The Kansas Honeymoon is Definitely Over

Kansans were pretty disgusted by the way they were treated by the Kansas Corporation Commission when it permitted Grain Belt Express back in 2013.  In addition to being unjustly stifled and tossed under the bus, they observed how the political fix seemed to be in for project approval.  In their eyes, KCC was nothing but a pliable puppet whose strings were held by Houston-based Clean Line Energy Partners.  If the object was to destroy any faith that the KCC could act in the best interests of the public it exists to serve, mission accomplished.

But have things changed over the past six years?  Has the complete failure of GBE to get anything accomplished in that time taken the shine off the project?  Is the KCC now once-bitten twice shy?  Perhaps.  At any rate, the honeymoon now appears to be over.

Last fall, Clean Line applied to have its permit extended for another 5 years (until 2023) like it was nothing.  Like they expected KCC to simply fall at their feet and grant any request.  After all, that had been the tone of their relationship with KCC.  Whether it was a changing of the guard at the KCC to new folks not under Clean Line's spell, or the smart intervention of one of GBE's landowner opponents, the extension didn't happen.  The KCC ordered Clean Line to provide answers.  But instead of doing that, Clean Line revealed that it had contracted with a new owner to purchase the project, if only KCC would approve the sale and extend the permit expiration date.  Landowner issues seemed once again lost in the shuffle as a new proceeding began to examine the potential sale to Invenergy.

The KCC surprised again when its staff filed testimony in the acquisition docket.  Instead of the sycophantic support Invenergy expected, the Staff recommended new conditions to be placed on approval.  Most surprising of all was a discussion of landowner impacts resulting from the stalled project, and a condition designed to protect them from continued uncertainty.

Condition No. 4: Invenergy shall make preliminary easement payments of [redacted percentage, most likely 30%] of the total eventual compensation to all Kansas landowners affected by the line siting within 12 months of a Commission decision to extend the 13-803 sunset provision or gaining approval for a new line siting.

In other words, Invenergy would have one year from approval to acquire GBE to make initial payments to affected landowners.  Put up or shut up.  Permission to string landowners along for another 5 years denied.  Landowners have been living under the threat of GBE for more than 5 years.  In that time, they have been kept in the dark... would the project be built?  Should landowners plan around potential easements, or should they be able to use their land in full, making other plans for impacted areas?  Planning is a huge part of life, and especially impactful to farm operations.  Should a farmer invest in new practices or uses for a proposed easement area?  Or let opportunity slip by because the investment would be wasted if the land was impacted by an easement in the future?  Information about GBE was sparse.  The "status reports" of the project submitted to the KCC were "confidential" and not available to landowners.  Landowners were just supposed to trust the KCC to protect their blind side, after the KCC broke their trust during the permitting process.  The only other information available was the rumor that Clean Line was not making scheduled payments on easement agreements it had signed early in the process.  Failure to preserve its easement agreements can only send the signal that the project wasn't going to happen.  Landowners waited and watched GBE flailing in other states and may have concluded it was safe to assume the project was dead.  Throughout this time, Clean Line provided no information to landowners.

And that was the basis for KCC Staff's recommended condition, to provide some certainty to landowners.  Go or no go?

But, as expected, potential new owner Invenergy flipped its lid over the conditions, this one in particular.  Earlier this week, Invenergy filed its Rebuttal with multiple reasons why this condition is unworkable in its entirety.  First of all, Invenergy says the KCC can't legally impose this condition and that Invenergy is entitled to string landowners along for another 5 years, at its own discretion.  Then it listed a whole bunch of self-interested reasons why it could not make initial easement payments within one year.  It's a long list, are you ready?

Placing a firm deadline by which preliminary easement payments must be made to all Kansas landowners unnecessarily and improperly restricts the ability of GBE, and by  extension Invenergy, to conduct Project development according to its proven best   practices which have resulted in the successful delivery of over 20,220 MW of generation   projects and 392 miles of transmission lines.

Awww!  Gosh, can you hand me a tissue?  I'm breaking up.  God forbid that Invenergy is unnecessarily and improperly restricted from doing whatever it wants, although landowners have been unnecessarily and improperly restricted from doing whatever they want with their own land for the past 5 years (and potentially for the next 5 years).  Invenergy has no proven "best practices" for involuntary easement acquisition or building multi-state transmission projects hundreds of miles long.  It has never held eminent domain authority before.  It has no idea what it's doing, but suggests that its right to bumble along is superior to landowner rights to use their own property freely.  Ridiculous!

Invenergy says there are so many things it must get accomplished before or during easement acquisition that a year isn't enough time.

Importantly, this deadline, in a vacuum, does not account for the many other Project development activities that must be carefully sequenced prior to and in parallel with easement acquisition in order to ensure efficient scheduling and deployment of capital to minimize Project costs and facilitate timely delivery, including but not limited to:

Completing the regulatory processes in the various states;

Closing on the Membership Interest Purchase Agreement;

Completing environmental permitting requirements, including extensive consultation with state and federal agencies;

Advancing Project engineering, including detailed design of the route to conform with environmental permitting requirements and landowner considerations;

Conducting an open solicitation for Project capacity;

Negotiating transmission service agreements with customers; and

Obtaining financing for construction of the Project.

There are endless variables that could impact the timing of this process, such that placing a firm deadline on payments to all Kansas landowners restricts the ability of GBE and Invenergy to efficiently manage Project development, and thus severely inhibits the Project’s likelihood of success.

In other words, Invenergy doesn't want to spend any money appeasing landowners until it is certain its project is going to be profitable.  Too bad for the landowners who would be held in limbo while all this is going on.

And besides, the siting of the line is still subject to modifications.  Invenergy simply can't pay the wrong landowner for the pleasure of stringing them along another 5 years!  And, get this... "...it would be premature and wasteful to be required to make capital expenditures for securing easements that may not be ultimately used."   But it is incredibly wasteful to keep landowners in limbo for years and years when they might be able to use their property more effectively if they thought it wouldn't ultimately have a transmission easement running through it.  Invenergy only cares for its own profits, not landowner well-being.

Oh, but no, Invenergy really, really cares for landowners!  Honest!

GBE and Invenergy fully understand and respect the uncertainty surrounding landowner impact from the Project, which has been an unfortunate consequence of regulatory uncertainty in other states that has hindered Project progress. It is important to clarify that, despite Invenergy’s concerns with Proposed Condition No. 4, it is in no way discounting the importance of landowner participation in the GBE Project and reaffirms its commitment to working with host communities to foster mutually beneficial relationships; this commitment is reflected in Invenergy’s track record of successfully negotiating over 16,000 lease agreements with landowners, entirely on a voluntary basis, across its project portfolio. GBE and Invenergy are planning, upon approval of the Transaction, to reengage affected landowners to provide Project updates and to be a resource for interested parties. This effort to become a known commodity in host communities and to develop and foster local relationships is an important first step in the land acquisition process that must not be overlooked simply for the sake of quickly obtaining easements.

Now I think I might need one of those airsickness bags.  Landowners are an "unfortunate consequence."  Ya know why all Invenergy's lease agreements are voluntary?  Because they have never had eminent domain authority to condemn property!  Also notice the word "lease agreement?"  That's not what Invenergy is offering Kansas landowners.  At best, Kansas landowners will be "offered" a one-time market value payment for only the acreage taken, in perpetuity.  A lease consists of recurring payments for use.  A lease has an end date.  Landowners in Kansas will get a one-time payment for unlimited use, forever.  Invenergy will OWN an easement on your property, not "lease" one.  Becoming part of the community may not be something beneficial.  Ask any community hosting one of Invenergy's energy projects how this has been applied in practice.  It probably won't be a positive experience. 

Invenergy needs to get to know you before it condemns your property.  Maybe they're going to serve community ham dinners and let your grandkids play in a rented bouncy house?  Then, when you're full and complacent, they're going to condemn an easement across your land.  Yeah, this is a really workable plan.  Not.  Who thinks up this stuff?  And more importantly, why do they think you're not going to read about their plans before they happen?

I don't think Invenergy's definition of "certainty" is the same as landowners.  Invenergy seems to think that "certainty" means the project is certain to be built.  Landowners just want to know, one way or the other, whether it will, so they can get on with their lives.

The best way to obtain certainty regarding the Project is to utilize available capital in an efficient and logical manner. Each of the development activities listed above will add incremental certainty to the Project. Inefficient use of capital will decrease certainty by putting unnecessary financial and logistical strain on the Project. Accordingly, while the intended result of Proposed Condition No. 4 is to increase certainty, it will actually have the opposite effect.

Unnecessary financial and logistical strain?  That's exactly what GBE has placed on landowners for the past 5 years, and Invenergy wants to do for the next 5.  If you don't like it happening to you, Invenergy, why do you want to do it to landowners?

So how do we give the landowners certainty?  Invenergy suggests it will add an item to those "confidential" reports it submits to the KCC that informs on the number of executed easement agreements.  So, giving more information in secret to a KCC that nobody trusts is supposed to provide peace of mind to landowners?  Surely you jest, Invenergy?

Why can't Invenergy make "good faith" payments to all landowners potentially affected by its project within one year of approval?  Is it because Invenergy has no faith?  If Invenergy doesn't have enough faith in this project to part with any cash, why should landowners, or more importantly, the KCC, believe in its promises?   Put up, or shut up, Invenergy.

While no landowners have intervened in the acquisition proceeding at the KCC and may not participate in settlement negotiations or hearing, they are not prohibited from commenting.  Maybe the KCC needs a little love and encouragement from landowners in order to hold firm on this condition?  If you've got a few minutes, shoot them your thoughts (or file them electronically).  Reference Docket No. 19-GBEE-253-ACQ.  Perhaps it's also time for the KCC to put up or shut up, and restore public faith in its mission.