The Neglected Political Economy of Eminent Domain

Abstract:     
This Article challenges a foundational assumption about eminent domain - namely, that owners are systematically undercompensated because they receive only fair market value for their property. The Article shows that, in fact, scholars have overstated the undercompensation problem because they have focused on the compensation required by the Constitution, rather than on the actual mechanics of eminent domain. The Article examines three ways that Takers (i.e., non-judicial actors in the eminent domain process) minimize undercompensation. First, Takers may avoid taking high-subjective-value properties. Second, Takers frequently must pay more compensation in the form of relocation assistance. Third, Takers and property owners may voluntarily settle on above-market compensation during pre-condemnation negotiations. The Article concludes by reflecting upon current efforts to reform eminent domain legislatively. Prominent legal scholars recently have proposed compensation-based reforms as an alternative to constraints on the use of eminent domain. The final Part rejects this suggestion, arguing that there are two problems, unique to takings raising public use questions, that more money cannot solve: First, high compensation levels may undermine political resistance to questionable projects; second, private takings may generate non-instrumental harms that will persist even as compensation increases.

Keywords: public use, eminent domain, takings, compensation, economic development, Kelo

JEL Classifications: H7, H70, K11, O1

Accepted Paper Series