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Vermont Gas to offer mediation to landowners, begin eminent domain process

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Posted on August 14, 2014 |
By Zach Despart



ADDISON COUNTY — Vermont Gas Systems announced on Tuesday that it is employing a new tactic to secure land rights necessary to construct a natural gas pipeline from Colchester to Middlebury — the company will now provide independent mediators to help landowners negotiate with the company.

“We’re going to be offering neutral mediation for those landowners who we have not been able to reach agreements with,” company spokesman Steve Wark said.

Landowners said they’re skeptical mediators will help them. Vermont Gas will concurrently begin eminent domain proceedings against some landowners. Eminent domain is the process by which an entity is allowed to take private property (with some sort of court-ordered compensation to the landowner) for a project that serves the public good.

Wark said Vermont Gas has reached land use agreements with 70 percent of landowners along the route, and is in active negotiations with an additional 20 percent of landowners. Wark added that the South Burlington company will begin eminent domain proceedings against the remaining 10 percent, or about 20 landowners the company does not believe it can reach an agreement with.

Wark said it is necessary to begin the eminent domain process now to keep the project on schedule.

“We want to have service to Addison County by 2015, and in order to stay on that track, we’re going to have to start filing those cases in the regulatory process to keep that schedule,” Wark said.

Wark acknowledged that Vermont Gas could have done a better job working with landowners earlier in the process, and said he hopes mediators will repair strained relations between the parties.

“I think we had some missteps in the beginning, and there’s been some misunderstandings and miscommunication,” Wark said. “We’ve simply reached the conclusion that a neutral third party is the best position to help these issues forward with certain landowners.”

LEGAL HELP, NOT MEDIATION

During meetings with state regulators over the last several months, Monkton residents said they did not want mediators, who by law cannot give legal advice — something residents said they need to help them negotiate complex easements.

Monkton landowner Maren Vasakta, who has yet to negotiate an easement with Vermont Gas, said a mediator is not what she and her neighbors are looking for.

“Homeowners need legal advice,” said Monkton landowner Maren Vasatka. “I think mediators are fine if (Vermont Gas) offers legal help too, but a mediator can’t give homeowners everything they need.”

Plus, she asks how independent a mediator would be.

“If a mediator is being paid for by Vermont Gas, that’s not an impartial party,” Vasatka said. “It’s going to be intimidating, it’s going to scare people, and people are going to enter into agreements not even remotely protecting homeowners.”

Claire Broughton, another Monkton landowner, said she does not believe a mediator would aid her negotiations with Vermont Gas. She said her main concern is not her ability to represent her interests, but that she believes Vermont Gas land agents have not answered questions she has about how the pipeline will affect her land.

“How can you ever do a deal with them, when they don’t answer your questions?” Broughton said.

Philip Beliveau, a St. George landowner currently negotiation an easement with Vermont Gas, said he is skeptical the company’s offer to provide mediators.

“Initially it just hits me as a PR move,” Beliveau said. “I feel like (Vermont Gas) is getting pressure, and they’re throwing things out to freshen their image.”

Still, Beliveau said he is eager to learn more about how mediation could help him.

“I certainly think it would be foolish to close any doors,” he said.

Beliveau said he’s wary of spending his limited resources on an attorney, but acknowledges he may have to in order to represent his best interests. He’s worried it’s a lose-lose situation.

“Each landowner could spend a lot of money and end up losing twice,” Beliveau said. “You could not get much from Vermont Gas and spend a lot of money to find that out.”

Department of Public Service Commissioner Chris Recchia praised Vermont Gas for offering mediators.

“This is a good step,” Recchia said. “I think it’s good to have as many tools in the toolbox as we can get.”

Recchia said since mediators are bound by ethics and codes of conduct, they can preside impartially over negotiations between landowners and Vermont Gas, even though the utility is footing the bill.

“I have no reason to believe that wouldn’t be accomplished,” he said.

Recchia added that by paying for mediators out of pocket, Vermont Gas will save ratepayers money.

“Any expense that’s incurred by Vermont Gas as a company, as opposed to ratepayers, is welcome news,” he said.

NO LEGAL FUND

Questioned by a reporter Tuesday afternoon, Wark reiterated Vermont Gas’ opposition to creating a legal fund to help landowners negotiate easements.

“That would be akin to essentially funding somebody’s lawsuit against you,” Wark said. “It would be bad precedent to have a requirement not only for utilities but for any agency or organization to essentially fund opposition to a project.”

But no matter how much money Vermont Gas spends on legal expenses, the company likely won’t be responsible for a dime. That’s because the project is entirely financed by ratepayers.

Wark said that legal costs are “recoverable expense,” meaning that the company pays attorneys out of pocket, then seeks reimbursement from ratepayers after the project is complete. Asked why Vermont Gas does not set up a legal fund for landowners as a recoverable expense, Wark said he did not think this was a good idea.

“It’s never been done,” Wark said. “Secondly, you would be adding costs. There are folks that will litigate everything, and you’ll be adding costs to the project.”

‘DAVID AND GOLIATH’

Sen. Chris Bray, D-New Haven, said Vermont Gas’s offer to provide mediators is a step in the right direction. But he said mediation only addresses one of two challenges facing landowners in these negotiations.

Mediators, Bray said, can aid landowners who are not accustomed to negotiating a land deal. But landowners are still left without an advocate who is an expert in real estate law, unlike attorneys working on behalf of Vermont Gas.

“The real challenge landowners face is their lack of knowledge of the law,” Bray said. “The fundamental problem is people are feeling they’re being asked to grant land rights when they don’t understand the full implications of it.”

Bray noted that landowners didn’t willingly enter these negotiations — rather, they were compelled to when the Public Service Board approved a natural gas pipeline through their land.

“Landowners come into this as unwillingly thrown into being a negotiator for an easement across their own property,” Bray said. “The utilities have expert legal teams of their own; this is their business. It’s a David and Goliath situation.”

Bray said he is concerned that while legal costs Vermont Gas incurs will ultimately be paid by ratepayers, landowners are forced to pay out of pocket for legal representation — costs they won’t recover.

“The fact that Vermont Gas can be reimbursed for their costs … I’m not sure there’s an adequate incentive for them to keep costs down,” Bray said. “If you have 46,000 ratepayers covering your costs, versus one family covering the cost of challenging, it’s very uneven.”

Bray said that despite an extensive dialogue between legislators, Vermont Gas and the Department of Public Service, landowners are still in the same tenuous position they were in when the project was approved last December.

“I’m not criticizing the Department of Public Service, they’ve been helpful and open to discussion, but frankly we haven’t changed the playing field much,” Bray said.

Bray said should he be re-elected to the Senate this fall, he will urge his colleagues to look at this issue, to perhaps change state law for future public infrastructure projects. Bray said he has spoken with other legislators this summer about creating an ombudsman to help Vermont residents in these situations.

“We need to go back and address the underlying process,” Bray said. “That’s what the Legislature owes.”

EMINENT DOMAIN

Wark said Vermont Gas wants to avoid taking land via eminent domain, a process enshrined in Vermont’s constitution to permit the state to seize private land for public projects. He said he believes landowners are better off using the mediation Vermont Gas is offering.

“When you look at compensation in the history of Vermont, compensation levels tend to be higher outside of the eminent domain process,” Wark said.

There may be an additional reason the company wants to avoid eminent domain — in such proceedings, landowners have the right to try their case in front of a jury of their peers, who may decide on more generous compensation than a mediator.

The eminent domain process is also time-consuming. Eminent domain proceedings related to the Northwest Reliability Project through Addison and Rutland counties in the mid-2000s lasted several years.

Wark said despite this recent history, he is confident Vermont Gas can complete the pipeline without taking land via eminent domain and complete the pipeline on time.

“There’s always a risk, but I’m an optimist,” he said. “I personally believe we’re going to reach agreements with every person.”

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