• Eminent domain is the government’s right to take control of private property and use it for public use, but only by compensating the owner fairly.
• The Bill of Rights protects the interests of the government and private property owners by enforcing the rules of just compensation and public use.
• Eminent domain is useful in instances where the government needs to build critical infrastructure, although it’s liable to be abused.
• The government must compensate the property owner before they can seize the land; if the owner and the government cannot agree on such a value, they may undergo a condemnation proceeding.
• Conversely, the community can also sue the government for an inverse condemnation if the public project has led to a decrease in the community’s quality of life.

Eminent domain authorizes the government to seize private property and pay the owner. Federal, state, and local governments use this power primarily for public-benefiting projects, but only as a last resort.

Eminent domain is one of the most controversial powers of government defined by the Bill of Rights[1].

The scope and power of eminent domain are enshrined under the Fifth Amendment of the Constitution[2], particularly the last two sentences:

“…nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

The Constitution acknowledges the government’s potential need for private property and its right to seize it. But to protect property owners and curb misuse, the property must serve the public as a whole, and the owner must receive fair compensation.

Land frequently appears in eminent domain proceedings, but government bodies can also seize other assets like leases, investment funds, contract rights, copyrights, and intellectual property[3].

How Did Governments Gain the Power of Eminent Domain?

Eminent domain originated from 17th-century English common law, leading many common-law nations to grant their governments similar powers.

A painting of the English countryside, 17th century—no doubt under the British crown’s eminent domain laws.

For instance, Canada terms it “expropriation[4],” Australia as “compulsory acquisition[5],” and New Zealand, Ireland, and the U.K. refer to it as “compulsory purchase[6].”

Regardless of the name, the objective remains—to seize private property for public projects.

The term “public use” doesn’t necessarily require direct use by the public, such as roads or parks, but broadly encompasses any use promoting public welfare.

For instance, constructing an industrial park, which will create jobs for the community, can be deemed public use due to its overall public benefit.

The government, when invoking eminent domain, must demonstrate the seized property’s utility for public use. Hence, comprehending the term from a legal perspective, as illustrated in the following case study, is essential.

Case Study: Kelo v. City of New London (2005)

The 2005 case of Kelo v. City of New London significantly impacted the definition of “public use” in eminent domain proceedings.

In this case, the city of New London, Connecticut, seized various private properties under eminent domain for an economic development plan and subsequently transferred ownership to a private developer, New London Development Corporation.

The plaintiffs, led by Susette Kelo, brought a lawsuit against the government, contending that the properties were taken for economic development. Their argument hinged on the unclear definition of “public use,” as the Constitution did not classify economic development as such.

The U.S. Supreme Court eventually sided with the city, declaring property seizure for economic development as “public use” because it served a legitimate public purpose and did not exclusively benefit a specific group.

This decision provoked substantial public protest nationwide, leading many states to pass laws restricting the use of eminent domain for economic development[7].

Just compensation, as implied by the Fifth Amendment, refers to the fair market value provided for the property, which is usually compensated in the form of money.

However, much like “public use,” determining “fair compensation” in eminent domain is often controversial due to its ambiguity.

Courts typically set just compensation based on the property’s fair market value, considering factors like land size and available resources. The method presumes that both seller and buyer participate willingly.

However, this method can quickly spiral out of control, as it doesn’t factor in the emotional investment people typically have in their property.

Moreover, sometimes determining fair market value is practically impossible. For example, if the government seizes 5 square feet of private land from each property along a road to widen it, assessing the fair market value of that land becomes challenging, if not impossible, due to the difficulty in finding a market for such small plots.

Taking and Condemnation Proceedings

The term “taking” pertains to the government seizing private land for its use. It can manifest as a physical taking, where the government directly encroaches on private land, or a regulatory taking, where government regulations restrict property use[8].

The government has to offer just compensation to the owner before taking the land. If the government and the owner fail to agree on the property’s fair market value, it may lead to a condemnation proceeding.

The government initiates a condemnation proceeding to clarify the purpose behind filing for eminent domain, such as its public benefit and the proposed compensation. The court will hear the defendants’ (private property owners) perspective, primarily concerning the property’s actual value.

The court bases its decision for just compensation on information from both parties.

Inverse Condemnation

Inverse condemnation occurs when the government’s use of eminent domain damages or diminishes the value of nearby private properties. Owners may sue the government for damages.

For example, if the state government seizes a plot and builds an oil refinery on it, the fumes and noise from the refinery are likely to decrease nearby homes’ property values. As a result, residents may file an inverse condemnation lawsuit against the government.

Eminent domain can have a number of positive effects. First, it allows the government to complete important public projects, such as roads, schools, and hospitals, that might not otherwise be possible because of owners who refuse to part with their properties.

Secondly, eminent domain can help facilitate the redevelopment of blighted areas, which can improve the quality of life for residents.

On the other side of the coin, eminent domain has been heavily criticized for its potential for abuse[9]. In particular, some governments (local and national) may invoke the power for controversial projects and private developments, such as sports stadiums and shopping centers.

Another criticism of eminent domain is that it disproportionately affects low-income and minority communities. These communities are often targeted for redevelopment, and the property owners may not have the resources to fight the government’s decision in court.

1. The Bill of Rights: A Transcription. (n.d.) National Archives. Retrieved from https://www.archives.gov/founding-docs/bill-of-rights-transcript
2. Fifth Amendment. (n.d.) Constitution Annotated. United States Congress. Retrieved from, https://constitution.congress.gov/constitution/amendment-5/
3. Kenton, W. (2022, February 06.) Eminent Domain. Investopedia. Retrieved from https://www.investopedia.com/terms/e/eminent-domain.asp
4. Expropriation. (n.d.) Thomson Reuters Practical Law. Retrieved from https://ca.practicallaw.thomsonreuters.com/1-620-9432?transitionType=Default&contextData=(sc.Default)&firstPage=true
5. The Commonwealth and You: Compulsory Acquisition of Land. (n.d.) Department of Finance. Official Website of the Australian Government. Retrieved from https://www.finance.gov.au/sites/default/files/2019-12/compulsory-acquisition-of-land-brochure.pdf
6.  Compulsory purchase and compensation: guide 1 – procedure. (n.d.) Department for Levelling Up, Housing and Communities. Official Website of the United Kingdom. Retrieved from https://www.gov.uk/guidance/compulsory-purchase-and-compensation-guide-1-procedure
7. Sprankling, J. (2007.) Introduction: The Impact of Kelo v. City of New London on Eminent Domain. Pacific McGeorge School of Law. Retrieved from https://scholarlycommons.pacific.edu/cgi/viewcontent.cgi?article=1073&context=facultyarticle
8. Takings and Eminent Domain. (n.d.) Office of the Property Rights Ombudsman. State of Utah, Department of Commerce. Retrieved from https://propertyrights.utah.gov/takings-and-eminent-domain/
9. Millsap, A. (2015, November 17.) The Injustice of Eminent Domain. U.S.News. Retrieved from https://www.usnews.com/opinion/economic-intelligence/2015/11/17/the-injustice-of-eminent-domain