Navigating Pipeline Challenges: Lessons From MVP and Beyond (2024)

The Mountain Valley Pipeline (MVP) has finally entered service, putting nearly a decade of federal and state legal, permitting and policy hurdles in the rear view mirror.

MVP's completion offers valuable lessons for future projects and insights from its permitting process can inform regulatory reform efforts and foster responsible development practices. These lessons will be center stage with MVP Southgate’s contemplated redesign and related filings.

When compared to other projects that have faced permitting hurdles, the need for further reform, most notably litigation time limits, is obvious. These lessons should guide broader discussions on energy policy and infrastructure planning.

Where Do MVP’s Opponents Direct Their Efforts?

A fleet of well funded environmental and activist groups became household names in the energy infrastructure space by opposing the project. With very few interregional pipeline projects in the queue (seeDeLa Express Pipeline: Navigating the Path to Approval), where do groups like the Sierra Club direct their focus? According to Sierra Club’s first email following MVP’s announced in service, the group plans to go after Wall Street:

“Pipelines like MVP could not have been constructed, and cannot be run without funding from Wall Street's largest asset managers. Asset managers are companies that manage our retirement savings, such as pensions and 401(k)s. They are using OUR savings to pour funds into pipelines, fracking, LNG, and more to expand dangerous fossil fuels. Demand asset managers keep fossil fuels in the ground!”

Lessons Learned

With MVP now flowing gas to customers, a retrospective examination of its nearly 10-year journey offers valuable insights into the challenges and complexities of navigating permitting and regulatory hurdles in energy infrastructure development. These obstacles have caused numerous delays and dramatic increased costs. We compared MVP's permitting footprint to other troubled pipelines that did not receive Congressional intervention and were ultimately canceled, including Constitution, Atlantic Coast (ACP), PennEast, and the Northeast Supply Enhancement Project (NESE).

At a high level, all these projects faced significant opposition in states that did not want them. Market need is one factor, but when state and local opposition is strong, permitting authorizations are often denied or heavily litigated. The main underlying issues involved: water quality certifications (WQC), land rights, and venue, with the Fourth Circuit being more likely than other appellate courts to side with states and environmental advocates challenging authorizations.

To set the stage, we compared these pipelines by project length, capacity, states crossed, and total development time (measured from pre-filing through environmental review and until cancellation). As you can see below, the comparison reveals recurring states in either the NY/NJ/PA or VA/WV/NC areas.

For additional context, we analyzed project opposition to gauge how amenable Eastern states are to pipeline projects. We measured this by focusing on comments filed for FERC jurisdictional projects, including total comments by state, number of comments filed per project, and the level of opposition. As you can see below, the data shows high opposition to natural gas pipeline development in all of these states. In hindsight, it is not surprising that building projects in states that don’t want them will end poorly, but they’re tough to ignore when the market need is so apparent.

However, historical context matters. Constitution started in 2012, the others in 2014, and NESE in 2016. The production revolution made possible by fracking and horizontal directional drilling began around 2005, and opposition started taking root around 2010. At the time most of these projects were proposed, the scale of litigation was not a certainty.

Pleading the Fourth (Circuit)

Zooming in on the Fourth Circuit, its bias against pipeline development became increasingly evident. Even in the face of legislation mandating approval of MVP’s permits, which removed judicial review and gave the DC Circuit “original and exclusive jurisdiction over any claim” questioning its validity, the Fourth Circuit granted a motion to halt construction through the Jefferson National Forest while it considered the constitutionality of the legislation and a motion to stay the Fish and Wildlife Service’s biological opinion. The Supreme Court had to issue an emergency order to vacate the stays, underscoring this conclusion.

This is not the first time the Supreme Court has had to overrule the Fourth Circuit. In litigation related to ACP, the Fourth Circuit vacated a U.S. Forest Service (USFS) permit for the pipeline to cross under the Appalachian Trail, determining that the USFS lacked authority because the trail was part of the National Park System. The Supreme Court, however, determined that the USFS did have the authority, thus overturning the lower court’s decision.

The reality is that judges are either elected or appointed by politicians, so bias exists and venue matters. Why else would companies in current litigation like GTN Xpress be aiming for consolidation of cases in the Fifth Circuit (which covers TX, LA, and MI) as opposed to the DC Circuit (seeRolling the Dice Without Rolled-in Rates - The GTN Xpress Rehearing)?

Water

Regarding Section 401 Clean Water Act (CWA) permits, both of MVP's WQC in Virginia and West Virginia experienced a cycle of approvals, legal challenges, suspensions, and re-certifications. An ironic twist occurred in early April 2023 when the Fourth Circuit vacated MVP’s water quality certification, possibly giving Senator Manchin the political leverage needed to secure MVP’s expedited approval through legislation. This legislation did little to change the big picture though, because while it mandated approval of all remaining permits and removed judicial review of these permits, it was limited solely to MVP.

All pipelines we compared to MVP have faced similar issues. The only significant reform in this area resulted from the Hoopa Valley Tribe v. FERC case, as applied to the Constitution pipeline. In Hoopa, the court found that the withdraw-and-refile cycle used by some states to indefinitely delay WQC approvals “does not trigger” a new one-year statutory review period under the CWA. Consequently, FERC reconsidered its previous determination that New York had not waived its CWA authority to issue or deny a WQC and ultimately reversed its decision, finding that New York had waived its authority.

Now, states must act on CWA permit applications within the one-year statutory deadline, or they effectively waive their authority to issue or deny a permit. While this removes the potential for indefinite delays, it essentially enforces existing law rather than changing the litigation feedback loop that occurs once a permit is issued or denied.

This Is Our Land, We Don’t Need You

MVP faced a complex array of land-related and constitutional challenges, including eminent domain disputes at the state level, jurisdictional conflicts over federal and state authority, federal land crossing issues such as those in the Jefferson National Forest, and constitutional debates regarding Fifth Amendment rights to due process and just compensation.

Comparatively, a particularly emblematic case is PennEast, where the court considered whether the pipeline could condemn state-owned lands for construction under the federal government’s eminent domain power. Although PennEast ultimately prevailed at the Supreme Court, allowing it to condemn state land, the pipeline failed to obtain other necessary permits from New Jersey, including water quality, wetlands, and flood hazard permits, because the state determined the pipeline was not needed.

This brings us back to where we started, highlighting the broader issue: building pipelines in states that oppose them is a recipe for delay. Similar to PennEast, both New York and New Jersey denied multiple water quality certification permits for the NESE pipeline, with New Jersey determining the project was unnecessary and denying the wetlands, flood hazard, and waterfront permits.

Permitting Reform and Looking Forward

Perhaps the developers have learned from these troubled projects or the market has moved to states that are (currently) more pro energy infrastructure development. Much of the recent pipeline development has been in Texas and Louisiana, focused on intrastate pipelines, avoiding FERC jurisdiction and limiting legal challenges to more friendly state courts and the Fifth Circuit. The test will be what happens to the aforementioned 690-mile, 42-inch diameter DeLa Express Project, which entered pre-filing at the Commission. It aims to transport two billion cubic feet per day from Texas to Louisiana, but because it crosses state borders, it will be the first large interstate FERC-regulated pipeline we have seen in quite some time. How the litigation unfolds will be telling.

With respect to permitting reform, we have recently seen new NEPA regulations, and as we discussed inCEQ’s Evolving NEPA Regulations — Part II, changes to the process for establishing categorical exclusions could enhance agency efficiency, but new requirements for climate change and EJ analyses may increase the compliance burden and the potential for legal challenges. The page limit and time limit provisions are also helpful, and the early engagement provisions could go either way, but all of these reforms focus on the agency process, which is only one side of the equation. The bottom line is that true permitting reform addressing litigation delay has yet to happen at the Congress like it did for MVP, and out of the box thinking is needed.

Proposed legislation has included measures to shorten the timeframe for filing lawsuits. However, proposals could further refine this approach by drawing inspiration from the MVP legislation’s requirement that all challenges must be heard by the D.C. Circuit, or FERC’s structure with its commissioners and specialized administrative law judges. Specifically, establishing a specialized judicial venue with judges who are well-versed in balancing environmental stewardship with the need for expedited reviews and stakeholder engagement could significantly enhance the effectiveness and fairness of the permitting process. This would ensure that judges understand the intricate issues involved and can make well-informed decisions swiftly. Of course Congress needs to function for any of these ideas to take root, and we continue to hope that bipartisan forces will align.

If you would like detailed analysis on specific infrastructure project litigation, regulation, or policy, pleasecontact us.