Due to slow internet speeds we have been unable to download the entire DEIS onto the Preserve Monroe Website. If you have not already downloaded the DEIS from the FERC site yourself, you can easily find and follow the link from the POWHR website: https://powhr.org/ You can also find a link to it on our Facebook Page as well as Preserve The NRV Facebook page and many others
Announcement of DEIS Public Meetings
The FERC has just issued the dates and locations for the public comments sessions for the MVP. All meetings begin at 5 p.m. (this definitely seems like a way to inconvenience everyone who works). The FERC will allow speakers to sign up until 8 p.m., each speaker is allotted 3 minutes and the meeting will end at 10 p.m.) -- the dates and locations for these sessions (note they left out the New River Valley entirely in their scheduling , also no hearings in Greenbrier or Summers County so expect a full house in Peterstown) are:
Tuesday, November 1st, Chatham High School, 100 Cavalier Circle, Chatham, VA
Tuesday, November 1st, Lewis County High School, 205 Minuteman Drive, Weston, WV
Wednesday, November 2nd, Franklin County High School, 700 Taynard Road, Rocky Mount, VA
Wednesday, November 2nd, Nicholas County High School, 30 Grizzly Road, Summersville, WV
Thursday, November 3rd, Sheraton Hotel, 2801 Hershberger Road, Roanoke, VA
Thursday, November 3rd, Peterstown Elementary School, 108 College Drive, Peterstown, WV
Wednesday, November 9th, California Area High School, 11 Trojan Way, Coal Center, PA
PLEASE NOTE: COMMENTS WILL BE ON A ONE-ON-ONE BASIS -- they will not be given in a public setting -- this is another way for the FERC to circumvent the process.
AN EXPERT REPORT ON
GEOLOGIC HAZARDS IN THE
KARST REGIONS OF VIRGINIA
AND WEST VIRGINIA
Investigations and Analysis Concerning the
Proposed Mountain Valley Gas Pipeline
Ernst H. Kastning, Ph.D., P.G. June 2016
KARST AND HAZARDS IN MONROE COUNTY
Monroe County, West Virginia is well-known for a large number of caves, some of which are extensive (Hempel, 1975). Indeed, it is home to extensive areas of karst (see Appendix B, Maps 1 and 3). The proposed Mountain Valley Pipeline poses some significant concerns where it passes through the county.
The significant areas of potential problems associated with karst have been identified in letters and depositions by citizens and experts in Monroe County. Among those who submitted comments to FERC include, Dr. Alfred F. Ziegler (Professor Emeritus of Geology, University of Chicago, and resident of the county), Dr. Paula C. Dodds (Licensed Professional Geologist, Laurel Mountain Preservation Association), Harold ‘Rocky’ Parsons (geologist, expert on karst, member of the Monroe County Planning Commission), and Judy Azulay and Nancy Bouldin (members of the Indian Creek Watershed Association (ICWA). It is highly recommended that their input be considered. It is also instructive to consult the Karst Hydrology Atlas of West Virginia (Jones, 1997) for an overview of extensive dye traces performed in that state over the years. There are several areas of karst where the pipeline could inflict significant potential environmental impact. Some of those are outlined here – the details are in the reports listed by the people above.
Of particular interest are the letters from the Indian Creek Watershed Association of October 14, 2015 and November 13, 2015. The letters from Parsons, dated June 6 and November 26, 2015, provide additional information.
Of particular concern are karst features close to where the proposed corridor crosses Indian Creek near Greenville (MVP mileposts 181-182). Indian Creek, which drains significant karst to the east, flows directly into the New River to the west. Surface water and water in the underlying karstic aquifer would be at risk from the pipeline.
Another area of concern lies along Ellison Ridge and in the Hans Creek Valley (MVP mileposts 182-187). Numerous springs are located in this vicinity. Hans Creek is a sinking stream.
Considerable recharge enters the underlying aquifer at its insurgence and emerges 0.3 mile downstream. There are numerous subtle karst features, mostly sinkholes, that indicate that this is an important recharge zone.
Numerous karst features occur between Little Mountain and Peters Mountain (MVP mileposts 194-195). As reported in the above cited letters to FERC from the Indian Creek Watershed Association, there are several caves, sinkholes, and a sinking stream in the karst that would be crossed by the pipeline at this locality. There are many springs along Peters Creek Mountain that provide water for all three of the water districts in the county, serving up to 70 percent of the households, public schools, and other users. One of the most at risk is the Red Sulphur Public Service District. Sweet Springs Valley Water Bottling Company, an award-winning water bottling company, derives water from these springs.
As with other mountain ridges along the pipeline corridor, there is significant allogenic recharge to karst aquifers from upland, non-carbonate terrains in this part of West Virginia. The karst aquifers identified above receive considerable recharge from allogenic sources. Hence, watershed delineation and establishment of buffer zones are critical in addressing impacts.
Slope stability and seismicity are ‘red flags’ in the Indian Creek to Peters Mountain section of the corridor. As seen in the data in Table 1-A, average maximum slopes are in excess of 40 percent.
Most of the soils indicated in Table 2 are poor in their ability to bear a high load. The likelihood of mass movement, including slides, is present along this segment of the corridor, leading to potential problems of slope stability as outlined in this Section of the report.
This part of Monroe County also lies within the Giles County Seismic Zone (see Appendix B, Figure 6A). Dr. Alfred M. Zeigler comments:
“The U.S. Geological Survey (Bulletin. 1839-E) reports that there was a ‘landslide of considerable proportions’ also reported at the time, on the face of Wolf Creek Mountain in Giles Co. The authors of this bulletin, published in 1990, searched for surface expression of ‘neotectonic’ features, such as recently active faults, without success, but did report ‘a giant rock-slide complex on Sinking Creek Mountain,’ also in Giles County, and [hypothesized] that it had been caused by seismic shaking, as had the ‘numerous other rock falls and slides in the area.’ They also implied that crustal warping might be indicated by variations in the elevation of terraces along the New River. Of course, a major rock-slide would completely disrupt a pipeline and this prospect would be worse than crossing a fault. This is because a fault is a known quantity with a known location and sense of movement, and could probably be allowed for by the pipeline engineers. The location of rock-slides, however, would differ each time and the effects could not be allowed for, even if they could be predicted.
The entire report can be read at wp.vasierraclub.org
Seeds of Resistance Coming to WVA & VA
Will be in Monroe County, Wednesday morning June 8th
FOR IMMEDIATE RELEASE: May 31, 2016
Monroe Co. Citizens to Join Cowboy & Indian Alliance to Plant "Seeds of Resistance" Ponca Corn on Land in Paths of Atlantic Coast & Mountain ValleyPipelines
Contact: Preserve Monroe –email@example.com or Roseanna Sacco @ 304-536-1207
Media invited to attend:
WHEN: June 8., 9 AM
WHERE: Blue Roamin Farm, 4 miles South of Union near Salt Sulphur Historic District
The people who helped to bring an end to the Keystone XL, Bold Nebraska, are coming to West Virginia to stand in solidarity with local landowners affected by the Atlantic Coast and Mountain Valley Pipelines. They will be planting “sacred corn” seeds along the route of the two pipelines. Between June 6 and 8, the group will stop at 4 locations in Virginia and 2 in West Virginia.
Jane Kleeb, organizer from Nebraska, and Mekasi Camp, a native of the Ponca tribe of Oklahoma, are making the journey down to support those in West Virginia who stand against the proposed pipeline projects. "We're going to stand together with the cowboys—the ranchers and farmers," said Mekasi Horinek Camp. "Together our families will plant sacred Ponca corn as seeds of resistance to these risky fracked gas pipelines. As the corn grows it will stand strong for us, to help us protect and keep Mother Earth safe for our children. We stand with the pipeline fighters.”
“Actions, like planting the Ponca corn, show the strength and commitment of people standing up to Big Gas and their reckless pipelines,” said Jane Kleeb, Bold Alliance President. “Using eminent domain for private gain is something the Cowboy and Indian Alliance stands against. We plan on using actions, prayer and all legal tools available to stop these risky pipelines.”
“We are looking at 6 new, high-pressure, large-diameter gas pipelines running through West Virginia. Not only are they not needed, but they are going to prove disastrous for the region’s water, air, soil, and economy,” says April Keating of Mountain Lakes Preservation Alliance. “We are already seeing landowner rights trampled, property values threatened, and a general disregard for the rights and health of human beings. Methane leakage is contributing hugely to global warming. If these pipelines go in, we will be locked into the same approach we’ve been suffering from for over a century.”
The gathering in Monroe County is to be hosted at Patricia A. “Cookie” Cole’s Blue Roamin Farm, near the Salt Sulphur Historic District 4 miles south of Union on US 219 This farm is threatened by the MVP Alternate 210 Route. The mere mention of construction from this intrastate line has already disturbed many in the area, and contributed to a loss of serenity and peace of mind as well as their property values.
Cookie is no stranger to fighting big corporations. In the 90’s another large infrastructure project, the APCO 765 Kv line was proposed to cross Monroe County including property belonging to her family in the Zenith Valley and Peters Mountain. This project was defeated in Monroe County by people like Cookie who refused to back down from large corporations whose only contribution to the county would have been a large ugly scare through the countryside and over Peters Mountain.
Parking will be available near or adjacent to Cookie’s Blue Roamin farm at Junction of Fullen Road and US 219. Email firstname.lastname@example.org for directions.
Read the complete Key- Log Economic Report Here There is a link to each County in the report.
This is just one quote from that report . "In November 2015, preservationist and businessman Ashby Berkley purchased Monroe County’s historic Sweet Springs Resort. One of the oldest developed mineral springs in the country, its early guests included Washington, Jefferson, Franklin, and other notables from U.S. history. The Sweet Springs Resort Park Foundation plans to restore and develop a 600-acre resort, conference center, business site, and sports complex for disadvantaged children: estimated as a ten-million-dollar project that is expected to employ over 250 workers. According to Berkley: “The aquifers in Monroe County that move through Peters Mountain are among the finest in the world, earning top awards at international water tasting festivals. To risk harm to this great natural water resource with pipelines or any earth disturbance would be a crime, and would be an absolutely worthless benefit to the people who live here and whose families have lived here since the 1700s” (Berkley 2016) "
Another local business made this comment:
Birdsong Farm, LLC
The owners of Birdsong Farm, LLC, an apiary raising honeybees and flowers, have been selling natural raw honey and natural beeswax products produced on the farm for nearly a decade. The farm runs organic applications and the owners worry the proposed pipeline would kill off their honeybees due to the pesticides and defoliants sprayed over the pipeline route. Also of concern are an additional estimated 20 million bees which reside between Greenville and Peters Mountain. With honeybees gaining increased federal importance and protection, the important work Birdsong Farm and neighboring farms are doing with their organic practices have created some of the most prime honeybee habitat in the world.
The proposed MVP route has already caused the owners of Birdsong to change their plans to create a U-pick strawberry farm. The U-pick strawberry farm would have produced locally-grown fresh strawberries, strawberry plugs, and value-added products to sell in an on-site store. Birdsong Farm was planning to hire employees to help run their local operation, however, the owners canceled their high tunnel grant and estimate the long-term loss in revenue to the county may run as high as half a million dollars.
-Patti and Constantine Chlepas, Owners of Birdsong Farm, LLC
Sorry for the lapse in updating this page It will be updated and kept up to date Thanks Preserve Monroe.
Please watch this short No Pipeline episode from our filmmaker friend, Marino Colmano.
Pass it around to as many folks as you can. We must spread the message about these threatening pipelines. Your help is needed.
CALL TO ACTION - EQT FILES LAWSUIT AGAINST FAYETTE COUNTY
The stakes are being waged and we're in a position to respond!
EQT has brought a lawsuit against Fayette, the first county in WV to pass an ordinance to ban the storage, use or disposal of any oil and gas waste within the county. The ordinance essentially bans fracking in the county. (See link to Register Herald article below)
The ordinance was passed last Tues, Jan 12. EQT filed their lawsuit on Jan. 13, the following day; they claim that the state Oil and Gas Act and the Fifth Amendment property rights are being violated by the ban.
Imagine that...their cry of "foul" when it comes to property rights!!
Two POWHR members have been profoundly involved in getting this ordinance passed, even as they've been waging battle against EQT alongside the rest of us.
The Fayette County Commission has set an extraordinary precedent in this state and they need all the support we can give to them. It takes a village...
The broad coalition that we've been striving to create across WV and Va. is a reality. We've been working together throughout the two states and within WV and VA in unprecedented numbers because we believe in the preservation of our water, heritage and rights!
1) We need to have letters written to the Register Herald, in particular. Fayette County is their readership area and the more they hear from us the more they'll cover the opposition.
•Snail Mail: Our Readers Speak
PO Box 2398
Beckley, WV. 25802
- No more than 300-350 words
- Letter writes are limited to one letter in a 30 day period
- Letters must be signed, include street address; daytime and eve phone numbers( for verification only)
2) Our WV state legislators must hear the roar that is growing throughout the citizenry:
"We citizens will not stand aside and allow the oil and gas companies and the legislators who support them strip away our rights for their own gains"
Phone numbers accompany the following foster. Please chip away at it over a few days!
3) We have solid candidates running for the U.S. House of Representatives ( Mike Manypenny, District 1) and the WV State Senate (James McNeely, district 10)
This is a two way street...we NEED these candidates to win and they need our support and campaign contributions.
4) Non Violent Direct Action Planning Meeting
Jan. 23, Sat. 2015
St. Thomas Episcopal Church
205 West Main St.
White Sulphur Springs, WV
FOR IMMEDIATE RELEASE
January 10, 2016
Contact: Elise Keaton
Many West Virginians remain opposed to forced pooling
Charleston, WV - Efforts are being made to reintroduce a forced pooling bill which died in the final hours of the 2015 legislative session. Mineral owners who oppose this bill believe it is clearly intended to allow the industry to take millions of acres of unleased minerals in this state.
Delegate “Woody” Ireland (R- Ritchie County) is the primary sponsor of the forced pooling bill. He stated at a stakeholder meeting held at the Capitol on January 7 that Ritchie County, “has more oil and gas wells than any other county in the state.” Del. Ireland argues that he is looking out for the interests of the state as well as mineral and surface owners; however due to his ownership of surface land and minerals in Doddridge and Ritchie Counties he is heavily vested in the outcome this legislation. This raises the question about other legislators who may financially benefit from the passage of a forced pooling/lease integration bill.
Local surface and mineral owners across the state remain opposed to a forced taking of their mineral rights. “This oil and gas would not be captured by ordinary vertical drilling. It is simply involuntary seizing of my reserves at a price set by a commission,” said Liz Tobey, a surface and mineral owner in Greenbrier County. “Our country was founded upon a free market system that allow(s) the owner of something to decide when and for how much to sell their property, not on the idea that if a corporation wants to make a buck, they can just take it.”
Members of the Southern WV Mineral Owners Coalition will align with other groups in the state and are committed to use their own resources to vote out of office any legislator who votes “Yes” on this bill in the next election. “We will not quietly stand by as our elected officials put the profits of an industry over the rights of the people in this state.” said Basil Keaton a surface and mineral owner in Raleigh County.
For more information about statewide opposition to the proposed forced pooling bill contact the Southern WV Mineral Owners Coalition at email@example.com or call 304-207-1150.
Reason for Caution: Mountain Valley Pipeline Economic Studies Overestimate Benefits, Downplay Costs October 6, 2015 Spencer Phillips, PhD, Key-Log Economics
Summary of Key Findings Upon review of EQT-commissioned studies of the economic effects of the Mountain Valley Pipeline, we conclude that the studies overstate benefits to local communities. As importantly, we find that even a more careful and modest assessment of benefits is inadequate to meet the information needs of decision-makers and citizens: a full accounting of the likely costs (negative economic effects) must be developed, and its results must be compared to more realistic estimates of benefits. MVP studies over-estimate “Construction Benefits” to the MVP region. o The chosen modeling technique and choice of region for analysis result in overestimates of regional benefit. o Most construction jobs will be filled by non-residents, further depressing the local economic impact. MVP studies overestimate total employment effects of pipeline operation and maintenance. o The studies’ modeling approach is unreliable for predicting multiplier effects more than one year into the future. Only direct operation/maintenance jobs should be counted as long-term effects. MVP studies overestimate benefits from fuel switching. o The studies do not demonstrate how much, if any, fuel switching would actually occur. o Estimated benefits for Franklin County, Virginia seem so unlikely given potential demand that they should be removed entirely. o The studies do not account for how future increases in gas prices and gas price volatility would affect either the likelihood of fuel switching in the first place or the long-run magnitude of any benefits from switching that still might occur. o The studies ignore energy conservation and/or renewables as additional alternatives to which would-be gas users could switch. MVP studies overstate financial benefits to local governments. o Estimated revenue increases are tied to fuel switching that may not occur. o Any actual increases in tax revenue will fade over time. o Studies ignore potential reduction in net tax revenue due to changes in property values. o Studies ignore likely increases in local public service costs and fail to present estimates of net effects on local government finances. FERC, elected officials, citizens and businesses need to consider costs, not just benefits. o Benefits estimates alone do not provide sufficient information to support a decision to permit the Mountain Valley Pipeline. o A full accounting for the following costs is needed. Lost ecosystem services, such as water quality, flood control, wildlife habitat and aesthetic value Higher community service costs, including disaster preparedness, social services, and road maintenance Reduced property values as safety risks, lost views and other factors are reflected in market prices Diminished economic development opportunities if MVP-oriented land uses impair or impede existing opportunities.
Details related to these five issues comprise the remainder of this report.
PAGE 2REASONS FOR CAUTION
Background and Policy Setting The Mountain Valley Pipeline, proposed to carry natural gas some 294 miles from Wetzel County, West Virginia to the Transcontinental compressor station in Pittsylvania County, Virginia, has been described as necessary both to meet growing demand for natural gas and, by providing a cheaper alternative to other fuels, to support economic growth in the counties along its proposed route (see map). EQT corporation and Mountain Valley Pipeline LLC (“MVP LLC”) 1, including through FTI consulting, have developed estimates of selected economic effects of the proposed pipeline (Ditzel, Fisher, and Chakrabarti 2014b; Ditzel, Fisher, and Chakrabarti 2014a; “Resource Report 5: Socioeconomics (Draft)” 2015).
Estimates of the possible economic benefit of the MVP matter because they bear on the review of direct and cumulative environmental effects, which by law include economic effects, that the Federal Energy Regulatory Commission (FERC) must complete before issuing a “Certificate of Public Convenience and Necessity,” or in the vernacular, permitting the pipeline to be built and operated. This review is governed both by FERC’s own procedures and, ultimately, by the National Environmental Policy Act (Council on Environmental Quality 1978).
Economic benefit estimates also matter because they have been cited by political leaders and others as support for the notion that constructing and operating the pipeline will inevitably enhance economic well-being in Virginia and West Virginia (Petska 2015). This is an understandable concern, but as with the formal pipeline review and approval process, citizens and their public servants need to know more about the full range of economic effects–that is costs as well as benefits–before deciding whether the MVP will improve the lives and livelihoods of people living in the region it would traverse.
To advance the public discourse and ensure that citizens and decision makers have a more complete and correct picture of the economic effects of the MVP proposal, a consortium of non-profit organizations, community groups and concerned citizens in West Virginia and Virginia have asked Key-Log Economics, a Charlottesvillebased consultancy, to review the three reports referenced above and to evaluate their claims of economic benefit from the MVP. This review is not the full picture either, but with it, we do sketch questions that FERC and others need to ask and answer as part of the official review.
Problems with Economic Impact and Benefit Estimates Two studies by FTI Consulting, “Economic Benefits of the Mountain Valley Pipeline Project in Virginia,” and “Economic Benefits of the Mountain Valley Pipeline Project in West Virginia” (Ditzel, Fisher, and Chakrabarti
1 The Mountain Valley Pipeline would be built and operated by Mountain Valley Pipeline LLC, a joint venture between EQT Corporation, who commissioned the studies reviewed here, NextEra Energy, Inc., WGL Holdings, Inc., and Vega Energy Partners, Ltd. In this review, “MVP LLC” refers to this joint venture, and “MVP” refers to the pipeline itself.
MOUNTAIN VALLEY PIPELINEPAGE 3
2014b; Ditzel, Fisher, and Chakrabarti 2014a) (“The FTI studies”) estimate economic impacts and benefits in four areas: Economic impacts resulting from spending on the construction of the pipeline; Economic impacts due to the ongoing operation and maintenance of the pipeline; Energy cost savings for energy users who switch to newly available natural gas; and Taxes paid to county governments.
The FTI studies employ methods, and either make or fail to examine assumptions in the use of those models, that lead to overstatement of each of these benefits. Benefits during construction are overestimated due to inherent issues with the models used and the choice of the size of the study region. For the three latter areas, long-term benefits are overestimated due in part due to the choice of empirical methods and in part due to overly optimistic assumptions about whether and to what extent the MVP would induce firms, institutions and households to switch to natural gas from other fuels. Because they relate to the long-term impacts, it is the latter three sets of estimates where the FTI studies raise the most serious questions about the accuracy and value of the results.
The first problem related to long-term estimates is that input-output analysis is inappropriately used to estimate long-term impacts, resulting in bloated estimates of jobs “created” by the ongoing operation and maintenance of the MVP. The second problem is that estimates of the benefits from fuel switching are likely to be very sensitive to assumptions about how likely it is that the MVP would cause firms to decide to switch, a decision that itself would be very sensitive to expectations about the level and volatility of future natural gas prices. The FTI studies neither explain their assumptions about those decisions nor include any sensitivity analysis related to price levels and volatility. By assuming that firms and others who hypothetically could use gas actually would begin to do so because of the MVP, and by assuming that cost advantages of natural gas relative to other energy prices will persist and be stable, the authors overestimate the benefits from fuel switching.
The third major problem is that tax revenue projections do not appear to have taken downside financial risk into account. Namely, what will happen to ad valorem tax revenues when the shale gas prices rise, when existing or other proposed pipeline capacity eats into MVP’s market share, or when, inevitably, shale gas becomes too expensive to extract and transport? To the extent that the MVP would affect private property value, resulting reductions in property taxes must be netted out of projected increases in ad valorem taxes to provide an accurate picture of how the MVP will affect local government revenue. As importantly, likely increases in local government costs should be subtracted from projected net changes in revenue to provide county governments with information about how the MVP would affect their bottom line.
We address each of these problems in turn.
MVP LLC’s studies overestimate short-term impacts of MVP construction.
The FTI studies’ estimates of economic impacts resulting from spending on the construction of the pipeline suffer from inherent problems with input-output analysis, for which FTI used the IMPLAN data and modeling software. Input-output models are so-named because they purport to translate an exogenous change in the economy—that is, the “input,” which in this case is spending required to construct the proposed MVP—into “outputs,” which are spending by firms that MVP LLC would hire to build the pipeline, spending by firms that those firms would hire, and so on, plus spending by the households whose labor the various firms would hire. The spending by MVP LLC in this case would be a “direct” effect. Spending by the other firms would be the “indirect effects.” Spending by those households would be the “induced effects.” The ratio of the sum of all three effects to the direct effect is called the “multiplier.”
PAGE 4REASONS FOR CAUTION
While intuitively satisfying, empirical input-output models like IMPLAN are built on a very restrictive set of assumptions about how those spending/hiring decisions are made. (See also the box on page 5.) Namely, the models assume that decisions are made the way they have always been made. Even though firms and people in the real world will adjust and innovate when faced with a new situation, firms and people in the input-output model will just do what they have always done. And since innovation tends toward cost minimization, using input-output models as a proxy for real-world decision-making tends to overestimate a firms’ spending and results in overestimates of “multiplier effects” (Hoffman and Fortmann 1996). What that means in this case is that construction of the MVP will not involve as much indirect and induced spending, or create as many indirect and induced jobs, in the real world as the output from FTI’s run of the IMPLAN model suggests.
Another caution—and another reason FTI’s estimates of construction impacts are likely inflated—is that FTI chose to use the entire states of Virginia and West Virginia as regions for analysis. Regional economic impact depends on the degree to which direct, indirect and induced spending can occur within the study region. The bigger the region, the more likely it is that you can find a firm in the region from which to buy materials or services, and the more likely it becomes that one could hire labor from someone living inside the region. In other words, the larger the region, the larger the multiplier effect.2 The FTI studies do not present a rationale for the choice of entire states as the study regions. While the appropriate regions might be somewhat larger than the 10 West Virginia and 5 Virginia counties the proposed MVP would cross, they should not consist of the entirety of both states.3 Consequently, the estimated multiplier effects and the benefits during construction, as presented in the FTI studies, are further overstated.
One final note regarding estimates of benefits during construction is that only 10% of the construction jobs would be filled by local workers. This estimate comes from MVP LLC’s Draft Resource Report 5 and would relate the number of “direct” jobs included in the total jobs estimates in the FTI studies. (It is unclear whether the definition of “local” in Draft Resource Report 5 is as expansive as the state-wide regions considered by FTI.) With 90% of workers coming from outside the affected region, a lot less of workers’ spending will occur inside the region. Unless accounted for in the use of IMPLAN—and FTI presents no information to suggest that it has accounted for the non-localness of construction workers—estimated multiplier effects will be inflated.
MVP LLC’s studies overestimate employment impacts of MVP operation and maintenance.
The FTI studies use input-output modeling (“the IMPLAN framework”) to project both short-term impacts from the construction of the pipeline and long-term or on-going impacts from the operation and maintenance (O&M) of the pipeline (Ditzel, Fisher, and Chakrabarti 2014a, 8; Ditzel, Fisher, and Chakrabarti 2014b, 11). While the former is generally reasonable (but see the cautions noted above), the latter is inappropriate. Briefly, inputoutput modeling is not suited for long-term economic impact assessment, and it has been empirically shown to be unreliable for that purpose. (See details in box on page 4.)
Using IMPLAN, the FTI studies project just 88 jobs across the two states (34 in Virginia and 54 in West Virginia) from the long-run operation and maintenance of the proposed MVP. The Draft Resource Report 5, on the other hand estimates, 25 “direct” O&M jobs for the long-run. This latter estimate seems reasonable, or at least it is in 2 This result, and cautions about defining the right-sized region, are summarized in Hjerpe and Kim (2007). 3 To give a simple example for why this is so, consider this scenario: A nonresident construction worker fills his gas tank in Blacksburg. The station’s owner, a Blacksburg resident, later spends a portion of her income on dinner out while vacationing in Virginia Beach. In FTI’s estimation, the expenditure on that meal is a benefit of the construction activity, because the spending occurs in the Commonwealth. But a regional impact analysis with a more thoughtfully drawn study region boundary would identify that expenditure as a “leakage” of dollars from the true impact area to another region. The cost of the meal would correctly be ascribed to the attractiveness of Virginia Beach as a vacation destination. It would not be ascribed to the construction a pipeline in the New River Valley.
MOUNTAIN VALLEY PIPELINEPAGE 5
line with similar estimates for the Atlantic Coast Pipeline, also under FERC review (Chmura Economics & Analytics 2014). The difference of 63 jobs is generated by the IMPLAN model’s “multiplier effect.” They comprise “indirect” employment, or jobs in companies providing materials and services needed for operation and maintenance of the MVP, and “induced” jobs, which are jobs supported when the people with the direct and indirect jobs spend their pay at grocery stores, at the doctor, or for other local goods and services.
To ascribe these indirect and induced jobs to the MVP as the cause of that employment in the long-term is to assume that the workers in those indirect and induced jobs would otherwise be idle. Such an assumption is not realistic: idle workers in the real world typically re-train or re-locate to take already open jobs, or they create new employment opportunities for themselves. Those 63 jobs, in other words, will most likely exist somewhere
MVP Studies Misapply Input-Output Analysis to Ongoing Operations
The reports by FTI Consulting take an “economic base” approach to estimate economic impacts of the MVP during its construction phase, which is reasonable, and for the indefinite operation and maintenance phase, which is not. As Haynes et al. (1997) note:
Where the economic base approach gets into trouble is when it is used inappropriately as a tool for planning or predicting impacts of greater than one year in duration; a snapshot of current conditions tells little about the form a region’s future economy may take.
The reason for this caution is that economic base theory and empirical input-output models grounded in that theory (e.g., the IMPLAN model used in the FTI reports) assume a static economy. In such an economy, there are no changes in relative prices, no input substitution or technological change in the production processes, no labor mobility, no change in products or consumers’ tastes and preferences, no regional migration, and no changes in state and local tax laws—to name a few. The constant technology assumption, for example, prevents firms from using cost-savings innovations, forcing them to be inefficient, and the result is higher multiplier effects than are actually experienced (Hoffmann and Fortmann 1996).
Ironically, the assumption of no changes in relative prices and no input substitution, if applied consistently throughout the FTI studies, would also mean that the estimated “direct-use benefits” resulting from fuel switching to natural gas would be zero. (Fuel-switching is input substitution, and the addition of natural gas to the range of fuel choices is, in effect, a change in relative prices. If those changes cannot occur, they can produce no benefits.)
Due to these restrictive assumptions, economic base models have a dismal track record when it comes to predicting economic growth in the real world and in the long run. (The “long run” is more than a year into the future, when firm can change technology, prices can adjust, and people can change what they want to buy.) In a review of 23 studies, Krikelas (1991) compared predictions of the economic base model against the actual experience of the subject regions and found only 4 studies where the models correctly predicted longer run economic growth. Similarly, Robertson (2003) tested predictions from input-output models against actual experience in 15 communities in Southeast Alaska (a region in which many of the restrictive assumptions of economic base theory might actually apply). He found that initial economic stimulus does not “cause changes in economic activity serving local demand for the average community…. The implications of these results [are that] secondary economic impacts [i.e., “multiplier effects”] cannot be taken as a foregone conclusion in policy analysis” (p. iii).
In the case of the MVP, long-run job estimates based on such multiplier effects are highly suspect and should not be included among the long-run economic impacts of the pipeline.
PAGE 6REASONS FOR CAUTION
with or without the direct MVP jobs. Operation of the pipeline, in other words, would no more create those jobs than it would form the methane pumped through it.
It may seem trivial to worry about whether 63 jobs are imaginary in a two-state region with more than 5.8 million full- and part-time jobs (Headwaters Economics 2015; U.S. Bureau of Economic Analysis 2015). Some of those 63 jobs, however, would have to be imagined in smaller communities where one or two jobs can make a big difference. It is all the more important, therefore, to avoid over-stating long-term impacts and over-promising economic benefits from the pipeline.
MVP studies overstate benefits from fuel switching.
The FTI report estimates ongoing savings (and economic benefit) of $5.6 million per year for the five Virginia counties and $1.6 million per year for the ten West Virginia counties. All of the estimated savings in West Virginia would come from conversion of school and county/municipal fleet vehicles to natural gas (Ditzel, Fisher, and Chakrabarti 2014b, 3–5). In Virginia, the savings come from conversion of fleet vehicles, fuel switching by residential, commercial and municipal energy customers in Giles, Montgomery, Roanoke and Pittsylvania counties, which have natural gas now, and from the establishment of natural gas service in Franklin County (Ditzel, Fisher, and Chakrabarti 2014a, 3–4).
With the extension of natural gas accessibility to Franklin county representing $2.58 million—nearly half—of the estimated fuel-switching benefits for Virginia, it is important to consider just how likely the installation of the necessary infrastructure might be. As the authors themselves note, “…the minimum demand level for an economic interconnection is approximately 1 billion cubic feet (1,000 MMSCF) annually” (Ditzel, Fisher, and Chakrabarti 2014a, 19). Their estimated demand potential in the county, however, is just 297.2 MMSCF, or about 30% of the economic threshold. The authors suggest that investors may choose to establish such an interconnection anyway, but they do not explain what would cause such a striking departure from the onebillion-CF-per-year rule of thumb.
Thus, the estimated long-term economic benefits of the MVP are driven by fuel-switching, but almost half of the fuel-switching in Virginia is assumed to happen under on a set of circumstances in a single county that are unlikely to occur. The effect of fuel-switching in Franklin County should not be included in the benefit tally. The total expected value of fuel switching benefits in Virginia (before considerations listed below) would therefore be $3.1 million per year—that is, the amount projected for the Virginia counties that already have some access to natural gas.
The reason for that billion-CF-per-year threshold, of course, is that the high fixed costs of establishing the interconnection must be spread over a large enough cumulative supply of (and demand for) gas that the market price per CF falls to within reach of individual customers. A similar dynamic applies to smaller-scale decisions about switching to natural gas. Homeowners need to determine whether to purchase or convert to a gas furnace. Municipal governments and public institutions need to consider whether or how fast to replace their fleet vehicles. And manufactures need to decide if converting a Unless demand for natural gas in Franklin County turns out to be more than three times the estimated level, nearly half of the estimated benefits from fuel-switching in Virginia would never materialize.
The MVP would no more create those additional 63 jobs than it would create the methane pumped through it.
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process from electric to gas heat is worth the up-front investment. The FTI studies do take such private fixed costs into account, and the benefit estimates reflect costs savings net of those investments.
The studies do not, however, explain or provide information that makes it possible to evaluate their assumptions regarding the level of fuel switching in any of the 15 counties. The authors reference their review of “press statements…interviews with private and public entities in the counties and states, and [interviews with] local distribution companies and municipal agencies to gauge the fuel switching and manufacturing expansion potential in the counties” (Ditzel, Fisher, and Chakrabarti 2014a, 8; Ditzel, Fisher, and Chakrabarti 2014b, 9). The studies also include lists of manufacturing firms in selected counties in the study region (see Table 7 in each report). The implication is that the listed firms represent potential fuel switchers. That implication, however, needs to be documented with information regarding the probability that each of the listed firms would switch to natural gas, when each would make the switch, and whether the switch would be complete or would cover just some portion of the firm’s fuel consumption.
The Virginia report lists the AEP Glen Lyn facility, which shut down this May, among the potential future natural gas customers. This suggests at a minimum that FTI’s estimates of potential fuel switching are in need of ad downward revision. It would also seem prudent to revisit the estimates of potential natural gas demand from the other listed firms to see if their plans might have changed in the nine months since the studies’ publication. Much more could change for these firms before the proposed MVP would come online, and any estimate of benefits from fuel switching should be tempered by an assessment of the risk that the switching may never occur.
The studies also err in their unstated but obvious assumption that fuel switching to natural gas will continue to provide an advantage in terms of variable costs in the mid- to long run. The fuel switching decision, after all, is as simple as deciding whether differences in the price of inputs (say gas versus oil), will be large enough to justify the investment in changing equipment, storage facilities, and processes to enable the future use of gas instead of the more expensive fuel. If the price advantage of gas is expected to persist long enough to recoup the upfront investment and longer term financing costs, then fuel switching could make sense. But if the price difference is expected to erode over time, fewer energy users would convert to natural gas.
Natural gas prices are almost guaranteed to increase significantly in the future. One reason is that even though the boom in unconventional natural gas is just a few years old and some worry about what to do with the “glut” of gas in regions like the Marcellus Shale (McMullen 2015), the industry is already experiencing the so-called “Red Queen Syndrome.” This refers to the need to drill more and more wells (all of which are expensive) just to maintain the a level of production sufficient to attract new investment. (The syndrome is so named from Through the Looking Glass, in which the Red Queen tells Alice that “It takes all the running you can do to stay in the same place.”)
This is a matter of the geological reality that, once hydrofracturing has begun, shale gas “diffuses and becomes impossible to extract without drilling costly new wells” (Engdahl 2013), coupled with the financial reality that returns for early investors are sometimes supported by investments by later investors. Regardless of whether branding this arrangement a “Ponzi scheme” is fair, there will come a time when returns on existing wells are not supported by the gas they produce. Investment, rig count and production will drop; prices will rise. (Gies 2015; McGraw 2015; Powers and Shaefer 2015).
In addition, natural gas development tends to target the most productive plays first, and the next increment of production will be more expensive to achieve. Added to the financial and geological forces driving the Red Queen Syndrome, this means that gas will become less abundant, more expensive, or both. As the Wall Street
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Journal reported in June, the rate of increase in gas supplies is slowing, the glut is becoming less severe, and prices are rising (Puko 2015).
The prospect of large increases in liquefied natural gas exports are another reason to discount estimates of future direct-use benefits of gas carried by the MVP. A 2013 analysis by Charles River Associates warns that under a high export scenario domestic natural gas prices could triple, resulting in particularly detrimental effects on the manufacturing and power generation sectors (Ditzel, Plewes, and Broxson 2013). As the authors note, the inexorable logic of supply and demand does indeed apply to the natural gas market: “[their analysis shows that] higher rates of natural gas demand are not sustainable without significantly higher natural gas prices” (p. 8).
Volatility in natural gas prices, even without an increase in the average level of those prices, can have a similar effect on fuel-switching behavior. Risk averse consumers, business owners, or municipal and commercial facilities managers would have to realize average costs savings plus a bit more—a “risk premium”—to make their variable, or risky, cost savings feel the same as stable cost savings.
It seems clear that both rising prices and increased volatility are more matters of “when” than “if.” The U.S. Energy Information Administration projects that natural gas prices will rise 2.3 times as fast as the next most expensive form of energy (oil) and more than 4.6 times as fast as the cheapest (electricity) between now and 2040 (US Energy Information Administration 2015). In light of such long-term projections, it seems reasonable that enthusiasm for making large investments in facilities and equipment that run on gas rather than other forms of energy would be dampened.
If the gap between the price of natural gas and the price of other fuels were to narrow sooner, that dampening would be even more pronounced. Powers and Shaefer interpret current data from the Marcellus and other gasproducing regions as indications that we are close to “peak gas,” with declines in production and increases in price to follow (Powers and Shaefer 2015). With rig counts dropping and unit production costs exceeding prices, they conclude:
Unless it is different this time (and it never is), the greatly reduced gas and oil rig counts will result in lower production and higher prices in both the short and long term.
Lastly, it is not just declining production that will be the source of extreme volatility in coming months– rising demand will help push the US natural gas market to extremes. With the retirement of between 25 and 50 GW of coal fired power plants that will largely be replaced by gas-fired plants, and the opening of dozens of chemical and fertilizer plants–sharply rising natural gas prices over the next two years is virtually guaranteed.
Increasing demand at a time of falling production will radically change the landscape of gas market despite the widely held belief that today’s status quo of low prices will continue.
Rising gas prices would of course be good for the owners of rights to gas and for the drillers and energy services companies that extract the gas. But higher prices would not be good for the end users on whose fuel-switching behavior FTI’s estimates of long-run benefit depend. Again, if these potential customers are economically rational, they will take the expected future increases and volatility in gas prices into account, and at least some of them will refrain from making that all-important fuel switching decision.
Neither volatility in natural gas prices nor the likely erosion of the cost advantages of natural gas were incorporated into the FTI studies’ estimates of benefits stemming from fuel switching. This could and should have been accomplished by adding a risk premium to the price of natural gas (and to competing energy sources, as appropriate) and/or by running different scenarios for varying levels of cost savings for natural gas relative to
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other fuels. Such an approach would have made the estimates more realistic and useful for public discourse and decision-making.
It is worth noting that the FTI studies do not consider that there are other energy sources, including conservation and renewables, to which would-be gas customers could otherwise switch. A firm considering a switch away from conventional electricity could install solar panels and continue to use existing electricallypowered equipment rather than having to converting to gas-using versions. Homeowners could add insulation, upgrade to more energy efficient appliances, and install solar panels of their own. Such conversions to (or additions of) renewables to one’s energy use also require up-front or fixed costs, but the ongoing cost savings would be less subject to the risk of increases in price of solar energy, which of course will remain free. Conversion to renewables might or might not be the preferred course for those firms, homeowners, and others who the studies assume will switch to natural gas, but by ignoring this obvious possibility, the studies further inflate their estimates of potential benefits of switching to gas.
One final caution on the topic of fuel switching is that the study seems to rely heavily on the story of the Celanese manufacturing facility in Giles County, Virginia as an archetype for what could happen if the MVP were to be built. Celanese decided in 2012 to convert its coal-fired boilers to natural gas to reduce pollution and increase efficiency. But Celanese made its decision to convert to gas without the presence or even the prospect of the Mountain Valley Pipeline. It is possible that there are further Celanese-style success stories waiting in the wings to take advantage of the proposed MVP. But just like Celanese, some of those potential converts to natural gas could make the switch without the MVP. In other words, at least some of the benefits from fuel switching that the FTI studies ascribe to the MVP could well happen using the infrastructure already in place. The cost savings associated with such cases should therefore not be counted as part of the benefits promised by the MVP.
MVP studies overstate expected tax revenues while ignoring public service costs.
In the FTI studies, tax revenues for local government are projected using a capitalized income approach. In this approach, net income for MVP LLC is estimated from its projected revenue and “…a set of proxy assumptions for operational and maintenance costs, selling, general, and administrative costs, cost of capital, debt/equity ratio, construction and long-term interest rates, and depreciation method and period” (Ditzel, Fisher, and Chakrabarti 2014a, 8; Ditzel, Fisher, and Chakrabarti 2014b, 8). Missing from this list of assumptions, however, is any consideration of risk or uncertainty regarding natural gas prices (see above) or other market factors that could reduce the capitalized income and therefore local tax revenue.
One important risk is that the MVP could turn out to be unnecessary. The US Department of Energy projects only a modest need for additional interstate pipeline capacity to meet demand from electric power generators (US Department of Energy 2015). New pipelines are one way to address that need, of course, and MVP is but one of several proposed for the Marcellus region. Other competition will come from increased capacity from the upgrade of existing lines, and more will come as one-way lines are converted to handle bi-directional flow. Each of these would erode MVP’s potential market share. The less need there is for the MVP, the lower will be both its net revenue and its tax payments to local governments.
Another risk is related to the price volatility and long-term price trends already discussed. Volatility in the short run and increasing prices in the long run would reduce the quantity of gas demanded by end users. Less demand by end users means less need for transmission, and again, lower revenue for MVP and local governments.
Furthermore, there is no indication in the FTI studies that there would ever be any end to the stream of estimated tax revenue. But gas is a nonrenewable resource that will become economically and/or technically
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impossible to recover long before the methane itself is used up. When there is no more gas to transmit from the Marcellus, there will be no more capitalized income, and the stream of revenue will evaporate. Whether revenues from the MVP will last 5, 10 or 30 years, local governments would be right to discount the projected level of revenue to account for both year-by-year variation in annual tax revenue and for the limit to the number of years during which there will be any revenue at all.
The question of public service costs and reduced property value are included in the following section. But briefly, it is at least possible that the construction and ongoing operation of the proposed MVP will negatively affect property values. Exposure to the risk of injury and death, limitations on the productivity of farm and forestland, and impaired vistas that might otherwise be enjoyed by landowners farther away could all reduce the market value of properties in the region. Property tax revenues would fall as well, leaving local governments with the choice of raising tax rates (which would have its own negative impact on market prices)4, or cutting local services in order to balance their budgets.
The latter of these options would be particularly challenging, because the MVP, if built, would add to the cost side of local governments’ budgets. As just one example, the potential for pipeline explosions means that local governments all along the route will need to increase the number and training level of their first responders, purchase equipment, develop and keep updated emergency response and evacuation plans, and otherwise be prepared 24/7/365 for mass casualty events. Such considerations make it clear that the promise of new revenue alone is much less than county and municipal governments need to know before deciding whether the MVP presents a net gain for their citizens.
FERC, the Public, and Individuals must Consider Benefits AND Costs In any other context, it would seem too obvious to point out that it is the net benefits, or benefits minus costs, that should bear on a public decision like permitting the MVP. And yet apart from the private costs of investments in infrastructure, equipment, or processes needed to accomplish fuel switching, the studies considered here largely ignore the public and external costs that would attend the construction, operation, and presence of the MVP. This nearly exclusive focus on benefits means, at a minimum, that the jury is still out on whether the MVP is good or bad, at least economically, for the citizens and communities it will affect in West Virginia and Virginia.
Arguably, consideration of the public or external costs of the MVP should be thoroughly covered in FERC’s Environmental Impact Statement. MVP LLC’s final version of Resource Report 5 (available now in draft form) should also provide information on these costs. To date, MVP LLC offers only vague assurances that the proposed MVP would impose no or only minor costs on agriculture, recreation, and other economic activities. It also claims that there would be no impact on property values (based on what is in our view a selective review of the literature on the subject) and that increases in community service costs would be minor and wouldoccur only during the construction phase (“Resource Report 5: Socioeconomics (Draft)” 2015, 5–24ff). The draft promises more substantive treatment of these issues in the final version of Resource Report 5 to be submitted with its filing with FERC.
In the meantime, other entities, including local governments, citizen groups, and businesses would be wise to conduct their own independent assessment of these costs to better ensure that all of the relevant information can be brought to bear on the permitting decision. A short list of the relevant vectors by which the MVP would impose costs include the following:
4 Phillips (2004) is one example of empirical research demonstrating that property values increase with proximity to protected areas (that preserve viewsheds and other values) and decrease with higher tax rates.
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1. Lost Ecosystem Services. The first vector is the effect of natural gas transmission on the environment and the echoes of that effect in the well-being of people in and beyond the region. From the construction phase, through years of operation (with and without potential leaks, explosions and other accidents), and on to eventual obsolescence and decommissioning, the MVP will alter the ecosystems it crosses. Surface and subsurface disturbance, alteration of watercourses, impacts on groundwater, fragmentation of habitat, visual blight, creation of travel corridors for invasive species, lost timber production, and other changes are all likely (and many are certain) effects of the MVP. Each of these effects will alter the capacity of the landscape to provide so-called “ecosystem services” – that is, “the benefits to people supplied by nature” (Reid et al. 2005; USDA Forest Service 2012). These benefits include: water to drink or as a resource for farms, vineyards, breweries, and distilleries; scenic amenities and recreational opportunities for residents and visitors; fiber production; nutritional and cultural value enjoyed by hunters and anglers; and protection from injury and property loss. These ecosystem services all have tangible value to people and are true economics assets that can be valued in monetary terms. Each will be diminished by the construction, operation and presence of the MVP, with concerns for water quality (due to a loss of erosion control) and air quality (due to emissions from compressor stations overwhelming ecosystems capacity to absorb pollutants) being particularly acute concerns.
2. Higher Community Services Costs. Like communities impacted by the shale gas boom itself, communities along the pipeline can expect a wave of impacts as transient workers come and go, roads are damaged by extra and extra heavy traffic, and as people suffer increases in physical and mental illnesses including asthma, depression, anxiety and others triggered by exposure to airborne pollutants, noise, and emotional, economic, and other stress. See, for example, Ferrar et al. (2013), Healy (2013), Fuller (2007), Campoy (2012), and Mufson (2012). While the shale gas boom and related “downstream” development is so new that definitive studies have not been completed, these and other reports do raise important questions about the impact of rapid expansion of natural gas on physical, mental, social, and fiscal health of people and communities. Some 90% of the workers who will build the MVP will be transient, with little connection to local communities (“Resource Report 5: Socioeconomics (Draft)” 2015). As the experience of communities in the Bakken and other parts of the Marcellus indicate, off-hours behavior of transient, temporary workers can increase needs for law enforcement, social services, drug abuse treatment, and other services. All of these add to the local costs, and added tax revenues or other fees paid by energy companies might or might not cover the added bills.
3. Reduced Property Values. The third vector of cost is more localized and well-understood: pipeline corridors and all gas transmission infrastructure entails the transfer of at least some portion of current landowners’ property to the gas industry. Landowners are typically paid some estimate of fair market value for the acreage directly occupied by rights of way and the infrastructure itself. But that acreage is typically a small fraction of the total area on which property value will decline. Properties within the earshot, blast radius, leak plume, and other physical contact with pipeline right-of-way and compressor stations will obviously suffer the greatest losses. Properties farther away that become less desirable, and therefore less marketable, because of impaired views or reduced enjoyment of recreation and other ecosystem services will lose value as well. While current legal precedent may require only that owners of property taken and physically occupied by natural gas infrastructure be compensated, economic efficiency demands that the full reduction in the value of all properties be considered and weighed against the estimated benefits of the MVP.
We are aware that the Commission has previously held that natural gas pipelines have, at most, an ambiguous and non-permanent effect on property values. In its Final EIS regarding the Constitution Pipeline,
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for example, the Commission cited two articles that conclude, respectively and in brief, that effects on property value from the presence of a pipeline can be either positive or negative (Diskin et al. 2011) and that a negative effect on property values due to a pipeline explosion diminishes over time (Hansen, Benson, and Hagen 2006). Neither of these studies is definitive for the Mountain Valley Pipeline.
For a number of reasons, the Commission must look beyond these studies to make an adequate examination of the impact of new, large, high-pressure natural gas transmission lines and associated infrastructure (e.g., compressor stations) on property values. One reason is that the subjects of those studies differ from the MVP scenario in some important ways, including the setting, uses, and age of the pipelines. Another is that the Diskin et al. article uses methods that are simply inadequate for the purpose of discerning the effect of a pipeline among the many factors that influence the value of a given piece of property. In addition, the subject of that study was a second pipeline installed in residential areas already home to a natural gas pipeline. Thus, the residents experienced little change in their exposure to physical danger, visual blight or other impacts. The impact of the first pipeline, in other words, would already have been capitalized into property values by the time the second pipeline was installed. One would therefore expect the incremental impacts of going from one pipeline to two pipelines to be relatively small compared to going from no pipeline to one pipeline. The latter would obviously be the situation for much of the proposed MVP route.
The subject of the second study was a liquid petroleum pipeline which may present different risk and other impacts than a high-pressure gas pipeline such as the proposed MVP. More importantly, the study focused not on the construction of a new pipeline but on the explosion of an existing one. Using more robust methods, Hansen, Bensen and Hagen did find a significant price effect after the explosion, but the effect did decay over time (2006).
We do not dispute these findings, but we would caution that the effects of the construction of the MVP could be quite different. One reason is the rapidly evolving means by which real estate transactions are formed. The information and tools available to homebuyers have changed dramatically in the nine years since the publication of the Hansen study, and they have changed radically since the explosion in 1999 that triggered the (temporary) drop in land prices its authors discovered. It is quite possible in that case that the rebound of prices occurred due to a lack of readily available information about the explosion to later purchasers. People buying a home in the years following the 1999 explosion could not query Zillow to see the history of land prices near the pipeline, nor could they explore online maps to see what “locally undesirable land uses” exist near homes they might consider buying. Nor did they have access to YouTube and repeated opportunities to find and view news stories, citizens’ video, etc. describing and depicting the explosion and its aftermath.
It is not that no such information existed—prospective buyers could always have consulted paper records kept by the local government agencies to learn the sales history, and they could have researched the neighborhood using older techniques. But internet-based tools have certainly changed the ways people shop for homes. We are now in a real world much closer to the competitive economic model that assumes that all buyers have full information about the homes they might buy. Even the proverbial space alien landing on earth with an eye toward buying property near the proposed MVP corridor would quickly learn that the property is in fact near the corridor, that there is a danger that the property could be adversely affected by still-pending project approval, and that fossil fuel pipelines and related infrastructure have an alarming history of negative health and environmental effects. Accordingly, the price that s/he (or any human) would offer for a home near the MVP will be lower than the price offered for one farther away or in
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another community or region entirely.
Reductions in real estate value are not merely hypothetical. Landowners and realtors along the proposed route of the Atlantic Coast Pipeline in central Virginia report that buyers have backed out of contracts and that other buyers are simply less interested in potentially affected properties (Smith 2015).5 In a more systematic review Kielisch (2015) provides evidence that natural gas pipelines negatively affect property values in a wide range of settings. In one of his reported studies, more than 60% of would-be buyers would not purchase properties that are exposed to the life safety and other risks associated with natural gas pipelines. The would-be buyers who stay in the market would pay 21% less properties exposed to such risks, even when informed that the probability associated with those risks is small.
Naturally, any reduction in property values would have implications for local public finance. Property tax revenues could drop, and local governments may need to raise property tax rates to meet budget obligations. This effect would be even more pressing if local public service costs rise while property tax revenues fall.
4. Diminished Economic Development Opportunity. Fourth and finally are the effects that the MVP could have on the region’s existing economic development opportunities. The Virginia counties in the path of the MVP, for example, have been experiencing lower unemployment (at 3.4%), much faster population growth, and faster personal income growth than the average for non-metro Virginia. Non-labor income (consisting primarily of investment income and age-related transfer payments) is growing very quickly: it has increased by 43% since 2000, while income from wages and salaries increased by just 4.3% over the same period (Headwaters Economics 2015; U.S. Bureau of Economic Analysis 2015).
In similar fashion, the 10 West Virginia counties compare well to the average of the non-metro portion of the state. Population is declining overall, but it is declining more slowly in the 10-counties the MVP is proposed to cross. The unemployment rate is slightly lower, but employment has grown by more than twice as much (7.2% versus 3.1%) across the 10 counties than it has in the whole of non-metro West Virginia (Headwaters Economics 2015; U.S. Bureau of Economic Analysis 2015).
While such simple comparisons are not definitive (see below regarding FTI’s comparison of Harrison and Webster County, West Virginia), they do beg the question of whether new natural gas infrastructure is necessary to support appropriate and sustainable economic development in this region. Indeed the trends noted above could well characterize a region that is capitalizing on its attractiveness to tourists, retirees, vacation homeowners, and footloose entrepreneurs in diverse industries. It could be taking advantage of what Mcgranahan, Wohan and Lambert call the “Rural Growth Trifecta” of outdoor amenities, a creative class of workers, and the right entrepreneurial context (innovation-friendliness) (2010).
In contrast to an older demand-side view of economic development in which jobs are created in a place and then people go to where the jobs are, an evolved supply-side understanding puts amenities and people first. Niemi and Whitelaw explain this it this way:
As in the rest of the Nation, natural-resource amenities exert an influence on the location, structure, and rate of economic growth in the southern Appalachians. This influence occurs through the so 5 FERC’s docket for the pre-filing phase of the Atlantic Coast Pipeline (PF15-6) is rife with testimony from landowners concerned that their property will be, or already has been, negatively affected by the mere possibility of that pipeline’s construction.
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called people-first-then-jobs mechanism, in which households move to (or stay in) an area because they want to live there, thereby triggering the development of businesses seeking to take advantage of the households’ labor supply and consumptive demand (1999, 54).
Further explanation and empirical results related to the importance of amenities, rather than resource extraction or incentives to attract industrial development, can be found in Knapp and Graves (1989), Power (1996), Rosenberger and English (2005), and Nzaku and Bukenya (2005), to name a few. In light of these findings, statistics from the cash economy, such as differences in wages between high-amenity and heavily industrialized areas make perfect sense: people do trade off cash income for quality of life . They receive what Niemi and Whitelaw call a “second paycheck” in health, recreational access and other values, that compensates for the income they give up by not moving to a less desirable location (1999, 18).6
Natural gas development and operations can upset the economic apple cart in these communities by reducing quality of life. The likely result is that recent investments in appropriate economic development will not perform as hoped, and further development along the same lines will be discouraged. Workers, businesses and retirees who might otherwise choose to locate in communities near those operations will opt instead for locations that retain more of their rural character, pastoral landscapes, and quality of life.
We note that the FTI studies do address this issue somewhat, but it is done in a very selective and potentially misleading way. Table 4 of the West Virginia report presents a side-by-side comparison of selected infrastructure and economic performance indicators for Harrison and Webster Counties. The two counties differ in several respects reflected in the table, including that Harrison County has natural gas access while Webster does not. The authors stated conclusion is that “counties with extensive infrastructure access (rail, water, electricity, natural gas, interstates, broadband, etc.) are simply provided more opportunities to grow their economy” (Ditzel, Fisher, and Chakrabarti 2014b, 15). Setting aside debates over whether “growth” per se, as opposed to development, is what people living in those counties need or want, there are few economists who would dispute this conclusion.
Where the authors err is in the clear implication (given the topic and focus of the report) that it is access to natural gas infrastructure that makes a critical difference. No economist would draw this conclusion based on the evidence presented, and no reader of the report should be led to believe that it is Harrison County’s access to natural gas that makes it have lower unemployment, for example, than Webster County.
Harrison is different than Webster in other important ways, including proximity to a regional airport, a population density ten times that of Webster, and a higher percentage of adults who have completed high school or college (“American FactFinder” 2015; “The National Map: Transportation” 2015). Any one of these and other factors (or a combination of them) could be much more important. Once other factors are considered, it could even be the case that natural gas access has no effect at all. Relevant information bearing on this question could easily be obtained through multiple regression analysis, but the authors do not attempt, or at least have not reported, such information.7
Even a broader descriptive analysis would shed more light on the question of whether natural gas pipelines and access to natural gas might influence economic development. Greenbrier County is one of the few West Virginia counties currently free of major natural gas infrastructure and, according to the FTI study,
6 See also Roback (1982; 1988) for earlier statistical analysis of this phenomenon. 7 The regional development literature is rife with models and examples for how such analyses can be performed and what tends most to influence economic growth. See Rasker et al. (2004), and Rosenberger and English (2005) as examples of the application of these models to rural areas with varying degrees of infrastructure and amenity access, along with other relevant factors.
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Greenbrier County has “significantly lower” natural gas usage than in the rest of the state (Ditzel, Fisher, and Chakrabarti 2014b, 38). Even so, and among the 10 West Virginia counties proposed for the MVP, Greenbrier County’s employment and personal income growth since 1970 (60.9% and 128.3%, respectively) are second only to those of Dodderidge County (80.3% and 140.3%). While one might take this as evidence that the shale gas boom (in Dodderidge) trumps Greenbrier’s amenities as an engine of economic growth, consider Harrison and Wetzel Counties, Dodderidge’s neighbors that are also in heart of the shale boom. Both counties lost population from 1970 to 2013 (Dodderidge and Greenbrier gained people), and their growth in employment and personal income were far slower than Greenbrier’s (Headwaters Economics 2015; U.S. Bureau of Economic Analysis 2015).
Do these data prove that shale gas extraction or a surfeit of gas transmission infrastructure prevents economic development? Of course not, but neither does FTI’s presentation show, let alone prove, that natural gas causes economic development. Further study is warranted, and FERC should ensure that these questions are addressed seriously and thoroughly in its deliberations.
These external market and non-market costs of the proposed MVP are not side issues or mere niceties. They are crucial to the question of whether or not a new natural gas transmission pipeline would truly bring net benefits and serve the economic interests of the region and its constituent communities. Economic efficiency, not to mention sound public policy, require that decisions about the MVP be made with the best possible information about the total economic costs the pipeline would impose, alongside better information about the potential benefits than has been developed and presented by MVP LLC to date.
Conclusions and Recommendations Given the cautions and considerations outlined above, we believe that the information presented to date regarding the economic effects of the proposed Mountain Valley Pipeline is both inaccurate for, and inadequate to, the task of informing public decisions about whether the MVP should or should not be permitted, built, and operated. Correcting these issues would require, at a minimum, the following actions: Revisit and revise estimates of the construction benefits using a right-sized study region. Adjust benefit estimates by considering only the direct effects (not indirect and induced effects) of operation and maintenance of the MVP. Remove Franklin County from estimates of direct benefits from fuel switching in Virginia. Conduct a rigorous sensitivity analysis to determine the extent to which fuel-switching benefits would occur with smaller price differentials between gas and other fuels and due to volatility of natural gas prices. Include conservation and renewables in the mix of alternatives against which potential fuel switchers would compare their current energy mix and/or an energy mix with added natural gas potential. Discount long-term property tax revenue projections to account for market-driven risk to ad valorem revenue and for reductions in private property value. Net public service costs out of projected changes in local tax revenue. Complete a thorough and rigorous evaluation of the full economic costs of the Mountain Valley Pipeline.
It is impossible to say at this point what the net effect, positive or negative, of the MVP would be. We can be certain, however, that more careful estimates of expected benefits would be lower than those presented by MVP LLC via the FTI studies to date. We can also be certain that the costs—that is, the negative economic impacts—of the proposed MVP (if constructed) will be higher than zero, which is the level stated or implied by the studies reviewed here. Further, stronger, and more comprehensive research is needed to determine how well more realistic estimates of benefits compare with the likely costs.
PAGE 16REASONS FOR CAUTION
(Richardson 1985; Robertson 2003; Krikelas 1992; Hoffman and Fortmann 1996) Works Cited “American FactFinder.” 2015. Data. US Bureau of the Census. Accessed September 20. http://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml. Campoy, Ana. 2012. “Drilling Strains Rural Roads; Counties Struggle to Repair Damage From Heavy Trucks in Texas Energy Boom.” The Wall Street Journal, July 26. Chmura Economics & Analytics. 2014. “The Economic Impact of the Atlantic Coast Pipeline in West Virginia, Virginia, and North Carolina.” Richmond, VA: Chmura Economics & Analytics. Council on Environmental Quality. 1978. “Regulations for Implementing the Procedural Provisions of the National Environmental Policy Act.” Washington, DC: Executive Office of the President. Diskin, Barry A., Jack P. Friedman, Spero C. Peppas, and Stephanie R. Peppas. 2011. “The Effect of Natural Gas Pipelines on Residential Value.” Right of Way. Ditzel, Ken, Rob Fisher, and Kaustuv Chakrabarti. 2014a. “Economic Benefits of the Mountain Valley Pipeline Project in Virginia.” McLean, Virginia: FTI Consulting. ———. 2014b. “Economic Benefits of the Mountain Valley Pipeline Project in West Virginia.” McLean, Virginia: FTI Consulting. Ditzel, Ken, Jeff Plewes, and Bob Broxson. 2013. “US Manufacturing and LNG Exports: Economic Contributions to the US Economy and Impacts on US Natural Gas Prices.” Washington, DC: Charles River Associates. Engdahl, F. William. 2013. “The Fracked-up USA Shale Gas Bubble.” Global Research. July 14. http://www.globalresearch.ca/the-fracked-up-usa-shale-gas-bubble/5326504. Ferrar, Kyle J., Jill Kriesky, Charles L. Christen, Lynne P. Marshall, Samantha L. Malone, Ravi K. Sharma, Drew R. Michanowicz, and Bernard D. Goldstein. 2013. “Assessment and Longitudinal Analysis of Health Impacts and Stressors Perceived to Result from Unconventional Shale Gas Development in the Marcellus Shale Region.” International Journal of Occupational and Environmental Health 19 (2): 104–12. doi:10.1179/2049396713Y.0000000024. Fuller, Alexandra. 2007. “Boomtown Blues: How Natural Gas Changed the Way of Life in Sublette County.” The New Yorker, February 5. http://www.ntc.blm.gov/krc/uploads/74/Pinedale-NewYorker.pdf. Gies, Erica. 2015. “Industry Insiders Call Shale Gas a Ponzi Scheme, Invoke Enron -- NYT Report - Forbes.” Accessed October 2. http://www.forbes.com/sites/ericagies/2011/06/27/industry-insiders-call-shale-gas-aponzi-scheme-invoke-enron-nyt-report/. Hansen, Julia L., Earl D. Benson, and Daniel A. Hagen. 2006. “Environmental Hazards and Residential Property Values: Evidence from a Major Pipeline Event.” Land Economics 82 (4): 529–41. Headwaters Economics. 2015. Economic Profile System. http://headwaterseconomics.org/tools/eps-hdt. Healy, Jack. 2013. “As Oil Floods Plains Towns, Crime Pours In.” The New York Times, November 30, sec. U.S. http://www.nytimes.com/2013/12/01/us/as-oil-floods-plains-towns-crime-pours-in.html. Hjerpe, Evan E., and Yeon-Su Kim. 2007. “Regional Economic Impacts of Grand Canyon River Runners.” Journal of Environmental Management 85 (1): 137–49. doi:10.1016/j.jenvman.2006.08.012. Hoffman, S.A., and L. Fortmann. 1996. “Poverty in Forested Counties: An Analysis Based on Aid to Families with Dependent Children.” In Sierra Nevada Ecosystem Project: Final Report to Congress, Vol. II, Assessments and Scientific Basis for Management Options. Davis, CA: University of California, Centers for Water and Wildland Resources. Kielisch, Kurt. 2015. “Study on the Impact of Natural Gas Transmission Pipelines.” Forensic Appriaisal Group, Ltd. Knapp, T. A., and P. E. Graves. 1989. “On the Role of Amenities in Models of Migration and Regional Development.” Journal of Regional Science 29: 71–87.
MOUNTAIN VALLEY PIPELINEPAGE 17
Krikelas, A.C. 1992. “Why Regions Grow: A Review of Research on the Economic Base Model.” Economic Review 77 (4). McGranahan, David A., Timothy R. Wojan, and Dayton M. Lambert. 2010. “The Rural Growth Trifecta: Outdoor Amenities, Creative Class and Entrepreneurial Context.” Journal of Economic Geography, May, lbq007. doi:10.1093/jeg/lbq007. McGraw, Seamus. 2015. “A Natural-Gas Ponzi Scheme?” Accessed October 2. http://www.pittsburghquarterly.com/index.php/Marcellus-Shale/a-natural-gas-ponzi-scheme.html. McMullen, Maureen. 2015. “Two Marcellus Pipeline Projects Move Forward.” Bakken.com. Accessed September 27. http://bakken.com/news/id/245310/two-marcellus-pipeline-projects-move-forward/. Mufson, Steven. 2012. “In North Dakota, the Gritty Side of an Oil Boom.” The Washington Post, July 18. http://www.washingtonpost.com/business/economy/in-north-dakota-the-gritty-side-of-an-oilboom/2012/07/18/gJQAZk5ZuW_story.html. Niemi, Ernest G., and W. Ed Whitelaw. 1999. “Assessing Economic Tradeoffs in Forest Management.” General Technical Report PNW-GTR-403. USDA Forest Service, Pacific Northwest Research Station. http://conservationfinance.org/guide/guide/images/18_niemi.pdf. Nzaku, Kilungu, and James O. Bukenya. 2005. “Examining the Relationship between Quality of Life Amenities and Economic Development in the Southeast USA.” Review of Urban & Regional Development Studies 17 (2): 89– 103. doi:10.1111/j.1467-940X.2005.00101.x. Petska, Alicia M. 2015. “McAuliffe Rebuffs Anti-Pipeline Protests in Roanoke.” Www.roanoke.com. Accessed September 29. http://www.roanoke.com/news/local/mcauliffe-rebuffs-anti-pipeline-protests-inroanoke/article_bcf90457-0ed4-541f-a020-120332702019.html. Phillips, Spencer. 2004. “Windfalls for Wilderness: Land Protection and Land Value in the Green Mountains.” Blacksburg, VA: Virginia Polytechnic Institute and State University, Agricultural and Applied Economics. Powers, Bill, and Keith Shaefer. 2015. “The Marcellus Is close to Peak Production and Why This Is so Important.” Oil and Gas Investments Bulletin. April 15. https://oilandgas-investments.com/2015/natural-gas/themarcellus-is-close-to-peak-production-and-why-this-is-so-important/. Power, Thomas Michael. 1996. Lost Landscapes and Failed Economies: The Search for a Value of Place. Covelo, CA: Island Press. Puko, Timothy. 2015. “Natural-Gas Prices Jump as Oversupply Evaporates.” Wall Street Journal, June 25, sec. Markets. http://www.wsj.com/articles/natural-gas-gains-ahead-of-inventory-data-1435240954. Rasker, Ray, Ben Alexander, Jeff van den Noort, and Rebecca Carter. 2004. “Prosperity in the 21st Century West: The Role of Protected Public Lands.” Tuscon, AZ: Sonoran Institute. Reid, Walter V., Harold A. Mooney, Angela Cooper, Doris Capistrano, Stephen R. Carpenter, Kanchan Chopra, Partha Dasbupta, et al. 2005. Millennium Ecosystem Assessment, Ecosystems and Human Well-Being: Synthesis. Washington, DC: Island Press. “Resource Report 5: Socioeconomics (Draft).” 2015. Mountain Valley Pipeline, LLC. Richardson, H.W. 1985. “Input-Output and Economic Base Multipliers: Looking Backward and Forward.” Journal of Regional Science 25 (4). Roback, Jennifer. 1982. “Wages, Rents and the Quality of Life.” Journal of Political Economy 90: 1257–78. ———. 1988. “Wages, Rents and Amenities: Differences among Workers and Regions.” Economic Inquiry 26: 23– 41. Robertson, Guy. 2003. “A Test of the Economic Base Hypothesis in the Small Forest Communities of Southeast Alaska.” General Technical Report PNW-GTR-592. USDA Forest Service, Pacific Northwest Research Station. http://www.fs.fed.us/pnw/pubs/pnw_gtr592.pdf.
PAGE 18REASONS FOR CAUTION
Rosenberger, Randall S., and Donald B.K. English. 2005. “Impacts of Wilderness on Local Economic Development.” In The Multiple Values of Wilderness, edited by H. Ken Cordell, John C. Bergstrom, and J.M. Bowker, 181–204. State College, Pennsylvania: Venture Publishing, Inc. Smith, Rachel. 2015. “Real-Estate Agents: Proposed Pipeline Already Affecting Sales.” NewsAdvance.com. Accessed May 18. http://www.newsadvance.com/work_it_lynchburg/news/real-estate-agents-proposedpipeline-already-affecting-sales/article_486d8e38-fcf5-11e4-b10b-5bfa67606fa1.html. “The National Map: Transportation.” 2015. National Map. USGS. August 4. http://nationalmap.gov/transport.html. U.S. Bureau of Economic Analysis. 2015. “Regional Economic Accounts: Local Area Personal Income & Employment.” Data. U.S. Department of Commerce Bureau of Economic Analysis. http://www.bea.gov/regional/index.htm. USDA Forest Service. 2012. “National Forest System Land Management Planning: Final Rule and Record of Decision.” Federal Register 77 (68): 21162–276. US Department of Energy. 2015. “Natural Gas Infrastructure Impications of Increased Demand from the Electric Power Sector.” Washington, DC: US Department of Energy. US Energy Information Administration. 2015. “Annual Energy Outlook 2015 with Projections to 2040.” DOE/EIA0383(2015). US Department of Energy. http://www.sciencedirect.com/science/article/pii/S0301421512004363.
This review was produced on behalf of and supported by the following grass roots citizens, environmental and community development organizations. Please visit their pages to learn more about the proposed MVP.
Blue Ridge Land Conservancy blueridgelandconservancy.org Greenbrier River Watershed Association wordpress.greenbrier.org Preserve Bent Mountain firstname.lastname@example.org Preserve Craig preservecraig.orgPreserve Franklin County preservefranklin.orgPreserve Giles County find Preserve Giles County on FacebookPreserve Greenbrier preservegreenbriercounty.org Preserve Monroe preservemonroe.org Preserve Montgomery County preservemontgomerycountyva.orgPreserve the New River Valleypreservethenrv.com Preserve Roanoke preserveroanoke.org Roanoke Group, Virginia Chapter, Sierra Club sites.google.com/site/roanokesierra/ Roanoke Valley Cool Cities Coalition rvccc.org Summers County Residents Against the Pipeline scrapthepipeline.orgVirginia Chapter, Sierra Club vasierraclub.orgVirginia Citizens Consumer Council find VCCC on Facebook
Ellen M. Gilmer, E&E reporter
EnergyWire: Wednesday, September 9, 2015
DODDRIDGE COUNTY, W.Va. -- Oil and gas workers didn't seem to appreciate the "Go home frackers" sign in Lyndia Ervolina's front yard here in northern West Virginia, where Marcellus Shale wells dot the landscape.
"It was so amusing. I'd watch them out the kitchen window," Ervolina said during a recent interview at her home. "These guys would walk over and look at that sign, and then one of them would kick it. They'd knock it down on the ground and stomp on it and walk away.
"And I'd walk back out there and set it up again."
Other showdowns between industry and frustrated landowners have been more hostile, often leading to confrontations and even courtroom battles. The primary complaints: traffic, noise and odors from the area's new natural gas wells, compressor stations and pipelines.
Doddridge County and other parts of northern West Virginia have faced a Marcellus drilling frenzy in recent years. Photo by Ellen M. Gilmer.
It's a familiar story in shale country, where nuisance complaints from landowners have grown routine. As hydraulic fracturing and horizontal drilling open new swaths of the country to development, drillers eager to cash in on the boom are moving closer and closer to populated areas. And in the eastern United States, where homes are not as spread out as in traditional oil and gas territory like Texas, the increased friction between drillers and their neighbors can be particularly acute.
"We've been inundated by so much so fast," said Doddridge County homeowner Lora Price, who lives near a natural gas processing plant and a compressor station. "Almost every road, every hollow has something going on. It doesn't seem to matter where you go; you're going to see a pipeline or a compressor station or a well pad."
In 2013 and 2014, more than 200 north-central West Virginia residents decided they'd had enough. Scores of lawsuits were filed against Antero Resources Corp. and Hall Drilling LLC, saying the inconveniences that come with nearby oil and gas production have made it impossible for the residents to even enjoy their homes.
"The number is rather remarkable," said West Virginia University College of Law's Josh Fershée, referring to the sheer volume of lawsuits.
Ervolina and Price, who are both plaintiffs, said they could not discuss details of the ongoing litigation but could describe the everyday impacts of shale development on their lives.
"Basically, we're going through a process where people are starting to evacuate this area," said Ervolina, a West Virginia native who has lived with husband Anthony in their house for 35 years. "A lot of people are just starting to leave because it's just a mess."
The lawsuits against Colorado-based Antero and Hall, a local company, have now been rolled into one mega-case before the state's Mass Litigation Panel, a group of seven circuit court judges who streamline proceedings for related complaints.
Antero and Hall fought hard against the consolidation, fearing a one-size-fits-all decision affecting disparate cases, each with unique circumstances. But the panel pushed on, aiming to establish a "uniform body of law." That way, landowners and industry can have a clear understanding of their rights once the case is resolved, instead of having multiple threads of litigation drag out on appeal for years.
The approach raises the stakes for industry. While any single nuisance lawsuit would be shrugged off as relatively minor for an oil and gas company, a decision for the plaintiffs in mass litigation could result in a tougher penalty for Antero and Hall across the board.
Antero is also facing a compliance order from U.S. EPA for improperly discharging fill material into wetlands and streams in West Virginia and was cited by state regulators for drilling a horizontal well that hit an existing vertical well and caused a methane leak. In all, the company had at least 27 reported spills in the state in 2014.
While Antero declined to comment for this story, the company has acknowledged in financial filings that it is facing lawsuits in West Virginia, Ohio, Pennsylvania and Colorado from plaintiffs who have alleged various damages from oil and gas activities.
"The plaintiffs have requested unspecified damages and other injunctive or equitable relief," Antero's most recent quarterly report says. "The Company denies any such allegations and intends to vigorously defend itself against these actions."
Beyond the direct impacts on drillers involved in the big case, a win for plaintiffs would resonate throughout West Virginia -- sending a message to other producers to minimize impacts on neighbors or else face the kind of uprising staged by the mass litigation plaintiffs.
But for now, the litigation's path forward is unclear. Neither side indicated any plans for settlement after a mediation hearing late last month, and those involved in the case are keeping quiet about the proceedings.
Outside experts, meanwhile, are watching the case closely. They say any new precedent for nuisance law in West Virginia would also raise eyebrows in other parts of the country, where various jurisdictions are attempting to define exactly how much inconvenience from drilling is too much.
The traditional legal test for a nuisance claim stems from common law: Does an action unreasonably interfere with the enjoyment and use of one's property? The interpretation of "unreasonably" can vary dramatically depending on the jurisdiction and circumstances, with some judges and juries excusing alleged nuisance activity when the defendant has at least made an effort to be unintrusive.
Anthony and Lyndia Ervolina's dog, Roxy, drinks from a stream on their property. The couple worries about the impact of oil and gas spills on the water. Photo by Ellen M. Gilmer.
In the oil and gas context, plaintiffs generally have a tough time demonstrating that any nuisance they have experienced warrants enough in monetary damages to cover the cost of going to court in the first place. In one Texas lawsuit against Chesapeake Energy Corp., for example, a jury agreed that the company's actions were a nuisance but awarded the homeowners $20,000 -- pocket change compared to the legal expenses.
In 2013, a major win for plaintiffs raised suspicion that the tide might be changing. In the landmark Parr v. Aruba case in Texas, a jury found that Bob and Lisa Parr, who say they suffered health problems from the air emissions of nearby well sites, were entitled to $3 million for the nuisance the wells created.
The verdict was the biggest known award of damages to date for a nuisance case related to shale drilling and was predicted to embolden other landowners to file their own nuisance suits (EnergyWire, July 16, 2014).
The West Virginia litigation could serve as a similar model. In the Mountain State, the legal test boils down to the same question of reasonableness, but as long as the drillers' actions are not considered reckless, state precedent also allows a balancing of interests between the plaintiffs and defendant. In other words, the court may consider whether industry's interest in producing natural gas outweighs residents' interest in peace and quiet.
Price said she understands the conflicting interests, but wishes residents who support the industry would take a longer view.
"They've got jobs, they've got income. I don't begrudge them their jobs," she said. "It's a shame that they can't see the broader future. It's mostly about 'What kind of money can we earn right now?'"
Ripe for debate
Fershée, a law professor and associate dean for faculty research at WVU, said several factors make West Virginia ripe for the debate.
First, he said in an interview, West Virginians typically do not own their mineral estate. The prevalence of split estates means that residents without a lease or a royalty check are often bearing the inconveniences of the shale boom without directly joining in the rewards.
West Virginia's mountainous topography also creates unique traffic problems, Fershée said.
"There's a lot of places where there's one way in and one way out," he said. "In other states, there are often ways that you alleviate some of that tension by building another road, which isn't a big deal because you're not literally moving a mountain to make that happen."
And the state's long history of coal mining -- which has not generally spread wealth to lower classes -- may have prompted residents to develop mistrust for extractive industries, Fershée said.
"In West Virginia, coal is the backbone of industrialization but not of local profit," he said. "People may see gas as kind of the new version of that. There's a skepticism of industry."
But Price's daughter, Autumn Long, who is fighting her own battle against a pipeline company that wants access to her property in nearby Harrison County, said West Virginians have not become outraged enough.
"In this state, there's been such a long history of exploitation and repression, and the population of this state has been walked over by the fossil fuel industry for so long," she said. "I'm always amazed to see what people will put up with. People just sit in their cars and sit in their cars and let these trucks drive past."
Still, she said, opposition seems to be slowly building. The added local impacts of major interstate pipeline proposals, including the Atlantic Coast and Mountain Valley lines, may push some otherwise complacent residents to the edge, she said.
"Everyone has a breaking point eventually, and I think that people are being pushed to that point now," Long said. "Unfortunately a lot of times, you don't do anything about it until it's in your backyard. And that's what's happening now: It's in people's backyards."
The tension between those supportive or tolerant of drilling and those actively fighting industry expansion is clear. Price said she's now known as the neighborhood "troublemaker," with at least eight neighbors employed by the oil and gas industry.
Robert McClain, who has lived on a farm in the Doddridge County community of Big Isaac since the 1940s, said his brother hasn't spoken to him in years, due to disagreement over whether to lease mineral rights under the family property for shale drilling.
Even families in agreement on the issue are split on how to respond to it. Anthony Ervolina, who grew up in Queens, N.Y., said he's fed up with the vibrations, the traffic and the gas fumes that fill his yard every evening, and he wants out.
The family's carefully landscaped property, filled with bamboo stalks, lilac trees, vegetable gardens and an outdoor dining area, has fallen into disuse while the couple decides whether they should stay -- an emotional decision for Lyndia.
"I absolutely love West Virginia with all my heart," she said while looking out at her yard last week. "I don't want to leave my home. If we all get up and leave, West Virginia is gone. But I need to leave."
Long is conflicted, too.
"I feel like I am standing on the train track watching a train bear down on me," she said. "Sometimes I think I must be crazy. Why am I doing this? But I have invested so much in my life and in my home, and everything I have is in this space."
The only hope, they say, is more public outrage and organized opposition from neighbors affected by the everyday impacts of industry. The mass litigation is a start, Price said, but she's having a hard time feeling optimistic overall.
"The majority of people who maybe are adversely affected, they're still not speaking out," she said. "It's just the way it is."
The mass litigation case is set for trial next year.
We hope you and your friends and family can make it RAIN OR SHINE TODAY for #HandsAcrossOurLand
Signs leading you to the venue will be out by 11:30 So come enjoy the afternoon. Signs at Jct of Rt 12 and Rt 122 in Forest Hill, leading you to the venue and also at Jct of Pine Grove Road and Blue Lick Rd. Or feel free to meet us for carpools to the venue. Find further details on our event page here: https://www.facebook.com/events/1477840392538125/
Can't make it to our event because of work, school, or other obligations? Join us digitally from wherever you are! Find more details here: https://www.facebook.com/events/1487661651546486/
Participants from across the country will be standing together in solidarity today against#Fracking and #FrackedGasPipelines! Please show your support, and join residents of WV, VA, MD, OH, PA, NY, OR, NC, and beyond!
A Media Event taking place on August 18th in West Virginia, Virginia, Ohio, Maryland, North Carolina and Pennsylvania
Don't miss this exceptional event! A large turnout is needed!!
Throughout Appalachia, farmers, small business owners, and people from every walk of life will be standing together on August 18th to protect our land from being taken over by the fossil fuel industry for pipeline infrastructure.
Let's join our neighbors, friends and supporters to celebrate the beauty of our land and our ongoing dedication to its preservation. In Monroe County, the event will take place on a large, lofty meadow with a magnificent view of Peters Mountain. Local media will be present and musicians are invited to attend.
Date and Time
Tuesday, August 18th at 1:00pm
1:00 - Carpool to venue
2:00 - 3:30 Event
3:30 - 4:00 Return carpool
OAK HILL FARM is located on Blue Lick Road - a narrow, one-lane road. Please park at one of the two Carpool Locations below.
Carpool Location # I
The Lindside Methodist Church, located at the northern end of Lindside. Howdy Henritz will organize carpooling to the venue.
Directions to Lindside Church: Coming from Peterstown on 219 N, church is on right side of road.Coming from Union on 219 S, church is on left side of road. Look for a brick church with a large white auxiliary building and large parking lot.
Carpool Location # 2
(Greenville, Hinton, Alderson, Creamery, Wayside)
The old Greenville School in Greenville. Maury Johnson will organize carpooling to the venue.
Directions to the Old Greenville School: From Rte 12 in Forest Hill, turn left onto on Rte 122. Drive approx 8 miles and just before Liberty Gas Station in Greenville, turn right on Old Greenville School Road. Watch for large blue sign "Old Greenville School" located toward the end of the road, approx 2/10 mile.
Join us holding Hands Across Our Land!
Let's show the media:
"We stand ready to protect our land!"
We look forward to seeing you on Tuesday at 1pm,
Visit our Event Page for more information:
Hearing held at the Union Courthouse
on Wednesday, August 5th at 10 am
Monroe County Circuit Judge Robert Irons ruled in favor of Monroe County Landowners at the Preliminary Injunction Hearing which took place in the Union Courthouse on Wednesday.
A full house audience of residents from Monroe, Summers, Greenbrier and other counties along the proposed pipeline corridors followed the 3 hour long hearing attentively.
The audience clapped in appreciation when Judge Irons delivered his decision to grant the injunction sought by Doris and Bryan McCurdy to bar surveyors for the Mountain Valley Pipeline project from entering their property in Greenville without their permission.
Preserve Monroe would like to express heartfelt thanks to Doris and Bryan McCurdy for their courage in standing up for landlowners rights to the ongoing use and enjoyment of their property.
Preserve Monroe would also like to express its gratitude and appreciation to Senior Attorney Derek Teaney of the Appalachian Mountain Advocates (APALMAD) law firm in Lewisburg for his impeccable presentation of pertinent facts and case histories of WV eminent domain law in support of the plaintiff's motion that the developers of the Mountain Valley Pipeline (MVP) have failed to demonstrate that the pipeline will serve a public use for the people of West Virginia.
Despite attempts by the MVP defense lawyer Charles Piccirillo to make public use a non-issue in this hearing, the McCurdy's attorney, Derek Teaney, proceeded to quote specific sections of the WV Code which cite public use as a requisite for the exercise of eminent domain for purposes of surveying in West Virginia.
At the close of the evidence presented by the plaintiff's (McCurdy's), rather than procceding to present MVP's case, Piccirillo made an oral motion for a 'directed verdict' (the legal term for a motion requesting a judge to make a decision based upon an assertion that the plaintiff has raised no genuine issue). Judge Irons denied the motion, saying he could not ignore language in the WV Code. Turning to Piccirillo, Judge Irons stated, "You have built your case on 'no need to consider public use'. My ruling is we do have to go there."
With thanks to all who supported the brave Monroe County citizens who challenged MVP's attempt to violate landowner rights,
News Coverage FROM The Washington Post:
News Coverage from WVNS-TV: http://www.wvnstv.com/story/29721100/mountain-valley-and-property-owners-are-back-in-court
News Coverage from The Roanoke Times: http://www.roanoke.com/news/local/mountain-valley-pipeline-opponents-win-a-round-in-west-virginia/article_63e81d57-cf5c-5370-a3af-66cb2f7b3fad.html
News Coverage from WV Public Broadcasting:
News Coverage from the Register-Herald:
News Coverage from WVVA:
Posted: Thursday, July 16, 2015 11:45 pm By Duncan Adams email@example.com
"Coming soon to a neighborhood near you. Or maybe not.
The latest alternate route for the proposed Mountain Valley Pipeline seeks to avoid “sensitive geologic features,” according to the company, such as caves and sinkholes in Giles County.
Alternate 200, which the company describes as “an enhanced and improved” version of an earlier route, would also bypass a wooded subdivision that has been a hotbed of well-informed opposition in Montgomery County and pull some new landowners into the fray.
Specifically, Mountain Valley reported that alternate 200 could affect 56 parcels of land previously outside the path of what would be a 42-inch diameter buried transmission pipeline transporting natural gas at high pressure.
More broadly, alternate 200 could have implications for property owners in Giles, Craig, Montgomery and Roanoke counties. If the new alternate eventually becomes a segment of the 300-mile long pipeline, it will likely please some people and antagonize others.
The route of alternate 200 is mapped on the company’s website, mountainvalleypipeline.info.
David Seriff, a resident of the Preston Forest subdivision in Montgomery County, opposed the pipeline project even before one alternative seemed destined to travel through the heart of his home.
Seriff emphasized Thursday that he remains resolutely opposed to the pipeline. He and other foes have described the project as an environmentally destructive, ill-advised investment in a fossil fuel by a private company threatening to acquire rights-of-way with eminent domain across private property.
But alternate 200 is a lesser evil, Seriff said, than an earlier attempt to detour around his subdivision.
“I do not want any pipelines,” he said. “However, this new route 200 does make a lot of sense because it avoids Preston Forest in its entirety,” affects fewer property owners in that vicinity, avoids many karst features in Giles County and does not travel a narrow, rocky ridge.
But Seriff knows that either celebration or its opposite would be premature.
Mountain Valley’s Maurice Royster emphasized in emails to county officials Wednesday that the company continues to evaluate previously identified routes. Royster is a manager of government affairs for EQT Corp., one partner in Mountain Valley Pipeline LLC.
Royster wrote it would be “premature for MVP to eliminate any routes from consideration” and said the company will evaluate all routes “until we submit our certification application to [the Federal Energy Regulatory Commission] later this year.”
As proposed, the $3.2 billion interstate pipeline project would transport natural gas from Wetzel County, West Virginia, to Pittsylvania County. The source of the gas would be hydraulic fracturing extraction wells in the Appalachian Basin.
FERC will determine whether the project’s public benefits outweigh its potential adverse impacts. If the commission approves Mountain Valley’s application, the pipeline company will be able to use eminent domain to acquire rights-of-way, if necessary.
Rick Shingles, an organizer of Preserve Giles County, an anti-pipeline group, reacted Thursday to alternate 200. He said the route seems designed to avoid geologic features that many people, both scientists and laymen, have said are incompatible with a large-diameter buried pipeline transporting natural gas at high pressure.
“It appears alternative 200 is designed to avoid the most serious obstacles to the FERC awarding MVP a certificate of necessity and convenience,” Shingles said.
“This will change nothing in the organized opposition to the pipeline other than to rally even more citizens to oppose it,” he said. “With each alternative, the MVP alarms, awakens and mobilizes still greater numbers of protesters.”
This time, Mountain Valley Pipeline alerted county officials before approaching landowners to seek permission to survey their property.
County administrators Clay Goodman, Craig Meadows and Chris McKlarney — from Craig, Montgomery and Giles counties, respectively — declined to comment Thursday. Each said they will wait to hear from their boards of supervisors. Each board has previously expressed opposition to the pipeline, as has the board in Roanoke County.
The controversial pipeline also has garnered support. Proponents, including Gov. Terry McAuliffe, have said that natural gas provides a cleaner alternative to coal for power generation and that domestic production enhances national security.
Bill Wolf helped organize Preserve Craig, an anti-pipeline group that has submitted reams of documents to FERC supporting the group’s stance that the Mountain Valley project’s adverse impacts far outnumber any potential benefits.
“Moving the pipeline route a few feet or even a few miles does not make a bad idea any better,” Wolf said.
He said the pipeline should not route through Craig County or elsewhere in the region’s steep, mountainous terrain.
“Erosion, sedimentation and devastating environmental, social and economic damage are guaranteed to occur here,” Wolf said.