I have to take issue with my Examiner and American Enterprise Institute colleague Tim Carney on his Sunday Examiner column. Tim has been writing excellent articles about crony capitalism, how collusion between government and corporate interests works to the detriment of ordinary citizens. Here his focus is on the use of eminent domain to build the Keystone XL pipeline. A Nebraska landowner has sued to block the taking of his property (actually, an easement across his property) by eminent domain and a Nebraska trial judge has ruled that the state law authorizing that process is unconstitutional. Tim sidesteps the question of whether the judge has correctly interpreted Nebraska law and takes a broader view:
The question that spurred the fight ought to heighten conservative questions about Keystone: Should pipeline companies have the right to use eminent domain, or should they be forced to pay market rates for the land they want? If the pipeline is so economically valuable, shouldn’t its developers be willing to pay what it takes to build it—without the government putting a gun to the head of landowners? It’s not an easy question—which means Keystone isn’t an easy issue.
I disagree: the use of eminent domain in such cases is an easy issue. Governments have delegated the use of eminent domain to corporations building railroads, pipelines and electric transmission lines for many years. Otherwise they would never get built, or would cost far more than they do--costs that would be passed on to consumers. The reason is that some property owners would hold out and demand far higher prices than others received. Routing facilities around their property or paying their outsized prices would make railroads, pipelines and electric transmission lines inordinately expensive and in many cases might block them altogether.
Under the Constitution, governments and corporations they empower to use eminent domain are required to pay fair market value by the Fifth Amendment to the Constitution, which requires that private property not “be taken for public use without just compensation.” Determining what "just compensation" is often not an easy issue; there is a long history of litigation and statutory rulings on this. But the use of eminent domain to provide the basic infrastructure (as opposed to the Pfizer research facility for which the city of New London used eminent domain in the Kelo case) is not or should not be controversial. Our standard of living requires railroads, gas pipelines and electric transmission lines. Eminent domain, as a practical matter, is necessary if they are to be built.
By the way, the Kelo decision does not prevent states from limiting eminent domain so that it cannot be used as it was in New London, and several states have moved in that direction. But none, so far as I am aware, is contemplating limiting eminent domain for basic infrastructure like gas pipelines and electric transmission lines.