On May 6, 2026, four U.S. senators wrote to the Federal Trade Commission asking it to go after grocery chains for a specific lease-drafting habit: writing a clause into the deed, when a store closes and the property sells, that bars any future owner from ever operating a grocery store there again.[1] Three weeks earlier, the Kent, Washington city council had already banned the practice outright. Two years before that, Washington’s attorney general made Albertsons rip an identical clause out of a shuttered Bellingham store, fourteen years ahead of its 2038 expiration.[2] In Denison, Texas, a city council member is currently suing Albertsons over the same kind of clause on a former Kroger, and he’s doing it without a lawyer because he can’t find one who’ll take it for free.[3] The clause behind all four of these fights is a first cousin of the ordinary exclusive use covenant that’s sat in retail leases since the 1950s. What changed is who’s suing over it.
An exclusive use clause a court will enforce as an ordinary contract term between a landlord and one tenant is, increasingly, the same clause a state attorney general, a city council, or a federal antitrust plaintiff will treat as an illegal restraint on trade once the tenant is gone and the clause keeps working anyway.
The lease version has been enforceable, and enforced, for over half a century. In Patuxent Development Co. v. Ades of Lexington, Inc., Maryland’s highest court upheld a covenant barring the landlord from leasing space within five miles to a competing five-and-dime, and held the restriction could be enforced by injunction against both the landlord and a later tenant who took space with notice of it.[4] That’s the doctrine every exclusive use clause in a shopping center lease still leans on: negotiated between two private parties, running against successors who know about it, enforced the ordinary contract-law way.
The deed version does something the lease version was never built to do: it survives the tenant. A grocery chain that closes a store doesn’t need an exclusive use clause anymore, it doesn’t operate there. What it can still do, if it owns the real estate, is sell the parcel with a covenant recorded against the title itself, binding whoever buys it next, and the one after that, for a term measured in decades rather than a lease term. Denison’s former Kroger carries a 25-year version of the same restriction, and Albertsons’ Bellingham parcel carried one running to 2038.[2][3] Neither chain had to keep operating a store to keep a competitor out of it. Owning the deed was enough.
Washington’s attorney general didn’t treat that as a lease dispute. He treated it as an antitrust case. The Birchwood covenant traced back to a 1982 agreement, got extended when Albertsons sold the closed store in 2018, and stayed on the books through a second sale in 2021 before the state’s investigation forced it off in 2024, along with a $25,000 payment to cover the state’s costs.[2] Nobody sued as a landlord-tenant matter. The theory was Washington’s unfair-business-practices law, and the remedy was removing a restriction from the deed of a property Albertsons no longer occupied.
Kent didn’t wait for a case to develop. It legislated the clause out of existence. The city’s October 2025 ordinance bars grocery, drug store, and pharmacy operators from placing covenants that keep a similar business out of a vacant building, citing food-insecurity rates in South King County running 15.9% against a 9.5% countywide average.[5] It’s modeled on ordinances already in Bellingham, Madison, Chicago, and Washington, D.C. A clause that used to be purely a matter of what the parties negotiated is now something a city council can void by ordinance before it’s ever tested in court.
Congress wants the FTC to make this a standing enforcement priority, and a private citizen in Texas isn’t waiting to find out if they will. The May 6 letter from Senators Gillibrand, Cantwell, Wyden, and Booker asks the FTC to investigate restrictive covenants that “further cement the harm” of a grocery closure and keep food prices high through reduced competition.[1] Separately, Denison city council member Aaron Thomas is suing Albertsons over the same fact pattern as a private citizen, representing himself, arguing the restriction on his town’s former Kroger raised food costs and cut off consumer choice.[3] The letter needs the FTC to act on it. Thomas didn’t wait to find out if it would.
A continuous operation clause is the landlord’s attempt to stop a tenant from going dark in the first place. This is what happens after that fight is already lost: the tenant closes anyway, and instead of just walking away, it sells the box with a covenant making sure nobody else gets to open what it shut down. Regulators are now treating that second move as the one that actually causes the harm.
Reading a clause the way a state AG will read it#
Acrebase’s clause library lets counsel pull every exclusive use and restrictive-covenant clause across a portfolio into one view and see which ones expire with the tenancy and which ones don’t. During redlining, it flags language that extends a competitive restriction past the point where the restricting party still occupies the space, the exact fact pattern behind the Bellingham settlement and the Denison suit. For a landlord negotiating a sale-leaseback or ground lease with a grocery or pharmacy anchor, that’s the clause worth reading twice before signing, because the tenant’s counsel wrote it to survive them.
If you are a landlord or a grocery chain selling a closed store, don’t record a restrictive covenant with a term longer than you can defend to a state attorney general with a food-desert statistic in hand. Tie the restriction to your own operation of the site, not to the deed, and it stops looking like the clause four senators just asked the FTC to investigate.
If you are a tenant or buyer eyeing a vacant grocery or pharmacy box, run title before you run a pro forma. An exclusive use clause that looks expired on the lease can still be alive on the deed, and increasingly, a state attorney general or your own city council might do the negotiating for you for free.
Footnotes
[1] Office of Senator Kirsten Gillibrand, “Gillibrand, Cantwell, Wyden, Booker Press FTC on Anti-Competitive Business Practices That Exacerbate Food Insecurity and Raise Grocery Prices” (letter dated May 6, 2026, urging FTC investigation of restrictive covenants limiting grocery competition). https://www.gillibrand.senate.gov/news/press/release/gillibrand-cantwell-wyden-booker-press-ftc-on-anti-competitive-business-practices-that-exacerbate-food-insecurity-and-raise-grocery-prices/
[2] Washington State Office of the Attorney General, “AG Ferguson: Albertsons Lifts Illegal Restrictions That Created Food Desert in Bellingham Neighborhood” (June 25, 2024 settlement; 1982 covenant extended via 2018 sale restriction through 2038; $25,000 payment to the state). https://www.atg.wa.gov/news/news-releases/ag-ferguson-albertsons-lifts-illegal-restrictions-created-food-desert-bellingham
[3] Food & Power, “Lawsuit Alleges Deed Restriction Gave Albertsons a Local Monopoly” (Aaron Thomas, Denison, Texas city council member, suing Albertsons pro se over a 25-year restrictive covenant on a former Kroger property). https://www.foodandpower.net/latest/denison-tx-lawsuit-albertsons-jun-25
[4] Tydings & Rosenberg LLP, “Drafting and Litigating Use Exclusives” (discussing Patuxent Development Co., Inc. v. Ades of Lexington, Inc., 257 Md. 398 (1970), enforcing a five-mile exclusive use covenant by injunction against a landlord and a subsequent tenant with notice). https://www.tydingslaw.com/news-insights/drafting-and-litigating-use-exclusives
[5] Kent Reporter, “Kent City Council Adopts Ordinance to End Grocery Store Covenants” (October 21, 2025 emergency ordinance; South King County food insecurity rate of 15.9% against a 9.5% countywide average, 2018–2022; ordinance modeled on Bellingham, Madison, Chicago, and Washington, D.C.). https://www.kentreporter.com/2025/10/24/kent-city-council-adopts-ordinance-to-end-grocery-store-covenants/
Acrebase is AI-powered contract intelligence for commercial real estate — clause extraction, risk flagging, and portfolio-wide search, plus tools for maintaining a consistent clause library and negotiation playbook across every deal a team runs. Learn more at acrebase.com, or get in touch about pricing.