Speaker 1: Yesterday, a federal appeals court in Virginia throughout a permit
Speaker 1: for the Atlantic Coast Pipeline to cross two national forests,
Speaker 1: including the Appalachian Trail, and criticize the U. S. Forest
Speaker 1: Service for granting a permit. But on the same day,
Speaker 1: a federal appeals court in d C seemed poised to
Speaker 1: reject environmentalist arguments that the Federal Energy Regulatory Commission was
Speaker 1: wrong when it granted a permit for a gas pipeline
Speaker 1: expansion project in northeastern Pennsylvania. There's a lot of litigation
Speaker 1: across the country over pipelines with environmentalists trying a shotgun approach?
Speaker 1: Are they winning? Here to tell us, as Brandon Barnes
Speaker 1: Bloomberg Intelligence senior litigation analyst who knows all there is
Speaker 1: to know about pipeline litigation, So Brandon, tell us first
Speaker 1: about this shotgun approach and whether it's a deliberate strategy
Speaker 1: that environmentalists have agreed to. Well, I think if you
Speaker 1: take a look at how things have developed over the
Speaker 1: last two three years in terms of the amount of
Speaker 1: litigation that's been filed and the various venues that it's
Speaker 1: being filed in, coupled with the nuanced approach to each
Speaker 1: one of these. These are highly technical arguments being filed
Speaker 1: by environmentalist It seems obvious that there's a new scattershot approach.
Speaker 1: We're going to file a lawsuit in a number of
Speaker 1: different courts, We're going to use a number of different
Speaker 1: permits as our fodder, and we'll find a way to win.
Speaker 1: It certainly increased the chances that one of those grabs
Speaker 1: the attention of a court and they stop a pipeline
Speaker 1: or a project or something. And it's working. And so
Speaker 1: I think this is a case of success begetting success.
Speaker 1: Let's talk about where it worked first. So in the
Speaker 1: Atlantic Coast pipeline. With that the fourth Circuit and Richmond
Speaker 1: criticized the Forest Service for abdicating its responsibility to preserve
Speaker 1: national forest resources, and they quoted Dr Seuss in doing so.
Speaker 1: I like that. They said, the Forest Services trusted to
Speaker 1: speak for the trees, for the trees have no tongues.
Speaker 1: So tell us what that was about. Well, this court
Speaker 1: has on three occasions come back at Atlantic Coast through
Speaker 1: the permitting of various federal agencies and stop the project.
Speaker 1: And so this is just sort of the tail end
Speaker 1: of that process. Uh, this by itself, isn't that material.
Speaker 1: We're only talking about twenty one miles of pipeline. But
Speaker 1: if you couple that with the two other permits that
Speaker 1: span a larger amount of construction and other areas in
Speaker 1: West Virginia and Virginia and potentially North Carolina, this is
Speaker 1: a real problem for this project. It's really causing a
Speaker 1: lot of delays here. So are courts in certain states
Speaker 1: or federal courts in certain areas more inclined to side
Speaker 1: with environmentalists or is it just a case by case basis.
Speaker 1: You know, I would have said no. You know, I'm
Speaker 1: a lawyer. I believe in the sanctity of of these
Speaker 1: courts and and the judges. But the trend, at least
Speaker 1: from my perspective, is that this fourth Circuit is certainly
Speaker 1: finding some common ground with the arguments that the environmentalists
Speaker 1: are putting forward. I don't think the d C Circuit
Speaker 1: necessarily has gone that far, but they definitely have had
Speaker 1: some decisions that are new and and potentially open up
Speaker 1: new avenues for these opponents. So is the recent DC
Speaker 1: case an anomaly then? I I don't think so, only
Speaker 1: because that's just another facet of this sort of shotgun
Speaker 1: of touch, let's try and challenge. And you're talking about
Speaker 1: the Ryan project with Morgan, you know, relatively small, hundred
Speaker 1: thirty seven three million dollar project, but it's important for
Speaker 1: the expansion of that that line in that system. That
Speaker 1: was another way of challenging the potential for that project
Speaker 1: to go through that could if it had been successful,
Speaker 1: or if it could be successful because that's been decided
Speaker 1: flow through to much bigger projects. So when you talk
Speaker 1: about the bigger picture, our environmentalists ahead or the builders.
Speaker 1: These days, the environmentals are far ahead. The in the
Speaker 1: last two years is the delays that have mounted on
Speaker 1: these projects is incredible. They're incredible. It's if you look
Speaker 1: at the two Thousteen period for pipeline projects, the average
Speaker 1: time for them to get federal certification and then start
Speaker 1: building was under four hundred days. It was it was
Speaker 1: less than a year. But in seventeen period that is
Speaker 1: jacked up over six hundred days. And so you're talking
Speaker 1: about more than a half a year edition in a
Speaker 1: pretty short amount of time. And a lot of that
Speaker 1: is due to the regulatory pressures at the state level
Speaker 1: and in the courts. So how much money is that
Speaker 1: costing if you know generally, well, it's that's actually a
Speaker 1: difficult question to answer because a lot of these projects
Speaker 1: kind of once they're done, you don't really see the
Speaker 1: companies coming out and tell you what the cost was
Speaker 1: or or the it's an incremental change over time. But
Speaker 1: we took a look at a bunch of the bigger
Speaker 1: pipelines that recently have been changing their cost estimates because
Speaker 1: of these delays. And if you look at the average
Speaker 1: on a quarter by quarter basis, if they delay by
Speaker 1: a quarter, it's about a hundred seventy million dollars. So
Speaker 1: is that stopping any new pipelines? Yes, yes, I think.
Speaker 1: And that's where we get into a little bit more
Speaker 1: of a of a geographical situation. So New York has
Speaker 1: in the last three years done a very good job
Speaker 1: of stopping projects from being built. Look at Constitution Pipeline,
Speaker 1: look at Northern Access. They have found a lot of
Speaker 1: difficult to getting through and some of these projects probably
Speaker 1: won't get built as a result. But and that sort
Speaker 1: of started to extend to other states. You see that
Speaker 1: New Jersey with Penn East and some of the other project.
Speaker 1: Virginia's change their permitting scheme midstream for a lot of
Speaker 1: these projects and adding delay after delay, and it's it's
Speaker 1: sometimes it's death by a thousand cuts, and sometimes it's
Speaker 1: a complete stop. Are there states where it's easier the
Speaker 1: permitting process is easier, easier, or at least more efficient.
Speaker 1: We know that looking at the process. So if we
Speaker 1: took a look at the time period after the federal
Speaker 1: government says yes it's okay you can build, all right,
Speaker 1: yes it's okay you can do this project, and take
Speaker 1: that time to the end where they're allowed to start building,
Speaker 1: that's usually the most sensitive time period for the states
Speaker 1: to kind of intervene and use their permitting process to
Speaker 1: slow things down. That time period if you're going through
Speaker 1: Ohio and Texas is far shorter less than sixty days
Speaker 1: typically on average, then if you're going through New York,
Speaker 1: which is more than two hundred days. So the difference
Speaker 1: is substantial, and I think projects know that. If you
Speaker 1: look at where new projects are being proposed, there's only
Speaker 1: one project that's been proposed through New York since January.
Speaker 1: I'm interested in who is bringing these lawsuits? We say environmentalists.
Speaker 1: Are they national environmental groups? Are they local environmental groups?
Speaker 1: Is there any thread. Traditionally you would have said, Okay,
Speaker 1: these are this is a very local Pipelines are local.
Speaker 1: Pipeline issues are local. It's not in my backyard or
Speaker 1: nimby issue. But since I think Keystone, certainly after Dakota
Speaker 1: Acts s you had a much stronger environmental movement from
Speaker 1: the national groups, Sierra Club, Environmental Defense Fund, UM. They're
Speaker 1: all taking advantage of the success that they've had in
Speaker 1: the courts or at the local state agency level, and
Speaker 1: I think that they're just spreading that across to all
Speaker 1: sorts of other projects. It's a fascinating area. Actually, thanks
Speaker 1: so much, Brandon. That's Brandon Barnes. He it's Bloomberg Intelligence
Speaker 1: senior litigation analyst.