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Dominion Energy said Tuesday it expects to seek a US Supreme Court appeal as well as pursue legislative and administrative options to move the Atlantic Coast Pipeline forward after the 4th US Circuit Court of Appeals declined Monday to remove a major hurdle for the project.
The appeals court in December struck ACP's permits from the US Forest Service to cross national forests and the Appalachian Trail. The pipeline developers and the Department of Justice had warned the court that the ruling could turn the trail into a long barrier to construction of pipelines moving Appalachian gas to markets, but the court Monday declined their requests to rehear the decision.
That denial added to uncertainties for the 600-mile, 1.5 Bcf/d project, which has faced multiple legal setbacks in the 4th Circuit, located in Richmond, Virginia.
An additional major hurdle is the court's stay on the US Fish and Wildlife Service's biological opinion and incidental take statement related to protected species.
Dominion said Tuesday in a statement that it continued to believe some construction could resume in the third quarter, and said it remained confident the project will be fully completed.
"We are confident that the US Departments of Interior and Agriculture have the authority to resolve the Appalachian Trail crossing issue administratively in a manner that satisfies the court's stated objection and in a time frame consistent with a restart of at least partial construction during the third quarter," the company said.
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The appeal to the Supreme Court on the case relating to the forest crossings and trail would be filed in the next 90 days, Dominion noted.
Further it said the increased cost estimates and adjustment to the project schedule announced in Dominion's February earnings call already "fully contemplated" the possibility the request for rehearing would be denied.
"Therefore, yesterday's 4th Circuit decision does not alter our operating [earnings per share] guidance as provided to the investment community on that call," it said. The company at that time increased the expected cost by $500 million to be between $7 billion and $7.5 billion, excluding financing costs, and said partial in-service was expected in late 2020 and full in-service in early 2021.
WEB OF LITIGATION
Gary Kruse of LawIQ agreed it was possible some construction might be able to resume in Q3. It might become possible for Dominion to build upstream and downstream portions while it works out the problem with the Appalachian Trail, he said.
Much could depend on what the Federal Energy Regulatory Commission's position will be on whether to allow that, he suggested. In August, FERC temporarily stopped work on the full route because of the 4th Circuit's rulings.
Still, Christi Tezak of ClearView Energy Partners said the greater obstacle for construction of the bulk of the project could be the FWS authorizations. Oral argument in that separate ligation is in early May. "At this point, we are not optimistic that the FWS will succeed in persuading the 4th Circuit to uphold these reissued permits," ClearView said in a note.
On the question of the Appalachian Trail, Tezak said that unless a petition is filed rather quickly, "we would not expect the Supreme Court to even rule on whether to take the case before it adjourns" at the end of June. The issue could remain outstanding until the fall, and it's unknown whether the court will hear the case.
DJ Gerken, senior attorney with the Southern Environmental Law Center, cast doubt on the construction schedule.
"They have a number [of permits] that are suspended, vacated or stayed and a lot of hurdles to clear before they're doing any construction this year," he said. Permits are also needed from FWS, the US Army Corps of Engineers and National Park Service, he said.
He was also uncertain about an administrative remedy for the trail crossing.
"They have options forward that involve rerouting and doing the work they should have done from the beginning, but I know of no way for these agencies to get around the court's ruling without violating the law," if the agencies were to approve the exact same location," he said.
ClearView also noted Monday's setback implies a growing risk for the Mountain Valley Pipeline, which could face a legal obstacle over its Appalachian Trail crossing.
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