American Oil and Gas Reporter - December 2018 - 45

SpecialReport: Natural Gas White Papers

Court Rulings Stymie Pipeline Projects
By Emily B. Thomas
DENVER-With soaring growth in
natural gas and natural gas liquids production, the Appalachian and Mid-Atlantic
regions arguably have held the most
urgent need for large-scale transmission
capacity development. Specifically, producers have faced the quandary of how
to develop the infrastructure necessary
to transport the backlogged surplus of
gas from the Marcellus and Utica shale
plays to the numerous population centers
along the East Coast as well as markets
in other regions.
The Mountain Valley Pipeline (MVP)
project has garnered much of the attention when it comes to meeting this goal,
as well as the controversy. The ballad
of the MVP underscores the legal challenges facing pipeline projects in the
region. As the designated project website
states, "With a vast supply of natural
gas from Marcellus and Utica shale production, MVP is expected to provide
up to 2 million dekatherms per day of
firm transmission capacity to markets
in the Mid- and South Atlantic regions
of the United States."
The MVP project was proposed as an
interstate natural gas pipeline system that
would span 303 miles from northwestern
West Virginia to southern Virginia. The
MVP is being constructed and owned by
Mountain Valley Pipeline LLC, which is
composed of five partners, with EQT
Midstream Partners holding the largest
interest and the operating responsibilities
(45.5 percent). NextEra Energy has 31
percent ownership, with Con Edison
Transmission holding a 12.5 percent interest, WGL Midstream 10 percent, and
RGC Midstream 1 percent.
The Federal Energy Regulatory Commission opened its docket for this project
on Oct. 27, 2014. In 2016, when the
MVP project was picking up steam, it
promised to meet the need for transmission
capacity to the Mid-Atlantic and Appalachian regions by linking existing infrastructure and corporate presence along
the route. According to a Jan. 22, 2016,
press release from MVP LLC:
"With the rapid development and vast
supply of natural gas in the Appalachian
region, the strategic design of the MVP

will extend from the Equitrans transmission system in Wetzel County, W.V., to
Transcontinental Gas Pipeline Company's
(Transco) Zone 5 compressor station 165
in Pittsylvania County, Va. The MVP is
expected to provide at least 2 million
dekatherms per day of firm transmission
capacity and has secured commitments
at 20-year terms for this amount, which
will support communities along the route,
as well as the growing demand markets
of the Mid-Atlantic and Southeast regions
of the United States."
MVP LLC proceeded to acquire FERC
authorization and garnered the necessary
permits, including those from the U.S.
Army Corps of Engineers and the Bureau
of Land Management. Construction of
the pipeline began in October 2017.
Legal Onslaught
These early "on-the-ground" successes
quickly were met with an onslaught of
legal challenges, leading to appellate proceedings in both the D.C. and Fourth
Circuit Courts of Appeals. Through these
battles, environmental groups have racked
up some headline-grabbing victories in
the Fourth Circuit related to the permits.
First, on July 27, 2018, the Fourth
Circuit addressed petitions seeking review
of the BLM's decision granting a right
of way through federal land for construction and operation of the MVP project
and the decision of the U.S. Forest Service
to amend the Jefferson National Forest
Land Resource Management Plan to accommodate the right of way and pipeline
construction (Sierra Club Inc. et al v.
U.S. Forest Service).
The Fourth Circuit held that aspects
of the Forest Service's decision failed to
comply with its obligations under the
National Environmental Policy Act and
National Forest Management Act. Specifically, the Forest Service originally had
expressed concerns with the estimated
containment value of the project. Yet, the
Forest Service later adopted FERC's environmental impact statement and approved the project permit, even though
these concerns were purportedly not addressed. The court held this fell short of
the "independent review" the Forest Service was required to conduct before adopting FERC's EIS.

Additionally, the court found BLM
failed to comply with the Mineral Leasing
Act by not looking closely enough at alternatives that would make greater use
of existing rights of way.
Thus, the court vacated both the Forest
Service and the BLM's decisions.
This ruling was an unfortunate loss
for the MVP project. However, because
it only related to the portion of the project
that runs through federal lands (roughly
3.6 miles out of the 303 miles), it implicated roughly only 1 percent of the overall
project, leaving 99 percent of the pipeline
route unaffected.
Bigger Hit
The bigger hit came on Oct. 2, 2018,
when the same court vacated the Clean
Water Act nationwide permit from the
U.S. Army Corps of Engineers. Specifically, the petitioners had asked the court
to set aside the Corps' Dec. 22, 2017,
verification and a July 3, 2018, reinstated
verification that construction of the MVP
project could proceed under the terms
and conditions of a Clean Water Act Nationwide Permit 12 (NWP 12), rather
than an individual permit (Sierra Club,
et al. v. U.S. Army Corps of Engineers).
The court then held that the Corps
lacked authority to substitute the "dry
cut" requirement, which is the Corps'
construction method for stream crossings,
"in lieu of" West Virginia's 72-hour temporal restriction. Accordingly, it vacated,
in its entirety, the Corps' verification of
the Pipeline's compliance with NWP 12,
because a project requiring an individual
permit cannot have a nationwide permit,
such as the one the Corps granted to the
MVP project.
The MVP project may have options
for managing this ruling, such as modifying its route to avoid stream crossings
that implicate the holding. It also may
be able to receive a reprieve by applying
for a new Corps permit after West Virginia revisits its 72-hour temporal restriction. Even so, none of these options
can take away the uncertainty that the
latest Fourth Circuit opinion has brought
to the project.
Glenn Benson, a partner at BakerHostetler who specializes in FERC regulation and represents developers on a
DECEMBER 2018 45

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