In a close ruling announced on June 23, 2005 the Supreme Court ruled 5 to 4 in Kelo v. New London that state and local governments could use eminent domain to take private property against the owners' will for use in private development. The decision is expected to have major ramifications for redevelopment and property rights cases around the country. The question facing the Court was the following:
What protection does the Fifth Amendment's public use requirement provide for individuals whose property is being condemned, not to eliminate slums or blight, but for the sole purpose of "economic development" that will perhaps increase tax revenues and improve the local economy?
Already 40 states are reexamining eminent domain laws and practices. This results in part from language in the Kelo v. New London ruling, which leaves room for states to define under what circumstances eminent domain can be used. In short to decide when private development serves a greater public good. Four states have already passed legislation restricting the use of eminent domain. In turn, city and state officials are countering that eminent domain abuse is rare and restricting its practice will cause economic suffering in their communities.
In addition to the state and community efforts, there is a move to reign in eminent domain on a national level. H.R. 4128, the Private Property Rights Protection Act of 2005 was passed by the House of Representatives in November of last year. The Act would withhold federal money from state and local governments that use powers of eminent domain to take property intended for private "economic development." Governments that violate the law would be forbidden from collecting federal money for economic development projects for two years. The Act defined private "economic development" as private, for-profit projects or those intended to increase tax revenue, tax base or jobs. The bill also would limit federal eminent domain powers.
The bill made allowances for eminent domain powers exercised on abandoned private property, for public-use roads, hospitals or military installations or in cases where the land is "considered an immediate threat to public health and safety." The bill has been referred to the Senate.
Additional sources: "40 states re-examining eminent domain," BUSINESSWEEK, Robert Tanner, February 5, 2005; MORTGAGENEWS DAILY;
CNN; THE ECONOMIST; Medill On The Docket; The Supreme Court; Kirstin Downey, "Revitalization Projects Hinge On Eminent-Domain Lawsuit," WASHINGTON POST, May 21, 2005