SUPREME COURT

Pipeline backers set stage for Appalachian Trail fight

Developers of the Atlantic Coast pipeline yesterday launched a highly anticipated Supreme Court appeal to preserve permits for the natural gas project to traverse the Appalachian National Scenic Trail.

A panel of judges for the 4th U.S. Circuit Court of Appeals earlier this year found the power to approve the project's 0.1-mile crossing of the trail fell not to the Forest Service, which may grant pipeline rights of way under the Mineral Leasing Act, but to the National Park Service, which is bound by a strict land conservation mandate (Energywire, Feb. 26).

Dominion Energy Inc., Duke Energy Corp. and other companies behind the 600-mile pipeline asked the nation's highest bench to find that the lower court got it wrong.

"While more than 50 pipelines presently cross under that footpath pursuant to similar rights-of-way, the Fourth Circuit concluded in the decision below that the Forest Service — indeed, every federal agency — lacks the power to grant rights-of-way to cross beneath the Trail pursuant to the MLA, rendering the footpath a 2,200-mile barrier separating resource-rich areas to its west from consumers to its east," Kirkland & Ellis LLP attorney Paul Clement argued in a petition filed last night.

If the court rejects the case or issues a ruling that is unfavorable for Atlantic Coast, a costly reroute could shutter the project altogether, some analysts predict.

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Pipeline challengers will argue that the Forest Service has never had the power to issue a right of way for a pipeline to cross the trail.

"Such an approval has never been necessary because other options, like state and private lands and existing rights-of-way, provide sufficient opportunities to route pipelines in the East," Southern Environmental Law Center attorney D.J. Gerken wrote in a letter to the Forest Service this week.

Gerken wrote that the 4th Circuit ruling does not affect existing pipeline crossings of the Appalachian Trail, which are either located on state or private land or predate federal acquisitions or the creation of the trail.

"We have examined every existing crossing of the [Appalachian National Scenic Trail] by an oil or gas pipeline and confirmed that the Forest Service has never before granted a new right-of-way for an oil or gas pipeline to cross the ANST where it traverses a national forest, until it did so for the Atlantic Coast and Mountain Valley pipelines," he wrote.

The Atlantic Coast and Mountain Valley projects were designed to carry gas from West Virginia to endpoints in North Carolina and Virginia, respectively.

The Supreme Court agrees to review roughly 1% of the cases it receives, but Atlantic Coast's petition was joined by a filing from Solicitor General Noel Francisco, lending the appeal additional heft.

Under the National Trails System Act, "the Park Service and the Forest Service have long agreed that the Park Service is responsible for administering the Appalachian Trail as a footpath, while the Forest Service retains jurisdiction and authority over the lands within national forests traversed by the footpath," the Justice Department wrote in its petition.

Dominion yesterday emphasized the project's role in the transition from coal- to gas-fired power and the companies' plans to build the pipeline through a tunnel more than 600 feet beneath the trail.

"This project remains vitally important to the economic and environmental future of our region, and we remain totally committed to it," said spokesman Aaron Ruby.

"We're confident we will prevail."

Other permits

Crossing the Appalachian Trail is not the only hurdle developers of the Atlantic Coast pipeline face.

The 4th Circuit has also instructed or allowed the Forest Service, Army Corps of Engineers, and Fish and Wildlife Service to revisit permits for the project (Energywire, Feb. 7).

Both Atlantic Coast and the federal government took aim at the court's decisions to affirm "novel" challenges by environmentalists.

"[R]eview is warranted to underscore the proper role of the appellate courts in considering challenges to a pipeline approved by more than a dozen expert agencies," Clement wrote in the Atlantic Coast petition.

"As noted, the decision here does not stand alone, but forms part of a pattern of decisions by the Fourth Circuit (with identical or largely overlapping panels) finding fault after fault in the arduous approval process for pipelines," he wrote.

Both petitions note that because the 4th Circuit's other unfavorable findings can be resolved on remand to the agencies, Atlantic Coast and the government did not appeal those decisions to the Supreme Court.

After the court determined that FWS had not sufficiently analyzed impacts on bats, bumblebees and other species in the pipeline's path, for example, Atlantic Coast backers halted construction.

During oral arguments on the FWS permits last month, a panel of 4th Circuit judges appeared critical of the federal government's reissued permits — particularly with respect to estimates of the pipeline's effect on rusty patched bumblebees (Energywire, May 10).

But the project developers could work with the agency to fix any deficiencies once the court hands back its decision, Guggenheim Securities LLC wrote in a recent analysis.

"If the biological opinion is upheld, this would allow for construction to recommence while the developer takes on the remaining Appalachian Trail issue into next year," the analysts wrote in an April 11 note.

ClearView Energy Partners LLC Managing Director Christi Tezak, who attended arguments in the 4th Circuit FWS case, said at the time that she saw nothing during the proceedings to indicate that the court would allow Atlantic Coast to restart construction under the reissued permits as they currently stand.

Mountain Valley pipeline

As Dominion, Duke and their partners head to the nation's highest court, the companies behind the neighboring Mountain Valley pipeline are attempting to negotiate a land swap that could help the project avoid some of the Atlantic Coast project's legal pitfalls.

The proposal would give the federal government control over private lands crossed by the trail and adjacent to the Jefferson National Forest, Mountain Valley developer EQM Midstream Partners LP wrote in a filing last week with the Securities and Exchange Commission.

"In exchange, the applicable federal agencies would grant the MVP Joint Venture an easement and right-of-way to cross the Trail using MVP Joint Venture's previously planned underground crossing method at Mountain Valley Pipeline's (MVP) existing crossing location that was approved in 2017 by the Federal Energy Regulatory Commission," wrote EQM Midstream, which holds a 45.5% interest in the project.

In the filing, EQM Midstream estimated that the land exchange would allow the pipeline to be in service by mid-2020 and would increase the project's costs from $4.6 billion to between $4.8 billion and $5 billion.

But Mountain Valley's move is not without legal risks, Height Capital Markets energy and utilities analyst Josh Price wrote in a Monday analysis.

He noted that the Federal Land Policy and Management Act bars BLM from selling land within the National Trails System.

"Additionally," he wrote, "all land exchanges must be in the public interest — another angle opponents will likely attack."

In a friend-of-the-court brief supporting a 4th Circuit rehearing of the Appalachian Trail decision, Mountain Valley wrote that the ruling carried "profound" consequences for other pipeline developers.

The appellate court in February declined to revisit the case.

Four justices must vote in favor of a petition in order for the Supreme Court to take a case.

The court is expected to vote on the Atlantic Coast petition later this year.

Twitter: @pamelalauren Email: pking@eenews.net

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