The ACP Wins One But The War Drags On

By Peter Galuszka

The $8.5 billion Atlantic Coast Pipeline has won a significant legal victory but the war is far from over.

The U.S. Supreme Court, in a 7-2 decision, has ruled in favor of project operated by Dominion Energy and Duke Energy saying that its 42-inch pipeline can cross under the Appalachian Trail in the George Washington National Forest.

The Court ruled that the pipeline can pass 600 feet underneath the trail and that the U.S. Forest Service has the right to allow a right of way. The Richmond-based 4th Circuit Court of Appeals had previously ruled that the Forest Service had no such authority.

Dissenting, Justices Sonia Sotomayor and Elena Kagan wrote that the U.S. Minerals Leasing Act does give the federal government the right to regulate federal land, including trails. Justice Clarence Thomas, who wrote the majority ruling, said that plans to bury the pipeline under the Appalachian Trail represent an easement which is not the same as “land.”

The project still faces eight other permitting issues involving the Forest Service, the U.S. Fish & Wildlife Service, the National Park Service and the U.S. Army Corps of Engineers.

Perhaps the biggest challenges of all are not with the regulatory process but simple economics. In February, a third partner, the Southern Company, sold its share in the project over concerns of rising costs. Originally figured at $5 billion, the pipeline’s cost is now estimated at about $8.5 billion.

The Marcellus Shale fields in West Virginia and Pennsylvania spearheaded a boom in natural gas production thanks to advanced hydrofracturing drilling methods known as “fracking.” The development had huge implications for the U.S. petroleum industry that resulted in much lower prices for natural gases and the revival of an export market.

But fracking wells are considerably more expensive than traditional ones and tend to play out after only a few years. That gives fracking companies a short time frame in which to ramp up production and pay off their substantial debt. The coronavirus pandemic has dampened demand thanks to dramatic economic slowdowns.

One victim is Oklahoma-based Chesapeake Energy Corp. which has been a pioneer in the fracking boom. Reuters reported that the firm is preparing to file for bankruptcy this week due to overwhelming debt.

Meanwhile, there are serious questions about whether more natural gas is needed, especially since the Virginia Clean Economy Act commits the state to switch from fossil fuels to renewable sources such as wind and solar in coming decades.