Temporary Eminent Domain

Abstract

Times of emergency call for drastic measures. These steps may include the physical takeover of privately-owned assets by the government for a certain period of time and for various purposes, aimed at addressing the state of emergency. When will such acts amount to a taking, and what compensation should be paid to the property owner? How do temporary physical appropriations during times of emergency diverge, if at all, from temporary takeovers in more ordinary times?
The doctrinal and theoretical analysis of potential temporary takings has been done mostly in the context of non-physical government intervention with private property, such as when a local government imposes a temporary moratorium on land development until a certain condition is met.

This Article focuses, however, on less investigated scenarios of temporary physical takeovers or other forms of government invasions. It seeks to identify the differences between a temporary invasion and a permanent occupation of property considered a per se taking under the Loretto rule. In so doing, this Article argues that while the alleged distinction between prevention of public harm and promotion of public benefit often proves untenable in evaluating whether a permanent government measure constitutes a taking, it might make more sense in exploring temporary acts.

Temporary eminent domain—referring here to various types of acts amounting to time-limited physical takings, even if not initially recognized as such by the government—may diverge from permanent eminent domain in yet another key element: identifying the basis for just compensation. Under long established (although often criticized) rules, compensation for a permanent taking is based on identifying the “fair market value” of the rights taken, while ignoring the effects that the public use for which the underlying asset is taken might have on the property’s long-term value.

The allegedly parallel metric used in the case of temporary takings, one of “fair rental value,” may often prove inadequate, both practically and normatively. This Article argues that because of unique aspects of temporary physical takings, legal rules on compensation should often seek to identify lost profits or actual damage. Moreover, in some cases, in which there is a direct relation between the pre-appropriation use of the asset and its post-appropriation use by the government, just compensation might also be based on a certain portion of the value of the public use. This is especially so when the time-sensitive value of the asset during such public use is particularly high. On this point, the Article offers an analogy to rules pertaining to compulsory licenses for patents.

Keywords: property, takings, eminent domain, just compensation, COVID-19, emergency, necessity, patents, compulsory license

JEL Classification: K11, K25, O34, P11