Category Archives: Property rights

Haymarket Project More than Amazon’s “Extension Cord,” Dominion Says

electric_cordDominion Virginia Power would have to upgrade its electricity distribution system to the Haymarket area of Prince William County sooner or later, even without the development of a data-center campus, testified Mark R. Gill, an electric transmission planning engineer with Dominion, in State Corporation Commission testimony filed yesterday.

“Without the request for service to the Haymarket Campus the Project would not be needed at this time; however, the high likelihood for nearby load growth, as showed in Prince William County’s own Build-Out Analysis, indicates that the Project would be needed at some point in the future to maintain reliable service in the area,” said Gill.

According to the build-out analysis, 8.5 million square feet of non-residential development and at least 889 residential units could be developed in Dominion and Northern Virginia Electric Cooperative (NOVEC)’s service territory around Haymarket, Gill said.

Gill was responding to earlier testimony by SCC staff engineer Neil Joshipura that in the absence of data centers proposed by an electric customer widely presumed to be Amazon Web Services, the electric system upgrade “would not be needed.” Dominion’s estimate for the preferred upgrade is $50 million. An alternative that would entail burying part of the route is estimated to cost $166.7 million.

Neighbors have vociferously opposed the project, fearing that it will obstruct rural views and negatively impact home values. Describing the new line, new substation, and existing line upgrades as a giant “extension cord” for Amazon, project foes argue that the cost of the project should be charged to Amazon rather than Dominion ratepayers generally. By arguing that the improvements will serve homeowners and businesses other than the “customer” presumed to be Amazon, Gill’s testimony buttressed the position that the project should be rolled into the Dominion rate base.

— JAB

Who Should Pay for Haymarket Transmission Project, Amazon or Ratepayers?

transmission_linesby James A. Bacon

Dominion Virginia Power wants to upgrade its electric grid to serve a new data center campus in the Haymarket area of Prince William County. Residents are up in arms about the potential loss to property values, and the cost of the project could range between $51 million for the least expensive alternative to $166.7 million for the lowest-impact alternative.

The Haymarket project is re-playing familiar controversies bubbling up around the state as Dominion undertakes a wave of improvements to its transmission and distribution system in response to the shift from coal toward natural gas and renewable sources. But this project has a twist. The justification for the project is to serve a single customer, widely believed to be Amazon Web Services (AWS). (Dominion is constrained by a confidentiality agreement not to identify the customer.)

The State Corporation Commission faces two big decisions: (a) Which alternative should it approve, and (b) who should pay for it — Amazon or Dominion rate payers?

Dominion has applied to the SCC for approval to construct a new substation in Haymarket, upgrade an existing distribution line from 115 kV to 230 kV, and construct a new 5.1-mile overhead line. The purpose is to deliver service to a proposed campus expected to house three data center buildings

According to testimony submitted by SCC utilities engineer Neil Joshipura last week, the data centers cannot be served reliably by the existing distribution system and connecting them to the grid would not comply with federal grid reliability standards. While Dominion has demonstrated a need for the project, noted Joshipura, “the Project is needed to serve a new customer, rather than to enhance overall system reliability, and the Staff notes that without the request for service to the Haymarket Campus, the Project would not be needed.”

The SCC has received dozens of letters from Haymarket residents opposed to the project. The area is part of Prince William County’s “rural crescent” slated for lower density development, and residents have famously fought off efforts to develop land near the Manassas National Battlefield Park and, more recently, build the Bi-County Parkway through the area. Most letters express the fear that the power lines would be visually intrusive in a quiet, rural area and would impact property values.

“We did not move to Gainesville 13 years ago to have an eyesore in our back yard,” wrote Peter Menard in a typical statement filed with the SCC.

If a line must be built, citizens tend to favor the “hybrid” above ground/buried cable alternative, although it costs three times as much as Dominion’s preferred alternative.

Citizens also object to the idea of making Dominion ratepayers pay for AWS’s business decision to locate its data center campus in Haymarket rather than Prince William’s Innovation business park. Joseph Knight put it this way in a letter to the SCC:

Amazon chose to buy cheaper land elsewhere in the Haymarket area, knowing that data center expansion is a key factor in Amazon’s overall long-term growth plans and knowing full well that the power at the Haymarket site was totally inadequate to support such an expansion and would require a major power substation upgrade. … Amazon must have intended from the very beginning to lay the entire cost of the upgrade, the property destruction, and the immense loss of value in private property on a wide swath of Western Prince William County.

Dominion classifies the Haymarket improvements as transmission facilities, not distribution facilities, which would make the project subject to the control of PJM Inter-connection, which operates wholesale electricity markets in a 12-state region. As a transmission facility, the improvements would be paid for by ratepayers in the Dominion Transmission Zone, which extends into North Carolina. A residential customer using 1,000 kWh would see a bill increase of $0.09 under Dominion’s preferred proposal and $0.37 under the hybrid proposal, said Joshipura.

Dominion had no comment on Joshipura’s testimony. “We are aware of the SCC staff report, and it’s under internal review,” said Chuck Penn, Dominion spokesman. “We’ll address it in our rebuttal” to be filed tomorrow.

Pipelines Don’t Hurt Home Values, Study Says

pipeline_impactA month after foes of the Atlantic Coast Pipeline issued an economic study showing that the natural gas pipeline would diminish property values along the proposed 550-mile route by $141 million, Dominion Energy has fired back by citing a study claiming that gas pipelines have no impact on residential property values at all.

Analyzing property values in communities in Ohio, New Jersey, Virginia, Mississippi, and Pennsylvania, the report determined that “there is no measurable impact on the sales price of properties located along or in proximity to a natural gas pipeline versus properties which are not located along or in proximity to the same pipeline.”

“These findings might help property owners feel more confident about natural gas pipelines proposed in their communities,” said Don Santa, CEO of the INGAA Foundation in a press release. The foundation is associated with the Interstate Natural Gas Association of America. The bulk of the analysis was conducted by Integra Realty Resources.

The study identified residential neighborhoods that were bordered or bisected by at least one pipeline and compared 200 home sales of similar properties both on and off the pipelines. Study areas included suburban communities outside Cincinnati, Ohio, a rural neighborhood in Clinton, N.J., a master-planned residential community in Prince William County, Va., a suburb outside Jackson, Miss., and a small town subdivision in Dallastown, Pa. Houses were “normalized” by adjusting for gross living area, size, age and other factors.

The INGAA study employed a methodology that compared actual home sales. By contrast, the Key-Log Economics study underwritten by pipeline foes calculated the loss of what it called “ecosystem service values,” which incorporated such intangibles as the loss of viewsheds, air quality and protection from extreme events. Key-Log obtained its per-acre values primarily from a database of more than 1,300 estimates compiled as part of a global study known as “The Economics of Ecosystems and Biodiversity.”

Your assignment: compare and contrast the merits of the two reports.

Pipeline Impact to Property Value and Property Insurability, INGAA Foundation

Economic Costs of the Atlantic Coast Pipeline, Key-Log Economics

— JAB

Putting a Price on the Priceless

jamestown_dig

Jamestown archaeological dig site. Photo credit: Daily Press

How does the state put a dollar value on historic, cultural and environmental assets threatened by eminent domain?

by James A. Bacon

In its high-stakes effort to win regulatory approval to build a 500 kV electric transmission line to the Virginia Peninsula, Dominion Virginia Power proposed in December to spend $85 million to mitigate the project’s impact on historical and environmental resources. That’s over and above the estimated $155 million cost to build the 7.7-mile line, which Dominion says is critical to maintain a reliable electric supply to nearly 500,000 residents from Williamsburg to Hampton.

Measures in the draft Memorandum of Agreement submitted to the U.S. Army Corps of Engineers would do nothing to alter the visual intrusion of the 17 towers crossing the James River near Jamestown. But it would allocate $52.7 million to underwrite archaeological work and other improvements in and around Jamestown Island, $15.6 million for water quality improvements, $12.5 million for landscape and battlefield conservation, and $4.2 million to acquire wetlands, restore shorelines and preserve historical resources nearby.

Dominion’s proposal is being circulated for feedback, and there is no guarantee that it will be accepted by the Army Corps, which  is charged with considering the adverse impact of the project on wetlands and historic assets. In the view of some conservationists, nothing can make up for the cluttering of view sheds in and around Jamestown, one of the most important historical sites in American history.

Whatever the Army Corps decides, the MOA still represents a watershed in Virginia regulation. It would be one of the largest sums, perhaps the largest sum, ever proposed to offset the impact of a Virginia utility project on environmental, historic or cultural resources.

“We’ve not conducted an exhaustive file search, but [I] suspect that few final mitigation proposals to resolve adverse effects to historic resources associated with a Corps permit have exceeded a total cost of $85 million,” says Mark W. Haviland, chief of public affairs for the Army Corp’s Norfolk office.

Few spots resonate in the Virginia psyche like Jamestown does, but the state is chockablock with historical sites, cultural sites, landscapes, wildlife habitats and view sheds that many would like to preserve from development. As Bacon’s Rebellion documented recently (see “Clash of Competing Values“), these intangible resources have become so ubiquitous that it is increasingly difficult for energy companies to build gas pipelines or electric transmission lines without crossing multiple assets.

Decades ago, routing pipelines and transmission lines wasn’t the complex task that it is today. It was a relatively straightforward exercise to calculate the fair-market value of farmland, timberland and houses to compensate landowners for lost economic value. But the determinants of economic value for land have evolved. Increasingly, Virginians in rural areas purchase property for the views they offer or the natural habitat they conserve, not for their ability to extract income. Moreover, various public and private entities are identifying habitats and view sheds as worth protecting — historical sites and districts; federal, state and local parks; scenic highways and scenic rivers; private conservation easements and public conservation zones;  and wetlands, wildlife habitat and more.

Can a price tag be put on an acre of habitat for the rare Cow Knob Salamander? How much is it worth to preserve the view from James Madison’s library window at Montpelier? What is the value of an obscure Civil War battlefield such as the indecisive 1864 cavalry clash at Samaria Church in Charles City County?

Much of the conflict between utilities and conservationists stems from regulators’ inability to value intangible assets that loom large in nearly every project, thus making it impractical for utilities to pay meaningful compensation. Dominion’s proposal is significant because it attempts to offset the adverse visual impact on Jamestown-area historical resources by funding the creation of non-visual benefits.

Both utility executives and their foes acknowledge the trade-offs between economic growth, jobs and profits on the one hand and hard-to-value historical, cultural and environmental assets. The great public policy question is what weight should be given to one and what weight to the other.

For years Virginia was a “a manufacturing powerhouse,” says Margaret Fowler, co-founder of the Save the James Alliance and one of the more outspoken foes of the Surry-Skiffes Creek transmission line project. “We were undeveloped, we needed power, we needed factories. Industrialization happened. At some point … we became sensitive to what we were losing — air quality, water quality, visual beauty. Has the pendulum swung too far? I don’t think so. But I understand the dilemma.” Continue reading

Clash of Competing Values

chickahominy_route

Map 1: Subdivisions and recreation areas. Proposed Chickahominy-Skiffes Creek transmission line route. (Click for image.)

Virginians need pipelines and transmission lines to keep the economy humming. But we also value our historical, cultural and historical heritage. The trade-offs are getting harder and harder.

by James A. Bacon

In the 1970s engineers at Dominion Virginia Power envisioned the need to increase the supply of electric power to the Virginia Peninsula one day. The logical course of action at the time seemed to be hooking into a 500 kV substation north of the James River in Charles City County, skirting Williamsburg, and plugging into a York County switching station where the power could be stepped down to lower voltages. To secure the route, the company proactively procured easements the entire length. It seemed an example of far-sighted planning.

When the Environmental Protection Agency enacted new toxic-emission standards earlier this decade that would compel Dominion to shut down its Yorktown coal-fired power plants, the company dusted off plans to import electricity from outside the Peninsula. However, taking a close look at the route, Courtney Fisher, an electric transmission siting and permitting specialist, found that many things had changed since the 1970s. Developers had built subdivisions right up to the easement. Environmental laws had became stricter, creating protections for wetlands and waterways. Government agencies had created classes of protected land, such as parks, conservation districts and agricultural/forestal districts. Private landowners had set up conservation easements. Society as a whole placed greater value upon scenic vistas and cultural resources like churches, battlefields, cemeteries and Indian settlements.

Even though Dominion owned the right of way, it didn’t take many public hearings to realize that building a high-voltage transmission line along that route would be a public relations disaster. The 38-mile line would cross 28 subdivisions and 300 parcels, leaving 1,129 residences within 500 feet of the line.

“The easement was purchased but the land was never cleared,” Fisher said. “Through the years, people bought houses. Their plats should have showed the easements. Some showed our transmission line easements and some did not. In either case, a line on a piece of paper is very different from the reality.”

Making matters worse, the transmission line would cut through 21 miles of forest land, requiring the clearing of 420 acres of trees, and it would affect 253 acres of wetland and forested wetlands. A crossing over the Chickahominy River would disrupt views to one of the most pristine stretches of river in eastern Virginia. To top it all off, the Chickahominy Indian tribe expressed concerns about the proximity of the line to its lands.

The route would have been so disruptive that Dominion decided to push an alternative, the 7.4-mile Surry-Skiffes Creek route across a historic stretch of the James River, arousing the wrath of conservationists and preservationists in the Williamsburg area and around the state.  As controversial as that proposed route has proven to be, Dominion believes the Chickahominy route would have been worse.

When it comes to picking a route, sometimes there are only painful choices, says Fisher. “We know we can’t please everyone, but we strive to minimize overall impacts.”

As the United States adapts to a post-coal era of more solar, wind and natural gas, major energy corporations are actively seeking to acquire right of way for two major gas pipelines and build several electric transmission lines in Virginia, with more projects waiting in the wings. The problem is that more places on the map are designated off-limits than ever before.

Route of the Williams Companies' Transco pipeline, built around 1950.

Route of the Williams Companies’ Transco pipeline, built circa 1950.

Building gas and electric lines was a lot easier a half century ago when projects disturbed little more than farm and woodlands. Witness the Transco pipeline built through Virginia around 1950 in a straight line. For purposes of acquiring right of way, it was a straightforward proposition to calculate the loss of economic value to a farm or a timber stand to compensate a landowner for an easement across his land.

Since then, suburban sprawl has smeared low-density subdivisions across vast swaths of the landscape, while changing societal values have placed a priority on preserving Virginia’s cultural, historical and environmental resources. Try assigning an economic value to a family cemetery, an expanse of marsh grass or the bucolic view from a vineyard.

Gas and electric companies follow a standard procedure when plotting routes for pipelines and transmission lines. The preliminary step is to plot the most economical path from Point A to Point B, using detailed maps identifying terrain features as well as environmental, historical and cultural assets in the path. Within the budget constraints of the project, they are willing to zig and zag to avoid sensitive locations. If it is impractical to steer around a subdivision, wetlands or scenic vista, utility companies endeavor to minimize the impact — whether drilling through mountains, in the case of pipelines, employing low-glare materials to build a transmission line, or utilizing any number of other strategies. Then begins the open houses and meetings with affected landowners, federal and state agencies and other interested parties to refine the proposed routes further.

A particularly thorny set of issues revolves around how much money utilities should spend in order to avoid or mitigate these conflicts. If a pipeline or transmission line diminishes viewsheds and destroys economic value, how much of that cost should be shifted to rate payers and how much should be absorbed by the property owner? And what happens if a historic, cultural or environmental asset is priceless? Bacon’s Rebellion will explore those issues in an upcoming article.

However those issues are decided, Virginia will be seeing more of these conflicts. To show how challenging it can be to plot a route, Bacon’s Rebellion sat down with Fisher to discuss the challenges posed by the Chickahominy-Skiffes Creek route and with Robert M. Bisha, director-environmental business for Dominion Resources, to walk through the major choke points in the proposed Atlantic Coast Pipeline. Continue reading

Why T.J. Deserves a Place in Our Pantheon of Heroes

TJ-statueby James A. Bacon

Students at the College of William & Mary have carried on a long tradition of festooning the campus statue of Thomas Jefferson with accouterments ranging from woolen scarfs to party hats. The latest fad is to append the effigy with sticky notes denouncing the founding father as a slave holder, a racist and a rapist. The activity imitates a similar movement on the University of Missouri campus, which has been coupled with a petition to remove a Jefferson statue on the grounds that it was offensive to idealize someone who owned and raped slaves. I don’t know if the anti-Jefferson movement will gain the same momentum at William & Mary, a public university in a state where Jefferson is revered like no other historical figure. But, given the tenor of the times, some kind of debate is inevitable.

TJI find the negative sentiments expressed in the sticky notes to be indisputably true at one level and profoundly misinformed at another. True, by today’s standards, Jefferson’s views and behaviors were reprehensible. He did own slaves. He did sell slaves and break up slave families. He most likely (though not indisputably) did keep a slave woman as a concubine. He did believe blacks to be inferior to whites. It is not unreasonable to ask why, for all his brilliance as an author of the Declaration of Independence, a United States president, an architect, the founder of the University of Virginia, and all-around polymath, we should continue to hold him in such high esteem (or, for that matter, why we should esteem any member of Virginia’s slave-holding aristocracy).

The case I would make for Jefferson (along with James Madison, George Washington, Patrick Henry and George Mason) is not that they reflected 21st-century sensibilities, which they clearly did not, but that they articulated values and principles for the first time in history that laid the foundation for the values we hold today. We could not have gotten to where we are today had Jefferson & Company not laid the groundwork.

Colonial America imported its institutions and mental constructs from a Europe that was emerging from the Middle Ages. Collective entities such as towns, cities, guilds, social classes and ethnicities — not individuals — were imbued with rights. When Nathaniel Bacon led a revolt against the autocratic Governor Berkeley of Virginia in 1676, leading a rag-tag band of impoverished farmers and freed slaves, he called for a restoration of the “rights of Englishmen.” Virginians were entitled to rights and privileges, embodied in the Magna Carta and common law that their ancestors had fought for and won. But those rights were not regarded as universal; they were peculiar to Englishmen and derived from English institutions. Jefferson’s great contribution was to draw from Enlightenment-era principles to argue that all men were endowed by their creator with inalienable rights, including life, liberty and the pursuit of happiness. Essentially, he reinterpreted the rights of Englishmen as rights applied universally to everyone. In Jefferson’s formulation, rights did not belong to collective entities; they belonged to individuals, and they were intrinsic to a person’s existence as a human being — the core principle of 21st-century political thought.

What is perhaps most remarkable about Jefferson is that he articulated principles in direct conflict with his own material self interest as a slave holder. While Jefferson indisputably failed to live up to his own principles, it is intellectually facile and lazy to end the discussion there. It is a truism (and one of Karl Marx’s few useful insights) that economic and social classes, both the rulers and the oppressed, create ideologies that support their material self interest. One must ask: How many ruling elites in the history of mankind have ever developed a governing philosophy that undercut their material self interest? How many ruling elites in history have wrestled with the dichotomy between those principles and the way they actually lived their lives, as Jefferson, Madison, Washington and others did? The answer: precious few. Indeed, I cannot off-hand think of any other ruling elite in the history of mankind that has done such a thing.

Jefferson articulated principles that most Americans, including the people who now despise him, hold dear today. We should revere him for making the leap from rights rooted in collective entities to rights applying to all. We should respect him for making that leap in contravention of his own material self interest, and appreciate the fact that the contradiction haunted him until his dying day, even if he failed to free all his slaves and impoverish himself in the process. The journey to equal rights for all Americans certainly did not end with Jefferson, but it started with him, and he rightly deserves a place in our pantheon of heroes.

“Cultural Attachment” the Latest Barrier to Infrastructure Projects?

country_road

Take me home, country roads…

by James A. Bacon

Landowner and environmentalist groups have advanced a number of arguments against building more gas pipelines (see previous post), but among the more novel is the idea that the proposed Atlantic Coast Pipeline (ACP) will disrupt the “cultural attachment” rural landowners feel for the land that would be traversed. What foes are contending here is that construction of a pipeline will do far more than hurt property values. It will damage peoples’ culture in ways that cannot be mitigated.

Most arguments against the Virginia pipelines are familiar in the sense that they appeal to widely (if not universally) recognized principles of economics and environmental stewardship. The “cultural attachment”gambit  is not like anything I have seen before.

Here’s how a letter to the Federal Energy Regulatory Commission from some 30 environmental and landowner groups makes the case:

The proposed route of the Atlantic Coast Pipeline will cross primarily rural landscapes where agriculture and forestry are the dominant land uses. The communities that would be affected by the ACP have deep roots in and strong cultural identification with the land and its rural character. In addition to adverse effects associated with the use of eminent domain, construction and right-of-way maintenance … the ACP will have significant adverse effects on the character of these currently non-industrialized areas.

The adverse effects of the taking and alteration of private property … must be assessed in light of the affected communities’ “cultural attachment” to the land. Cultural attachment is the “cumulative effect over time of a collection of traditions, attitudes, practices, and stories that ties a person to the land, to physical place, and kinship patterns.” Much of the land that would be affected by the ACP has been held in families for generations and people’s reliance on the land for survival and prosperity has resulted in high levels of cultural attachment. Rural Appalachian communities have historically suffered from significant intrusions, such as railroad highway constructions, that have “undercut the cultural patterns that had developed through people’s relation to the land, physical place, and kin.

As the U.S. Forest Service recognized in a 1996 Draft Environmental Impact Statement for an Appalachian Power Co. project in rural West Virginia and Virginia:

Substantial outside-generated intrusions (such as highways, railroads, and transmission lines) that breach the boundary of a high cultural attachment area may have significant adverse impacts to the sustainability of the local culture. … The permanence of the intrusions is a symbol of the imposed dominance of commerce and economic interests. … Permanent and elongate linear intrusions tend to bifurcate previously existing cultural units into new units. This tends to fracture informal support systems and create new boundary areas. Boundary areas created by intrusion are often abandoned by area residents from cultural management, thereby increasing the likelihood of additional intrusions.

Bacon’s bottom line: It strikes me that this argument is getting at something real. Some people feel an attachment to the land so strong that it transcends the monetary value of the land. Disruption to these ties cannot be measured by any conventional means, thus they cannot be compensated.

If the Virginia Department of Transportation wanted to run a highway through my home in western Henrico where I have lived for 13 years, I would be plenty unhappy. But I wouldn’t be devastated. My personal identity is not tied up in the house. I have no ancestral ties here, no spiritual ties. Leaving the house would have no impact on my network of kin and friends. I fully expect to sell the house when I retire and I’m ready to downsize. The house is a commodity in a way that property is not for people with strong attachments to the land.

I sympathize with those who fear the loss of something that can never be retrieved. But I have concerns. The idea of “cultural attachment” is so vague and hard to define that it could be applied to almost anything. There is no way to measure cultural attachment, and there is no way to ascertain the sincerity of the people who claim to have it. If this new doctrine were given legal force, it could be invoked to block any infrastructure project that ran through a rural area, that is to say, almost every road, highway, rail line, transmission line or pipeline ever proposed.

The idea has been around at least 20 years (since the 1996 U.S. Forest Service report at least). It doesn’t appear to have gained much traction since then. It will be interesting to see if FERC gives it any credence.