Last month, Nashville’s mayor filed legislation to condemn a piece of private property. Often, condemnations are used to allow governments to acquire land to build roads or schools. But in this case, the condemnation was intended to stop a data center. A company had a lawful contract to buy the land, the zoning fight wasn’t going the mayor’s way, and so the city is attempting to take the land so nobody can use it.
That’s an abuse of eminent domain, and it deserves to lose in court. But local governments aren’t the only danger. Pressure is building for the federal government to step in to help build more data centers.
Recommended Stories
Some of what’s happening involves proper uses of government. An executive order fast-tracking federal permits or bills in Congress to accelerate the energy infrastructure these facilities need are helpful. When government speeds up its own approvals and gets out of the way, everyone wins.
NUCLEAR OPTION: THE ONLY LOGICAL ANSWER TO AI ENERGY CRISIS
But permitting reform never satisfies for long. Sooner or later, even when a permit is granted quickly, a project still stalls because a landowner won’t sell or because state and local governments stonewall projects. Then, someone will draft the next step: a federal certificate, a designation, or a delegation of authority that lets data center developers overcome unwilling owners and governments, as pipeline companies have for nearly eighty years.
In 1938, Congress put interstate pipelines under federal rate regulation. In 1942, it went further: no company could build an interstate pipeline without a federal certificate approving the project — the route, the facilities, all of it. Then, those federally approved pipelines ran into a wall. Landowners said no. States refused to let out-of-state companies use their condemnation procedures, and courts denied eminent domain to projects Washington had already blessed.
Companies held a federal right to build, but no way to exercise it. So in 1947, Congress added Section 7(h), which said any company holding a federal certificate may take the land it needs through eminent domain. Suddenly, a private, for-profit corporation could wield the sovereign power to force you to give up your property rights.
Notice what Congress didn’t do. It didn’t loosen its grip on routes so companies could buy around unwilling sellers. It didn’t free them to pay whatever a willing seller demanded — cost-based rate regulation meant big payouts risking money the company might never recoup. The federal government had eliminated the two things a free market uses to solve exactly this problem, flexibility and price, and then concluded the only fix for the mess it created was to let private companies condemn land.
Defenders of the system point out that condemnation is rare. By the industry’s own count, less than 2% of easements on recent projects required condemnation. But that statistic proves the coercion, not the restraint. Every “voluntary” easement is signed in the shadow of automatic condemnation. When the company across the table can take your land if you say no, you aren’t negotiating, and attorneys representing landowners know that. Landowners are choosing between selling for more money now or getting less money when it’s condemned later.
That is the pattern to watch for. Government intervention creates a bottleneck; the bottleneck creates a “necessity,” and the necessity justifies handing sovereign power to private interests. Each step sounds reasonable at the time. The destination is not.
Now apply the pattern to data centers. Whatever thin case existed for pipeline eminent domain in 1947 doesn’t exist here at all. A pipeline is linear infrastructure, and a single holdout parcel can kill hundreds of miles of route. A data center is a building. It can go in another county, another state, on a brownfield, on the federal land the government is already offering. The companies building them are among the wealthiest in human history. If a hyperscaler can’t persuade a landowner to sell, the answer is to offer more money or build somewhere else. That’s not a market failure. That’s the market.
AI DATA CENTER BACKLASH IS AIMED AT THE WRONG TARGET
So what should Washington do? Keep doing what works — cutting its own red tape is the rare intervention that expands liberty instead of reallocating it. Beyond that, its role is the one the Constitution actually assigns it, and it runs in both directions. Property rights don’t have a favorite team. The farmer who doesn’t want to sell his land for a data center and the company that lawfully bought a parcel to build one hold exactly the same right: to decide what happens to their own property. Courts should protect both — striking down condemnations designed to veto a lawful private project, as Nashville is attempting, just as firmly as they should refuse to bless schemes that let corporations condemn their way through unwilling sellers. And if courts don’t adequately protect property rights, Congress and state legislatures should do so. The right to say no and the right to buy and build are the same right. A government that can override either one can override both, and eventually will.
If a data center is worth building, it’s worth paying for — every parcel, at a price the owner accepts. Congress should remember what happened the last time it decided otherwise. Eighty years later, we’re still living with the Gordian knot created by government interference into free markets and property rights.
Daniel Dew is Vice President for External Affairs at Pacific Legal Foundation. He previously worked for companies building federally regulated interstate natural gas pipelines.
