Federal appeals court stay adds snag to Mountain Valley gas pipeline schedule

Washington — The 4th US Circuit Court of Appeals decision to stay water crossing authorizations for the Mountain Valley Pipeline, or MVP, puts a new rub in the schedule for the 303 mile, 2 Bcf/d natural gas project.

"Even a brisk briefing schedule would likely put a ruling on the merits of the case into 2021," ClearView Energy Partners said in a research note. "Our most aggressive estimate for an expedited schedule suggests a decision in late 2Q 2021 at the earliest."

The 4th Circuit on Nov. 9 granted environmental groups' request to put in place a stay pending litigation over the US Army Corps of Engineers' verification of water crossings for the project, under a general permit known as Nationwide Permit 12.

That comes as the Equitrans Midstream-led project recently pushed its target date for the start of full operations to the second half of 2021.

Aside from the water crossings, the project has been working to restore permitting in two other key areas, where it faced adverse 4th Circuit rulings: endangered species authorizations and permission to cross the Jefferson National Forest.

Forest Service front

Gary Kruse of LawIQ said a greater risk for the project may arise from future litigation over a US Forest Service authorization. Comments on the Forest Service's draft supplemental environmental impact statement were due Nov. 9, he noted, and debate persists over whether the agency's estimates of sedimentation were adequate. If the Forest Service responds methodically to those comments, that could push the timing past the end of the Trump administration.

The timing could mean the project will present an early test for the Biden administration's approach to natural gas pipelines. If the Forest Service under Biden gave its stamp of approval after a methodical review, that might however help its prospects in the 4th Circuit, Kruse said.

The project is mostly built but has been stalled in final segments, notably on multiple stream crossings and a 25-mile buffer area around the Jefferson National Forest.

ClearView said the environmental organization Sierra Club would likely oppose an expedited court review in the Army Corps stream crossing litigation in the hope of improving its odds of success under a Biden administration. While the Obama administration finalized the 2017 Nationwide Permit program, it is less clear how a Biden administration might treat West Virginia revisions to that permit that supported MVP's new stream crossing verification, ClearView said.

"We would expect strong political pressure on the new administration to 'kill' this project on the basis of its potential greenhouse gas emissions alone, and urge it to adopt the Sierra Club's approach," ClearView said in a research note.

Possible paths forward

The 4th Circuit, in granting the stay Nov. 9, did not publish an opinion, promising instead to do so at a later date.

Once that is done, analysts expected it was possible MVP would appeal the stay to the US Supreme Court.

To continue moving the project forward, Height analysts also expected MVP would continue to seek Federal Energy Regulatory Commission approval to use conventional bore for stream crossings to avoid Army Corps jurisdiction.

"While this activity is regulated at the staff level at FERC, a Democratic-led FERC under Biden could direct staff to slow approvals," Height analysts said in a research note. They also expected MVP would apply for individual stream crossing permits from the Army Corps -- a process that could carry with it timing risks under a Biden administration.

MVP in a statement Nov. 9 said while it was disappointed with the court action, it expected a different outcome once the case is reviewed on the merits. Crews are continuing with forward construction in upland areas along the route, the company said.

Environmentalists applauded the court action, saying it would block a rush to resume construction and potential environmental harms.

"This decision will help ensure the pipeline doesn't keep posing catastrophic threats to waterways that people and imperiled species depend on to survive," said Jared Margolis, senior attorney with the Center for Biological Diversity, in a statement.