March 27, 2015

Pipelines or Property Rights?



Last January, Senators Bob Menendez and Maria Cantwell offered an amendment to the Keystone Pipeline bill stipulating that “Land or an interest in land for the pipeline and cross-border facilities described in subsection (a) may only be acquired from willing sellers.” You might think that Senate conservatives—always (loudly) mindful of private property rights—would be inclined to sign on. Alas, only Senators Kelly Ayotte and Rand Paul broke Republican ranks to vote “yes.”

Earlier this month, Tom Steyer’s NextGen Climate charged that Senate Republicans were “willing to completely abandon their own principles in order to kowtow to their Big Oil backers.” While conservatives certainly won’t relish lectures about principles from the likes of Mr. Steyer, in this case, he has a point. TransCanada—the company building the Keystone XL Pipeline—is using eminent domain to seize private property in a fashion that would send conservatives around the bend were those methods employed in other contexts.

Consider the Heritage Foundation’s response to the Supreme Court decision in Kelo v City of New London:

The Takings Clause in the Fifth Amendment was enacted to prevent the government from infringing on the private property rights of citizens, a right which was fundamental to the American Founding. Thus the words “public use” limited the government’s power to the taking of private property only when the land desired would be used by the general public. Roads, schools, or libraries would be permissible grounds for public takings under this original understanding. The Court abused precedent, reinforcing grave errors by extending the misinterpretation of “public use” as being the equivalent of “public purpose,” which not only displaces the language of the Clause, but invites limitless infringement on one of our most fundamental rights. As Justice O’Connor states powerfully in her dissent, “Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded—i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public—in the process.”

So … is the Keystone XL Pipeline for use “by the general public,” much as roads, schools, and libraries are used by the general public?  Of course not. The pipeline can be used only by those who do business with TransCanada. It is simply impossible to fit support for the use of eminent domain in building the pipeline within the boundaries of Heritage’s position in Kelo.

Even if conservatives do an about-face and embrace the Kelo definition of “public use”—at least when oil is at issue—there are still problems conservatives need to wrestle with.

First, eminent domain proceedings are initiated by TransCanada, not the state. Do conservatives really support state laws which deputize private companies to bring eminent domain actions on behalf of government? At the very least, companies should have to convince state officials to marshal government power to take private property, an undertaking that should only be taken by representatives of the people—not by representatives of self-interested corporations.

Second, TransCanada does not have to demonstrate that there is a hold-up problem, the only intellectually serious rationale for eminent domain laws in the first place. There are plenty of means, however, by which companies can get around the hold-up problem. Seizing property should not be the company’s first option in dealing with landowners who are unwilling to sell (even if it is the least expensive option).

One could reasonably argue that it is bad policy to allow every other commercial entity to use eminent domain proceedings save for TransCanada. But if conservatives opposed eminent domain power of this sort but likewise opposed singling out TransCanada, why didn’t they offer an amendment to the amendment that would have universalized the prohibition (which would have been a neat trick)?

Nebraska state courts have recently jumped in to stop TransCanada’s eminent domain proceedings, but only because it’s unclear whether the legislature acted constitutionally in giving the governor the authority to decide the pipeline route. The larger issues discussed here are not in play. And that’s too bad. Conservatives should not vary their allegiance to private property rights based on who’s doing the poaching.