Bacon's Rebellion

Democracy Thrives in Sunlight

Pipelines Offer Hope, Provoke Despair

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by

James A. Bacon
in , ,

Fern and Earl Echols stand near a pipeline marker on their property in Giles County. Photo credit: Roanoke Times
Fern and Earl Echols stand near a pipeline market on their property in Giles County. Photo credit: Roanoke Times

Recent articles have highlighted rural communities that stand to win and lose from proposed natural gas pipeline mega-projects crossing the state.

On the hopeful side, the Daily Press reports that Isle of Wight County economic development director Tom Elder would like to build a lateral line off the proposed Atlantic Coast Pipeline (ACP) to supply gas to the county’s intermodal industrial park. Gas from the interstate pipeline would supplement supplies made available by local gas distributor Columbia Natural Gas.

“If we had a heavy user, there’s some stipulations that Columbia couldn’t provide at this point,” Elder told the Isle of Wight Board of Supervisors.

Said County spokesman Don Robertson: “We’d love to have a gas line at the intermodal park — it’s going to make that park more marketable. … How and when that happens is obviously going to be determined by the amount of funding and the board’s willingness to do that.”

Isle of Wight joins Brunswick County, Buckingham County and others that view natural gas as a potential boon to their industrial development efforts.

By contrast, residents of Newport in Giles County worry that the economy of their small town will suffer from the Mountain Valley Pipeline. “Newport, more than any community in the pipeline’s proposed path, is potentially going to take a direct hit in the heart of our historic district, while avoiding more affluent communities and homes,” lifelong resident Perry Martin told the Roanoke Times.

Initially, Newport residents expressed concerns that the MVP route would run close to a school, recreation center and rescue squad building. When the pipeline company adjusted the route closer to the center of the town, foes said it threatened other assets such as an ante-bellum church and the historic C.A. Hardwick house. If the pipeline exploded — admittedly, an unlikely event — the potential impact zone would encompass those buildings and several others.

Pipeline companies attempt to negotiate with landowners to obtain the right to cross their land, and often adjust their routes if they can’t reach agreement. But sometimes altering the route is impractical, in which case they can invoke the power of eminent domain on the grounds that their projects are a public necessity. Communities along the route of the ACP in Augusta, Nelson and neighboring counties voice similar fears to the residents of Newport.

“I just don’t understand how people can come in and just take what you’ve worked your whole life for,” said resident Earl Echols. “Where’s 80-year-old people going to go and start over?”

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22 responses to “Pipelines Offer Hope, Provoke Despair”

  1. LarrytheG Avatar
    LarrytheG

    I’m not understanding why the pipeline companies can’t work with all counties and citizens in the path to sweeten the pot.

    They ought to offer every county an opportunity to tap if they find a company that would come if there was a tap.

    and each property owner – should get a solar installation on the pipeline right of way that either feeds to their house or feeds to the grid and they get an income from it.

    People who give up their land for a private venture should be treated as partners in that venture – not unwilling donors.

    It boggles my mind that these companies present themselves in a way that some see them as little different than the robber barons of an earlier time in this country.

    Are they blind to this or just don’t care or perhaps that is really who they are!

  2. Steve Haner Avatar
    Steve Haner

    I suspect nobody knows yet but there will be some amount of compensation and for all we know at this point it will be more than enough to re-locate. To read the story you might think nobody was going to be paid at all….

    The propaganda campaign is widespread. There is a front page article on the recent small newspaper published for Northside Richmond, all about the dislocations caused by the Blue Ridge Parkway during the FDR administration. Oh, the horror, the horror – again, reading the story, you’d think no compensation was offered – although during the depression it probably was not much. You’d think there was no benefit from the jobs created, or the iconic parkway that now exists (and that now Must Be Protected Against Evil Pipelines.) Bit of irony there….

  3. LarrytheG Avatar
    LarrytheG

    Steve – the BRP is not a profit-making venture.

    It was truly for the public.

    Would you approve of a company taking land for the BRP then charging unregulated fees to enter it ? I support fees, by the way but only to the point where they cover the costs… not profit.

    I’m flummoxed by how you seem to dump all of this in the same category and don’t differentiate between what is a genuine public use and what is a bona-fide private sector for-profit venture.

    1. TooManyTaxes Avatar
      TooManyTaxes

      Larry, it’s my recollection that much of the BRP was constructed under the direction of the Works Progress Administration as part of a Depression-era jobs program. I think even the CCC was involved. So, while the Parkway is an important public resource, it’s creation had a different set of parents in my view.

      1. LarrytheG Avatar
        LarrytheG

        @TMT – it was – but the point was that the land was taken – to be used for a road that served the public – as opposed to a private sector company taking the land and then building a for-profit road.

        I’m distinguishing between land taken for an obvious and indisputable public purpose usually by the govt versus land taken by a private company to be used as a for-profit venture.

        essentially when ED is used – the company is taking private property as the capital for it’s project instead of investors providing that capital.

        It’s essentially a subsidy from property owners to a for-profit entity.

        Other companies have willingly negotiated with property owners on a willing-buyer/willing-seller basis – on a 95% success basis:

        ” The number of affected property owners was staggering. Nearly 25,000 stakeholders were involved in the half-mile corridor encompassing the pipeline route – all of whom had to be advised of their rights under FERC regulations. REX West and East covered portions of eight states and involved 1,352 miles of right of way for a 42” welded steel natural gas pipeline system. There were 4,843 tracts with more than 6,500 individual owners. ”

        “The project was accomplished within budget and with nearly 100% voluntary acquisition. For REX West, voluntary acquisition was 99.7% successful. While REX East proved to be a more difficult area to acquire and the acquisition costs were somewhat higher, CLS still accomplished voluntary acquisition at the rate of 99.2%. The use of condemnation was extraordinarily low for a project of this size traversing such a large and difficult area.”

        https://www.irwaonline.org/eweb/upload/mar_Web_RockiesExpress.pdf

        My question is – why is this not a reasonable way to do these Dominion/Mountain Valley pipelines?

        This is not that hard to do ….

        By the way – I DO SUPPORT the use of eminent domain for the hold-outs.. the 5% or less who just will not sell.. but I think the rest of it should be acquired on the same basis the Rocky Express pipeline right-of-way was acquired.

        Property owners should be the equivalent of investors.. able to share in the profits.. as de-facto investors. We should never be forcing one set of property owners to give up their assets so another property owner can use those rights to make a profit for their ventures. That’s just wrong.

        1. TooManyTaxes Avatar
          TooManyTaxes

          Larry, eminent domain has been used by public utilities for years, as you know. Businesses affected with the public interest have been regulated to one degree or another and have had access to the power of condemnation. A pipeline is such a business.

          Article I, § 11 of the Virginia Constitution states: “A public service company, public service corporation, or railroad exercises the power of eminent domain for public use when such exercise is for the authorized provision of utility, common carrier, or railroad services. In all other cases, a taking or damaging of private property is not for public use if the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development, except for the elimination of a public nuisance existing on the property.”

          The landowners who oppose this taking should file suit in state court and prove the pipeline is not for “public use,” if they can.

          Of course, a property owner can negotiate any contractual agreement that the pipeline operator will accept. I’ve negotiated a number of radio spectrum leases and have tried to get the commercial wireless operator to agree to share revenues/profits from the licensed radio spectrum. But they’ve never agreed. The license holders have preferred to have some form of compensation than none. I’ve always obtained an acceptable lease for my clients since they’ve voluntarily executed the lease.

          Your suggestion is certainly interesting. I just don’t see utilities agreeing to it. Or the General Assembly changing the law. But that’s just my view.

          1. LarrytheG Avatar
            LarrytheG

            TMT – The “company” is a subsidiary of Dominion and NOT a regulated Public Service Corporation but rather a for-profit company.

            If it actually WERE a regulated public service corporation I would have no problem with it’s use of ED.

            They’re saying that because they’re going to sell a lot of the gas to Dominion itself for electricity – that that means they are virtually a public service company but I’m not buying it because clearly they intend to sell other gas – for a profit – to the highest bidder,

            When we say a business is “serving the public interest” what does that mean?

            Does it mean that WaWa and 7-11 and Costco qualify as “serving the public interest” because they sell fuel at their stores?

            would that entitle them to condemn land to put up one of their stores?

            If the Dominion subsidy were a true regulated company serving the public interest then the price of the gas they sell would be regulated and as far as I can tell – it is not.

          2. TooManyTaxes Avatar
            TooManyTaxes

            As I wrote, take them to court and prove the proposal’s ” primary use is for private gain, private benefit, private enterprise.” That will stop any condemnation of private property. The Virginia Constitution was amended several years ago in reaction against Kelo.

            Chief Justice Taft: ”(1) Those [businesses] which are carried on under the authority of a public grant of privileges which either expressly or impliedly imposes the affirmative duty of rendering a public service demanded by any member of the public. Such are the railroads, other common carriers and public utilities. (2) Certain occupations, regarded as exceptional, the public interest attaching to which, recognized from earliest times, has survived the period of arbitrary laws by Parliament or Colonial legislatures for regulating all trades and callings. Such are those of the keepers of inns, cabs and grist mills. . . . (3) Businesses which though not public at their inception may be fairly said to have risen to be such and have become subject in consequence to some government regulation. They have come to hold such a peculiar relation to the public that this is superimposed upon them. In the language of the cases, the owner by devoting his business to the public use, in effect grants the public an interest in that use and subjects himself to public regulation to the extent of that interest although the property continues to belong to its private owner and to be entitled to protection accordingly.” Wolff Packing Co. v. Industrial Court, 262 U.S. 522, 535 -36 (1923).

  4. Steve Haner Avatar
    Steve Haner

    The pipeline industry is highly regulated, Larry. Pipelines compete with trucks and trains – they provide transportation. Trucks and trains run on dedicated rights of way built with eminent domain and so should pipelines. If this pipeline were entirely inside one state, that state would control it. Because this pipeline crosses multiple states, FERC will control its location. The wholesale price of natural gas is not regulated but not that long ago, early in my career, it very much was. A bipartisan wave of price deregulation of many industries changed that, and letting the price of gas follow the market is why we have this explosion of supply.

    The opponents of this lack facts. Larry, you simply ignore basic facts. I suspect you are even wrong in your claim that the underlying company is not a public service corporation. I fully understand the people who will actually lose property or have their lives disrupted, and I think the compensation should be generous. I would also note that far fewer houses will be taken than would be if the same route was being developed for trucks or trains!

    Those who are not directly impacted, their motivation is total hostility to fossil fuels in any form.

  5. LarrytheG Avatar
    LarrytheG

    Let me make clear – I am IN FAVOR of a gas pipeline to move that gas to where it is needed.

    I am OPPOSED to any/all NIMBY that is just NIMBY for NIMBY sake. I DO NOT support those opposed purely on their own self-interests…

    I see TRUE public necessity pipelines as no different than power lines, highways, train rights of ways – even rights-of-ways along public roads for utilities. I support all of that as necessary for a civilized world.

    And I would be IN FAVOR – or ANY legitimate and legal public service company to build a pipeline using Eminent Domain as long as the Govt ensures that the rights of private property owners are protected – as well as the public’s right to be protected from predatory pricing from a monopoly – as well as the Monopoly itself being protected from unfair competition.

    so I hope all of this makes clear.

    Now – if the Dominion Subsidiary is indeed a legitimate public service company – I would agree and provide a mea culpa although I’ve said from the very beginning that I have no problem with legitimate public service corporations using ED.

    However, then I’d throw this back to Steve and other defenders. Would you still hold the same position if the subsidiary is NOT a public service corporation?

    I think I have a consistent position. Is it consistent to support a for-profit company that is not a public service corporation – be given the authority to use ED?

    Bonus Question – If there are 3 proposals for the same basic concept -can ALL of them be meeting the same public necessity criteria if only one of them will be economically viable?

    Are all 3 going to be able to essentially take land from people – then abandon their project later and then do what with the land?

    these are legitimate questions… and so the very first one is whether or not the Dominion Subsidiary is a true public service corporation. If it is – I shut up! 😉

  6. CleanAir&Water Avatar
    CleanAir&Water

    There seems to be a bunch of important factors left out of this discussion regarding the use of eminent domain ….

    First there is no immediate ‘need’ for these pipelines. The natural gas required to run the public utility generation of electricity is already available. Not only is it available, Dominion’s filings with the SCC for the 2 recently built gas generating plants stated they have contracts to purchase the gas from other pipelines. Where is the public necessity?

    FERC’s requirement for ‘necessity’ is a pledge by the pipeline builders that they have contracts to sell the gas. Those contracts presented to FERC for the ACP are redundant contracts … more gas for the already supplied 2 new plants. What ‘public necessity’ says that additional ‘standby’ sources of supply must be available?

    So, if the public necessity rests in the future … additional gas plants to be built … then … who is to say that those future plants will actually be built? Will the comparative prices of solar and offshore wind be competitive? Many predict that will happen, and storage too in the early 2020’s. That should reduce demand along with the potential for efficient buildings ad storage will begin to replace gas for immediate startup when the sun goes behind the clouds.

    BNEF’s annual state report says that “Energy efficiency represents an obvious area of opportunity for Virginia. ACEEE places VA’s energy efficiency savings potential at 23% cumulative energy savings in 2030 relative to 2012 consumption. That’s equivalent to avoiding 25TWh of generation in 2030. (BNEF- annual 2016) Actions to incent efficiency improvements will save everyone monies.

    Another future would include offshore wind. Virginia is building some of the manufacturing needed for an offshore industry in Hampton Roads, and Virginia’s coast is prime real estate for offshore wind, with depths of 50 m being found as far out as 80 km. “This shallow water, combined with an exceptional OWE resource, a large coastal population, an aging and congested land-based grid, low severe-hurricane risk and relatively high electricity prices, makes this an ideal location for large OWE farms.” Production estimates believe offshore wind in MD and VA can produce 65% of total grid electricity, including meeting peak usage, the most expensive electricity to generate. Currently higher priced, a commitment by Massachusetts to developing offshore wind will bring the price down 55% according to a study at the University of DE.

    So the prices of natural gas will go up and the price of renewables will continue to come down. Where does that leave the $5B pipelines? Pipelines are 40-year infrastructure investments. Profits rely on increased demand, but there is a caveat to that. Should the promised demand go away, then the pipeline may export their product. Eminent domain for export goods? Not exactly “public necessity”.

    So yes, I do not want to see additional fossil fuel infrastructure built, but ‘total hostility’ is hyperbole. I recognize that the future will take time. Our clean energy future will be phased in, but that will not happen if we keep building ‘old stuff” with lifetime use in the 40+ year range.

    1. TooManyTaxes Avatar
      TooManyTaxes

      CleanAir&Water – Out of curiosity, which entity, if any, has intervened in the FERC proceeding requesting a certificate of public necessity to make your arguments? Thanks.

  7. LarrytheG Avatar
    LarrytheG

    Are the Atlantic Coast Pipeline and the Mountain Valley Pipeline Necessary?

    https://www.southernenvironment.org/uploads/words_docs/2016_09_12_Synapse_Report_-_Are_the_ACP_and_MVP_Necessary__FINAL.PDF

    Virginians added a plank to their Bill of Rights specifically to rebut the Kelo decision. “A public service company, public service corporation, or railroad exercises the power of eminent domain for public use when such exercise is for the authorized provision of utility, common carrier, or railroad services,” it says. “In all other cases, a taking or damaging of private property is not for public use if the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development, except for the elimination of a public nuisance existing on the property. The condemnor bears the burden of proving that the use is public, without a presumption that it is.”
    Virginia law treats pipeline companies as public service corporations, and the Atlantic Coast Pipeline would provide utility services. At the same time — and here’s the rub — it would do so for private gain and private enterprise. ”

    From the RTD ” Bart Hinkle: Pipeline brings a property-rights fight to Virginia”

  8. CleanAir&Water Avatar
    CleanAir&Water

    Mot sure what you are asking. The FERC process – application from the ACP to build the pipeline. Approval gives them the right. The ACP is primarily owned by Dominion and Duke Power.

    “Under Section 7(c) of the Natural Gas Act of 1938, the Federal Energy Regulatory Commission (FERC) is authorized to issue certificates of “public convenience and necessity” for “the construction or extension of any facilities … for the transportation in interstate commerce of
    natural gas.” Thus, companies seeking to build interstate natural gas pipelines must first obtain certificates of public convenience and necessity from FERC. The Energy Policy Act of 2005 (EPAct) designates FERC as the lead agency for coordinating “all applicable Federal authorizations” and for National Environmental Policy Act (NEPA) compliance in reviewing pipeline certificate applications. “

    1. TooManyTaxes Avatar
      TooManyTaxes

      What I was getting at is: What interest groups, existing or ad hoc, have intervened in the FERC proceeding to challenge the claimed need for the pipeline?

      1. TomH Avatar
        TomH

        TMT,

        I have intervened in the FERC proceeding on behalf of Friends of the Central Shenandoah. Supporting information is available on Censhen.org. My argument has been primarily about the lack of need and its subsequent effect on the legitimate use of eminent domain. More will be submitted shortly. If you send a note to me through Jim, I can send you the filings.

        I have presented the arguments before in Bacons Rebellion. To sum up. In 2017 enough pipelines will exist to bring the full capacity of the Marcellus to market. Much of the production of the Marcellus can then directly supply the northeastern markets. The Transco corridor supplied these markets since the 50s with gas from the Gulf Coast. Now about half of its capacity will be available to move gas from the Marcellus to the Southeast and beyond. The Department of Energy agrees in its Quadrennial Energy report (2015), saying that “this reversal of flow is sufficient to meet the needs of Virginia and the Carolinas” through 2040.

        According to a spokesman I talked with, Transco cannot consider this available volume as “capacity” unless they have customers for it. When they do have customers, such as for a project that is designed to move gas into the Transco corridor for sale in the Southeast that is larger than the ACP, that volume of pipeline capacity is now “fully subscribed”. That is how Dominion reports it to the media and in their application for the ACP. It is technically correct but very misleading. When policymakers and ordinary citizens hear that existing pipelines are “fully subscribed” it sounds like no more natural gas can be transported through them. In this case, the “subscribers” for the capacity are all gas producers in the Marcellus hoping to find a market for their gas. This is the most productive and cheapest source in the U.S., cheaper than ACP’s source. Virginia and North Carolina can access all the gas they need via existing pipelines with much less disruption and at a much lower cost to ratepayers.

        According to tariffs filed by the ACP with FERC, the cost of serving the Brunswick and Greensville plants using the ACP would cost Virginia ratepayers more than $218 million per year more than using existing pipelines to transport the gas. And $91 million per year more to buy the gas if the current price differential remains.

        Since an adequate source of supply exists and using existing pipelines is far cheaper than a new pipeline, this hardly supports a finding of “public convenience and necessity” for the ACP. The project is simply to add revenues to non-regulated utility holding companies (the ACP will yield a profit of $135 million per year). These companies are moving away from electricity because there is limited load growth and are concentrating their investments in natural gas because FERC pays a 50% higher rate of return for gas pipelines than utilities receive for transmission lines and power plants.

        Clean Air & Water has pointed out that within 10 years the cost of renewables and storage will undercut the cost of conventional generation. It is happening in California now. Aggressively building pipelines and power plants without taking into account this looming disruption by new technologies, ratepayers and shareholders will be stuck with huge stranded costs. Or far higher energy bills.

  9. LarrytheG Avatar
    LarrytheG

    this pipeline was built 99% without eminent domain:

    http://www.eia.gov/todayinenergy/images/2014.06.18/main.png

  10. Steve Haner Avatar
    Steve Haner

    But in fairness, Larry – was not the possibility of eminent domain lingering in the background, motivating at least some people to reach a deal? Also those are very sparsely populated regions, at least until you approach the Mississippi. Even then, a lot of large tracts of farmland in southern Illinois and Indiana probably make things easier. You don’t see farms like those in VA. As previously noted, placing a buried pipeline across a cornfield doesn’t really keep the farmer from doing business. Just like placing a pipeline under the Missouri River will do those “tribal activists” absolutely no harm. This war is about something else and it might wind down fairly based on the election.

    This is America. Just about everything is a profit-making enterprise. The pipeline business to me is no different than trucking, rail, electricity generation and distribution, etc – all profitable and all regulated and all dependent on the use of eminent domain.

    1. LarrytheG Avatar
      LarrytheG

      Steve – yes I admit the potential of using ED probably did influence folks to some degree but look at the stats:

      “REX West and East covered portions of eight states and involved 1,352 miles of right of way for a 42” welded steel natural gas pipeline system. There were 4,843 tracts with more than 6,500 individual owners. ”

      and they had a 99% voluntary agreement rate.

      but I’d still ask you – how would you differentiate between a Walmart needing land for store and Dominion needing land for a pipeline in terms of the criteria for using ED?

      Do you think Walmart should be able to use ED?

      If not – what is your reason?

      and how would that reason compare with Dominion’s ability?

      is there a clear and concise criteria that allows Dominion but not Walmart?

      in terms of pipeline under reservoirs.. I’m not sympathetic to the protestors… to be honest but on the other thand – putting an oil pipeline under a reservoir seems a really bad idea… and if you look at a map -you can see the issue – it’s money for additional pipeline – to go around. So let me turn the tables on you – do you think it would be a good idea to put an oil pipeline under the Chesapeake Bay? most pipelines have a service life and the news these days shows multiple major leaks on major pipelines. It’s one thing for one to run for hours or days in a field… but underneath a reservoir?

  11. LarrytheG Avatar
    LarrytheG

    Steve – there is a real distinction between a public service company and a for-profit company.

    Are you saying that any for-profit company should be able to use Eminent DOmain so it can serve the public “better”?

    How about you making a distinction such that Walmart cannot
    condemn land for a new Walmart to “serve the public’?

    How would you make that distinction if not with the existing definition of a public service company or public convenience and necessity?

    what criteria would you use to insure that any for-profit company could not use ED just to make it cheaper for them to do business?

    You gotta admit – if Walmart could go threaten a property owner with ED -he’d probably sell quicker and cheaper , right?

  12. TooManyTaxes Avatar
    TooManyTaxes

    I just received an email from Americans for Personal Property, which is fighting the pipeline, especially as it would require the use of condemnation. It’s pushing a route that would be collocated with an existing Dominion facility (power line, I presume) on the same RoW.

    It sounds worthy of consideration, but also raises security issues in my mind. Putting two critical public facilities next to each other in a single RoW makes it easier to sabotage both at once. I hope FERC also considers security as part of its decision.

  13. LarrytheG Avatar
    LarrytheG

    I’m NOT opposed to the use of ED – for a purpose that is regulated to ensure the public is provided with a needed service – as a regulated fair price.

    I’m NOT opposed to ANY for-profit company acquiring capital from investors to build capital facilities that they would then sell for as high a price as the market will bear to make as much profit and ROI as they can.

    what I object to is giving the later company a govt-subsidized acquisition of capital from people who are not only not investors but in fact coerced… and unwilling property owners whose property is being essentially given at less than market rates to other property owners for those owners to use for their own benefit.

    The REX pipeline – a FOR PROFIT company DID acquire 95+% of their right-of-way NOT through eminent domain but instead by reaching voluntary agreement for an agreed-to market price from each of over 4000 individual property owners.

    That’s the way it should work – not the way Dominion is doing it.

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