On June 23, 2005, the Supreme Court handed down Kelo v. City of New London , (1) addressing whether, under theFifth Amendment Takings Clause, the sovereign power of eminent domain ("condemnation") canbe used to transfer private property to new private owners for the purpose of economicdevelopment. (2) The Courtheld 5-4 that the City of New London's use of private-to-private condemnations to further itseconomic revitalization project satisfied the Takings Clause's demand that eminent domain beemployed for a "public use," (3) despite the private nature of the transferees. The City's good-faithpurpose, said the majority, was to carry out a carefully considered areawide redevelopment planbelieved by the city (and state) to be needed to reverse decades of economic decline. On these facts,the majority deemed the public use requirement satisfied, especially given the strong deference owedby courts to legislative determinations of local needs. Many observers argue that Kelo does not depart from established eminent domain law -- thatits view of public use as covering New London's revitalization plan is indistinguishable from priorCourt precedent sustaining eminent domain for mixed private and public gain. Contrariwise, a vocalminority (starting with the four dissenters) argues that the decision represents a major expansion ofpublic use, while still others counter that it actually narrows public use. For present purposes, thisdebate is unimportant. What matters here is that Kelo cast a bright spotlight on a controversial andincreasingly frequent practice: the use of private-to-private condemnation by state and localgovernments solely to increase tax base or tax revenues, and create jobs. The new attention givenby Kelo to the possibility that people's homes can be taken involuntarily for such purposes (uponpayment of compensation) provoked a popular outcry and media coverage such as few recentSupreme Court decisions have generated. Following Kelo , the majority of state legislatures saw theintroduction of, or talk of the introduction of, bills limiting the use of eminent domain. (4) Congress entered the fraythrough the introduction of roughly a dozen bills, most of them seeking to discourage state and localuse of eminent domain for economic development through the device of attaching restrictiveconditions on federal grant money. (5) The use of funding conditions, rather than a direct federalcommand that localities not condemn for economic development, presumably reflects theconstitutional federalism concerns raised by the latter approach under the Commerce Clause,Fourteenth Amendment (Section 5), and Tenth Amendment. (6) The main topic of this report is the principal " Kelo bill" in Congress at this time, H.R. 4128 , the Private Property Protection Act of 2005. H.R. 4128 hews tothe prevalent congressional approach to Kelo : imposing a condemnation-restricting condition on thegrant of federal money. It was originally introduced as H.R. 3135 by RepresentativeSensenbrenner, chairman of the House Committee on the Judiciary, one week after the Kelo decision. It was reported in greatly expanded form as H.R. 4128 and passed the House376-38 on November 3, 2005. This report also examines a bill amendment introduced by Senator Bond, like H.R. 4128 a federal-money-restricting provision. The Bond Amendment was added onthe Senate floor to H.R. 3058 , the Transportation, Treasury, Housing and UrbanDevelopment, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Actfor FY2006. H.R. 3058 was enacted November 30, 2005, as P.L. 109-115 , with the BondAmendment as Section 726. Other bills and resolutions responding to the Kelo decision are not treated here, eitherbecause they have been eclipsed by H.R. 4128 , have seen little activity, or arenonbinding resolutions. These include S. 1313 (restricting federal funds), S. 1704 (restricting federal funds), S. 1883 (creating an Office of PropertyRights Ombudsperson), S. 1895 (restricting federal funds and eliminating tax benefitsfor private parties acquiring property), H.J.Res. 60 (amending the Constitution), H.Res. 340 (expressing disagreement with the majority opinion in Kelo ; passed Houseon June 30, 2005 by 365-33), H.R. 3083 and 3087 (each identical to S. 1313), H.R. 3315 (restricting federal funds), H.R. 3631 (restricting federalassistance), H.R. 3405 (restricting federal funds), and H.R. 4088 (restricting federal funds). Section 2: The Heart of the Bill. The keyprovisions in H.R. 4128 are Sections 2(a) and 2(b). Section 2(a) sets out the state andlocal activities that the bill prohibits -- No State or political subdivision of a State shall exerciseits power of eminent domain, or allow the exercise of such power by any person or entity to whichsuch power has been delegated, over property to be used for economic development or over propertythat is subsequently used for economic development, if that State received Federal economicdevelopment funds during any fiscal year in which it does so. Section 2(b) states a consequence under the bill when a state or local government violates Section2(a) -- A violation of subsection (a) by a State or politicalsubdivision shall render such State or political subdivision ineligible for any Federal economicdevelopment funds for a period of 2 fiscal years following a final judgment on the merits by a courtof competent jurisdiction that such subsection has been violated .... Under Section 2(c), the Section 2(b) ineligibility period is terminated if the offending state or localityelects to return all real property the taking of which was judicially determined to offend Section2(a). (7) Section 3 of the bill is the federal-condemnation counterpart to Section 2, barring federalagencies from using eminent domain for economic development. Section 3, however, is much lessimportant than Section 2; at least as defined in the bill, federal condemnation for economicdevelopment is rare. Section 8: Definitions. Section 8 determineswhich government condemnations are prohibited by Sections 2(a) and 3 above through its definitionof "economic development." Given the huge variety of purposes for which eminent domain is usedaround the country, crafting such a definition is a difficult task, attempted by many of the Kelo billsin Congress. In Section 8's version, economic development means "taking private property, withoutthe consent of the owner, and conveying or leasing such property from one private person or entityto another private person or entity for commercial enterprise carried on for profit, or to increase taxrevenue, tax base, employment, or general economic health." Seven exemption categories are stated. The first allows the conveyance of private property to public ownership or an entity that makes theproperty available to the general public as of right (e.g., common carriers), or for use as a road orother right of way open to the public. Other categorical exemptions include removing harmful usesof land that constitute an immediate threat to public health or safety, acquiring abandoned property,clearing defective chains of title, use by a public utility, and redeveloping brownfields. The bill uses the words "economic development" in a second context in addition to Section2(a). The phrase "Federal economic development funds" in Section 2(b) defines which federalmonies are to be suspended should a court find that prohibited condemnations have occurred. Notwithstanding the word overlap, the bill defines the Section 2(b) phrase in completely differentlanguage than it uses for the Section 2(a) phrase. "Federal economic development funds," accordingto Section 8(2), are those federal monies distributed to or through states or their politicalsubdivisions "under Federal laws designed to improve or increase the size of [their] economies ...." The Attorney General is charged under Section 5(a)(2) with compiling a list of such federal laws,to delineate the particular federal funds that must be suspended in the event of Section 2(a)transgressions. (8) Section 4: Private Right of Action. Section 4gives the bill an enforcement mechanism in the form of a private right to sue. A property owner"who suffers injury as a result of a violation of any provision of this Act may bring an action toenforce any provision of this act in the appropriate Federal or State court ...." Unlike the typical suit,where the plaintiff has the burden of showing the elements of the cause of action, H.R. 4128 shifts the burden of proof to the defendant government "to show by clear and convincingevidence that the taking is not for economic development." Any such suit must be brought withina prescribed time window -- namely, after the condemnation and the property's subsequent use foreconomic development, but before seven years following such economic-development use. (But see"Legal Comments on Section 4," infra, on the possibility that Section 4 also allows suits before andduring an improper condemnation as well.) Prevailing plaintiffs are to be awarded attorneys' fees; no comparable provision is includedfor prevailing government defendants. Other Bill Provisions. Other bill provisions areas follows. Section 13 is a counterpart to Section 2(a) and 2(b) for the specific case where propertyof religious and nonprofit organizations is condemned. In the case of Section 13, condemnationtriggers a funds cut-off if the condemnation occurs "by reason of the non-profit or tax-exempt statusof such organization." This may be a rough analog to the prohibited "economic development"purpose in Section 2.