Daronda Combs

April 19, 2002

On March 27, federal regulators ruled unanimously in favor of the construction of a natural gas pipeline, designated to run through Southwest Virginia's revered Blue Ridge Parkway.[1]  The decision is the first step in the Federal Energy Regulatory Commission's (FERC) process of determining whether a certificate of public convenience and necessity will be issued to Duke Energy's subsidiary, East Tennessee Natural Gas Company.  The proposed pipeline-referred to by the energy companies as the Patriot Project.[2] FERC's preliminary finding that the public benefits of the proposed project outweigh any adverse impacts occurs before an environmental review.[3]  As a result, the Commission claims that a "final certificate authorization is dependent on a favorable environmental review."[4]  Environmentalists are aligned with farmers, hunters, fishers, and local politicians to oppose the project, "complain[ing] that the pipeline would disturb more than 1,270 acres of agricultural land and nearly as much woodland."[5]  Since FERC has not yet completed its environmental analysis, the Commission's preliminary determination "that the public benefits of the proposed project will outweigh any adverse impacts" was based only on "non-environmental issues."[6]  According to FERC, the pipeline will serve the public interest by "provid[ing] fuel for new electric generation plants[,] provid[ing] additional gas supplies to local distribution companies[,] and bring[ing] natural gas service to portions of Southwestern Virginia for the first time."[7]

The lack of an environmental analysis, however, is what members of the Blue Ridge Coalition-one of the pipeline's fiercest opponents-use as the building block of their criticism.  FERC claims that "nothing in [the preliminary determination] order limits our actions regarding our environmental analysis."[8]  However, Helen Melton of the Carroll County chapter of the Blue Ridge Coalition contends, "FERC ... goes out of its way to prejudice the proceeding against lesser environmentally and landowner-impacting alternatives currently contemplated in the Environmental Impact Statement."[9]  Accordingly, she asserts that this amounts to a "tilting [of] the proceeding to favor Duke's proposed route [through the Blue Ridge Parkway]."[10]  Further, she "suggests the FERC will prejudice the environmental review."[11]  According to FERC, however, they must make a preliminary decision, finding that "the benefits outweigh the adverse effects on economic interests," before the completion of an environmental analysis is even triggered.[12]

Another criticism is the lack of confirmed customers, and consequently, an identifiable market demand, for the pipeline.[13]  Duke and East Tennessee depend on general statements to support their claim.  For example, in January a Duke Spokeswoman said that "'[t]he Patriot Extension helps us meet the needs of our customers.  The southeast United States is a high-growth area, and with that growth comes increased energy demands.'"[14]  Despite the criticism of such claims, FERC finds that the benefits outweigh the adverse effects on economic interests.[15]  While economic interests are certainly an important consideration of non-environmental issues, FERC's analysis is based solely on East Tennessee's economic interests rather than the interests of the residents affected by the pipeline.[16]  For example, the Commission appears to trust East Tennessee's averment "that the availability of natural gas service will stimulate industrial development" in a region that East Tennessee describes to the Commission as desperate for employment.[17]  Although this discussion takes place in the "Background" section of the Commission report, there is no indication anywhere in the report that any alternative sources were considered by FERC that would bolster these averments or go to actual "demand" for the pipeline.[18]  We can blame the FERC regulations for such a slanted consideration of the facts since it is likely that the Commission completely depends on those facts included in the application pursuant to the regulations that were relied upon by the applicant, East Tennessee.[19]  Since FERC is not required by the law or by their own regulations to consider underlying facts about the region from other sources, the process creates a bias toward energy companies.  Considering the report, it appears that the Commission depended solely on those facts submitted by East Tennessee in making their preliminary determination to grant a certificate of public convenience and necessity.

Furthermore, the Commission supports its determination by the "strong support" for the Patriot Project, which they claim is demonstrated by the contracts and precedent agreements that East Tennessee has already entered.[20]  Arguably, "strong support" does not constitute market demand or public convenience and necessity.  Instead, it represents convenience and necessity for East Tennessee, who, according to FERC must "execute contracts equal to the capacity to which the customers have committed themselves in the precedent agreements prior to beginning construction under any authorization eventually granted in this proceeding."[21]  As a result, FERC is considering only East Tennessee's version of the "demand" for their services in the area and the binding contracts that East Tennessee must enter in its determination of market need for the project.  Neither the Commission's consideration of East Tennessee's facts regarding the potential "demand" for the project in Southwest Virginia nor its "strong support" justification constitute "public convenience or necessity."

Moreover, the Commission takes a hands-off approach regarding the impacts on landowners at this stage of the game despite its claims to consider potential impacts of the proposed project on landowners and communities affected by the proposed pipeline route.[22]  Specifically, the Commission discounts many of their property value concerns as environmental in nature and therefore, not applicable to the preliminary determination.[23]  First, the Commission argues that considerations of adverse effects on tourism and related jobs by the marred scenic views, spoiled wilderness areas, and harm to fish and other outdoor activities should not be addressed until the EIS.[24]  Second, they disregard the complaints of farmers that "the pipeline would reduce the value of their land by dividing it into smaller parcels and making access difficult."[25]  TFinally, FERC dismisses the objections from others who "believe the existence of a pipeline on their property would reduce the attractiveness of their property to prospective retirees and vacation home buyers."[26]  Since the Commission suspended consideration of these issues until the environmental analysis stage of the determination, they effectively triggered an analysis that should be substantially more influential than I expect FERC normally regards EIS's.

The property value debate also includes consideration of eminent domain proceedings that will ensue as a result of siting the pipeline.  The Natural Gas Act grants authority to the certificate holder to "institute an eminent domain proceeding in the United States District Court in which the property is located, or in a state court."[27]  The Commission, however, denied the Blue Ridge Coalition's request to "require ... any eminent domain proceedings be brought in state court in the county in which the property is located" because they claim to have "no authority to determine what constitutes just compensation, or in which court an eminent domain proceeding will be held."[28]  Although FERC may lack the actual authority to provide this relief, the Commission's complete denial to provide any assurance that the pipeline construction will not result in either an unjust compensation or a taking has effectively dismissed the property value concerns of landowners.

In conclusion, the environmental and public interest concerns of the Patriot Project, as currently proposed, are great.  It is ironic that the preliminary decision made by FERC was based on East Tennessee's showing that the new pipeline is in the public convenience and necessity, when it does not appear very necessary to anyone but East Tennessee.[29]  The Commission's "to be continued" attitude toward many landowner concerns leads me to believe that the EIS is now due substantial consideration before the certificate of public convenience and necessity should be granted.  Since FERC has the option to grant a conditional certificate if it so chooses,[30] it should, at a minimum, use its discretion under this conditioning authority to fairly address some of those landowner concerns that were suspended for consideration at the next and final stage of the game.  If they were not due fair consideration at the economic stage, they are due far more consideration at the forthcoming environmental stage.  As a result, the Commission should either condition the certificate to validate and endorse some of the landowners' concerns or they should deny the certificate all together based on the environmental impacts.  If not, these energy companies may learn how fierce the opposition from Southwest Virginians can get.

______________

[1] Christopher Brooke, Pipeline Clears Initial Hurdle, GALAX GAZETTE, March 31, 2002 available at http://www1.roanoke.com/news/galaxgazette.html. On April 9, 2002, the Galax Gazette reported that U.S. Representative Rick Boucher had proposed a new route for the pipeline to FERC. This new proposal would keep the pipeline out of Patrick and Henry counties in Virginia. New Route Proposed, GALAX GAZETTE, April 9, 2002 available at http://www.galaxgazette.com/galaxgazette/myarticles.asp?P=340269&S=486&PubID=6357&EC=0. Since the Blue Ridge Parkway is in neither of these counties, however, this new route does not keep the pipeline from running through the well-known and well-respected Parkway.

Duke Energy's original proposed pipeline route.

http://www.degt.duke-energy.com/content/projects/degt1b.asp

[2] See U.S. FED. ENERGY REGULATORY COMM'N [hereinafter FERC], PRELIMINARY DETERMINATION ON NON-ENVIRONMENTAL ISSUES 8 2002 available at http://www.ferc.gov/calendar/commissionmeetings/Discussion_papers/03-27-02/c-2.pdf.

[3] Id. "Only when the benefits outweigh the adverse effects on economic interests will the Commission proceed to complete the environmental analysis where other interests are considered."

[4] Id.

[5] Rueters, Duke wins initial OK for natural gas pipeline in Virginia, ENVIRONMENTAL NEWS NETWORK, March 28, 2002, available at http://enn.com/news/wire-stories/2002/03/03282002/reu_46790.asp.

[6] Christopher Brooke, Pipeline Clears Initial Hurdle, GALAX GAZETTE, March 31, 2002 available at http://www1.roanoke.com/news/galaxgazette.html.

[7] Id.

[8] FERC supra note 2, at 1.

[9] A.W. Hauslohner, Pipeline foes continue to fight, GALAX GAZETTE, April 1, 2002 1A.

[10] Id.

[11] Id.

[12] See PRESIDENT'S COMMISSION ON HOUSING, THE REPORT OF THE PRESIDENT'S COMMISSION ON HOUSING (1982).

[13] DUKEMINIER & KRIER, supra note 10.

[14] Siegan, Keynote Address, 14 ENVTL. L. 645, 648-649 (1983).

[15] RAWLS, supra note 7.

[16] Rabin, Expulsive Zoning: The Inequitable Legacy of Euclid, in ZONING AND THE AMERICAN DREAM 101 (1989) (discussing the use of zoning as a tool for the exclusion of unwanted groups).

[17] See West Bros. Brick Co. v. City of Alexandria, 193 S. E. 881, 883-884 (1937); see also O'Rourke v. Teeters, 146 P.2d 983 (Cal. Ct. App. 1944).

[18] See J. Dubin, From Junkyards to Gentrification: Explicating a Right to Protective Zoning in Low-Income Communities of Color, 77 MINN. L. REV. 739, 762-763 (1993).

[19] L. KENDIG, PERFORMANCE ZONING (1980).

[20] Id. at 94-279.

[21] See American Society of Planning Officials, Performance Standards in Industrial Zoning, Planning Advisory Service Information Report No. 32, 1-2 (1951).

[22] See R. BABCOCK, THE ZONING GAME 131-132 (1966).

[23] See KENDIG, supra note 19; See also U.S. DEP'T OF COMMERCE, STANDARD STATE ZONING ENABLING ACT (1924, revised 1926) [hereinafter SSZEA].

[24] D. KMIEC, ZONING AND PLANNING DESKBOOK § 3.03[1] (1989).

[25] See Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987).

[26] See SSZEA, supra note 27.

[27] Id. at 20; see also 15 U.S.C. § 717f(h).

[28] Id. Arguably, the Commission could use its conditional authority (described in footnote 30) to give some relief since the right to institute eminent domain proceedings is a right ancillary to the certificate. However, it appears that this is not an issue deemed by the Commission as environmental in nature and will likely not be considered in the EIS.

[29] See id. at 8.

[30] See 15 U.S.C. §717f(e). "The Commission shall have the power to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require."