On June 28, 2022, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) issued a decision in Sierra Club v. FERC upholding FERC’s approval of Mountain Valley Pipeline, LLC’s (“MVP”) Southgate Project.

The Southgate Project extends MVP’s Mainline System Project, a 303.5-mile-long interstate pipeline system, an additional 75.1 miles from Southern Virginia into central North Carolina. On June 18, 2020, FERC issued a certificate of public convenience and necessity for MVP’s Southgate Project (“Certificate Order”). In the Certificate Order, FERC approved a 14% return on equity (“ROE”) for the Southgate Project finding that the Southgate Project more closely resembled a new pipeline rather than an extension of an operational pipeline because the Mainline Project was not operational and therefore had no operations or revenue streams. FERC, in the Certificate Order, also agreed with the conclusions presented in the final environmental impact statement (“EIS”) and found that the environmental impacts associated with the Southgate Project were acceptable considering the public benefits that the Southgate Project would provide.

Sierra Club, joined by other environmental groups, challenged the Certificate Order on two fronts: FERC’s approval of the 14% ROE and the adequacy of the EIS. The D.C. Circuit rejected both arguments and upheld FERC’s Certificate Order. With respect to the ROE, the D.C. Circuit held that FERC acted reasonably in approving a 14% ROE for the Southgate Project. The D.C. Circuit explained that it was appropriate for FERC to treat the Southgate Project as a new market entrant in light of the risks the Southgate Project faced. In response to the challenge to the Southgate Project EIS, the D.C. Circuit held that FERC had not violated the National Environmental Policy Act because FERC properly considered mitigation measures and the cumulative impacts of the Southgate Project.

Despite the D.C. Circuit’s decision upholding FERC’s approval of the Southgate Project, MVP cannot proceed with construction of the Southgate Project until the Mainline System Project receives all of its outstanding permits. Note that on June 24, 2022, MVP requested from FERC a further extension (until October 13, 2026) to complete the Mainline System Project. The comment deadline for MVP’s extension request closes on July 29, 2022.

A copy of the D.C. Circuit’s opinion in Sierra Club v. FERC can be found here.