Supreme Court Seems Ready to Back Atlantic Coast Pipeline Permit

(Bloomberg) -- A majority of U.S. Supreme Court justices seemed supportive of a crucial permit for Dominion Energy Inc.’s planned $8 billion Atlantic Coast Pipeline, suggesting the Forest Service acted lawfully by clearing the natural-gas line to cross under the Appalachian Trail.

In an hour-long argument in Washington Monday, Chief Justice John Roberts said the position taken by environmental groups opposed to the pipeline would “erect an impermeable barrier” along the 2,200-mile (3540-kilometer) trail, separating consumers on the eastern seaboard from inland energy resources.

A ruling in Dominion’s favor would eliminate the biggest obstacle to the 600-mile pipeline, which would carry as much as 1.5 billion cubic feet of gas per day from the Marcellus shale basin in West Virginia to customers in North Carolina and Virginia.

Without the permit, “the whole enterprise is done,” Justice Department lawyer Anthony Yang told the court Monday. President Donald Trump’s administration is backing Dominion, challenging a federal appeals court ruling that tossed out the permit.

Dominion, which is developing the pipeline with Duke Energy Corp., says it expects to begin construction by mid-year and complete it by the end of 2021. The company is still facing a pending administrative review of other environmental issues.

The case will also affect EQM Midstream Partners LP’s Mountain Valley gas pipeline from West Virginia to Virginia. Mountain Valley told the Supreme Court in December that the appeals court ruling forced a halt to its project, which is 90% complete at a cost of more than $4.3 billion.

The 4th U.S. Circuit Court of Appeals said the Forest Service lacked authority to issue the Atlantic Coast permit because the Appalachian Trail is controlled by the National Park Service. The U.S. Mineral Leasing Act says the Forest Service doesn’t have jurisdiction over “lands in the National Park System.”

Dominion and the Trump administration contend that while the National Park Service manages the Appalachian Trail, the underlying land is part of a national forest -- putting it within the Forest Service’s jurisdiction.

Justice Elena Kagan called that “a difficult distinction to wrap one’s head around.”

“When you walk on the trail, when you bike on the trail, when you backpack on the trail, you’re backpacking and biking and walking on land, aren’t you?” she asked Yang.

But Roberts likened the trail to an easement, in which one entity owns the underlying land but others have the right to walk along it in certain places.

This “doesn’t strike me as that unusual a concept, that there are property rights that are distinct from rights in the land” the chief justice said.

Below the Trail

Other justices focused on the placement of the pipeline well below the trail.

“When I think of a pipeline that is 600 feet below the surface, that doesn’t seem like a trail,” Justice Samuel Alito said. “So instead of having to draw this distinction between the trail and the land, why can’t we just say that the trail is on the surface and something that happens 600 feet below the surface is not the trail?”

Michael Kellogg, the lawyer for the environmental groups, said that approach couldn’t be squared with the wording of federal law. Kellogg pointed to a provision that says the Interior Department, which houses the Park Service, has the authority to grant rights-of-way “upon, over, under, across or along” the Appalachian Trail.

Justice Stephen Breyer said he worried about the implications of Kellogg’s position.

“If you’re saying it goes down to the center of the earth, then there are all kinds of things some other Congress might do,” Breyer said. “This land belongs to the federal government down to the center of the earth.”

Atlantic Coast Pipeline’s lawyer, Paul Clement, urged the justices to issue a broad ruling that would apply even if a pipeline were not so far below the surface. But he added: “It’s not my job to resist winning this case on a narrow ground, so I’m not going to do that.”

The argument was a positive one for the pipeline, Washington-based ClearView Energy Partners told its clients in a note. “We like its chances with the Supreme Court,” the note said.

Longest Footpath

The trail, completed in 1937, is the world’s longest hiking-only footpath, according to the Appalachian Trail Conservancy, which works to protect and maintain it.

Atlantic Coast says more than 50 pipelines already cross the trail, some of them on Forest Service land. But the environmental groups say none of those were authorized under similar circumstances. Some are on state or private land, while others predate the 1968 congressional designation of the Appalachian Trail.

The case is to some degree a proxy for a broader fight over the nation’s energy policy. Business groups are backing the pipeline, as are unions that would benefit from the thousands of jobs it would create. Local property owners are joining environmental advocates in seeking to block the project.

The Appalachian region, which includes the Marcellus shale basin, is practically drowning in natural gas. Pipelines like Atlantic Coast have been proposed as a way to shuttle fuel out of gas fields and toward demand centers in the southeastern U.S., where it can be used for heating and cooking as well as to generate electricity.

Opponents question the need for new gas infrastructure, pointing to slowing demand in the years since the project was announced in 2014. Environmental groups say natural gas pipelines further America’s dependence on fossil fuels at a time when climate change demands a complete shift to renewable sources of energy.

The cases are United States Forest Service v. Cowpasture River Preservation Association, 18-1584, and Atlantic Coast Pipeline v. Cowpasture River Preservation Association, 18-1587.

--With assistance from Rachel Adams-Heard and Stephen Cunningham.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Laurie Asséo

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