The U.S. Supreme Court struck a blow against homeowners and
small businesses on June 23, 2005, when it ruled in Kelo v. City
of New London that eminent domain could be used for
economic development purposes. By implication, the Court ruled
that government could take land from one private owner and sell or
give it to another if government officials believed that the new
owner would use the land in a more productive manner to create jobs
and increase tax revenues. By ruling in favor of the city, the
Supreme Court greatly expanded the permissible uses of eminent
domain beyond the traditional purpose of taking private property
only for broadly used public facilities such as roads, schools, and
fire stations. In the process, the Court has substantially weakened
individual property rights.
Although many responded to Kelo with anger, many others
greeted it warmly, setting in motion two conflicting responses that
will take years to resolve. In many states, intense citizen anger
led elected officials to enact much stronger state laws and
constitutional amendments to better protect individual property
rights and to prohibit Kelo-type takings. In other states,
however, efforts to enhance such protections failed to become law,
and many businesses and local officials have used the Kelo
decision as the excuse to escalate their use of eminent domain for
economic development purposes.
The Erosion of Property Rights
By vastly expanding government's ability to take private
property, Kelo continued the erosion of the constitutional
protections for private property that in recent years have been
further compromised by a growing propensity in many communities to
impose strict regulations on how private land may be used. Such a
"regulatory taking" occurs when government allows the property
owner to keep the land but greatly restricts his freedom to use
Zoning and growth boundaries are the most common forms of
regulatory taking at the state and local levels. At the federal
level, laws such as the Endangered Species Act and the Clean
Water Act give certain environmental goals preference over the
rights of property owners.
Although zoning has been practiced in the United States since
1916, when New York City implemented the first citywide land use
plan, its application in recent years has extended to
increasingly restricting the extent to which individuals can
develop their property. In turn, these abusive land use regulations
have limited the supply of building lots and increased the price of
land, thereby making home ownership increasingly unaffordable for
moderate-income American families.
In many instances, federal and local regulations reduce
individual freedom and diminish property values. Whereas eminent
domain requires government to compensate the former owner
fairly for the taken property, courts have ruled consistently
that compensation is not required in most regulatory takings.
Congressional Efforts Die in the
In response to Kelo, many Members of Congress introduced
legislation to limit the scope of the ruling and to provide
greater protection to homeowners and small businesses. In the
House of Representatives, Judiciary Committee Chairman James
Sensenbrenner (R-WI) introduced the Private Property
Protection Act of 2005 (H.R. 4128) to prevent any government entity
receiving federal funds from using eminent domain for economic
development. A violation of the prohibition would disqualify that
entity from receiving federal funds for two years. H.R. 4128 was
passed in November 2005 by a vote of 376 to 38 and sent to the
Senate for consideration.
In September 2006, the House also passed Representative
Steve Chabot's (R-OH) Private Property Rights Implementation Act
(H.R. 4772) to allow property rights cases to be filed in federal
court rather than in state courts as is customary today. Mr.
Chabot's legislation was an attempt to expedite a judicial process
that often gets bogged down in state courts where lengthy delays
and appeal processes often exhaust the plaintiff's resources long
before a settlement can be reached.
Neither bill became law. Following passage in the House, both
bills were sent to the Senate and referred to the Senate Judiciary
Committee, which is where they remained until early December 2006
when the 109th Congress adjourned. The Senate also failed to act on
similar bills introduced by Senator John Ensign (R-NV) and by
Senator John Cornyn (R-TX). The Bush Administration has not viewed
the issue as one of its higher priorities, although it did
issue a statement supporting H.R. 4128.
States Take the Lead
Although the federal role in protecting property rights has
ranged from diffident to counterproductive, many state
legislatures and courts have taken a number of positive actions in
recent years to enhance private property protections, and voters
have passed several ballot initiatives that strengthen property
Perhaps one of the most dramatic enhancements of property rights
occurred in November 2000 when the citizens of Oregon voted in
favor of Measure 7 to provide some relief to some property owners
whose land values were adversely affected by Oregon's mandatory
growth boundaries. Although a state court voided the referendum on
technical grounds, a revised initiative-Measure 37-passed in 2004.
After several court challenges, the Oregon Supreme Court ultimately
upheld it in February 2006.
Under the new law, qualifying landowners whose property lies
outside the growth boundaries would now be allowed to develop their
property unless the community agrees to compensate them financially
for the diminished value caused by any extant regulations that
would limit such development. Recognizing that broad citizen
support for both referenda may indicate declining public support
for strict growth boundaries, Portland's METRO (the area's land use
planning authority) agreed in 2004 to expand the area's growth
boundary to geographic limits that it previously expected to reach
in 2040. As a
result of the increase in available land for development, home
prices in the Portland area have become more affordable compared to
prices early in this decade.
There have also been some state-level successes in protecting
private property through the courts. Notably, in July 2004, the Michigan
Supreme Court unanimously reversed its infamous 1981
Poletown decision, in which it had ruled against property
owners in the Poletown neighborhood of Detroit. In an act similar to New
London's use of eminent domain to take the property of Suzette Kelo
and her neighbors and transfer it to other private owners for
redevelopment, Detroit had sought to seize Poletown's more than
1,000 homes and 600 businesses and churches and to transfer the
land to General Motors for a new factory. The city's action was
challenged in court, and the Michigan Supreme Court ruled in 1981
that it was an acceptable use of eminent domain. Although the
surviving Poletown landowners will receive no compensation, the
court determined in 2004 that it must overrule its 1981 decision
"to vindicate our Constitution, protect the people's property
rights, and preserve the legitimacy of the judicial branch as the
expositor-not creator-of fundamental law." The decision is also having
the more important effect of preventing such seizures-based on
public benefit rather than public use-from happening
again in Michigan.
The Michigan decision, however, was a rare instance in which a
court sided with the property owner. For the most part, the courts
have been reluctant to rule against the use of eminent domain for
economic development purposes or against restrictive zonings and
rezoning (regulatory takings) no matter how significant the
loss to the owner. Typical is the October 2000 ruling by a
Virginia state court against two elderly women whose combined
320 acres were part of a 500-acre area that had been downzoned from
four houses per acre to one house per acre by the Prince William
County Board of Supervisors in 1998. The sisters sued to have the
original zoning density (in effect since 1958) restored, but the
court ruled that the action was "unfair but not unlawful."
While successful state and local efforts to protect and
strengthen property rights have been rare, this may be changing in
response to broad-based anger at the Supreme Court's controversial
Kelo ruling. Unlike the previous property rights abuses
inflicted on ordinary people, the Kelo decision seems to
have been sufficiently irresponsible as to demonstrate vividly just
how vulnerable homeowners and small businesses are to covetous
corporations, elitist municipal planners, and economic development
bureaucrats. The consequence was a firestorm of national
indignation that led citizens to demand better protection from
their public officials at the federal, state, and local levels.
Many elected officials responded, and within weeks of
Kelo scores of bills were introduced in state legislatures
across the country, while petitions to put the issue on the ballot
were circulated in states that allowed voter referenda. According
to a November 2006 report by the U.S. Government Accountability
Office, between June 23, 2005, and July 31, 2006, 29 states enacted
at least one of three general types of change in their eminent
domain laws: 23 placed restrictions on its use for economic
development; 24 added additional procedural requirements; and 21
tightened their definitions of "blight," "economic development,"
and "public use."
Even more protections have been proposed since July 2006. In the
year and a half since the Kelo decision, many of these
initiatives have led to changes in state laws and constitutions,
while some reform efforts have failed in the face of withering and
well-financed opposition, notably from environmental groups,
municipal governments, and state government agencies. All in
all, the wins significantly outnumber the losses. Below is a
summary description of the recent successes and failures in the
effort to strengthen property rights at the state level by way of
referenda and legislation.
Referenda Results: The Winners
In November 2006, voters in 10 states passed constitutional
amendments or other measures designed to protect property
South Carolina. By a vote of 86.1 percent to 13.9
percent, South Carolina voters approved an amendment to the
state constitution prohibiting the use of eminent domain for
economic development except for public use. The amendment limits
the definition of "blight" to conditions that pose a danger to
public health and safety. The amendment also removed constitutional
provisions that allowed several counties to use eminent domain
for private use.
Florida. By a vote of 69.1 percent to 30.9
percent, Florida voters passed a state constitutional
amendment prohibiting the government from taking property for
reasons of blight, complementing the state legislature's earlier
passage of laws that limit the use of eminent domain.
Georgia. By a vote of 82.7 percent to 17.3
percent, Georgia voters endorsed a constitutional amendment
requiring that elected officials formally vote for or against each
use of eminent domain in their communities. This amendment
complements new property rights protections passed earlier in the
year by the state legislature.
Michigan. By a vote of 80.1 percent to 19.9
percent, Michigan voters approved a constitutional amendment
that builds on and strengthens the Michigan Supreme Court's
reversal of the infamous Poletown decision. Among its many
provisions, the amendment requires that property owners must
receive 124 percent of fair market value for property taken by
eminent domain, explicitly prohibits the use of eminent domain for
economic development and/or tax revenue enhancement, and specifies
that condemnations based on blight must be subject to a higher
standard of evidence.
New Hampshire. By a vote of 86 percent to 14
percent, voters ratified a constitutional amendment that the state
legislature had passed by the overwhelming vote of 277 to 61.
The new amendment provides that "No part of a person's property
shall be taken by eminent domain and transferred, directly or
indirectly, to another person if the taking is for the purpose of
private development or other private use of the property."
Louisiana. In the September 2006 primary
election, by a vote of 55 percent to 45 percent,
Louisiana voters approved a constitutional amendment that had
earlier been passed by the legislature. The amendment prohibits the
use of eminent domain for economic development purposes to boost
jobs and tax revenues. It also limits the definition of "blight" to
threats to public health and safety.
Nevada. By a vote of 63.1 percent to 36.9
percent, Nevada voters took the first steps toward endorsing
State Question No. 2, a citizen initiative supporting a
constitutional amendment that, among other measures, limits the use
of eminent domain for private development by more clearly defining
Public use shall not include the direct or indirect transfer of
any interest in property taken in an eminent domain proceeding from
one private party to another private party. In all eminent domain
actions, the government shall have the burden to prove public
Nevada law requires that constitutional amendments must be
approved by voters in two consecutive elections. Therefore, a
second successful vote (in 2008) is required before it is included
in the state constitution.
Oregon. For the third time in three consecutive
elections, Oregon voters endorsed a ballot measure to change the
state's statutes to strengthen the protection of property
rights. By a vote of 67 percent to 33 percent, voters favored
Measure 39, a citizen initiative that states:
[A] public body…may not condemn private real property
used as a residence, business establishment, farm, or forestry
operation if at the time of the condemnation the public body
intends to convey fee title to all or a portion of the real
property, or a lesser interest than fee title, to another
North Dakota. By a vote of 67.5 percent to 32.5
percent, North Dakota voters approved a state constitutional
amendment that prohibits the use of eminent domain when the
government's intention is to transfer the property from one private
owner to another.
Arizona. By a vote of 65.2 percent to 34.8
percent, Arizona voters endorsed an initiative that restricts
the application of eminent domain by tightening the
definitions of "blight" and "public use." The initiative also
imposes some restraints on regulatory takings.
Referenda Results: The Losers
In November 2006, voters in three states rejected state
constitutional amendments to protect property rights.
Washington. By a vote of 58.8 percent to 41.2
percent, Washington voters rejected Initiative Measure No. 933, a
ballot initiative that would have required compensation to property
owners for regulatory takings. Created and endorsed by the
Washington Farm Bureau, the initiative would have required
compensation when government regulation damages the use or value of
private property, would have forbidden regulations that prohibit
existing legal uses of private property, and would have provided
exceptions or payments. The initiative was introduced in
response to an increasing number of environmental regulations
and prohibitions being imposed on farm land. Advocates of the
initiative estimate that their opponents outspent them by $3.7
million to $700,000, with one environmental group providing
$500,000 to the opposition.
California. By a vote of 52.5 percent to 47.5
percent, Californians rejected Proposition 90, a
constitutional amendment that would have limited the use of
eminent domain and regulatory takings in the state. The amendment
would have prohibited the use of eminent domain for any private use
or to transfer to another private owner, except when the other
private entity is performing a "public use." The amendment also
provided a new and narrower definition of "public use." As for
regulatory takings, the proposal would have required the
"government to compensate landowners for substantial economic
losses to private property that may result from the adoption of
new state and local government regulations and
statutes, except when those actions are taken to protect public
health and safety."
Idaho. By a vote of 76 percent to 24 percent,
Idaho voters rejected Proposition 2, a citizen initiative
designed to protect private property by prohibiting the use of
eminent domain for economic development or to transfer property
from one private owner to another, except for certain uses
explicitly included in the constitution. The amendment would
also have required compensation for any diminution in a property's
value as a result of a regulatory taking, broadly defined.
Legislative Actions: The Winners
The Florida legislature enacted a 10-year
prohibition on the use of eminent domain by local
governments to take property from one private owner for
transfer to another.
As of July 2006, the following states had enacted laws limiting
the use of eminent domain for certain public purposes: Alaska,
Idaho, Colorado, Kansas, Nebraska, Minnesota, Iowa, Arkansas,
Michigan, Texas, Illinois, Indiana, Ohio, Kentucky, West
Virginia, Alabama, Georgia, Pennsylvania, New Hampshire, and
Among some of the changes, Maine and
Alabama prohibited the use of eminent domain on non-blighted
areas for the purpose of private retail, office, commercial,
residential, or industrial use.
Ohio imposed a moratorium on the use of eminent
domain through the end of 2006. During this time, a
government-appointed commission will study the issue and make
recommendations. Kansas, Minnesota, and
Pennsylvania passed laws prohibiting or limiting the public
sector's ability to use eminent domain for economic development and
Georgia's constitutional amendment to improve property
rights protection allows only elected officials to invoke
eminent domain and limits its use for economic development as
described "by general law." The relevant statutes were strengthened
earlier in the year by the state legislature. Under the new laws,
"Small businesses and homes can no longer be taken by local
government for economic development purposes." The
legislation also tightened the definition of "blight."
Legislative Activities: The Losers
The South Carolina legislature passed and the voters
subsequently endorsed a strong constitutional amendment
limiting the use of eminent domain for economic development and
private benefit, but the effort to enact an even more
ambitious proposal that would compensate for and/or limit
regulatory takings failed, although the legislature is
expected to revisit the issue in its 2007 session. Among the
opponents of the takings proposal were environmental groups that
complained "that local governments won't be able to plan
properly for growth if legislation requires them to pay property
owners when zoning reduces property values"-which is exactly the
In Virginia, as many as 40 different public authorities
(e.g., school boards) have the power to use eminent domain, and
Kelo-like takings and worse have become common. In 2006, the
Virginia legislature failed to enact a bill that would have
limited the ability of government and other public entities to
use eminent domain for purposes of economic development. Among
the major entities opposing the legislation were the Virginia
Department of Transportation, the state's counties and
cities, and the associations that represent them, including
the Virginia Municipal League. In effect, Virginia taxpayers were
footing the bill for their government officials to lobby against
their interests. At the same time, key legislators who count
several local governments and condemning authorities as
clients in their law practices played a role in killing the
Other states that failed to enact stronger property rights
protections in 2006 include Maryland, Massachusetts,
Hawaii, Connecticut, New Jersey, New Mexico, New York, and
Washington. In Maryland, 42 bills were introduced in the
state legislature to enhance protections for private property
owners, but all remained bottled up in committee through the end of
the session. As in Virginia, the opposition to better protection
was spearheaded by the state's municipal and county officials. The
executive director of the Maryland Association of
Counties justified its anti-private property position by
arguing that better protection "will cause more people to be
interested in playing the jury wheel of fortune than at the
Sustaining the Momentum
The property rights battles that the Supreme Court spawned in
nearly every state in the past year often went beyond protecting
against Kelo-like seizures to addressing the even more
common abuses that occur through regulatory takings. While most of
the efforts to limit regulatory takings did not succeed,
either in the state legislatures or at the ballot box, the
debate surrounding the harmful effects of regulatory takings
brought the issue to the public's attention and has opened the way
for future reforms.
To sustain this momentum, states that have not yet taken steps
to protect their citizens' property should:
- Prohibit the use of eminent domain to transfer property from
one private owner to another, except for a very limited number of
well-defined purposes involving broad public use;
- More clearly define the term "public use;"
- More clearly define the term "blight" and limit it only to
instances in which public health and safety are at stake; and
- Enact laws to discourage regulatory takings and provide
compensation when they occur.
At the same time, the federal government should support state
and local efforts by:
- Prohibiting the use of federal funds by any development
project, state, and/or local agency that uses eminent domain to
transfer land from one private owner to another for purposes of
- Withholding federal funds for affordable housing and
community development from any jurisdiction that does not
compensate land owners for value lost from abusive zoning
practices and other land use regulations; and
- Enacting legislation to clarify the intent of the U.S.
Constitution with regard to compensation for regulatory
Much to the surprise of property rights defenders, the
infamous Kelo decision may ultimately lead to a
strengthening of individual property rights in the United States.
Although many states, municipalities, and government bureaucrats
saw the Supreme Court's decision as a green light to continue
recklessly seizing private property for transfer to wealthy
developers and corporations, the vast majority of the voters and
many elected officials saw the Court's decision as a serious threat
to be deterred and defeated.
In many cases, this threat has been defeated. Within
little more than a year of Kelo, 29 states had enhanced
their statutes and constitutions to prohibit or severely limit
the use of eminent domain, and more states will likely join their
ranks in 2007 as the effort to protect ordinary citizens against
the covetous predations of bureaucrats and unscrupulous
Ronald D. Utt, Ph.D.,
is Herbert and Joyce Morgan Senior Research Fellow in the Thomas A.
Roe Institute for Economic Policy Studies at The Heritage
Price, "Eminent Domain Surges After Ruling," The Washington
Times, June 21, 2006, at (January 19, 2007).
and Ronald D. Utt, Ph.D., "Housing Affordability: Smart Growth
Abuses Are Creating a 'Rent Belt' of High-Cost Areas," Heritage
Foundation Backgrounder No. 1999, January 22, 2007, at www.heritage.org/Research/SmartGrowth/
Management and Budget, "Statement of Administration Policy: H.R.
4128-Private Property Rights Protection Act of 2005," November 3,
(January 19, 2007).
Oppenheimer, "Court Upholds Measure 37," The Oregonian,
February 21, 2006, at
(January 19, 2007).
"Portland Urban Growth Boundary Expanded to Above 2040 Plan," at
of Wayne v. Hathcock, 684 N.W. 2d 765 (Mich. 2004).
Neighborhood Council v. Detroit, 410 Mich. 616; 304 N.W.
2d 455 (1981).
of Wayne v. Hathcock.
"Judge Upholds Board Limitation on Development," The Washington
Post, November 1, 2000, p. V1, at
(January 23, 2007).
members of the business community were openly opposed to property
rights abuses and changed their business practices to reflect these
views. See Paul Nowell, "BB&T Takes a Stand," The Free
Lance-Star (Fredericksburg, Virginia), March 5, 2006, p.
Government Accountability Office, Eminent Domain: Information
About Its Uses and Effect on Property Owners and Communities Is
Limited, GAO-07-28, November 2006, p. 5, at (January 19,
comprehensive and up-to-date information on the status of property
rights protection throughout the United States and a source of
information for this report, see Castle Coalition, Web site, at
(January 19, 2007). The
Castle Coalition is a property rights project of the Institute for
Coalition, "Legislative Action Since Kelo," January 16, 2007, p.
12, at (January 19, 2007).
details, see Patrick J. Wright, "Proposal 4: A Legal Review and
Analysis," Mackinac Center for Public Policy Policy Brief,
October 5, 2006, at (January
§ I, New Hampshire Legislature, 2006 Sess., at
(January 19, 2007).
Nevada, State Question 2, § 1, 2006 General Election, at
(January 19, 2007).
Oregon, Measure 39, § 2, 2006 General Election, at
(January 19, 2007).
Fairness Coalition, "Learn About 933," at (January 19,
C. Gilroy, "Analysis of California's Proposition 90: The Protect
Our Homes Act," Reason Foundation Policy Brief No.54,
October 2006, at
(January 19, 2007). Emphasis in original.
of Idaho, Proposition 2, 2006 General Election, at
(January 19, 2007).
Government Accountability Office, Eminent Domain, pp.
McCutcheon, "Unfinished Business, Pro-Business, New Business,"
Georgia Policy Review, May 2006, p. 4, at (January 19,
Builders Association of South Carolina, "Legislative Report,"
updated July 27, 2006, at (January
Wenger, "Conservation Group Battles 'Takings' Action," The Post
and Courier (Charleston, South Carolina), November 25,
Government Accountability Office, Eminent Domain, p. 3.
Hopkins, "Special Interests vs. Virginia Taxpayers," The
Washington Times, March 23, 2006. See also Jeremy Hopkins,
The Real Story of Eminent Domain in Virginia: The Rise, Fall,
and Undetermined Future of Private Property Rights in the
Commonwealth, Virginia Institute for Public Policy
Report No. 11, December 2006, at
pdf/V002-0017EminentDomain.pdf (January 19, 2007).
Berman, "Eminent Domain Reform Proponents Will Try Again," The
Daily Record (Baltimore, Maryland), December 13, 2006, at
(January 19, 2007).