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