Two new episodes in the long-running energy soap opera called the Mountain Valley Pipeline
On Feb. 13, a federal appeals court again rebuffed local opponents of the natural gas pipeline being constructed 304 miles across West Virginia to Virginia and North Carolina, carrying gas from the Marcellus and Utica shale formations. The case has been up and down from federal courts, putting the project in suspended animation.
The courts in many cases have consistently ruled that the Federal Energy Regulatory Commission has authority to grant the pipeline developers the right of federal eminent domain, overriding state and local land use laws.
Just a week later (Feb. 20), the pipeline developers – a joint venture of Equitrans Midstream Corporation; Next Era Energy; Consolidated Edison; AltaGas; and RGC Resources, with Cannonsburg, Pa.-based Equitrans the major partner and eventual operator of the pipeline – announced another delay in the project and a significant hike in the estimated cost.
In the latest court case, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit, on remand from the Supreme Court, said that “we again conclude that the Natural Gas Act explicitly strips district courts of jurisdiction to review a FERC certificate after a court of appeals receives the record in a suit challenging that certificate.”
An analysis from the D.C. law firm of Akin Gump Strauss Hauer & Feld wrote, “The D.C. Circuit came to the same conclusion in a 2022 decision. However, that decision was vacated by the U.S. Supreme Court,” which remanded the case back to the appeals court because of the wording of the 2023 Fiscal Responsibility Act (FRA) and its application in a case involving review of a business merger, Axon Enterprise Inc. v. FTC.
The appeals court concluded there was no conflict between the Axon case and the pipeline legal dispute. The Akin analysis said, “Ultimately, the court determined that the jurisdictional question could be answered in the text of the NGA, without consideration of the FRA.”
While the pipeline project cleared another of the many legal hurdles, Mountain Valley continues to climb a financial and economic mountain. Releasing its 2023 earnings results late last month, Equitrans (ETRN:NYSE) backed away from its target of completing construction before the end of this month and increasing the cost estimate. CEO Diana Charletta, who became CEO on Jan. 1, said, “ETRN is now targeting construction completion and commissioning in the second quarter of 2024, at a total estimated project cost ranging from approximately $7.57 billion to approximately $7.63 billion.”
Charletta blamed the delay until possibly June and the nearly 6% estimated cost increase on “unforeseen construction challenges, throughout much of January, construction crews encountered adverse weather conditions, including precipitation well above 20-year averages. While our construction plans took into account the potential effects of winter weather, these conditions were far worse and longer in duration than anticipated, imposing a significant impact on productivity, which, in turn, impeded our ability to reduce construction headcount.”
Equitrans is the nation’s largest North American natural gas producer. The company reported 2023 revenue of $1.39 billion, with net income of $386.7 million (up from a 2022 loss of $327.9 million), and earnings per share of $0.89, compared to a 2022 loss of $0.76 per share.
When the company announced the Mountain Valley project in 2014, the estimated cost was $2.5 million, with completion scheduled for 2018. The project quickly generated opposition, often by landowners in the pipeline’s path. It also required numerous federal permits from the Interior Department’s U.S. Fish and Wildlife Service and Bureau of Land Management, the Agriculture Department’s U.S. Forest Service and, most important, the Federal Energy Regulatory Commission, which granted federal eminent domain.
The project faced numerous challenges before the U.S. Court of Appeals for the Fourth Circuit, which struck down the Interior and Agriculture permits, putting the project in temporary limbo. Ultimately, in June 2022, Sen. Joe Manchin (D-W.Va.), chairman of the Senate Energy and Natural Resources Committee, cut a deal with the Biden White House to clear the path (literally) for the pipeline.
The February federal appeals court ruling may be the final hurdle for the troubled pipeline, ending the decade-long perilous pipeline saga.
–Kennedy Maize