Certificates for MVP and ACP - Now Serving Number...

Friday the 13th proved to be the end rather than beginning of a nightmare for some project developers. The FERC issued certificates to both the Mountain Valley Pipeline Project (MVP) and the Atlantic Coast Pipeline Project (ACP), as well as their smaller sister projects. However, in both, Commissioner LaFleur issued a surprising dissent, in which she took the position that the benefits from building two separate, but closely aligned, projects did not outweigh the environmental impacts. The issuance of these two orders offers a window into understanding how FERC: (1) is working through the quorum backlog; (2) is addressing the recent Sabal Trail D.C. Circuit decision; and (3) may change the benefit or "need" determination.

Despite the dissenting opinion, the decisions are near complete wins for the project developers. The order issued for MVP and its sister project, the Equitrans Expansion Project, did not include any additional, non-routine environmental conditions. The ACP order, however, has a novel condition. The project, approved along with the Supply Header Project, is subject to a condition that prevents the Director of Office of Energy Projects from issuing a notice to proceed with construction for either project independently. Instead, the developers can only expect to begin construction when all of the necessary permits for both projects have been obtained.

Reading the Tea Leaves


Do these decisions offer insight into how FERC's project caseload is progressing? These recent events are evidence that FERC is not prioritizing backlog based environmental review completion dates. ACP's Final EIS issuance on July 21 was a relatively recent environmental report compared to others, while the PennEast Pipeline Project received its Final EIS several months earlier, in April. Thus, FERC and state-level dynamics continue to reinforce the unique nature of regulatory risk for individual projects.


These issues are complex, but applying effective analytics can yield significant benefit. Since late early 2017, LawIQ's dynamic rolling forecasts for both ACP and MVP certificate issuance have consistently estimated mid-October events (see chart below). Wondering what to expect for the other projects...?


LawIQ's ACP Forecast

A key issue that may have slowed the issuance of all certificates following restoration of the quorum was the D.C. Circuit's Sabal Trail. Following the issuance of the NEXUS certificate, we analyzed the pending backlog projects with respect to the following three categories: (1) where the downstream gas analysis was as robust as in NEXUS; (2) where there was some discussion of downstream greenhouse gas, but not nearly as robust as in NEXUS; and (3) where there was no discussion of downstream greenhouse gases. Atlantic Coast had a robust analysis and MVP had some discussion, but not as robust as NEXUS, suggesting that revisiting environmental review procedurally may not be necessary.

There was some question as to whether FERC would issue orders in the "limited analysis cases," such as MVP, without seeking additional data from the applicants or perhaps issuing a supplemental environmental report. The MVP order is a very positive development for these similarly situated cases in that FERC simply had its staff perform the more detailed analysis and set it forth in the decision. As such, there no longer seems to be any bar for the issuance of a certificate order in other limited analysis cases, such as WB Xpress, PennEast and Mountaineer Xpress.

The ACP opinion relied on the analysis contained in the Final EIS, suggesting that the two remaining projects that included a similarly robust analysis, namely, Eastern Market Access and Eastern System Upgrade, should not be impacted. However, we still do not know how FERC will address the Sabal Trail decision for those projects, such as Gulf Coast Expansion, Lone Star, Central Virginia Connector Project, and Eastern Shore's 2017 Expansion, where there was simply no discussion of the downstream greenhouse gases.

Also - A Rare Dissent

Commissioner LaFleur explained that, with regard to balancing need and environmental impact, she could not agree that the benefits from either MVP or ACP, evaluated as separate projects, outweighed the environmental impacts. She argued that those impacts could be substantially reduced by requiring the project applicants to propose a single project that would meet the market needs. Commissioner LaFleur also called into question the current Certificate Policy Statement, which identifies many ways to determine need, but ultimately defaults to the percentage subscribed under precedent agreements.

Commissioner LaFleur's point of view bears consideration going forward, especially by project developers considering projects with geographically similar footprints. Dissenting opinions at FERC are rare. In the past ten years, only one other certificate, for Millennium's Minisink Compressor Station Project, has been the subject of dissent. What makes her statements even more noteworthy is that they offer a rare glimpse into the issues being debated among Commissioners, both past and present, as well as those of FERC staff who are instrumental players in the decision-making process.