Saturday, March 6, 2010

Eminent Domain and Corruption in China: A Murderous Combination

Today's Telegraph has a story (here) about how a back room deal between property developers and local government officials led to the murder of an 80-year-old woman in Hubei province, as she tried to defend her home from bulldozers. She was beaten, thrown into a ditch, and then buried alive as the bulldozer pushed a mound of dirt upon her. By the time she was dug out, she was dead.

Is this a cautionary tale for the alleged abuse of eminent domain in the United States?  I can certainly imagine some groups, such as the Institute for Justice and its Castle Coalition, who might think so. Those are the folks who litigated on behalf of the plaintiffs in Kelo v. City of New London, 545 US 469 (2005), an eminent domain case in which the plaintiffs claimed that the city authorized the taking of land from one group of private owners by a second group of private owners for private gain. Justice O'Connor's dissent in Kelo agreed with them, claiming that the majority's ruling opened the door to exactly the kind of thing that is happening in China (albeit without the murder).

But any comparisons would be misleading for several reasons, not least of which is that the Chinese government and its subdivisions own the land to begin with. Consequently, what happened there really does not constitute eminent domain in the first place. In addition, notwithstanding Justice O'Connor's dissent, the majority in Kelo made clear that local governments in the US could not simply take land from one group of private owners and transfer title to a new group of private owners (developers) for private purposes or benefits. In Kelo, there was no evidence of any back-room deal between government officials and developers, and the taking was pursuant to a general plan of redevelopment, created with public input.

Finally, and most importantly, in the US the open nature of the political process and the fact that landowners are not a discrete and insular minority make it extremely unlikely that what is happening in China could happen here, even if the Supreme Court failed to intervene. Indeed, the aftermath of the Court's Kelo decision illustrates how political processes protect property rights in the US. In part because of Justice O'Connor's hyperbolic dissent, in part because of the stoking of property-rights interest groups such as the Institute for Justice, the Kelo ruling was highly controversial, despite the fact that it did not change the law of eminent domain/public use/compensation in any significant way. A media firestorm erupted and public opinion polls showed that most American's were opposed to the result in Kelo. A majority of state legislatures around the country responded by enacting eminent domain reform laws  - some of which were minor and ineffective, but others of which were quite substantial - to limit their own power of eminent domain in various ways, including restricting what constitutes a "public use" justifying eminent domain and requiring higher than fair-market compensation for certain categories of eminent domain takings, e.g., of occupied residences and farmland. In many states, the democratic process has provided a level of protection against the state's own power of eminent domain that greatly exceeds the constitutional protection provided by the Fifth Amendment's Taking Clause, as interpreted by the US Supreme Court.

3 comments:

  1. As a practitioner of eminent domain law, I read your article with interest. Your reference to the story from China links to the London Telegraph, not the New York Times. In New Jersey, where eminent domain abuse has been rampant, the legislature has fiddled for five years without passing any amendments to the Eminent Domain Act of 1971 or the Local Redevelopment Housing Law of 1992. The only reason that abuse does not continue is that the residential and commercial real estate market has been severly impacted by the economy. Once the market cycles back, which it will, the developers - with the help of their political friends - will continue to condemn properties that are not blighted.

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  2. The problem with eminent domain is not only its abuse for private enrichment (in spite of the constitutional requirement of "public use") but also the fact that the constitutionally promised "just compensation" is not just and indeed isn't compensation because it fails to compensate the property owners for all their demonstrable economic losses inflicted on them by the taking of their land and (particularly) their businesses. Thus, the courts that heap generous damages on tort plaintiffs (sometimes duplicating the awards under the so-called collateral source rule) profess to be horrified that the owners in eminent domain cases may get fully compensated for their actual losses. This stinks to high heaven, and by degrees American people are getting tired of it.

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  3. Empirical studies of compensation for eminent domain indicate that poor people are systematically under-compensated, while wealthier landowners tend to be over-compensated. Public choice can explain the discrepancy, based on the respective wherewithal of rich and poor landowners to fight. Some states, such as Indiana, have enacted into law super-compensation provisions for the taking of agricultural lands and occupied residential properties.

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