Originally published for customers on July 13, 2023
What’s the issue?
Mountain Valley Pipeline was originally supposed to be in-service by December 1, 2018, but has been stymied by repeated appeals of the federal permits it needs to complete its construction. A three-judge panel of the Fourth Circuit has repeatedly voided permits that were approved by administrative agencies, whether controlled by Republicans or Democrats.
Why does it matter?
In early June, Congress passed the Fiscal Responsibility Act of 2023, which raised the debt limit. In that act, however, was a special provision that applied only to Mountain Valley Pipeline. Section 324 ratified, approved and directed issuance of all outstanding and needed federal authorizations, including state water quality certificates, that were necessary for the construction and operation of MVP. It also required all federal agencies “to continue to maintain” such authorizations. Finally, it stripped the courts of authority to review all required approvals and directed that any challenge to the statute’s constitutionality be heard in the DC Circuit. However, twice this week, the Fourth Circuit issued stays of two required permits and ignored the law passed by the other two branches of government.
What’s our view?
For Mountain Valley Pipeline to complete construction it will need to find a way to have the provisions of the statute upheld over the objection of the Fourth Circuit. If it fails in that endeavor it will likely be impossible for the project to ever be completed. While we think there is a 90% chance that it can eventually do that, the project’s projected in-service date, which is currently the end of 2023, may need to move to at least the end of 2025 depending on how quickly it can perfect an appeal of the stay decisions issued this week.
Mountain Valley Pipeline (MVP) was originally supposed to be in-service by December 1, 2018, but has been stymied by repeated appeals of the federal permits it needs to complete its construction. A three-judge panel of the Fourth Circuit has repeatedly voided permits that were approved by administrative agencies, whether controlled by Republicans or Democrats.
In early June, Congress passed the Fiscal Responsibility Act of 2023 (Debt Limit Act), which raised the debt limit. In that act, however, was a special provision that applied only to MVP. Section 324 ratified, approved and directed issuance of all outstanding and needed federal authorizations, including state water quality certificates, that were necessary for the construction and operation of MVP. It also required all federal agencies “to continue to maintain” such authorizations. Finally, it stripped the courts of authority to review all required approvals and directed that any challenge to the statute’s constitutionality be heard in the DC Circuit. However, twice this week, the Fourth Circuit issued stays of two required permits and ignored the law passed by the other two branches of government.
For MVP to complete construction it will need to find a way to have the provisions of the statute upheld over the objection of the Fourth Circuit. If it fails in that endeavor it will likely be impossible for the project to ever be completed. While we think there is a 90% chance that it can eventually do that, the project’s projected in-service date, which is currently the end of 2023, may need to move to the end of 2025 depending on how quickly it can perfect an appeal of the stay decisions issued this week.
Section 324 of the Debt Limit Act specifically states that notwithstanding “any other provision of law, no court shall have jurisdiction to review any action taken [to approve] construction and initial operation at full capacity of the Mountain Valley Pipeline, . . . whether issued prior to, on, or subsequent to the date of enactment” of that act. But as the saying from The Wire goes, “When you come at the King, you best not miss.” Well, earlier this week, the Fourth Circuit in two very short orders essentially said to Joe Manchin and Joe Biden that they missed and that the Fourth Circuit has declared itself to be King.
Following the passage of the act, both the federal government and MVP moved to dismiss appeals of permits issued by the Bureau of Land Management and the U.S. Forest Service to authorize the project to cross the Jefferson National Forest and an appeal of the biological opinion issued by the U.S. Fish and Wildlife Service. However, the environmental opposition groups that filed those appeals had also requested a stay of both decisions while the Fourth Circuit considers the cases. In two single sentence orders, the Fourth Circuit completely ignored the motions to dismiss and the Debt Limit Act and granted the motions for stay while it considers the merits of the cases.
Although the Fourth Circuit did not act on the pending motions to dismiss, late on Wednesday of this week, it did schedule oral argument on those motions for next Thursday, July 27. While the court could still grant those motions, that seems unlikely, but the scheduling of the oral arguments is still a benefit, as we discuss below. There is no time limit or even any requirement that the court ever rule on the motions even after it hears oral argument. This puts MVP in the difficult position of finding a path for getting the cases to the Supreme Court regardless of what the Fourth Circuit may do. MVP will likely need to pursue all of the paths discussed below in the hope that just one breaks in its favor and results in the Supreme Court upholding the Debt Limit Act’s elimination of the Fourth Circuit’s jurisdiction over all of MVP’s permits.
The quickest path to the Supreme Court open to MVP would be to file an emergency motion with the Supreme Court asking it to remove the stay on construction while the question of the court’s jurisdiction can be sorted out through the usual appeal process. Under Supreme Court practice such an emergency motion is filed with the justice responsible for the Fourth Circuit, who is Chief Justice Roberts. These emergency motions are processed through what is often referred to as the Supreme Court’s “Shadow Docket.” That term is used to distinguish decisions reached through this process as opposed to the full “Merits Docket,” which involves the customary appeals process of briefs, oral argument and full written opinions. Issues presented through the Shadow Docket are typically motions that are approved or denied very quickly without any written opinion as to the grounds for the decision, thus the reasoning and the justices supporting the decision are not disclosed and remain in the “shadows.”
Update: MVP filed the expected appeal to SCOTUS on July 14, asking it to vacate the stays imposed by the Fourth Circuit and allow construction to resume.
Over its history, the court was typically reluctant to weigh in at the early stages of a lower court proceeding, but over the last few years the Shadow Docket has become more active. During the last term there were a number of emergency motions filed to block lower court actions. One which received a lot of notice was the court’s decision to block a Texas District Court’s ban on the use of the abortion drug, mifepristone, but there were other similar motions in the last year. These motions were typically resolved within about three weeks after they were filed with the court, which is why this process would be the quickest and surest way for MVP to get the restrictions on its activities lifted.
Upon receipt of such an emergency motion, we would expect the Chief Justice to refer the motion to the entire court and the court would only grant such a motion if five justices were in favor. That may be a difficult burden for MVP and the Biden administration, but MVP did recently retain the services of an attorney who is intimately familiar with the Supreme Court’s processes and how to appeal to the individual views of each justice. That attorney, Donald B. Verrilli, Jr., is considered one of the foremost attorneys currently practicing before the Supreme Court. He is easily in the top ten for number of arguments before the court with over fifty to his credit. He served as the Solicitor General of the United States from June 2011 to June 2016. To get the court to intervene this early in the case, Mr. Verrilli and the current Solicitor General will need to craft an argument that can garner the votes of five justices, which is the number required to overturn the stays imposed by the Fourth Circuit.
The briefs that were filed by the parties in support of and against the government’s and MVP’s motions to dismiss focus on the constitutionality of the Debt Limit Act’s provision that eliminated the court’s jurisdiction over any appeal of the permits and vests any challenge to the constitutionality of that provision in the DC Circuit and not the Fourth Circuit. The case most similar to this one and cited by all of the parties was a case called Patchak v. Zinke, which the court decided in 2018. That case was similar to this one in that it involved a decision by the executive branch to transfer an interest in land to an Indian tribe for construction of a casino, which decision was challenged by Mr. Patchak, a neighboring landowner. After considerable delays in the transfer caused by the litigation, Congress passed a law very similar to section 324 that eliminated federal court jurisdiction over any challenges to the transfer.
While there are technical differences between the facts and the statutory language in the two cases, the votes of six justices still serving on the current court provide some guidance about how the legal principles and the politics involved in this case will make it hard for MVP and the Biden Administration to form a coalition of five justices to overturn the stay imposed by the Fourth Circuit. In the Patchak case, four currently serving justices with very different viewpoints, Thomas, Alito, Kagan and Sotomayor, all agreed that the jurisdiction stripping in that case was constitutional. Two justices, Chief Justice Roberts and Justice Gorsuch joined in a scathing dissent in which the Chief Justice argued that it was clearly unconstitutional for Congress and the President to pass a law that “manipulates jurisdictional rules to decide the outcome of a particular pending case,” which is exactly what the Debt Limit Act was intending to do in the three cases that were pending at the Fourth Circuit at the time it was enacted.
We do not know the views of the three newest justices, Kavanaugh, Coney Barrett, and Brown Jackson concerning the constitutional authority of Congress and the President to rip away the court’s jurisdiction in a pending case. But we do know that in general the three liberal justices, Kagan, Sotomayor and Brown Jackson, have had concerns about the court’s growing use of the Shadow Docket to intervene early in cases being addressed by the lower courts, especially when, as in this case, they may agree with the substantive outcome of the lower court decision. Conversely, the six conservative justices seem to have less concern about the growing use of the Shadow Docket, but there may not be five of them willing to uphold the statute given that two of them, Chief Justice Roberts and Justice Gorsuch vehemently dissented in Patchak. Mr. Verrelli and the current Solicitor General will need to craft a very artful argument if they hope to attract five votes to stay the stay imposed by the Fourth Circuit.
As we noted above, late on Wednesday, the court scheduled oral argument on the motions to dismiss these cases based on its lack of jurisdiction following the passage of the Debt Limit Act. While there is no requirement that the court ever act on those motions, based on this panel's past behavior, we would expect a decision to typically take about 75 days following oral argument. That would allow that decision to be immediately appealed to the Supreme Court using its regular merits docket system. Under that process the votes of only four justices are needed to hear a case and it would remove the problem that use of the Shadow Docket may create for the three liberal justices. If a decision on the jurisdictional question can be entered in the next few months, that would allow the case to be heard in the Supreme Court’s session that begins this October and runs through June 30, 2024. While the outcome of that case may still not be clear because we do not know how the three new justices may vote on the jurisdictional question, this path creates a fairly quick and certain process for allowing construction to resume if the Supreme Court were to uphold the constitutionality of the Debt Limit Act. That would put the in-service date for the project in late 2024.
The entering of a stay does not necessarily indicate how the court intends to rule on the substantive merits of the case. So it is at least conceivable that, if the first two paths do not lead to a positive result for MVP, then the Fourth Circuit could rule in the government’s favor and uphold all of the permits. While we think this result is unlikely given this panel’s past history, the typical timeline for such an appeal would mean a decision on the merits sometime in the spring of 2024 and an in-service date for the project in the fall of 2024.
The more likely result if the first three paths are not successful is that the Fourth Circuit ultimately voids at least one of the permits and then MVP and the Biden administration appeal that decision to the Supreme Court on the grounds that the Fourth Circuit lacked jurisdiction to reach that decision. The risk associated with this path is that any such decision by the Fourth Circuit would likely come too late to be argued and decided by the Supreme Court in the 2023-2024 session ending on June 30, 2024. That would mean that the case would not be heard until the session that ends on June 30, 2025 which would likely mean the in-service date would not be until late in 2025.
If you look at each one of these four scenarios, you can assign a probability of success to each one and associate that probability with a range of potential in-service dates associated with that scenario.
As seen above, we have assigned a likelihood of success to each scenario and spread that percentage over a range of dates for the expected in-service date under each scenario. MVP only needs to catch one of the waves in the above chart to go into service. But if it fails to catch at least one, then the project will likely be canceled.
We can also look at the cumulative odds of the project going into service at some point by assuming that if one of the earlier waves fails to carry the project home, then that makes it more likely that a subsequent wave will do the trick.
As seen above, we estimate by late 2025 there is a 90% chance that the project is in-service. However, that means there remains a 10% chance of a wipeout that causes the project to be canceled. We will continue to monitor the efforts of MVP and the Biden administration to successfully implement each of the above scenarios and keep you updated on those efforts.
View the replay below of our July 11 customer webcast on the recent developments impacting Mountain Valley, its various avenues for relief, and implications for in-service timing.