The Daley Note: August 24, 2023
After a years-long permit struggle, the Mountain Valley Pipeline (MVP) has passed through the legal equivalent of Mordor. The US Fourth Circuit Court of Appeals recently dismissed two legal challenges against MVP, clearing a significant legal hurdle for the project.
The Fourth Circuit on August 11 dismissed two longstanding petitions from environmental groups. The court cited language in the 2023 Fiscal Responsibility Act that transferred jurisdiction over constitutional challenges to MVP to a DC appellate court.
MVP and lead developer Equitrans Midstream (ETRN) were thrown a lifeboat by Congress as part of the debt-ceiling compromise. Signed into law by President Biden on June 3, the Fiscal Responsibility Act directs federal agencies to issue and maintain all authorizations for MVP. The bill also includes Section 324, which moved jurisdiction for challenges to MVP from the Fourth Circuit to the US Court of Appeals for the District of Columbia.
The ruling by the court ends a five-year legal struggle over construction permits that have raised costs and caused delay. Based in Richmond, the Fourth Circuit first vacated permits for MVP in 2018, and the court has continued to side with opponents of the project. Recently, the Fourth Circuit in April 2023 revoked permits for MVP to cross waterways in West Virginia. The court also issued a stay on construction in early July. That order was lifted by the Supreme Court on July 27, citing the pro-MVP language in the Fiscal Responsibility Act.
In the latest ruling, the Fourth Circuit’s three judges agreed Section 324 had stripped their ability to continue hearing petitions filed against MVP. “Here, Congress has removed our jurisdiction to hear the merits of the present petitions,” the Fourth Circuit panel wrote in the dismissal order.
The Supreme Court decision cleared the way for ETRN to restart construction on the 2 Bcf/d pipeline, and ETRN will continue to have the green light after the latest ruling from the Fourth Circuit. The pipeline is 94% complete, according to ETRN, which projects it can finish construction on MVP by YE23.
East Daley Analytics continues to see potential for delay, particularly if the project timeline slips into winter and cold temperatures disrupt construction work. In our Northeast Supply and Demand Forecast, we currently model a 2Q24 start-up for MVP.
We are skeptical of the near-term benefits of MVP to Appalachian producers since we expect most of the new capacity to be “phantom takeaway.” Most producers in the Northeast are content to keep production flat, so we anticipate spare egress capacity regardless if MVP is built (see figure). Nevertheless, we view MVP as valuable to jumpstart new infrastructure investments required to connect the Northeast to the next wave of demand from LNG exports. – Andrew Ware Tickers: ETRN.
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