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Landowners' challenge to Mountain Valley Pipeline rejected by US Supreme Court

Highlights

2 Bcf/d natural gas takeaway project faces other hurdles

Operator continues to target full in-service in Q4 2019

Houston — The US Supreme Court on Tuesday refused to hear a constitutional challenge by landowners affected by the construction of the Mountain Valley Pipeline to the Federal Energy Regulatory Commission's procedures for reviewing the Appalachian Basin natural gas takeaway project.

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The approximately 300-mile pipeline is being designed to deliver 2 Bcf/d of gas to markets in Virginia and North Carolina, and it is seen as a key conduit for allowing more Marcellus shale supplies to be used for power generation and LNG exports.

Even with the high court's decision to deny certiorari -- an order granting review of a decision by a lower court -- the EQM Midstream Partners-operated project still faces significant opposition from environmental and public advocacy groups, including battles over water crossings and water permits.

A federal appeals court previously vacated the project's US Army Corps of Engineers permit, and Virginia's State Water Control Board has voted to hold a hearing to consider revoking the Clean Water Act Section 401 permit for the project.

Spokeswoman Natalie Cox said in an email responding to questions that the operator continues to target full in-service in fourth-quarter 2019. She declined to comment on the high court's decision, which was made without comment.

The litigation targeted the way eminent domain use has evolved in a deregulated gas market to take private property for pipeline development. Specifically, the case related to FERC's certificate order for Mountain Valley Pipeline and whether landowners subject to property condemnation had adequate opportunity for judicial review.

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The landowners argued that FERC could not rule on their claims because they are constitutional in nature and challenge the legitimacy of the Natural Gas Act. Among other things, they alleged violations of their Fifth Amendment rights, as well as that FERC's "sub-delegation" of the power of eminent domain to MVP was unconstitutional. FERC argued that the federal district courts lack jurisdiction over the claims. A federal district court sided with FERC and a federal appeals court upheld that decision, leading to the appeal to the Supreme Court. Mountain Valley Pipeline is a joint venture of operator EQM Midstream, WGL Midstream, RGC Midstream, Con Edison Transmission and an affiliate of NextEra. Shippers include WGL Midstream, Roanoke Gas and EQT Energy, the marketing unit for No. 1 US gas producer EQT.

Mountain Valley Pipeline, which remains under construction, has also proposed the MVP Southgate expansion, which would extend the reach of the pipeline, once operational, into central North Carolina. That project faces opposition of its own, including over market demand. North Carolina regulators have raised concerns about the proposed rates for the expansion project.

Construction on the nearly 73-mile MVP Southgate pipeline is expected to begin in the first quarter of 2020, subject to FERC authorization.

-- Harry Weber, Harry.Weber@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com