EMINENT DOMAIN IN VIRGINIA

AN ANALYSIS OF VIRGINIA SENATE JOINT RESOLUTION 3

Joseph J. Viviano

I. Introduction

Eminent domain constitutional reform has been underway in Virginia for the last two

years. The proposed constitutional amendment, Virginia Senate Joint Resolution 3, will greatly

expand constitutional protections for Virginian landowners. Many of these protections already

exist in the Virginia Code. However, property owners will receive two additional protections

when their property is taken or damaged by the government: the right to lost profits and the right

to compensation caused by a loss of access. This Paper proceeds by first explaining the

development of constitutional eminent domain law in Virginia to provide context for examining

Senate Joint Resolution 3. Next, the effect the proposed constitutional will have on current law

in Virginia is analyzed. Finally, this Paper concludes by rebutting arguments opposing Senate

Joint Resolution 3.

II. A Brief History of Eminent Domain in Virginia and Constitutional Reform

Absent a constitutional provision to the contrary, the State's power to take or control the

use of private property for the public's benefit is absolute. This is inherent in the meaning of

“eminent domain,” which the Virginia Supreme Court has defined as:

the right on the part of the state to take or control the use of private property for the public benefit when public necessity demands it, is inherent in every sovereignty, and is inseparable from sovereignty, unless denied to it by its fundamental law.1

In Virginia, as in other states, the “Constitution is the fundamental law. It is the charter by which

our people have consented to be governed; it sets forth the basic rights and principles sought to

1 City of Roanoke v. Berkowitz, 80 Va. 616, 619 (1885) (emphasis added).

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be maintained and preserved in a free society.”2 Accordingly, a constitutional restriction is the

only way Virginia residents can absolutely restrain the State’s power of eminent domain.

Given the nearly unlimited scope of the State’s power to take property for the “public

benefit,” it is somewhat surprising that Virginia’s first Constitution, which was ratified in 1776,3

did not contain any provisions to restrain this power. The Virginia Constitution has been

completely revised a total of five times.4 These revisions occurred in the years of 1830, 1851,

1870, 1902, and in 1971.5 However, a constitutional provision restricting the State’s power of

eminent domain was not made until 1830 – fifty-six years after the Virginia’s first Constitution

was ratified. This restriction was revised later in the Virginia Constitution of 1902. Both of

these amendments were ratified in response to governmental abuses that were occurring in the

context of eminent domain.

a. The Virginia Constitution of 1776

Although identified by the Virginia Legislature as the state’s first constitution, the

Virginia Constitution of 1776 (hereinafter “Constitution of 1776”) is actually titled as a “Bill of

Rights.” This peculiarity arose from arguments advanced by Thomas Jefferson, who stated that

the delegates to the Convention of 1776 were without authority to adopt a constitution.6 Despite

2 Coleman v. Pross, 219 Va. 143, 152, 246 S.E.2d 613, 618 (1978).3 See VA. CONST. of 1776, available at http://www.nhinet.org/ccs/docs/va-1776.htm#1.4 Most states have revised their Constitution's four or five times. By way of comparison, Michigan has adopted four separate constitutions, and both Pennsylvania and New York have each adopted five distinct constitutions. HISTORY OF MICHIGAN CONSTITUTIONS, Michigan Legislature, available at http://www.legislature.mi.gov/documents/publications/constitution.pdf; See PENNSYLVANIA’S CONSTITUTION: A BRIEF HISTORY, Pa. Bar Ass’n, http://www.pabarcrc.org/history.asp (last visited Mar. 7, 2012); GUIDE ON THE NEW YORK STATE CONSTITUTION, Albany Law School, http://www.albanylaw.edu/media/user/librarypdfs/guides/nyconsti.pdf (last visited Mar. 7, 2012). 5 VA. CONST. of 1971 forward. “This does not count the Constitution of 1864, which was drafted under wartime conditions and whose legal status was never certain. This count also does not include the revision of 1928, in which fewer than half of the sections of the Constitution of 1902 were changed.” Id at III n.1. 6 See HOWARD, A. E. DICK, COMMENTARIES OF THE CONSTITUTION OF VIRGINIA 1166 (1974).

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Thomas Jefferson’s arguments, the Virginia Supreme Court later held that this Bill of Right was

the equivalent to a constitution.7

Property was typically condemned during the 18th Century and early 19th Century to

further private economic development through the construction of dams. Dams were built to

power watermills that could be used to ground grain into flour. After a dam was constructed, the

water level would rise and flood the land of nearby private owners, destroying the value of their

land in the process.8 Anyone who wanted to build a dam was required to apply to the county

court9 for a writ of ad quod damnum (Latin for “to what damage”).10 An affected landowner was

required to receive at least 10 days notice prior to the execution of a writ of ad quod damnum.

Upon execution of a writ of ad quod damnum, the county sheriff was ordered to impanel a group

of five landowners to serve as a jury.11 The jury was taken to view and appraise the land.12 The

juror’s valuation was then delivered county clerk, and upon delivery title was divested from the

private landowner. The person constructing the dam was then required to pay the damaged

landowner the amount of damages assessed by the jury.13

While the law required compensation to be paid to the landowner when the taking

benefited another private party, there was no requirement that a landowner be compensated when

the taking was for the public benefit. Although Section 6 of the Constitution of 1776 provided

that “all men, hav[ing] the right of suffrage . . . cannot be taxed or deprived of their property for

public uses, without their own consent, or that of their representatives,”14 this provision merely

7 Kamper v. Hawkins, 3 Va. (1 Va. Cas.) 20 (1793).8 See Anthony v. Lawhorne, 28 Va. 1, 1 (1829).9 Id.10 Black’s Law Dictionary (9th ed. 2009).11 Attorney Gen. v. Turpin, 13 Va. 548, 548 (1809).12 Id.13 See Anthony, 28 Va. at 1.14 VA. CONST. of 1776, § 6 (emphasis added).

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limited the government’s power to collect and levy taxes,15 and did not prohibit or restrain the

government from taking private property. And absent any check on public takings, the

government was free to condemn land without paying the owner any compensation.16

b. The Virginia Constitution of 1830, 1851, and 1870

In the context of eminent domain law in Virginia, the Virginia Constitution of 1830 is

significant because it was the first Virginia Constitution that provided any protection for private

owners against the State's power of eminent domain. Section 11 of the 1830 Constitution

(“Section 11”) substantially mirrored the language of the Fifth Amendment of the United States

Constitution,17 and provided that “[t]he Legislature shall not pass any . . . law, whereby private

property shall be taken for public uses, without just compensation.”18 Section 11 was adopted

without debate.

Throughout the entire 919 page record of the proceedings and debates from the Virginia

Constitutional Convention of 1829, it was only Chief Justice John Marshall who even bothered

to reference Section 11. As a resident of Richmond, Virginia, Chief Justice of the United States

Supreme Court John Marshall was selected as a delegate to the Convention.19 While defending

his opinion that Virginia judges should continue to hold office during good behavior, he

remarked:

15 PROCEEDINGS AND DEBATES OF THE VIRGINIA STATE CONVENTION OF 1829-30 195 (Ritchie & Cook, eds.) (1830).16 See Tuckahoe Canal Co. v. Tuckahoe & J.R.R. Co., 38 Va. 42, 76 (1840) (stating “[i]ndeed, in former days, the eminent domain in the establishment of roads was exercised . . . without compensation; but it is now very wisely and justly provided by the constitution, that in all cases where private property is taken for public uses, just compensation shall be made to the owner for his loss.”); accord Iron City Auto. Co. v. City of Pittsburgh, 253 Pa. 478, 494; 98 A. 679, 684 (1916) (stating “[a]t the common law no damages were recoverable when property was taken for a public improvement”).17 The Fifth Amendment of the United States Constitution states, in part, that “nor shall private property be taken for public use, without just compensation."18 VA. CONST. of 1830, § 11 (emphasis added).19 PROCEEDINGS AND DEBATES OF THE VIRGINIA STATE CONVENTION OF 1829-30, supra n. 15 at 3.

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Do you believe, that the Legislature will put forth their grasp upon private property, without compensation? Certainly I do not. There is as little reason to believe they will do such an act as this, as there is to believe, that a Legislature will offend against a Judge who has given a decision against some favourite opinion and favourite measure of theirs, or against a popular individual who has almost led the Legislature by his talents and influence.20

Save perhaps Justice Marshall, the delegates to the 1829 Constitutional Convention apparently

believed that protection against the state’s inherent power of eminent domain was so

fundamental as to render debate gratuitous. Commenting on the addition of Section 11 during

the Virginia Constitutional Convention of 1902, Delegate Westcost stated:

The power of eminent domain, which is an inherent attribute of sovereignty, is the right on the part of the State to take all the wealth of all the individuals of the State whensoever and to whatsoever extent public necessity may dictate the propriety of doing so. . . . [I]t is not to be wondered at that, with respect to this sovereign power, vested in the General Assembly of the State of Virginia, absolutely without limitation or restraint, except that of public necessity, of which it is its own judge, a power so extensive, so far-reaching, so potential in its capacity to affect the rights of the private citiezn, [sic] it should have been found necessary to limit it by a constitutional provision, as was done in 1829.21

Following the adoption of the Constitution of 1830, Virginia adopted a new Constitution

in 1851 and again 1870. While these Constitutions were significant for a variety of reasons,

including continuing to restrict suffrage only to landowners,22 the “just compensation” clause of

Section 11 of the Constitution of 1830 remained unchanged. Constitutional reforms regarding

eminent domain were not made again until the 1902, when Virginia held its second constitutional

convention. The Supreme Court of Virginia had numerous opportunities to interpret the just

20 PROCEEDINGS AND DEBATES OF THE VIRGINIA STATE CONVENTION OF 1829-30, supra n. 16.21 STATE OF VIRGINIA, REPORT OF THE PROCEEDINGS AND DEBATES OF THE CONSTITUTIONAL CONVENTION 697 (1906) (hereinafter "DEBATES OF 1902"). 22 Compare VA. CONST. of 1830 Art III, § 14 (granting suffrage to every white male holding a freehold estate of the value of at least twenty-five dollars) with VA. CONST. of 1776 Art §6 (stating that "all men, having sufficient evidence of permanent, common interest with, and attachment to, have the right of suffrage"). Section 6 of the Virginia Constitution of 1776 was the community

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compensation clause contained in Section 11 of the Virginia Constitution of 1830 in the years

between 1830 and 1902.

One of the first cases to apply Section 11 was Commonwealth v. Beeson (1830).23 In

Beeson, a river had risen to wash away a public road.24 The State then sought to reconstruct the

road further inland on privately owned land without following condemnation procedures or

paying “just compensation.”25 The Supreme Court of Virginia held that the state was required to

formally condemn any additional land necessary to construct a new road, and that the property

owner was entitled to just compensation. The case is significant because the Court stated that

private property could not only be taken for “public uses,” as required under the Constitution, but

for “public purposes.” 26 Given that the case involved the construction of a public road, it is

doubtful that the Court intended to create a distinction between “public uses” and “public

purposes.” Nevertheless, the critical distinction between “public use” and “public purpose” was

created which survives today.

In the infamous decision of Kehrer v. City of Richmond, the Virginia Supreme Court held

that a property owner was not entitled to compensation for “consequential damages” if the

owner’s “lands are not actually taken” by a condemnation authority.27 In Kehrer, the plaintiff

owned a business that fronted a city street.28 In the process of grading the road, the City of

Richmond had placed the dirt on the plaintiff’s property.29 Apparently, the amount of dirt

removed was so large that the plaintiff was required “to erect a barrier,” four feet high, “along

23 Commonwealth v. Beeson, 30 Va. 821 (Va. Gen. Ct. 1832).24 Id. at 825.25 Id. 26 Id. (stating that “in this commonwealth, private property can only be taken for public purposes, and then only upon making a just compensation to the party deprived”).27 Kehrer v. City of Richmond, 81 Va. 745, 747 (1886).28 Id. at 746.29 Id.

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the whole front of his lot, to prevent the earth from falling upon and covering up his premises.” 30

The plaintiff was then forced, at his own expense, to remove the dirt that was placed on his

property and to construct a stairway “to have ingress and egress to and from his premises.”31 The

plaintiff alleged that as a result of the grading, “ingress and egress to and from . . . his store [was]

rendered inconvenient and unsafe, the value of his [property was] greatly diminished, his

business serious impaired, [and] rainwater finds easy access into his . . . store causing great

damage.”32

The Virginia Supreme Court held that “the plaintiff’s loss was consequential, and,

therefore damnum absque injuria33 (Latin for “damage without wrongful act”)34 because the

plaintiff’s property had not been taken.

The result is, that the declaration before us is fatally defective. The property of the plaintiff has not been taken, nor have his rights been unlawfully invaded. And if, in consequence of the acts complained of, he has been obliged, as he avers, to erect a barrier for the protection of his property, or steps, in order to have ingress and egress to and from his premises, or if his business has been injuriously affected, and the value of his property diminished, it is a mere incidental injury, caused by the prosecution in a lawful manner, of a public improvement, for which there is no redress.35

Less than a decade later in Home Bldg. & Conveyance Co. v. City of Roanoke, it was admitted

that the property owner had sustained over $100,00036 in damages, but since the condemnation

authority did not actually “take” the lands, the property owner was without remedy.37 The

Virginia Supreme Court recognized the harshness of this rule, but nevertheless continued to

follow it:

30 Id.31 Id.32 Id. (internal quotations omitted). 33 Id.34 Black's Law Dictionary (9th ed. 2009).35 Kehrer, 81 Va. at 750.36 This number has been adjusted for inflation. 37 Home Bldg. & Conveyance Co. v. City of Roanoke, 91 Va. 52, 20 S.E. 895, 899 (1895).

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The opinion of the court . . . in Kehrer v. City of Richmond, [is] a doctrine that, we admit, appears harsh, and may be really so, when applied to some cases; but it should be remembered that it is not the province of this court to make the law, but rather to enforce it.38

c. The Virginia Constitution of 1902

The stage was set at the Constitutional Convention of 1902 for constitutional amendment

to provide landowners relief from the holdings in Kehrer and Home Bldg. & Conveyance Co. In

support of the Amendment of 1902, Delegate Westcott described a situation very similar to that

in Kehrer, where a city had lowered the grade of a road and thereby destroyed the value of a

home adjacent to the road.39 Under then-existing law, the landowner “ha[d] no remedy on

earth, . . . except . . . to pull down his house and then grade his lot down to the proposed change

of grade of the new street.” Section 58 of the Virginia Constitution of 1902 was amended to

state that “the General Assembly shall not enact any law . . . whereby private property shall be

taken or damaged for public uses, without just compensation” (“Amendment of 1902”).

It was the design of th[is] amendment to our Constitution under consideration to remove an existing mischief, viz., the damaging of private property for public use without just compensation.40

Under the Amendment of 1902, if the government took or damaged land for public uses, the

landowner was required to receive just compensation. This provision was later amended in 1928

to allow the General Assembly to defined “public uses,” and has remained unchanged since.

A cursory reading of the debates and proceedings form the Virginia Constitutional

Convention of 1902 suggests that that the drafters of the Amendment of 1902 intended for

landowners to be compensated for all damages that resulted from a condemnation authority’s

actions.

38 Id. at 20.39 DEBATES OF 1902, supra n. 21 at 701. 40 Swift & Co. v. City of Newport News, 105 Va. 108, 52 S.E. 821, 824 (1906).

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Now, then, if the provision which we propose to insert in the new Constitution of Virginia had existed at that time the gentlemen representing this wealthy corporation would have been confronted with the provision that not only shall private property not be taken, but it shall not be damaged for public uses without just compensation, and whatsoever the damage that individual had received by reason of that corporate act, over and above the damage which others of the community generally experienced by reason of it, he would have been entitled to, and could have enforced his demand for.41

However, it is clear upon deeper analysis that the drafters did not intend for lost profits to

compensable. The Amendment of 1902 was drafted to track the same language used in the

constitutions of seventeen other states42 and to “adopt the construction given to that State law by

the courts of last resort of that State,” with Supreme Court of Illinois leading the charge. The

law in Illinois was,43 and still is,44 that lost profits are not compensable. As stated in the leading

treatise on eminent domain of the time, factors such as the “loss of profits and the like, if

admitted in evidence are material merely as bearing upon the main issue [of measuring the

market value of the land taken], and not as independent element of damage.”45 This is still the

prevailing rule today.46 Therefore, it is not surprising that when asked to rule on whether lost

41 DEBATES OF 1902, supra n. 21 at 704. 42 DEBATES OF 1902, supra n. 21 at 704. 43 Braun v. Metro. W. Side Elevated R. Co., 166 Ill. 434, 437, 46 N.E. 974, 975 (1896) (“This rule excludes all evidence as to the amount of business done, or which could be done, in the property, or the probable profits arising therefrom.”).44 Citizens Utilities Co. of Illinois v. Metro. Sanitary Dist. of Greater Chicago, 25 Ill. App. 3d 252, 259; 322 N.E.2d 857, 863 (1974) (stating that the “loss of business profits and consequential deterioration in property value are not elements of damage”).45 LEWIS, JOHN, A TREATISE ON THE LAW OF EMINENT DOMAIN IN THE UNITED STATES 895 (2nd ed. 1900), ; Accord Searle v. Lackawanna & B.R. Co., 33 Pa. 57, 64 (1859); Seattle & M.R. Co. v. Roeder, 30 Wash. 244, 263; 70 P. 498, 505 (1902); City of Oakland v. Pac. Coast Lumber & Mill Co., 171 Cal. 392, 400; 153 P. 705, 708 (1915); Chicago, R.I. & P. Ry. Co. v. Larwood, 1935 OK 685, 175; Okla. 96, 51 P.2d 508 (1935).46 See, e.g., Vela v. Plaquemines Parish Gov't, 2000-2221 La. App. 4 Cir. 3/13/02; 811 So. 2d 1263, 1273 (2002); Detroit/Wayne County Stadium Auth. v. Drinkwater, Taylor, & Merrill, Inc., 267 Mich. App. 625, 658; 705 N.W.2d 549, 570 (2005); State ex rel. Dept. of Highways v. Robb, 1969 OK 47; 454 P.2d 313, 317 (1969); but cf. People ex rel. Dept. of Transp. v. Muller, 36 Cal. 3d 263, 271; 681 P.2d 1340, 1345 (1984) (loss of goodwill in forced relocation is compensable and “may be measured by the capitalized value of the net income or profits of a business”); State v. Hammer, 550 P.2d 820, 826 (1976).

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profits were compensable, the Supreme Court of Virginia in 1927 answered the question in the

negative, holding that lost profits “are too speculative and too uncertain to be” awarded.”47

Although the drafters of the Amendment of 1902 did not contemplate compensation for

“lost profits,” it is likely that they intended for damages resulting from “lost access” to property

to be compensable. Part of the damages suffered by the landowners in Kehrer and the situation

anecdotally described by Delegate Westcott arose from a loss of access. For instance, in Kehrer,

the property owner alleged that he was required to construct a stairway to access his property

following the grading of the street.48 Therefore, it is likely that at least in some situations, the

drafters of the Amendment of 1902 intended to compensate property owners for a loss of access.

This position is buttressed by John Lewis in his treatise on the law of eminent domain, which

was referenced numerous times during the debates of the Convention of 1902.49 Lewis says:

[]There can be no doubt that the enjoyment of convenient access to the street . . . is a right which the owner enjoys in connection with his property . . . so that the material impairment of such access is . . . a ground for a claim for damages when the constitution or statutes of the state provide compensation when property is damaged for public use. It is accordingly well settled, in states which such provisions are in force, that when . . . ingress and egress of premises abutting . . . a public street are physically obstructed by which the street is used, altered, or improved, . . . the owner of such premises is entitled to compensation so far as such impairment depreciates the market value of his property.50

Accordingly, the drafters of the Amendment of 1902 most likely intended to compensate

property owners for a loss of access.

Four years later in 1906, the Supreme Court of Virginia made clear that the term

“damages” in the Amendment of 1902 included those resulting from a loss of access. In Swift &

Co. v. City of Newport News, “the City of Newport News raised the grade of a street in front of

47 Fonticello Mineral Springs Co. v. City of Richmond, 147 Va. 355, 368; 137 S.E. 458, 462 (1927).48 See Kehrer, 81 at 747.49 See Debates of 1902, supra n. 21 at 690, 692, 693, 694, passim.50 Lewis, John, supra n. 46 at 877-88 (emphasis added).

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the plaintiff property owner's beef and cold storage business, which fronted the street.”51 The

grade of the street was raised at least four inches, which allegedly caused the plaintiff build a

new sidewalk to access his property.52 The Court then held:

The new Constitution has not taken from the cities of the state the right to raise or lower the surface of a street when necessity requires, nor made it dependent upon the will of the parties affected thereby, but only provides that just compensation shall be made for the damage done.53

However, in subsequent cases the Court proceeded to greatly limit when damages from a loss of

access could be claimed.

The first of these cases was Town of Galax v. Waugh, which held that while “[a] city of

[sic] has no right to obstruct its streets so as to deprive the property owner of free access to and

from his property abutting thereon,”54 a property owner is not entitled to damages “[i]f the

change of grade of a street causes an enhancement of the market value of property abutting the

street greater than that of property not so abutting.”55 In the abstract, this holding is both logical

and fair. It would seem fair that if a loss or change in access causes damages to the property

owner in the amount of $5,000, but that the value of his property nevertheless increased by

$10,000 as a result of the change in access, the property owner should have no claim against the

condemnation authority. However, the real-world result is much harsher. It was undisputed in

Galax that as a result of a change in the street grade, access to the property owner’s basement

was “virtually closed up.”56 The property owner operated a large retail business in the basement

which produced about $50,000 in revenue per year (in 1928), and as result of the basement’s

closure, “this retail business has been practically ruined,” and “that the room [wa]s . . .

51 Close v. City of Norfolk, 82 Va. Cir. 636 (2009) (citing Swift & Co. v. City of Newport News, 105 Va. 108, 52 S.E. 821, 823 (1906)). 52 Swift & Co. v. City of Newport News, 105 Va. 108, 52 S.E. 821, 823 (1906). 53 Id.54 Town of Galax v. Waugh, 143 Va. 213, 237; 129 S.E. 504 (1925).55 Id. at 241.56 Id. at 218.

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[rendered] practically valueless.”57 The fact that the value of the owner’s property increased “ten

to twenty-five percent”58 was likely of little consolation to the property owner when it came at

the expense of his entire business.

The other main restriction that developed subsequent to ratification of the Constitution of

1902 was that damages for lost access would only when direct access to the property was

terminated, and not when direct access to the property is reduced or limited. In Wood v. City of

Richmond, the city issued a permit to the property owner to build two driveways for entrance

into his gasoline station.59 After city had issued the permit, and after the driveways had been

constructed, the city subsequently ordered one of the driveways to be removed because it was in

violation of a city zoning ordinance.60 The Supreme Court of Virginia recognized that “that an

abutter has an easement in the public road which amounts to a property right,” but that this right

must yield to the state’s police power to “control the use of the streets as to promote the safety,

comfort, health and general welfare of the public.”61 Accordingly, the Court refused to grant

relief to the property owner because:

[w]hatever restraints the legislature imposes upon the use and enjoyment of property within the reason and principle of this duty, the owner must submit to, and for any inconvenience or loss which he sustains thereby he is without remedy. It is a regulation and not a taking, an exercise of police power, and not of eminent domain.62

The Virginia Supreme Court later reaffirmed this general principle in 1973 and again in 1974.

In State Highway Comm’r v. Howard (1973), the State Highway Commissioner a two-

lane highway by adding two additional lanes.63 After construction was completed, the road

57 Id.58 Id. at 219.59 Wood v. City of Richmond, 148 Va. 400, 402; 138 S.E. 560 (1927).60 Id.61 Id. at 407.62 Id.63 State Highway Comm'r v. Howard, 213 Va. 731, 732, 195 S.E.2d 880 (1973).

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became a four-lane highway, with two lanes running southbound and two lanes running

northbound.64 A median installed between the north and southbound lanes which made it more

difficult to access the landowner’s property.65 The Court held that the loss of access was not

compensable because:

the abutter has no property right in the continuance or maintenance of the flow of traffic past his property. Circuity of route imposed upon the abutter, resulting from the exercise of a police power in the regulation of traffic, is an incidental result of a lawful act. It is not the taking or damaging of a property right. Although the abutting landowner may be inconvenienced by the presence of a median strip, he has no remedy if such dividing strip is reasonably adapted to benefit the traveling public.66

If the property owner was to receive compensation, he must sustain the nearly impossible burden

of proving “that the Commission acted unreasonably, fraudulently, or capriciously.”67

This same principle was affirmed in State Highway Comm’r v. Easley (1974), where the

State Highway Commissioner “undertook to improve Route 58 by placing a median strip

between the two eastbound and the two westbound lanes” and “regulate access to the [property

owner’s] two parcels by placing curbing along the highway right of way with two openings.”68

The loss of value “resulting from limitation of access caused by the new curbing” was estimated

to be $20,000 to the two parcels, and a little more than $18,000 was awarded.69 The Court held

that the trial court erred in allowing evidence of the damage caused by installation of the median

and curbing because “the owner of property abutting a public road has no right to compensation

when the state, in the exercise of its police powers, reasonably regulates the flow of traffic on the

highway.”70

64 Id.65 Id.66 Id.67 Id.68 State Highway Com'r v. Easley, 215 Va. 197, 198; 207 S.E.2d 870 (1974).69 Id.70 Id. at 203.

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The Supreme Court of Virginia finally recognized a limitation to this principle in State

Highway and Transp. Comm’r v. Linsly (1982). In Linsly, the State Highway Commissioner

took land that “resulted in elimination of the landowners’ direct access” to a public highway.71

In lieu of direct access, the Commissioner planned to build a service route to the property.72 The

question on appeal was “whether the trial court erred in permitting the condemnation

commissioners to consider this change of access in determining their award of just

compensation.”73 The Supreme Court held that the trial court did not err because while a

“reduction or limitation of direct access to an abutting landowner’s property generally is not

compensable,” the same is not true where “there is a complete extinguishment and termination of

all the landowners’ rights of direct access.”74

III. The Proposed Constitutional Amendment will have only a minimal effect on the law of eminent domain in Virginia.

Like the two earlier constitutional amendments that reformed the law of eminent in

Virginia, Virignia Senate Joint Resolution 3 of 2012 (the “Proposed Amendment”) attempts to

correct abuses stemming from the government’s exercise of eminent domain by more wholly

compensating property owners when their property has been damaged or taken. Supporters of

the Proposed Amendment include Virginia Attorney General Robert McKenna, who states that

one the purposes underlying the amendment is to ensure that “the cost of taking property [are] be

borne by the public, not by the individual property owner” and that “[f]air and full compensation

[is] be given when property is taken or damaged.” This statement echoes arguments made at the

Virginia Constitutional Convention of 1902 in favor of requiring compensation for property

owners whenever the government takes or damages their land.

71 State Highway & Transp. Comm'r v. Linsly, 223 Va. 437, 439, 290 S.E.2d 834 (1982).72 Id. 73 Id. at 440.74 See id. at 443.

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Is there ever, under any circumstances, so imperative a demand for a public improvement as that it shall be done at the expense of one or two individuals of the city? . . . I ask you, in that or any case the gentleman can ever cite, any reason why these improvements should be made at the expense of a few individuals, instead of at the expense of the general public? In whose behalf are they made?75

Given the Amendment of 1902’s failure to adequately remedy eminent domain abuses, one

would be justified in doubting whether the Proposed Amendment will be any more successful in

ensuring that “the cost of taking property [are] be borne by the public, not by the individual

property owner.” This concern is amplified by the arguably limited effect the Proposed

Amendment will have on eminent domain law in Virginia.

a. The Proposed Amendment and related statutes.

Like the Amendment of 1902, the Proposed Amendment enjoyed broad support from

both sides of the isle in the Senate and the House of Delegates. It passed 83 to 17 in the House

of Delegates76 and 23 to 17 in the Senate.77 If subsequently ratified by the Virginian voters, the

Proposed Amendment will amend Section 11 of the Virginia Constitution to read:

That the General Assembly shall pass no law whereby private property, the right to which is fundamental, shall be damaged or taken except for public use. No private property shall be damaged or taken for public use without just compensation to the owner thereof. No more private property may be taken than necessary to achieve the stated public use. Just compensation shall be no less than the value of the property taken, lost profits and lost access, and damages to the residue caused by the taking. The terms "lost profits" and "lost access" are to be defined by the General Assembly. A public service company, public service corporation, or railroad exercises the power of eminent domain for public use when such exercise is for the authorized provision of utility, common carrier, or railroad services. In all other cases, a taking or damaging of private property is not for public use if the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development, except for the elimination of a public nuisance existing on the property. The

75 DEBATES OF 1902, supra n. 21 at 701. 76 House Vote on Senate Joint Resolution 3 (2012), available at http://leg1.state.va.us/cgi-bin/legp504.exe?121+vot+HV1432+SJ0003 (Mar. 6, 2012). 77 Senate Vote on Senate Joint Resolution 3 (2012), available at http://leg1.state.va.us/cgi-bin/legp504.exe?121+vot+SV0395SJ0003+SJ0003 (Feb. 13, 2012).

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condemnor bears the burden of proving that the use is public, without a presumption that it is.78

Although the Proposed Amendment will include many new provisions in the

Constitution, most of these provisions only enshrine rights already codified in Virginia’s post-

Kelo legislative reforms. For instance, the clause recognizing the right to private property as

“fundamental,”79 the clause requiring that “[n]o more private property may be taken than

necessary to achieve the stated public use,” and others are almost verbatim from Section 1-219.1

of the Virginia Code.80 The main changes which are currently not in effect are the provisions

regarding lost profits, lost access, and the condemner’s burden of proving that the intended use is

a “public use.”

b. Limited compensation for “lost profits” will be allowed only when property is taken, and damages for “lost access” will be permitted if the loss of access is a “material impairment of direct access to property.”

The Proposed Amendment delegates the responsibility of defining the terms “lost profits”

and “lost access” to the General Assembly. Seizing this opportunity, and before the Proposed

Amendment was even been ratified by Virginian voters, the General Assembly passed House

Bill No. 1035, which defines “loss access” and “lost profits” as:

78 S.J. Res. 836, Reg. Sess. (Va. 2012).79 Recognition of the right to private property as “fundamental” is important because governmental actions that infringe on fundamental rights are strictly scrutinized. The Virginia Supreme Court initially held that actions that infringed on property rights were subject to strict scrutiny.

There is no better settled rule of law than this, that statutes which encroach on the personal or property rights of the individual are to be strictly construed; and this is especially the case where it is claimed that the statute delegates to a corporation, whether municipal or private, the right of eminent domain,-one of the highest powers of sovereignty pertaining to the state itself, and interfering seriously, and oftentimes vexatiously, with the ordinary rights of property. 

City of Charlottesville v. Maury, 96 Va. 383, 31 S.E. 520, 521 (1898) (emphasis added). However, in 1990 the Court held that injuries to real property do not implicate a fundamental right. Hess v. Snyder Hunt Corp., 240 Va. 49, 53, 392 S.E.2d 817, 820 (1990).

80 See Va. Code § 1-219.1.

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"Lost access" means a material impairment of direct access to property, a portion of which has been taken or damaged as set out in subsection B of § 25.1-230.1. This definition of the term "lost access" shall not create any new right or remedy or diminish any existing right or remedy other than to allow the body determining just compensation to consider a change in access in awarding just compensation.

"Lost profits" means a loss of business profits, subject to adjustment using generally accepted accounting principles consistently applied, from a business or farm operation for a period not to exceed three years from the date of valuation that is suffered as a result of a taking of the property on which the business or farm operation is located, provided (i) the business is owned by the owner of the property taken, or by a tenant whose leasehold interest grants the tenant exclusive possession of substantially all the property taken, or (ii) the farm operation is operated by the owner of the property taken, or by a tenant using for a farm operation the property taken, to the extent that the loss is determined and proven pursuant to subsection C of § 25.1-230.1. This definition of the term "lost profits" shall not create any new right or remedy or diminish any existing right or remedy other than to allow the body determining just compensation to consider lost profits in awarding just compensation if a person asserts a right to lost profits as an element of damage in a claim for compensation.

Before addressing what effect these definitions will have on the law of eminent domain, there is

an initial question as whether these definitions will be upheld following the inevitable challenge

to their constitutionality.

As discussed infra, the Virginia Supreme Court has held that the constitutional provisions

forbidding damage to private property without just compensation are self-executing.81 This was

true even though the Amendment of 1928 expressly gave the General Assembly the power to

define “public uses.” When a constitution provision is self-executing “all statutes existing when

such a Constitution is adopted, or which might thereafter be passed, inconsistent with its

provisions, are nullified by such constitutional prohibition, though legislation may nevertheless

be desirable and valuable for the purpose of defining the right and aiding in its enforcement.”82

Thus, the legislature was without the power to define “public uses.”

81 Swift & Co. v. City of Newport News, 105 Va. 108, 52 S.E. 821, 824 (1906).82 Id.

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There is immense wisdom in this holding because the “purpose of the constitution is to

shape and fix the limits of governmental activity.”83 Such limits would be illusory if the

legislature was free to define their boundaries. For instance, the First Amendment prohibition

against laws abridging the freedom of speech would be effectively abrogated if Congress was

free to narrowly define “speech” as “all communication that is not public.” Despite this

principle, the Supreme Court of Virginia has held that all actions taken by the General Assembly

are presumed to be constitutional. Thus, even though the General Assembly did not have the

power to define “public use,” the Supreme Court almost always upheld the legislature’s

definition of “public use.”84 If this precedent holds, it is likely the definitions in House Bill No.

1035 (“H.B. 1035”) will be upheld. If these definitions are upheld, property owners receive little

more compensation than what was already provided under the Constitution of 1902.

H.B. 1035 defines “lost access” as a material impairment of direct access to property,

which has been taken or damaged .”85 Accordingly, compensation for a loss of access will be

available even if property is not taken. Intuitively, the term “material impairment” seems to

create some middle ground between a mere loss or reduction of access rights (which are not

compensable), and a total termination of direct access (which is compensable). However, it

appears that Virginia jurisprudence already follows the “material impairment” requirement.

The term “material impairment” first appeared in the context of damages for lost access

in the Illinois case of Dep't of Pub. Works & Bldgs. v. Wilson & Co., Inc. (1975).86 Although not

binding on the Virginia Supreme Court, Wilson & Co. was previously cited by the Virginia

83 Dean v. Paolicelli, 194 Va. 219, 226, 72 S.E.2d 506 (1952).84 The General Assembly will no longer have the benefit of this presumption under the Proposed Amendment. See S.J. Res. 836, Reg. Sess. (Va. 2012) (stating that “the condemnor bears the burden of proving that the use is public, without a presumption that it is”). 85 Va. H.B. 1035 (2012). 86 Dep't of Pub. Works & Bldgs. v. Wilson & Co., Inc., 62 Ill. 2d 131; 340 N.E.2d 12 (1975).

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Supreme Court in Linsly,87 and therefore may remain persuasive. In Wilson & Co., the Illinois

Supreme Court held that “[w]hen [the right of access] is taken or materially impaired by action

of the State the property owner is entitled to compensation.”88 This rule has been followed by a

number of other states.89 The Illinois Court held that a “material impairment” exists if direct

access to a public street is completely eliminated, but it is more instructive to examine where the

Court held that a “material impairment” did not exist.90 The Illinois Supreme Court held that a

“material impairment” does not exist where the flow of traffic along the public road is affected

by (1) “the installation of [a] median as a traffic control device,” (2) regulations limiting the

direction of traffic, or (3) the diversion of traffic to another road.91 This holding substantially

parallels the law as it currently exists in Virginia.92

If the Illinois interpretation of “material impairment” is adopted by the Virginia Supreme

Court, arguably the law in Virginia regarding compensation for a loss of access will not change.

However, this would seem to be contrary to rule that:

[A] change in the organic law of the state [i]s not meaningless. But it would be meaningless if it should be adjudged that the Constitution . . . gave no additional or greater security to private property sought to be appropriated to public use than was guarantied [sic] by the former Constitution.”93

Given that the Illinois definition of “material impairment” already exists in Virginia’s definition

of “damages,” arguably the Proposed Amendment is intended to create rights not already in

existence. Therefore, condemnation authorities and property owners should expect a somewhat

87 State Highway & Transp. Comm'r v. Linsly, 223 Va. at 444.88 Dep't of Pub. Works & Bldgs. v. Wilson & Co., Inc., 62 Ill. 2d at 140-41. 89 See, e.g., State ex rel. Morrison v. Thelberg, 87 Ariz. 318, 324, 350 P.2d 988 (1960); Burris v. Metro. Transit Auth. of Harris County, 266 S.W.3d 16, 22 (Tex. App. 2008).90 See Dep't of Pub. Works & Bldgs. v. Wilson & Co., Inc., 62 Ill. 2d at 143-44 (distinguishing prior cases where direct access was not eliminated). 91 Id. at 14092 See supra p. 11-14.93 Swift & Co., 52 S.E. 821 at 825 (citing with approval City of Chicago v. Taylor, 125 U.S. 161, 168, 8 S. Ct. 820, 824, 31 L. Ed. 638 (1888)).

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broader interpretation of “material impairment” than what was recognized in Illinois. Just how

broad is a question that will be answered by the courts.

The constitutional mandate for an award of “lost profits” is both a first in Virginia

jurisprudence and is contrary to the prevailing rule in the United States. Therefore, Virginian

property owners will receive compensation beyond what was required under the Constitution of

1902. However, the situations where “lost profits” will be awarded to property owners, and the

extent of the profits to be awarded under House Bill No. 1035, leave much to be desired.

Unlike “lost access,” lost profits will only be awarded when property is taken, and not

when property is damaged. This is made abundantly clear by the Bill’s languge:

Lost profits" means a loss of business . . . that is suffered as a result of a taking of the property on which the business or farm operation is located, provided (i) the business is owned by the owner of the property taken, or by a tenant whose leasehold interest grants the tenant exclusive possession of substantially all the property taken, or (ii) the farm operation is operated by the owner of the property taken, or by a tenant using for a farm operation the property taken. . . .94

This approach ignores that in cases involving a loss of access, often the most immediate and

lasting damage to a business is a loss of profits. For example, in Linsly, the property owner’s

direct access to the highway was completely destroyed.95 In lieu of direct access, the State

Highway Commissioner constructed a service road that provided indirect access to the

property.96 Had a business been located on this property, especially one such as a restaurant that

depended on passing traffic to generate revenue, the losses would have been both immediate and

enduring.

94 Va. H.B. 1035 (2012) (emphasis added).95 Linsly, 223 Va. 437 at 439.96 Id.

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Besides amounting to questionable policy decision by the General Assembly, there is a

strong argument that awarding lost profits when property is taken, but not when property is

damaged, is unconstitutional. The Proposed Amendment states:

No private property shall be damaged or taken for public use without just compensation to the owner thereof.97

As discussed supra, there is a line of Virginia cases holding that, albeit in limited circumstances,

one type of “damage” is a loss of access. Accordingly, since lost access constitutes “damage” to

property, the property owner must receive “just compensation,” including “lost profits.” If this

precedent is followed, then not granting lost profits where property has been damaged by

impairing access is unconstitutional.

House Bill No. 1035 will also likely be challenged on the amount of lost profits that may

be claimed as just compensation. Under House Bill No. 1035, a maximum of three years of lost

profits will be awarded.98 Under current precedent, the Virginia Supreme Court has held that lost

profits are "too speculative and too uncertain" to be awarded.99 While it must be conceded that

lost profits are estimates, this alone should not prevent an award of damages for lost profits.

Lost profits are routinely awarded in other cases, such as those involving claims for patent

infringement, copyright infringement and breach of contract.100 In these cases, detailed economic

formulas are used to determine the amount of lost profits.101 The Virginia Supreme Court will

have to decide whether a similar type of economic analysis is required by the Proposed

Amendment, or whether the General Assembly's limitation of awarding three years of lost profits

passes muster.

97 Va. S.J. Res. 3 (2012).98 Va. H.B. 1035 (2012) (emphasis added).99 Fornticello Mineral Springs Co., 147 Va. at 368.100 See Robert R. Jones & Associates, v. Nino Homes, 858 F.2d 274, 277 100 A.L.R. Fed. 241, (C.A. 6 1988).101 Epstein, Roy. J., THE MARKET SHARE RULE WITH PRICE EROSION: PATENT INFRINGEMENT LOST PROFITS DAMAGES AFTER CRYSTAL, 31 AIPLA Q. J. 1 (2003), available at http://royepstein.com/Epstein_AIPLA_Winter2003.pdf.

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II. Arguments Against the Proposed Constitutional Amendment

Despite the relatively limited impact the Proposed Amendment will have the law of

eminent domain in Virginia, a strong and vocal minority group has opposed the Proposed

Amendment. This group is led by the Virginia Municipal League, a nonpartisan organization

with 57 staff that is comprised of all 39 cites, 156 towns, and 10 counties in the State of

Virginia,102 and the Virginia Association of Counties, a lobbyist firm whose purpose is to

“represent, promote and protect the interests of” Virginia counties in “state and national levels in

legislative and regulatory processes.”103 By its own admission, the Virginia Association of

Counties “opposes legislation that will limit the use and increase the expense of eminent

domain.”104 Both groups lobbied heavily against the 2007 post-Kelo reforms. The arguments

against raised by these organizations and their supporters largely exaggerate the effect the

Proposed Amendment will have. These arguments are identified and discussed in seriatim.

a. The Proposed Constitutional Amendment should be rejected because its effect on taxpayers has not been adequately assessed by the Virginia General Assembly.

One writer has criticized the proposed constitutional amendment because it was “rubber-

stamped” and “slipped through the backdoor of the state Capitol without proper vetting to assess

its potential impact on road construction or water line extensions.”105 The position adopted by

the writer is untenable. Article XII of the Virginia Constitution of 1971 provides two methods

for amending the Virginia Constitution (hereinafter “Virginia Constitution”). Under either

method, the task of amending the Virginia Constitution is onerous, time-consuming, expensive,

102 VIRGINIA MUNICIPAL LEAGUE, About the League, http://www.vml.org/About%20the%20league.html (last visited Apr. 7, 2012).103 VIRGINIA ASSOCIATION OF COUNTIES, Mission Statement, http://www.vaco.org/What.html (last visited Apr. 7, 2012).104 VIRGINIA MUNICIPAL LEAGUE, 2012 Legislative Priorities, available at http://www.vaco.org/LegislativeNews/LegPriorities12.pdf.105 A costly overreach on condemnation, ROANOKE TIMES (Jan. 13, 2012), http://www.roanoke.com/editorials/wb/303447.

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and difficult. As noted by the Virginia Supreme Court, this time consuming and cumbersome

process ensures that any proposed constitutional amendment has been “put to [voters] for final

action only after careful analysis, elimination of errors of form and substance, and approval,

without change, by the requisite number of members of each house in two General

Assemblies.”106

Section 2 of Article XII of the Virginia Constitution allows the Virginia General

Assembly to call a constitutional convention upon a vote of two-thirds of the members of both

the senate and house.107 Delegates are then elected in a manner proscribed by the General

Assembly,108 and the scope of the delegates’ authority may be limited to addressing only specific

topics (e.g., suffrage or taxation).109 Within 90 days after the convention is adjourned, any

proposals must be published to voters110 in the manner prescribed by Section 30-19.9 of the

Virginia Code. The publication requirements are quite extensive, and require printed copies of

an “explanation”111 for each amendment to be: (1) “distributed to the general registrar of each

county and city, not less than ninety days prior to the election,” (2) posted online, and (3)

“published by paid advertisement in each daily newspaper with an average daily circulation of

more than 50,000 in Virginia.” The amendment or proposal is effective upon a majority vote of

the people.112 The cost for the entire process can range from $7.5 million to $49 million.113

106 Coleman v. Pross, 219 Va. 143, 158, 246 S.E.2d 613, 622 (1978).107 VA. CONST. of 1971 Art, XII, § 2.108 Id.109 See Staples v. Gilmer, 183 Va. 613; 33 S.E.2d 49 (1945).110 VA. CONST. of 1971 Art, XII, § 2.111 Va. Code § 30-19.9.112 Id.113 See PAN, G. PETER et. al., COST ESTIMATES FOR A CONSTITUTIONAL CONVENTION, Hawaii Legislative Reference Bureau, p. 98 (2008), available at http://hawaii.gov/lrb/rpts08/costcon.pdf (estimating the cost of a constitutional convention in Hawaii); see also Lehman, G. Joseph, Constitutional Convention Won’t Fix Michigan’s Problems, HTTP://WWW.MACKINAC.ORG/12509 (Apr. 13, 2010) (stating that cost of a constitutional convention in Michigan was estimated to be $45 million).

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In lieu of a costly constitutional convention, Section 1 of Article XII of the Virginia

Constitution allows the General Assembly to propose specific constitutional amendments for

ratification by voters. Although the cost of placing a referendum on the ballot is only

approximately $320,000,114 the process of amending a specific portion of the Constitution in

Virginia is among the longest and most difficult in the country. Indeed, the Supreme Court of

Virginia has described the process as “a deliberately lengthy, precise, and balanced

procedure.”115 This process begins when a joint resolution to amend the Virginia Constitution is

introduced in either the Senate or House of Delegates.116 The Virginia Constitution requires that

“the same” resolution must be agreed on by a majority of both the House of Delegates and

Senate.117 The Virginia Supreme Court has held that “[t]here must be approval of the same

precise proposal.”118 No so much as a comma or period may be changed by either legislative

body.

Following this first step, the amendment is tabled until after the next general election of

members of the House of Delegates.119 A general election for the House of Delegates is held

every two years.120 Accordingly, it can take up to two years for any further action to be taken on

any proposed constitution amendment. Following the general election, a majority of the

members of both the Senate and House must again approve “the same” proposed constitutional

amendment.121

Under the unambiguous language of Article XII, Section 1, if any constitutional amendments are proposed in one house, “the same” must be agreed to by a

114 2012 Fiscal Impact Statement, Department of Planning and Budget at 1, (Feb. 27, 2012), available at http://leg1.state.va.us/cgi-bin/legp504.exe?121+oth+HB5FER122+PDF.115 Coleman v. Pross, 219 Va. 143, 153; 246 S.E.2d 613, 619 (1978).116 See VA. CONST. of 1971 Art, XII, Section 1; Va. Code Ann. § 30-19.117 Id. 118 Pross, 219 Va. at 154.119 VA. CONST. of 1971 Art, XII, Section 1; Va. Code Ann. § 30-19.120 VA. CONST. of 1971 Art, IV, Section 3.121 VA. CONST. of 1971 Art, XII, Section 1; Va. Code Ann. § 30-19.

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majority of the members elected to each house, referred to the next regular session after the intervening general election of House of Delegates members, agreed to by a majority of the members elected to each house, and submitted to the qualified voters.122

Even if the proposed constitutional amendment is again approved by the members elected

to each house, this does not mean the proposed constitutional amendment will enacted. Rather,

this process only ensures that the amendment will be placed on the ballot for ratification by

Virginian voters.123 Given the time that must elapse between the first and second vote on the

proposed amendment; that new delegates may have been elected to replace delegates who

previously voted in favor of the proposed constitutional amendment; and that the proposed

amendment must nevertheless still be approved by a majority of the electorate, the process of

amending the Virginia Constitution is extremely difficult.

As cumbersome as these procedures are, “strict compliance with these mandatory

provisions” ensures “that all proposed constitutional amendments shall receive the deliberate

consideration and careful scrutiny that they deserve.”124 Accordingly, the Proposed

Constitutional Amendment was anything but “rubber-stamped” by the Virginia legislature.

b. The statutory definition of “public use” will be rendered void and left for courts to determine and create uncertainty.125

Section 11 of Article I of the Virginia Constitution of 1971 provides that “the term

‘public uses’ is to [be] defined by the General Assembly.” For decades the General Assembly

broadly defined “public uses” to “embrace all uses which are necessary for public purposes.”126

Section 11 was also invoked when the legislature delegated a political subdivision, such as a city

122 Pross, 219 Va. at 154.123 See VA. CONST. of 1971 Art, XII, Section 1; Va. Code Ann. § 30-19.124 Pross, 219 Va. 143, 154, 246 S.E.2d 613, 620 (1978) (emphasis added).125 Rives, Sterling E., Eminent domain amendment needs more work, http://www2.timesdispatch.com/news/commentary/2012/jan/08/tdcomm04-eminent-domain-amendment-needs-more-work-ar-1593396/ (Jan. 8, 2012).126 Va. Code § 15-702 (repealed); Va. Code § 15.1-276 (repealed); Va. Code § 15.2-1900 (repealed).

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or housing authority, the power of eminent domain to acquire property for a specific “public

use.” In other words, Section 11 was used by the General Assembly to invoke, rather than

restrict, the power of eminent domain.

For example, the General Assembly amended the charter of the city of Richmond,

Virginia “to authorize and permit the city to acquire and maintain property for public uses” by

granting the city council the power “[t]o acquire places for the parking or shortage of vehicles by

the public.” The Virginia Supreme Court described this act “an express declaration by the

General Assembly that the contemplated use is a public one.”127 A more direct example is found

in Section 36-2 of Virginia Code, whereby the General Assembly declared:

the sale or lease of land and the acquisition, construction, rehabilitation, and operation of residential housing units for persons of low and moderate incomes are necessary for the public welfare and are public uses and public purposes for which public money may be spent and private property [may be] acquired by purchase or through the exercise of the power of eminent domain.128

These piecemeal declarations of “public use” continued until 2007 when the General Assembly

repealed its earlier all-encompassing definition of “public uses” and enacted Section 1-219.1 of

the Virginia Code, which states:

The term “public uses” mentioned in Article I, Section 11 of the Constitution of Virginia is hereby defined as to embrace only the acquisition of property where: (i) the property is taken for the possession, ownership, occupation, and enjoyment of property by the public or a public corporation; (ii) the property is taken for construction, maintenance, or operation of public facilities by public corporations or by private entities provided that there is a written agreement with a public corporation providing for use of the facility by the public; (iii) the property is taken for the creation or functioning of any public service corporation, public service company, or railroad; (iv) the property is taken for the provision of any authorized utility service by a government utility corporation; (v) the property is taken for the elimination of blight provided that the property itself is a blighted property; or (vi) the property taken is in a redevelopment or conservation area and

127 City of Richmond v. Dervishian, 190 Va. 398, 405, 57 S.E.2d 120, 123 (1950).128 Va. Code Ann. § 36-2 (emphasis added).

26

is abandoned or the acquisition is needed to clear title where one of the owners agrees to such acquisition or the acquisition is by agreement of all the owners.129

Sterling E. Rives, III, county attorney and legislative liaison for Hanover County, Virginia,

argues that the proposed constitutional amendment should be rejected because it will “render[]

void” this definition of “public use,” and therefore create an air of uncertainty for both property

owners and condemnation authorities.

Under the Constitution of Virginia, private property may be taken only for "public uses," and the General Assembly is authorized to define "public uses." Inexplicably, the proposed constitutional amendment eliminates the authority of the General Assembly to define what constitutes a public use.

Consequently, the carefully drafted definitions of "public use" and "public facilities" — and the limitations on these terms set forth in the 2007 legislation — will be rendered void. The constitutional amendment itself contains no definition of "public use." Therefore, the definition of the concept of "public use" will be up to the courts, while property owners and government entities will be left in a state of uncertainty until a body of case law interpreting "public use" has developed.130

This same argument was made during the Constitutional Convention of 1902, and it is no more

true today than it was a century ago. In opposing the Amendment of 1902, Delegate William G.

Robertson, an attorney who represented cities in condemnation proceedings, stated:

[W]hy do I ask that the Legislature deal with it instead of the Constitution. I have attempted to give some reasons. This constitutional provision is too broad; we cannot tell how it will work, and it cannot be repealed. . . . I respectfully submit that we ought not to put into our Constitution something about which there is such grave doubt as to what our courts will do.131

Similarly, Mr. Rives’ also argues that the Proposed Constitutional Amendment should be

opposed, in part, because it will create “uncertainty” until interpreted case law develops a new

definition of “public uses.” However, for two reasons, the Proposed Constitutional Amendment

129 Va. Code Ann. § 1-219.1.130 Rives, supra n. 122.131 Debates of 1902, supra n. 21 at 695 (emphasis added). It must be noted that anecdotal evidence suggests that any uncertainty resulting from ratification of the Amendment of 1902, if any, did not substantially impede condemnation authorities because courts subsequently narrowly defined the word “damages.” See Note, Eminent Domain in Virginia--Compensation for Damages and Nonphysical Takings, 43 Va. L. Rev. 597 (1957).

27

will have little effect on the current definition of “public uses,” and thus no uncertainty will

result.

The first reason that the definition of “public uses” will not change is because the General

Assembly has never had the authority to define “public uses” in the first place. Contrary to all

the explicit language of Section 11 and the Legislature’s attempts at defining “public uses,” the

Virginia Supreme Court has repeatedly held that the legislature has no such power. “A

constitutional provision should never be construed as dependent for its efficacy and operation

upon legislative will.”132 Support for this position is also found in the general principle that

“[t]he Legislature cannot conclude the constitutionality of its own enactments.”133 That said, all

actions taken by the legislature are given deference. Accordingly, the Virginia Supreme Court

has held that while only the judiciary has the ultimate authority to determine what constitutes a

“public use,” the General Assembly’s declaration that a use is a “public use” is presumed to be

correct:

Section 58 of the Constitution of Virginia provides that the General Assembly shall not enact any law whereby private property shall be taken or damaged for public uses without just compensation, ‘the term ‘public uses' to be defined by the General Assembly.’ However, a declaration by the General Assembly (which we do not have here) that a contemplated use is a public one, is not conclusive and is subject to judicial review, but it is presumed to be right.134

Therefore, since judiciary has always been responsible for defining “public uses,” the hundred-

plus years of case law defining “public uses” will remain to guide both condemnation authorities

and property owners alike.

Moreover, the legislature’s definition of “public uses” in Section 1-219.1 of the Virginia

Code will only be held unconstitutional if it is clearly inconsistent with the Proposed

132 Swift & Co., 52 S.E. 821 at 824.133 City of Richmond v. Carneal, 129 Va. 388, 106 S.E. 403, 405 (1921).134 Rudee Inlet Auth. v. Bastian, 206 Va. 906, 909; 147 S.E.2d 131, 134 (1966); accord Mumpower v. Hous. Auth. of City of Bristol, 176 Va. 426, 448, 11 S.E.2d 732, 740 (1940).

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Constitutional Amendment. It is a familiar principle of the law that “courts will declare an

enactment unconstitutional only when it clearly is repugnant to some provision of either the state

or federal constitution.”135 Most of the provisions in Section 1-219.1 of the Virginia Code are

not inconsistent with, let alone “repugnant to,” the Proposed Constitutional Amendment. In

defining “public uses,” the Proposed Constitutional Amendment states:

A public service company, public service corporation, or railroad exercises the power of eminent domain for public use when such exercise is for the authorized provision of utility, common carrier, or railroad services. In all other cases, a taking or damaging of private property is not for public use if the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development, except for the elimination of a public nuisance existing on the property.136

The Virginia Code already contains a substantially similar provision:

Except where property is taken (i) for the creation or functioning of a public service corporation, public service company, or railroad; or (ii) for the provision of any authorized utility service by a government utility corporation, property can only be taken where: (a) the public interest dominates the private gain and (b) the primary purpose is not private financial gain, private benefit, an increase in tax base or tax revenues, or an increase in employment.137

In summary, existing case law will to a large degree continue to define “public uses,” many of

the reforms enacted by the General Assembly will be preserved.

c. A constitutional amendment is unnecessary following the post- Kelo v. New London legislation enacted in 2007 .138

Mr. Rives also argues that the Proposed Amendment is unnecessary in light of the post-

Kelo reforms enacted by the General Assembly in 2007. “Since 2007, not a single bill has been

proposed by legislators to weaken these additional protections for property rights. Consequently,

Virginians should be skeptical of claims by special-interest groups that this amendment is needed

135 F.E. v. G.F.M., 35 Va. App. 648, 661-62, 547 S.E.2d 531, 538 (2001) (emphasis added).136 Va. S.J. Res. 3 (2012).137 Va. Code § 1-219.1(D).138 Rives, supra n. 122.

29

to guarantee those property rights established in the 2007 legislation.”139 As with other

arguments raised against the Proposed Constitutional Amendment, this same argument was made

during the Constitutional Convention of 1902:

If there is any evil growing out of the fact that people have been damaged and arebeing damaged by such works, we submit that that evil can be cured by a proper legislative enactment, and we further submit that that is the best way to cure that evil.140

These arguments miss the point. The Proposed Amendment is designed protect residents

over the next hundred years, not the preceding five. As stated by the Virginia Supreme Court,

the purpose of the constitution is to protect the rights described therein from interference by the

General Assembly.

Th[is] is a constitutional right, not to be intermeddled with by the ordinary legislature. If they can interfere at all, they may perpetually change and alter it, so as to suit party purposes and views. . . . The constitution of every state in the union defines the right, . . . as does, also, that of the United States, leaving nothing to the discretion of such a capricious and mutable tribunal as an annual legislature.141

As stated by Virginia Attorney General McKenna, “a law . . . can be chipped away by future

sessions of the General Assembly,” but the Proposed Amendment will ensure the post-Kelo

reforms are “enshrined in Virginia's constitution to protect it from the whims of politicians who

favor dollar signs over individual rights.”142

d. The Proposed Amendment will be too costly to enact.

A final argument made by opponents to the Proposed Amendment is that the Proposed

Amendment will be too costly, both in terms of increasing the cost of acquiring land by

139 Rives, supra n. 122.140 DEBATES OF 1902, supra n. 21 at 688.141 Custis v. Lane, 17 Va. 579, 581 (1813).142 Cuccinelli, Kenneth T., Attorney General Cuccinelli talks eminent domain abuses, property rights at NAACP event, (Oct. 29, 2011), available at http://www.oag.state.va.us/Media%20and%20News%20Releases/News_Releases/Cuccinelli/102911_Eminent_Domain.html.

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condemnation and in lost economic development.143 Similar arguments were also made at the

Virginia Constitutional Convention of 1902. In arguing against the Amendment of 1902, it was

said that:

You might get together a syndicate of the richest men in this country, men who controlled the entire wealth of this country and who would see the advantages of building a road in Virginia, and yet they would say, "we cannot afford to go into a state which will put us in such jeopardy." Ah, but the gentlemen say that in these other states there has been no such hindrance. . . .[H]ere in our Constitution it is proposed to put in something which, in my humble judgment, will have a tendency to prevent capital from coming into this State.…I believe that as soon as this provision goes into the Constitution every city in this Commonwealth and every railroad company will be assailed with suits in our Courts.

Obviously, economic growth in Virginia did not cease following ratification of the Amendment

of 1902, and for two main reasons, there is little reason to fear growth will stagnate following the

ratification of the Proposed Amendment.

First, the Proposed Amendment will have a de minimis impact on the State’s finances.

Virginia’s 2013 Budget totals over $41 billion.144 However, the Virginia Department of

Planning and Budget estimated that the Proposed Amendment would cost the Virginia

Department of Transportation only $36 million annually – less than one-tenth of one-percent of

the State’s entire budget.145

Second, the Proposed Amendment will not affect the business climate in Virginia. As

noted supra, the only real change that will result from the Proposed Amendment is the inclusion

of lost profits in calculating just compensation. Almost all of the other provisions have existed

in current law since 2007. These reforms have had no impact on the business environment in

143 See Rives, supra n. 122. 144 Virginia Dep't. of Planning & Budget, 2012 Executive Budget Document, (Dec. 19, 2011) available at http://dpb.virginia.gov/budget/buddoc12/index.cfm.145 Id.

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Virginia. The state was ranked first by annual survey CNBC’s of the Top States for Business in

2007, 2009, and 2011, and was ranked second in 2008 and 2010.146 Since little will change

following ratification of the Proposed Amendment, fears of economic stagnation should be met

with skepticism.

Despite Virginia’s favorable economic environment even after the 2007 reforms, Mr.

Rives provides a single example of where he believes economic development would be impeded

by the Proposed Amendment.

The proposed amendment . . . does specify one example of what is not a "public use" and what is therefore prohibited. It reads, "a taking or damaging of private property is not for public use if the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development, except for the elimination of a public nuisance existing on the property. . . . Therefore, if an economic development prospect should want to locate a new business in a Virginia locality, the locality could not guarantee the extension of utilities or improvement of roads to accommodate the business. . . . Last year, Rolls-Royce opened a much-heralded facility in Prince George County, providing jobs, tax revenue and a boost to research and development in the commonwealth. However, the location of this plant depended on the county's commitment to improve public road access to the site. The use of condemnation to acquire the additional right of way was required. This amendment would have precluded this deal.

This argument ignores that the Proposed Amendment specifically grants public service

corporations the power of eminent domain to provide utility services and construct highways.

As the plain language of the Proposed Amendment states, it is only where a condemnation

authority is not providing “utility, common carrier, or railroad services” that the restriction

against private benefits applies:

A public service company, public service corporation, or railroad exercises the power of eminent domain for public use when such exercise is for the authorized provision of utility, common carrier, or railroad services. In all

146 Cohn, Scott, CNBC, Virginia is Victorious — Again — In CNBC's Top States For Business , (Jun. 28, 2011) http://www.cnbc.com/id/43381920/.

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other cases, a taking or damaging of private property is not for public use if the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development, except for the elimination of a public nuisance existing on the property.147

III. Conclusion

As a measure to ensure the basic protections to property rights granted in the post-Kelo

reforms are retained in the future, Senate Joint Resolution 3 should be applauded, but as a

measure designed to ensure that property owners receive just compensation, Senate Joint

Resolution 3, like those constitutional amendments before it, will likely fall short. It will only

limitedly expand the situations of where compensation will be awarded as a result of damages

from a loss of access. And while the damages in the form of lost profits will finally be

recognized, it remains to be seen how narrowly the Virginia Supreme Court will construe lost

profits as an element of just compensation. If history is any indication, the General Assembly's

definition that limits an award of "lost profits" to three years will likely be upheld. Therefore,

little will change following ratification of Senate Joint Resolution 3, and that is precisely why the

arguments against Senate Joint Resolution 3 should met with weighted skepticism.

147 S.J. Res. 836, Reg. Sess. (Va. 2012).

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APPENDIX

TABLE 1 – EMINENT DOMAIN PROVISIONS IN THE VIRGINIA CONSTITUTION

1776

No provision.

1830

“The Legislature shall not pass any . . . law, whereby private property shall be taken for public uses, without just compensation.”

1851

No change. “The Legislature shall not pass any . . . law, whereby private property shall be taken for public uses, without just compensation.”

1870

No change. “The Legislature shall not pass any . . . law, whereby private property shall be taken for public uses, without just compensation.”

1902

The General Assembly . . . shall not enact any law whereby private property shall be taken or damaged for public uses, without just compensation.

1928

[T]he General Assembly shall not pass any law . . . whereby private property shall be taken or damaged for public uses, without just compensation, the term “public uses” to be defined by the General Assembly.

1971

No change. [T]he General Assembly shall not pass any law . . . whereby private property shall be taken or damaged for public uses, without just compensation, the term “public uses” to be defined by the General Assembly.

2012

That the General Assembly shall pass no law whereby private property, the right to which is fundamental, shall be damaged or taken except for public use. No private property shall be damaged or taken for public use without just compensation to the owner thereof. No more

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private property may be taken than necessary to achieve the stated public use. Just compensation shall be no less than the value of the property taken, lost profits and lost access, and damages to the residue caused by the taking. The terms "lost profits" and "lost access" are to be defined by the General Assembly. A public service company, public service corporation, or railroad exercises the power of eminent domain for public use when such exercise is for the authorized provision of utility, common carrier, or railroad services. In all other cases, a taking or damaging of private property is not for public use if the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development, except for the elimination of a public nuisance existing on the property. The condemnor bears the burden of proving that the use is public, without a presumption that it is.148

TABLE 1 – EMINENT DOMAIN DEFINITIONS

2012 Virginia Senate Joint Resolution No. 3 No. 437, Virginia 2012 Regular Session 2012 Virginia House Bill No. 1035, Virginia 2012 Regular SessionPassed both the House and Senate

"Lost access" means a material impairment of direct access to property, a portion of which has been taken or damaged as set out in subsection B of § 25.1-230.1. This definition of the term "lost access" shall not create any new right or remedy or diminish any existing right or remedy other than to allow the body determining just compensation to consider a change in access in awarding just compensation.

"Lost profits" means a loss of business profits, subject to adjustment using generally accepted accounting principles consistently applied, from a business or farm operation for a period not to exceed three years from the date of valuation that is suffered as a result of a taking of the property on which the business or farm operation is located, provided (i) the business is owned by the owner of the property taken, or by a tenant whose leasehold interest grants the tenant exclusive possession of substantially all the property taken, or (ii) the farm operation is operated by the owner of the property taken, or by a tenant using for a farm operation the property taken, to the extent that the loss is determined and proven pursuant to subsection C of § 25.1-230.1. This definition of the term "lost profits" shall not create any new right or remedy or diminish any existing right or remedy other than to allow the body determining just compensation to consider lost profits in awarding just compensation if a person asserts a right to lost profits as an element of damage in a claim for compensation.

148 2012 Virginia Senate Joint Resolution No. 3, Virginia 2012 Regular Session, 2012 Virginia Senate Joint Resolution No. 3, Virginia 2012 Regular Session; 2012 Virginia House Bill No. 5, Virginia 2012 Regular Session, 2012 Virginia House Bill No. 5, Virginia 2012 Regular Session.

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