Originally published for customers on July 26, 2023
What’s the issue?
The Mountain Valley Pipeline (MVP) project is facing a critical few days. Last night at 5:00 PM, the environmental groups opposing the project filed their responses to MVP’s Supreme Court petition in which MVP has asked that court to void the stays that the Fourth Circuit has imposed on a number of project permits. Also, the Fourth Circuit has scheduled oral argument on the government’s and MVP’s motions to dismiss the challenges to those permits for Thursday of this week.
Why does it matter?
Section 324 of the Fiscal Responsibility Act of 2023 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. Despite enactment of this law, the Fourth Circuit continued to block the project by staying the very permits that Congress ratified.
What’s our view?
We think that Section 324 will ultimately be upheld in court, but the paths to that result multiplied over the last week. In a very emphatic brief filed by the Solicitor General of the U.S. on behalf of Congress and the administrative agencies, she urged the Supreme Court to take action and remove the stays issued by the Fourth Circuit, preferably even before the oral argument on Thursday. However, whether, how and when any action is taken by the Supreme Court will be critical in determining when exactly MVP may be able to go into service.
Update Aug. 1, 2023
Following the Supreme Court's intervention in the actions of the 4th Circuit, we believe that the risk of that court interfering in the continuing activities of the project has been essentially reduced to zero ...
Update Aug. 1, 2023
Following the Supreme Court's intervention in the actions of the 4th Circuit, we believe that the risk of that court interfering in the continuing activities of the project has been essentially reduced to zero. However, we still see two primary risks to the project's unimpeded construction.First, the risk of a court stay has shifted from the 4th Circuit to the DC Circuit. We expect the opposition groups to file a case at the DC Circuit seeking a determination of the constitutionality of Section 324. Since that section directs actions like that to the DC Circuit, there is no doubt that the court has jurisdiction. The issue will be whether the court enters any type of stay while it considers the question. We think there is a substantial risk, say 40 to 50%, that the court could enter an "administrative" stay while it receives briefs on the constitutional question, but a much smaller risk, say 5-10%, that it would enter a stay for the entire time of the proceeding. But even a short say could severely impact MVP's timing if they are correct that they have very little time between now and the onset of winter to complete some major areas of construction.Second, we believe that the project will be subjected to substantial "extra-judicial" opposition. See the attached flyer. MVP will likely need to go to court in both West Virginia and Virginia seeking to have opposition groups restrained from physically blocking construction. That opposition may also be enough to slow construction to the point that MVP is unable to complete the work required before winter.All of this means, that while it is not impossible for MVP to place the project into service by the end of this year, we think the more probable date is likely sometime in the first quarter of 2024.The Mountain Valley Pipeline (MVP) project is facing a critical few days. Yesterday, the environmental groups opposing the project filed their responses to MVP’s Supreme Court petition in which MVP has asked that court to void the stays that the Fourth Circuit has imposed on a number of project permits. Also, the Fourth Circuit has scheduled oral argument on the government’s and MVP’s motions to dismiss the challenges to those permits for Thursday of this week.
Original Article
Section 324 of the Fiscal Responsibility Act of 2023 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. Despite enactment of this law, the Fourth Circuit continued to block the project by staying the very permits that Congress ratified.
We think that Section 324 will ultimately be upheld in court, but the paths to that result multiplied over the last week. In a very emphatic brief filed by the Solicitor General of the U.S. on behalf of Congress and the administrative agencies, she urged the Supreme Court to take action and remove the stays issued by the Fourth Circuit, preferably even before the oral argument on Thursday. However, whether, how and when any action is taken by the Supreme Court will be critical in determining when exactly MVP may be able to go into service.
July 26 Is Supposedly a Critical Date
In both its applications to the Fourth Circuit and its petition to the Supreme Court, MVP stated that if the stays were not lifted by July 26, “major earth-disturbing tasks could not be completed until spring under ordinary conditions.” Thus, according to MVP’s own assertions, “unless any stay is lifted by July 26, 2023, Mountain Valley likely will not be able to achieve an in-service date before Spring 2024.” A brief filed by the Solicitor General of the U.S. (Solicitor’s Brief) in support of MVP’s Supreme Court petition specifically noted that the Fourth Circuit scheduled oral argument on MVP’s and the government’s pending motions to dismiss for July 27, 2023 — “one day after the estimated date on which MVP had informed the court construction must restart to complete the pipeline this year.”
Following MVP’s petition to the Supreme Court, which was filed on July 14, the Chief Justice issued an order on July 17 directing the environmental opposition groups to file their responses to MVP’s petition by 5 PM on July 25. In the intervening days there have been a number of briefs filed both in support of and in opposition to MVP’s petition, but none were as significant as the Solicitor’s Brief. Perhaps the Chief Justice’s order was designed to allow for a decision on the 26th or perhaps early on the morning of the 27th before the oral argument that starts at 10:00 AM. We will know that shortly.
MVP’s Possible Paths Forward
In MVP Blocked Once Again by Fourth Circuit – Needs to Catch a Break to Finish, which we issued the day before MVP filed its petition with the Supreme Court, we noted a number of possible paths the pipeline could pursue to obtain a determination that Section 324 had constitutionally stripped the Fourth Circuit of any authority over the permits it stayed. In that article we stated our view that there was a 90% chance that the statute would ultimately be upheld, but that the paths to that result were numerous. Following the filing of the Solicitor’s Brief, we have revised that percentage up to 95% that the statute is ultimately upheld, however the paths to that result have also grown.
Writ of Mandamus
Both MVP and the Solicitor’s Brief suggested an option that we had not considered, which is that in lieu of simply voiding the stays imposed by the Fourth Circuit, that the court could instead issue a writ of mandamus to the Fourth Circuit. Most ordinary folk have not heard of such a process and that is not surprising because even MVP acknowledges that it is “an extraordinary remedy.” The term basically means that the Supreme Court would issue an order that directs, or mandates, what the Fourth Circuit should do. In MVP’s petition, instead of simply voiding the stays issued by the lower court, it provides that the Supreme Court could issue a writ, or order, that requires the Fourth Circuit to simply grant the motions to dismiss that are set to be argued tomorrow.
The Solicitor’s Brief suggests that ordering the lower court to grant the motions to dismiss is an appropriate remedy as well, but also proposes a more limited type of mandate or order. The Solicitor’s Brief suggests that the Supreme Court direct the Fourth Circuit to dissolve its stays but allow the Fourth Circuit to place the petitions on hold while the environmental groups file a claim at the DC Circuit, which Section 324 identifies as the only court with jurisdiction over a claim challenging the constitutionality of Section 324. The writ issued by the Supreme Court would require the Fourth Circuit to hold the cases pending before it until either the DC Circuit determines Section 324 to be unconstitutional, at which point the Fourth Circuit would once again have authority over the permits, or the DC Circuit upholds Section 324 as constitutional, at which point the Fourth Circuit would be required to dismiss the actions pending there. The problem this scenario would present for MVP is that the DC Circuit could and may institute an administrative stay on the permits while it at least gets the initial briefs on the constitutional question or could issue a stay until it actually decides the constitutional issue. Neither of those results would likely allow MVP to place the facility into service this year, if its portrayal of July 26 as a drop dead date is at all accurate.
The Myriad of Paths to a Final Resolution
As we did in MVP Blocked Once Again by Fourth Circuit – Needs to Catch a Break to Finish, we have tried to capture all the paths available to MVP for establishing that Section 324 is valid and thus the project must be allowed to finish construction. We have laid those possibilities out on the chart below with our projection of the in-service date that would likely result from that path and the accumulating likelihood that MVP will be placed into service by a particular date in the future. Ultimately, because we think there is a 95% chance that Section 324 will be found to be constitutional, there is a 95% chance that MVP will eventually be placed into service.
Quick Summary of the Various Paths
While we could spend hours discussing the pros and cons of each path and why we have assigned the odds we have to each, we quickly set forth our high level view below.
- Supreme Court vacates stay or directs dismissal of the case on July 26.
This is the most favorable result for MVP by far and purportedly would allow it to place the pipeline into service by the end of this year. MVP says it has about three months of construction and one month of commissioning work to do, which would put the in-service date at the end of November. We still think the construction work is more like four or five months plus the one month of commissioning, which would put it more like the end of December or early next year. - Supreme Court vacates stay or directs dismissal of the case after July 26.
This would still be a very positive result for MVP, but if you believe that their drop dead date of July 26 is correct, this would mean that the in-service date would be sometime in the Spring of 2024. - Supreme Court issues Writ of Mandamus directing case to DC Circuit, which denies all stay requests.
This result would be very similar from a timing perspective to the Supreme Court vacating the stay sometime after July 26, but would likely extend the in-service date for the time period the court considered the motions for a stay unless MVP was willing to risk being stopped yet again. - Supreme Court issues Writ of Mandamus directing case to DC Circuit, which issues administrative stay.
This is still a positive for MVP because it would take the case away from the Fourth Circuit, but a temporary administrative stay while briefs are filed would mean an in-service date of Spring 2024. - Fourth Circuit grants motions to dismiss cases, or Supreme Court quickly overturns decision denying motions to dismiss.
We have severely discounted the likelihood that the Fourth Circuit will suddenly see the light and grant the motions to dismiss. But that could change when we listen to the oral argument tomorrow. A prompt Supreme Court review would likely require a renewed emergency petition. - Expedited Review of Jurisdictional Question occurs at the Fourth Circuit, which finds it has jurisdiction, but Supreme Court reverses.
This assumes that the Supreme Court orders the Fourth Circuit to quickly decide or the Fourth Circuit itself quickly issues a decision on the motions to dismiss that are being argued tomorrow. This would allow a full merits review by the Supreme Court in the term that starts October 1, but would push the in-service date into late 2024. - Supreme Court issues Writ of Mandamus directing case to DC Circuit, which grants stay request.
This would be one of the two worst scenarios for MVP from a timing perspective because it is clear that under Section 324 the DC Circuit has the authority to consider the constitutionality of the statute. That means an emergency petition challenging the DC Circuit’s action would not be as well founded as the one challenging the Fourth Circuit’s stay. This would likely push the in-service date into late 2025. - Fourth Circuit vacates permits, but Supreme Court overturns that decision in merits review.
This would be the other worst path for MVP and would lead to an in-service date in late 2025 because it would mean a full merits review in the Supreme Court term that begins in October 2024. - Act of Congress is held unconstitutional.
As we stated in our summary, after reading the Solicitor’s Brief, we believe there is a small chance of this occurring, approximately only 5%. But if it were to occur, we think it would mean the end of the project.
Grab Some Popcorn and Fire Up Your Browser Refresh Button
A decision from the Supreme Court on MVP’s emergency petition could come as early as today. Based on similar motions that were addressed in the Supreme Court’s prior term, we would expect two entries in the docket for the case. The first would be an indication that the Chief Justice had referred the matter to the entire court and the second would be the actual decision by the full court. Both of these would likely just be reflected in very short orders and would appear on the Supreme Court’s docket page for MVP’s emergency petition. So we will be monitoring that page until we see what the court does with the petition and you are free to play along with us by using your browser's refresh button.
However, MVP or the government could file a reply to the responses filed yesterday by the environmental groups. That would likely push any Supreme Court decision past 10:00 AM on Thursday, which would mean that the Fourth Circuit would go forward with the oral argument on the motions to dismiss filed by MVP and the government based on the fact that Section 324 constitutionally stripped the Fourth Circuit of jurisdiction over the cases. We will of course be listening to that argument, but again if you want to grab some popcorn and listen in as well, you can use this link to listen to the oral argument live.