Eminent domain allows the state or federal government to claim private property for public use as long as there is just compensation. However, definitions of public use can vary based on the legal jurisdiction.
There is limited and inconsistent research on the economic effects of eminent domain.
The federal or state government can seize private property via eminent domain if the land will be for public use and landowners receive just compensation. The act of acquiring land under eminent domain is referred to as condemnation.
The power of eminent domain is granted by the Fifth Amendment of the U.S. Constitution and is extended to states by the Due Process Clause in the Fourteenth Amendment (GAO, 2006).
Eminent domain is often used to assemble large areas of land for redevelopment projects. Some examples of eminent domain use cases include:
The federal definition of public use for eminent domain is broad (Carpenter, 2010). As a result, stricter definitions for public use are deferred to the states (Deborah, 2006).
States typically interpret public use to justify eminent domain in two ways:
In general, eminent domain generates benefits and costs for different groups, and it is difficult to objectively measure these in order to identify their overall impact. Additionally, it is not clear what portion of the public must benefit from the use of eminent domain to justify public use or advantage.
Courts do not use a specific formula to calculate how much of the public must benefit, and they may not require that the entire community or even a considerable portion of it enjoys the public benefit, as long as there are benefits such as a decrease in unemployment, increase in the tax base, or revitalization of local industries (Nader, 2004; Coleman, 2019).
Energy and utility companies often use eminent domain to build out infrastructure (e.g., renewable energy infrastructure). A state’s public utility commission can determine that certain values satisfy public use, such as increasing the reliability, affordability, or sustainability of the power grid.
In Missouri, land cannot be condemned purely for economic development purposes that will solely increase the tax base, tax revenues, employment, or general economic health (RSMo 523.271).
In areas where courts tend to favor government use of eminent domain, housing prices increased for at least four years after the legal precedent was set (Chen, 2020). At the same time, there is concern by property rights groups that property is being undervalued when condemned for eminent domain (GAO, 2006).
There is limited research on how eminent domain affects economic development.
Cases where economic development was justified as public use for eminent domain disproportionately condemn land from the elderly, as well as racial minority and low-income neighborhoods (Bailey, 2012).
Residents of low-income neighborhoods often rely on their communities for day-to-day needs such as child care. When a household is displaced because their land is condemned through eminent domain, they can lose access to their community support network (GAO, 2006).
HB 2005 passed in 2022 and requires that:
Bailey, J. (2012). Ethnic and Racial Minorities, the Indigent, the Elderly, and Eminent Domain: Assessing the Virginia Model of Reform. Wash. & Lee J. Civil Rts. & Soc. Just., 19, 73.
Byrne, P. F. (2016). Have post-kelo restrictions on eminent domain influenced state economic development? Economic Development Quarterly, 31(1), 81–91. https://doi.org/10.1177/0891242416671805
Carpenter, D. M., & Ross, J. K. (2010). Do restrictions on Eminent Domain Harm Economic Development? Economic Development Quarterly, 24(4), 337–351. https://doi.org/10.1177/0891242410370680
Chen, D. L., & Yeh, S. (2020). Growth under the shadow of expropriation? The economic impacts of eminent domain.
Coleman, J. W., & Klass, A. B. (2019). Energy and Eminent Domain. Minn. L. Rev., 104, 659.
Deborah, D. A. (2006). (rep.). Eminent Domain: Public Use. Minnesota House of Representatives Research Department. Retrieved October 25, 2022, from https://www.house.leg.state.mn.us/hrd/pubs/ss/clssemntdom.pdf.
Lanza, S. P., Miceli, T. J., Sirmans, C. F., & Diop, M. (2013). The use of eminent domain for economic development in the era of kelo. Economic Development Quarterly, 27(4), 352–362. https://doi.org/10.1177/0891242413493661
Nader, R., & Hirsch, A. (2004). Making eminent domain humane. Vill. L. Rev., 49, 207.
United States Government Accountability Office (GAO). (2006). (rep.). Eminent Domain - Information about Its Uses and Effect on Property Owners and Communities Is Limited. Retrieved October 25, 2022, from https://www.gao.gov/assets/gao-07-28.pdf.
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