Category Archives: Regulation

Lots of Sunlight, Not Much Transparency

Clear as mud

Clear as mud

by James A. Bacon

Two months ago the Department of Navy announced the signing of a contract with Dominion Virginia Power to purchase enough solar electricity to meet 6% of Naval Station Norfolk’s electric power needs for more than 10 years. The next day, Dominion announced the purchase the Morgans Corner Solar Facility, located within Dominion’s North Carolina service territory but developed by Chicago-based Invenergy, Inc. The net result: Morgans Corner would supply green electricity to the naval station.

Key terms of both deals were not released. Dominion did not say how much it paid to purchase the project from Invenergy, nor did the Navy say how much it would pay for the electricity. Invenergy had little to say about anything. There was little tangible information in either press release, nor could I extract information in interviews to determine if the transactions are in the best interest of U.S. taxpayers or Virginia rate payers.

Virginia’s electric power companies are under pressure from a voluntary Renewable Portfolio Standard to generate 15% of the state’s electricity from renewable sources by 2025. At the same time implementation of the Environmental Protection Agency’s Clean Power Plan, which requires Virginia to reduce its carbon dioxide emissions 32% by 2030, will compel power companies to phase out coal-fired electricity production in favor of natural gas and renewables. Given the relative economics of wind and solar in Virginia, it looks like solar will be the main vehicle for reaching clean power goals.

Here’s the problem: These deals are about as transparent as a muddy windshield. As Virginia utilities position themselves to devote hundreds of millions of dollars in renewables — Dominion alone expects to invest $743 million over the next six years — the public doesn’t know what kind of deals are being cut.

When I started digging into this story, I hoped that the Morgans Corner deal might provide some insight into the economics of solar energy in Virginia. After all, Naval Station Norfolk is part of the Department of the Navy, a public agency that one would think would have a commitment to transparency on matters not compromising the safety of our military forces. But after badgering Navy spokesmen for weeks, all I could get was an email response with information that I, for the most part, had extracted already from Navy websites. Dominion was more cooperative — the company set up interviews with two executives — but the company was limited by non-disclosure agreements as to what they could say. As for Invenergy, repeated interview requests yielded no more than a referral to the company’s original boilerplate-laden press release.

Taxpayers are paying for this solar electricity. Why can’t we have access to the terms of the contract? It’s not as if Naval Station Norfolk is a corporation that maintains secrecy for competitive reasons. I feel like something is being hidden from the public. Sadly, the public doesn’t know enough to care.

Here’s what we know…

As part of the Obama administration’s larger goal of reducing government greenhouse gas emissions, the Department of the Navy has set a goal of producing or procuring 1 gigawatt of renewable electricity by the end of 2015 on its way to producing 50% of its electricity from alternative sources by 2020.

According to Diane Corsello, Dominion’s director of business development for solar generation, the utility has developed a “good working relationship” with the Navy over the years. “They reached out to us,” she said, for help in meeting the renewable mandate. The Navy and Dominion explored multiple options for providing green energy to Naval Station Norfolk, including both on-site and off-site facilities.

Around that time, Invenergy was developing a 20-megawatt solar facility in North Carolina’s Pasquotank County, taking advantage of state and federal tax benefits. The company, which specializes in developing and constructing renewable energy projects, had 3,500 megawatts of such projects in the development pipeline as of September. Developing a solar project entails, among other things, acquiring land, typically near a high-capacity electric transmission line, and obtaining a slew of permits before construction can begin.

“It takes a lot of time to develop a site from a greenfield condition,” explained Todd Flowers, senior business development manager for Dominion.

While working with the Navy, Dominion identified the Morgans Corner project as a good match. Invenergy had moved Morgans Corner far along the development process. The 20-megawatt project, which will install 81,000 solar panels on 110 acres, had all its permits and key agreements in place, and construction was scheduled for completion in April 2016.  Dominion could step in and acquire the facility in a “build-transfer” agreement. Continue reading

Battle Lines Forming Over Clean Power Plan

Attorney General Mark R. Herring

Attorney General Mark R. Herring

The partisan battle lines are forming over the implementation of the Environmental Protection Agency’s Clean Power Plan, which calls for Virginia to reduce carbon dioxide emissions from state power plants 32% by 2030.

Attorney General Mark R. Herring, a Democrat, announced two weeks ago that Virginia will join a coalition of 17 other states supporting the Obama administration against a lawsuit filed by 24 other states. Foes of the plan argue that the EPA far exceeded its legislative authority in regulating CO2, and observers say the case could well reach the U.S. Supreme Court.

Del. Israel O'Quinn, R-Washington.

Del. Israel O’Quinn, R-Washington.

Meanwhile, Del. Israel O’Quinn, R-Washington, has introduced a bill that would require the General Assembly to approve and oversee implementation of the plan in Virginia. While the Clean Power Plan mandates CO2-reduction targets for each state, it allows each state to figure out how to achieve the goals.

Herring justified his support for the plan on the grounds that climate change “is a real and urgent threat to the health and safety of Virginians, our environment, and our economic success as a Commonwealth.” By way of specifics, he cited the threat of sea-level rise in Hampton Roads that could displace residents and businesses and threaten Naval Station Norfolk, and the prospect of extreme weather, droughts and floods. said Herring: “It’s long past time to acknowledge these realities and take decisive action.”

O’Quinn’s bill would require the Department of Environmental Quality (DEQ) to work in conjunction with the State Corporation Commission (SCC) to prepare a report assessing the plan’s effect on the Virginia’s electric power sector, electric customers, jobs, economic development, economic competitiveness,  and state and local government.

The report also would identify new state laws that might be needed to implement the plan, study whether to rely upon EPA measures for calculating the CO2 reduction goal, and report on whether the Commonwealth should invest in energy efficiency programs, promote non-emitting nuclear power or participate in multistate programs. The report also would advanced recommendations on how best to avoid stranded investments in power plants that would be shuttered before they were fully paid off.

Getting answers to those questions is probably a good idea — the more information, the better — but sure to be controversial is the final item in the bill: “DEQ shall not submit to the EPA any state plan until both the Senate and the House of Delegates have adopted resolutions that approve the state plan in accordance with this act.”

It is safe to predict that the McAuliffe administration will not respond favorably to the idea of requiring the Republican-dominated General Assembly to approve the plan. Separation-of-power issues are potentially at stake here as well as ideological differences over climate change. Look for this to become a hot topic in the 2016 session.


How the Digital Trinity is Transforming Health Insurance

surdakby Christopher Surdak, JD

In his recent post, “The Politics of Big Data,” my friend and colleague Jim Bacon asked some pertinent questions regarding how our government, and our society at-large, can put data to use for the common good. In a fairly short discourse Jim hit on a range of explosive topics, from privacy, data sovereignty, property rights, Universal Service, government regulation and legislation, universal health care, Obamacare and Medicare/Medicaid, predictive analytics and preventative medicine, and more. Each of these could fill a book in their own right; I should know, as I’m working on those books right now!

Of all of the issues raised by this discussion, the one that immediately came to mind was that of the use of our individual data to support the effective delivery of healthcare. As I have written and spoken of extensively in the recent past, healthcare stands to be the industry most disrupted by the application of Big Data in the coming decade. (Indeed, I’m keynoting a discussion on exactly this disruption at the American Health Information Management Association information governance conference this week.) In no other industry is so much valuable information put to so little use, for so little gain, at so much cost, thereby leading to suffering, the waste of human life, and the ineffective expenditure of so much treasure.

Why is this so? Why is our health system so sickly when compared to that of other countries? Why does healthcare seem to extract so little value from information, when compared to other industries? Is it from too much government regulation, or too little? Is it from the influence of commercial special interests such as the payers, or the professional special interests of practitioners, such as the AMA? Is it because our technologies cannot meet our needs, or is it because we are not prepared to accept the implications of those technologies? I would argue that all of these factors are at play in this discussion; that all of the ranting that accompanied Jim’s post were all equally spot on, and all completely off the mark.

All of these positions are equally accurate, and equally pointless in the real world. Whether healthcare providers put patient data to work for the common good or their own good is irrelevant; it will be put to work in any event, with significant unintended and extremely disruptive consequences. Whether special interests or patients will benefit from the use of data is not open to question. The answer is: both will. Whether or not our privacy will be sacrificed or not is also a pointless question; of course it will. And finally, whether or not we will willingly give up our privacy in order to gain these benefits from our data is a further pointless question; we already have.

Disruption in Insurance: The Canary in the Coal Mine for Healthcare

The best example I can give of what WILL happen in healthcare over the next decade, equally in Virginia as with the other 49 states, can be seen in what is rapidly taking over the insurance industry across the country. Insurance is an old-school, highly-regulated, data- and money-intensive industry. Insurers have both access to massive amounts of very private information on all of us, and intense motivation for putting that data to use. The potential for profit, and hence abuse, is exceedingly large.

But, the motivation for using our data isn’t necessarily nefarious. Insurers look at each of us to determine our risk profiles so that they can both make money (that is, remain solvent so their checks to benefactors or debt holders don’t bounce) and provide coverage to all segments of the population at affordable prices (or at least the perception of affordability).

The regulatory framework that governs the insurance industry is well over a century old. It is state-based, state-enforced, and is designed to provide universal coverage to people from all walks of life. If you drive a twenty-year-old pickup truck, you probably pay proportionately less than someone who drives a new European sports sedan. If you’re a 60-year-old who smokes a pack a day and loves Miller Time, you’re likely to pay more for your life insurance than a 24-year-old jogger and yoga nut. Our regulatory framework has been designed to try to make insurance available and fair for all, and to ensure that insurers remain profitable, but not excessively-so.

Despite all of this, insurance is going through a fundamental, massively disruptive, and permanent transformation right before our eyes. This transformation is being driven by what I call the Digital Trinity of mobility, social media and advanced analytics. These three technologies trends are completely transforming how we live, work, play, and interact with our world, and they are causing enormous unintended consequences across our entire society. These changes are comprehensive, and old-school, hard-line, heavily regulated industries such as insurance are the MOST likely to be disrupted, rather than the least likely.

To see these disruptions consider this. Car insurers have deployed smartphone apps that allow them to track the driving behaviors of their customers in real-time, turn by turn. These apps keep track of how fast you accelerate, how hard you brake, how fast you drive down the residential streets of your neighborhood, and whether or not you text or talk while driving. These apps create huge amounts of extremely sensitive data, they are massively invasive of your privacy, they provide an enormous source of information for discriminating against you in setting your insurance rates; and they are massively popular.

If I told you three years ago that car insurance companies soon would be tracking all of this information on the drivers that they cover, you might think I was crazy. If I then told you that customers would sign up for such apps by the tens or hundreds of thousands, in order to gain a discount in their rates, you’d probably think I was certifiable. Americans are voluntarily giving up extremely intimate details on their behavior, surrendering their Constitutionally inalienable rights, and opening themselves up to all manner of government and commercial scrutiny in order to save 15% on their car insurance? Yes they are, in droves. You may think this sounds crazy, and you’d be right.

Yet, this is exactly what is going on right now. Innovators such as Progressive Insurance started these behavior-tracking apps, providing discounts to drivers who demonstrate good behaviors. These apps have been so successful, that now all insurers are scrambling to deploy similar apps with similar capabilities, while they still have time. Continue reading

Virginia Hospital Profits Surged 11% in 2014

hospital_profitsSpeaking of government-coddled industries…. Virginia’s hospitals increased annual profits 10.7% in 2014 compared to the year before, according to the most recent data compiled by the Virginia Health Information data and reported by the Thomas Jefferson Institute for Public Policy (TJI).

“Hospitals campaign for Medicaid expansion, and want to maintain the state’s control over how hospitals and doctors can invest in new equipment and additional patient beds under the current Certificate of Public Need (COPN) law, saying their financial situation is so precarious that they need these programs to survive,” said Michael Thompson, president of the TJI. “But the financial numbers from the hospitals themselves seem to tell a different story.”

Bacon’s bottom line: I don’t begrudge strong profits — profits are necessary for a functioning market-based economy. But these are monopoly/oligopoly profits. I do begrudge monopoly profits gained by throttling the competition. Like the higher ed system (see previous post), Virginia’s hospital sector has prospered through rent seeking.

There are two ways to go from here. One is to increase the government role as mediator between hospitals, patients and health care funders in divvying up the revenue pie — a zero-sum game. The other is to evolve toward a market system based upon competition, productivity and innovation that drives down costs and improves outcomes — a winning formula for all.

If General Assembly Republicans want to thwart Medicaid expansion next year — as they rightly should, on fiscal grounds — they need to paint a vision for a market-based health care system. I’ve seen baby steps in that direction like the All-Payer Claims Database. But we’ve got a long way to go. Where’s the vision? Do Republicans offer more than, “Repeal Obamacare,” and “Just say no to Medicaid expansion?”

To win the war of ideas, you…. need ideas. The Dems have bad ideas. But bad ideas trump zero ideas. C’mon, Republicans, up your game.

Update: The Virginia Hospital and Healthcare Association has responded to the TJI report. While the overall industry remains profitable, states the VHHA, many local hospitals, mostly rural, are unprofitable. Among rural providers 17 of 37 operated in the red in 2013. Meanwhile,”the financial  challenges that produce negative operating margins are real and worsening.” See the full response here.

Putting Easements to the Test

As gas and electric companies propose dozens of pipeline and transmission-line projects in Virginia, landowners are finding their conservation easements don’t provide as much protection as they thought.

Elizabeth Terry Reynolds (left) and her sister Grace Terry show a map of family land in Roanoke County. The current iteration of the proposed Mountain Valley Pipeline route would cut through family land, and a construction access road would run through land held in a conservation easement (seen in blue).

Elizabeth Terry Reynolds (left) and Grace Terry show a map of family land in Roanoke County. The current iteration of the route for the proposed Mountain Valley Pipeline would run through family property, and a construction access road would cut through land held in a conservation easement (seen in blue). The sisters traveled to Warrenton yesterday to speak before a subcommittee of the Virginia Outdoor Foundation.

by James A. Bacon

As a surge of proposals for gas pipelines and electric transmission lines in Virginia works through the regulatory process, a backlash by grantors of conservation easements is brewing. In letters and in public hearings, landowners are openly questioning whether conservation easements provide the protections they were thought to provide, and some are pressuring the Virginia Outdoors Foundation (VOF), which holds most of the easements, to work more aggressively to safeguard them, even to the extent of getting more actively involved in cases before the State Corporation Commission (SCC).

“The process we’ve used for the past 100 years in Virginia is no longer working,” said Chris Miller, president of the Piedmont Environmental Council (PEC), at a VOF committee hearing yesterday in Warrenton. The PEC’s membership includes dozens if not hundreds of conservation easement grantors.

In Virginia, the SCC approves electric transmission line routes, Miller said. The SCC uses an “adversarial” process, in which power companies, environmental groups and other interests present their evidence and their arguments. Rather than conducting its own investigations, the SCC relies upon the material that is submitted. Typically, VOF has not taken sides in these hearings. Given the increasing collision of interests, Miller said, “There is distrust now in the landowner community whether the VOF has the capacity to protect their values.”

The VOF, a publicly funded entity, promotes the preservation of open-space lands and administers roughly 4,000 easements covering more than 750,000 acres of land, an area about the size of the state of Rhode Island. The foundation recently created an Energy and Infrastructure Committee to address the incursion of big infrastructure projects on land protected by easements.

Brett Glymph, VOF executive director, said she will take Miller’s proposal under advisement, consult with legal counsel, and make a recommendation to the full board of directors. Unless a special meeting is called, the earliest the board could take up the issue would be in March, she said.

Conflicts between utilities and landowners have sharpened as the number of easements and energy projects have increased in recent years. Successive Virginia governors have made it a priority to bolster the amount of scenic, historic and environmentally valuable land either owned by the public or protected by conservation easements. As an incentive, state law allows landowners to claim up to $75 million in state tax credits each year for land grants and easements. The result has been a dramatic increase in the acreage of protected land in Virginia over the past decade.

At the same time, a transformation of the energy economy has put Virginia in the path of major energy projects. The development of the Marcellus shale fields in West Virginia and Ohio has created a boom in natural gas production. There are four active proposals to build or upgrade gas pipelines through the state to serve growing markets in Virginia and North Carolina. Meanwhile, electric utilities, compelled by Environmental Protection Agency rules to reduce pollution and carbon-dioxide emissions, are closing coal-fired power plants, building gas-fired plants and swapping more electricity between each other, all of which requires the rerouting of electricity flows and the construction of new transmission lines.

Four energy companies — Dominion Virginia Power, Appalachian Power, the Atlantic Coast Pipeline, and the Mountain Valley Pipeline — briefed the VOF committee about their individual projects. None of their representatives addressed Miller’s comments, but they did describe the challenges of devising routes for pipelines and transmission lines while also trying to protect wildlife habitat, rivers and streams, historic areas, cultural artifacts, view sheds and conservation easements. Routing pipelines, said Brian Wilson with the Atlantic Coast Pipeline, is “very much an exercise in competing constraints.”

SCC spokesman Ken Schrad responded in an interview today that “any interested party” can participate in an SCC transmission-line proceeding. The commission is required by law to weigh the environmental impact of a project along with its effect on rate payers and electric-system reliability. Staff members do some research, but because staffers are not environmental experts, the commission also hires consultants. Further, Schrad said, the SCC works with the state Department of Environmental Quality (DEQ) to solicit input from a myriad of state agencies, including the VOF, about environmental impacts.

“The commission certainly gets environmental testimony,” Schrad said. “A conservation easement would have to be taken into consideration in an environmental review.” Continue reading

The Politics of Big Data

big_databy James A. Bacon

Yesterday I blogged about the All-Payer Claims Database, which has the potential to provide unprecedented insight into medical outcomes and charges in Virginia. By consolidating medical claims data for hundreds of millions of health claims, the database will enable employers, insurers and hospitals to conduct analytical studies that were impossible previously.

There is a lot of maneuvering behind the scenes regarding the database, as I have learned from an informed source whom I will not quote because we were chatting informally and he might have thought we were off the record.

Participation in the database is voluntary, so it took years of coaxing and wrangling to persuade Virginia’s private insurance companies to relinquish their data. Anthem Blue Cross-Blue Shield, the state’s largest insurer, is the most ambivalent about the project. With more than one million Virginia customers, its database is big enough that it can go solo with the kind of analysis people envision for the statewide database. That ability confers it a significant competitive advantage over its smaller rivals. If Anthem dropped out, the value of the statewide database would diminish significantly. Accordingly, the General Assembly may consider legislation in 2016 to make participation mandatory.

That raises an interesting philosophical question: Is it justifiable for state government to mandate the sharing of outcomes data? In an era in which data confers tremendous marketplace power, any such mandate would penalize Anthem. The insurer could advance a plausible argument that a requisitioning of its data would amount to an uncompensated seizure of valuable property — property far more valuable than its office buildings, computer networks and other tangible assets.

But Anthem’s right to protect its property from government seizure conflicts with the public good that can be achieved through the sharing of data. The bigger and more comprehensive the database, the greater the benefits to public health that can be achieved by mining it.

Politicians comfortable with the exercise of state power will have no moral or philosophical compunction about extracting the data from Anthem against its wishes. But what of conservatives and libertarians who respect private property and distrust the arbitrary exercise of government power? Should we insist that any sharing be voluntary? Or should we compel Anthem to share?

I think there is a case to be made for mandated data sharing on conservative/ libertarian grounds that it can drive market-based reforms of Virginia’s health system. Health care in America is not a market-based system, it is a corporatist system negotiated between the federal government, hospitals, insurers, physicians and pharmaceutical companies. Prices are opaque to the patient-consumer. Accountability is so diffused throughout the system as to be meaningless. Making price and quality data available to the public, formatted in such a way that the public can understand it and act upon it, is essential to creating a market-based system.

But price and quality data are only part of the picture. Virginia has other state-level barriers to a market-based system, including the Certificate of Public Need (COPN), which restricts competition, and state-imposed insurance mandates, which force insurers to offer expensive plans with broad benefits. Price transparency cannot by itself drive the transformation to a competitive, market-based system. But as part of a bundle of reforms including the repeal of COPN and insurance mandates, data sharing could bring about a net gain in freedom, competitiveness and prosperity that would appeal to the conservative conscience.

If You Like Wind and Solar, You’d Better Like Transmission Lines, Too

If you want more of this....

If you want more of this….

by James A. Bacon

Wind and solar power are becoming increasingly competitive with fossil fuels and nuclear as an electric power source. As Virginia integrates more renewable energy sources into its electric generation mix, a big question is how much can the power grid handle before the intermittent nature of blowing winds and sunny skies threatens the reliability of electric service. The answer, according to PJM Interconnection, is quite a lot.

... you need to build more of this.

… you need to build more of this.

PJM, the Pennsylvania-based entity that oversees the reliability of the electric grid in a multi-state region in the Mid-Atlantic and Midwest, including Virginia, commissioned GE Energy Consulting to examine the issue. The conclusion:

The PJM system, with adequate transmission expansion and additional regulating reserves, will not have any significant issues operating with up to 30% of its energy provided by wind and solar generation. … No insurmountable operating issues were uncovered over the many simulated scenarios of system-wide hourly operation. …

Bacon’s bottom line: This is not news to anyone in the electric power industry — the study is a year old. But it’s news to me, as I slowly climb the learning curve on this topic, and it may be news to readers who have been moving up that learning curve with me, not to mention legislators who shape the regulatory environment for Virginia utilities.

There is one critical caveat in the quote above that bears close attention: “with adequate transmission expansion.”

PJM’s grid could handle 20% renewable penetration with modest requirements for new transmission lines, the study states, but costs soar at the 30% level. Depending on the scenario, PJM estimates that the regional grid would require construction of between 754 and 2,946 total miles of transmission lines ranging in cost between $3.7 billion and $13.7 billion.

Under the 30% renewable-penetration scenario, PJM assumes that much of the power will originate in Midwest states with strong, steady winds where wind power is most economical, and the grid will need transmission capacity to move electricity to markets in the east. But even with solar-intensive scenarios, new transmission lines also may be needed on a local level as power companies reconfigure the flow of electricity from decommissioned coal, nuclear and, eventually, gas-fired generating stations to the solar facilities.

And that raises a new question: Can power companies build those transmission lines on a timely basis? Environmental and landowner groups put up staunch resistance to the construction of intrusive high-capacity transmission lines through wilderness, countryside and areas of historic value, as has we have seen on numerous occasions in Virginia. These conflicts can be protracted. Friday night, for instance, the U.S. Army Corps of Engineers held another public hearing on the proposed Surry-Skiffes Creek transmission line, even as Dominion Virginia Power warned that the line will take at least 18 months to construct and will create a months-long window of vulnerability when it shutters two coal-fired units at its Yorktown Power Station. Residents and businesses on the Virginia Peninsula face a high likelihood of rolling blackouts in 2017.

The re-engineering of the electric grid to address the global problem of climate change could result in more intense conflict at the local level over disruption to wildlife habitat, soil erosion, water quality and other environmental values — not to mention economic disruption. Virginia has only begun to grapple with this contradiction.

(Hat tip: Kevin Chandler.)

The Virginia Way

talkEva Teig Hardy, former Virginia health secretary, on the endless debate over Certificate of Public Need regulations of Virginia hospitals, as quoted in the Richmond Times-Dispatch:

I think we need to go somewhere with this. Otherwise we are making changes that are just very superficial to the process but not to the substance of COPN. Changes like this have been talked about (since) I was secretary 30 years ago. We talked about this 15 years ago. We talked about it 10 years ago. We haven’t moved.

“Cultural Attachment” the Latest Barrier to Infrastructure Projects?


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.

Pipeline Foes Appeal to FERC

This map shows approximate routes of four proposed natural gas pipelines running through Virginia. Image credit: Dominion Pipeline Monitoring Coalition

This map shows approximate routes of four proposed natural gas pipelines running through Virginia. Image credit: Dominion Pipeline Monitoring Coalition. (Click for larger image.)

by James A. Bacon

A coalition of pipeline opponents has called upon the Federal Energy Regulatory Commission (FERC) to conduct a comprehensive review of the need for four natural gas pipelines running through Virginia rather than reviewing them on their individual merits. The coalition, which includes numerous environmental and landowner groups, was joined by two Virginia state legislators: Sen. John S. Edwards, D-Roanoke, and Del. Joseph R. Yost, R-Giles.

Foes have raised a host of issues regarding the impact of the proposed pipeline projects on the environment and landowners. While the pipelines would be buried, their rights of way would be maintained clear of trees and brush, they argue, creating erosion issues, disrupting wildlife habitat, despoiling view sheds, and harming local agricultural, craft and tourism economies. Wider impacts from bolstering the consumption of natural gas would include an increase in the greenhouse gases implicated in global warming (CO2 and methane) and environmental damage caused by fracking.

Of the four pipeline projects, the Atlantic Coast Pipeline (ACP) and the Mountain Valley Pipeline (MVP) have been actively mapping of routes, and both have filed applications with FERC. Both MVP and ACP say demand for natural gas is increasing as electric utilities switch from coal to gas, and both companies have lined up customers to purchase most of the gas that would move through their pipelines. The public need, they say, is demonstrated by the fact that the pipelines have hard contractual commitments for the gas.

FERC has not accepted previous requests for comprehensive reviews, and the response of a FERC spokesperson did not suggest than any re-evaluation of its position was imminent. “The commission’s stance has been that we don’t develop infrastructure, that we process the applications that come through FERC,” spokesperson Tamara Young-Allen told the T-D.

But pipeline foes are giving it another try. The details of their arguments can be found in a letter to FERC addressing the Atlantic Coast Pipeline specifically.

Pipeline foes say FERC is required to determine whether a pipeline applicant has made efforts to minimize adverse effects upon landowners, communities, existing pipelines and their captive customers. “To demonstrate that its proposal is in the public convenience and necessity, an applicant must show public benefits that would be achieved by the project that are proportional to the project’s adverse impacts.”

The Atlantic Coast Pipeline, states the letter, does not provide any benefit that existing pipelines could not provide. Central to their argument is that new pipelines are not needed to meet the market’s growing demand for gas.

Evidence shows that significant existing pipeline capacity may be available to serve the South East and Mid-Atlantic markets. … Gas pipelines nationwide on average utilized only 54 percent of their capacity between 1998 and 2013. FERC has similarly acknowledged the underutilization of pipeline capacity and found that improved scheduling of natural gas deliveries would make “more efficient use of existing pipeline infrastructure.”

ACP would tap bountiful Marcellus shale gas deposits in West Virginia and Ohio, creating a supply alternative in Virginia and North Carolina to gas originating in the Gulf of Mexico. But foes argue that existing or already-approved pipelines to the north can move gas from Marcellus to the existing Transco superhighway pipeline, which serves Virginia markets. In the past Transco moved gas only from south to north. But by 2017 it will be able to move gas both directions, providing a way for Marcellus gas to reach Virginia markets.

Utilizing the existing infrastructure to the maximum extent possible, foes argue, would minimize the disruptive impact of building new pipelines.

For an in-depth discussion of the four Virginia pipeline projects, see “A Plethora of Pipelines.”

Update: Dominion, managing partner of the ACP, has provided a more detailed response than appeared in the T-D article: FERC will assess the cumulative effect of ACP and other proposed projects within a three-state region. ACP anticipates minimal impact due to “implementation of specialized construction techniques, the relatively short construction time frame in any one location, and carefully developed resource protection and mitigation plans.”

While critics have called for a programmatic Environmental Impact Statement — “a much broader, speculative regional analysis” — FERC has said in recent rulings and statements that an EIS  would not present “a credible forward look and would therefore not be a useful tool for basic program planning.”