​U.S. Supreme Court upholds key permit for Atlantic Coast pipeline

Supreme Court building Image: JWN file photo

The U.S. Supreme Court upheld a crucial permit for Dominion Energy Inc.’s planned $8 billion Atlantic Coast Pipeline, saying the Forest Service acted lawfully by clearing the natural-gas line to cross under the Appalachian Trail.

The 7-2 ruling eliminates the biggest obstacle to the 965-kilometre 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.

Dominion pared earlier losses and was trading up .26 per cent at $83.42 at 11:40 a.m. in New York. EQM Midstream Partners LP, which will also benefit from the ruling, was up 16 per cent at $22.57 at 11:41 a.m. in New York, after earlier rising as much as 19 per cent. Equitrans Midstream Corp. climbed 15 per cent to $9.27 after gaining as much as 18 per cent.

Dominion, which is developing the pipeline with Duke Energy Corp., has said it expects to begin construction this year and have the pipeline fully in service by early 2022. The company is still facing review of other environmental issues.

Dominion didn’t immediately respond to requests for comment.

“Today’s decision is an affirmation for the Atlantic Coast Pipeline and communities across our region that are depending on it for jobs, economic growth and clean energy,” Duke Energy said in a statement. “We look forward to resolving the remaining project permits.”

A federal appeals court had thrown out the permit, saying the U.S. Forest Service lacked the authority to approve the right-of-way because the Appalachian Trail is controlled by the National Park Service.

Dominion and the Trump administration contended 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. The U.S. Mineral Leasing Act says the Forest Service doesn’t have jurisdiction over “lands in the National Park System.”

Justice Clarence Thomas wrote the court’s opinion. Justices Sonia Sotomayor and Elena Kagan dissented.

Bloomberg Intelligence analyst Brandon Barnes said the court’s decision will allow the project to shift toward lining up permits from the Forest Service.

“With a high court decision in hand, the project can expect the U.S. Forest Service to wrap up work on reissuing approvals voided by the lower court, which we think happens this summer,” Barnes said in a research note.

The ruling also will help EQM’s Mountain Valley gas pipeline in West Virginia and Virginia. Mountain Valley told the Supreme Court in December that the appeals court ruling forced a halt to its project, which is 90 per cent complete at a cost of more than $4.3 billion.

The 3540-kilometre Appalachian Trail stretches from Georgia to Maine.

The case is U.S. Forest Service v. Cowpasture River Preservation Association, 18-1584.

© 2020 Bloomberg L.P.