The measure was intended to prevent state and local governments from using their powers to take property for private development projects.
Richardson said yesterday a number of community officials opposed the measure.
He says the legislation would bring New Mexicans more harm than good.
The measure was sponsored by Republican Representative Richard Cheney of Farmington.
The bill was in response to a US Supreme Court decision last year that allowed a city in Connecticut to take homes for a private development project.
Dozens of states are considering revisions to their eminent domain laws because of the unpopular ruling by the nation's highest court.