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Public Service Department officials answer pipeline questions in Monkton

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Posted on March 10, 2014 |
By Zach Despart



MonktonMeeting2660.jpg
LANDOWNERS IN MONKTON affected by the Addison-Rutland Natural Gas Project voice their concerns with the negotiating tactics of Vermont Gas Systems at a meeting hosted by Department of Public Service commissioner Chris Recchia, general counsel Louise Porter, and Sen. Christopher Bray. Independent photo/Zach Despart

MONKTON — Dozens of Monkton residents whose land Vermont Gas Systems is seeking for a natural gas pipeline attended a meeting hosted by two officials from the Department of Public Service and Sen. Christopher Bray, to help landowners negotiate right-of-way easements with the utility company.

The meeting, held Thursday evening at the Monkton firehouse, featured Public Service Commissioner Chris Recchia and DPS General Counsel Louise Porter.

Vermont Gas is seeking easements from 39 landowners in Monkton for the Addison-Rutland Natural Gas Project, a natural gas pipeline that has been approved by the Public Service Board to run from Colchester to Middlebury. Company spokesman Steve Wark declined to identify how many landowners it has signed agreements with to date. But town land records from February puts that number at 12.

Wark did say that the company has made progress on securing easements since last month.

Bray organized the meeting after pitching the idea to Monkton voters at their annual town meeting just three days earlier. Porter and Recchia stressed they could not give legal advice, and stated the purpose of the meeting was to help landowners understand their legal rights in negotiating with Vermont Gas, including the eminent domain process.

Recchia suggested that it would be in landowners’ best interest to negotiate with Vermont Gas rather than try to prevent the project from moving forward.

“If you’re thinking an approach to this is to stonewall, I would say don’t choose that path,” Recchia said. “The project is approved, the project is going forward. I want you to have the best shot at getting what you need.”

Recchia acknowledged that Vermont Gas still needs to secure several permits before beginning construction, but said he would not spend time entertaining proposals on how to stall negotiations.

“Tonight, I’m not going to talk about how to stop the project,” Recchia said.

Monkton selectboard Chair Stephen Pilcher, Democratic state Rep. Mike Fisher of Lincoln and David Sharpe of Bristol also attended the meeting. Bristol attorney James Dumont, who represented several landowners when the Vermont Electric Co. sought land via eminent domain for the Northwest Reliability Project in the last decade, also was on hand to field questions.

OPTIONS VS. EASEMENTS

Nine landowners in January received letters from Vermont Gas in which the company said it would begin the process of eminent domain if the landowners did not come to the negotiating table. Many of these landowners said they were surprised and felt threatened.

Landowner Maren Vasatka questioned why the letter sent to her by Vermont Gas included an option for an easement agreement rather than an actual easement agreement.

An easement option is an agreement that allows Vermont Gas to move to a formal easement at a later date, and typically pays landowners about 10 percent of the total value of the property sought. An easement is the final agreement between a landowner and the utility that details how the land will be used, in which the landowner is compensated in full for the value of the property.

Vasatka said signing an option agreement would put her at a disadvantage, as the compensation from it will not be enough to pay an attorney to review a future easement agreement.

Speaking to Vasatka, Porter said she did not know why Vermont Gas was continuing to seek options after the Certificate of Public Good (CPG) had already been issued.

“I didn’t understand it, and I don’t understand why your letter in January attached an option for an easement as opposed to an easement,” Porter said. “Once the CPG and the project was going, it is my belief, and I have shared with them in the strongest possible terms, that no one should have been offered an option, unless for whatever reason they’d want to move quickly.”

Pilcher offered a similar sentiment as Porter.

“The CPG has been signed; they really should be negotiating easements, not options,” Pilcher said.

Wark said Vermont Gas pursued options for easements before the project received a Certificate of Public Good, since it would have been impractical for the company to buy land if the pipeline’s future was uncertain. Now that the project has been approved, Wark said the company is still open to negotiating options for easements, but the ultimate goal is to reach easement agreements.

Wark said negotiating options allows landowners to receive some compensation immediately, typically 10 percent of the total compensation for an easement agreement.

“In many cases people said they want cash now,” Wark said. “It was a way for us to grant benefits for overall agreement beforehand.”

Now that the project has been approved, Wark said the ultimate goal of the company is to secure easements in order to begin construction. Not all of the eminent domain letters sent to landowners in January included options. The letter to Selina Peyser, for example, included a draft easement agreement.

“We want to get an easement, especially since the CPG,” Wark said.

Recchia said he would look further into the merits of negotiation options for easements rather than actual easements

“I’m honestly unclear about their different nature, and I’ll be looking into it,” Recchia said.

JUST COMPENSATION

Another key question raised by landowners was if they will be compensated not just for the fair market value for their land, but also for how the pipeline will affect the value of their entire property.

“I want the answer to my question I’ve been asking all along — how much is this pipeline going to devaluate my property,” Michael Alderman said. “They’re making a profit from running gas through my property, and now it is worth less. I want that difference.”

Porter cited one of the Vermont statutes that deals with eminent domain, noting that the law provides the possibility that landowners may be compensated for devaluation of their property.

Section 112 of Title 30, which lays out the state’s eminent domain laws, states that landowners shall be compensated for both the current value of the property and “impairment to the value of the remaining property or rights of the owner, and consequential damages.”

If negotiations ultimately fail and Vermont Gas initiates condemnation proceedings, the Public Service Board  will rule what compensation landowners will receive. Recchia said the Department of Public Service will defend the public good in these proceedings, but cautioned that this does not just mean protecting the interests of landowners.

“Recognize that can be a two-edged sword,” Recchia told landowners. “It’s not just making sure you get a fair market value for your property, it’s making sure ratepayers and the rest of citizens of Vermont aren’t paying you an exorbitant amount for your property.”

Porter said that historically, the Department of Public Service has not provided a witness to give testimony about the value of a property during eminent domain proceedings. This places the onus on landowners to hire an appraiser to lobby on their behalf.

Vasatka said that she believed Vermont Gas should help pay for landowners’ legal expenses related to drafting an easement agreement.

“I think it’s in Vermont Gas’ best interest, if they want to make this go, to set up some kind of legal fund for us,” Vasatka said. “I don’t think we as landowners should have to burden that.”

Vasatka said she previously asked Vermont Gas for $600 to pay her attorney for preparing easement documents, but the company declined. Wark said the company has no intentions of creating a legal fund for landowners.

“Per our (memorandum of understanding) with Monkton, we paid for an easement workshop, but we’re not in the position to create a legal fund, per se,” Wark said.

Wark said that if the company were to provide funds to help affected landowners with legal fees, this cost would ultimately be passed on to ratepayers.

“There have been a couple people who are staunch opponents, and we would be putting the company and customers in position to fund their own opposition,” Wark said.

Based on recent jurisprudence, it is unlikely that landowners will be awarded attorneys’ fees in eminent domain proceedings. During the condemnation proceedings related to the Northwest Reliability Project in 2009, the Vermont Supreme Court refused to award attorneys’ fees to a Shelburne real estate company.

NON-DISCLOSURE AGREEMENTS

Several landowners said they have been asked by Vermont Gas representatives to sign non-disclosure agreements, which would bar them from speaking with neighbors about the details of negotiations. Porter said in her experience, non-disclosure agreements are common for these types of negotiations.

Wark confirmed that Vermont Gas asks landowners to sign such agreements, and defended the practice.

“We do use non-disclosure agreements because each agreement is unique and specific,” Wark said. “Given ongoing negotiations with landowners, we want to maintain confidentiality.”

Rep. Sharpe said he would support legislation that would prohibit utility companies from using such agreements in the easement process.

“I’m a big believer in transparency in government, and I believe this process ought to be transparent,” Sharpe said. “You ought to be able to talk to your neighbors.”

MOVING FORWARD

The two-hour meeting concluded after Bray, Recchia and Porter agreed to host another meeting at a later date to check up on negotiations.

Speaking to the Independent afterward, Recchia said he thought the meeting was productive, and that he appreciated the level of passion many of the landowners had.

“I heard some things about areas that we can work on,” Recchia said. “I feel like we understood coming in that this process got off to a rocky start, for whatever reasons, and that it needs to be rebooted.”

Wark said Friday that the company will send new letters to landowners. Wark added that landowners, if they are interested, will also have the opportunity to meet with a Vermont Gas employee. Previously, landowners have been negotiating with real estate agents hired by Vermont Gas for this project.

Nonetheless, Wark said that Vermont Gas’ strategy will remain the same.

“We want to negotiate in good faith with landowners, and that requires flexibility on both sides,” Wark said.

Vasatka said she had mixed feelings about the meeting, and that she looks forward to hearing back from Recchia and Porter.

“I’ve still been legally threatened with eminent domain,” Vasatka said. “Until that’s removed, I’m still facing the bully in the schoolyard, just wondering what day he’s going to take my lunch money.”

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