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LAND USE CONTROLS (PART III), AND GOVERNMENT TAKINGS

THE POWER OF EMINENT DOMAIN

Zoning should be distinguished from another land use management technique sometimes employed by the government; namely, the expropriation of land from private ownership via the government’s exercise of its power of eminent domain – most commonly understood as the power to force a property owner to transfer their land to the government or to tolerate some government intrusion or burden on that land, notwithstanding objections by the property owner. This power is constitutionally derived (at both the state and federal level) and requires the payment of “just compensation” to the persons from whom the land is taken. The line between regulation (e.g., zoning) and taking, however, is not always clear, and some regulation may ultimately be determined by a court to be so extensive and limiting as to require the payment of just compensation.

Richard A. Posner, ECONOMIC ANALYSIS OF THE LAW 55-56 (6th ed. 2003):

A good economic argument for eminent domain … is that it is necessary to prevent monopoly. [Taking the case where a right of way is needed, for example, consider that] once a pipeline has begun to build its line, the cost of abandoning it for an alternative route becomes very high. Knowing this, people owning land in the path of the advancing line will be tempted to hold out for a very high price – a price in excess of [the value to the owner in light of the owner’s other potential uses of the land]. Transaction costs will be high, land-acquisition costs will be high, and for both reasons the [pipeline company] will have to raise the price of its services. [As a result], some consumers will shift to substitute services … [the pipeline company will in turn] need, and buy, less land, [and] as a result of all of this, land that would have been more valuable to the [pipeline] company than to its present owners will remain in its existing, less valuable uses, and this is inefficient. … In settings of high transaction costs people must be allowed to use the courts to shift resources to a more valuable use, because the market is … unable to perform this function in those settings.

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