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Testimony Before Texas Senate State Affairs Committee Defending Private Sector Use of Eminent Domain

Testimony of Tom Giovanetti

President, Institute for Policy Innovation (IPI)

Before the State Affairs Committee

March 4, 2019

SB 421


Thank you Mr.\Madam Chairman for this opportunity to share our thoughts. My name is Tom Giovanetti, and I am the president of the Institute for Policy Innovation, a 32 year old conservative, free-market policy think tank in Dallas. We are strong believers in both property rights and economic growth, and of course the issue of eminent domain arises when property rights and economic growth intersect.

I’d like to focus my remarks on the troubling assumption that seems to underlie this legislation: Namely, that there is something wrong or potentially abusive about allowing the private sector to use eminent domain. Such an assumption is completely wrong, and in fact contrary to the Constitution, contrary to limited government, and contrary to conservative principles. Though I admit that this position may surprise some who consider themselves defenders of property rights, limited government, the Constitution, and conservative principles.

Neither the federal Constitution nor the state constitution reserve a monopoly to government to build and own infrastructure. Let me repeat that: Our constitutions do not give government a monopoly on building infrastructure. In fact, as we should all know, the core design of the Constitution is to limit government, not the private sector. The Constitution limits government, and conservatives believe in limited government, and thus a small government, but a large, robust private sector.

The Constitution puts only two conditions on eminent domain: It has to be for a public use, and it has to include just compensation. The public use requirement does not mean government. And it’s clear from law and from court decisions that infrastructure is a public use.

Remembering that the Founders gravely distrusted government taking private property from citizens, it’s remarkable that this provision is in the Constitution, and it’s fair to assume the Founders would have assumed private companies would have been building roads and bridges and ports, rather than the very government they were trying to limit.

If only the government can use eminent domain, than only the government can build infrastructure, and that’s a recipe for bigger government. Conservatives believe government should do only that which it is mandated to do, and the private sector should do everything else. It was on purpose that the government didn’t build our cable and telecom and broadband networks. It was on purpose that the government didn’t build our railroads, or oil and gas pipelines.

If only the government can build infrastructure, that’s a recipe for bigger government. That’s an offense to my limited government principles. It is a feature, not a bug, that we let the private sector build infrastructure with their own private capital instead of requiring that all infrastructure be built and maintained by government using taxpayer dollars. If you remember nothing else from my testimony I hope you remember this: By allowing robust private sector infrastructure building, we can grow the Texas economy without growing the Texas government. Growing the Texas economy without growing the Texas government is the best of all possible worlds to someone who claims to be a limited government conservative.

I have far more confidence in private sector companies to arrive at voluntary agreements with landowners than I do in the government. Government, after all, is accustomed to using force and getting its way, while in the private sector companies are accustomed to having to please their customers, and having to deal with the blowback of unhappy customers and bad publicity. It is far more likely that landowners will be better served by the private sector than by government when it comes to eminent domain and infrastructure construction. Private companies have every incentive to keep consumers as happy as possible. This is another feature, rather than a bug, of letting private companies build infrastructure.

There may very well be ways to improve the current laws and practices in Texas regarding eminent domain, but the legislation before you wrongly assumes that private sector use of eminent domain is more problematic than government use, and exclusively targets the private sector for new regulations and requirements. Let me suggest that a conservative who believes in limited government would make the opposite assumption: Namely, that we should be more sensitive to abuses at the hand of government than at the hand of the private sector.