Expropriation is the act of a government claiming privately owned property against the wishes of the owners, ostensibly to be used for the benefit of the overall public. In the United States, properties are most often expropriated in order to build highways, railroads, airports, or other infrastructure projects. The property owner must be paid for the seizure since the Fifth Amendment to the Constitution states that private property cannot be expropriated “for public use without just compensation.”
- Expropriation is the act of a government claiming privately owned property to be used for the benefit of the overall public.
- Properties may be expropriated in order to build highways, railroads, airports, or other infrastructure projects.
- Property owners must be compensated fairly for property that is expropriated, as instructed by the Fifth Amendment.
In the United States, a doctrine known as “eminent domain” provides the legal foundation for expropriation. U.S. courts have accepted the doctrine as a government power suggesting it is implied by the Fifth Amendment clause covering compensation. Under this rationale, the Amendment’s statement that property cannot be expropriated without proper compensation implies that property can, in fact, be taken.
Compensation Concerns Regarding Expropriation:
Expropriation raises justifiable concerns ranging from the acceptable reasons for expropriation to the process for recourse and the scope and amount of fair compensation. With regard to compensation, there is debate as to what constitutes fair recompense for owners of expropriated property. In cases spanning five decades, from the 1930s to the 1980s, the U.S. Supreme Court has repeatedly acknowledged that the definition of “fair market value” can fall short of what sellers may demand and possibly receive in voluntary transactions.
Consequently, in eminent domain cases, the standard is often not the most probable price, but the highest price obtainable in a voluntary sale transaction involving the subject property. Since the condemnation deprives the owner of the opportunity to take their time to obtain the optimal price the market might yield, the law provides it by defining fair market value as the highest price the property would bring in the open market.
Expropriations to Boost Tax Revenues:
A federal Supreme Court decision in the early 2000s—and subsequent reactions to the decision—have shaped the ability of governments to seize property under eminent domain for the sole reason of increasing tax revenue. Kelo v. City of New London, 545 U.S. 469 (2005) affirmed the authority of New London, Conn., to take non-blighted private property by eminent domain and then transfer it for a dollar a year to a private developer solely for the purpose of increasing municipal revenues.
The decision spurred outcry about overly broad expropriation powers and prompted further action at both the state and federal levels.
The Supreme Courts of Ill., Mich (County of Wayne v. Hathcock ), Ohio (Norwood, Ohio v. Horney ), Okla., and S.C., subsequently ruled to disallow such takings under their state constitutions. There was also federal action, despite relatively few expropriations being carried out by that level of government. On the first anniversary of the Kelo decision, President George W. Bush issued an executive order stating that eminent domain may not be used by the federal government “for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken.”