The Pima County Kinder Morgan Shakedown

mitigate-Pineapple-Cactus$1,600,000 demanded for the purchase of mitigation credits for impacts to Pima Pineapple Cactus

In the southwest we call it mordida. In places like Chicago, Illinois, the Bronx, New York, or Elizabeth New Jersey it is called a shakedown. Pima County administrator Chuck Huckelberry calls it mitigation.

By any name; it has become the expected cost of trying to do business in Southern Arizona.

The latest Pima County shakedown is outlined in a memo by Huckleberry regarding the Kinder Morgan’s proposed natural gas pipeline, which will consist of the construction of a 60 mile long, 36 inch diameter pipeline located between Tucson and Sasabe, Arizona.

More than 92% of the public land in question is owned by the Arizona State Land Department and only 2.2% is owned by the County.

In a March 12, 2014 letter of support for the project and the much needed jobs it will bring, the Arizona State Building and Construction Trade Council advised the County in a letter that the “project will create hundreds of union jobs during construction,” and will “provide a positive economic and job creation impact during construction, in addition to the estimated $4.9 million in as valorem property tax revenues within Pima County per year.”

According to the Trade Council, “In Arizona, Kinder Morgan operates approximately 5,000 miles of pipeline and two terminals. It is also a leading energy company with more than 80,000 miles of pipeline and 180 terminals throughout the nation. In 2013 alone, Kinder Morgan employed 219 people within Arizona and paid approximately $15 million to local and state taxing bodies.”

The vast majority of the land that will be occupied by the pipeline is owned by the state of Arizona. Less than three miles is owned by Pima County. But that little patch is expected to result in approximately $1.6 million in annual property tax revenues for the County.

While the unions and the taxpayers in the 8th poorest metropolitan area in the country dreamed of the good construction jobs and pipeline tax revenues, Huckelberry schemed.

In a memorandum dated March 21, 2014, Huckelberry outlined his demands. The bottom line; Huckelberry wants $12 million in mordida for use of the little patch of land.

Sierrita needs the County to complete the negotiations within the month of April in order that they might secure a May 15, 2014 issuance date for the remaining requested County permits.

Sierrita needs a handful of permits, and while under the doctrine of federal preemption, state and local agencies may not prohibit or unreasonably delay the construction or operation of facilities that have been approved by FERC, companies are required to cooperate with state and local permitting agencies.

The Sierrita Pipeline will be subject to the regulatory authority of the FERC (Federal Energy Regulatory Commission) and the PHMSA (Pipeline and Hazardous Materials Safety Administration ) of United States Department of Transportation (“USDOT’). FERC has exclusive regulatory authority over the placement of interstate natural gas pipeline facilities. USDOT and PHMSA have exclusive jurisdiction with regard to safety standards that apply to the design, installation, inspection, operation and maintenance of the pipeline facilities.

The FERC is the lead federal agency for the preparation of the Environmental Impact Statement for this project.

The issuance of the Final Environmental Impact Statement (“FEIS”) for the project was March 28, 2014. FERC did issue the FEIS on that date. As Kissel notes, the FEIS concluded:

“We determined that construction and operation of the Project would result in limited adverse environmental impacts. This determination is based on a review of the information provided by Sierrita and further development from data requests; field investigations; scoping; literature research; alternatives analyses; and contacts with federal, state, and. local agencies, Native American tribes, and other stakeholders. We conclude that the approval of the Project would have some adverse environmental impacts, but, with the exception of the Pima Pineapple Cactus, these impacts would be reduced to less-than-significant levels.”

Because all of the studies have been done, if there is a hold-up, it will likely be caused by the County.

To make sure all defenses are in place, in a letter dated April 3, 2014, Huckelberry wrote to Congressman Raul Grijalva, who regularly fights to keep the border open and industry closed, asking for Grijalva’s assistance in challenging the finding by the U.S. Fish and Wildlife Service that a pipeline route west of the Buenos Aires National Wildlife Refuge would be “appropriate.”

The Buenos Aires National Wildlife Refuge, a porous region along the border through which illegal migrants and goods flow freely, has been a pet project of Grijalva for years, for various reasons.

However, the area is really not at issue in the final plan, but Huckelberry does anything he can to muddy the waters for the easily confused members of the Pima County Board of Supervisors, and Grijalva can always be counted on to call on the Center for Biological Diversity or other fringe groups with deep pockets to prevent progress.

To that end, Huckelberry threw everything but the kitchen sink into his March 21, memorandum. From money for the Medical Examiner to identify the remains of illegal border crossers, to new ATVs for Sheriff deputies, the memorandum reads like a ransom note.

Obviously unaware, that companies are expected to pay the mordida and move on, the president of Sierrita Gas Pipleine, LLC., Mark Kissel, responded to Huckelberry’s memo. In his letter dated April 7. Kissel took an opportunity to “communicate directly with the Board regarding various matters relating to the development of its proposed natural gas pipeline project from an interconnection with the existing pipeline facilities of El Paso Natural Gas Company, L.L.C. near Tucson, and extending to a point on the United States – Mexico border near Sasabe.

In that letter, Kissel specifically addresses the March 21 memorandum, and advises the Board, “Sierrita’s engineering consultants have worked diligently with the District on this matter and have submitted engineering data on each of the proposed wash crossings. A sediment transport analysis on the Altar Wash will be completed by the end of April. Sierrita has agreed to fund habitat restoration in the amount of $2.3 million through the Flood Control District as a condition for the issuance of the Floodplain Use Permit.”

Kissel notes that Huckelberry focuses “considerable attention to certain costs that it characterizes as being imposed on Pima County as a result of the Sierrita Pipeline.” Huckelberry stated that there are a number of permits, rights-of-way and other assistance that Sierrita requires from Pima County.”

According to Kissel, Sierrita made an offer of $19,600 for these easements and permits. Pima County made a counter offer “dated February 25, 2014 for $32,270 which was accepted by Sierrita on March 4 2014. Based on that acceptance, Sierrita has understood that this item was resolved, subject only to any necessary documentation and formal presentation to the Board.”

At April 8, 2014 meeting, despite the fact that Sierrita took no position on the USFWS decision regarding the Buenos Aires Wildlife Refuge and the route through the refuge is no longer a potential route for the pipeline,” according to Kissel, Huckelberry offered up Resolution No. 2014 – 42, “seeking full mitigation for damages and costs to Pima County that result from the construction and operation of the West Route Alternative for the Kinder Morgan Sierrita Pipeline to be sited through the Altar Valley, west of the Buenos Aires Wildlife Refuge crossing the international border with Mexico near Sasabe, Arizona.

The Board voted to delay a decision. The company had sought to work with the County to “secure these permits and approvals on or before May 15, 2014,” according to Kissel.

Although the construction and operation of the Sierrita Pipeline have been considered in the FEIS and will be further considered by the FERC in its consideration of Sierrita’s application for a Certificate of Public Convenience and Necessity for the construction, ownership and operation of the pipeline, Huckelberry included observations and proposals in his memo regarding some of his concerns.

Chuck claims that the “restoration plans are not consistent with the area’s ecology.”

However, Kissel notes, “This opinion is inconsistent with the efforts and conclusions of the FERC staff as expressed in the FEIS and that the cooperating agencies in the preparation of the FEIS included the U.S. Fish and Wildlife Service (“USFWS”) – Arizona Ecological Services Office, the Buenos Aires National Wildlife Refuge, Arizona G8lne and Fish Department and the U.S. Customs and Border Protection.

He writes, “The FEIS was issued only after extensive analysis from FERC and the incorporation and consideration of numerous stakeholders, including Pima County. Indeed, since Sierrita filed its initial certificate application more than a year ago, FERC issued more than 250 data request questions, at times in direct response to stakeholder comments. Sierrita has exhaustively and satisfactorily responded to each data request question.

In addition, FERC has received and reviewed more than 130 separate comments filed by landowners, agencies, and other stakeholders as part of the FEIS development. Sierrita has responded to each material comment filed by stakeholders.”

Chuck is demanding the development of an Oversight Committee. Kissel writes that while Huckelberry wants “an independent project monitoring committee,” the fact of the matter is that “FERC will already be assuming the responsibility of tracking the effectiveness of Sierrita’s remediation and reclamation efforts and has sole regulatory authority to do so…”

Kissel argues rightly that the “creation of another entity would be cumbersome, expensive and inefficient,” but clearly Kissel does not understand that that cumbersome, expensive and inefficient is the County way.

Huckelberry creates little pockets of money here and there according to his good friend Mike Hellon, and the pipeline could create another. Huckelberry is demanding a Mitigation Endowment Fund. Huckelberry proposes that the “mitigation fund should be created to provide annual revenue for ongoing monitoring and mitigation of the impacts of the Sierrita Pipeline,” according to Kissel.

However, as a condition for the Certificate of Public Convenience and Necessity, which authorizes the construction of the Sierrita Pipeline, ongoing monitoring and mitigation efforts are already required.

Huckelberry wants an Altar Valley Conservation Alliance (“AVCA”) monitor remediation and revegetation. However, FERC is already set to enforce Kinder Morgan’s obligation.

Ignoring the role and responsibilities of FERC, Huckelberry estimates that the construction of the Sierrita Pipeline will result in additional annual expense to Pima County of $1,020,686. Kissel writes, “This consists of additional sheriff department costs of $461,436 per year, and a cumulative total of $559,250 per year for: (i) additional expense ($174,000 – $261,000) associated with a possible increase demand on Medical Examiner and Public Fiduciary services resulting from increased migrant deaths that are somehow related to the construction of the Sierrita Pipeline; (ii) access road maintenance expense ($98,250) for existing roads that are already used by the public and that will be restored to equal to or better than pre-construction condition; (iii) incremental open space management costs ($200,000) for additional fencing, water repair, trash pickup and incident response on public lands along the route (notwithstanding the fact that more than 92% of this public land is owned by the Arizona State Land Department (“ASLD”) and only 2.2% is owned by the County); and (iv) repair of damage to ranchlands (which does not appear to actually be an expense of the County).”

Sierrita holds that Huckelberry’s numbers are “highly speculative and greatly overstated.”

Once again, Kissel seems unaware that math in Pima County is unique to Pima County.

Numbers have a different value, and seem to have little actual value; the bigger the better. As a result, Huckelberry also wants Kinder Morgan to pony up for over $16 million in other expenses:

• $2,300,000 for mitigation of the impacts of the project on riparian habitat;

• $3,792,000 to purchase land to offset impacts to land and vegetation;

• $1,600,000 for the purchase of mitigation credits for impacts to Pima Pineapple Cactus;

• $7,000,000 to cover the cost of long-term monitoring and repair of environmental impacts of the pipeline;

• $1,500,000 for “Altar Valley watershed improvements”; and

• $274,040 for additional vehicles for the Pima County Sheriff (four 4WD vehicles and two ATVs).

As Kissel notes, “For some unexplained reason the Administrator Memo presumes this expense will continue indefinitely even after the construction efforts are completed.

Kinder Morgan is under no obligation to negotiate with Huckelberry but it is likely that they will negotiate with him because they are sophisticated folks and King Chuck, as Huckelberry has come to be known, rules his kingdom with a tight fist….. on everyone’s’ throats.

Check back tomorrow for Sierrita Pipeline project: Just the basics

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