Eminent domain is the power of the government or its designees to acquire privately
owned land for public use, subject to the protections against unlawful “takings”
as provided by the Fifth Amendment of the U.S. Constitution, and similar provisions
of state constitutions.
Utilities, railroads and highway transportation entities are commonly granted the
right to acquire property through eminent domain. When a property is taken through
the process of eminent domain, the owner of the condemned property is entitled to
receive just compensation in the amount of the fair market value for the land. In
some cases, additional money may be awarded to the landowner if they are running
a business or other operation at the site that adds to the value of the property.
What the stakes are
An important step in preventing abuse of eminent domain authority is to have a clear
definition of “public use”. Establishing parameters that a project must fulfill
to be considered in this category will help to weed out frivolous proposals.
In 2005, the case of Kelo v. The City of New London brought this issue to the fore.
The U.S. Supreme Court decision in this Connecticut case allowed the city to take
one owner’s private property and transfer it to another private owner for the purpose
of economic development. Private-property advocates argue that such action was not
the intent of eminent domain laws, because the property condemned was not used for
a public purpose.
According to the National Conference of State Legislatures (NCSL), thirty-nine states
enacted legislation or passed ballot measures during 2005 - 2007 in response to
the Kelo decision. The laws and ballot measures generally fall into the following
Prohibiting the use of eminent domain for economic development, enhancing tax revenue
or transferring private property to another private entity (or primarily for those
Defining what constitutes “public use”.
Establishing additional criteria for designating blighted areas subject to eminent
domain. vStrengthening public notice, public hearing and landowner negotiation criteria,
and requiring local government approval before condemning property.
Placing a moratorium on the use of eminent domain for a specified time period and
establishing a task force to study the issue and report findings to the legislature.
Utility industry practices
Eminent domain is a necessary tool for utility companies to complete projects that
require the specific use of certain property for the public good. The issue of eminent
domain typically arises in connection with proposals to construct new transmission
lines or power plants.
Carbon capture is another area which will require utilities to acquire specific
property for the transportation and storage of carbon dioxide. With carbon capture
becoming an increasingly important issue, we are seeing the issue of eminent domain
spread to a new area. Several states are now looking at extending eminent domain
rights to sequestration sites.
Case Study: Indiana and Carbon Dioxide Pipelines
The current jurisdictional void over the siting of CO2 pipelines at the federal
level is making eminent domain a hot topic in state legislatures across the nation.
Siting for CO2 pipelines is currently a state issue, provided pipelines don’t cross
federal lands. In such cases, the Bureau of Land Management controls the siting
In Indiana, SB115 which was proposed and defeated in 2010, would have declared the
transportation of CO2 via pipeline to be in the public interest. Authors of the
bill felt that the transport of captured CO2 by pipelines could help to reduce emissions
in the air, and promote economic development. With this declaration came the right
to exercise eminent domain. As a provision to this right, any entity choosing to
exercise it would need to compensate the owner of the land, as well as pay any costs
that the owner may incur when relocating. The amount of the compensation differed
depending upon the function the acquired property served:
- 150% fair market value for residences
- 125% fair market value for agricultural land
- 100% fair market value for all other lands
Though the bill did not make it through the legislative process, it raised many
important questions about the future of eminent domain usage for carbon dioxide