Editor’s note: Charlotte resident Rebecca Foster is a member of the town’s energy committee and writes the column Carpe Greenum for The Citizen, a weekly newspaper for Charlotte and Hinesburg.
When my family moved to New York City in the early 1970s there was dog poop everywhere. As a little girl I learned how to roller skate the obstacle course down my block — fast! — and come home with clean skates. General outrage finally led to a “pooper-scooper” law in 1978 that, miraculously, worked. To this day, some 600,000 dog owners are still taking responsibility for their dogs’ waste instead of leaving it to smear on the shoes of everyone else. Years of debate, controversy, and even hurling of dog poop (NYC-style) preceded the law, however. Dog owners did not want to relinquish their privilege of depositing copious amounts of poop indiscriminately around the city.
Making the world at large suffer for an individual’s or group’s pleasure or profit is called “externalizing costs.” It is as old as Eve eating from the Tree of Knowledge and comes in countless forms. Sometimes the cost is easy to define because it’s identifiable and personal — a noisy all-night party next door, litter by the side of the road, dog poop in your garden.
We experience positive externalities as well, the classic example is bees, who, in addition to making honey, have a side hobby of pollinating our gardens. But when it comes to the environment it seems the negative externalities predominate. Industrial effluents pour into the earth’s rivers, lakes, oceans, and skies; materials are stripped from the ground leaving permanent scars; forests are felled, baring fragile soils that quickly erode. None of this is news, but it is baffling that society has not found a way to internalize those costs.
So let’s look at the externalities in our own backyards. Canada’s Gaz Metro owns Vermont Gas Systems (VGS), and wants to extend a pipeline deeper into Vermont. The hoped-for end goal is to pipe gas to Tennessee-based International Paper’s mill in Ticonderoga, N.Y. IP’s profits run over $1 billion a year. A Canadian company and a Tennessee company desire to increase their profits, but at what cost, to whom?
The environmental costs of this project have been exhaustively described in this column, from super-potent methane emissions that escalate climate change to hydrofracking pollution that poisons drilling areas to the danger of fossil fuel dependence. Dr. Elizabeth Stanton’s expert testimony to the Public Service Board (PSB) last year put a number to it. She said that the first part of the pipeline would increase emissions by more than three million tons over 100 years and bring environmental costs of $76 million. I don’t take figures like this too literally, because $76 million won’t keep even one person alive if there is no fresh water or clean air. In a closed system such as our planet, toxic water anywhere matters everywhere. “The costs and risks from climate change are borne by the world at large,” says the conservative International Monetary Fund on its website, “whereas there are few mechanisms to compel those who benefit from greenhouse gas-emitting activity to internalize these costs and risks.”
It appears that VGS is counting on externalizing the non-environmental costs of this pipeline extension as well, not least to the people who own the land on the route. Most Vermonters would be surprised to learn that taxpayers, ratepayers, and municipalities have already been paying for VGS’s new enterprise, and more is expected of them. Many are starting to ask, in effect, for a pooper-scooper law for VGS.
Externalizing costs was internalized, if you will, in the very concept of the project. In 2011 VGS requested approval from the PSB for an expansion fund that would be fed approximately $4.4 million annually by current customers. VGS got their request, but not without a scathing dissent from one PSB member, John Burke. He characterized the “improper” plan as allowing VGS to raise “venture capital” from ratepayers in order to “directly subsidize the expansion.”
“I am puzzled,” Burke went on to write, “that the majority (of PSB members) is apparently under the impression that VGS is not in a position to contribute the necessary investment capital needed to meet the planning and development costs of the project. As a result, the majority concludes that VGS should be allowed to obtain those funds from ratepayers, apparently ignoring the fact that VGS’s parent, Gaz Metro, has more than a sufficient amount of capital available to fund the proposed investment.” Burke detailed that in its 2009 annual report, “prosperous” Gaz Metro had gross revenue in excess of $2 billion.
Will Gaz Metro’s billions pay for extra training and risk compensation? I think we know the answer to that. Pony up, taxpayers.
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Is VGS mooching off of non-billionaire ratepayers? “The burden of the development costs (are placed) squarely on the shoulders of existing ratepayers,” concluded Burke, “while providing VGS with a virtual cost-free source of investment capital.”
Next up for mooching, the taxpayers. If we’re talking shoulders, the burden of VGS’s application costs fall onto the taxpayers. We pay for the staff at the PSB, the Department of Public Service, and the Agency of Natural Resources. “Permit application fees do not begin to cover the thousands of hours of state worker time required,” says Jennifer Baker of Monkton. Every meeting held in a town hall, school, or library is paid for by the taxpayers. When VGS workers were arrested this January by taxpayer-funded public servants for making methamphetamine, they were incarcerated in taxpayer-funded jails, and they will be tried in taxpayer-funded courts. All externalized costs, Baker points out, because VGS failed to properly screen its workforce.
If the pipeline is built it will present unprecedented hazards for first responders, many of them volunteers, in towns along the route. Will Gaz Metro’s billions pay for extra training and risk compensation? I think we know the answer to that. Pony up, taxpayers.
The ultimate moochee: landowners. Imagine you’ve owned your home for decades and plan to live out the rest of your years here. One random day someone knocks on your door and says they’re going to put a high-pressure, high-volume, industrial transmission pipeline across your property, perhaps through your well, perhaps within the blast zone of your house.
Based on the experiences of actual landowners along the VGS proposed pipeline route today, you will pay in money, property value, time and stress because VGS knocked on your door. No matter how much you pay, there is no protection against your land being condemned for a pittance and inheriting the safety risk. Risk? VGS won’t tell you, but according to data from the Pipeline and Hazardous Materials Safety Administration there have been some 8,000 significant (i.e., someone hospitalized or killed or damages of over $50,000) gas and oil pipeline ruptures in the U.S. since 1986 totaling $7 billion in damages.
You, the landowner, didn’t ask for this pipeline, and yet you have to hire an appraiser, a lawyer, and lose income from the time you put into the attempt to force VGS to pay the right price. To add insult to injury, while VGS is fleecing you they are sinking hundreds of thousands of dollars into advertising — they admit to over half a million in just one year, but honestly it could be anything.
How could VGS scoop its poop?
VGS could start by refunding the millions it took from the ratepayers and pay fees to the state ample enough to cover taxpayer expenses.
Then, let the marketplace dictate landowner compensation. The process of eminent domain values the land according to the square foot, while “the real value is not in the land,” according to attorney Christopher Denton in the Wall Street Journal last year, “but in the economic opportunity the right of way grants to the business entity.” Just how much does VGS value that right of way? Let the negotiations begin, on an even playing field, without eminent domain, and we will see. The Review on the Economics of Climate Change famously said that climate change “is the greatest example of market failure we have ever seen.” Eminent domain is another great example of market failure.
Lastly, paying for the environmental destruction of fossil fuels is less straightforward and would have to come in the form of a federal tax, the mechanism for which does not yet exist.
Scooping all of this together, the company would be paying closer to the true cost of the project. But, for the moment, VGS is enriching itself on the backs of ratepayers, taxpayers, landowners, and the environment. If VGS had to pay the true cost for this project, it couldn’t afford it.