Federalism, the Baltimore Colts, and the Limits of Eminent Domain:

Property law scholar Gideon Kanner has an interesting article in the Los Angeles Daily Journal on the 25th anniversary of the Baltimore Colts' midnight move to Indianopolis. As Kanner points out, the Colts' precipitous departure was caused by the team owner's fear that the city of Baltimore would use eminent domain to condemn the team and thereby prevent it from moving. This fear was precipitated by a then-recent California state court decision ruling that the City of Oakland's effort to condemn the Oakland Raiders in order to prevent them from moving was a permissible "public use" under the state constitution.

As Gideon points out, the Colts were able to foil Baltimore's plan simply by leaving before the city could act. More generally, cities around the country have made little effort to condemn mobile businesses or nonprofit organizations, despite the fact that eminent domain jurisprudence in many states is permissive enough that such efforts would likely survive judicial scrutiny. Why haven't state and local governments sought to condemn mobile assets? The answer is clear: businesses would quickly flee any jurisdiction that started using eminent domain in this way. The example of the Colts is telling. Moreover, other firms would forego the opportunity to move into the area in the first place.

For these reasons, condemning mobile assets is a losing proposition for state and local governments - even if courts will let them do it. Federalism and interjurisdictional competition protect property rights in movable goods with relatively little need for judicial intervention. By contrast, there is little similar protection for property rights in land and other static assets. A landowner might be able to flee a jurisdiction with harsh policies; but he can't take the land with him. For this reason, decentralized federalism is less likely to provide effective protection for property rights in immobile goods. Thus, judicial intervention, including that of federal courts, may be necessary. I discuss this point at greater length in this article (pp. 221-23). Once we understand the distinction between mobile and immobile property and the special vulnerability of the latter, there need be no contradiction between support for decentralized federalism and support for federal judicial protection for landowners' property rights.