The ‘last pipeline’? Mountain Valley Pipeline remains stalled as it seeks extension from federal regulators

Mountain Valley Pipeline chalked up a win Friday when federal regulators found it wouldn’t jeopardize any of five endangered or threatened species known to live in its path, but the project remains paused while other regulators decide whether to lift a stop-work order and extend its construction window. 

MVP has been stalled since October, when a federal court ruling led the Federal Energy Regulatory Commission to shut down all major work on the project until the U.S. Fish and Wildlife Service redid a review of its impacts on endangered or threatened species. 

With more than 30 miles of upland work remaining to be done in Southwest Virginia, largely in Roanoke and Giles counties, the pipeline’s developers — a group of five companies led by Equitrans Midstream — have faced a time crunch. Already far behind schedule and with costs that have ballooned from $3.7 billion to $5.4 billion, the project is coming up on the expiration of its FERC certification on Oct. 13.

In May, Equitrans leaders sought to reassure investors that the pipeline still had “a narrow path” to hit its late 2020 in-service target and $5.4 billion price tag as long as they received Fish and Wildlife’s approval and FERC lifted its stop-work order by July. 

In June, the company revised its in-service date to early 2021. Officials also said costs could exceed $5.4 billion by about 5 percent “due to the need to adapt to complex judicial decisions and regulatory changes — creating carrying costs and requiring supplemental crews to safely maintain the entire 303-mile route during the halt of construction and through the upcoming winter months,” according to an email from MVP spokesperson Natalie Cox. 

On Aug. 25, Mountain Valley formally applied for a two-year extension of its certification. In support, its lawyers cited “unforeseen litigation and permitting delays outside of Mountain Valley’s control.” 

“Mountain Valley undeniably made good faith efforts to meet its construction deadline,” the company wrote in its Aug. 25 application. “Since the issuance of the commission’s order, Mountain Valley has worked diligently to complete timely construction of the project in a safe and environmentally-protective manner.”

Not everyone agrees. Landowners from opposition group Preserve Bent Mountain in Roanoke County have urged FERC to deny the extension, pointing to what they say are harmful sedimentation and tree-cutting, “rushed and shoddy construction” and a record of errors that led to a $2.15 million settlement between Mountain Valley and Virginia over environmental damage. (The commonwealth has since sought an additional $86,000 in fines.)  

“To allow MVP two more years of its proven record of the last six years would be at minimum, to reward incompetence and wrongdoing,” wrote opponent Roberta Bondurant in a Sept. 9 filing on behalf of the group. 

In another letter to FERC in response to the recertification request, Roanoke County Assistant County Administrator Richard Caywood described the local government as “concerned about the environmental impacts of the project as MVP has been repeatedly cited for (Department of Environmental Quality) violations since construction started in 2018.”

But Virginia Sen. Frank Ruff, R-Mecklenburg, who represents an area east of Roanoke and Giles that the pipeline crosses, urged FERC to extend the project’s certification. 

“MVP is an important project in terms of economic development, local tax revenue and jobs,” he wrote. Besides providing fuel to Roanoke Gas, he argued, the pipeline is expected to pay about $7 million in taxes to six Virginia localities annually.

“During these challenging budget times, these local governments are in tremendous need of additional revenue to meet basic services,” Ruff wrote.

Virginia Sens. Tim Kaine and Mark Warner, both Democrats, urged FERC to extend the deadline for public comment on MVP’s request from 15 days to 30 days, citing the COVID-19 pandemic.

“An extension of the MVP intervention and public comment period deadline will provide small but meaningful relief for Virginians in the midst of unprecedented challenges at home. It will also bring additional transparency to the process by which FERC certificates natural gas pipelines,” they wrote.

Signs of life

The Sept. 4 issuance of the Fish and Wildlife Service’s biological opinion on endangered species impacts has raised the possibility that work on the pipeline will restart soon. 

In May, Equitrans CEO Thomas Karam told investors that once Mountain Valley received its biological opinion and FERC lifted its stop-work order, “we will fully mobilize and get upwards of 4,000 people on the right-of-way to start doing that upland work.”

When FERC is likely to lift that order, and whether it will do so before it issues a ruling on the certificate extension, is not clear. Commission spokesperson Tamara Young-Allen said in an email that “a timeline for the decision here is not prescribed by regulation or precedent.”

That’s not the case for FERC’s recertification decision, where the body has said it “will aim to issue an order acting on the request within 45 days.”

Certificate extensions are generally granted, said several industry watchers, although Young-Allen said the commission does not keep statistics on its decisions.

FERC has set a high bar for evidence that will be weighed in its recertification decision, stating that it will only address “arguments relating to whether the applicant has demonstrated there is good cause to grant the extension.”

“The commission will not consider arguments that re-litigate the issuance of the certificate order, including whether the commission properly found the project to be in the public convenience and necessity and whether the commission’s environmental analysis for the certificate complied with the National Environmental Policy Act,” the commission specified in an Aug. 27 notice of the application. 

Elly Benson, a senior attorney with the Sierra Club, said that regardless of recertification, “the wheels should not be put back in motion in terms of construction” because despite the Fish and Wildlife authorization, Mountain Valley still lacks key approvals from the U.S. Forest Service, the Bureau of Land Management and the U.S. Army Corps of Engineers.

The Sierra Club, along with seven other environmental groups, is also asking FERC to require that Mountain Valley produce a supplemental environmental impact statement “to address significant new circumstances and information bearing on MVP’s environmental impacts” that have emerged since the initial environmental review in June 2017. 

“That’s from unanticipated slips to all sorts of sedimentation impacts and erosion impacts that FERC and Mountain Valley were warned about by local landowners but were not anticipated in the final” environmental impact statement, she said. 

‘The last major pipeline’?

Speculation about Mountain Valley’s future has swirled since the July cancellation of Virginia’s other major pipeline, the Dominion Energy and Duke Energy-backed Atlantic Coast Pipeline project. “Is this the end of new pipelines?” The New York Times asked at the time, citing analysts’ doubts about the barriers environmental challenges to pipelines pose to new development. 

Still, many industry watchers assumed that Mountain Valley would be spared. Its developers claim the pipeline is 92 percent complete, although some Virginia opponents contest that characterization. And others have viewed the opening left by the Atlantic Coast Pipeline’s exit as a boon to MVP.

“That was about 1.5 (billion cubic feet) a day of capacity that was going down (to) the southeastern market. … So not having that project online makes MVP more desirable,” Toby Rice, president and CEO of EQT Corp., told investors during a July 27 call. “I think the customers that signed up for that project are still looking for that gas, and MVP is going to be a good outlook for that.” 

EQT Corp., which used to own Equitrans Midstream before a 2018 spinoff and still has close ties with the company, is one of four firms that through subsidiaries have committed to buy gas from Mountain Valley over a 20-year period. 

But uncertainties remain. John McAvoy, CEO of Con Edison, which is the only MVP stake owner to not also have a commitment to purchasing gas from the project, told investors this August that the company would “consider monetizing” its 12 percent stake in the pipeline. 

Nevertheless, he added, “we’re focused on getting it across the finish line with our partners.”

EQT president Rice also sounded a more somber note when talking to analysts in July.

“I think people making the argument that MVP is the last major pipeline that comes out of the (Appalachian) basin, I think is pretty credible,” he said.