Thursday, January 19, 2012

Pinocchio Fact Checker: Arguments against HB 648 Bragdon/Forrester

Pinocchio Fact Checker: Arguments against HB 648 Bragdon/Forrester Amendment

In the spirit of the "Pinocchio Fact Checker," Bury the Northern Pass looks at the rhetoric and reality of arguments against  HB 648 Bragdon/Forrester amendment (648 B/F)

1. Providing electricity is a public purpose, and eminent domain should not be restricted.  

     That may have been the case in the old days when utilities were government owned, highly regulated, and essentially an arm of the government.  But it is entirely different in today’s world of de-regulation and investor-owned utilities. To disprove this objection you need go no further than current 371:1, which bans eminent domain for generation plants because, in the de-regulated environment, generation plants are private businesses.  Electricity is no longer recognized as a special public good.  648 B/F simply carries the logic of 371:1 to close the loophole that would allow private transmission lines to use eminent domain.

2.  648 B/F is not needed because Article 12-a already provides full protections to landowners. 

Not true.  Article 12-a will not provide ANY protections until, at best, the very end of the process.  A landowner threatened now by an abuse of eminent domain has no claim under Article 12-a.  A court will throw out any claim and say “let the Public Utilities Commission (PUC) process run its course before we hear any case.”  So, a landowner has to wait until the private transmission line developer petitions for eminent domain to the PUC under 371:1, and then wait for the PUC decision. This is unfair for landowners.

And remember, the PUC is a VERY activist agency that frequently substitutes its own judgment in areas where the legislature has spoken clearly.  The PUC does not have to take landowner interests into account – it balances ratepayer and utility interests.  There is a real risk the PUC, enamored of renewables and essentially working for utilities and ratepayers, will stretch to find a way to allow takings of land.  If the PUC grants a taking and the landowner appeals under 12-a to the NH courts, the courts will give the PUC a huge amount of deference and will set aside a PUC decision only if it is an “abuse of discretion” or is unsupported by any facts.  For these reasons – delay, litigation cost, PUC incentives and deference of the courts to the PUC – the supposed protections of 12-a are illusory.  Landowners need 648 B/F for any meaningful protection at the front end of the process.

3. 648 B/F unfairly targets a single project, Northern Pass.    

Not true. The Bragdon-Forrester language (and the original HB 648 language) is general in scope.  The bill targets property rights and eminent domain abuses.  Opponents of 648 B/F can’t even argue that the bill would principally affect Northern Pass.  There are now two private transmission lines proposed for New Hampshire – Northern Pass and Northeast Energy Link.  And many more private transmission lines are at various stages of consideration at federal, regional and state planning bodies. The potential for abuse of eminent domain by private transmission lines is a large, growing problem and a very appropriate subject for legislation.

4. But Northern Pass was already proposed, so 648 B/F is unfairly trying to stop an EXISTING project.

Northern Pass has absolutely no regulatory status in New Hampshire at the current time.  The project has made no application or filing with the PUC. The project doesn’t even have a route!  This argument is like saying that if a company comes to New Hampshire and announces it plans to build a nuclear waste facility, but it doesn’t have any town identified yet or any specific plans and has not yet made any regulatory applications, there can no longer be any legislative actions about nuclear waste.  There is nothing unfair about 648 B/F given the inchoate state of Northern Pass.  And on narrow legal grounds, Northern Pass is in no way “vested” for purposes of having rights protected from future legislation. 

Northern Pass may also claim that it is "unconstitutional" under the federal or state constitution to take away its vested contractual rights (i.e., transmission services agreement between NU, NSTAR and HQ’s US subsidiary) based on its ability to have the use of NH's eminent domain statutes because it entered into contracts that affect interstate commerce and it has started the federal regulatory process for approval of its transmission line. 

This is also nonsense.  Article 12-a of the NH Bill of Rights was enacted more than four years prior to the announcement of Northern Pass in explicit recognition of the Supreme Court's invitation to the States to alter the outcome of the Kelo holding.  648 B/F does nothing more than make the statutes conform to the proscriptions of Article 12-a.  There is no ex-post-facto problem at all in conforming ancient legislation to recognize that which the Constitution already prohibits.

 5. 648 B/F will chill future energy investment in New Hampshire.     

The “chill” argument is based on the false premise that 648 B/F is unfair to Northern Pass (see #3 and #4).  Indeed, the contrary position is more likely accurate.  Businesses like certainty and clarity in the rules.  It should be 100% clear when eminent domain is, and is not, available.  This will let businesses decide how to proceed and invest.  648 B/F makes the needed clarifications and updates the old statutes.  It takes away the loophole under 371:1 that lets private transmission lines apply for eminent domain even though 12-a says no.  This levels the playing field between companies prepared to push the outer envelope of legal interpretation (Northern Pass) and those that are more conservative and responsible.

6. 648 B/F will stop "good" energy investments – new renewables plants, connector lines, the upgrade of the Coos Loop, etc. 

All 648 B/F will stop is eminent domain abuse by private projects in the energy sector.  It affects nothing else.  New renewables generation plants already were restricted from using eminent domain, under 371:1.  648 B/F changes nothing on eminent domain by generation plants – they can’t use it. 

648 B/F also changes nothing regarding “connector lines” that hook up generation plants to the grid.  It has long been accepted across the industry that connector lines do not get eminent domain in New Hampshire.  See the New England Power Generators comment letter on 648 B/F from last year – no generation plant would even try to use eminent domain for its connector line! 

Similarly, the Coos Loop upgrade, long studied by the state, is in essence a “connector line” that would add capacity to connect new wind farms and biomass plants to the grid.  This is why ISO-NE and the state have made it 100% clear that any Coos Loop upgrades must be paid for by the generators themselves.  If the Coos Loop upgrade ever occurs, it would not be entitled to eminent domain in any case under the better view that it is a connector line.  And in any case, NH’s own studies say the Loop upgrade can be accomplished within the existing ROW.

7. 648 B/F will stop “public-private partnerships” where the state, ratepayers and private businesses come together to build new energy facilities.

A project with private funding and for private gain should not be entitled to eminent domain, even if the private component is small.  That’s a matter of principle.  There are lots of different ways to get projects done, and all 648 B/F does is to make clear that private elements preclude eminent domain.

8. Northern Pass is good for New Hampshire and if 648 B/F passes, then Northern Pass dies and NH loses the benefits

See the Bury the Northern Pass's three-part blog for a rebuttal of all the claimed NH benefits of Northern Pass.  But even assuming for the moment that the project would be good for New Hampshire, 648 B/F in no way forecloses the transmission lines.  Northern Pass is absolutely free to go back to FERC and ISO-NE with a new project structure that would seek to have the costs of the lines allocated region-wide to ultimate electricity customers.  There is a clear path to do this – a “reliability” project, an “economic” project or a “policy” project, all under ISO-NE rules.  (Note:  ISO-NE is still in the process of developing its “policy” rules under FERC Order 1000).  If Northern Pass, when cast as a participant-funded project, cannot use eminent domain, then it can seek another project form that would take the project out of the coverage of 648 B/F and allow Northern Pass to apply to the PUC for eminent domain.