Dominion Resources Is on a Tear

acl pipeline map By Peter Galuszka

Dominion Resources has been on a tear recently.

It’s been muscling through a dubious law in the General Assembly that would allow it to avoid State Corporation Commission rate audits for six years.

And, it has been throwing its weight around in less populated sections of the state. It is suing to force its way on the land of private property owners to survey its $5 billion Atlantic Coast Pipeline project that would take fracked natural gas from the Marcellus Shale formation in West Virginia and Pennsylvania on new routes to the southeast.

Property owners, particularly those in Nelson and Augusta Counties, are fighting in federal court in Harrisonburg.

What’s most interesting about this case is how the Commonwealth of Virginia, which swaddles itself in the ideals of the American Revolution of individual rights , somehow ignores the rights of small property owners when a big utility with deep pockets for political donations is involved. One wonders where all the conservatives are who were huffing and puffing over the Kelo case a few years back

And (bonus question) what do the two situations have in common? Republican State Sen. Frank Wagner of Virginia Beach, that’s who. He introduced the bill for Dominion to sidestep SCC oversight with the excuse that Dominion has deal with the impacts of a yet-to-be-finalized set of new federal carbon emission rules.

In 2004, Wagner also carried water for Dominion and other power companies by getting a law passed that would allow a “public service company” to survey private property without getting permission.

This is the basis of several hundred lawsuits Dominion has filed against small landowners. In the pipeline case, it will be interesting to see whether the natural gas is used for the common good of American customers or will end up being exported to foreign countries. Dominion insists it won’t,  but time will tell.

Another oddity is that Dominion is demanding access to survey a pipeline route when it hasn’t formally applied for  the project with the Federal Energy Energy Commission. Imagine if some private landowners showed up at the front door of Dominion’s downtown Richmond headquarters and demanded access to the building because they were thinking about building a natural gas pipeline? (Somebody call security!)

Here’s an opinion piece I wrote for this morning’s Washington Post.

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22 responses to “Dominion Resources Is on a Tear

  1. another great article from Peter!

    I’m not so bound up over fracking and linking it to whether or not a pipeline should be built or not.

    In general, I think pipelines are far safer than other means of moving fuels and other liquids and gases.

    However I am opposed to the companies having the right of eminent domain unless the pipeline is available to any customer to use and not reserved just for the company building it

    AND

    that it not be used to export

    If a company wants a pipeline for it’s own business use and/or wants to be able to export – then they should be operating in the free market and if they have to pay an arm and a leg for right-of-way – then that’s just as much a legitimate cost of doing business as buying anything else they need is.

    And I still don’t understand why in the age of GOOGLE Maps and helicopters and drones – there is a need to go physically on someone’s property and my suspect is that DOminion uses this as an opportunity to engage the owner in a dialogue about acquiring the right-of-way and I’ve heard that intimidation has been perceived by some property owners.

    and right now – we actually have at least 3 different companies trying to build similar pipeline routes – and it appears that Dominion may have a competitive advantage – due in large part to it’s relationship with the Va GA and legislation that some say provide it with an unfair advantage over other competitors.

    So.. I support pipelines but I also support the free-market over crony-capitalism and especially the kind that has the State favor one competitor over the other.

    are we going to give the right of ED to any/all companies that propose a pipeline route?

    • I generally agree with Larry that a natural gas pipeline that does not serve any retail customers or retail suppliers should not have the right to condemnation as a utility.

      But what about the Alaska pipeline? It likely could not have been built without access to government land and the ability to condemn private property. Does it make a difference because it is a oil pipeline and oil is not a utility service. I’m having a hard time reconciling the two issues.

      What if we discover an oil field as big as the North Slope of Alaska in Fluvanna County? Would Virginians support construction of a pipeline to deliver it to oil refineries and to Norfolk for further shipment. Somehow I think the answer would be “yes.” But then why do I agree Dominion shouldn’t be given eminent domain for its non-utility gas pipeline?

      • TMT – do you know how much money each Alaskan gets every year from the oi and pipeline?

        What if, in Virginia the property owners got a cut of the profits and/or got free natural gas for as long as the pipeline existed?

        why not the property owners become de-facto investors with all rights and benefits – all investors get?

        • YES! This is exactly my point as well. You need to use my land, you share the profits.

        • Larry, I think you have answered your own question. If a landowner and a pipeline reach agreement for an easement, the compensation could be anything agreed upon. But when condemnation is involved, the court must award the landowner the value of the property interest.

          I’ve negotiated a number of leases/licenses for landowners (antenna, fiber optic) and the facility providers consistently refused to share any profits or revenues with the landowner, with the only exception being preferred provider in a condo or planned community. There, the HOA got a door fee in exchange for bundling the price of the telcom/video services into the monthly HOA fee. The price is always substantially cheaper than the market price because HOAs often have the right to cancel existing contracts once residents take over control of the HOA.

          • You’re assuming that landowners are in the position to negotiate on a level playing field. Most have no experience doing this. Information is extremely hard to come by and mostly only available from the company which tells you what they want you to know when they want you to know about it and not before. Over and over we hear “that hasn’t been determined yet.” Many landowners feel there is nothing they can do but accept what the company offers and believe that paying an attorney to help them just means they’ll have another bill to pay. The threat of eminent domain is a powerful threat to most citizens. Talk with people who are dealing with this. Our world does not contain the level playing field one you envision. Everyone says we’re just being NIMBYs and I’m amazed how many people shrug and say, it’s the way it is. This is all dead wrong.

  2. I was also curious and perhaps someone who reads/posts here knows the answer.

    we have a ton of existing rights-of-ways for roads and powerlines and even other pipelines.

    Is there some rule or law that prevents using existing rights-of-ways?

    any one know?

    • None whatever. The better to use an existing ROW, if you can do so.

      A significant problem is, you may be able to bury a pipeline under fields etc. in a straight line from point A to B, where a railroad has to follow grade and a transmission line may have to follow a more circuitous route for esthetic and property-owner-opposition reasons. So it may cost too much extra to follow the longer route.

      Another problem is, to follow a railroad ROW, you have to get the railroad’s cooperation, and they are notoriously uncooperative.

      But the killer limitation to electric/pipeline cooperation is physics.

      Unfortunately, the physics of running a metal pipeline beneath (thus parallel to) a very high voltage transmission line (like the ones with the big steel towers and nice wide swaths through the woods) carrying an alternating electric current is: massive inductance of electric current in the pipeline. Perhaps approaching the same thousands of volts as the electricity in the transmission line.

      This would not be fun for people working on the pipeline or touching anything physically connected to it. Also it would accelerate corrosion of the pipe itself.

      From what I’ve heard, the non-metallic alternatives for most large pipe construction are not adequate to the task.

    • Look at the FERC record for Dominion’s justification for not using existing rights of way along roads or powerlines. It seems pretty lame to me. One right landowners should have is real information on those alternatives. To date, I have not found a way for us to force Dominion to truly consider those alternatives.

  3. In West Virginia land owners that allowed gas lines on their property got deeded free gas for the dwelling for as long as gas flowed in the pipe, or from the well. There is also precedent in West Virginia that if a power line was built and if it crossed you land, even only a nick, you got free electricity.

    Are Virginians smart enough to leverage a deal like that for all land owners this line crosses or are West Virginians just better at negotiating than Virginians?

    • These are transmission lines and they have no intention of serving every landowner. Further, because they want the line to move gas across the state, the cost of connecting to the line is tremendous. These lines are twice or more the size of ones that’ve been used in the past.

  4. Murphy’s Law implies that power lines and pipelines aren’t good neighbors.

    Then there is the Hen House law which recommends hen house disbursement over making things easy for rabid terrorist foxes.

    That last one is also a law that could apply to wannabe monopoly energy companies with friends in high office.

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  6. well.. here’s something interesting:

    ” The Commission staff’s Alternatives analysis will consider whether the pipeline can be placed near or within an existing pipeline, power line, highway or railroad right-of-way.”

    From FERC – who has to approve the Certificate of Need:

    An Interstate Natural Gas Facility on My Land? What Do I Need to Know?

    http://www.ferc.gov/for-citizens/citizen-guides/citz-guide-gas.pdf

    another thought –

    Jim Bacon does not like the govt deciding if something is “needed”.

    yet.. here is FERC performing that role…

    wonder how Jim feels about that?

  7. here’s a definition worth paying attention to:

    ” Definition of CERTIFICATE OF CONVENIENCE AND NECESSITY

    : a certificate from a public board or commission required by federal or state statute before engaging in certain public undertakings or services to protect existing franchises against injurious competition”

    since there are 3 different proposals – why not let them actually compete against each other – without the use of Eminent Domain or give the certificate to the company that can get the pipeline built with the least number of condemnations…. that proffers the strongest claim that it will not export the gas?

    Dominion has the fix in for Virginia but I wonder if they are going to have that advantage in front of the Feds.

    What serves the public – best – is to let the companies compete to see who wants to serve the public the most with the least impact to property owners and the promise to not export.

    • Check the record for how many of these FERC has denied. FERC was set up to promote energy and has steadfastly refused to incorporate a consumer office or position for balance. Inherently, FERC is probably even more on Dominion’s side than even our bullied state government is.

      It IS hard to imagine that all the proposed lines will be built in Virginia but if at least one is going to be built, I expect Dominion will be the one to do it. When did you last see it not get its way?

  8. I was with you until that last: “The promise to not export”? Why? Why do you care? Most energy commodities are sold at close to world prices adjusted for transportation cost anyway so it doesn’t matter. But even if you cared on principle, how can you differentiate between the customer who buys from the pipeline to convert the gas to LNG and export it, versus the customer next door who burns it in a boiler? Why should that difference matter to the regulator approving the project, either? It’s exactly like saying you can move data over my fiber optic cable to browse the internet, but not to stream movies in competition with my movie service, and especially not to watch porno flix. Either you are a common carrier, with no discretion to judge the customer’s intended use of the delivered product, or you are NOT. Common carriage = net neutrality = none of your business why.

  9. BTW LarryG, the rest of what you say, “What serves the public – best – is to let the companies compete to see who wants to serve the public the most with the least impact to property owners,” is a fair summary of the criteria that the FERC will in fact apply to decide between competing interstate gas pipeline applications.

    • re: exporting

      is exporting serving the same public interest – that justifies using eminent domain?

      I’m not opposed to export – as a strict business proposition without any subsidies from the govt or landowners.

      ED is a subsidy and the use of it is justified when the public directly benefits.

      • I agree that eminent domain should not be used if the purpose – even part of the purpose – is export. It seems we’ve been focusing on energy independence since the 70’s. Some said we had to get involved in the recent no-win scuffles abroad to protect our access to oil. If this is so important, why would we export our fuel, especially a fuel that is so damaging to our environment? Moving fuel across state lines for US needs is a totally different ball game from exporting it. Pipeline owners say they provide the highway and can’t influence what those who contract with them to move the gas do with it. None of the economic analyses I’ve seen are convincing that Virginia is going to benefit from any of these pipelines. To tap the gas and provide economic development, a very huge energy intensive business would be required. Would there be sufficient workforce to support that? It’s the landowners who are most hurt with this project. If it’s going to be done, landowners need a steady stream of income for taking the daily safety risk of hosting the pipeline. That should happen before any taxes are paid or the taxes should directly offset landowner taxes.

        • I think you make a good point about fuel.

          For years and years we’ve been told that the price of fuel can harm our economy and kill jobs – and, in fact, access to oil has been used as justification
          for asserting that being involved in the middle east – protects our security.

          I have no problem exporting manufactured projects – as much as we can.

          but I have a huge problem exporting our oil and gas if it tends to deplete our own supplies as well as drive up the price we pay for it domestically.

          moving gas within our domestic borders for distribution to any/all customers – like a public utility is different from a company building infrastructure for it’s own private business interests as evidence by the common carrier law.

          obtaining right-of-way via eminent domain is a subsidy – a public subsidy – paid for by taxpayers. It should not be used to reduce costs for private ventures that do not benefit the taxpayers who are subsidizing it.

          we have built a network road system to serve everyone including private interests.

          we have something similar to that right now with a pipeline network.

          if someone wants a new segment or leg – seems to be that right-of-way should be available to anyone who has a use or need for it – rather than dedicating it to one company.

          here’s something worth reading about the issue:

          Why aren’t Kelo activists also incensed over natural resource development takings?

          The Frontier of Eminent Domain

          http://object.cato.org/sites/cato.org/files/serials/files/regulation/2008/6/v31n2-4.pdf

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