The “public Use” Requirement in Eminent Domain Law: a Rationale Based on Secret Purchases and Private Influence

This article provides a rationale for understanding and interpreting the “public use” requirement within eminent domain law. The rationale is based on two factors. First, whereas the government often needs the power of eminent domain to avoid the problem of strategic holdout, private parties are usually able to purchase property through the use of secret buying agents. The availability of secret buying agents makes the use of eminent domain for private parties unnecessary (indeed, undesirable), but the government is ordinarily unable to make secret purchases because its plans are subject to democratic deliberation and known in advance. Second, whereas the use of eminent domain for traditional public objectives does not create a danger of corruption, the use of such power for private parties invites the potential for inordinate influence. Private parties that directly benefit from takings can obtain a concentrated benefit and often pay little for the property and thus have a strong incentive to influence the eminent domain process for their own advantage. In light of the analysis, the article finds that the Supreme Court’s recent decision in Kelo v. City of New London and decisions in several other important cases are problematic. The article concludes that the theory of public use based on secret purchases and private influence provides a socially desirable, administrable, and constitutional mechanism for distinguishing between public and private uses and reforming the law of eminent domain. * Fellow, John M. Olin Center for Law, Economics, & Business, Harvard Law School. J.D., Harvard Law School; B.A., University of Notre Dame. ([email protected]) A special word of thanks is due to Steven Shavell for many helpful comments and discussions. I would also like to thank participants of the Seminar on Law and Economics at Harvard Law School for their suggestions. I am grateful as well to the John M. Olin Center for research support.