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The Supreme Court of North Carolina late last week issued an important eminent-domain decision, concluding that a taking occurs when the state imposes indefinite use-restrictions on property that falls within a proposed highway corridor. The court’s opinion, Kirby v. North Carolina Department of Transportation, can be found here.

At issue in Kirby was North Carolina’s Roadway Corridor Official Map Act. According to this “Map Act,” the North Carolina Department of Transportation was authorized to record highway-corridor maps, which had the effect of imposing restrictions on property located within planned highway corridors. For example, once a highway-corridor map was recorded, the issuance of permits for buildings on affected property was prohibited. The property owners were entitled to seek administrative remedies (e.g., a variance), but in all cases, the restrictions remained indefinite, “absent affirmative action by the owner and either approval from the State or a certain lapse of time.”

Everette and Martha Kirby, and other owners of property located within certain corridor maps, filed claims for inverse condemnation, arguing that the development restrictions imposed under the Map Act amounted to a taking of their property for which they were entitled to compensation.

The decision turned on whether the state’s action was an exercise of the police power or the power of eminent domain. Generally speaking, under the police powers, a government may restrict certain uses of property to prevent injury to the public. But when the government exceeds its police-power authority, its action may result in a taking.

Here, the court stated, the Map Act’s “indefinite restraint on fundamental property rights is squarely outside the scope of the police power.” Further, a “taking effectuated by eminent domain does not require ‘an actual occupation of the land,’ but ‘need only be a substantial interference with elemental rights growing out of the ownership of the property.’ ” Therefore, “[b]y recording the corridor maps at issue here, which restricted plaintiffs’ rights to improve, develop, and subdivide their property for an indefinite period of time, NCDOT effectuated a taking of fundamental property rights.”

For those interested, the North Carolina Supreme Court’s opinion includes a brief examination of the “fundamental right to property,” citing Blackstone and Locke, among others. Also, the underlying appellate-court decision provides a thorough discussion of the difference between the police power and the power of eminent domain.

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Oliver Dunford is Of Counsel at Hahn Loeser & Parks LLP.