VIII. "Going Prices" In Up-Markets: Regulated Prices In Down Markets?
Will the now largely deregulated utilities go the old route of condemnation, or simply buy the corridors they want? One of the persistent reasons for the use of eminent domain in the public interest is to avoid hold-out prices by monopoly corridor property owners being passed along to the public in the form of higher utility rates. Corridors are special use properties. Some corridors are owned by railroads, some by quasi-public entities. And some are owned by government agencies.
Many corridors are public goods for which there is no provable market value because they never transact in the open market place (e.g., public roads, flood control channels, navigation servitudes, airspace for plane travel, etc.). Privately owned corridors only sell infrequently and have a limited market value to a narrow range of buyers. Corridors are one of the ultimate examples of why real estate is often termed an imperfect market in which properties are unique and illiquid. It is probably not coincidental that with the crash of dot.com businesses and stocks, the use of eminent domain has returned as evidenced by the court cases cited above. As former going prices for fiber optic easements go by the wayside with the crash of the dot.com industry, the surviving deregulated telcos can buy at the bottom of the market based on nominal land values (Turrettini, 2002, p. 186). Once the telecom and dot.com markets light up again they can reap a windfall at the expense of landowners.
To borrow a term from the “California Energy Crisis” of 2000, does eminent domain thus become more of a way to “game the system” than a means of Constitutional just compensation? Or is there an unstated rule that government will look the other way and allow deregulated telcos to pay much higher “going prices” for fiber optic easements and other property rights than is afforded under eminent domain during bull markets; and impose nominal compensation by eminent domain during bear markets?