Railroading Eminent Domain

by Tom Campbell, Executive Producer and Moderator, NC SPIN, January 28, 2016.

Governor McCrory’s pronouncement that the proposed CSX rail hub in Selma is effectively dead is both good news and bad. Without question this could be a great benefit to our state but the handling of it was not good, especially regarding the use of eminent domain.

James Madison is credited with writing the Fifth Amendment to our Constitution, insisting that when private land is “taken” or condemned by eminent domain it was to be used for a public use and that landowners were to receive just compensation. Federal, state and even local governments have historically used that power for projects like roads, public works, buildings, airports and rail lines.

What is the definition of “public use?” Over the years governments have expanded eminent domain to include economic development projects, most often in blighted neighborhoods for urban renewal, but in 2005, the U.S. Supreme Court, in Kelo v. City of New London, ruled by a 5-4 vote, that eminent domain’s definition could be expanded for economic development if appreciable benefits, such as new jobs and increased tax revenues would result.

The proposed CSX intermodal facility will be the East Coast hub for trains, trucks and ships, utilizing our ports at Morehead City and Wilmington, as well as I-95 and rail lines, costing $242 million and employing up to 300 in construction and a projected 1,500 jobs in coming years. It has the potential for making North Carolina a real transportation center.

Here’s the rub. The state is to provide $100 million of the initial cost of construction in incentives and Johnston County will forego $6 to $7 million in real estate and personal property taxes for seven years, minimizing, at least for the near future, much of the public benefit.

Neither the state nor CSX employed good public relations or business sense. Only as the announcement was being made did CSX personnel begin knocking on doors of affected property owners to tell them that they must sell their property or have it taken by eminent domain, if necessary.

They could have learned from the past. In the 1970s Firestone Tire and Rubber decided to build a tire plant in Wilson next to the Norfolk Southern line. Firestone hired several different agents to secretly negotiate with landowners for the purchase of their property. Only after all the tracts were under contract did they announce their intentions. Property owners, local government and the citizens of the county were all pleased to get the new employer.

It is no wonder residents and Johnston County Commissioners were understandably upset with the manner in which this was handled, especially if the proposal had been under consideration for several years.

One of the great tasks of large economic development projects is to assemble needed acreage at reasonable costs to make them viable; secrecy is obviously important or else land prices will skyrocket and, if a small number of property owners balk, it might even be justifiable to invoke eminent domain, but only as the last resort.

We hope CSX will not give up on this east coast hub because it indeed sounds like a wonderful boon to our state. But we also hope they will step back and bring it to reality in such a way that people don’t feel like they’ve been railroaded.