All Commentary
Saturday, February 1, 1997

The True Takings Reform Imperative

The Power of Eminent Domain Should Be a Power of Last Resort

Mr. Kochan is an adjunct scholar with the Mackinac Center for Public Policy in Midland, Michigan, and author of the Center’s recently published report Reforming the Law of Takings in Michigan.

In recent years, a takings revolution has been occurring, with hundreds of reform bills introduced in state legislatures and with historic legislation pending in Congress. The most protective of these efforts aim to require payment of compensation when governmental actions diminish the value of a property owner’s land. One piece of Congressional legislation, for instance, would require the state to compensate an owner any time a federal action diminishes the value of an individual’s property by more than 33 percent.

These reforms, while admirable in the effort to ease the harm done to property owners by governmental regulation, should not divert us from the true imperative of the constitutional protection of property. Under the Constitution, the state is obligated to avoid adversely affecting property rights whenever possible.

The reform bills re-enforce the letter of the Fifth Amendment’s Takings Clause[1] as a liability rule. They allow the government almost unlimited power to affect a citizen’s property, as long as it pays for its actions. Reparation payments for harms done to property, however, are seldom perfect compensation for an owner’s loss. So, while reforms that focus on increasing the compensatory obligations of the government should be embraced, the spirit of the Takings Clause is that the government should employ its power of eminent domain only in situations of necessity—that is, when addressing concerns not susceptible to private solutions.

In the Lockean tradition, the Framers of the Constitution created a government of limited powers, with the protection of property constituting its essential purpose. The great and chief end therefore, of men’s uniting into commonwealths, and putting themselves under government, “is the preservation of property,” wrote John Locke, adding, “To which in the state of nature there are many things wanting.”[2]

James Madison observed the essential correlation between property and the state when he wrote, Government is instituted to protect property of every sort. . . . This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.[3]

In this light, it is clear that protection and preservation, not merely compensation, must be the focus of just governance.

In an era of burgeoning governmental regulations, we are moving toward a society in which there are many things wanting in the preservation of property. Countless government programs, including historic preservation, zoning, and environmental regulations, drastically affect the uses and values of private property. Though work can be done to create a statutory, constitutional, and jurisprudential structure that provides a more just system of compensation for property owners aggrieved by governmental actions, no system of compensation can perfectly replace the value owners attach to their property.

Subjective value is impossible to validate when determining damages, so compensation awards are forced to use the market value standard. When the government takes land and is only required to pay the amount of market value diminished, however, the current owner may not be fully compensated. The owner may attach personal value to the property or may be able to sell his or her property rights to another who values the property more than the average person in the market.

Coerced transfers of property rights fail to guarantee a mutually beneficial exchange. Only when the state is forced to bargain with a property owner for acquiring his or her land, a use of land, or a restraint on use, can a more balanced scheme of compensation occur. In a compensation system based on market value, the harm done property owners by government actions may be diminished, but it will never be eliminated.

For this reason, among others, responsible policymakers must not just work to correct our definitions of takings and liberalize the system of compensation, but must also work to minimize the amount of takings that actually occur. Following the intent of the Framers, property rights should be a primary concern, not a secondary concern receiving importance only after fulfilling some other perceived objective of the state.

Moreover, a sound protection of property rights is fundamental to all other liberties.[4] As James Madison warned, Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions.[5]

The government does not have the unlimited power to silence an individual so long as it compensates that person for the infringement on his right to free speech. Similarly, despite the Takings Clause’s more expansive grant of power, the clause should not be considered a carte blanche license to infringe real property rights. The excessive growth of the state’s power to control real property has vital implications for the general liberty of the citizenry, and this growth must be brought in check if our property in liberty is to be preserved.

Limiting the size and scope of the regulatory state is the most important takings reform. The power of eminent domain is, and was always meant to be, only a power of last resort.

1.   U. S. Constitution, Amendment V: [N]or shall private property be taken for public use without just compensation.

2.   John Locke, Second Treatise of Government, Richard H. Cox, ed. (Arlington Hts., Ill.: Harlan Davidson, 1982), p. 75.

3.   From an essay entitled Property, published March 27, 1792, National Gazette; reprinted in James Madison, The Papers of James Madison, Vol. 14, Robert Rutland et al., eds. (Charlottesville, Va.: University of Virginia Press, 1983), p. 266.

4.   The Supreme Court has even stated: Property does not have rights. People have rights. The right to enjoy property without lawful deprivation . . . is in truth a ‘personal’ right. . . . In fact, a fundamental interdependence exists between the personal right to liberty and the personal right in property. Neither could have meaning without the other. That rights in property are basic civil rights has long been recognized. Lynch v. Household Fin. Corp., 405 U. S. 538, 552 (1972).

5.   Madison, supra at 266.