American Oil and Gas Reporter - July 2020 - 26

Midstream Developments

U.S. Supreme Court Ruling Favors ACP
WASHINGTON-The U.S. Supreme
Court gave a boost to pipeline construction
on June 15 by ruling the U.S. Forest
Service has authority to grant the Atlantic
Coast Pipeline (ACP) a permit to pass
beneath the Appalachian Trail.
On the same day, the Justice Department asked the high court to remove another barrier to midstream development
by temporarily blocking an order from
the U.S. District Court for the District of
Montana that prevents the Army Corps
of Engineers from using its Nationwide
Permit 12 to approve water crossings for
oil and gas pipelines.
(Editor's Note: On July 6, SCOTUS
granted Justice's request as it pertains to
new pipeline projects around the country.
The one-page order reads, in part, "The
district court's May 11, 2020, order granting partial vacatur and an injunction is
stayed, except as it applies to the Keystone
XL Pipeline, pending disposition of the
appeal in the U.S. Court of Appeals for
the 9th Circuit.")
Meanwhile in the state of Michigan,
various entities in multiple decisions
during the month of June alternately
boosted and, at least temporarily, closed
the door on Enbridge Inc.'s plans to
replace its Line 5 segment in the Straits
of Mackinac.
Atlantic Coast Pipeline
SCOTUS ruled 7-2 that the U.S. Court
of Appeals for the 4th Circuit erred in
2018 when it ruled the U.S. Forest Service
lacked the authority to grant ACP a permit
to pass beneath the Appalachian Trail,
the Energy Equipment & Infrastructure
Alliance (EEIA) reports.
Nevertheless, on July 5, pipeline owners
Dominion Energy Inc. and Duke Energy
Corp. announced they were cancelling
the project.
The 600-mile ACP was intended to
carry as much as 1.5 billion cubic feet of
Marcellus Shale gas a day from West
Virginia to customers in North Carolina
and Virginia.
EEIA says the 4th Circuit agreed with
environmental groups, who argued that
the Appalachian Trail was part of the
National Park System and that the Forest
Service did not have jurisdiction over
Park System lands under the 1920 Mineral
Leasing Act.
However, EEIA says, SCOTUS found
the Forest Service could grant rights of
way through lands crossed by the Ap26 THE AMERICAN OIL & GAS REPORTER

palachian Trail within national forests.
Writing for the majority, Justice Clarence
Thomas states, "Because the Department
of Interior's decision to assign responsibility over the Appalachian Trail to the
National Park Service did not transform
the land over which the trail passes into
land within the National Park System,
the Forest Service had the authority to
issue the special use permit.
"The lands that the trail crosses are
still federal lands, and the Forest Service
may grant a pipeline right of way through
them-just as it granted a right of way for
the trail," the opinion continues. "A trail
is a trail and land is land."
The decision was hailed by West Virginia Attorney General Patrick Morrisey,
who led an 18-state coalition that submitted
an amicus brief supporting ACP, as well
as West Virginia Governor Jim Justice
and U.S. Senator Shelley Moore Capito,
R-W.V.
Among others praising the ruling are
the West Virginia Oil & Natural Gas Association, the Affiliated Construction Trades
in West Virginia and the Consumer Energy
Alliance, which declares, "It is time for
anti-energy groups to stop playing political
games that fail to improve our environment
and serve only to make energy more expensive for families, businesses and consumers, using contorted legal theories that
stretch credulity and good sense with the
sole mission of stopping the development
of energy infrastructure."
Mark Burghardt, a partner in international law firm Dorsey & Whitney's oil
and gas group, calls the decision very
good for natural gas producers, pipeline
companies and gas consumers. "Long
term, it allows pipeline companies to
plan routes with certainty on how to cross
the 780-mile Appalachian Trail, and will
allow development of natural gas fields
in less populated areas to the west," he
says.
Pulling ACP's Plug
Nevertheless, Dominion and Duke announced July 5 that they were cancelling
ACP "because of ongoing delays and increasing cost uncertainty." On the same
day, Dominion also announced it was selling
"substantially all" of its gas transmission
and storage assets to an affiliate of Berkshire
Hathaway Inc. for $9.7 billion.
In announcing cancellation of ACP,
Dominion and Duke say legal developments have created an unacceptable layer

of uncertainty and anticipated delays. Included among them, the companies say,
is the U.S. District Court for the District
of Montana's order blocking the Army
Corps' use of NWP 12 and the U.S.
Court of Appeals for the 9th Circuit's
subsequent refusal to block the Montana
court's order.
Dominion and Duke say this and other
legal challenges have led to delays that
have caused ACP's project cost to increase
from their original estimate of $4.5 billion-$5.0 billion to $8.0 billion.
Among the legal challenges that still
were facing ACP, published reports observe,
is a ruling by the 4th Circuit in an aspect of
the Forest Service permit decision not challenged in the Supreme Court that the agency
could not authorize the pipeline to cross
under the Appalachian Trail until it found
no other alternative routes were viable.
In other rulings, the 4th Circuit also
invalidated the Virginia Air Pollution
Control Board's authorization for an ACP
compressor station in Buckingham County,
Va., and tossed out the pipeline's Clean
Water Act Section 404 water-crossing
permits, saying they were not consistent
with state laws, reports indicate.
Various parties expressed regret at the
ACP announcement while blasting pipeline
opponents.
In a joint statement, The American
Petroleum Institute President and Chief
Executive Officer Mike Sommers and
North America's Building Trades Unions
President Sean McGarvey say, "Like too
many shovel-ready projects before it,
ACP faced legal and permitting challenges
waged without merit by activists, and
these challenges ultimately cost Americans
along its route the environmental, employment and economic benefits that
modern pipeline projects bring."
For their part, Dominion and Duke
say the cancellation "reflects the increasing
legal uncertainty that overhangs largescale energy and industrial infrastructure
development in the United States. Until
these issues are resolved, the ability to
satisfy the country's energy needs will
be significantly challenged."
Adds the Energy Equipment & Infrastructure Alliance, "While delays in this
case have imposed unsupportable costs on
the project's sponsors, much greater costs
now will be borne by millions of Americans
who will not have adequate access to the
energy essential to their health, safety,
comfort and standard of living."

American Oil and Gas Reporter - July 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - July 2020