• VPIRG wants IP gas pipeline app dismissed
     | January 28,2014

    The Vermont Public Interest Research Group has asked the Public Service Board to dismiss an application that would extend a natural gas pipeline under Lake Champlain to serve the International Paper mill in New York.

    VPIRG argued in its motion filed Monday with the Public Service Board that the Federal Energy Regulatory Commission, not the state, has regulatory jurisdiction when it comes to interstate gas pipelines.

    “FERC jurisdiction of interstate gas pipelines is, with limited exceptions, exclusive,” Bristol lawyer James Dumont wrote in his motion on behalf of VPIRG. “No state or local jurisdiction exists to review any environmental concerns, nor to make any siting decisions.”

    Plans to extend the pipeline to serve the IP plant in Ticonderoga, N.Y., is the second phase of a planned three-phase project by Vermont Gas Systems. The PSB last month approved Phase I, extending the pipeline from Chittenden County south to Middlebury. Phase II of the Addison Rutland Natural Gas Project would extend the pipeline west to Cornwall and under Lake Champlain to serve the IP plant.

    Phase III would extend the pipeline farther south to serve parts of Rutland County.

    VGS has said the key to serving Rutland by 2020, 15 years earlier than projected, is the IP plant. Revenue from serving IP will substantially defray the cost to extend the pipeline to Rutland, VGS officials have said.

    The motion cites a cost of $64.4 million for Phase II, of which IP would pay $62 million.

    VPIRG’s argument is that until FERC holds a hearing and rules on whether “some or all of the proposed project falls within a service area determined to be exempt from FERC jurisdiction … the Board is without jurisdiction.”

    Responding to the motion, VGS spokesman Steven Wark said that VPIRG is throwing up unnecessary legal obstacles to stop the pipeline.

    “Any attempt to use legal maneuvers to slow down the project effectively condemns average Vermonters and small-business owners to using dirtier and more expensive fuel oil or propane for decades to come,” Wark said in an email. “Vermont Gas cannot understand why anyone would want to deny Addison and Rutland counties the very valuable economic and environmental benefits of this project, and we are confident that the advantages will allow the Addison-Rutland Natural Gas Project to move forward through Vermont’s very rigorous regulatory and permitting process.”

    Wark acknowledged that FERC has jurisdiction over the New York extension and that VGS would request an exemption. He said there is no requirement that a FERC application “must come first.”

    In his motion, Dumont raised the question of whether VGS should be exempt under FERC rules on the premise that its market area simply crosses state lines.

    “In this case, the purpose of the Phase 2 project is primarily to transmit gas under Lake Champlain to a single industrial user, International Paper. The distribution `market’ consists of a single industrial user. VGS has not identified any residential users, or any other industrial users,” according to the three-page motion.

    In a telephone interview, Dumont said if FERC grants an exemption, it would give the PSB jurisdiction over what happens on the Vermont side of Lake Champlain. However, he said on the New York side of the lake that authority would still rest with the New York Public Service Commission.

    The motion also argues that VGS possibly fails the exemption test on two other grounds.

    VGS has offered IP the option of buying its natural gas from another provider while using the VGS pipeline for transmission. “The effect of such an election would be that VGS is providing transmission pipeline services rather than selling gas to a retail customer,” Dumont wrote.

    The other issue, according to the motion, is that Vermont law does not give the PSB jurisdiction “over rates charged to New York customers, and IP and VGS cannot provide that jurisdiction by agreement.”

    Dumont previously filed a motion asking the board to alter its Phase I pipeline approval regarding the route the pipeline would take crossing the Palmer farm in Monkton.

    bruce.edwards @rutlandherald.com

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