Energy analysts were wary that the Federal Energy Regulatory Commission might halt construction on the Dominion Energy Inc.-led 1.5-Bcf/d Atlantic Coast natural gas pipeline after a federal appeals court vacated a permit, but developers insisted the project will still meet a late 2019 in-service date.
According to Dominion spokesman Aaron Ruby, the developer will still be able to build in areas in West Virginia and North Carolina. The developer will work to reinstate a U.S. National Park Service permit for crossing under the Blue Ridge Parkway that the U.S. Court of Appeals for the 4th Circuit stripped in an Aug. 6 decision, and it will work to resolve an issue with an incidental take statement from the U.S. Fish and Wildlife Service that was also affected by the court. (U.S. Court of Appeals for the 4th Circuit docket 18-1082, 18-1083)
"Construction has been underway in West Virginia and North Carolina for a couple months," Ruby said in an Aug. 7 email. "We've made significant progress, and we’ll continue moving forward ... The project remains on track for completion in late 2019."
While the court ruling on the incidental take statement, which permits limited wildlife disturbance, impacts only about 20 miles of the project route in West Virginia and 80 miles in Virginia, some energy industry analysts said this could be enough to prompt FERC to halt construction on the project. FERC staff issued an order stopping all construction on Mountain Valley Pipeline LLC's 2-Bcf/d pipeline project after the 4th Circuit vacated permissions in July from federal agencies.
In the Aug. 6 ruling affecting Atlantic Coast, the 4th Circuit referenced the commission's reasoning for halting construction on Mountain Valley. Just as Mountain Valley construction was contingent upon the authorizations from federal agencies, construction on the Atlantic Coast pipeline without its federal authorizations "would violate FERC’s certificate of public convenience and necessity," the court said.
According to Washington Analysis LLC analyst Rob Rains, despite the fact that the National Park Service right-of-way permit covered only one mile of the Atlantic Coast route, "today's decision likely adds some additional delay ... and will likely require FERC to impose a temporary work stoppage order, like we recently saw for Mountain Valley Pipeline." The trick will be restoring the permit, which could amount to several months of additional delays, Rains said in an analyst note.
Clearview Energy Partners Managing Director Christi Tezak agreed the order could trigger a FERC order stopping construction. Like Mountain Valley, Atlantic Coast pipeline "now also lacks similar [right-of-way] approvals to cross federal lands, and the approach to the project's proposed crossing of the Blue Ridge Parkway has been expressly identified by the court as problematic," Tezak said.
According to a Height Capital Markets energy industry analyst note, the court decision could "have ripple effects throughout [Atlantic Coast's] regulatory landscape." The decision could impact not only FERC construction approvals, but also reviews by the Virginia Department of Environmental Quality, which is still considering Atlantic Coast pipeline's applications for an erosion and sediment control plan and stormwater management plan. Analysts Katie Bays and Josh Price said project opponents could use the decision to pressure state regulators into revoking a conditional water quality certification.
Additional delays could increase the overall cost of the project. "In February, the companies announced the price tag for the pipeline ballooned by $1.5 billion from earlier estimates, to $6 billion, as permitting delays add to construction costs," the Height analysts said. "Eventually, rising costs and protracted litigation could cause the utilities' regulators to question whether [Atlantic Coast] provides customers with sufficient value."
According to Virginia Department of Environmental Quality spokesperson Ann Regn, the state is still working our through the permit applications for Atlantic Coast and waiting for additional information from the developer. Atlantic Coast pipeline cannot begin building in Virginia until it receives the remaining permits.
FERC spokesperson Tamara Young-Allen said on Aug. 7 that the commission does not comment on court proceedings. (FERC dockets CP15-554, CP15-555)
The Southern Environmental Law Center and Appalachian Mountain Advocates asked FERC to issue a stop work order for all of Atlantic Coast pipeline. "As a result of the court's decision today, Atlantic is no longer in compliance with mandatory conditions of its certificate of public convenience and necessity, and the commission must halt all construction activities," the group said in the Aug. 6 letter.
The Atlantic Coast pipeline project is a joint venture of Dominion, Duke Energy Corp. and Southern Co. Gas The pipeline will run approximately 600 miles through parts of West Virginia, Virginia and North Carolina. FERC authorized the project in a certificate order October 2017.