NEXUS Stay - What's the Impact to NEXUS and the Industry?
The Court of Appeals for the Sixth Circuit (Sixth Circuit) in a 2-1 decision issued a stay of construction of the NEXUS pipeline along an 8 mile segment through the City of Green, Ohio (City). Unlike the stay that was issued in Atlantic Sunrise , it appears that this stay will be in place for at least 45 days. Based on this decision, now even after the FERC issues a certificate and then a notice to proceed with construction, the developer may remain at risk for a stay being issued until the time for appealing the issuance of a state permit has passed.
Issue
The City challenged the issuance of the Section 401 Water Quality Certificate (WQC) to NEXUS by the Ohio Environmental Protection Agency (OEPA). The City asserted, and the majority of the Sixth Circuit panel surprisingly found, that the OEPA may not have properly issued the WQC because it failed to follow its own rules in reviewing the application. While the majority made it clear that they weren't definitively finding that the OEPA failed to follow its own rules, they did find that the City had submitted enough evidence to make such a final finding substantially likely.
Impact to NEXUS and Other Projects
It is unclear how much of an impact the stay of construction within the City will have on the overall project. While NEXUS asserted a full stay of construction for one week would cost it approximately $4.2 million, the company did not quantify the cost of a stay on construction within the City, as ordered by the Sixth Circuit. What is clear, however, is that the stay will likely be in place for longer than one week.
In the order granting the stay, the majority indicated that it was also ordering that the case be handled on an expedited basis. But the letter issued by the clerk, along with the order, simply indicated that the briefing schedule that had been issued in October remained in effect. That schedule doesn't require a response by OEPA and NEXUS until December 22 and allows the City two weeks after that to file its final brief. Given that the court has not indicated how quickly it will schedule oral argument in this case, this hardly seems to be an expedited schedule, which may also present issues for NEXUS given that it has a tree clearing window that closes on March 31.
As for the potential impact for other pipeline projects, the court's final holding would only apply directly to pipelines being reviewed by the OEPA. There is only one project currently pending at FERC, the Risberg Lateral, that could be impacted by the Sixth Circuit's ultimate decision. But for the industry as a whole, the stay issued by the Sixth Circuit presents another hurdle for pipeline developers, because developers may not be in the clear until the appeal period for all federally required permits has expired.