Is Compulsory Managed Retreat Our Future?

Nearly 100 million people live on the U.S. coasts. In the coming years, sea-level rise will cause enormous destruction to our nation’s coasts and put millions of coastal residents at risk of displacement. Extreme storms are also becoming more frequent: earlier this fall, Tropical Storm Nicholas brought dangerous storm surge threats and cut off power to parts of the Texas Gulf Coast last. And over the summer, Hurricane Ida flooded basement apartments and turned parkways into canals in New York City and along the East Coast. Storms are only due to get worse as climate change progresses.

Municipalities are responding in varying ways to these climate change risks, including building sea walls and elevating homes in flood and storm-prone areas. At some point, though, reinforcing existing housing in flood-prone communities is not enough, and may actually increase long-term ecological risk. Policymakers are now turning to a strategy called managed retreat—the purposeful and planned relocation of people, property, and infrastructure away from vulnerable areas, such as coastlines and flood-prone regions—as a viable response to this rising crisis.

Managed retreat is not a new concept: governments have been quietly offering residents buyouts to move away from flood-prone areas for decades. A key feature, however, is that these relocations have been voluntary.

But in 2015, the U.S. Army Corps of Engineers (USACE) quietly clarified its flood mitigation policy, conditioning flood mitigation funding on municipalities’ agreement to use eminent domain to relocate households if necessary, in what may be the first compulsory managed retreat policy in the United States. While the federal government has a long history of using eminent domain—defined as the government’s authority to take private property, with compensation, for public use—it has traditionally used its eminent domain powers to make room for highways and other public infrastructure. The use of eminent domain to combat climate change by compelling homeowners to move out of harm’s way is a new and controversial application of this government power.

This brief examines the use, legality, and risks and benefits of the government using its eminent domain powers to force managed retreat.

Managed retreat has traditionally been a wholly voluntary process. In the wake of a disaster, local governments apply to the Federal Emergency Management Agency (FEMA) or the Department of Housing and Urban Development (HUD) for funds to implement buy-out programs. The federal government usually provides three quarters of the funding, and state and local governments administer the programs and fund the balance. Once local governments receive buyout funds, they offer homeowners with damaged properties the pre-disaster value of their home to move away instead of rebuilding.

The Army Corps also works to reduce overall flood risk utilizing a variety of approaches, including building structures such as levees or floodwalls, or by funding a variety of “nonstructural” flood risk management projects, such as elevating or flood-proofing homes and buildings, or relocating them to less flood-prone areas. However, in 2015, the USACE issued a Planning Bulletin clarifying its policy for participating in nonstructural flood risk management and coastal storm damage reduction projects. The Bulletin states (emphasis added):

“In order to have a complete plan, the ability to use eminent domain must be retained and a condition of an implementable project. A 100-percent voluntary participation plan for acquisition, relocation, permanent evacuation is not considered a complete plan and is not acceptable for USACE participation. All future acquisition, relocation, and permanent evacuation recommendations for USACE participation must include the option to use eminent domain, where warranted.”

In defending its policy, Corps officials have said that eminent domain is necessary in order to guarantee that the buyouts, which Congress has funded, will actually occur. In a 2016 webinar discussing this Bulletin, a Corps official reiterated:

“We are no longer going to do voluntary, 100 percent voluntary buyouts of any kind … USACE’s participation is going to require that the sponsor at least retain eminent domain for implementation of buyouts. And why are we doing that? Well, for one thing it’s helping us ensure completeness of our recommendation. If you say you have a buyout plan for 100 structures but you only have a participation rate of 40 percent, do we really have the plan, a complete plan that we’ve told Congress that we were going to implement?”

Essentially, this USACE policy gives the municipalities applying for USACE flood mitigation funding a stark choice: Agree to use eminent domain to force people from their flood-prone homes if necessary, or forfeit federal money needed to combat climate change. Curiously, this contrasts with FEMA’s approach, which currently only allows for voluntary purchases of storm-damaged homes. What is also different about this policy, compared to other flood mitigation projects funded by USACE in the past, is that the land from which homeowners are to be moved away from is intended to be left empty. Very little has been written about USACE’s policy, and USACE did not respond to multiple requests for information.

So far, a handful of communities appear willing to accept the Army Corps’ terms, including Nashville, where residents selected for a buyout program received letters from the City stating that eminent domain would be used, if necessary. Local officials from Brookhaven, New York and the Tourism Development Council in Okaloosa County, Florida have also indicated willingness to use eminent domain as needed. That said, it remains to be seen whether, and how, these municipalities will actually remove people from their homes, in the event that residents refuse to move voluntarily.

But by and large, communities have resisted the use of eminent domain. Flood-prone Charleston, South Carolina, has ruled out compulsory buyouts. In New Jersey, the state has instead leveraged a voluntary buyout program to acquire and tear down 700 flood-prone homes. And in the Florida Keys, Monroe County embarked on a three-year multi-million dollar study in partnership with the Army Corps in 2018 to develop a storm mitigation plan, in which an initial draft of the plan included mandatory buyouts of vulnerable homes. After Monroe County stated it would not move forward with the plan if the Corps insisted on mandatory buyouts, the eminent domain features were ultimately removed from the final recommended plan, which is now awaiting congressional approval.

The drawback of relying on a voluntary managed retreat process is that such a process leaves many people at risk, particularly the poorest and most vulnerable, while also keeping localities responsible for providing increasingly expensive services to those that remain. As a Corps official noted in the webinar transcript discussing the USACE Bulletin:

“What do you do if you have a voluntary buyout and there is a cul-de-sac and four of the five owners are voluntarily bought, they'll sell to you, but the fifth one is just going to be a holdout? Do you allow him or her to sit there and to continue to get damaged? Do you still require the local services of the road and utilities to be going to that person?”

As communities grapple with the need to move away from flood-prone regions, they face the dilemma of either mandating that residents relocate, or losing out on much-needed federal funds.

The federal government’s eminent domain power is derived from the Fifth Amendment, which stipulates that “nor shall private property be taken for public use, without just compensation.” This power is applicable to state governments through the Fourteenth Amendment. Three key elements are at play: (1) whether there is a “taking” of property; (2) whether the property is being taken for a “public use”; and if so, whether the government has provided (3) “just compensation.”

Taking:

When exactly has the government “taken” someone’s private property? This typically involves either an actual physical possession of the land, or where a regulation deprives a homeowner of all economically beneficial use of their property. Here, a government “taking” should be easily established if the homeowners in a given neighborhood or community are forced to leave their homes and relocate to other areas.

Public Use:

The government can acquire property if the intended use of the space serves a greater public benefit than the current use of the space. In general, “public use” for eminent domain purposes is broadly defined and can include direct government usage, but also private usage achieving a public benefit, even if the usage does not fall squarely into traditional conceptions of “public use.” Courts have ruled that the government can take private property to make room for schools, parks, roads, railroads, airports, military bases and libraries, as well as for economic development and ecological preservation.

In using eminent domain to facilitate managed retreat, the question of whether a government taking is for a “public use” should also be relatively easy to establish, at least at the federal level. Federal law grants legislatures wide discretionary power to decide whether a taking is for a public benefit. As such, the federal government will likely face few legal barriers when using eminent domain as a managed retreat tool, especially if the use is couched in terms of ecological preservation. Courts have consistently held that environmental conservation, including preserving forests, establishing parks, and setting aside open space for future generations, qualifies as a “public use.” For managed retreat purposes, the condemned land isn’t being “preserved” per se, but is being used as a buffer zone to protect inland populations from flooding and storms. There is a good argument here that the taking qualifies as a “public use” for eminent domain purposes.

While the federal government has a broad interpretation of “public use” for eminent domain purposes, state and local laws may hold a narrower view, and could require that property condemned actually be used by the public, such as is the case in Maine. Regardless, a strong case can be made that a taking is for a “public use,” whether at the local, state, or federal level, if the land is being used to protect residents from sea-level rise and climate change.

Just Compensation:

Perhaps the most complicated piece in evaluating whether eminent domain makes sense for a community surrounds “just compensation” for the homeowners who must be relocated.

When the government exercises its eminent domain authority, the government must pay “just compensation,” which is equal to the fair market value of the property at the time of the taking. Fair market value can be determined by the price a willing buyer and seller would agree to, while negotiating under normal market conditions based on all surrounding circumstances at the time of the taking. But how does climate change and sea-level rise factor into “normal” market conditions and circumstances? If homes will literally be under water or destroyed in a wildfire in a matter of years, how does that affect pre-disaster property values? The extent to which the housing market factors in climate change risks into property values remains poorly understood.

Furthermore, with compensation paid out at fair market value, inequity issues arise because expensive homes would be paid out at a higher rate than less-expensive homes, so those with expensive homes would be able to afford more attractive relocation options and have the means to relocate more easily. In addition, wealthier homeowners who can afford to hire an attorney can almost always negotiate a significantly higher government payout compared to unrepresented, lower-income homeowners, who often end up shortchanged and forced to take whatever the government offers. That reality, coupled with the severely constricted affordable housing stock in this country, means that there may be few relocation options for these lower-income homeowners, particularly for those living in densely populated areas with high housing construction costs.

But perhaps the most practical concern with eminent domain on a large scale is the exceedingly high financial cost. According to the First Street Foundation, nearly 15 million homes are at risk of flooding, and according to Zillow the typical U.S. home costs $308,000. Compensating just 10 percent of flood-prone residents for property takings would cost the government nearly half a trillion dollars, to say nothing of exponentially more expensive propositions like relocating airports, hospitals and ports. The financial analysis alone may render eminent domain an impracticable option for many localities, and lead municipalities to forego eminent domain as an option when pursuing buyouts. That said, voluntary buyouts also require municipalities to compensate homeowners the fair value of their homes, and so on a large scale voluntary buyout scenarios will similarly become financially infeasible.

Beyond legal and financial considerations of compulsory managed retreat, policymakers must examine the general benefits of such an approach, as well as its risks.

Benefits:

The efficiency of an eminent domain approach—when it works as intended—is undeniable. Entire communities can be moved out of harm’s way much more quickly than through a voluntary buyout approach. Given the urgency of rising sea levels and the ever-increasing number of life threatening storms, compared with the huge expense of maintaining city services for a few holdouts that are unwilling to relocate, eminent domain appears to be an increasingly reasonable option.

History shows that eminent domain is an incredibly effective tool that can mobilize major projects. The federal government has used its eminent domain power in the past to condemn property to construct public buildings and aqueducts to provide cities with drinking water, to maintain navigable waters, and to produce war materials. Perhaps the most well-known example of the federal government’s past eminent domain use was in establishing the interstate highway system in the 1950s and 60s, with 48,000 miles of interstate highway paved, connecting far-flung parts of the country. This immense undertaking could not have happened without the government’s eminent domain power.

Risks:

That said, eminent domain has a controversial history. Minorities and marginalized communities usually do not have the resources or political capital to fight against the application of eminent domain in their community, so they often suffer its most negative effects. When eminent domain was used to build out the interstate highway system, many cities were gutted in the process, with whole neighborhoods isolated or torn down, dividing minority communities across the country. Highways were sometimes built right along boundary lines that had been used during racial zoning, which further divided communities along racial and socioeconomic lines in ways that are still felt today. Wealthy residents moved to the suburbs, draining cities’ tax bases and hastening their decline. So while this immense undertaking may not have happened without eminent domain, the inequities that arose are a stark warning for those keen on a compulsory approach to relocate communities.

Eminent domain is also politically toxic. While liberals object based on equity concerns, conservatives oppose eminent domain as a violation of individuals’ property rights. Indeed, the right to property is fundamental to our country’s cultural ethos, and for many citizens, becoming a homeowner is quintessential to achieving the American dream. To then suggest that people must leave the homes they have worked so hard to afford, without giving them a choice in the matter, seems antithetical to American values.

The approach can also lead to protracted lawsuits that could last years. It is unclear what would happen to the land during this time, and whether the government can proceed with relocating homeowners in the interim. If some homeowners in a community are relocated but others obtain injunctive relief, this could really slow down managed retreat efforts. The entire process would instill fear or anxiety in the community, as people wait to see whether their properties will be taken next.

On top of that, there is also the question of what to do with all of these displaced residents, once they have been forced to move. Where will these people go, and what kind of relocation assistance will be provided? Will there be designated communities that displaced households can be permanently relocated to? How will the communities receiving these displaced households be impacted? In one example of poor post-disaster relocation planning, survivors of the 2018 Paradise wildfire who had nowhere to go were provided free FEMA housing at a trailer park in Chico, California, only to be unceremoniously evicted when the site closed after a few months. Paradise fire survivors now make up one-third of Chico’s growing homeless population. Any plan for managed retreat must be careful to avoid a similar scenario. But with land values skyrocketing in parts of the country, there are certainly widespread affordable housing shortage concerns that will only continue to be exacerbated as climate change forces more and more people inland in the future.

With such a controversial history, and so many open questions, eminent domain may be too politically untenable to be adopted on a wide scale. Forcing people from their homes is widely unpopular among both homeowners and the local officials compelled to enforce such policies. If a natural disaster strikes, most Americans would prefer to rebuild rather than move. As policymakers incorporate eminent domain into their managed retreat policies, people may also become vulnerable to misinformation campaigns surrounding the government’s power to take their private property. With all of these factors in mind, when faced with the prospect of mandatory buyouts, governments might choose not to conduct buyouts at all, which could mean catastrophic damage to coastal regions when the next big storm or flood inevitably hits.

So if buyouts are an untenable option for large-scale managed retreat, what can local decision makers do to protect their communities from climate change?

Instead of providing freehold titles to residents of coastal properties, could municipalities confer “life rights” for vulnerable properties? In that scenario, residents could remain in their homes for the remainder of their life, and the home would revert to the government thereafter. The Florida Forever program is experimenting with this model by conserving land through life estates, which allow for property to revert to state ownership after the property resident has passed away. Norfolk, Virginia’s 2018 zoning ordinance also calls for life estates to be used to help enhance flood resilience and direct new, more intense development to higher ground. If a community requires immediate relocation due to an imminent storm, this time-bound option would be ineffective. Then again, in those cases, the homeowner would be displaced either way. Alternatively, a homeowner’s property interest could be structured to terminate and revert back to the government once the area becomes too unsafe to live in, such as when the average high tide line in a coastal community has risen past a certain level.

Another potential option could utilize land trusts to take properties while also placing rolling easements on property, allowing residents to stay until it becomes too risky. A rolling easement, which is a legally enforceable expectation that a coastal shoreline can migrate inland as sea levels rise, could help to restrict shore protection measures such as bulkheads and seawalls, remove preexisting coastal structures, and facilitate a natural inland migration, while also providing notice to coastal residents that their property rights are finite. North Carolina is one such state that already prohibits all permanent shoreline protection structures, which often cause irreversible damage to beaches and coastlines, and are not a permanent solution for sea-level rise. Rolling easements, if grounded in the public trust doctrine—i.e., that the state owns the tidelands in trust for the public benefit—could also potentially insulate local governments from takings claims. While this “wait and see” approach may be more palatable for local municipalities to adopt, it is not a preventive strategy.

Rebuilding restrictions could also be implemented to require residents to move inland if their homes are destroyed by a storm or flood, and prevent these residents from rebuilding in the same place. Maine’s Sand Dune Rules and South Carolina's Beachfront Management Act are two examples where rebuilding a storm-damaged property is restricted. While this option doesn’t pose the same fraught political risk as a mandatory buyout, again, it is not a preventive approach and requires damage and destruction to occur.

Moving incentives could encourage people to relocate from vulnerable areas on their own accord, without waiting for a buyout program to be offered. Financial incentives could encourage relocation; New Jersey’s Blue Acres Program offered participants a five percent financial incentive to relocate within their original county. Additionally, if there are vibrant, attractive, and affordable residential and commercial developments built on higher ground nearby that vulnerable coastal residents can readily relocate to, then the choice to voluntarily relocate would be much less difficult. Ultimately, creating local, affordable housing options and developing local economic opportunities can help to drive people towards these more preferable options and away from their storm-prone homes. Coupled with tools such as life estates, rebuilding restrictions and rolling easements, and gradually people can be shifted out of harm’s way.

Incorporating eminent domain as a condition for its flood mitigation funding is certainly a strong signal of just how seriously the Army Corps views the looming climate crisis that lies ahead. And as we continue to see eroded coastlines and witness more extreme weather events, policymakers and other agencies may have no choice but to adopt a similar approach in managed retreat strategies moving forward. That said, eminent domain may be too blunt, too unpopular, and too economically infeasible to be broadly implemented to move people out of disaster-prone areas.

Utilizing life estates, rolling easements, and rebuilding restrictions are helpful, but may not go far enough. With millions of households at risk of flooding, incentives must be put in place to encourage inland migration to communities that are less susceptible to the damaging effects of climate change. Ideally, these communities will contain affordable housing and critical infrastructure that will be attractive to an influx of new residents.

In any event, some retreat from coastal and flood-prone regions must occur. It is just a question of whether the retreat will occur suddenly and chaotically, or whether communities can adopt strategies in time to implement a safe and efficient retreat.