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XII. Deregulatory Takings

Recently, as abundant sources of capital for telecom have dried up, some courts have stepped in to rule that the deregulated prices set for fiber optic corridor easements, pole line attachments, and for property rights involving other deregulated network industries, such as natural gas pipelines, will be re-regulated in the “public interest.” This is a sort of "deregulatory taking" theory, giving away private rather than public rights (Sidak and Spulber, 1998).

Many public utilities own their gas, telephone, power line, and cable rights-of-ways as easements within privately owned lands. To mandate that compensation for use of private land to accommodate the timely build out of telecom infrastructure at say agricultural land prices instead of industry-created “new economy prices,” makes eminent domain into an arbitrary and capricious game in which one side holds all the cards. If the deregulated utility does not like dealing an ace card (“new economy compensation”) it can always deal a joker (nominal compensation). As legal scholar Donald J. Kochan has stated, abuse of the public interest doctrine for condemnation often results in the metaphorical special interest capture of wealth from Peter to effect well-intended subsidies to Paul (Kochan, 1998, pp. 49-116).

Real property law has historically addressed condemnation, inverse condemnation, and regulatory takings issues, but not deregulatory takings issues (Sidak and Spulber, 1998). A deregulatory taking of real property is perhaps an anomaly in that, unlike physical takings or regulatory takings, it represents a physical invasion of property in which the only ostensible public interest is acquiring property rights on the cheap, as landowners would otherwise be able to sell such property rights by voluntary exchange market for considerably more compensation than buyers have willingly paid others. Deregulatory takings result from the “sale” of commoditized legislation to interest groups (Kochan, 1998, p. 91).

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