The Volokh Conspiracy

The Institute for Justice, a leading libertarian public interest law firm that has litigated numerous property rights cases, reports that the Illinois state senate has passed a bill authorizing the use of eminent domain for the benefit of casinos:

The bill passed 32-20 in the state Senate on May 1 and is now being considered by the House Executive Committee. Gov. Pat Quinn has previously vetoed two Chicago casino bills in the past. However, while the governor still has concerns about this new casino bill, he has indicated he could sign, so long as gambling revenue funds education and ethics standards are tightened. (After all, four of Illinois’ last seven governors have gone to prison.) Yet casinos abusing eminent domain apparently hasn’t crossed Quinn’s mind.

As the IJ post notes, takings for the benefit of casino interests have occurred in other states, and often lead to the same sorts of abuses as other “economic development” condemnations of the type upheld by the federal Supreme Court in Kelo v. City of New London. Such takings are routinely used by politically powerful firms to acquire property from the politically weak. They also often destroy more economic value than they create. I discuss these problems in much more detail in this article.

In the aftermath of Kelo, some 44 states passed eminent domain reform laws intended to curb such abuses. But Illinois’ law is one of many that contain major loopholes that prevent them from providing much in the way of meaningful protection for property owners. The IJ post notes that Illinois’ 2006 law rates only a D+ under their grading scale.

Hopefully, the Illinois House of Representatives will reject the Senate bill. The legislation is currently before the House Executive Committee. If the House does not reject the bill, it is possible that state courts would strike it down. In a 2002 decision, the Illinois Supreme Court ruled that the potential economic benefits of expanding the operations of a private business is not a “public use” justifying the use of eminent domain under the state Constitution. As the Court put it (quoting a lower-court dissenting opinion), “the economic by-products of a private capitalist’s ability to develop land cannot justify a surrender of ownership to eminent domain.” At least some takings for the benefit of casino interests could run afoul of this ruling, although the state supreme court did not categorically ban all takings that transfer land to private parties for economic development purposes.

UPDATE: I have made a few stylistic revisions to this post.

As Damon Root notes, The Supreme Court recently refused to consider Ilagan v. Ungacta, an important Public Use Clause property rights case. I wrote an amicus brief on behalf of numerous public interest organizations and law professors urging the Court to take Ilagan and use it as an opportunity to clear up major ambiguities left over after Kelo v. New London, and also as a vehicle for reversing Kelo itself. I discussed the significance of the case in this post:

Ilagan v. Ungacta is a fairly egregious case where land was condemned for the purpose of benefiting a powerful private party, in this case the then-mayor of Agana, Guam, and his family (the new owners of the condemned property). In Kelo v. City of New London, one of the most widely opposed decisions in Supreme Court history, the Court ruled that the Public Use Clause of the Fifth Amendment allows condemnations for virtually any “public purpose,” including transferring property from one private owner to another in hopes of stimulating greater “economic development.” But the Court also noted that government may not “take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit.” Unfortunately, neither Kelo nor other Supreme Court decisions have made clear what it means for a taking to be “pretextual.”

[L]ower federal courts and state supreme courts have come up with at least five different approaches to deciding what counts as a pretextual taking....

Ilagan is a great case for the Court to clarify the meaning of pretext because it includes all four possible indicators of pretext identified by various lower court decisions: dubious motives, a highly skewed distribution of benefits, lack of careful planning, and a major private beneficiary whose identity was obvious in advance of the taking...

[T]his case is also a good opportunity for the Court to consider overruling Kelo.... [T]he case for overruling Kelo easily qualifies under the Court’s traditional standards for overruling a constitutional decision: Among other things, the ruling was based on poor reasoning, it has been widely criticized, and its recent nature ensures that it has not yet created much in the way of reliance interests. Most strikingly, the Court should reconsider Kelo because retired Justice John Paul Stevens, the author of the Kelo majority opinion, has publicly admitted that his reasoning was based in part on what he calls an “embarrassing to admit” mistake.

With rare exceptions, the odds against the Supreme Court accepting any particular case are usually long. For that reason, this outcome is not surprising, though it is still disappointing. But we are still going to continue our efforts to persuade the Court to both clarify the meaning of “pretext” and overrule Kelo.

From Hillcrest Property, LLP v. Pasco County (M.D. Fla. Apr. 12, 2013):

Before 2025 Pasco County must build more and larger roads to accommodate the inevitable increase in automobile traffic. Preferring to avoid the payment of “just compensation” after acquiring the necessary land by eminent domain, Pasco County has hatched a novel and effective but constitutionally problematic idea, a most uncommon regulatory regime that is crowned by Pasco County’s “Right of Way Preservation Ordinance.”

The unremarkable part of the regime designates new “transportation corridors,” which expand certain Pasco County highways. The specific instance contested in this action designates a new transportation corridor that widens State Road 52, an arterial east-west highway in Pasco County, and identifies the boundaries of State Road 52′s future right-of-way. For most landowners, whose land is encroached by the transportation corridor but who have no plans to develop the land adjacent to the encroached land, no immediate consequence (and no constitutional jeopardy) occurs; Pasco County will take the expanded right-of-way—when needed—by eminent domain and will pay “just compensation” as determined by a jury in a Pasco County circuit court.

The remarkable part of the regime and the constitutional mischief appear in the instance of a landowner whose land is encroached by the new transportation corridor but who plans to develop the remaining land, which adjoins the encroachment. The Ordinance requires Pasco County to deny the landowner’s development permit and to forbid development of the land adjoining the new transportation corridor unless the landowner “dedicates” (conveys in fee simple) to Pasco County — for free — the land within the new transportation corridor. In other words, to avoid the nettlesome payment of “just compensation,” the Ordinance empowers Pasco County to purposefully leverage the permitting power to compel a landowner to dedicate land encroached by a transportation corridor. In Pasco County, if there is no free dedication, there is no permit.

As the Pasco County Attorney proudly declares, “The right of way preservation ordinance [ ] drafted and defended by this office (which is one of only a few in the state) saves the County millions of dollars each year in right of way acquisition costs, business damages and severance damages.” This bully result is effected by threatening to deny every proposed new use of private land, from medical clinic to beauty parlor, from restaurant to bait shop, and by coercing everyone, great and small, rich and poor, popular and unpopular, unless the landowner completes the mandatory “voluntary” dedication of real estate....

Because the Ordinance’s modus operandi is not yet common, neither party cites legal authority directly deciding the constitutionality of an identical ordinance. Nonetheless, the features of the Ordinance are striking (and, as the Pasco County Attorney confirms, startlingly effective) and constitutional examination is essential. If constitutional, the Ordinance undoubtedly will become quickly fashionable, as counties seize a singular opportunity to procure land for public use by the thrifty expedient of coerced conveyance rather than by the historically and constitutionally prescribed mechanism of eminent domain (which is, viewed from a county’s vantage, encumbered by the strictures of “due process” and “just compensation” and burdened by both the supervision of an independent judge and the informed discretion of a disinterested jury).

And the court’s conclusion, after many pages of analysis:

Pasco County has enacted an ordinance that effects what, in more plain-spoken times, an informed observer would call a “land grab,” the manifest purpose of which is to evade the constitutional requirement for “just compensation,” that is, to grab land for free. Viewed more microscopically, Pasco County’s Ordinance designs to accost a citizen as the citizen approaches the government to apply for a development permit, designs to withhold from a citizen the development permit unless the citizen yields to an extortionate demand to relinquish the constitutional right of “just compensation,” and designs first and foremost to accumulate — for free — land for which a citizen would otherwise receive just compensation.

Aware undoubtedly of the brazenness of the Ordinance, Pasco County has garnished the Ordinance, has disguised the Ordinance, has planted in the Ordinance a distraction, using the familiar phrase “roughly proportional” or “rough proportionality,” words intended to evoke the soothing reassurance of the Supreme Court’s decision in Dolan, words intended to deploy aggressively the foggy notion that if the words “roughly proportional” appear in a scheme to regulate land, the scheme is constitutional. Not so.

The parties laboriously briefed in this action an array of theories. Both the magistrate judge and I have examined, exhaustively and exhaustingly, the contending theories, briefed and unbriefed. The magistrate judge has opined formidably. Accepting the magistrate judge’s report for the most part but viewing the law in part from a slightly different vantage, I contribute some additional analysis and accept the magistrate judge’s conclusion. Another judge might find the magistrate judge’s opinion or this opinion inexact in this or that particular of constitutional law. Nonetheless, this Ordinance is an unmistakable, abusive, and coercive misapplication of governmental power, perpetrated to cynically evade the Constitution. The Ordinance cannot stand, whether for the precise reasons stated here or for a related reason.

Last week, I blogged about how the Alabama state legislature recently adopted a bill that undermines its post-Kelo eminent domain reform law and opens the door to the taking of private property for transfer to a wide range of politically connected private interests. Two state senators who sponsored the law have claimed that their bill doesn’t really expand eminent domain authority [HT: John Ross, who is similarly skeptical about the sponsors' denials]:

A new law designed to help lure high-tech manufacturing jobs to Alabama does not give cities greater eminent domain powers, several people involved in the legislation said Monday....

state Sen. Arthur Orr, R-Decatur, said that’s simply not the case. Orr said the “Major 21st Century Manufacturing Zone Act” does nothing to change or broaden eminent domain laws....

State Sen. Bill Holtzclaw, R-Madison, said he is “very big on personal property owner rights” and would not have co-sponsored the legislation if he thought it might be used to expand the use of eminent domain.

“I’ve been adamantly opposed to that,” Holtzclaw said Monday. “If there’s something there that was unintentional, we’ll close the loop on it.”

These denials are dubious, at best. The relevant legislation, Senate Bill 96 contains the following language:

It is further found and declared that the powers conferred by this chapter are for public and, in the case of automotive, automotive-industry related, aviation, aviation-industry related, medical, pharmaceutical, semiconductor, computer, electronics, energy conservation, cyber technology, and biomedical industry manufacturing facilities, private uses and purposes imbued with a public interest and for which public money may be expended, either directly or indirectly, in the case of automotive, automotive-industry related, aviation, aviation-industry related, medical, pharmaceutical, semiconductor, computer, electronics, energy conservation, cyber technology, and biomedical industry manufacturing facilities, and the power of eminent domain and police power exercised.

The language in bold is wording that the new bill added to preexisting law. Note that the whole section is, among other things, a list of purposes – now including “private” purposes – for which “the power of eminent domain” may be “exercised.” Those purposes now include private firms that are “automotive, automotive-industry related, aviation, aviation-industry related, medical, pharmaceutical, semiconductor, computer, electronics, energy conservation, cyber technology, and biomedical industry manufacturing facilities.” In other words, an enormous range of private businesses can now lobby to have the power of eminent domain used to transfer property to them, usually at the expense of the poor and politically weak.

This new authority is mostly limited to areas that contain “underutilized large tracts of real property suitable for the location of automotive, automotive-industry related, aviation, aviation-industry related, medical, pharmaceutical, semiconductor, computer, electronics, energy conservation, cyber technology, and biomedical industry manufacturing facilities which, when serving as the site therefor, enhances the public benefit and welfare by, among other things, facilitating the creation of skilled manufacturing jobs, promoting local economic development and the stimulation of the local economy, creating additional tax revenues, and enhancing the public’s overall quality of life.” But this is not much of a constraint. Almost any area can be considered “underutilized” relative to some other more intensive use of the same property. In addition, the new owners of the condemned land are not legally required to in fact ensure that the local economy will indeed improve relative to what would have happened otherwise. And, obviously, if the area were not “suitable” for the business the new owner operates, they probably would not try to have it seized for their benefit in the first place. Similar laws in other states have simultaneously endangered property rights and set back the very economic development they are supposedly intended to produce. We cannot know for certain what Alabama courts will make of the new law. But the most likely result is a major expansion of eminent domain authority.

I don’t know whether Senator Orr and Senator Holtzclaw are being disingenuous, got bad advice from staff or outside lawyers, or simply don’t realize what was in the bill they sponsored. The latter is certainly possible in an age where lawmakers often vote for laws they have little understanding of. If it really was an “unintentional” error, as Holtzclaw suggests might have occurred, he and his colleagues can demonstrate their good intentions by passing a new bill that repeals the language quoted above.

Finally, I should acknowledge that the two senators issued their denials before I wrote my initial post on this issue on April 3. I wrote that post in a hurry, did not do as much research as I should have, and as a result, did not run across their statements until today. I regret that oversight, even though the denials do not change my evaluation of the bill.

In the aftermath of the Supreme Court’s controversial 2005 decision in Kelo v. City of New London, which ruled that state and local governments could condemn property for transfer to private parties for “economic development,” 44 states passed eminent domain reform laws intended to curtail abusive condemnations. Many of the new laws only pretended to curb the use of eminent domain without actually doing so. But Alabama was one of the exceptions, passing one of the nation’s better post-Kelo reforms. Unfortunately, as John Ross of Reason explains, the Alabama state legislature has now largely reversed its post-Kelo reform law, opening the door for condemnations that benefit powerful private interests at the expense of the poor and politically weak:

This month, Alabama Governor Robert Bentley signed into law a bill that allows local officials to condemn private property and turn it over to private developers.

Alabama’s statutes had contained some of the best protections in the nation for property owners; officials couldn’t seize property for private development unless it was a true threat to human health and safety.

Welcome back to the bad old days.

Advertised as a tool to attract industry to Alabama, the new law (the Major 21st Century Manufacturing Zone Act) expands tax subsidies for companies that open a manufacturing facility of at least 250 acres. It also allows municipal officials to seize property for “private uses and purposes imbued with a public interest” like auto factories, biomedical facilities, and pharmaceutical plants.

Officials can now condemn property they deem “blighted,” which, since the statutory definition of the term is so subjective, could be nearly any property.

As I discuss in this article, such “economic development” takings not only often victimize the politically weak for the benefit of powerful private interests, but also regularly fail to actually produce the development that supposedly justified the condemnation in the first place. That’s exactly what happened in Kelo itself, where nothing has been built on the condemned property, even eight years after the Supreme Court’s decision in the case.

Due in considerable part to widespread political ignorance (most voters lack the time and expertise needed to tell the difference between effective reform laws and purely symbolic ones), state legislators often were able to pass off cosmetic reform laws as genuine solutions to the problem eminent domain abuse. Recent events in Alabama highlight the risk that even strong post-Kelo reform laws can be undermined as the public understandably shifts its attention to new issues.

Today, the Baltimore Sun published a detailed story about Towson University Professor Benjamin Neil, who has been accused of numerous instances of plagiarism, especially in a 2012 article on Kelo v. City of New London and post-Kelo eminent domain reform which has since been withdrawn by the Journal of Academic and Business Ethics:

A longtime Towson University professor has resigned his post as the head of the city school system’s ethics panel amid allegations that his published academic articles contain content from dozens of sources without proper — or in some cases any — attribution.

University officials and journal publishers say they are reviewing several articles submitted by Benjamin A. Neil, a legal affairs professor, after a librarian at another university alerted them to the issue.

A Baltimore Sun review of five papers published by Neil shows passages with identical language and others with close similarities to scholarly journals, news publications, congressional testimony, blogs and websites. In many cases, there was no attribution.

Neil, who has taught at Towson for more than 20 years, says he properly attributed work from other authors.

“I don’t think I’ve done anything wrong,” said Neil, 62. “The issue seems to be that I didn’t put things in quotes. But I’ve given attribution to people....”

Meanwhile, some of his colleagues across the country and authors of the original material who were contacted by The Sun criticized what they called “lazy plagiarism” and a breach of academic integrity. Experts say the incident highlights the pressures that professors feel to publish.

“It’s completely unacceptable conduct, particularly for a professor,” said Jeffrey Beall, a scholarly initiatives librarian at the University of Colorado, Denver who contacted Towson officials and journals about the alleged plagiarism.

It so happens that I was one of the scholars whom Neil plagiarized in his since-withdrawn article “Eminent Domain: In Theory – It Makes Good Cents.” Here is a site created by the Baltimore Sun which gives several examples of plagiarism from that article, including the one Neil copied from my 2007 Northwestern University Law Review article, “Is Post-Kelo Eminent Domain Reform Bad for the Poor.”

Here is the relevant excerpt from Neil’s article (which does not cite or mention mine in any way):

Professor David Dana, in his essay published in the Northwestern University Law Review, suggests that most post-Kelo reform efforts are seriously flawed because they tend to forbid the condemnation of the property of the wealthy and the middle class for “economic development,” but allow the condemnation of land on which poor people live under the guise of alleviating “blight”. This, he claims, results in reform laws that “privilege the stability of middle-class households relative to the stability of poor households” and “express the view that the interests and needs of poor households are relatively unimportant.” [footnotes omitted, but I emphasize that none of those notes cited my 2007 article]

Here is what I wrote:

In a recent essay in the Northwestern University Law Review, Professor David Dana argues that most post-Kelo reform efforts are seriously flawed because they tend to forbid the condemnation of the property of the wealthy and the middle class for economic development, but allow the condemnation of land on which poor people live under the guise of alleviating blight.This, he claims, results in reform laws that privilege[] the stability of middle-class households relative to the stability of poor house-holds and “express[] the view that the interests and needs of poor house-holds are relatively unimportant.”

With the exception of a small change in the first sentence, Neil has copied my text verbatim. That’s a fairly clear case of plagiarism. At the same time, it’s a relatively minor one. The passage in question is short and merely summarizes David Dana’s work, rather than putting forward any original ideas of my own. And Neil did cite Dana (or rather copied my citations to him). Any harm to me was probably insignificant.

If this were the only case of plagiarism in Neil’s work, I would say he deserves only very modest punishment. It might even be sufficient if he fixed the problem, apologized, and promised not to do it again. But, as the Sun article explains in detail, this is just one of many plagiarized passages in Neil’s articles. Some of the others were a lot more egregious than this one. That suggests an ongoing pattern of misconduct, not just an isolated, possibly inadvertent, error.

Serial plagiarizing of others’ work is not just a discourtesy to those authors who didn’t get proper credit. It is also a violation of the academic’s duty to contribute to our knowledge by developing new ideas, rather than merely copying what others said previously. It will be interesting to see the results of Towson University’s investigation into this case.

This Thursday at 5 PM, I will be speaking on Kelo v. City of New London and post-Kelo eminent domain reform at South Texas College of Law in Houston. The talk will be held in the Emile Slohm conference roomon the 6th Floor, and is sponsored by the South Texas Federalist Society.

I will will cover both Kelo itself, and the massive political and judicial reaction it has generated. South Texas property professor Josh Blackman, who is also a prominent legal blogger, will provide commentary.

We recently filed an amicus brief urging the Supreme Court to hear Ilagan v. Ungacta, an important property rights case on the Public Use Clause of the Fifth Amendment. I wrote the brief on behalf of the National Federation of Independent Business Small Business Legal Center, twelve other organizations (including the Cato Institute, the Becket Fund for Religious Liberty, the Owners’ Counsel of America – a nationwide organization of eminent domain lawyers, and the American Forest Resource Council), and several prominent constitutional law and property scholars, including co-bloggers Randy Barnett and Todd Zywicki.

Ilagan v. Ungacta is a fairly egregious case where land was condemned for the purpose of benefiting a powerful private party, in this case the then-mayor of Agana, Guam, and his family (the new owners of the condemned property). In Kelo v. City of New London, one of the most widely opposed decisions in Supreme Court history, the Court ruled that the Public Use Clause of the Fifth Amendment allows condemnations for virtually any “public purpose,” including transferring property from one private owner to another in hopes of stimulating greater “economic development.” But the Court also noted that government may not “take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit.” Unfortunately, neither Kelo nor other Supreme Court decisions have made clear what it means for a taking to be “pretextual.”

As I explain in the brief (pp. 4-13), lower federal courts and state supreme courts have come up with at least five different approaches to deciding what counts as a pretextual taking. Some courts emphasize the motives of the condemning authority, some focus on the distribution of benefits from the taking, and some on the extent and quality of the planning process behind the taking. The Third Circuit has emphasized the presence or absence of a private beneficiary of the condemnation whose identity was known in advance. Finally, some courts – including the Guam Supreme Court in this case – define pretext so narrowly as to permit even the most egregious favoritism.

Ilagan is a great case for the Court to clarify the meaning of pretext because it includes all four possible indicators of pretext identified by various lower court decisions: dubious motives, a highly skewed distribution of benefits, lack of careful planning, and a major private beneficiary whose identity was obvious in advance of the taking.

Because the official rationale for this taking, like the one in Kelo, is the promotion of “economic development,” this case is also a good opportunity for the Court to consider overruling Kelo. As the brief outlines (pp. 21-25), the case for overruling Kelo easily qualifies under the Court’s traditional standards for overruling a constitutional decision: Among other things, the ruling was based on poor reasoning, it has been widely criticized, and its recent nature ensures that it has not yet created much in the way of reliance interests. Most strikingly, the Court should reconsider Kelo because retired Justice John Paul Stevens, the author of the Kelo majority opinion, has publicly admitted that his reasoning was based in part on what he calls an “embarrassing to admit” mistake. Here is the relevant passage from the brief:

Even Justice John Paul Stevens, author of the Court’s opinion, has admitted that its reasoning was based in part on an “embarrassing” error: the assumption that a series of late nineteenth and early twentieth century “substantive due process” Supreme Court decisions applying a highly deferential approach to state government takings were actually decided under the Takings Clause of the Fifth Amendment. John Paul Stevens, Address at University of Alabama School of Law, Albritton Lecture (Nov. 16, 2011), 14-18.... These cases were relied on by the Court as key precedents supporting the proposition that the outcome in Kelo was dictated by “more than a century” of precedent. Kelo, 545 U.S. at 483.... An “embarrassing” error in reasoning—acknowledged by the author of the Court’s opinion—provides strong justification for the Court to at least consider overruling Kelo.

I discussed Stevens’ mistake and its significance in greater detail in this article (pp. 241-44).

Justice Stevens himself continues to believe that Kelo was rightly decided, but only on the basis of the radical and historically inaccurate claim that the Public Use Clause imposes no constraints on government’s power to take property. Both Kelo itself and decades of other precedents go against that view.

I don’t claim that this error by itself proves that Kelo should be overruled. But its exposure, combined with other factors, amounts to a strong case for the Court to at least reconsider the issue.

A few days ago, I blogged about a Chinese homeowner who refused to give up his house to a local government that sought to force him out in order to build a road on the site. It now appears that he has agreed to sell the house for the price offered by the government, which is likely far below the true value of the property:

A five-story home that had been left as the only house in the middle of a highway was demolished Friday after becoming a worldwide sensation and the latest symbol of the frequent resistance by Chinese homeowners who are forced to make way for massive infrastructure projects. The house was demolished Saturday after the owners, a duck farmer and his wife, agreed to accept the $41,000 compensation, according to the Associated Press. The owner had previously said he had spent $95,000 to complete the house.

In China, homes left standing amid a big development are known as “nail houses” because they’re difficult to remove, points out Xinhua, noting that this one had been dubbed the toughest of all nail houses. The owner refused to move for more than a year. It’s unclear why the relocation offer was accepted now...

It is difficult to say whether the sale was truly “voluntary” or whether he yielded to pressure tactics. Regardless, the controversy over the Chinese government’s forcible displacement of millions of people for development projects – often with little or no compensation – is likely to continue.

This recent Chinese case has attracted a lot of attention in both China and the West, and is drawing comparisons to the famous US takings case of of Kelo v. City of New London. The Huffington Post describes the facts as follows:

In the middle of an eastern Chinese city’s new main road, rising incongruously from a huge circle in the freshly laid pavement, is a five-story row house with ragged edges. This is the home of the duck farmer who said “no.”

Luo Baogen and his wife are the lone holdouts from a neighborhood that was demolished to make way for the main thoroughfare heading to a newly built railway station on the outskirts of the city of Wenling in Zhejiang province.

Dramatic images of Luo’s home have circulated widely online in China this week, becoming the latest symbol of resistance in the frequent standoffs between Chinese homeowners and local officials accused of offering too little compensation to vacate neighborhoods for major redevelopment projects.

There’s even a name for the buildings that remain standing as their owners resist development. They are called “nail houses” because the homeowners refuse to be hammered down....

Xiayangzhang village chief Chen Xuecai said in a telephone interview Friday that city planners decided that Luo’s village of 1,600 had to be moved for a new business district anchored by the train station. Chen said most families agreed to government-offered compensation in 2007.

Luo, 67, and a handful of neighbors in other parts of the new district are holding out for more.

“We want a new house on a two-unit lot with simple interior decoration,” Luo told local reporters Thursday in video footage forwarded to The Associated Press.

Luo had just completed his house at a cost of about 600,000 yuan ($95,000) when the government first approached him with their standard offer of 220,000 ($35,000) to move out – which he refused, Chen said. The offer has since gone up to 260,000 yuan ($41,000).

Although in this case, and some others, Chinese authorities have hesitated to forcibly remove resisting property owners, in the past the Chinese government has forcibly displaced millions of people in order to make way for construction, often paying them little or no compensation. Some 1.25 million people were expelled from their homes in order to “beautify” Beijing in preparation for the 2008 Olympics.

Overall, the state of property rights protection in China is significantly worse than in the post-Kelo United States, though our performance is very far from ideal.

To try to get more insight into the “nail house” case, I contacted leading Taiwanese takings scholar Professor Yun-chien Chang of the Academia Sinica in Taipei. Chang has written extensively on eminent domain and property law in the United States, China, and Taiwan. He e-mailed the following (reprinted with his permission):

Under-compensation is by all evidence very common. On the other hand, nail houses like these are not unprecedented.
I am almost sure that the local government has the power to tear down the nail houses, but they also do not want to make a scene... The Shengzhen SEZ government has the power to tear down the “small title” properties, but they choose not to, for various reasons...

Perhaps, as [economist] Steven NS Cheung argued, juridical competition at the county/city level (in, e.g., attracting foreign direct investment) is throat-cutting. So local government considers it bad PR to blatantly use its eminent domain power. After all, nail house owners at some points will bow out “voluntarily.”

The Huffington Post story quoted above notes that Chinese authorities are not usually shy about using pressure tactics to facilitate “voluntary” capitulation by owners:

What is unusual in Luo’s case is that his house has been allowed to stand for so long. It is common for local authorities in China to take extreme measures, such as cutting off utilities or moving in to demolish when residents are out for the day.

That said, it seems possible that Chinese officials, like many American ones, hesitate to use blatant coercion in highly publicized cases like this one. That would make for bad PR, as Chang puts it. In run of the mill cases where displacing homeowners doesn’t attract much media scrutiny, they are often far more ruthless.

Finally, it’s worth noting that one potentially significant difference between this case and Kelo is that Luo is being displaced for the purpose of building a publicly owned road, whereas Susette Kelo was forced out to make way for a privately owned development project that never actually built anything. For reasons I discussed in this article, there is a stronger economic rationale for using eminent domain for public roads than for private development projects. But that doesn’t mean that all takings for roads are necessarily justified, and it certainly does not excuse the Chinese government’s practice of egregiously undercompensating displaced property owners.

We don’t yet have the final results. But Virginia news radio station WINA 1070 is projecting that Question 1, the Virginia eminent domain reform referendum question, is going to pass by an “overwhelming” margin. For reasons I outlined here and here, this is an important improvement over the present Virginia constitution, which is one of the worst in the nation when it comes to protecting property rights. Question 1 is by no means perfect. But it’s definitely a step in the right direction.

This continues a longstanding national trend in which post-Kelo eminent domain reform referendum initiatives usually pass overwhelming, except in a few cases where they were paired with extraneous unpopular items. I discussed referendum initiatives that have passed in other states in this article.

I realize that this probably will not be the most important Virginia election result of the night. But it is significant for anyone interested in property rights issues.

UPDATE: A. Barton Hinkle of the Richmond Times-Dispatch recently posted a good column on Question 1 and its success.

UPDATE: The election returns are now available, and Question 1 got an impressive 74.7% of the vote.

In addition to the presidential and congressional elections tomorrow, there are also some important referenda initiatives on the ballot in many states. They include several on issues of special interest to me and many VC readers: property rights and the War on Drugs.

Here in Virginia, we have Question 1, which would strengthen protection for property rights against eminent domain abuse. For reasons I outlined here and here, Virginia currently has one of the nation’s worst state constitutions on property rights issues. While far from perfect, Question 1 would be a major improvement over the status quo. I hope my fellow Virginians will support it.

Six other states have marijuana legalization initiatives on the ballot, including three (Colorado, Oregon, and Washington) that would legalize marijuana entirely, and three others that would only legalize medical marijuana. As I explained here, all of these initiatives are imperfect, but still important improvements over the status quo. Polling data suggests that the Colorado and Washington initiatives have a good chance of passing, and Oregon is not completely out of the question. This is an important opportunity to roll back the War on Drugs in three major states, and I hope the voters will take it.

According to survey data, opposition to drug legalization comes disproportionately from political conservatives. I summarized the conservative case against the War on Drugs here. Conservatives and others may also want to check out the late William F. Buckley’s reasons for opposing it.

This Thursday at 6:30 PM, I will be speaking on property rights and eminent domain reform in Virginia at the Old Dominion Boat Club in Alexandria. I will be joined by Virginia Attorney General Ken Cuccinelli, or perhaps it is more correct to say that I will be joining the AG. The event is open to the public.

I expect that much of the discussion will focus on Question 1, the eminent domain reform constitutional amendment that Virginians will vote on this November. Although Question 1 is far from perfect, I believe it is an improvement over Virginia’s present constitution. I defended Question 1 here and here.

In Friday’s Washington Post, state legislators Scott Surovell and Linda Puller published an op ed attacking Question 1, the eminent domain reform referendum question that Virginians will vote on in November. Unfortunately, their arguments are off-base, and some are seriously misleading.

Question 1 would amend Virginia’s Constitution to forbid economic development takings of the kind the US Supreme Court allowed in Kelo v. City of New London. Such takings often enable powerful interest groups to use the power of eminent domain to transfer property to themselves at the expense of the politically weak; they also tend to destroy more economic value than they create. If adopted by the voters, Question 1 would provide some important protection against such abuses.

Surovell and Puller’s critique of Question 1 completely ignores the fact that Virginia’s present constitution is one of the worst in the country when it comes to protecting property rights. Article 1 Section 11 states that the “public uses” for which property can be taken by the government are to be “defined by the General Assembly” – the state legislature. This gives the legislators a blank check to authorize the taking of property for any reason they wish, including benefiting powerful interest groups at the expense of the poor and weak.

Surovell and Puller claim that “[t]he language in the Fifth Amendment [of the federal Constitution] is virtually identical to existing language in Article I of the Virginia constitution because James Madison borrowed the concept from George Mason, who had written it into the Declaration of Rights in 1776. It has stood virtually unchanged for 236 years.” They accuse supporters of Question 1 of seeking to “change language in the Virginia constitution that dates to George Mason.”

In reality, neither the Fifth Amendment nor Virginia’s original 1776 Constitution include language giving the legislature unconstrained authority to define what counts as a public use. The state legislature did not get unconstrained power to define “public use” until the Constitution was last rewritten in 1971. That change certainly wasn’t the handiwork of George Mason and James Madison. Madison famously wrote that “Government is instituted to protect property of every sort...that alone is a just government, which impartially secures to every man, whatever is his own.” I doubt he would approve of a constitution that allows the legislature to take property for any reason it wants.

Surovell and Puller correctly point out that Virginia’s 2007 statutory eminent domain reform law already forbids Kelo-style economic development takings. But they ignore the reality that protecting these rights in the state constitution is necessary to prevent future legislatures from backsliding on the issue. Until Kelo thrust the problem of eminent domain abuse into the national spotlight, most voters were unaware of it. As public attention moves on to other issues, developers and other interest groups could successfully lobby for a return to business as usual. Virginia’s permissive pre-Kelo eminent domain law licensed egregious abuse for the benefit of private interests. Question 1 would help ensure that those days don’t return.

Surovell and Puller complain about Question 1′s requirement that businesses whose property is condemned will be entitled to compensation for lost profits and lost access, as well as the value of the land itself. They claim “this is unfair because it gives businesses more rights than people.” Since businesses are in fact owned by people, this is a strange dichotomy.

In any event, it is not just commercial enterprises but all property owners who will be entitled for compensation for lost profits and lost access if their land is condemned. The wording of Question 1 makes no distinction between businesses and other owners. Obviously, business owners are more likely to suffer lost profits in the event of a taking than residential ones. But that fact in no way justifies ignoring these losses.

Compensation for lost access and lost profits is itself a matter of fairness. As the Supreme Court put it in 1960, the whole point of requiring compensation for takings is to “bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Loss of access and profits is part of the burden that takings impose on property owners, and they deserve compensation for that no less than for the loss of the land as such. If, as Surovell and Puller claim, takings create “broad public benefits,” then the public should compensate the property owners who are forced to sacrifice their rights. If local governments decide that such compensation is too much to pay, that might be a sign that the alleged “public benefits” aren’t really worth their cost.

Surovell and Puller worry that compensation for lost profits result in compensation for individuals even when they lose part of their land for projects that actually increase the profitability of their businesses. If that happens, however, there need be no compensation for lost profits, because no profit will actually have been lost. If the government can prove that landowners’ profits will actually go up after a taking, nothing in Question 1 requires them to pay compensation for losses that don’t actually exist.

It’s also worth noting that Question 1 gives the state legislature the power to define what counts as loss of “profit” and “access” for purposes of compensation. Given the lobbying power of local governments, it’s unlikely that the legislature will define these concepts in a way that imposes excessive burdens on them. If anything, there is a greater danger that the Assembly will shortchange property owners. Owners targeted for condemnation rarely wield great political power; otherwise their land probably would not be condemned in the first place.

In sum, Question 1 is far from perfect. It does not protect property rights as fully as it should. But it’s a major improvement over Virginia’s current constitution.

Various people have asked me what I think of Virginia Question 1, the eminent domain reform referendum question that will be on the ballot in November. Question 1 is one of many eminent domain reform referendum questions developed as part of the political backlash against the Supreme Court’s decision in Kelo v. City of New London (2005), which ruled that the Constitution allows government to take property from one private owner to another on the grounds that doing so might promote “economic development.”

Virginia is one of 44 states that have enacted eminent domain reform legislation since Kelo. The most recent is Mississippi, where voters passed Measure 31 last year. Restrictions on eminent domain were long overdue because economic development and blight takings often victimize property owners for the benefit of powerful interest groups, and actually destroy more economic value than they create.

My bottom-line take on Question 1 is that it is a clear improvement over the status quo, but still has some flaws. As I discussed here, Virginia’s present Constitution is one of the worst in the country when it comes to property rights. Article 1, Section 11 allows government to condemn property for virtually any reason authorized by the legislature. If the voters pass Question 1, that will change.

Unlike many states that have enacted post-Kelo “reform” legislation that doesn’t really constrain eminent domain, Virginia’s state legislature has already enacted a fairly strong reform law through the legislative process, which I briefly described in my article surveying post-Kelo reform in all the states. But a constitutional amendment constraining eminent domain is still valuable because statutory reforms could easily be eroded over time as public attention shifts to other issues, and powerful interest groups lobby the legislature to allow takings that benefit them.

Unfortunately, there are some potential flaws in the proposed Amendment’s wording that make it less effective than it could be. Question 1 would change the state Constitution to forbid takings “the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development, except for the elimination of a public nuisance existing on the property.” The amendment also has some valuable provisions forbidding the condemnation of more property than is necessary for the “public use” justifying the taking, increasing compensation for owners of condemned property, and specifying that the right to private property is “fundamental” (which usually triggers a higher degree of judicial protection when the right is threatened).

This is a clear improvement over the status quo. But it leaves the door open for “blight” condemnations enacted under a broad definition of “blight.” In many states, post-Kelo reform has been undermined by blight condemnation laws that define blight so broadly that almost any area can be declared blighted and condemned. It is not clear whether Question 1′s ban on takings takings for “private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development” covers blight condemnations adopted under an extremely broad definition of “blight.” If the legislature ever broadens Virginia’s relatively narrow post-Kelo blight law, the courts will have to decide whether that is compatible with Question 1. I think there would be plausible arguments on both sides.

Moreover, even takings enacted under a narrow definition of “blight” are often problematic, because they tend to victimize poor and politically weak communities for the benefit of influential interest groups. There are better ways to improve blighted areas than condemning the neighborhood in order to save it. Indeed, stronger protection for property rights might well promote economic development in poor areas rather than hinder it.

Finally, the fact that Question 1 only bans takings whose “primary” use is “private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development,” could potentially allow local governments to slip such takings in through the back door by arguing that economic development is tied to some other goal. Much may depend on how the courts interpret the meaning of “primary.”

Like most other post-Kelo referendum measures, Question 1 will probably pass easily. The vast majority of the public hates the Kelo decision and economic development takings. The only post-Kelo referendum initiatives that have ever failed were three that tied bans on economic development takings to other, less popular proposals, such as abolishing rent control. By contrast, over a dozen relatively “clean” post-Kelo reform initiatives have passed easily.

Question 1 will probably pass as well. Because it is a clear improvement over the status quo, I’m going to vote for it myself. The best should not be the enemy of the good. But Virginians should not imagine that passing this amendment will create an iron-clad safeguard against abusive takings in this state.