Properly Construing the Just Compensation Clause

The Fifth Amendment to the U.S. Constitution guarantees that “private property” shall not “be taken for public use, without just compensation.” But what does it mean for compensation to be “just”? To find a practical standard for this tricky constitutional mandate, early courts adopted the concept of “fair market value” as descriptive of the Just Compensation Clause’s parameters. Over time, this formulation of the Just Compensation Clause predominated over all others. So much so, in fact, that many courts now refuse to admit evidence on the question of just compensation if it does not comport with one of the three approaches to ascertaining fair market value developed by the appraisal industry: the comparable sales approach, the cost approach, or the income approach. But the Just Compensation Clause was never intended to be interpreted so narrowly. Especially in eminent domain cases, where damages can be ongoing and conditional and thus are not adequately accounted for in the traditional approaches for assessing fair market value. This Article argues that if the Just Compensation Clause is meant to serve as a meaningful deterrent to government overreach, the current interpretation of the Just Compensation Clause must be broadened to allow for the admission of any evidence of commercially relevant information that would be given weight in negotiation. If it is not, our poor and underrepresented communities will continue to shoulder the burden of this constitutional deficiency.

Of all the terms used in the Taking Clause, just compensation has the strictest meaning. The Fifth Amendment does not allow simply an approximate compensation but requires a full and perfect equivalent for the property taken.

—Penn Central Transportation Company v. New York City, 438 U.S. 104, 150 (1978) (Rehnquist, J., dissenting).