Fight Song - An Epic Battle Brews Over the Mountain Valley Pipeline Project - RBN Energy

Fight Song - An Epic Battle Brews Over the Mountain Valley Pipeline Project | RBN Energy

Even an “Act of Congress” may not be enough to keep the Mountain Valley Pipeline out of trouble. The long-stalled natural gas takeaway project in Appalachia briefly appeared to be unfettered from regulatory and legal shackles after Congress rolled an MVP mandate into the debt-ceiling bill — the Fiscal Responsibility Act (FRA) of 2023. With the MVP provision, Congress effectively approved all required permits for the greenfield project without judicial review in a bid to fast-track the completion and initial startup of the pipeline. The FRA, which President Biden signed into law on June 3, appeared to instantly clear MVP’s path. But that reprieve didn’t last long. Earlier this week, the U.S. Fourth Circuit Court of Appeals once again halted construction of the project, seemingly in defiance of the FRA, setting the stage for a fight at the Supreme Court. In today’s RBN blog, we break down the latest developments and how they impact MVP’s prospects.

Before we dive into what’s happened this week, let’s get a quick refresher about what the MVP project is all about. The pipeline is designed to connect Appalachian gas supply to growing power generation markets in the Mid-Atlantic and Southeast, including southern Virginia and, via the MVP Southgate extension, North Carolina. The MVP mainline (dashed pink line in Figure 1) is a ~300-mile, 42-inch-diameter pipe with an initial capacity of 2 Bcf/d, which the sponsor has said can be expanded by an incremental 500 MMcf/d through additional compression.

MVP Southgate (dashed purple line in Figure 1) was initially proposed as a 75-mile extension from the tailgate of the MVP mainline near Chatham, VA, to an end point in Alamance County, NC, about 50 miles south of the Virginia-North Carolina border. Given the permitting issues, MVP’s lead sponsor and prospective operator, Equitrans Midstream Partners LP (EQM), had said it was reevaluating the extension, and since the FRA’s enactment, it has asked the Federal Energy Regulatory Commission (FERC) for more time — until June 2026 — to complete it. (That filing has spurred strong opposition of its own. See our weekly

Figure 1. Mountain Valley Pipeline and MVP Southgate Projects. Source: RBN

We have chronicled MVP’s long, long journey in the nine years since it was proposed (most recently in Will It Go In Circles). It received its certificate from FERC in 2017 and construction began in early 2018. But as the project tried to work its way through the permitting jungle — even after a FERC certificate is issued, a project has to get permits at the state level, primarily water permits from the U.S. Army Corps of Engineers at the federal level, but with a state’s ability to obstruct them — gas-market participants watched as permit after permit was issued, only to be yanked away by a federal appellate court after being challenged by environmental groups. (This is somewhat ironic, given the net emissions benefits of the pipeline, as we discussed in Ghosts of Pipelines Past and Future.) But just as MVP was once again testing its sponsors’ resolve by having yet another permit reversed, along came the debt-limit crisis.

As we discussed in Rescue Me, the FRA included language that deemed the MVP project to be in the national interest and basically required everyone to approve it — period, end of story — and to issue all necessary permits within three weeks after the ink on President Biden’s signature was dry. Not ignoring MVP’s long legal history, the provision also attempted to close just about all possibility of further legal challenges, at least to the permits themselves. Specifically, it ensconced into law that “no court shall have jurisdiction to review any action taken by the permitting agencies for the construction and initial operation at full capacity of MVP.” It left open the door to legal challenges to the MVP provision in the FRA itself, but specified that those would fall exclusively in the jurisdiction of the DC Circuit Court of Appeals.

Even as the FRA was being passed, there were pending cases in both the Fourth Circuit and DC Circuit courts petitioning against various federal agency approvals. But the federal agencies filed to dismiss those appeals for lack of jurisdiction, and on June 28, FERC gave MVP the go-ahead to start all remaining construction. (Despite innumerable regulatory and legal setbacks, the project sponsor managed to complete all but 6% of the project pre-FRA.) For a moment, it seemed like it was only a matter of time before the cases were dismissed. Of course, that turned out to be too good to be true for MVP. It didn’t take long for environmental groups to file motions for a stay of construction as they petitioned for review of the FRA-mandated federal approvals.

On July 10, a three-judge panel in the Fourth Circuit unanimously sided with The Wilderness Society and once again halted construction of the pipeline, pending review of the petition challenging the U.S. Forest Service’s May 15 record of decision (ROD) to allow construction of a three-mile stretch through the Jefferson National Forest in southwestern Virginia. Notably, the U.S. Department of Justice (DOJ) filed a letter with the court pointing out that the ruling came on the same day as the deadline for responding to the motion for stay — but before the DOJ had a chance to respond. The court followed that up with a ruling on July 11 to stay the U.S. Fish and Wildlife Service’s Biological Opinion and Incidental Take Statement while it reviews a separate petition from environmental groups challenging that approval. This ruling halts all construction activity, not just in the national forest. Neither order addressed the FRA’s MVP mandate in any way. Late on July 12, the Fourth Circuit filed another order consolidating three cases against federal permitting agencies and set a July 27 date for oral arguments.

This sets up a monumental cage fight, given that, as we said, the FRA explicitly states that “no court shall have jurisdiction to review any action taken by the permitting agencies for the construction and initial operation at full capacity of MVP.” The petitions challenging the permits, which were filed prior to the FRA being signed into law, have argued, among other things, that the FRA has no bearing on these cases because it is unconstitutional for Congress to dictate a result in pending litigation. The permitting agencies, on the other hand, have responded with motions to dismiss the appeals altogether, citing lack of jurisdiction based on the FRA. And for its part, Equitrans has said it is considering its legal options, including filing an emergency appeal to the Supreme Court to challenge the Fourth Circuit rulings.

What does all this mean for MVP completion and timing? There are a number of ways this could go, but it’s hard to imagine this won’t come down to the constitutionality of the MVP provision in the FRA, which means it will ultimately need to be resolved by the Supreme Court. The Supreme Court is currently in recess for the summer, so the chance of getting a final resolution in the near-term seems dim. An emergency appeal, which is decided by one justice (in this case, the one assigned to the Fourth Circuit, Chief Justice John Roberts), could lead to a stay of the circuit court’s rulings (a “stay of the stay,” emblematic of how confusing the legal process can be). Such action by the Supreme Court would potentially still allow MVP to resume construction and complete the project this year. However, MVP has said it has 4-5 months of construction work remaining, and that work typically can’t continue during the harsh winter months. So a protracted legal battle that can only be argued in front of the Supreme Court once it’s back in session in the fall would likely push the completion timeline to mid-to-late 2024, at the earliest.

The whole MVP saga underscores the regulatory and legal challenges that face the developers of just about any major energy-infrastructure project — and the need for federal permitting reform. The pipeline project also has a direct impact on upstream production in the U.S.’s largest gas-focused shale play. As we said late last month in I Walk the Line, MVP (with a mandate for its approval signed into law) is widely viewed as being the last major gas takeaway pipeline likely to be developed out of Appalachia — and a critical factor in allowing Marcellus/Utica producers to ramp up their output. Figure 2 summarizes RBN’s monthly supply-demand (SD) balance outlook for the Northeast through end-of-year 2028 and assumes that — with or without MVP — production will be constrained by pipeline capacity, though the completion of the long-delayed pipeline would allow for a measurable boost.

Figure 2. RBN’s Northeast Supply-Demand Forecast. Source: RBN NATGAS Appalachia

The graph stacks up in-region demand (purple layer in the stack) and Cove Point LNG feedgas (orange layer), along with available pipeline exit capacity (green layer). The dark-blue line represents regional supply, including production and the little bit of LNG imports the region still receives, historically, as well as for the “no-MVP” scenario through 2028, while the light-blue line illustrates our “with-MVP” scenario for that period.

Without MVP, we estimate that Northeast supply would grow by an average ~1 Bcf/d each year through 2025 before growth slows to a crawl and supply becomes capped at a little over 37 Bcf/d by 2027. With MVP, however, supply growth would get a bigger bump up front and grow by an average 1.5 Bcf/d through 2025 but would still ultimately flatten out by 2027 — the only difference being that it would be constrained at a higher level of just under 39 Bcf/d.

For the latest on how this evolves and impacts our production and basis forecasts, follow along in the NATGAS Appalachia report.

“Fight Song” was written by Rachel Platten and Dave Bassett. It appears as the first song on Rachel Platten’s first EP for Columbia Records of the same name, released in May 2015. It also appeared as the fifth song on Platten’s third studio album and first major-label release, Wildfire. Released as a single in February 2015, it went to #6 on the Billboard Hot 100 Singles chart and has been certified 5x Platinum by the Recording Industry Association of America (RIAA). The song has been featured in several television shows and Ford car commercials. It was named the official theme song for the 2015 “Rise Above Cancer” campaign. Personnel on the record were: Rachel Platten (vocals, piano) and Jon Levine (programming, bass, keyboards and guitar).

Wildfire was recorded in 2015 and produced by Jon Levine, Brian West and Ben Singer. Released in January 2016, the album went to #5 on the Billboard 200 Albums chart and has been certified Gold by the RIAA. Three singles were released from the LP.

Rachel Platten is an American singer-songwriter. After releasing two independent albums in 2003 and 2011, she signed with Columbia Records in 2015. Her debut single, “Fight Song,” made the Top 10 in several countries worldwide and won her a Daytime Emmy Award for a live performance of the song on Good Morning America. In June 2015, Platten performed “Fight Song” with her friend Taylor Swift in front of an audience of 50,000 people in Philadelphia during Swift’s 1989 World Tour supporting Swift’s' fifth studio LP, 1989. Platten has released four studio albums, one EP and six singles. She has appeared in several television shows and is the author of a children's book. She continues to record and tour.