History of Eminent Domain and its Abuse
Eminent domain, as we know it today, can be traced to the Latin term Eminenes Dominium, which referred to a government’s power to appropriate private property for the public’s use, with or without the property owner’s consent.
1789: The U.S. Constitution
The founders were concerned about the potential abuse of eminent domain—an early U.S. Supreme Court decision even refers to it as “the despotic power”—so they limited its use through the “takings clause” of the Fifth Amendment: “[N]or shall private property be taken for public use, without just compensation.” The clause limits eminent domain in two ways: first, the government can only take private property for a “public use” and second, the government must pay for it.
1800: Federal Takings Clause in State Constitutions
Eminent domain restrictions are similarly stated in 49 state constitutions. Indiana, the one exception, does not explicitly limit eminent domain in its constitution, but the state’s courts have held that it is implied in the Indiana constitution’s due process guarantee. Takings clauses vary in length and detail, but all require that the use of eminent domain be for a public use.
Early Uses of Eminent Domain
For most of the 19th and early 20th centuries, governments permitted eminent domain to be used only for true public uses, such as roads, bridges, parks, and public buildings and facilities. The courts began authorizing a slight expansion of the power when they allowed private companies like railroads and public utilities to take property for the laying of railroad tracks and transmission lines—but these companies were tightly regulated and had to provide the public equal access to the rail lines or utilities.
1954: Berman v. Parker
The Berman decision, however, profoundly expanded the definition of what constitutes a “public use” and created incentives for abuse by governments and private developers to circumvent the free market. In this case coming out of Washington, D.C., the U.S. Supreme Court upheld the constitutionality of “urban renewal”—efforts by the federal government and local officials to revitalize urban areas to supposedly remove slums and eliminate blight. In this one decision, the Court transformed the words “public use” to mean “public purpose” as defined by a legislature or administrative agency.
In Berman’s wake, governments began vastly expanding the definition of blight so they could condemn perfectly fine properties for private development under the pretense of urban renewal. In addition, many state supreme courts adopted the rationale of Berman, reading their public use clauses the same way. Continuing down this slippery slope, governments began to bypass the charade of declaring an area blighted and instead used eminent domain to take homes and businesses so that the land could be given to other private parties who the government believed would produce more tax revenue than the current owners.
1981: Poletown Neighborhood Council v. City of Detroit
The precedent established in the Berman decision allowed governments to continue to push the envelope on “legitimate” condemnations. In the 1981 Poletown decision, the Michigan Supreme Court allowed the City of Detroit to bulldoze an entire neighborhood, complete with more than 1,000 residences, 600 businesses, and numerous churches, in order to give the property to General Motors for an auto plant. The City didn’t even pretend that the community was “blighted,” it simply wanted the land based on GM’s promise of more jobs and taxes. This case set the precedent, both in Michigan and across the country, for widespread abuse of the power of eminent domain for private development.
1984: Hawaii Housing Authority v. Midkiff
Three years later, the U.S. Supreme Court held in Midkiff that a state could use eminent domain to break-up a land oligopoly and redistribute the property. The Court relied on Berman, rationalizing that it is the taking’s purpose—be it the redistribution of property or removal of blight—that determines its constitutionality. This firmly established the transformation of the takings clause from “public use” to “public purpose.”
2004: County of Wayne v. Hathcock
After years of mounting eminent domain abuse nationwide, the tide began to turn. The Michigan Supreme Court reversed Poletown through its unanimous decision in County of Wayne v. Hathcock in July 2004. The Court decisively rejected the notion that “a private entity’s pursuit of profit was a ‘public use’ for constitutional takings purposes simply because one entity’s profit maximization contributed to the health of the general economy.”
2005: Kelo v. City of New London
Despite the reversal of Poletown and Michigan’s rejection of the rationale that pure economic development constitutes a public use, the U.S. Supreme Court ruled in 2005 that private property may be seized for private commercial development, based on the possibility of increased tax revenue or jobs. In Kelo v. City of New London, Susette Kelo and a six other homeowners in New London, Connecticut, had their property taken through eminent domain for private economic development projects. The City didn’t even declare their properties “slum” or “blighted”—their sole rationale was that someone else could make more money off of their land than the current owners could.
Using eminent domain for “economic development” alone is a new phenomenon, and one that has spread rapidly since the Kelo decision—the yearly amount of abuse has tripled since June 2005. To read more about recent eminent domain abuse, see our report: Opening the Floodgates: Eminent Domain Abuse in a Post-Kelo World.
Although this case dealt an unprecedented blow to property rights nationwide, state legislatures have taken it upon themselves to do what the U.S. Supreme Court refused to do and protect private property from tax-hungry governments and land-hungry developers. In the one year after Kelo, 31 states passed laws curbing the abuses sanctioned by that decision. To check the status of eminent domain reform in your state, visit our Legislative Center.