Can the Government Delegate Its Power of Eminent Domain to Private Parties?

Yes. Since the earliest days of the Republic, courts have held that the federal and state governments can lawfully delegate their power of eminent domain to private third parties like corporations and railroads. Eminent domain is the power possessed by governments to take private land for public use as long as fair and just compensation is paid for the land taken. The legal proceedings are generally called condemnation proceedings.

In one of the earliest cases, the United States Supreme Court held it lawful for the federal government to delegate its authority to condemn private land that was necessary to construct a bridge between New York and New Jersey. The court confirmed that Congress had the sovereign power to construct bridges for interstate commerce and that Congress could exercise eminent domain for that purpose. Further, the Court agreed that Congress could choose to build bridges for interstate commerce through a corporation and could delegate the power of eminent domain. See Luxton v. North River Bridge Co. 153 U.S. 525 (US Supreme Court 1894).

The Supreme Court recently revisited the issue in the case of PennEast Pipeline Co., LLC v. New Jersey, 141 S. Ct. 2244 (US Supreme Court 2021). In that case, the court once again confirmed that the federal government can delegate its power of eminent domain to private third parties. PennEast Pipeline involved a pipeline company. As the court explained, in 1938, Congress passed the Natural Gas Act to regulate the transportation and sale of natural gas in interstate commerce. To build an interstate pipeline, a natural gas company must obtain a certificate from the Federal Energy Regulatory Commission stating that such construction "is or will be required by the present or future public convenience and necessity." This is the "public use" component of the eminent domain power. In 1947, Congress amended the Natural Gas Act to allow certificate holders to exercise the federal eminent domain power as long as just compensation is paid for any land taken for the pipeline.

In PennEast Pipeline, a certificate of public convenience and necessity was obtained authorizing construction of a 116-mile pipeline from Pennsylvania to New Jersey. The court confirmed that this was a proper delegation of the eminent domain power from the federal government to a private third party.

The court went further and held that the private third party could use the delegated power of eminent domain to condemn land in which the State of New Jersey had an ownership interest. This was a novel and new question of law. The court reached this conclusion by reiterating that the States gave Congress the power of eminent domain when the States ratified the Constitution. Further, the federal government has always had the authority to condemn land owned by the States. Moreover, the federal government has always had the power to delegate its eminent domain power. As such, it was fully within the authority and power of the federal government to delegate to a third party its full eminent domain power, including the power to condemn land owned by a State or land in which a State had an interest.

Here in North Carolina, the Legislature has the same power and authority to delegate its power of eminent domain. This was held to be true as far back as 1914 when the North Carolina Supreme Court stated that the "... Legislature has the right to determine what portion of this sovereign power it will delegate to public or private corporations to be used for public benefit." Virginia & C. S. R. Co. v. Seaboard Air Line R. Co., 165 N.C. 425 (NC Supreme Court 1914).

The North Carolina General Assembly has delegated its power of eminent domain to private parties by statutory law. In North Carolina, these are called "private condemnors." N.C. Gen. Stat., § 40A-3. Examples of private condemnors in North Carolina include:

• Corporations, bodies politic or persons for the construction of railroads, power generating facilities, substations, switching stations, microwave towers, roads, alleys, access railroads, turnpikes, street railroads, plank roads, tramroads, canals, telegraphs, telephones, electric power lines, electric lights, public water supplies, public sewerage systems, flumes, bridges, and pipelines or mains originating in North Carolina for the transportation of petroleum products, coal, gas, limestone or minerals
• School committees or boards of trustees or of directors of any corporation holding title to real estate upon which any private educational institution is situated for the purpose of obtaining pure and adequate water supply
• Franchised motor vehicle carriers or union bus station companies organized by authority of the Utilities Commission for the purpose of constructing and operating union bus stations
• Railroad companies for the purposes of constructing railroads, depots, etc.

For more information, and to schedule a confidential consultation with experienced and dedicated eminent domain and condemnation attorneys in Charlotte, contact Arnold & Smith, PLLC. Use our “Contact” page or give us a call at 704-370-2828. We handle land use, zoning and condemnation legal matters in federal court, in Mecklenburg County and elsewhere in North Carolina. We have offices in Charlotte, Lake Norman, and Union County.