What is eminent domain?

Under the just compensation clause of the Fifth Amendment, the government can seize privately owned property to be used for certain public projects — this could be a road, a railroad, an airport or a pipeline — but it must also provide fair compensation.

The amount of compensation considered “just” can be disputed. For example, a Virginia family recently disputed an eminent domain claim to a part of their family property, where there are plans for a natural gas pipeline. A jury awarded the family compensation of about $523,000 for the land — significantly more than the pipeline company believed it was worth.

As long as the government has a legitimate public use for the property, overturning an eminent domain claim is unlikely — but there are ways for a landowner to increase the payout they receive.

Key insights

• The Fifth Amendment to the U.S. Constitution requires the government to pay “just compensation” when it takes private property for public use.
• Examples of public use might include a public park, a public utility, a public school or a highway.
• In most cases, it’s not possible to refuse an eminent domain action. However, there are ways to increase compensation.

What is a recent example of eminent domain?

Eminent domain is enacted to seize property more frequently than you might expect. “It is so constant that, if you surveyed all 50 states, you would see its power invoked on a daily basis,” said Ryan Simatic, an attorney with Biersdorf & Associates, a Minneapolis firm that represents property owners impacted by eminent domain.

He gave a few current examples of eminent domain cases, including claims on a church parking lot needed for a public use project and a commercial property being seized for the development of a city road.

Pipeline projects are also common triggers of recent eminent domain cases. In Iowa there are multiple proposed liquid carbon dioxide pipeline projects that would affect private land and would require eminent domain claims.

Local farmers who would be impacted by the pipelines have cited concerns not only about losing parts of their land but also about the disturbance of topsoil reducing their crop yields and the safety concerns of hazardous materials running under the ground.

According to the Progressive Farmer, Summit Carbon Solutions is spearheading a project that would build about 681 miles of pipeline in Iowa alone. The company is requesting the state government let it potentially use eminent domain in up to 30 counties during the construction of the pipeline, if needed. It’s unclear how many landowners will object to the use of their property for the pipelines.

In another case, an oil pipeline builder sued property owners in Tennessee unwilling to sell access to their land under eminent domain. The company later announced that it would halt the lawsuits and look for alternative routes to build the pipeline.

Eminent domain seizures are happening every day, according to Simatic. “Our firm has represented property owners who have had their property taken for roads, schools, parks, public parking lots and so forth,” explained Simatic. “But it can also be for utilities. Some states even allow the use of eminent domain for economic development, like reviving ‘blighted’ areas,” he said.

What determines “just compensation” in eminent domain?

Just compensation is a significant aspect of any eminent domain claim. Just compensation is the amount of money the owner receives when they relinquish their rights to the property.

Robert Bird, an attorney and professor of business law at the University of Connecticut, says there isn’t an exact formula for just compensation — it’s negotiated between the government and the property owner. “It generally means that the property owner should receive sufficient compensation to put the owner in the same position as if the taking had not occurred,” he said. “When property owners challenge takings, it is often over the issues of just compensation.”

For a single-family home, for example, the fair market value might be used. This can be determined using a property appraisal.  But in cases involving farms, commercial businesses or industrial properties, there tend to be more cases of litigation over just compensation.

In the event a parcel of a larger plot of land is taken and this decreases the value of the land the owner is allowed to keep, just compensation might also include what are known as “severance damages.”

Is there a way around eminent domain?

Can you get around an eminent domain claim? Assuming the taking of the property is for a legitimate public use project, the answer is usually no. However, it’s important to make sure the government meets the requirements to claim eminent domain. These requirements include:

1. The property being taken must be private property.
2. The authority taking the property must be a government entity or a private company working under the authority of the government.
3. The property must be a genuine necessity to the public use project.
4. The owner of the property must be paid just compensation.

While it is unlikely you can avoid an eminent domain claim on a property if it’s legitimately for a public use project, it’s not uncommon for property owners to walk away with a larger payout than they were originally offered if they negotiate.

Bottom line

While it’s uncommon to successfully challenge an eminent domain claim, it is common for the landowner to get a higher payout than originally offered by the government authority. “The most effective long-term way to curb eminent domain is to vote for elected representatives who do not support aggressive use of eminent domain as a government practice,” explained Bird.