Eminent Domain & the Threat to Private Property

EMINENT DOMAIN POWER FOR A NON-UTILITY PRIVATE COMPANY? 

Update: This bill was ratified and signed by the governor with the provision that eminent domain would not apply to private, for-profit pipeline companies. This provision will sunset in June of 2019.

On Tuesday, October 20, a Senate Judiciary subcommittee met to discuss and take testimony on S.868, a bill that would grant the power of eminent domain to a company constructing any kind of pipeline. Eminent domain, remember, is a power held by governments – not private companies – to expropriate private property for public use. The bill now in the General Assembly, however, would require private pipeline companies to go through a permitting process with both the Public Service Commission (PSC) and the Department of Health and Environmental Control (DHEC) before the power of eminent domain could be exercised.

It bears emphasizing that, with or without a permitting process, this is the first time state law would explicitly allow a non-utility private company to seize private property. 

In order to obtain the necessary permit from the PSC a pipeline company would have to demonstrate that its proposed project serves the “public convenience and necessity.” The state constitution allows the legislature to define what constitutes a public use, and S.868 defines it in the vaguest way possible: “a use that is vital to the welfare of the people of this State.” In S.868 legislators have chosen to devolve this power to state agencies, like the PSC, that are even less accountable then they are.

Throughout the subcommittee meeting the bill’s sponsors denied they were expanding the powers of eminent domain. This despite a recent opinion issued by the Attorney General explicitly casting doubt on the idea that oil pipeline companies can exercise eminent domain powers under current law.

In other words: Oil pipeline companies do not (at least according to the AG) have eminent domain power; S.868 would establish a permitting process whereby oil pipeline companies could attain eminent domain power; therefore S.868 would, in fact, expand eminent domain power.

Why doesn’t the state constitution protect private property?

The short answer to that question is: It’s vague.

• The U.S. Supreme Court held in Kelo that eminent domain could be exercised on behalf of a private company so long as the taking served a “public purpose” (for example, to increase revenue).
• The South Carolina constitution was amended after Kelo to say that private property shall not be taken for private use, and that eminent domain may not be used unless the condemnation is for public use.
• Unfortunately, however, the constitution doesn’t define “public use.” Thus lawmakers can satisfy this clause with legislative language such as “vital to the welfare of the people of this State.”
• The constitution also permits property condemned by the government for “blight” – vaguely defined to include lack of ventilation, light, and sanitary facilities, dilapidation, and deleterious land use – to be taken and transferred to a separate private interest.
• Under our state’s weak constitutional protections, many private companies considered to be utilities (telephone companies, electric lighting and power companies, water supply companies, etc.) are currently permitted to exercise eminent domain.

What can be done?

• The constitution needs a clear definition of public use. This definition should include only projects that are publicly owned and made open and available to all members of the public, such as roads and parks.
• The constitution should further clarify that eminent domain can only be exercised by the state and never by a private entity.
• Finally, the constitution should disallow the use of eminent domain to eliminate “blight.” Historically blight takings have often served as pretext for takings for economic development schemes. Florida has already disallowed blight takings, permitting local ordinances to deal with threats to public safety without using eminent domain powers.

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