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Faculty Perspective:
Public-Use Limitations and Natural Property Rights

By Professor Eric R. Claeys

The law of "public use" has huge consequences in land-use law. If an act of eminent domain is for a "public use," it is constitutional as long as the government that is taking the property pays the owner just compensation; but if the taking goes for a "private use," it is unconstitutional and no award of just compensation can save it. Nevertheless, in recent decades, this doctrine has become a dormant field. Many courts have upheld condemnations, even when the land taken goes to private businesses and developers, as long as the condemnations generate jobs, tax revenues and economic stimuli for local communities.

In the last year, however, several developments have rekindled interest in the field. In 2004, in Wayne County v. Hathcock, the Michigan Supreme Court overruled Poletown v. City of Detroit, the most deferential and economic-development-friendly public-use decision in the country. This past February, the U.S. Supreme Court heard oral argument in Kelo v. City of New London, which provides the Court with its first opportunity in two decades to reconsider its public-use precedents. As I argued to the Court in an amicus curiae brief I co-authored for the Claremont Institute, this reconsideration is overdue. Municipalities use eminent domain much more enthusiastically than they did when the Court last heard a public-use case. St. Louis illustrates the trend. In recent years, local authorities have used aggressive understandings of blight and eminent domain to expedite redevelopment projects in the Brentwood Promenade and the Kirkwood Commons.

In a recent article, I have reexamined the conceptual foundations of public-use law in American natural-rights theory. Since public-use doctrine has been dormant for so long, it is appropriate to reexamine the doctrine from its first principles. Those first principles are natural-rights principles, for constitutional eminent domain guarantees have close association in history and theory with the principles of natural and unalienable rights expressed in the Declaration of Independence.

Let me illustrate these principles by applying them to the situation in which a municipality uses eminent domain to condemn land for a private shopping mall. Under the natural-rights approach, such condemnations may pass muster in two separate situations. First, the condemnation may be a taking for public use. Under the natural-rights approach, however, a taking is for public use only if the public actually uses the property. In other words, the property must be owned either by the government or by a private common carrier with a duty of access to any member of the public who wants access. Private shopping malls and commercial developers do not satisfy this test, however, unless they submit to the same rate regulation and duty of access to which electric companies, phone companies and other common carriers are subject. Thus, judged by natural-rights standards, many contemporary economic-redevelopment takings are not properly exercises of the eminent domain power.

That said, natural-rights standards contemplate another possibility, that the condemnation might be justified not as a "taking" but as a sound "regulation" of an intractable land-ownership dispute. Economic-redevelopment takings are often defended on the ground that they surmount "assembly" or "hold-out" problems: to reap the economic benefits from a large and diverse shopping center, a developer needs to surmount the unreasonable objections of a few obstreperous owners. Jurists who appreciated natural-rights theory appreciated this possibility, but they circumscribed it with two limitations. First, local authorities needed to show that there was a real necessity, a genuine hold-out or assembly problem. Nineteenth-century courts found such necessity when mill owners needed to flood neighbors' lands to build mill dams. But in contemporary practice, a shopping mall developer would have a far harder time proving that he could not develop around a few recalcitrant homeowners. Second, jurists required local authorities to show that the miller "secured a reciprocity of advantage" to the owners - in other words, that the ousted owners received compensation generous enough to ensure that they profited on the forced condemnation of their lands. Some nineteenth-century mill acts guaranteed ousted farmers damages one and a half times the fair market value of their farmland. By contrast, in current practice, most homeowners get fair market value at best.

Many contemporary lawyers are surprised to hear that one can cull from treatises and cases that are more than a century old lessons that are relevant to practice and policymaking today. I prefer to turn this challenge around. Land-use practice today may be impoverished because it has forgotten how to articulate the concerns that animated the law a century ago. The natural-rights approach offers two deep challenges in principle to contemporary law and practice. First, what properly counts as "property"? If property is primarily an owner's expectation that she will get fair market value if the government needs her land, contemporary practice makes sense. But natural-rights theory maintains that the institution of property is what it is because different people apply assets to different uses, to reflect different individual talents, and to pursue different life goals. If so, the market-value payments owners get in eminent domain proceedings rarely, if ever, compensate owners for what they consider the true worth of their property, and the grounds in which governments should forcibly reassign ownership of land ought to be sharply circumscribed.

Second, what is the overriding object of government? Contemporary redevelopment practice holds that government may reassign ownership of land when the new owner is likely to create more jobs, tax revenues and economic growth than the old owner. The natural-rights approach insists that the overriding objects of the law ought to be to secure citizens' freedom and moderate the character of political life. From that perspective, government has less interest in who owns a given piece of land, and more in making sure that owners are secure that they will be able to use their land for their own personal ends. The natural-rights approach thus breaks sharply with contemporary practice at the level of policy. Contemporary practice tends to focus on taxes, jobs and other short-term economic consequences likely to follow from a particular commercial development. If the natural-rights critique is accurate, however, many contemporary condemnations may do the civic equivalent of cutting off one's nose to spite one's face. To gain the concrete benefits that might come from jump-starting the local economy, municipalities may do more diffuse but greater harms by demoralizing local residents, land markets and civic political processes.