Court cuts off gas contracts

August 17, 2016:- If you are interested in electricity prices, today’s decision from the Supreme Judicial Court (SJC) affects you. The case saw the Conservation Law Foundation and the power company Engie Gas (formerly GDF Suez) on the same side. Neither wanted to see electricity companies able to buy pipeline capacity, as this article in the Springfield Republican explains.

The question before the SJC: May the Department of Public Utilities  (DPU) approve contracts that electricity-distribution companies want to enter into with natural-gas power generators?

The answer: No. That is the abridged version of today’s 37-page decision.

The impact? Find out by looking at your electricity bills over the months and years ahead.

Note to grammarians and students of legislative drafting: You too may be interested in this decision because it discusses redenda singula singulis, AKA the rule of the last antecedent.

IMG_7031
Peter Vickery, Esq.
archimedes

New Gas Pipeline Decision

archimedes
Leverage requires a place to stand

Three environmental groups lost their case against the Federal Energy Regulatory Commission (FERC) because they lacked standing. As Archimedes noted, you can move the world with a long enough lever and a fulcrum, but only so long as you have a place to stand. Without standing, not only will you fail to move the world, but — as the three groups learned too late — you will also fail to move the United States Court of Appeals for the D.C. Circuit.

The story began when Spectra Energy applied to FERC for a certificate of public convenience and necessity (a permit) to build a natural gas pipeline to New York City via Jersey City. The Atlantic Chapter of the Sierra Club, Food & Water Watch, and NO Gas Pipeline intervened in the FERC proceedings and opposed the issuance of a certificate for several reasons, notably the increased likelihood that the gas in the pipeline would cause the homes of their Jersey City members to suffer from increased levels of radon. FERC did not fnd the objections persuasive and on May 2012 issued the certificate. The three organizations and the City of Jersey petitioned the Court of Appeals to review the decision.

On July 1, 2014, the court dismissed the petition for want of jurisdiction. It had other reasons for dismissing Jersey City’s petition, but for the environmental coalition the fatal issue was standing: the court held that each group had failed to show “injury in fact,” meaning “the invasion of a legally protected interest which is (a) concrete and particularized… and (b) actual or imminent, not conjectural or hypothetical.” In trying to demonstrate standing, the groups alleged that the pipeline would raise the risk of radon and terrorism, both of which could injure their Jersey City membership.

These risks were too speculative, the court decided. The supposedly heightened radon risk depended on energy companies choosing to (1) extract high-radon gas and (2) transport it without taking steps to reduce the radon levels. There was no evidence that Spectra would make these choices.

As for the terrorism threat, the court observed that the commission of an act of terrorism depends on the “intervening acts of third parties,” i.e. terrorists.  Perhaps the court had in mind the perverse incentive that would result from forbidding construction of a pipeline because of the chance that terrorists might try to blow it up. If acts of violent sabotage could serve as the basis for denying permits, some pipeline opponents might find themselves unable to resist the temptation to engage in them. And, besides, there is precious little that al Qaeda et al will not target or weaponize in the realm of infrastructure (or anything else, for that matter).

Here, however, I am speculating. But if I were trying to persuade a judge to deep six a project, I would keep this public policy issue in mind and refrain from relying on the target-for-terrorism argument. The main point for readers with an interest in the Northeast Expansion Project is that for standing purposes, organizations and the individuals that they consist of must demonstrate facts that establish “actual and imminent” injury. Harms that are too contingent and attenuated will not suffice. That remains true even if the organizations intervened at the FERC stage.

The take-away: In and of itself intervening in FERC proceedings is no guarantee that the intervenor will have standing to challenge FERC’s decision in court.

Pipeline: House feels the need for speed

Although the Natural Gas Act preempts state laws about natural gas pipelines, it preserves the role state agencies play in issuing permits under federal environmental laws. This proviso appears in section 717b(d) of the statute. For example, because pipeline construction involves the discharge of water, the Clean Water Act requires the pipeline company to obtain a water quality certificate (in addition to a certificate of public convenience and necessity from the Federal Energy Regulatory Commission (FERC)). reduced speed

Not being immune to public pressure, state agencies have allegedly dragged their feet on occasion (e.g. failing to promptly process water-quality applications) a problem Congress sought to address in 2005 via the Energy Policy Act. Congress intended to accelerate the permitting process through expedited judicial review, which allows a pipeline company to petition the U.S. Court of Appeals for the D.C. Circuit if the agencies fail to meet FERC’s deadlines.

But according this report from the Interstate Natural Gas Association of America, since the act took effect the speed of permitting has gone down rather than up. In 2012 President Obama issued Executive Order 13604 directing federal agencies to “adhere to guidelines and schedules”  and, to that end, establishing a Steering Committee on Federal Infrastructure Permitting and Review Process Improvement. But the new committee does not seem to have injected or diffused sufficient alacrity into the executive branch.

So to solve the problem (again) Congress is considering another bill, the Natural Gas Pipeline Permitting Reform Act. This post on PipelineLaw.com provides some helpful background. At present, if an agency lets FERC’s deadlines slide the onus is on the pipeline company (not FERC) to go to court for an order telling the agency to comply with the timetable. Under the proposed bill if an agency fails to approve or deny a permit by FERC’s deadline, the permit will issue anyway. After passing the House (252:165) the bill is now before the Senate. With no action likely this side of the November elections, the bill will probably not have any effect on the Northeast Expansion that Tennessee Gas Pipeline Company proposes to build across northern Massachusetts.

Featured

Pipeline Answers: What Counts Toward Just Compensation? Stigma and Hassle

What rights do landowners have when a pipeline company takes part of their property by eminent domain? As I mentioned on Monte Belmonte‘s show on The River, although federal law governs the taking itself, state law determines the meaning of “just compensation.” What, then, is “just compensation” for an easement over part of your land?

Here in Massachusetts the courts start their analysis with the applicable statute, M.G.L.c.79, s.12, which provides that in the case of a partial taking the assessment shall include “damages to the part not taken.” So the landowner needs to show the diminution in the fair market value of the whole parcel (both the taken part and the remaining part). In other words, what would a hypothetical willing buyer pay for the property as a whole after it had been on the market for a reasonable length of time. At this point readers may wonder how a judge would arrive at that hypothetical buyer’s price. The following case provides some guidance.

When the United States District Court for the District of Massachusetts considered this issue, it decided to take into account several factors, including (1) “stigma,” i.e public fear of potential hazards (even exaggerated fears based on misinformation) and (2) the possible additional construction expenses and the “administrative hassle” of having to abide by the company’s rules. The figure the judge ordered was far in excess of what the company deemed reasonable, so the company appealed. But the Court of Appeals for the First Circuit affirmed the judge’s decision. Portland Natural Gas Transmission Sys. v. 19.2 Acres of Land in Haverhill, 195 F.Supp.2d 314 (D.Mass. 2002) aff’d 318 F.3d 279 (1st Cir. 2003).

What does this mean for landowners in Berkshire and Franklin Counties whose properties the underground pipeline might cross? When preparing for the eminent domain case, they should make sure their attorneys have garnered abundant evidence of how the taking will diminish the fair market value of their property, including photographs and testimony from expert and lay witnesses alike. In putting their evidence together they should bear in mind that the court should take into account the “stigma” and “hassle” factors.

If you have questions about what might constitute “stigma” and “hassle,” please feel free to post a comment/call/email.

Gas in Mass.? Not so fast.

In October I gave a talk on the law surrounding hydraulic fracturing (fracking) and shared the stage with Professor Steven Petsch, a geologist who teaches at the University of Massachusetts, Amherst. oct 9 mtg 1 You can watch both presentations by clicking here. Mine starts around the 46-minute mark, by the way.

My presentation focused on the current regulatory ban on Class II wells and the question of whether it could withstand a courtroom challenge. Professor Petsch described the geology of the Pioneer Valley and made absolutely clear that nobody has discovered natural gas in the area. He also explained why: The history of the rock formations in Western and Central Massachusetts make it extremely unlikely that they contain recoverable natural gas.

About a year ago the Massachusetts State Geologist posted a helpful overview online, which you can read here. Like Professor Petsch, the State Geologist makes abundantly clear that nobody has discovered natural gas in Massachusetts.

Nevertheless an organization called Environment Massachusetts keeps claiming that gas deposits have been found here. The people who work for Environment Massachusetts may be right about a lot of things, but on this they are just wrong. So please remember, if a canvasser from Environment Massachusetts asks you for a contribution because (as their website alleges) “geologists recently discovered shale gas in Western Massachusetts,” you may decline with a perfectly clear conscience.