Saturday, January 14, 2012

Why New Hampshire Needs HB 648 (Bragdon/Forrester amendment) Now! (Part 2)

Why New Hampshire Needs HB 648 (Bragdon/Forrester amendment) Now!

Q’s & A’s

                                                           Part 2

                                                    Part 1  | Part 3

Q7:  Northern Pass keeps touting it claims about “economic benefits” from the transmission lines. You know, things like jobs, taxes, and electricity prices.  They also talk about environmental benefits.  Does any project get to use eminent domain in New Hampshire just because it has economic benefits or environmental benefits?

A:  No!  Under the NH state constitution, economic or social benefits don’t entitle any project to eminent domain.  We have to say first off that we do not agree that the supposed benefits claimed by Northern Pass are real (click here to see a detailed analysis of why). But even if these claimed economic or social benefits were real, they simply could not justify the use of eminent domain in New Hampshire.  This is another area where Northern Pass tries to muddy the waters.  Let’s go over the reason why any such benefits are irrelevant.

The first thing to understand is that there is a set of federal constitutional rules on eminent domain as well as a wholly separate set of state constitutional principles.  For Northern Pass, all that matters are the New Hampshire takings principles because they are stricter.  But to understand the New Hampshire rules, you also have to understand the federal approach, because our state rules were adopted to tighten up the federal principles and make eminent domain much harder to achieve in New Hampshire.

The infamous Kelo v. New London case shows the federal rules.  In that case, a split US Supreme Court said the city of New London was allowed to take Suzette Kelo’s house and other properties because the city had an economic development plan that called for redevelopment of the area with new offices and other improvements.  The city’s plan would supposedly create new jobs, higher taxes, and other economic benefits.  The US Supreme Court majority said this was enough to justify eminent domain.  Jobs, taxes and other economic benefits claimed by the city showed that the city had a “public purpose” for the takings, and the court refused to dig any deeper.

The Supreme Court appeared almost sheepish in making this broad ruling, however, and they took special care to say that states should feel free to adopt stricter limits.  As the court’s majority said, “We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.”

There was nationwide public outrage about the Kelo decision.  People strongly objected to the idea that a big business could take their home for a new office building just because tax collections would supposedly increase or new jobs would come to town. (In fact, Pfizer never built in New London.) Responding to the public outcry, most of the states considered or adopted strict new state requirements that limited takings to a much greater extent than federal law.

New Hampshire took the lead and adopted some of the most stringent limits on eminent domain.  This was done by a constitutional amendment.  The new amendment, Article 12-a, was adopted by an overwhelming 85% popular vote.  Before the popular vote, the New Hampshire state senate, in a bipartisan vote, unanimously approved and recommended the new eminent domain amendment.  (Isn’t it ironic that just five years later, the senate is having such a difficult time upholding the very same property rights?  Remind your senator about 12-a!)

Article 12-a says, “No part of a person's property shall be taken by eminent domain and transferred, directly or indirectly, to another person if the taking is for the purpose of private development or other private use of the property.”  When you call your senator, please ask him or her to take the time to read Article 12-a.

The key limit in Article 12-a is that takings are not allowed for the purpose of private development.  Article 12-a was meant to reverse the Kelo concept that because economic or social benefits may flow from a private development, that’s enough of a public purpose to justify eminent domain.  Article 12-a turns the equation around.  Under Article 12-a, if the purpose of a proposed taking is private development, then the taking is illegal, and the economic or social benefits from the private development, no matter how big they supposedly may be, are just plain irrelevant.

Got it?  The test for eminent domain in New Hampshire under Article 12-a is the purpose of the taking.  If it’s for a private development project, the proposed taking is illegal.  Jobs, taxes, electricity prices, environmental benefits or any other claimed economic or social benefits do NOT come into the mix.

As we explained in yesterday’s blog (Part 1), Northern Pass is the poster child for a private development project.  It was dreamed up by a foreign government corporation and three investor-owned utilities for their own profit.  The proposed transmission lines are not needed to keep the lights on; to the contrary, they are all about more profit for the corporate sponsors of the project.  The lines weren’t asked for by any federal, regional or state regulator, they are essentially unregulated, and contrary to any normal public utility assets, they are for the exclusive use of just one company, Hydro-Quebec.

Let’s put this all together and summarize Article 12-a and Northern Pass with a graphic:

Private development project > no eminent domain
Northern Pass = private development project
Northern Pass > no eminent domain

Q8. Wow, New Hampshire’s 12-a really does make us the “live free or die” state, doesn't it? It’s perfectly clear that 12-a rules out eminent domain for private utility developers. So why are we even bothering with 648? Wait, wait, don’t tell me . . . I remember from yesterday. It’s that 371:1 problem. You said that in the old days when PSNH was owned by the state and fully regulated and it built transmission lines to electrify our towns, providing electricity was a public purpose.  But we’re in a new century, and electricity has been deregulated.  Private businesses now “do” electricity.

You and I can start a new business and build a hydro plant to make some money.  That’s a private business, and it doesn’t get eminent domain under Article 12-a or RSA 371:1.  You and I can start a new business and build a transmission line to make some money.  Just like Northern Pass, that’s a private business, and it doesn’t get eminent domain under Article 12-a.

All HB 648 does is update RSA 371:1 to treat private transmission lines the same as private generation plants.  Neither gets eminent domain under the state constitution, no matter how many jobs, taxes or other economic or social benefits they may supposedly provide. Right?

A. Yes, you’ve got it right, Q.  Purported economic and social benefits are entirely irrelevant to the property rights discussion, and RSA 371:1 needs to be updated to conform to 12-a. Northern Pass’s claimed benefits will probably come up anyway; let’s hope the Senate President rules any discussion of them out of bounds!  Anything else, Q?

Q. Yes. I've heard a rumor that there may be an announcement of a power purchase agreement (PPA) between PSNH and Hydro-Quebec, and that Northern Pass will say this means Northern Pass is good for New Hampshire and should have eminent domain.  What is the story with a possible PPA? Does it change the eminent domain analysis?  If a PPA is announced, does this mean HB 648 should not pass?"

A. Good question. We’ll answer it tomorrow in Part 3.