Part of a symposium on public use, this essay presents an analytic framework for eminent domain that begins by breaking condemnations into two parts: a swap of property for fair market value, and the confiscation of what I term "the uncompensated increment." The uncompensated increment is made up of three distinct components: (1) the increment by which the property owner’s subjective value exceeds fair market value; (2) the chance of reaping a surplus from trade (that is, of obtaining an amount larger than one’s own true subjective valuation); and (3) the autonomy of choosing for oneself when to sell. Whether government can appropriate this uncompensated increment in a given instance gets to the heart of the public use inquiry. I suggest that the answer to the inquiry can be found in the same unloved and amorphous factors that determine whether other uncompensated appropriations of value amount to regulatory takings. The analytic template of regulatory takings law does a good job of grappling with important features of eminent domain fact patterns such as the degree of market thinness and the potential for political malfunction.
The aim of a regulatory takings inquiry is to determine whether compensation is required in order for the government to pursue an objective that is within its legitimate compass. In the eminent domain context, compensation is already being paid; hence, one might think that the application of regulatory takings factors to the uncompensated increment would merely go to the question of whether the level of compensation ought to be adjusted upward. But there is an incommensurability problem that is suggested by the autonomy component of the uncompensated increment. At least in some subset of cases, overriding autonomy with an involuntary sale seems problematic even if the amount of compensation is adjusted upward; the extra dollars, in a sense, are the wrong currency in which to provide "just compensation" for a taking. I will suggest some ways to set the parameters for this autonomy-based constraint on eminent domain, and will also discuss how principles of self-assessment might be employed to overcome the difficulties associated with forced sales in situations where public use is contested.
Law and Economics
Date of this Version
Lee Anne Fennell, "Taking Eminent Domain Apart" (February 2005). University of Illinois Law and Economics Working Papers. Working Paper 19.