Landowner Deals Crucial for Speedy Certification
While stressing FERC doesn't want the pipeline companies to have
to pay "ransom" to landowners, Commission Chairman James Hoecker
told a meeting of the National Association of Regulatory Utility
Commissioners (NARUC) in San Francisco yesterday pipelines have to
do a better job of hammering out early, innovative deals with
property owners affected by their projects.
"We'll act faster if the pipelines act responsible up front,"
Hoecker said. "Frankly, if they don't do that, our hands are
Illinois state regulator Ruth Kretschmer, however, took up the
pipelines' cause, stating her past experience in real estate and as
a state energy regulator has shown "money talks," and that
so-called "robber barons" have extorted a lot of money from
pipelines. She said some of the pipeline companies have paid the
equivalent of "black mail" to landowners to avoid delays in their
"It is a very difficult issue," Hoecker conceded. FERC doesn't
want to subject the pipelines to extortion by property owners. "On
the other hand, there is a lot of finger pointing and we don't have
much of a record at all about how good the land work has been prior
to companies filing applications with FERC.
"If we are going to give a company the right of eminent domain
under federal law, we better do it in those instances where there
is a clear need. Because quite frankly, property rights are a big
deal in Washington, DC, right now," he said. "Handing out the
rights of eminent domain has to be done sparingly."
He said FERC is open to more expedited certification of new and
expanded interstate pipeline projects and currently is streamlining
the process with a new "project office," which will focus on the
construction, engineering and environmental aspects of energy
But the pipeline industry "has to be more proactive upfront as
far as landowners' concerns and engage in a collaborative process
so we don't have a holdup once we have a proposal before us. Siting
is extremely difficult when you have thousands of letters from
landowners and members of Congress calling you saying a project is
completely contrary to the public interest.
"If we want to find a responsible way to deal with those issues
working with the industry - and I think clearly [the pipelines]
have gotten the message - then I think our process in the future
will work very well," he said.
He admitted state regulation has been way ahead of FERC in
implementing performance-based ratemaking. "We are going to have to
begin to look more critically at this and to develop new ways to
invent good and more efficient economic behavior." He said the
commission was open-minded toward individual incentive proposals
from pipelines, but added the caveat that he was unaware of how the
state PBR mechanisms have worked so far.
Generically, he said that setting performance standards for
companies can end up being "the ultimate example of
command-and-control regulation" if they are not carefully thought
out and implemented.
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