By Larry Jones
October 31, 2005

The House and Senate are moving different legislative proposals to restrict state and local use of eminent domain to take private property for economic development. The House Judiciary Committee on October 27 approved H.R. 4128, a free standing bill that will permanently prohibit federal, state and local use of eminent domain to take private property for economic development. Under the proposal, state and local governments violating this prohibition will be ineligible for federal economic development funds for two years after a judgment is rendered. However, a state or local government could restore its eligibility for funds by returning any real property taken for economic development, and by replacing or repairing any property damaged as a result of the violation. The full House is expected to consider H.R. 4128 the week of October 31.

On October 20, the Senate approved H.R. 3058, the 2006 Appropriations Bill for Transportation, Treasury and Housing, which includes language that would prohibit the use of federal funds to support federal, state or local projects that seek to use the power of eminent domain, unless eminent domain is used for public use. The language in the bill leaves the door open for government officials to use eminent domain to promote economic development so long as there is a determination of public use by a local, state or federal official authorized to make such decisions, and such determination is capable of being subject to judicial review, and the economic development does not primarily benefit private entities.

The Senate bill also makes clear that any use of federal funds for the removal of blight, and for infrastructure projects such as mass transit, railroad, airport, highway, water and waste water as well as utility projects that benefit or serve the general public "shall be considered a public use for purposes of eminent domain."

Senator Christopher Bond (MO), who chairs the Subcommittee on Appropriations for Transportation, Treasury and Housing, appears to have listened to concerns expressed by local officials who urged Congress not to rush to move a permanent fix to the Kelo decision before examining more closely how eminent domain is being used in states and localities across that nation. The Senate measure is temporary since the eminent domain restrictions are included in an annual appropriations bill. In response to local concerns, a provision was included in the bill calling for a study on the nationwide use of eminent domain within 12 months after enactment. The study would be conducted by the Government Accountability Office in consultation with organizations representing state and local governments.

The proposals in both chambers are in response to widespread public opposition to the Supreme Court's decision in Kelo v. City of New London. In the decision, the Court affirmed the city's use of eminent domain to take private property which was turned over to a private developer for commercial development. At issue in the case was whether the city's planned commercial development, which will produce jobs for local residents and increase tax revenues to support public services, can be viewed as "public use" under the Fifth Amendment Taking Clause. The Supreme Court ruled in favor of the city on June 23, affirming economic development as an acceptable public use under the Taking Clause.