PIPELINES

Atlantic Coast permit pileup: Where things stand

Though the Atlantic Coast pipeline's path winds through mountainous Appalachia, the contentious gas project may face its biggest uphill battle in court.

Over the last two months, the 4th U.S. Circuit Court of Appeals has instructed or allowed federal agencies to revisit a slate of critical approvals for the gas pipeline. The court's Dec. 7 delay of a key Fish and Wildlife Service Endangered Species Act review, which the 4th Circuit has now twice rejected, led developers to halt construction.

Since that time, the court has returned several other key federal permits and approvals — sometimes at regulators' request. In the meantime, the project's costs and schedule have become moving targets.

The delays are notable, especially in light of President Trump's reported plans to further smooth the path for energy infrastructure build-outs across the country (Greenwire, Jan. 24).

"Trump's deregulatory agenda and efforts to streamline the pipeline permitting process is bumping up against the law," said Josh Price, energy and utilities analyst at Height Capital Markets. "Just because he wants to speed infrastructure doesn't mean the laws have changed."

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The Federal Energy Regulatory Commission issued its certificate of public convenience and necessity for the Atlantic Coast pipeline in October 2017, launching construction of the project, which extends more than 600 miles from West Virginia to North Carolina. FERC's authorization was a rare split decision, featuring a dissent from departing Democratic Commissioner Cheryl LaFleur, who said the proposal was too similar to the nearby Mountain Valley pipeline.

An alternative plan to merge the two routes, she wrote, would result in fewer impacts to the George Washington and Monongahela national forests, the Appalachian Trail, and the Blue Ridge Parkway (Energywire, Oct. 16, 2017).

Federal permits for Atlantic Coast to cross through each of those places are currently in legal gridlock.

"For the most part, there tends to be a lot of deference by the federal courts to agencies," said Jim McElfish, a senior attorney at the Environmental Law Institute. "The 4th Circuit seems to be taking a hard look at these permits and rights of way, rather than saying they will assume the expert federal agencies got it right.

"It's not typical."

Various pipeline challengers last year asked the courts to examine the FERC certificate itself, but the 4th Circuit dismissed that request as premature. A consolidated lawsuit to fight the FERC certificate is currently before the D.C. Circuit.

The barrage of legal challenges will almost certainly delay Atlantic Coast's timeline, which will likely come at a price. Estimated costs for the pipeline are now as high as $7.5 billion, up from $7 billion, developer Dominion Energy Inc. said in an earnings announcement Friday. The project is expected to be in full service in early 2021.

"We remain highly confident in the successful and timely resolution of all outstanding permit issues as well as the ultimate completion of the entire project," Dominion Chairman, President and CEO Tom Farrell said in a statement last week. "We are actively pursuing multiple paths to resolve all outstanding permit issues including judicial, legislative, and administrative avenues."

Virginia lawmakers are currently pushing a bill that would, among other things, block Dominion from passing the cost of the pipeline to ratepayers (Energywire, Jan. 31).

"Anytime there are multiple lawsuits, there's always the risk that one or more permits won't be issued or won't be issued in time," McElfish said. "In the case of [Atlantic Coast and Mountain Valley], the pockets might be deep enough to sustain them, but in some cases, the projects begin to not make economic sense."

The delays are accumulating, especially as the 4th Circuit has apparently tabled oral arguments on the FWS review until at least May.

"Atlantic is lacking many of the permits it needs to continue construction," Southern Environmental Law Center attorney Patrick Hunter said. "This leaves us with a serious question as to whether this thing will ever be built.

"It's certainly not going to be built anytime soon."

Here's what E&E News readers need to know about the recent frenzy of permit delays in the 4th Circuit:

FWS biological opinion and incidental take statement

Last spring, a panel of 4th Circuit judges determined that FWS had been too vague in its assessment of how many local bats, bumblebees and other species would be affected by the Atlantic Coast pipeline.

Later that summer, the same judges — Chief Judge Roger Gregory and Judges Stephanie Thacker and James Wynn Jr. — suspended the FWS incidental take statement and sent it back to the agency. That ruling, which also struck a National Park Service right of way, prompted FERC to stop construction on the pipeline.

FWS and NPS quickly reissued their authorizations, and construction was back on track by September.

Environmental challengers returned to the courts, and by December, the 4th Circuit had frozen not just the incidental take statement but also the overarching FWS biological opinion.

The court's much broader stay this time led Dominion and other Atlantic Coast developers to stop the project. The Southern Environmental Law Center this week called on FERC to issue its own stop-work order.

Oral arguments in the case had been tentatively scheduled for March, but delays appear to have pushed the hearing to the 4th Circuit's next session, which falls in May. The judges rejected requests by Dominion to shrink the scope of its December ruling or to accelerate proceedings in the case.

Forest-crossing permits

Just one week after Gregory, Wynn and Thacker halted the FWS take statement and biological opinion, the same three judges struck down key Forest Service permits for Atlantic Coast.

In an opinion led by Thacker, an Obama appointee, the 4th Circuit ruled that the agency improperly allowed the pipeline to cross the George Washington and Monongahela national forests, as well as the Appalachian Trail.

Those decisions violated both the National Forest Management Act and the National Environmental Policy Act, the court found. Furthermore, the judges said, the agency lacked statutory authority to allow the project to cross the Appalachian Trail.

Gregory, a Clinton and George W. Bush appointee, and Wynn, an Obama appointee, joined the opinion.

Atlantic Coast this month petitioned for a rehearing en banc, which would put the question before the full court. The 4th Circuit froze its stay while those proceedings move forward.

Price of Height Capital Markets questioned whether Atlantic Coast's request would bring a different result — especially because Gregory, the court's chief judge, was party to the earlier orders striking the permits.

NPS right of way

Following the 4th Circuit's December rulings on the FWS and Forest Service permits, NPS asked to reevaluate its own permit for Atlantic Coast to cross a national parkway.

The agency said it had based its decision in part on the Forest Service authorization for the project to intersect the George Washington National Forest.

NPS's initial Blue Ridge Parkway right of way was scrapped by the 4th Circuit last summer, but, like FWS, the agency quickly reissued its approval, paving the way for Atlantic Coast to resume construction last September.

Neither Atlantic Coast nor environmental litigants opposed NPS's request to revisit the right of way. The court remanded the permit last month.

Army Corps verifications

Just two days after the NPS permit remand, the 4th Circuit allowed the Army Corps of Engineers' Huntington District to rethink another important approval.

Last fall, the 4th Circuit vacated Mountain Valley's Clean Water Act Nationwide Permit 12, a broad authorization for certain utility projects to pass through waterways and wetlands. The court sided with challengers who contended that the project's water crossings required more in-depth examination.

The judges found that because West Virginia environmental regulators had improperly waived state certification, which is required for a project to move forward under the nationwide permit, the Huntington District office's assurances that the project met the terms of the permit were therefore arbitrary and capricious.

The ruling threw into question similar verifications that the same corps district had issued for Atlantic Coast.

The court agreed last month to send the certifications back to the district office. Again, the government's request went unopposed by Atlantic Coast and project critics.

Hunter of the Southern Environmental Law Center said Atlantic Coast's critics will closely scrutinize any authorizations or permits the agencies hand back.

"The ball is back in those agencies' courts in terms of next steps," he said. "We'll be watching to see what they do there."

Twitter: @pamelalauren Email: pking@eenews.net

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