The U.S. Supreme Court's recent decision on eminent domain, Kelo v. New London, has unleashed heavy political fallout--much of it negative--in the U.S. Congress and in the states.

On the surface, the ruling does appear to be a win for cities. Neighborhood homeowners could be forced to sell not just to a city but to private developers who want to build a project that would expand the city's tax base. The Court clearly indicated that localities have a legitimate role in planning and that economic development--and particularly, improving blighted areas--can't be halted simply because some property owner objects.

"In a political vacuum, the Kelo decision is very good for local governments," says Mark Flynn, director of legal services for the Virginia Municipal League. But the real political world is something else. The decision has some states rushing to curb local powers of eminent domain (an action that has the Court's blessing). The Texas House and Senate, meeting in special session in July, quickly approved competing bills to block local governments from taking private property for economic development projects.

There would have been much more legislative response if more state legislatures had been in session when the decision came down in June. In fact, in anticipation of the Court's ruling, a few states, including Utah and Nevada, passed new restrictions on eminent domain earlier this year.

More is certain to come. Indiana state Representative David Wolkins intends to introduce a bill next year that would narrow Indiana's definition of "blight" and would force redevelopment agencies to pay ousted owners 150 percent of the appraised value of a property, just to discourage them. "What I don't like is where somebody has a higher and better use in their minds, and they give the land to a private developer," Wolkins says. His bill won't touch local governments' right to invoke eminent domain for clear public uses such as building roads or parks.

Redevelopment agencies are likely to serve as a prime target in other states as well. Eminent domain skeptics in states such as Colorado and Nevada have already found they couldn't muster the support for a broad attack on localities.

Not everyone is rushing to change the rules. The other political reality is that governments can't seize any land they'd like--the unpopularity of eminent domain serves as a curb on the practice even where it's perfectly legal. That was the case, for instance, in Cypress, California, where the political fallout from a decision to force a church out to make way for a Costco store led local officials to find a more expedient settlement.

"Elected officials rightly know that they cannot go around taking property at will," says Indianapolis Mayor Bart Peterson, who has taken the lead on this issue for the National League of Cities. Peterson argues that eminent domain remains a crucial tool for revitalizing neighborhoods, pursuing large economic development projects and fighting sprawl. As state legislatures debate the issue in the coming months, many local officials will be making those same points repeatedly--and are likely to keep their authority--despite the sudden distaste for the idea in the wake of the Court's decision.