April 2019, Vol. 246, No. 4

Government

Appeals Courts Provide Good, Bad News on Pipelines

The top federal appeals court in charge of policing regulatory decisions gave a big victory to the Federal Energy Regulatory Commission (FERC) in February by endorsing its approval of the Mountain Valley Pipeline. 

The U.S. Court of Appeals for the District of Columbia issued a decision, dispatching complaints raised by environmental groups about the way FERC issued a certificate to Mountain Valley in 2017. The project would extend 300 miles from Wetzel County, W.Va., into Pittsylvania County, Va.

Petitioners raised 16 challenges to FERC’s environmental assessment of the Project and subsequent issuance of the certificate. The court wrote in its decision, “None of the challenges succeeds.” 

Natalie A. Cox, spokeswoman for Equitrans Midstream Corporation, the lead sponsor of Mountain Valley, which was 70% complete by the end of 2018, said, “We are pleased with the Court’s decision to uphold the FERC’s approval. The construction process includes very stringent monitoring by FERC officials, state and local agencies, and MVP personnel to ensure MVP is adhering to each of the permitted requirements.”

Cat McCue, communications director, Appalachian Voices, the environmental group that filed the lawsuit, declined to comment.  

That decision by the U.S. Appeals Court for D.C. came about a week before the 4th Circuit Court of Appeals affirmed its December 2018 decision, saying FERC’s decision to approve the 600-mile Atlantic Coast pipeline, also in Virginia, was flawed because its environmental impact statement was inadequate in considering U.S. Forest Service concerns about a crossing of the Appalachian Mountains.

“We are disappointed by the decision since it may impact pipelines that wish to cross the Appalachian Trail unless reversed by the U.S. Supreme Court or an act of Congress,” states one pipeline lobbyist in Washington.

Karl Neddenien, a spokesman for Dominion Energy, said, “Within the next 90 days, we will file an appeal to the Supreme Court of the United States regarding the 4th Circuit Court’s invalidation of the Atlantic Coast Pipeline’s U.S. Forest Service Appalachian Trail crossing authorization. We are also pursuing legislative and administrative options, and we expect these issues to be resolved in the coming months, whereby we will recommence construction.”

But the Mountain Valley decision seemed to strengthen FERC’s hand on environmental reviews and on a number of other matters. Environmental groups led by Appalachian Voices had tried to tie the Forest Service concerns about the Atlantic Coast’s crossing of the Appalachian Mountains with FERC’s alleged failure to consider the same issue when it approved Mountain Valley. But the court said FERC’s issuance of the Mountain Valley certificate “did not hinge” on the granting of any rights-of-way through federal land. 

The court also ruled in favor of FERC on two other issues which have become prominent objections used by environmental groups to contest FERC approval of new pipelines. A popular trending argument made to sway FERC environmental impact statements (EIS) is that the commission did not consider the impact of downstream greenhouse gas emissions, which would be created by a project. 

In the case of Mountain Valley, the petitioners argued FERC erred in concluding that such emissions are not reasonably foreseeable indirect effects of the project. 

The court set that objection aside saying, “We need not consider that argument, however, because even if petitioners are correct, FERC provided an estimate of the upper bound of emissions resulting from end-use combustion, and it gave several reasons why it believed petitioners’ preferred metric, the Social Cost of Carbon (SCC) tool, is not an appropriate measure of project-level climate change impacts and their significance.”  

There will be perhaps some clarity on how the FERC should calculate and weigh greenhouse gas emissions given that the D.C. Appeals Court is now hearing a lawsuit filed by a New York state environmental group objecting to the FERC’s approval of Dominion Gas Transmission’s New Market Project.

FERC concluded in 2016 when the project was first approved that its environmental review of the New Market Project – a limited undertaking “to construct and operate certain compression and related facilities” in New York –did not need to include an analysis of distant, causally reduced greenhouse gas emissions “associated with the production, processing, distribution, or consumption of gas.”  

Another frequent objection from environmental groups is that a particular pipeline is not needed. This argument was also made by environmental groups in the lawsuit against Mountain Valley. But, the court said, “… FERC’s conclusion that there is a market need for the project was reasonable and supported by substantial evidence, in the form of long-term precedent agreements for 100% of the Project’s capacity.” 

Moreover, it stated Mountain Valley’s precedent agreements are with corporate affiliates and “does not render FERC’s decision to rely on these agreements arbitrary or capricious…”