You are here

Court challenges stop work on Virginia gas pipeline

A string of legal victories has brought work on the US$7 billion natural gas pipeline to a halt, at least temporarily, while an even bigger case looms in the new year

BT_20181231_NAHGAS31V93M_3655265.jpg
With all those permits currently vacated, the pipeline had to stop all construction activity. Very little has actually been built, and none in Virginia, though some tree-clearing began earlier this year.

Richmond, Virginia

PROTESTERS banging drums may get more attention, but what has really damaged the controversial Atlantic Coast Pipeline in 2018 has been quiet action taking place in courtrooms.

Opponents represented by the Southern Environmental Law Center (SELC) have won a string of legal victories that have brought work on the US$7 billion, 600-mile (965km) natural gas pipeline to a halt, at least temporarily. Several rulings are under appeal, while an even bigger case looms in the new year.

Taken together, the federal court rulings suggest a permitting and approval process that was hasty and, possibly, misguided.

sentifi.com

Market voices on:

"They all have the same narrative," said DJ Gerken, a lawyer in the SELC's Asheville, North Carolina, office. "Atlantic was very arrogant in the selection of this route . . . and counted on bullying these agencies to get it through."

The pipeline is planned to carry fracked natural gas through rugged mountain terrain and several national forests from West Virginia through central Virginia and into North Carolina. Investors still seem confident the project will move ahead, but Dominion Energy - the company spearheading the pipeline - has lately complained of painful consequences from the delays.

"We've been forced to lay-off or delay hiring more than 4,500 construction workers on the project," Aaron Ruby, a Dominion spokesman, said via e-mail. "We're confident we will ultimately prevail in the courts and be able to resume construction, but that won't undo the hardship many working families are going through during the holiday season."

In a report last month, Dominion said delays had increased the cost of the project from US$6.5 billion to US$7 billion and pushed its completion date from late next year into the middle of 2020.

The natural gas industry website Marcellus Drilling News blamed the delays on "a myriad of frivolous lawsuits from Big Green groups" and said the slowdown "means everyone will now pay more. Thanks Big Green". As natural gas projects are facing challenges nationwide, the US Chamber of Commerce issued a report claiming that "the anti-energy 'Keep it in the Ground' movement has prevented at least US$91.9 billion in domestic economic activity". It said delays on the Atlantic Coast Pipeline in particular had cost US$2.3 billion in lost economic impact, though it did not explain how that number was calculated.

None of the setbacks seems to have hurt Dominion's bottom line. Early in December, the company's board of directors increased the stock dividend by 10 per cent.

But lawyers for the SELC - representing a number of environmental groups, including the Virginia chapter of the Sierra Club, the Virginia Wilderness Committee and Defenders of Wildlife - say the blows against the project are significant.

"The Atlantic Coast Pipeline is in serious jeopardy," SELC lawyer Gregory Buppert said on Dec 19, when Virginia's Air Pollution Control Board delayed - for the second time - a vote on a permit for a gas compressor station that is crucial for the pipeline.

All three legal challenges mounted so far have been heard by judges with the US Court of Appeals for the Fourth Circuit.

In each case, the judges ruled against the pipeline:

  • In May, judges rejected a permit issued by the US Fish and Wildlife Service aimed at regulating the pipeline's impact on endangered species. They ruled that the federal agency had failed to set required limits on how much the pipeline could harm five types of creatures.

The Fish and Wildlife Service reissued the permits shortly after the ruling, but the SELC challenged the new permits as also flawed. Judges from the Fourth Circuit issued a stay of the new permits until they could be reviewed, and that action is pending.

  • In August, the same judges also tossed out a permit issued by the National Park Service for the pipeline to cross the Blue Ridge Parkway. They found that the Park Service "does not explain how the pipeline crossing is not inconsistent with the purposes of the Parkway and the overall National Park System", and said the permit was "arbitrary and capricious". That permit also was reissued and then challenged by the SELC, and the judges suspended it, pending review.
  • On Dec 13, a panel of judges from the Fourth Circuit vacated permits from the US Forest Service that allowed the pipeline to cross two national forests and the Appalachian Trail. The judges were particularly harsh, finding that Forest Service staffers had raised serious questions about the permits but then made a sharp, unexplained turnaround and approved them. The court called the decision "mysterious". Mr Buppert said the explanation was that the Trump administration put pressure on the agency, citing e-mails that showed appointees pressuring staff to stick to Dominion's timeline.

The judges threw out the agency's claim that it had reviewed alternative routes, and found that the Forest Service had no authority to permit the crossing of the Appalachian Trail. Instead, the National Park Service has jurisdiction - but has said it cannot act and that Congress would have to step in.

That, Mr Gerken said, leaves the pipeline with no approved way to cross the Appalachian Trail. "They're going to have to go back to the drawing board," he said.

Mr Ruby said the pipeline builders are appealing the decision to the full Fourth Circuit. He said the company also is exploring the possibility of legislation in Congress.

With all those permits currently vacated, the pipeline had to stop all construction activity. Very little has actually been built, and none in Virginia, though some tree-clearing began earlier this year.

Meanwhile, the SELC is gearing up for what could be its biggest case, challenging the Federal Energy Regulatory Commission on the fundamental permit for the entire project.

The lawyers argue that there is no market justification for the pipeline. Dominion and one of its partners, Duke Energy, submitted evidence of market demand that Mr Gerken said amounted to letters from their own subsidiaries saying that they would buy the gas.

He noted that earlier this month, Virginia's State Corporation Commission rejected Dominion's routinely submitted estimate of future demand, saying it was inflated. "Those demand projections are what support their arguments that they need more power plants, which is their basis for building the pipeline," Mr Gerkin said.

The case will get underway sometime early next year. WP