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  • - [Kim] Hi, this is Kim from Khan Academy.

  • Today we're learning more about

  • the takings clause of the Fifth Amendment.

  • In another video we'll discuss

  • the other clauses of the Fifth Amendment,

  • those that deal with self-incrimination

  • and due process of law.

  • But in this video we're concentrating

  • on just the last few words of the Fifth Amendment

  • which forbid the government from taking private property

  • for public use without just compensation.

  • To learn more about the takings clause,

  • I sought out the help of two experts.

  • Richard Epstein is the Lawrence A Tisch Professor of Law

  • and Director of the Classical Liberal Institute at NYU Law.

  • He's also a Senior Fellow at the Hoover Institution.

  • Eduardo Penalver is the Allan R. Tessler Professor

  • and Dean of Cornell Law School.

  • So Prof. Epstein can you give us a little background?

  • Just what is the taking clause?

  • - [Richard] Well, there's a rule in Constitutional Law

  • that the shorter the provision,

  • the more difficult the interpretation.

  • And this is a very short petition.

  • It says, "nor shall private property be taken

  • "for public use without just compensation."

  • And the first thing to understand about the clause

  • is that it's in the passive voice.

  • So it doesn't tell you who's taking it.

  • And early on, since this was the part of the Bill of Rights,

  • it was said to apply only to Congress and not to the states.

  • And then after the Civil War, through the 14th Amendment,

  • it was said to apply to the states.

  • So now it applies to both the states

  • and to the Federal government.

  • - [Eduardo] Many constitutions don't have

  • an explicit property protection clause,

  • but there's a fairly strong norm

  • around compensating owners of private property

  • when you, essentially commandeer their property

  • for public purposes.

  • And that seems to have been the motivation.

  • It's, the clearest reading of it is that

  • it's a provision of the Constitution that makes clear

  • that when the Federal government takes your property,

  • or when the states takes your property for some public use,

  • that they have to make you whole

  • by giving you just compensation.

  • - [Richard] Private property's a pretty comprehensive term.

  • Everybody understands that it means land

  • and the things you build on land.

  • They also understand that it tends to cover chattels,

  • that is things like books and baseballs

  • that you happen to own and wild animals.

  • But it's also, it's much broader than that.

  • It covers all sorts of intangible rights,

  • like patents, copyrights, trade secrets.

  • These are very complicated and generally speaking

  • the government doesn't have any obligation

  • to create a patent,

  • but once it gives you the patent

  • it just can't take it from you

  • because the patent after conferred, is in fact,

  • now a property right.

  • And then it also may or may not cover

  • other kinds of intangibles like good will

  • which is the value associated with the business,

  • knowing that your past customers

  • may come back to you in the future.

  • - [Eduardo] On the motives of the Framers

  • for including this talk about things like the confiscation,

  • mostly of personal property

  • during the Revolutionary War by the British government,

  • that was possibly motivation to make clear

  • that if in future scenarios

  • if the government wanted to take your property

  • it would have to, it would have to compensate you.

  • And I think most historians don't think

  • there was a real problem being addressed by this.

  • A problem of uncompensated taking of property

  • by colonial governments during that period,

  • or by the state governments

  • during the Articles of Confederation.

  • - [Richard] The Framers wanted a system

  • of what we call limited government.

  • And so the takings clause, essentially says, is

  • "yes, we need your land for a fort,

  • "and it's really very important.

  • "But if we're gonna take it and use it for a fort,

  • "that's a public use, we're gonna pay you compensation

  • "for the fair market value of the land

  • "before the fort was put on."

  • And this is in order to make sure

  • that you can't pick and choose your victims,

  • and it's a way of assuring government regularity.

  • That's the first.

  • Second thing is more economic,

  • less apparent at the time of the Framing,

  • but pretty apparent today.

  • Is if the government can take something

  • and not pay you compensation, it's gonna overtake.

  • So your land is worth $100,000 as a farm,

  • but if you're gonna use it for a fort

  • it's only worth $10,000.

  • If you don't have to pay the $100,000,

  • well you may take it because you get $10,000 worth of gain.

  • But if you have to pay the fellow a fair market value

  • of the property interest taking, you won't do it.

  • So essentially what it does is it makes sure,

  • or at least improves the odds,

  • that when the government does take property,

  • or does regulate, it will in fact

  • improve overall social welfare.

  • So you have a political function dealing with singling out

  • and you have an economic function

  • dealing with the overall improvement of government behavior

  • from an economic point of view.

  • - [Kim] Okay, so say I had a piece of land

  • and the government decided

  • that they wanted it for some purpose.

  • What would be the legal process

  • for the government to go about acquiring my land?

  • - [Eduardo] Well, the process for eminent domain

  • really varies by state,

  • but typically there's some notice

  • that the government gives you

  • that it intends to take your property.

  • The government goes to court

  • and gets an order of condemnation

  • to take title of the property.

  • And then often as a requirement

  • that the government bargain with you

  • about the value of the property.

  • It will tell you what it thinks the value is,

  • the fair market value is the standard that we use

  • for just compensation.

  • That's the value that a willing buyer would pay

  • to a willing seller for the land.

  • It doesn't include things like your sentimental value

  • or anything like that.

  • So it's just the market value of the property.

  • There's some back and forth

  • through this required bargaining.

  • If the government and the property owner

  • can't reach an agreement,

  • then the government can go to court

  • and get the court to specify the value of the property

  • that would aid in compensation.

  • And then the payment is made and the deed is transferred

  • and the government becomes the owner of the property.

  • - [Kim] Interesting, so the government

  • has gone through this process to try to acquire my land.

  • What if I'm a real hold-out

  • and I just really don't want the government to get my land?

  • What happens then?

  • - [Eduardo] Well, you can litigate various pieces of this,

  • and again it depends a little bit on the state law,

  • so some states put more procedural hurdles

  • in the way of the government,

  • then other states make it easier for the government.

  • But under the Constitution there are really only two ways

  • you can resist the taking of your property

  • through eminent domain.

  • One is by arguing that the use that the government plans

  • to make of your property doesn't count

  • as a legitimate public use.

  • Because the clause says, "nor shall private property

  • "be taken for public use without just compensation."

  • And that public use language has been interpreted

  • to be a limitation on the power of eminent domain.

  • And then you can argue, the second thing you can argue

  • is that what the government is offering you

  • in terms of just compensation is not adequate compensation.

  • And you can litigate those through the courts

  • and that can slow the process down quite a bit.

  • Some states make it easier for the government by saying,

  • "well the government can actually just take title,

  • "while you litigate."

  • And others make you go, you know,

  • allow you to stop the condemnation process

  • and litigate in advance.

  • But there's often what's called a quick-take procedure

  • which allows the government to move more quickly

  • and put the litigation on the back end.

  • But the public use, if the use is found not to be public,

  • what you win is, you got an actual prohibition

  • on the taking itself.

  • You keep your property.

  • If you win on the just compensation side,

  • all you get is more money, they still take your property.

  • (laughs)

  • - [Kim] So, you mentioned public use.

  • What counts as public use?

  • - [Eduardo] Well, under the current law,

  • any use that generates a public benefit

  • is really a public use.

  • So the way the court has put it is anything the government,

  • any purpose the government can pursue

  • through any other means,

  • it can pursue through eminent domain.

  • So, if the government wants to create jobs,

  • or if the government wants to beautify,

  • or if the government wants to remove blight,

  • all those things are things that we think it's legitimate

  • for the government to try to do.

  • If it can do those things, it can do them

  • through the use of the eminent domain power.

  • - [Kim] One thing that strikes me as interesting

  • is just the fact that this clause is in the Fifth Amendment

  • among things like, double jeopardy or self-incrimination.

  • So why do you think the Framers included

  • this particular clause here

  • as opposed to elsewhere in the Bill of Rights?

  • - [Richard] Well that's a great question

  • to which there's no obvious answer,

  • but the one clause that is pretty close to it

  • is the due process clause in the Fifth Amendment

  • which says, "nor shall any person be deprived

  • "of life, liberty or property without due process of law."

  • So if you start with the procedural stuff,

  • somebody's gonna say, "well, how do we know

  • "that the procedures aren't fair?"

  • And if it turns out that the government uses

  • a set of procedures that don't give you adequate notice,

  • you're always going to end up short

  • on the amount of compensation that you're gonna acquire.

  • So bad procedures tend to lead to bad outcomes

  • which tend to lead to property being taken

  • at less than full market value.

  • So what happens is is therefore very close linkage

  • between the procedures used under the due process clause

  • and the substance of protection that you have under takings.

  • - [Kim] Any changes in the interpretation

  • of the takings clause by the Supreme Court over time?

  • - [Richard] Well there's been a huge

  • kind of switch up and down

  • and let me put it the following way.

  • In the beginning there wasn't much of anything

  • that was done with respect to the takings clause.

  • The first Federal case to deal with it

  • was called Barron against Baltimore in 1833 or so.

  • And it just simply said that the clause does not allow

  • for protection of Mr. Barron against the city of Baltimore,

  • because it only binds the Federal government,

  • it doesn't bind the state.

  • After the Civil War, two things happened

  • of real distinction.

  • The first thing is

  • you start getting comprehensive regulation

  • of the railroads and the rates they can charge

  • and then public utilities

  • and the rates that they can charge.

  • And then in 1921 there's a case called Block v. Hirsch

  • and it's a very close five to four decision.

  • But they sustain on the grounds that it's a war time,