Thursday, December 22, 2011

Northern Pass’s AG Filing: Just Plain Wrong on the Facts, Law and Policy

This is the second blog in a two-part guest series on Northern Pass's filing with the NH Attorney General's office on December 20, 2011. The first blog is here.

Two days ago Northern Pass made a formal filing with the Attorney General’s office seeking to block the Tillotson trustees’ agreement to conserve the bulk of the Tillotson land.  The Tillotson land would be conserved under a conservation easement with the Society for Protection of New Hampshire Forests. 

If they are approved by the AG’s office and become effective, the conservation easement and related instruments would prevent Northern Pass from routing their proposed transmission lines across the Tillotson land.  The Forest Society is currently conducting an $850,000 fundraising campaign to raise the money needed to pay for the easement.
Northern Pass’s filing is available here.
This blog analyzes the key arguments made in NP’s filing to support their claim that the conservation easement should be set aside insofar as it prevents the transmission lines.  We conclude that NP’s arguments are wrong on the facts, law and policy.  We believe it is highly likely the AG’s office will reject NP’s filing and will approve the conservation easement.
NP’s Argument 1:  NP opposes only the prevention of the transmission lines, not the conservation of the remaining land.
The two are inseparable.  There is little point in conserving the Tillotson land if the land will be crossed by Northern Pass’s massive, visually shocking above-ground transmission lines.  Conservation easements are all about the preservation of the landscape, and a landscape ruined by a string of HVDC transmission line towers up to 135’ tall does not have substantial preservation value.  The Tillotson trustees were entirely reasonable in determining that a core element of the conservation easement would be the prevention of Northern Pass’s lines.
NP’s Argument 2:  The conservation easement is unfair because it allows the Tillotson interests to use part of the property for a wind farm and related connector lines.  If this is allowed, Northern Pass should be allowed on the land as well.
The use reserved by the Tillotson interests is fully consistent with a resort property and other conserved land.  You don’t need to look any further than the Mountain View Grand Hotel (powered in substantial part by a new windmill).  Visually, the connector lines that would carry power to the Balsams Hotel or deliver excess power to the grid would be a fraction of the scale of NP’s proposed lines and, unlike NP, could easily co-exist with the natural environment. Northern Pass’s argument compares apples to oranges.
Wind power development on the Tillotson land would represent a local renewable resource with the power generated locally and available locally.  Northern Pass would simply cross over New Hampshire to bring Hydro-Quebec’s non-renewable power to southern New England, while wind development on the Tillotson land would further New Hampshire’s renewables energy policies and have clear local and New Hampshire benefits. More apples to oranges.
NP’s Argument 3:  The Tillotson trust can get another $2.2 million (more money for trust purposes) by selling a transmission line right of way to Northern Pass and conserving the rest of the property, and failing to pursue this additional money is a breach of the trustees’ fiduciary duties
As noted earlier, there is little point in conserving any of the Tillotson land if the conservation value of the land is ruined by Northern Pass’s lines.  Conservation and the transmission lines are simply inconsistent.  The notion of an “additional $2.2 million” (filing, p.2) is patently ridiculous. 
The trustees chose to conserve the land rather than allow the land to be crossed by NP’s transmission lines. This was (and is) an “either/or” decision. What Northern Pass is really arguing – a stunningly arrogant position -- is that their transmission lines are somehow more important than conserving the Tillotson land.
The trustees saw it differently, and their decision to conserve the land rather than grant a crossing to NP is fully within the trustees’ discretion under the suite of principles specified in the trust documents. The decision fully comports with the trustees’ fiduciary obligations.

The overarching purpose of the trust is to benefit the North Country and its residents. Under the trust documents the trustees are directed to give special consideration to, among other things:

§ “conservation and sustainable utilization of the natural resources of the North Country, including Tillotson Corporation’s North Country forest land holdings”;

§ “economic development and enhancement of the North Country economy”;

§ “promotion and support of the health, education, cultural advancement and economic well being of the residents of the North Country.”

Northern Pass’s core argument – that the transmission lines would generate additional money for the trust – fails entirely to account for these key mandatory principles of stewardship of the trust. Nowhere do the trust documents say that these core principles are somehow subordinate to dollar values. Indeed, the better argument is that these principles trump questions of dollars and cents.

When the express trust principles are considered, NP’s position melts away. It is beyond serious argument that Northern Pass’s proposal — to cross the Tillotson land and bisect other beautiful and largely untouched areas of the North Country with visually jarring, environmentally damaging and value-destroying above-ground transmission lines — is flatly inconsistent with the trust’s mandates. The lines would damage the Tillotson land and could impair the prospects for successful revival of the Balsams Hotel. More generally, the North Country’s natural resources would be irrevocably compromised; economic development in the region would be seriously impaired; and the well being and sense of place of North Country residents would be critically damaged.

Northern Pass erroneously argues that this is all about money and nothing else.  But even on the narrow money front, NP’s position leaves out most of the important stuff.  NP’s argument looks only at purchase price of the transmission line easement.  NP fails to quantify, or even recognize, the many quantifiable “negative externalities” from the lines.  Property value declines, damage to the prospects of the Balsams Hotel, harm to tourist businesses and related activities, and measurable declines in the sense of place and well being of North County residents would almost certainly, in combination, exceed the $2.2 million purchase price offered by NP. 
It gets worse for Northern Pass’s narrow money position.  We believe that even after considering the quantifiable positive effects of Northern Pass’s proposal (tax revenue, some temporary jobs, etc.), it is highly likely that the net financial impact of an easement sale to Northern Pass would be negative.
The bottom line is that even if it were all about the money (which it is not!), NP’s argument would fail.
NP’s Argument 4:  The trustees bowed to “what we know to be focused political and personal pressure in opposition to Northern Pass.”
The trustees did an exceptional job of coming to a decision that carries out the purposes and intents of the trust and benefits the North Country.  And three cheers for the opposition for supporting the trustees with principles-based commentary. 
Unlike Northern Pass, which plays politics (via its affiliates) with money and favors, the opposition doesn’t try to buy political decisions.  The opposition’s tools are limited to sound ideas, proposals and discussion.
NP’s Argument 5:  The trustees carried on parallel negotiations with Northern Pass and also on the conservation easement and chose the conservation easement without any detailed explanation to Northern Pass of why its offer was rejected.  The trustees never told Northern Pass that the transmission lines may be inconsistent with the trust principles
So what?  It’s standard practice in business and in real estate transactions to negotiate with multiple parties, bring all parties to their best deal, and then make a decision.  Sellers don’t have to share any of their thoughts or considerations. 
Northern Pass seems to be asking the AG’s office to “feel their pain” from being left at the altar, but this is simply not a relevant argument.  The Tillotson trustees have no obligation whatsoever to explain their considerations to Northern Pass either before, during or after negotiations.
NP’s Argument 6:  If you don’t go along with us, we’ll sue everyone in sight.  “We hope that this will be resolved appropriately through the exercise of the Attorney General’s supervisory authority over the Tillotson Trust and that litigation over this important issue can be avoided” (filing, p. 6).
Litigation threats roll so smoothly off the tongues of Northern Pass’s hired guns.  This one is a doozy.  As best we can tell, Northern Pass is threatening to sue the Tillotson trustees and the Attorney General’s office if they won’t agree to crumble and go along with what NP wants.  Maybe even the Forest Society. 
But just imagine. Northern Pass, a front for a Connecticut investor owned utility corporation, sues two New Hampshire charitable organizations, the Tillotson trust and the Forest Society, and the NH Attorney General’s office! Does Northern Pass seriously believe that if it tied up the project in protracted litigation, wasted NH taxpayer dollars for defense, attacked two charitable institutions, and burned whatever bridges it may have left in NH that it would ever be able even to bury a transmission line in this state?