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Mountain Valley Pipeline’s Up-And-Down Legal Journey: Explained

Jan. 26, 2022, 7:52 PM

For about seven years, the Mountain Valley Pipeline project has forged through a raft of legal challenges and regulatory hurdles that ultimately doomed several other projects in the region.

The $6.2 billion, 304-mile natural gas pipeline system would span from northwestern West Virginia to southern Virginia. The line is more than 90% constructed, according to pipeline developers, with an aim of transporting Appalachian shale gas to the eastern U.S.—a cherished goal for the gas industry.

EQM Midstream Partners would operate the pipeline, and it owns a significant interest in the project.

But the latest legal blow arrived Tuesday. The U.S. Court of Appeals for the Fourth Circuit tossed the federal government’s approval of the project’s three-and-a-half-mile route through Jefferson National Forest.

1. Why does the project matter?

The Mountain Valley Pipeline was designed to carry 2 billion cubic feet of natural gas a day, alleviating a natural gas glut created by the hydraulic fracturing drilling boom. The drilling technique unlocked gas reserves trapped by shale rock formations underlying Appalachia.

In the past decade, major pipeline projects sprung up to move gas drilled in states like Pennsylvania, West Virginia, and Ohio to places like New England, the Mid-Atlantic, and the South, said Victor B. Flatt, a George Washington University visiting professor who studies energy and environmental law.

U.S. utilities’ shift from burning coal to natural gas—and growing export opportunities to Europe, Asia, and the Caribbean—fed the rush.

Mountain Valley’s “ability to lock in contracts with several shippers who stand by the pipeline even through its legal challenges confirms the utility and consumer interest,” said Felix Mormann, a professor at Texas A&M University School of Law.

The Mountain Valley project, if it succeeds, would be a major win for the industry as other regional gas pipelines have succumbed to rising local opposition and political pressure.

Among projects canceled since 2020: The 116-mile PennEast Pipeline from Pennsylvania to New Jersey; the 600-mile Atlantic Coast pipeline from West Virginia across Virginia and into North Carolina; and the 121-mile Constitution pipeline, which would have traveled from northeast Pennsylvania to central New York.

2. What spawned the lawsuits?

Environmental groups sued to block the PennEast Pipeline, Atlantic Coast Pipeline, and other canceled projects. Their opposition to the Mountain Valley Pipeline is just as vigorous, according to Carolyn Elefant, an attorney with her own energy practice who started her career at the Federal Energy Regulatory Commission.

The Sierra Club, Appalachian Voices, and Wild Virginia say the project isn’t needed, and they want the D.C. Circuit to overturn FERC’s orders allowing construction to proceed. Groups led by Appalachian Voices also want the Fourth Circuit to reject the Fish and Wildlife Service’s finding that the project wouldn’t jeopardize protected species.

West Virginia and Virginia recently approved water permits for the project, which prompted more lawsuits.

The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg. Bloomberg Law is operated by entities controlled by Michael Bloomberg.

One of the differences between the Mountain Valley Pipeline and the PennEast, Constitution, and Atlantic Coast pipelines is that the canceled projects faced strong opposition from states, Elefant said.

VIDEO: We look at the series of high profile legal setbacks that has some in the industry asking—is it still possible to build pipelines in America?

3. What does this week’s ruling mean?

Environmental groups didn’t need state opposition to secure a win in their challenge to a three-and-a-half-mile pipeline route through a national forest in Virginia and West Virginia.

The Bureau of Land Management and Forest Service didn’t consider sedimentation and erosion impacts, prematurely approved the use of a conventional bore method to build stream crossings, and failed to comply with a forest planning rule, the court said.

The agencies must now consider the forest crossing plan for a third time. The first two reviews were completed under the Trump administration, but this is the first time the Biden administration will take a look.

“If your agencies have been overturned by the court in one out of every three cases, you want to turn things around,” Elefant said. “Part of that is doing the more robust analysis that will withstand judicial review.”

4. How is FERC involved?

Aside from legal challenges, the Mountain Valley project could face a contentious review at one closely watched Washington institution: the Federal Energy Regulatory Commission.

The five-member independent agency approved Mountain Valley’s project in October 2017 and allowed construction to begin as legal challenges mounted.

FERC’s “certificate of public convenience” survived court challenges, but pipeline developers are seeking FERC approval to change its stream-crossing method at about 120 water bodies. FERC staff published an environmental assessment for the amended certificate in August 2021.

FERC’s ruling on the amended certificate will likely be guided by a new pipeline certificate policy statement, expected to publish in coming weeks. The commission’s new 3-2 Democratic majority is expected to demand stricter project reviews. (A FERC spokeswoman declined to comment on when further action may occur.)

“Overall, the tolerance for adverse impacts from large fossil fuel projects has gone down,” said Suzanne Mattei, an energy policy analyst who covers pipeline projects at the Institute for Energy Economics & Financial Analysis.

Mountain Valley developers, unlike the three other recently abandoned pipelines, “threw caution to the wind and did a lot of building in the hopes that would create momentum,” she added. “But that’s just a very risky way to go about it.”

5. What comes next?

The Fourth Circuit will likely soon decide whether to uphold or toss the Fish and Wildlife Service’s endangered species review. The Tuesday decision blocked work on part of the project, but this other ruling could halt construction on the entire project.

Pipeline experts are mixed on whether the pipeline will succeed.

The legal setbacks add time and cost. The project is already nearly four years behind schedule and costs have nearly doubled from the original price tag of $3.5 billion.

“I feel strongly, no, it won’t be completed,” said Mary Finley-Brook, a professor at the University of Richmond and expert on regional pipeline projects. “It has not been doing well for a long time, so I feel strongly that this is the beginning of that final end.”

Elefant offered a different view: “I feel like because the pipe is already in the ground, I just don’t know how the company can mothball that.”

To contact the reporters on this story: Daniel Moore at dmoore1@bloombergindustry.com; Maya Earls in Washington at mearls@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Cheryl Saenz at csaenz@bloombergindustry.com