?”

The concept of “public use” was straightforward in the early days of our country. Common public uses included roads, schools, courthouses, jails, etc. –basically any improvement that was “used by the public”. In the middle of the 20th century, the concept of public use was put to a test. Local governments began to recognize the detrimental effects of slum neighborhoods on the vitality of those neighborhoods and the overall community. The term “blight” was applied to this situation. In order to revitalize a slum area and eliminate the blight, cities recognized that that would only occur under a single ownership rather than multiple, independent ownerships that comprised the slum area.

Local governments decided to use their power of eminent domain to acquire all of the independently owned parcels of land and then transfer them to a developer who would redevelop the slum area and eliminate the blight. Since the ultimate ownership of the parcels was for a private use (the developer) and not a public use, the takings were challenged because they did not meet the “public use” requirement of the Constitution.

In reviewing this case, the Supreme Court upheld this exercise of eminent domain by the local government because the goal of eliminating neighborhood blight was a valid “public purpose”. Although the Constitution very specifically states “public use”, the court had no problem ignoring that specific wording. It was satisfied that a public purpose would meet the Constitutional requirement of “public use”. Thus, since that time, public use and public purpose have been used interchangeably.

Challenging Public Use

The concept of public use was also challenged in another way. This is most easily explained with an example. Imagine a local government constructing a road into a new development that has been championed by local officials. Unfortunately, the road must go through a property with a different use from the development. This different use detracts from the new development. When making its offer for the roadway land through this property, the municipality offers to purchase the entire parcel. While the owner is certainly free to sell the whole property to the municipality, the owner could choose not to. In that situation, the court would block the taking if the municipality sought to condemn the entire parcel. The court’s reasoning would recognize the necessity component in the public use requirement. The taking for the road can only include land needed, or necessary, for the road. Land outside of that physical boundary is not needed for the public use of the road, and public use does not allow a condemning authority to take that extra land.

Who Has the Power to Use Eminent Domain?

Over time the power of eminent domain has been given to certain non-government entities, such as utilities. Examples of projects that require takings are power lines, pipelines, and railroad right of way. This power is typically granted by the state through a statute. It may require a specific application by the utility for each project. Not every such project, though, receives eminent domain power. When this happens, it usually involves projects for pipelines and power lines. In those cases, if the utility cannot negotiate an acquisition from the owners, the utility is forced to alter its route and negotiate with different owners.

Up to this point we have been discussing situations where the condemning authority is affirmatively exercising its power of eminent domain. In those situations, the condemning authority will follow the procedure for a taking outlined in that particular state, or the federal rules where a taking is by the federal government. But what happens when a taking occurs, and the condemning authority neglects or refuses to start an eminent domain proceeding? How does an owner receive just compensation in that situation? This leads us to a small corner of eminent domain law called inverse condemnation, or de facto condemnation in some states.

Dan Biersdorf, our lead attorney, discusses eminent domain in more detail

Inverse Condemnation

Inverse condemnation is not addressed in the Constitution, but it is outlined in statutes. The premise of these statutes is to allow an owner the ability to seek just compensation where property is taken from the owner, but the condemning authority refuses to declare a taking and recognize the obligation to pay just compensation to the owner. In this situation, the owner is required to start a lawsuit against the governmental unit that did the taking. In that lawsuit the owner asks the court to 1) determine that a taking occurred and 2) order the governmental unit to pay just compensation. If the owner is successful in obtaining a court order that a taking did occur, many states require the governmental unit to pay the owner the costs and fees that the owner incurred to obtain the order.

The classic inverse condemnation occurs when a governmental unit physically invades private property. This invasion does not need to be intentional. A rare example is the construction of a local road where no taking is declared. Another example is the diversion of water onto private property that would not have occurred but for actions or a project undertaken by the governmental unit. Courts have held that the invasion of property does not need to be permanent. Even a temporary invasion will be recognized by the courts as a taking which gives rise to the obligation to pay just compensation.

Regulatory Taking

Another category of inverse condemnation, called a regulatory taking, appeared more recently in the history of eminent domain law during the latter part of the twentieth century. A regulatory taking occurs when a governmental unit enacts a regulation that is unduly burdensome on a property. If the regulation is so burdensome that all use of the property is lost, the result is a total regulatory taking. This is called a Lucas taking after the Supreme Court decision by that name which enunciated this rule. Where the regulation reduces the value of the property, but does not take all of the value, the result is a partial regulatory taking. This is called a Penn Central taking after the Supreme Court decision of that name which enunciated that rule.

Since it is rare that a regulation destroys all value in a property, Lucas takings do not occur very often. Penn Central takings are more frequent, albeit rare, but they are difficult to prove. Although the affected property can retain some value, Court decisions have shown that the value after the regulation should be no more than 30% of the pre-regulation value, and, more likely, no more than 10% of the pre-regulation value. The reason for the uncertainty is the refusal by courts to set a bright line for the amount of reduction that is needed. Each case is evaluated independently, where two other factors are also considered.

As noted, above, physical invasions can be either permanent takings or temporary. The same holds true for regulatory takings, however, the law surrounding temporary regulatory takings is very recent and not very well developed. That is one of the “frontiers” of eminent domain law.

Dan discusses more about eminent domain below

What Are The Phases of Eminent Domain?

Eminent domain cases have two phases: 1) the right to take phase is the first one, and 2) the just compensation, or damages, phase is the second one. Everything discussed in this overview up to this point has addressed the first phase. In cases where the condemning authority initiates (declares) the taking, the first phase involves determining whether the condemning authority’s project satisfies the public use/purpose requirement. In an inverse condemnation case, the first phase involves determining whether a taking actually occurred. In all eminent domain cases the second phase does not begin until the first phase is completed.

Declared taking cases represent nearly the entire universe of eminent domain cases. The tiny balance of the universe of eminent domain cases involves inverse condemnation. Since the public use for most declared takings (roads, public buildings, etc.) has been established for a long time, the right to take phase in those cases is perfunctory, i.e. the condemning authority merely makes the required statutory record. There is no dispute, and they are unopposed. In inverse condemnation cases, the right to take is THE issue, but the extremely low number of inverse condemnation cases means that, overall, the right to take issue is unchallenged in the vast majority of all eminent domain cases. Consequently there are very few cases where the right to take is a litigated issue.

Disputes in Eminent Domain

One should not conclude, though, that there are very few disputes in eminent domain cases. To the contrary, there are a lot of them. Those disputes, however, are over the amount of money which should be paid for the property being taken by the condemning authority. That is what the second (just compensation) phase of an eminent domain case is all about.

The purpose of this introductory overview is to provide the reader with a roadmap to understand how eminent domain works. This website is designed to allow the reader to explore these eminent domain issues in greater detail. Since just compensation issues are so vast, we won’t even attempt to address them in this overview. But they are covered extensively in the website, and you are invited to explore them at your leisure.

Even after reading and contemplating the information in this website, many readers are likely to still have unanswered questions. For that reason, we invite those readers to contact us directly with their questions. This is particularly pertinent for those readers who are actually facing a potential taking. Talking to a skilled eminent domain lawyer is the only way to make sure your questions are answered. To encourage readers with potential cases to understand their cases better, we will talk about your case with you, and even analyze it, at no charge.

Learn more by reading our Frequently Asked Questions for Eminent Domain.