House bill ends eminent domain for economic development

by Winifred E. Campbell, Esq.

The United States House of Representatives passed with bi-partisan support H.R. 1433, The Private Property Rights Protection Act, on February 29, 2012. The bill aims to bar the federal government from using eminent domain for economic development. The bill would also withhold federal development funding to states that take private property for economic development. The bill is now being considered by the Senate.

The proposed Private Property Rights Protection Act is in response to the 2005 U.S. Supreme Court decision in Kelo v. City of New London. In Kelo, the Court upheld the condemnation of private property for transfer to other private owners to support “economic development.” The Kelo decision was met with outrage across the country. Frequently, the use of condemnation for economic development benefits wealthy developers at the expense of the poor and politically weak.

Many states have responded to Kelo by passing laws that thwart the profitability of taking private property for economic development. For example, Mississippi passed legislation in 2011 that restricted the transfer of condemned property to another private owner for ten years after condemnation.

New Jersey has been slow to respond to Kelo. The state’s strongest reaction may be seen in Gallenthin Realty Dev., Inc. v. Borough of Paulsboro, where the New Jersey Supreme Court reined in the definition of “blighted” property. Too frequently, municipalities were deeming property as “blighted” because it was not being used in an optimal manner. See our previous blog post, Reversal of Blight: Eminent Domain and Redevelopment.

It remains to be seen whether the Senate will choose to send a strong message in response to the Kelo decision by passing The Private Property Rights Protection Act.


Winifred E. Campbell, Esq. is an associate at Carlin & Ward licensed to practice in New Jersey and and Pennsylvania.