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Ed Newbold | Eminent domain an unconstitutional subsidy for Keystone XL
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Eminent domain an unconstitutional subsidy for Keystone XL

Eminent domain an unconstitutional subsidy for Keystone XL

Posted April 28, 2014 from Seattle WA

I’m running an ad in the A-Section of the Seattle Times on Tuesday April 29, 2014 against the gifting of eminent domain to the foreign company that wants to build the Keystone Pipeline.

Here is the ad as it will appear in the Times:  Seattle Times ad keystone April 27 2014

The ad speaks for itself but on the chance that anyone wants my take on the points in it, here is some explanation of the various sentences.

The kicker, Hooray for the Cowboy and Indian Alliance against Keystone, refers to the group that is now on the Capitol lawn protesting the crossing of Nebraska by the Keystone Pipeline.  These folks are heroes in my opinion.  Please Google them.

The ad itself echoes calls I’ve made before regarding climate-forcing:  Before we draw up schemes to reduce climate-forcing let’s first audit the government’s relationship with the energy sector and identify and delete all subsidies that by definition increase climate forcing as they distort the market.

The principle is the same as in medicine.  If a very bad doctor is constantly jabbing the patient with a sharp stick, the first thing he(!) should do is stop jabbing.  Then maybe think about commencing medical diagnosis and treatment.

Governments around the world are certainly like this bad doctor.  They spend lavishly–over $500 billion a year—to subsidize the use of fossil fuels, according to the WorldWatch Institute, although in my opinion that’s probably a significant understatement, as it no doubt ignores the more hidden subsidies.

One crucial subsidy is the gift of the governmental power of eminent domain to the foreign-owned company building the Keystone Pipeline.  With eminent domain powers in hand, Keystone XL can avoid the harsh discipline of the free market in land prices and force landowners to sell, resulting in a final market price for their product that is lower than the free market price would have been.  This in turn induces customers to use more of the product and use it more carelessly  than they would have if they had to pay the true market cost.

My ad goes on to refer  to “incompetent” rulings on eminent domain by the Supreme Court.  This may seem bratty coming from an instant-Wikipedia-expert on the subject with no legal training.  But the rulings have been so incompetent in 1954, 1984 and later in 2005, that I feel certain most people will agree with me.  Here is the last example:

In the infamous  Kelo vs. New London, Connecticut case the Supreme Court ruling allowed the city government of New London…“ to take non-blighted private property by eminent domain, and then transfer it for a dollar a year to a private developer solely for the purpose of increasing municipal revenues .” (quoting Wikipedia).

Here’s what happened next, lifted in entirety from Wikipedia:  “The redevelopment in New London, the subject of the Kelo decision, proved to be a failure and as of 2012 (seven years after the court’s decision) nothing has been built on the taken land in spite of the expenditure of over $80 million in public funds. The Pfizer corporation, which owned a $300 million research facility in the area, and would have been the primary beneficiary of the additional development, announced in 2009 that it would close its facility, and did so shortly before the expiration of its 10-year tax abatement agreement with the city.[12] The facility was subsequently purchased in 2010 for just $55 million…” by a boat building company.

 

Also very troubling is that High courts have mostly failed to see the difference between a forced and a willing sale.   If you are planning to move to Texas, you might well be happy to get the exact market value of your house in a sale.  Now suppose you have lived in your house all your life, you love your house, it’s the house your grandparents built, and you were planning to die in it. How is being told by government that you must get out by the end of the summer, and not because of anything you did wrong.  Does market value for your house feel fair and just now?

I’ll let the concluding “public use,” or “public good” argument at the end of my ad go unsupported.  It’s tiresome to address the “is there or isn’t there anthropogenic climate-forcing going on in the world” argument.  This brings up the “externalization” of costs that the tar sands imposes on the whole world.  Tar sands oil is the most carbon-intensive fuel that’s been developed so far, and this doesn’t include the other toxic externalities such as the destruction of the Canadian boreal forest and creatuib of massive toxic waste ponds where the forest used to be.  That’s why I try to stay on the issue of subsidy, which economists essentially all agree adds inefficiency to an economy.  But suffice it to say a large percentage of US citizens would, like me, categorize tar-sands crude as a bad thing.

But we could always ask the people of the town of  Lac-Mégantic what they think.

(47 died when a train passing through that town in Quebec  derailed and exploded.  It was carrying Bakken crude, but bitumen from the tar sands is just as or more explosive.)

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