Unpacking the Recent Federal Court Rulings Turning Pipeline Development on its Head

Aug 13, 2018

Federal regulators have halted construction of two major natural gas pipelines that cross through Appalachia this month, following several federal court decisions.

The Federal Energy Regulatory Commission (FERC) halted the Atlantic Coast Pipeline on Friday, Aug. 10. The agency issued a similar stop-work order earlier this month for the 303-mile Mountain Valley Pipeline. Both orders followed decisions issued by the 4th U.S. Circuit Court of Appeals, a federal appeals court based in Richmond, Virginia.

Since getting the green light from FERC last year, developers of both the Atlantic Coast Pipeline (ACP) and Mountain Valley Pipeline (MVP) have found themselves spending a lot of time in the courtroom battling more than a dozen lawsuits from pipeline opponents.

The litigation touches on everything from landowner rights to the validity of permits issued by an alphabet soup amalgamation of state and federal agencies.

The decisions out of the 4th Circuit, which has been especially prolific this summer, cover a lot of ground and have not exclusively been in the favor of pipeline opponents. Still, some experts and court watchers say the court’s decisions may be fundamentally shifting both the ways in which future natural gas pipeline projects will be proposed and the opposition strategy for environmental groups and landowners.

“I think the ground is shifting for opponents of natural gas pipelines in that they’ve seen some of these really specific challenges to federal review processes pay off,” said Ellen M. Gilmer, a legal reporter with E&E News who has been closely following the court rulings out of the 4th Circuit. “[Pipeline developers] know now that they’re going to be facing huge pushback in court.”

Mark “Buzz” Belleville, director of the Natural Resource Law Center at the Appalachian School of Law, said he sees the spate of lawsuits and 4th Circuit court decisions as proxies for a larger problem: no federal agency is taking a comprehensive view on how the build-out of natural gas pipeline infrastructure across the mid-Atlantic region and Appalachia should take place.

Credit Shayla Klein / West Virginia Public Broadcasting

Once built, both the MVP and ACP are expected to transport billions of cubic feet of natural gas from the Utica and Marcellus shale formations to markets — both residential and export — on the East Coast and in the Gulf states.

“Most rational people realize we have to figure out how to get gas out of the Utica and Marcellus, but we can’t do it all,” he said.

These are nearly a dozen major proposed pipeline projects that would cross Appalachia awaiting FERC approval. Some may overlap. For example, portions of the Mountain Valley and Atlantic Coast pipelines run within hundreds of feet of one another. Belleville said federal regulators don’t have a mechanism to consider whether that made sense, or if another solution was possible, but they could if they created a regional, or programmatic, plan for pipeline buildout.

“Nobody — no president, no executive agency — is stepping back and saying, ‘big picture, where do we want to put these pipelines, what do we want to do here?’ ” he said.  

Belleville added that until a regional review is conducted, pipeline project developers will likely have to continue to contend with an all-out deluge of lawsuits filed by those who oppose the development.

Delays could have major financial effects for pipeline developers.

EQT Midstream Partners, which is the lead developer of the $3.5 billion MVP, said it would have to push back the project’s completion date by at least eight months if the 4th Circuit ruled the pipeline must halt water crossings in West Virginia.

“Under the most optimistic scenario, MVP would incur more than $600 million in incremental expense due to the suspension of construction in these areas until December 1, 2018,” MVP wrote in a court filing.

On June 21, the court invalidated a water crossings permit issued by the U.S. Army Corps of Engineers and halted all construction in streams and wetlands in West Virginia. A month later, the court vacated two more of the MVP’s federal permits. These were related to construction within the Jefferson National Forest. FERC ordered all construction to halt following that ruling, at least temporarily.

A spokeswoman for the pipeline did not respond to a request for comment as to whether this has affected the project’s completion date.

A New Opposition Playbook

For environmental and conservation groups that continue to fight these and other pipelines, the court decisions coming out of the 4th Circuit do provide a roadmap for what works, said Nathan Matthews, a senior attorney with the Sierra Club. He argued the ACP case that challenged the project’s Incidental Take permit and National Park Service approval of the pipeline's construction under the Blue Ridge Parkway. The court this month invalidated both permits, which triggered FERC to issue a stop-work order.

Credit Steve Helber / Associated Press file photo

He said this ruling and others by the 4th Circuit that have sided with arguments made by environmental groups affirm “these pipelines have serious impacts that can’t be papered over.”

Matthews said in the case of the ACP and MVP, opponents did not limit their legal challenges to FERC.

“Going wide and engaging in every federal approval is one [strategy] that other pipeline opponents should emulate,” he said.

He acknowledged every pipeline fight will be different. For example, not every pipeline crosses a national forest like the MVP and only some projects will potentially affect endangered species like the ACP.

"But having the broad community opposition and the folks that are engaged at all levels and pursuing all of those in court, if necessary, I think is the way that these pipeline challenges need to proceed going forward," he said. "Our wins here show that that strategy has paid off.”

Another lesson Appalachian pipeline opponents may be teaching others is that collaboration between grassroots organization can be powerful. In a brief published last week, Nicholas Stump, a faculty member with the George R. Farmer Jr. Library at the West Virginia University College of Law, noted the collaborative effort between grassroots groups is a central tenant of many environmental actions undertaken in the region. It has also has played a big role in the ability of smaller organizations to mount legal challenges against the MVP and ACP.

“Appalachian grassroots organizations are deeply involved in these recent MVP victories, as such organizations served as environmental plaintiffs in these actions,” Stump wrote, adding later, “Thus, Appalachian grassroots organizations occupy a central role in such legal-institutional efforts.”

Still, not all legal challenges by pipeline opposition groups have been successful.

In late July, the 4th Circuit ruled against a group of landowners who challenged FERC’s eminent domain process. On Aug. 1, the court ruled against environmental groups who challenged state water quality permits issued by state agencies in Virginia for the MVP.  

Gilmer, with E&E News, said the future of pipeline battles going forward depends, in part, on how environmentalists define success.

“If success means they shut down a pipeline, I don’t think the rulings that we have seen so far from federal courts suggest so far that this is likely to happen extremely soon,” she said.

In the stop-work orders FERC issued to both the ACP and MVP, the agency noted it ultimately expects new federal permits that had been vacated by the 4th Circuit to be reissued. Both MVP and ACP pipeline developers expressed confidence they could quickly sort out the permitting issues.

But FERC also said it could not predict how quickly that might happen. Delays could add millions of dollars to the final cost of these pipelines.

“As we have seen in court, they are able to slow down construction, temporarily halt construction, force agencies to take a closer look,” Gilmer said of lawsuits brought by opposition groups. “In that way, they are really pushing that issue forward.”