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Washington Watch: What’s in Store for the Atlantic Coast Pipeline?

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On Feb. 24, the U.S. Supreme Court will hear oral arguments on whether the Atlantic Coast Pipeline LLC (Atlantic) can move forward with its pipeline project linking natural gas fields in West Virginia with markets in Virginia and North Carolina. At issue is whether the U.S. Forest Service properly granted Atlantic a right-of-way (ROW) for its pipeline to cross under a small portion of the Appalachian National Scenic Trail (Trail). The Fourth Circuit answered that question with a resounding “no,” holding that the Trail is on National Park System land through which no federal authority can grant a pipeline ROW, absent future Congressional action. As discussed below, the Supreme Court’s opinion will affect much more than the future of Atlantic’s pipeline.

Atlantic’s Project

On Oct. 13, 2017, by a 2-1 vote, the Federal Energy Regulatory Commission (FERC) authorized Atlantic to construct a new $5 billion pipeline project stretching 600 miles from Harrison County, West Virginia, to eastern portions of Virginia and North Carolina. The pipeline will provide 1.5 million dekatherms per day of firm transportation service. Ninety-six percent of the capacity is subject to precedent agreements with six shippers, with almost 80 percent of the transported gas anticipated to supply gas-fired, electric generation facilities needed to back up expanding renewable generation.

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In addition to FERC’s authorization, Atlantic and its affiliates obtained 33 separate regulatory approvals from federal, state and local regulators. One involves a ROW issued by the Forest Service to cross 16 miles of the George Washington National Forest (GW Forest), including a one-tenth mile stretch where horizontal directional drilling would be used to construct the pipeline 700 ft beneath the Trail. After more than two years of analysis, including participating as a “cooperating agency” in an environmental impact statement prepared by FERC, the Forest Service granted the ROW on Jan. 2, 2018. A few weeks later, several environmental groups filed an appeal with the Fourth Circuit Court of Appeals challenging the Forest Service’s ROW.

Fourth Circuit Decision

The environmental petitioners argued that, in granting the ROW, the Forest Service committed several procedural errors. More importantly, they argued that the Forest Service does not have authority to issue the ROW. Their argument has three parts. First, Congress designated the Trail as a National Scenic Trail administered by the Secretary of the Interior, who in turn delegated that duty to the National Park Service. Second, Congress determined that land in the National Park System includes “any area of land and water administered by the Secretary [of the Interior]” through National Park Service.” Accordingly, the Trail is land in the National Park System. Third, the Mineral Leasing Act (MLA), the federal statute under which the Forest Service issued the ROW, grants the appropriate federal agency head to issue a pipeline ROW across “Federal lands,” but, significantly provides that “Federal lands” mean “all lands owned by the United States except lands in the National Park System.” Thus, the environmentalists contend that the entire Trail (including the land beneath) is National Park System land under the exclusive authority of the Nation Park Service.

The thrust of the environmental groups’ argument is not the wrong federal agency granted the ROW, but instead that no agency — neither the Forest Service nor the National Park Service — can rely on the MLA to issue a pipeline ROW across the Trail. The Fourth Circuit bought the environmentalists’ argument, vacated the ROW, and in so doing quoted the 1971 Dr. Seuss book, The Lorax: “We trust the United States Forest Service to ‘speak for the trees, for the trees have no tongues.’” A thorough review of the record leads to the necessary conclusion that the Forest Service abdicated its responsibility to preserve national forest resources.

Supreme Court Case

Atlantic disagreed with the Fourth Circuit, but did not have right to appeal to the Supreme Court. An aggrieved party seeking the Supreme Court to review a lower court decision must file a petition for a writ of certiorari. “Writ” means a written command, while “certiorari” is Latin for “to be more fully informed.” By filing a request for a writ of certiorari, a party is simply asking the Court to order a lower court to send up the record of the case for review. The Supreme Court is not obligated to grant the requested review, but rather carefully chooses cases that might have national significance or harmonize conflicting circuit court decisions. Only if four of the nine Justices agree, will the Court grant the request. Each year, the Court reportedly receives more than 7,000 petitions for a writ of certiorari, but only hears oral argument for 100 or less! Nevertheless, Atlantic sought and received a writ of certiorari.

On appeal, Atlantic essentially used the following history lesson to explain why the Fourth Circuit’s decision is wrong. In 1911, Congress authorized the Agriculture Secretary to acquire lands to be preserved as national forests. The Secretary later acquired what is now the GW Forest, roughly one million acres in West
Virginia and Virginia administered by the Forest Service. In 1920, Congress enacted the Mineral Leasing Act (MLA) to authorize federal agencies to grant ROW “for pipelines to cross federal lands they administer.”

In 1968, Congress enacted the National Trails System Act (Trails Act) to promote different types of national trails. The Trail, established contemporaneously with the act, is a footpath winding through 14 states (from Maine to Georgia) and crossing hundreds of miles of private land, 60 state lands (game, forests, or parks), a national wildlife refuge, six national parks, and eight national forests, including the GW Forest. Because the Trail was and is administered by a variety of federal, state, and private interests, the Trails Act vests either the Interior Secretary or the Agriculture Secretary primary responsibility to administer each trail, but leaves the ownership of the land unaffected. Therefore, while the Trail passes through the GW Forest, the GW Forest still remains national forest lands administered by the Forest Service, which, acting under the MLA, had authority to grant Atlantic a pipeline ROW under the Trail.

Cast in this light, Atlantic told the Supreme Court: “The decision below gets an exceptionally important question exceptionally wrong.” Left unchecked, the Fourth Circuit’s “decision converts a Trail that is primarily on land owned or operated by private state, and Forest Service entities into a 2,200-mile Park Service barrier separating critical natural resources from consumers along the East Coast….” Thus, the issue before the Supreme Court means much more than the billions of dollars invested in Atlantic’s pipeline, it also imperils 56 pipelines that already cross under the trail, as well as electrical transmission lines, telecommunications sites, water facilities and roads.

In addition to the litigants’ arguments, the Supreme Court will also consider amicus curiae (friend of the court) briefs filed by non-litigants, including other pipelines (e.g., Mountain Valley Pipeline, LLC, whose project would also cross the Trail), labor unions, members of Congress, environmental groups,
landowners, and the Attorney Generals of West Virginia (in support of Atlantic) and Virginia (opposing Atlantic).

After hearing oral arguments, the nine justices will meet to reach a preliminary decision about the outcome of the case. The written opinion will likely issue before next fall.

Washington Watch is a regular report on the oil and gas pipeline regulatory landscape. Steve Weiler is partner at Dorsey & Whitney LLC in Washington, D.C. Contact him at weiler.steve@dorsey.com.

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