Motion to Dismiss VGS Petition

STATE OF VERMONT PUBLIC SERVICE BOARD Petition of Vermont Gas Systems, Inc., for a certificate of public good, pursuant to 30 V.S.A. § 248 , authorizing the construction of the “Addison Natural Gas Project Phase 2 (ARNGP Phase 2)” to extend natural gas transmission facilities in Franklin and Addison Counties, for service to the Ticonderoga mill in New York, and construction of 2 Community Gate Stations for distribution service in the towns of Cornwall and Shoreham, Vermont ) ) ) ) ) ) ) ) Docket No. 8180 VPIRG MOTION TO DISMISS PETITION The Vermont Public Interest Research Group (VPIRG), by and through the Law Office of James A. Dumont, Esq., PC, hereby moves pursuant to Board Rules 2.103 and 2.105 and Vermont Rules of Civil Procedure 12 and 56 for an order dismissing the petition filed by Vermont Gas Systems, Inc. on the grounds that the Board is without jurisdiction over the subject matter of the Petition. Unless and until the Federal Energy Regulatory Commission, “after a hearing,” issues a final order determining that some or all of the proposed project falls with a service area determined to be exempt from FERC jurisdiction under 15 U.S.C. § 717f(f), the Board is without jurisdiction. MEMORANDUM The Petition filed by Vermont Gas Systems, Inc. (VGS) seeks approval from this Board of what the Petition describes as a pipeline from Vermont to New York. pipelines is, with limited exceptions, exclusive. FERC jurisdiction of interstate gas No state or local jurisdiction exists to review any environmental concerns, nor to make any siting decisions. National Fuel Gas Supply Association v. Public Service Commission of New York, 894 F.2d 571 (2d Cir. 1990) (state public service commission review preempted); J. M. Darby, J. M. Robins, B. L. Webb, The Role of FERC and the States in Approving and Siting Interstate Natural Gas Facilities and LNG Terminals After the Energy Policy Act of 2005 – Consultation, Preemption and Cooperative Federalism, 6 Tex J. Oil Gas Energy L. 335, 343-347 James A. Dumont, Esq. 15 Main St., PO Box 229 Page #1 Bristol VT 05443 (2010) (other than the role of states in issuing water quality certifications under § 301 of the Clean Water Act, and to apply Coastal Zone Management Act plans, state jurisdiction is wholly preempted). Instead, federal law imposes review pursuant to the requirements of the Natural Gas Act, the National Environmental Policy Act and other federal laws. Section 717(f)f is an exception. If and when “after hearing,” FERC determines that an interstate pipeline is to be used to provide service to an area it determines to be a petitioning utility’s service territory, jurisdiction reverts to the states. Washington Gas Light Company v. Prince George’s County Council, 711 F.3d 412, 422-426 (4th Cir. 2013) (interstate gas business determined by FERC to serve an area under § 717f(f) is exempt from FERC jurisdiction and left to state jurisdiction). FERC approval of an application under § 717(f)f is not pro forma. The statute requires a hearing. The purpose of the hearing to determine whether the application satisfies the statutory purpose, which is to free from federal jurisdiction those companies that are primarily engaged in local distribution whose market area crosses state lines. In re Cincinnati Gas & Electric Company d/b /a/ Duke Energy of Ohio, Inc., 117 FERC ¶62,074 (2006). One of the factors considered is whether there exists state regulatory jurisdiction over the company. 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 (IP). The distribution “market” consists of a single industrial user. VGS has not identified any residential users, or any other industrial users. Paragraph 11 of the Petition states that that single industrial user would pay $62 million of the project’s $64.4 million cost. This falls far outside the run of the mill § 717f(f) application, summarized in Cincinnati Gas & Electric. The prefiled testimony of VGS Vice President Simollardes (pp. 17-18) states that IP has the option of procuring its own supplies of gas and paying VGS just for the costs of transmitting the gas that IP has procured on its own. The effect of such an election would be that VGS is providing transmission pipeline services rather than selling gas to a retail consumer. This possibility may be found by FERC to fall outside the intent of § 717f(f). Also according to Ms. Simollardes, the governing tariffs will be James A. Dumont, Esq. 15 Main St., PO Box 229 Page #2 Bristol VT 05443 Vermont Public Service Board tariffs. FERC may not find this credible, since 30 V.S.A.§ 203 does not provide this Board with jurisdiction over the rates charged to New York customers, and IP and VGS cannot provide that jurisdiction by agreement. Thus, rather than avoiding FERC jurisdiction where Vermont would otherwise have jurisdiction, the VGS petition to FERC may create a gap in regulation. In short, it is not a foregone conclusion that VGS will prevail in obtaining a § 717f(f) determination. At the conference held in this matter on January 22, 2014, several persons raised their concerns about the difficulty and cost of simultaneously and unnecessarily participating in state and federal proceedings. This problem can and must be avoided by recognizing that unless and until FERC issues a final order approving of an application under § 717f(f) -- which VGS has yet to file -- this Board has no jurisdiction. Conclusion The Petition should be dismissed. 1/27/14 The Vermont Public Interest Research Group By: James A. Dumont James A. Dumont, Esq. Law Office of James A. Dumont, Esq. PC 15 Main St., PO Box 229 Bristol VT 05443 jim@dumontlawvt.com cc: Docket 8818 Service list James A. Dumont, Esq. 15 Main St., PO Box 229 Page #3 Bristol VT 05443