Breaking: West Virginia Vacates Section 401 for Mountain Valley Pipeline Project

In a letter to the U.S. Army Corps of Engineers released on Friday, the West Virginia Department of Environmental Protection (WVDEP) vacated and remanded the Clean Water Act, Section 401 Water Quality Certificate (WQC) for the Mountain Valley Pipeline (MVP) project. The WVDEP's action is surprising, and should be watched by other projects, such as the Mountaineer Xpress Project, that require a WQC in West Virginia. As far as this action's impact on MVP, we expect that it may: (1) not delay FERC's issuance of MVP's certificate; (2) delay the start of construction as compared to current expectations, but ultimately could help the schedule if the issue that led the WVDEP to vacate its WQC had led the Fourth Circuit Court of Appeals to vacate the WQC; and (3) help the revised WVDEP decision withstand any future appeal.

The Backdrop

The WVDEP's issuance of the WQC in March 2017 was appealed to the Fourth Circuit by a number of environmental groups, including the Sierra Club. Notably, the WVDEP's recent decision to vacate and remand its WQC decision -- which came one week before its brief in that appeal was due -- indicated that the agency was vacating and remanding the WQC to itself to allow it "to reevaluate the complete application to determine whether the State's certification is in compliance with Section 401 of the federal Clean Water Act." As such, it is possible that the decision by the WVDEP to vacate its prior decision is based on its assessment of the litigation risk it faced on appeal as it prepared to file its brief. We expect the WVDEP will notify the Fourth Circuit of this decision, and seek to have the case currently pending before that court dismissed as being moot, since the relief being sought in that case is for the court to "vacate the Section 401 Certification and remand the matter to WVDEP."  

The Read-Through

This decision may delay the commencement of construction for MVP as West Virginia reassesses its WQC decision, making our most recent high quartile predictive model date a more likely barometer than the median date. Nonetheless, the decision should not delay FERC's issuance of MVP's certificate, as certificates are routinely issued prior to a state's issuance of the WQC. While it is conceivable that the WVDEP could reverse its prior decision, and deny the WQC for the project, we do not view that outcome as likely.  



In some ways this decision could, in fact, reduce the uncertainty associated with the environmental groups' appeal to the Fourth Circuit. The WVDEP may have been concerned it would lose the appeal -- but such a decision would be months away, since the oral argument had been tentatively scheduled for December 5-7. If an adverse decision were to issue after the oral argument, WVDEP would then have to begin its reassessment of the WQC, which could have caused a halt to, or a further delay in, the start of construction. By vacating the decision now, the WVDEP can immediately start its reassessment, rather than waiting for the court's decision months from now. Presumably, the WVDEP's revised review will address the shortcomings identified in the appeal, which should help the subsequent decision withstand any future appeal of that revised decision.  

This reassessment could present an interesting test case of FERC's recently identified authority to determine that a state has waived the right to issue a WQC if it fails to act within one year after receiving an application. Mountain Valley Pipeline filed its initial WQC application on February 25, 2016, and filed its final application, on which the WVDEP ultimately acted, on December 23, 2016. It is certainly possible that MVP will ask FERC to find that West Virginia has waived its right to issue a WQC, especially if the WVDEP does not act by December 23 of this year. If WVDEP were to open the process to public hearings and comments, any action on the revised assessment would likely come after that date.


The effect of this decision on other cases, such as the Mountaineer Xpress Project, currently waiting for a WQC from the WVDEP, is difficult to judge, but the decision may lead to a delay in that process, assuming the WVDEP reviews its procedures to make sure it corrects any deficiencies in its review process.  



As always, please reach out if you have questions or would like to discuss further.