Memorandum

The purpose of this memo is to provide information and guidance on an eminent domain provision in the Transportation, Treasury, Housing and Urban Development, the Judiciary, and Independent Agencies Appropriations Act, 2006 (P.L. 109-115, div. A). Section 726 specifies certain conditions under which Federal Highway Administration funds may not be used for Federal, State or local projects. This language pertains to projects that will use FY 2006 funds .

Background:

Section 726 of the Transportation, Treasury, Housing and Urban Development, the Judiciary, and independent Agencies Appropriations Act, 2006 (P.L. 109-115, div. A) prohibits the use of funds made available by that Act for projects that seek to use the power of eminent domain, unless eminent domain is employed only for a public use. Surface transportation projects that benefit or serve the general public are defined as a public use, effectively exempting them from the restriction. This general provision applies to each agency that receives funding from this appropriations act and is designed to address the U.S. Supreme Court's decision last year in Kelo v. New London, 126 S. Ct. 24 (2005).

SEC. 726 ."No funds in this Act may be used to support any Federal, State, or local projects that seek to use the power of eminent domain, unless eminent domain is employed only for a public use Provided, That for purposes of this section, public use shall not be construed to include economic development that primarily benefits private entities. Provided further, That any use of funds for mass transit, railroad, airport, seaport or highway projects as well as utility projects which benefit or serve the general public (including energy-related, communication-related, water-related and wastewater-related infrastructure), other structures designated for use by the general public or which have other common-carrier or public-utility functions that serve the general public and are subject to regulation and oversight by the government, and projects for the removal of an immediate threat to public health and safety or

Brownsfield as defined in the Small Business Liability Relief and Brownsfield Revitalization Act (Public Law 107-118) shall be considered a public use for purposes of eminent domain: Provided further , That the Government Accountability Office, in consultation with the National Academy of Public Administration, organizations representing State and local governments, and property rights organizations, shall conduct a study to be submitted to the Congress within 12 months of the enactment of this Act on the nationwide use of eminent domain, including the procedures used and the results accomplished on a state-by-state basis as well as the impact on individual property owners and on the affected communities."

Section 726 applies to FY 2006 funds made available by the Appropriations Act to pay for surface transportation projects, including "formula fund" projects and projects earmarked for funding in statute such as the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (P.L. 109-59) or the Appropriations Act. Most surface transportation projects, including SAFETEA-LU and appropriations act earmarks would likely fall under the "public use" exception because they relate directly or closely to a surface transportation facility open to public travel.

Whether any surface transportation project, including a Congressional earmarked project, might be affected by the prohibition in section 726 can be determined by looking at the facts of the project. The relevant facts would include, but are not limited to, whether the project would benefit or serve the general public, and whether the use of eminent domain is involved in the project.

Coordination with headquarters is strongly encouraged before approving or denying funding to any questionable project because of this provision. This would include instances where payments are to be made to liquidate obligations from previously approved projects that come due in FY 2006 where the nature of the project raises some question about the application of section 726. Coordination should occur in any instance where the fact situation is questionable, for example an earmarked project that does not relate directly or closely to a surface transportation facility that is open to the general public.

Action

Ensuring compliance with the prohibitions of Section 726 is the responsibility of each Division office. The Division office shall ensure that it has a process in place to ensure that programs and projects receiving FY 2006 Federal financial assistance are in compliance with section 726. As part of this process each Division office should ensure that it is appropriately documenting the steps taken to ensure compliance with the prohibitions of Section 726 and should also consider documenting those instances where use of Federal Funds were denied due to the prohibitions in Section 726. Some methods which may prove appropriate to ensure compliance with Section 726 are:

1. To review the project concept in planning or to review the purpose and needs statements for NEPA or, for smaller projects to review the application for funding.
2. To review the projects/project phases contained in the STIP. Divisions should be able to determine needed Federal actions and funding.
   1. For projects or funds that are grouped in the TIP and/or STIP, individual projects/project phases listed in the TIP and/or STIP as a "grouped project" that involve right-of-way acquisitions could be listed separate from the TIP and/or STIP by the State DOT for purposes of Section 726 tracking and monitoring by the Division Offices.

For further information, you may contact me, Arnold Feldman at (202) 366-2028 or by e-mail Arnold.Feldman@fhwa.dot.gov or the Office of Real Estate Services Point of Contact for your Division.