By Larry Jones
August 8, 2005

When Congress returns from the August recess the week of September 5, the leadership is expected to consider legislation restricting state and local use of eminent domain to promote economic development. Following a huge public outcry against a June 23 Supreme Court ruling, which affirmed the City of New London’s (CT) use of eminent domain to take private property to promote economic revitalization, several lawmakers introduced legislation restricting, to varying degrees, the state and local use of eminent domain.

Of immediate concern is language adopted in the 2006 House appropriation bill (H.R. 3058) for the departments of Transportation, Housing and Urban Development, Treasury and the Judiciary. Under the proposal, federal funds administered by these departments would be denied to any state or local government that uses eminent domain to force an individual to sell his/her property to make way for economic development. The House leadership has pledged to push for a broader provision that will cover all federal funds.

The Senate may consider a less restrictive measure when it takes up its version of the 2006 appropriation bill. Senator Christopher Bond (MO) is considering offering an amendment restricting state and local use of eminent domain “only for a public use.” Under Bond’s proposal, public use will not include economic development. However, it would stipulate that “any use of funds for mass transit, airport, seaport or highway projects as well as projects for the removal of blight shall be considered a public use.”

Representatives James Sensenbrenner (WI) and John Conyers (MI) have also introduced legislation (H.R. 3135, the Private Property Rights Act) to prohibit state and local governments from using federal funds in any way to help exercise eminent domain for economic development purposes; and would deny all federal funds to a state or local government that violates this prohibition. The exception would be eminent domain could still be used to take private property for general public use or for the removal of blight. Senators John Cornyn (TX) and Bill Nelson (FL) have introduced similar but slightly different legislation in the Senate.

Representatives Maxine Waters (CA), Robert Ney (OH) and Spencer Bachus (AL) have introduced legislation that would amend the Housing and Community Development Block Grant Act to withhold community development block grant funds from any state or local governments that does not enact laws or regulations prohibiting the use of eminent domain to take private property frOm an individual for transfer to another individual; or for commercial or economic development purposes.

The above proposals are just a few of the eminent domain restrictions pending before Congress. If enacted, state and local governments stand to lose some or all of its power to use eminent domain in connection with federal assisted projects. If this should happen, economic development will be difficult if not impossible since state and local governments would no longer be able to assemble property needed for a economic development projects.