- Vermont Gas has required landowners along the proposed gas pipeline route to sign non-disclosure agreements preventing them from disclosing how much they were paid for easements on their land. This has kept many details of land deals secret.
- While land easement purchases are public record, additional "damages" payments to compensate landowners are not, allowing Vermont Gas to pay landowners more than what is publicly reported.
- Regulators at the Department of Public Service say they have little information on Vermont Gas' land expenses so far and will audit costs later, when the utility seeks ratepayer reimbursement, but transparency advocates argue the public deserves more disclosure now.
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VermontGasreformatted
1. Vt. Gas land deals shrouded in secrecy
ZACH DESPART, FREE PRESS STAFF WRITER
November 15, 2015
(Reformatted from online version. Original: http://bfpne.ws/1MPR1Xf)
ADDISON COUNTY - Philip Beliveau believes his neighbors
have a right to know how much Vermont Gas Systems paid him to
extend the company's new natural gas pipeline through his St.
George property.
He would tell them himself, but Beliveau is barred by a non-
disclosure agreement he said Vermont Gas required him to sign.
Vermont Gas, which in July promised candor and openness after
being fined by regulators for waiting months to disclose a massive
project cost hike, has taken steps to keep details of the company's
land deals secret.
By refusing to disclose full sums paid for parcels and requiring
landowners to sign non-disclosure agreements, Vermont Gas
shielded many details of land purchases from public view. A three-
week Burlington Free Press investigation of thousands of public
records unearthed only a fraction of Vermont Gas' payouts to
landowners.
The utility's tactics disturb Beliveau, who sparred for months with
Vermont Gas land agents before settling.
“It’s not ethical for them to keep it hidden,” Beliveau said. “It
seems it should all be public record.”
Vermont Gas in May paid Beliveau $9,500 for an easement, land
records reveal. But Beliveau said he was paid a larger sum for
damages, based on the estimated depreciation to his property
caused by the pipeline.
Opponents of the project, which include landowners,
environmentalists and consumer advocates, decry Vermont Gas'
secrecy around land deals as the latest example of a lack of
transparency by Vermont's only gas utility. They say they have lost
faith in the Department of Public Service to protect the interests of
landowners and the greater public.
Of the $154 million projected cost of the project, Vermont Gas
intends to ask ratepayers to pay up to $134 million. For that reason,
2. opponents of the 41-mile pipeline believe ratepayers have a right to
know where, when and for what purpose Vermont Gas incurred
expenses.
“We firmly believe if those costs are going to be recouped in rates,
the public has a right to know how much Vermont Gas is
spending,” said Greg Marchildon of AARP Vermont, which acts as
a consumer advocate.
Landowners want to ensure they are fairly compensated for their
property while consumer groups seek to protect ratepayers from
bearing the burden of extravagant spending by Vermont Gas.
Vermont Gas is close to securing all parcels needed to complete
the pipeline, and has filed eminent domain proceedings against the
remaining holdout landowners. Vermont Gas defends the
company's practices as in compliance with regulators' expectations.
"We are open and transparent in everything we do," spokeswoman
Beth Parent said.
Department of Public Service Commissioner Chris Recchia said he
believes Vermont Gas' business practices are permissible, and
declined to compel Vermont Gas to disclose more detailed expense
reports before the project is finished.
Regulators approved the pipeline in December 2013 for $87
million, but Vermont Gas has since increased the price tag by 78
percent. The utility broke ground in June 2014 and plans to
complete the pipeline late next year.
But to complete the company's largest pipeline expansion,
Vermont Gas will first have to persuade the Public Service Board
to permit the project to move forward. The board has yet to
complete an investigation into whether the massive cost hikes
evaporated the pipeline's economic benefit to Vermont.
3. Secret land deals
Vermont Gas compensates landowners along the pipeline route in
two ways: land or easement purchases and damages.
Land purchases and easements — a narrow right-of-way through a
property — are recorded on tax returns with town clerks. Damages,
which compensate a landowner for a loss of land value because of
the pipeline, are unrecorded in public records.
The Burlington Free Press examined property transfer tax returns
in the eight towns along the pipeline route: Colchester, Essex,
Williston, St. George, Hinesburg, Monkton, New Haven and
Middlebury.
Vermont Gas spent $5.2 million on 235 easements and land
purchases between 2013 and Sept. 30, land records state.
4. The company spent $9.8 million on land acquisition during that
same period, according to an October expense report Vermont Gas
filed with regulators. That report includes the only insight into land
deals Vermont Gas has released publicly.
A Vermont Gas pipeline construction site along Route 289 in Essex. (Photo:
Free Press file)
Of the $4.6 million spent by Vermont Gas through Sept. 30 on land
acquisition unaccounted for in public records, spokeswoman Beth
Parent said that money was spent on compensation, legal fees,
administrative costs, appraisals, expert testimony and studies in
support of eminent domain filings.
Parent refused to break the $9.8 million right-of-way budget into
line items, detail how much Vermont Gas has spent compensating
landowners, or say how many landowners were subjected to non-
disclosure agreements.
"At this time, with sensitive negotiations and proceedings
underway, the company cannot divulge further details about the
budget or individual landowner agreements or filings," Parent said.
Parent defended non-disclosure agreements as standard practice in
mediation.
Since 2014, Vermont Gas has refused reporters' requests for details
about deals with individual landowners, arguing that doing so
would compromise landowners' privacy. Parent last week declined
to provide details of land deals even without releasing the names of
landowners.
Don't ask, don't tell
5. Parent maintains Vermont Gas has been transparent because the
company discloses all documents requested by regulators. She said
Vermont Gas would provide additional details about land deals
should the Public Service Board or Department of Public Service
ask.
Recchia, head of the Department of Public Service, said he sees no
reason to make such a request.
"I will see the information that I need to see when I need to see
it," Recchia said.
Chris Recchia, commissioner of the Public Service Department. (Photo:
Free Press file)
Beyond the three-page, 11-line-item expense report filed in
October by Vermont Gas, Recchia said he knows little about
expenses incurred to date.
Regulators will vet Vermont Gas' expenses when the utility asks
the Public Service Board to be compensated for the project,
Recchia said. Auditing expenses before Vermont Gas completes
the project would be premature, he believes.
"It’s not unusual for us not to know at this point," Recchia
said. "These are private contractual agreements between Vermont
Gas and private landowners."
Recchia said he believes non-disclosure agreements can protect
landowners who wish to remain private. But after listening to
transparency concerns raised by Monkton landowners at a series of
public forums last year, Recchia in November 2014 asked Vermont
Gas to no longer require non-disclosure agreements as a condition
of closing.
6. Recchia said ratepayers have a right to know details of expenses
Vermont Gas intends to recoup through rate increases, but agrees
with the department's policy to wait to evaluate expenses until after
the pipeline is operational.
“When they ask for any money to be recovered by ratepayers,
we’ll get the information and we’ll assess it,” he said.
The commissioner said should he judge some of Vermont Gas'
expenses to be imprudent, he will advise the Public Service Board
against reimbursing those costs.
Recchia rejected the premise that Vermont Gas’ use of non-
disclosure agreements and refusal to detail land deals represents a
lack of transparency. The commissioner said he believes Vermont
Gas has demonstrated openness throughout the project — even
though the company waited more than five months to disclose a
$32 million cost hike to the Public Service Board.
Recchia testified to the Public Service Board that Vermont Gas
ignored his pleas during the spring of 2014 to report the new
estimate to the PSB. Yet he praised the company’s
communications with regulators on Monday.
“I think Vermont Gas has been forthright and transparent over the
past year, and accurate,” Recchia said. “I think they were
transparent and forthright before that, just not accurate.”
Opponents cry foul
Pipeline opponents argue Vermont Gas’ insistence on non-
disclosure agreements and refusal to detail land deals misleads
regulators and puts landowners at a negotiating disadvantage.
Maren Vasatka, a Monkton landowner and real estate agent by
trade, said she believes Vermont Gas purposefully pays
landowners more in damages than for the purchase of an easement.
This keeps easement prices artificially low, she said, and keeps
neighbors in the dark.
As damages are absent from public records, Vasakta said some
landowners along the route had no idea their neighbors were being
paid more than the sums recorded with town clerks.
“They weren’t aware there was other money being considered,”
Vasatka said.
7. Vasatka and her husband wrangled with Vermont Gas for years
over an easement through their property. In October, Vermont Gas
tried a new approach and offered to buy their home and 17 acres
for $560,000 — a sum 91 percent higher than the grand list value
of the property . Vasatka and her husband took the deal, though
they continue to oppose the pipeline and believe regulators have
failed the public.
Maren (left) and Ricky Vasatka have sold their home and property in
Monkton to Vermont Gas Systems. They are seen on Thursday, November
5, 2015, where VGS' proposed natural gas pipeline is slated to cross the
property. (Photo: GLENN RUSSELL/FREE PRESS)
“It got to the point where the whole system is favoring Vermont
Gas,” Vasatka said. “If we had any faith in the Department of
Public Service and the Public Service Board to do the right thing,
we’d continue to fight.”
Marchildon, of the AARP, said ratepayers deserve to know if
Vermont Gas is paying more than fair market value for land in an
effort to avoid lengthy eminent domain proceedings.
“I don’t want to be paying for something that could have been
purchased for $10 that was purchased for $100,” Marchildon said.
8. Bristol attorney James Dumont, who represents landowners along
the pipeline route, said public records often show only a fraction of
what Vermont Gas pays to landowners.
Center, Bristol attorney James Dumont listens with Jane and Nathan
Palmer of Monkton during a meeting of the Public Service Board to discuss
the proposed Vermont Gas pipeline in Montpelier on Wednesday, March
18, 2015. The Palmers are landowners who oppose the pipeline that would
cross their property. (Photo: Free Press file)
Dumont said non-disclosure agreements only benefit Vermont Gas,
since the pacts "prevent landowners from comparing notes with
each other, and the public from knowing what's going on."
Dumont said when Vermont Gas asks the Public Service Board to
raise rates to pay for up to $134 million of the project, the utility
will have to justify every dollar spent. Dumont said he fails to see a
reason why regulators would allow Vermont Gas to withhold
expenses from public scrutiny.
“They can’t argue these are going to stay secret forever,” Dumont
said.
9. Senator raises concerns
Sen. Chris Bray, D-Addison, said he has long been concerned how
Vermont Gas' tactics may diminish the negotiation power of
landowners.
Between secret land deals and the looming possibility of
government-sanctioned land seizure, Bray said he understands how
landowners can feel overmatched.
“You have a large corporation backed by a team of lawyers talking
to individuals about eminent domain proceedings,” Bray said.
“That’s a really threatening situation to be in.”
The three-term senator said all parties in a negotiation should have
equal knowledge of a transaction. Bray struggles to see how that
could be the case when landowners are barred from seeing how
much their neighbors were compensated.
Maren Vasatka (center) talks with Sen. Chris Bray (D-Addison) about the
proposed Vermont Gas Systems natural gas pipeline outside of Monkton's
town meeting on Tuesday March 4, 2014. (Photo: Free Press file)
10. “In this situation you have one party with all the expertise, and
they’re literally defining the market for others,” Bray said of
Vermont Gas. “That, to me, puts citizens at a disadvantage.”
Bray said the burden of disclosing information should be on
Vermont Gas, since landowners did not ask for the utility to plot a
pipeline through their yards, woods and farmland.
The New Haven legislator said he was perplexed why regulators
would decline to require Vermont Gas to provide more
comprehensive quarterly expense reports, noting the series of cost
hikes that have spurred two Public Service Board investigations.
“It would seem appropriate for the Department of Public Service to
bring a higher level of scrutiny to projects exceeding their budget,”
Bray said.
Tactics unchanged?
Philip Beliveau, the St. George landowner, agreed to terms with
Vermont Gas six months after Recchia said he asked the utility to
stop requiring non-disclosure agreements.
Beliveau said Vermont Gas land agents asked him to sign a non-
disclosure agreement, and he felt he had no choice but to comply.
11. A sign at the end of Nathan and Jane Palmer's driveway on Rotax Road in
Monkton makes clear their view of Vermont Gas Systems' proposed
Addison natural gas pipeline project that would pass through there. (Photo:
Free Press file)
“I felt it was part and parcel of the agreement,” Beliveau said.
If Vermont Gas officials had said he could opt out of the secrecy
pact, Beliveau said he would have.
Recchia said he was unfamiliar with Beliveau's case, but said he
believed Vermont Gas had stopped forcing landowners to
sign non-disclosure agreements at his request.
"My impression was they agreed to that condition,” Recchia said.
Parent did not respond to a request for comment on Beliveau's
case, nor to a question asking Vermont Gas' interpretation of
Recchia's request.
Vermont Gas hopes to secure easements from the remaining five
landowners, in Hinesburg and Monkton, by the time crews resume
construction next spring.
Contact Zach Despart at 651-4826 or
zdespart@burlingtonfreepress.com. Follow him on Twitter at
www.twitter.com/ZachDespart.