The Case for Federal Eminent Domain Reform

Nick Sibilla of the Institute for Justice, the libertarian public interest firm that litigated Kelo v. City of New London and many other property rights cases, has a good op ed in Forbes on the need for reform measures to curb federal funding of abusive condemnations by state and local governments:

Eight years ago, the U.S. Supreme Court ruled the city of New London, Conn., could use the power of eminent domain to seize an entire neighborhood…. The city justified this as a “public use” by claiming the development might increase tax revenue and jobs.

Americans were—and still are—outraged by this decision. Since Kelo v. New London, 44 states have passed some type of eminent domain reform…..

Despite this well-deserved backlash to the Supreme Court, eminent domain abuse still festers. Six states have failed to pass any type of reform….

Meanwhile, in states that have reformed eminent domain laws, municipal governments and developers have exploited loopholes. For example, some of these reforms still allow seizing property that has been declared “blighted.” Unsurprisingly, blight can be very broadly defined….

While many redevelopment projects are funded through state and local measures, federal grants are still being used to fund eminent domain abuse. Cedar Rapids, Iowa, received a $35 million grant from the Department of Commerce’s Economic Development Administration (EDA) to seize a hotel for a new convention center. At the time, it was the “largest discretionary grant” ever doled out by the EDA. In fact, that same bureaucracy was also responsible for granting $2 million to the redevelopment project that threatened Susette Kelo’s little pink house….

To that end, Congressman Jim Sensenbrenner (R-WI) has reintroduced the Private Property Rights Protection Act, which was recently passed by the House Judiciary Committee. If the act passes, a state or political subdivision that exercises eminent domain for economic development would be cut off from receiving federal economic grants for two years….

The Private Property Rights Protection Act has been backed by the NAACP, while opposition to eminent domain for private gain has united the Farm Bureau, the Mexican American Legal Defense and Educational Fund, and the National Federation of Independent Business.

As I explained in this post, the Private Property Rights Protection Act has languished in Congress for eight years, despite strong public support for eminent domain reform, and backing from a wide range of groups representing racial minorities and small businesses. In this article, I catalogue the many states where post-Kelo eminent domain reform has been vitiated by broad definitions of “blight” and other deliberately inserted loopholes. Even if it passes, the PRPA would not completely end abusive takings. But it would reduce their incidence them by denying them federal funding.

In addition to victimizing poor and politically weak property owners, “economic development” takings of the kind upheld in Kelo often end up destroying more development than they ever create. As Sibilla points out, the Kelo site itself is a dramatic example of this problem.

CONFLICT OF INTEREST WATCH: I have worked with the Institute for Justice on a number of property rights cases, including writing several pro bono amicus briefs on their behalf.

UPDATE: In this 2011 article, I discuss why some of the standard benefits of federalism and political decentralization do not apply when state and local government condemn or otherwise burden immobile property. But you don’t have to agree with all of the points I make there in order to recognize that the federal government should at least refrain from subsidizing economic development takings, even if it should not actually ban them outright.

UPDATE #2: In the original version of this post, I accidentally misspelled Nick Sibilla’s last name. The mistake has now been corrected.

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