Last week, the U.S. Supreme Court handed down a victory to the 600-mile Atlantic Coast natural gas pipeline.
The issue at hand was whether the U.S. Forest Service could allow the pipeline to be built underneath the iconic Appalachian Trail, which is managed by another federal agency, the U.S. Park Service.
In a 7-2 decision, the court reversed a lower court’s decision and ruled that the USFS does have the authority to grant the pipeline permission to be built under the trail. The decision was hailed as a win by lead developer Dominion Energy and Gov. Jim Justice. Environmental groups note the project still needs eight more permits along its route.
It’s just one high profile court ruling in a string of lawsuits brought against this and other pipelines. So, just how significant is this win? And what does it mean for the future of the ACP — which is behind schedule and has ballooned in cost — as well as other pipelines here in Appalachia?
Energy and Environment Reporter Brittany Patterson spoke with Christi Tezak, managing director with ClearView Energy Partners, an independent research group based in Washington, D.C. Tezak is an energy analyst who follows pipeline litigation.
***Editor's Note: The following has been edited for clarity and length.
Patterson: So what was the issue at the heart of the Supreme Court's ruling?
Tezak: So the question before the Supreme Court was the Fourth Circuit's decision in December 2018 that found that the Forest Service lacked the authority to give a natural gas pipeline permission to cross the Appalachian Trail at a location that happened to be within the George Washington National Forest.
Patterson: And what did the Supreme Court find?
Tezak: Basically, the Fourth Circuit read all of the laws together as indicating that the Appalachian Trail had become part of the Park Service, and as part of the Park Service, the Forest Service couldn't provide permission to cross it. But the Supreme Court found that the way the statutes that structure the Park Service are set up, the land on which the Appalachian Trail is located within the Forest Service doesn't really transfer its ownership, for lack of a better description, to the Park Service, and therefore the Forest Service retains the authority to authorize a pipeline to cross beneath it.
Patterson: So, does this mean that the Atlantic Coast Pipeline is just going to go right back into construction?
Tezak: Oh, no, because the halt in construction actually has nothing to do with the Appalachian Trail. The important thing about the Appalachian Trail crossing being upheld by the Supreme Court is that it obviates the need for an amendment to the route and that would have created a whole other set of changes and comments and approvals and all sorts of things. So, it takes away the risk that Atlantic Coast would have to relocate the route.
What it does not do, however, is solve the real reason why the pipeline's not under construction. The reason the pipeline is not under construction today is because the Fourth Circuit has vacated not once but twice, the Endangered Species Act review associated with the pipeline.
Patterson: There have been a lot of lawsuits, including this one, that have slowed down pipeline construction, especially of the Mountain Valley Pipeline and Atlantic Coast Pipeline. Is this changing the calculus for companies looking to build future pipelines?
Tezak: Before Atlantic Coast and Mountain Valley, the suspension and vacatur of a permit was actually quite rare. And the change over the last couple of years we ascribe to the increased sophistication and substance of the challenges brought by pipeline opponents. What has changed, and what changed in particular with Atlantic Coast and Mountain Valley, is how the environmentalists went after the permits. So the ability to actually stop a pipeline and construction wasn't something that was easily achieved — I'd argue it still is a tough thing to manage — but it proved successful with some very solid lawyering on the part of the opposition to really get into the substance of permits issued by federal agencies.
Patterson: What are the long-term implications of this case?
Tezak: I think that the Appalachian Trail ruling of the Supreme Court is an important one. But I think it's only one part of broader trends that surround the challenges facing the construction of new infrastructure, particularly infrastructure that carries conventional fuels like oil and gas. And I think that investors do recognize that the opposition is becoming increasingly more sophisticated.The operator leaders that are good at preparing their documentation in federal review, that don't rush the federal regulator to a decision, that execute their obligations under the law the way they need to, are the projects that are most likely to get built. And the ones where, you know, if corners were cut or if I’s weren't dotted and T's weren’t crossed — for example in the case of the Forest Service permits for ACP and MVP where things that should have been addressed were left out — then you can have some pretty significant vulnerabilities. And so I think that there is pressure from the investment community on pipeline sponsors to do good work on the first pass so that their permits do hold up in court, because the challenges to them are improving over time.