MVP and ACP – Similar Projects, Similar Problems, Different Paths

EQM’s Mountain Valley Pipeline Project and Dominion’s Atlantic Coast Pipeline are similar in their design and timing. The opposition that each has faced is also similar, but ACP has more issues left to resolve and appears further from being in-service because it always planned on a two-season construction process.

Today, we focus on the two issues that remain open for both projects, and compare and contrast the paths they appear to be following to resolve these issues. In short, MVP appears to be pushing forward on many fronts, including construction activities, while ACP appears to have taken a wait and see approach before it resumes full construction.

Nationwide Permit 12

Both projects sought coverage under the U.S. Army Corps of Engineers (USACE) nationwide permit (NWP) program for their crossings of wetlands and streams under NWP12. However, the water quality certificate (WQC) that West Virginia had issued for the use of NWP12 in that state limited it to projects that were no larger than 36 inches in diameter and that could complete all crossings of streams within 72 hours. The USACE’s verification that the projects could comply with these conditions was challenged at the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit). In a decision issued in November 2018, the Fourth Circuit determined that MVP could not satisfy the two referenced conditions in the WQC and therefore could not rely on NWP12 to construct the project. Consequently, the USACE asked the Fourth Circuit to dismiss the challenge of the ACP verification and remand the issue to the agency for further review, which the court did in January.
Since then, both projects have apparently been working with the West Virginia Department of Environmental Protection (WVDEP) to modify its WQC to eliminate the conditions that the projects could not satisfy so that they can once again apply for coverage under NWP12. That process led to the WVDEP’s issuance of a revised WQC on April 24, 2019. The USACE issued the revised WQC for public comment on June 27, 2019 and is accepting comments on the proposed revision through the end of this week.
It will undoubtedly take some time for the USACE to address the issues raised in those comments, which we fully expect the environmental opposition to submit. Once that is complete, we presume that the USACE will reissue the NWP12 with the revised conditions and that the two projects will then file to be covered by the revised permit. We expect this entire process to be challenged once again at the Fourth Circuit, but there is precedent finding that this process is appropriate and it may be difficult for the Fourth Circuit to reject this approach.
In the meantime, however, MVP has filed for the approval of variances from FERC to change the crossing method for over 30 streams and wetlands from the open cut method approved in the final environmental impact statement to a directional bore. MVP supported these variance requests by submitting an email from the Huntington District of the USACE that states that such a crossing method “can be performed in a manner that would not constitute a discharge of dredged or fill material.” Under MVP’s reading, this allows these crossings to go forward even while awaiting coverage under NWP12 for the other crossings it needs to make.
MVP is able to continue making substantial progress on the pipeline installation, as reflected in the following chart showing its recent progress in completing the backfilling and tying in of the pipeline across all but one of its construction spreads.

MVP Progress in Backfilling & Tying-In Forecast (Aggregate Average Speed)

As depicted above, if MVP can continue to make progress at the rate it recently has achieved across all spreads, it should be able to complete the backfilling of the pipeline by early next year. This is in contrast to ACP, which has suspended construction across all areas of the project, apparently while it seeks to restore coverage under NWP12.

Crossing of the Appalachian Trail on Land Owned by the US Forest Service

Both projects cross the Appalachian Trail (AT), the 2,192 mile footpath that traverses 14 states along the East Coast from Maine to Georgia. Both projects cross the AT on land that is within a national forest. The right of way granted to both projects by the U.S. Forest Service for crossing through each project’s respective national forest was challenged at the Fourth Circuit, which vacated the Forest Service’s grant in both cases. However, the court’s action regarding ACP was more problematic because the court also vacated the grant of ACP’s easement to cross the AT, and seemed to indicate that the federal government could not allow a pipeline to cross the AT on land owned by the federal government without an Act of Congress. Given this decision, MVP likely anticipates that, when it obtains a revised agreement to cross the national forest, its crossing of the AT will also be challenged.
ACP and the U.S. Solicitor General on behalf of the federal government have each petitioned the U.S. Supreme Court to review the Fourth Circuit’s decision. The Supreme Court has given the environmental groups opposing both requests until the end of August to file a response. Appeals to the Supreme Court are not automatic -- but the likelihood that the Supreme Court will accept the case is increased as petitions from the Solicitor General are up to ten times more likely to be granted than petitions solely from private parties. If the Court agrees to take the case, a decision would likely not be issued until the early summer of 2020.
In the meantime, MVP has acquired land from a private owner that is a part of the AT and is seeking to swap that newly acquired land for a revised agreement to cross the AT at the location approved in its final environmental impact statement. The apparent strategy of this approach is that land swaps are governed by a different statute than the one under which ACP received its easement for the crossing of the AT and would seemingly put MVP’s crossing of the AT under a different legal standard. MVP has submitted a preliminary proposal for this land swap to the U.S. Departments of Interior and Agriculture. Such transactions are not usually completed quickly and MVP’s swap may take more than a year from the time it was submitted on June 14 -- but it allows MVP to hedge its bets in case ACP’s appeal to the Supreme Court is unsuccessful.
The crossing of the national forest land and the AT may now be the primary critical path items on MVP’s plans and may account for why MVP is currently projecting an in-service date of mid 2020. We have modeled MVP’s progress on restoration of the right of way below.

MVP Progress in Final Restoration Forecast (Aggregate Average Speed)

As shown above, if MVP can continue restoring the right of way at the pace it has recently achieved, it should have about 70% of its right of way finally restored by late 2020. That level of restoration would generally be sufficient for FERC to authorize placing a pipeline into service.

Which Path is Best?

As it has suspended construction work across the pipeline project, ACP has clearly adopted a wait and see approach for its project as it seeks clarity on at least some of the permitting issues. Conversely, MVP is pushing ahead and is targeting an in-service date about one year from now. But which approach will prove to be wiser in hindsight?
If both projects end up unable to cross the AT on land owned by the federal government, ACP will almost certainly be viewed as prudent for delaying the costs of construction and for aligning those costs with the ultimate flow of revenue. Conversely, if both projects can quickly get the NWP12 reinstated and can pursue a valid method for crossing the AT on federal land, MVP will be better positioned to take advantage of those developments and begin earning revenue more promptly.
Only time will tell -- but in the meantime, LawIQ will continue to analyze these issues as ACP and MVP strive to place their pipelines in service.

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