Surprise MVP Decision May Indicate Formation of a Pragmatic Core at FERC

Originally published for customers April 13, 2022

What’s the issue?

Very late on Friday evening, FERC issued a unanimous decision that approved an application filed by Mountain Valley Pipeline to modify the crossing method to be used for 183 of the waterbody and wetland crossings it still needs to complete to put its mainline project into service.

Why does it matter?

The decision is important for MVP as it means any opposition groups will be forced to file appeals of this decision in parallel with many others that they have pending. But even more importantly, the split of the votes for the decision may be an early indicator that the two former state-level utility commissioners, Christie and Phillips, are forming a pragmatic core at an otherwise polarized FERC that may allow long-delayed projects to finally receive a vote and perhaps even win approval.

What’s our view?

The impact to MVP is somewhat blunted by the numerous conditions in the certificate that limit staff’s ability to allow construction on the 183 crossings to start. For the broader industry, there are signs of a pragmatic core, but also some worrying indicators that even this pragmatic core will likely slow down project approvals beyond what have been historic norms.


 

Very late on Friday evening, FERC issued a unanimous decision that approved an application filed by Mountain Valley Pipeline (MVP) to modify the crossing method to be used for 183 of the waterbody and wetland crossings it still needs to complete to put its mainline project into service. The decision is important for MVP as it means any opposition groups will be forced to file appeals of this decision in parallel with many others that they have pending. But even more importantly, the split of the votes for the decision may be an early indicator that the two former state-level utility commissioners, Christie and Phillips, are forming a pragmatic core at an otherwise polarized FERC that may allow long-delayed projects to finally receive a vote and perhaps even win approval.

The impact to MVP is somewhat blunted by the numerous conditions in the certificate that limit staff’s ability to allow construction on the 183 crossings to start. For the broader industry, there are signs of a pragmatic core, but also some worrying indicators that even this pragmatic core will likely slow down project approvals beyond what have been historic norms.

 

The MVP Decision

The case in which FERC issued its decision on Friday was filed by MVP to modify the method it was to use for crossing 183 wetlands and waterbodies. The application requested authority to change the method from an open-cut to some version of a bore, mostly conventional bores.

The decision noted the tortured history of MVP’s efforts to obtain the needed regulatory authority to cross all of the wetlands and waterbodies needed to complete the project. On October 13, 2017, FERC issued MVP its certificate. MVP started construction but then on November 9, 2020, the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) issued a stay of MVP’s use of Nationwide Permit 12, issued by the U.S. Army Corps of Engineers (USACE) for the project. On November 18, 2020, MVP filed a request with FERC to amend its certificate authorization to cross all remaining wetlands and waterbodies between MP 0 and 77 by trenchless method as opposed to open-cut method. But then on January 26, 2021, MVP changed its strategy and withdrew the request, “explaining that it intended to conduct a comprehensive review of all outstanding waterbody and wetland crossings and then file a new certificate amendment application with the Commission, as well as a new permit application with the USACE.” It is that amended application, which was filed on February 19, 2021, that FERC approved last Friday.

FERC voted unanimously to approve MVP’s amendment, which will allow MVP to change the crossing method for 183 waterbodies and wetlands at 120 locations from open-cut to trenchless; slightly shift the permanent right-of-way at mileposts 0.70 and 230.8; and conduct 24-hour construction activities at eight trenchless crossings. However, the vote was split into three factions. Commissioners Christie and Phillips apparently approved the full decision. Chairman Glick and Commissioner Clements concurred, but explained that this project was different from almost every other project pending before FERC. They stated that they only voted for it because MVP’s use of trenchless waterbody crossings will result in fewer environmental impacts than the crossing method that the Commission approved under the original certificate, “meaning that today’s order amending Mountain Valley’s certificate will almost certainly represent an improvement over the status quo.” Commissioner Danly concurred but noted his disagreement with the main opinion’s refusal to repudiate a prior decision by FERC that attempted to consider the significance of greenhouse gas (GHG) emissions and the main opinion’s use of the Social Cost of Carbon, which he says provides nothing to the order.

 

MVP’s Path Forward

The approval of MVP’s revised crossing method is certainly a positive development for the project as it removes one hurdle that stood in the way of the project’s completion. In addition, getting the FERC decision now means that any appeals of that decision, and there are certain to be appeals, can proceed in parallel with a number of other challenges facing the project.

Mountain Valley Pipeline Decision Path

Click here to download the full resolution PDF.

As seen above, we are tracking the numerous challenges facing the project. This FERC decision was just one of many and does little to actually advance the project timeline because FERC conditioned the ability to start the revised crossings on a number of other permits on the above chart. In particular, none of the revised crossings can even be started until the following occur:

  1. The U.S. Army Corps of Engineers issues the permit for all of the remaining waterbody and wetland crossings not covered by this application.
  2. That permit is conditioned on three others, namely the continued validity of the two water quality certificates issued by the states of Virginia and West Virginia and on completing consultation with the U.S. Fish and Wildlife Service, whose biological opinion regarding endangered species was voided by the Fourth Circuit earlier this year.
  3. Finally, the certificate for the revised crossings is limited in time the same way the original certificate was, which requires all construction to be completed by October of this year, which is impossible.

That limit on the time period for completing construction also may have encountered further risk this past week. The current time limit is actually an extension of the three-year time limit in the original certificate. The two-year extension that was granted almost two years ago was the subject of an oral argument last week before the U.S. Court of Appeals for the District of Columbia Circuit (DC Circuit). During that argument, the judges appeared to acknowledge that the initial extension was not unusual and maybe could have been done without a revised environmental assessment, but seriously questioned some of FERC’s logic. In particular, at least one of the judges was troubled by FERC’s conclusion that it did not need to consider how poorly the environmental measures in the original order had actually worked to protect the environment. With respect to the challenged order extending the original three-year construction deadline by an additional two years, opposition groups asserted that before extending the deadline FERC should have considered the actual performance of its environmental measures because the failure of those measures had led to numerous alleged water quality violations in both of the states crossed by the project.

In the order approving the extension of time, FERC simply dismissed this request by noting that MVP entered into consent decrees to resolve the violations, so “no additional action by the Commission is necessary at this time.” Judge Millett was very troubled by this blithe dismissal by FERC. She pointedly asked FERC counsel whether there was a “principle that if other entities find problems and impose new measures . . . that absolves the Commission, or any agency, from having to do a supplemental EIS.” Even if the DC Circuit upholds the prior extension, there could very well be language in that decision which would lead FERC to undertake a supplemental EIS before granting an additional extension. If that happens, the extension request could be delayed by almost a year, which could substantially delay MVP’s resumption of construction.

 

What Does the Decision Mean for the Industry?

The issuance of the MVP decision should be a welcome sign to the industry that Commissioners Christie and Phillips, both former state-level utility commissioners, appear to be forming a pragmatic core in contrast to the agenda-driven positions taken by the extremes from both ends of the political spectrum. The most significant finding in the decision that the industry can rely on going forward is the determination that conventional bores do not require a permit from the U.S. Army Corps of Engineers for discharges to the wetlands and waterbodies being crossed, and therefore no water quality certificate from the states involved with such crossings.

However, the decision, as noted by Chairman Glick, was a pretty unique one, and not like any typical pipeline expansion project. So there are limits to how applicable this decision may be to future decisions and some troubling signs about the views of these two centrist commissioners. First, the decision appears to follow the 1999 Certificate Policy Statement, which simply reflects that that policy has not yet been replaced due to the fact that FERC withdrew its updated policy statement and reissued it as a draft, which we discussed in FERC Reverses Course, But Some Celebrate Prematurely. Second, the decision notes that Staff’s Environmental Assessment (EA) was prepared in accordance with the Council on Environmental Quality’s (CEQ) July 16, 2020 final rule regarding the preparation of documents under the National Environmental Policy Act (NEPA). But the CEQ has indicated that it is proposing to generally restore these regulatory provisions to those that were in effect for decades before being modified in 2020. Third, the Commission rejected some suggestions by the Environmental Protection Agency to prepare a cumulative effects analysis at a watershed level for all of the crossings, but did so only because such analysis was not required under the 2020 NEPA regulations. Similarly, it rejected an EPA recommendation to provide a discussion of the conflict over time between continuing operational emissions and GHG emission reduction policies, but only because there would be no increase in the operational emissions from the proposed changes to the project.

The decision did calculate the change in construction emissions, which is not surprising, but also used the Social Cost of Carbon to calculate the monetary impact of those increases. However, the decision claimed to not characterize the emissions from the amended project as significant or insignificant, but only because FERC has issued for comment its revised GHG policy which will determine whether and how the Commission will conduct significance determinations going forward. Of course, the decision to not require a full Environmental Impact Statement means that the decision implicitly found the emissions are not significant, because otherwise an EA would not have been sufficient.

The decision also noted that under the traditional way FERC determined whether a project would impact environmental justice communities, Staff concluded that none of the counties or census blocks crossed by the Mountain Valley Pipeline Project had such communities. However, using FERC’s updated standards that were issued after the EA was prepared, FERC Staff determined that more than half of all census block groups (eighteen out of thirty-five) qualify as environmental justice communities.

The most troubling aspect of the decision for the industry would appear to be the conditions imposed in the certificate, which appears to adopt Chairman Glick’s position that FERC will not allow any construction to begin until all permits for a project have been received. The decision specifically prohibits Staff from allowing any of the work to proceed until MVP receives its permit from the USACE to complete all the remaining waterbody crossings which were not the subject of the application, plus a revised or new biological opinion from the U.S. Fish and Wildlife Service for the original Mountain Valley Pipeline Project. Neither of those have anything to do with the project approved in the application and thus appear to support the Chairman’s antipathy toward piecemeal construction authorizations.

Finally, the Commission’s issuance of this decision between open meetings may be a sign that the policy adopted during the Chairman Chatterjee era of issuing certificate decisions only at open meetings is no longer in place. That could mean other projects currently pending a decision may no longer have to wait for an open meeting to get their certificates.

If you would like to discuss our analysis of the risks facing MVP, please contact us.

Recent Articles

June 17, 2020

ACP Wins at the Supreme Court — Necessary But Not Sufficient for ACP and MVP

January 27, 2022

FERC’s Authority Over Electric Transmission Likely Still Not Enough to Overcome State Objections

June 14, 2022

FERC Delays Impact Revenues Throughout Gas Pipeline Ecosystem