The U.S. Court of Appeals for the Fourth Circuit on Tuesday vacated the water crossing permit for Mountain Valley Pipeline LLC, another major setback for a project plagued by regulatory uncertainty in recent months.

The Fourth Circuit’s three-page order, which indicated a more detailed opinion was “forthcoming,” vacated the Nationwide Permit 12 (NWP 12), issued by the Army Corps of Engineers under the Clean Water Act (CWA) to regulate waterbody crossings. In MVP’s case, opposition groups seized on a special condition included in the NWP 12 in West Virginia, which requires all stream crossings be constructed within 72 hours.

For four proposed crossings in West Virginia’s Elk, Gauley, Greenbrier and Meadow rivers, MVP had planned to use the more environmentally protective but time-consuming “dry cut” crossing method, ostensibly violating the 72-hour special condition.

In vacating the NWP 12, the court concluded that the Army Corps “lacked authority to substitute the ‘dry cut’ requirement ‘in lieu of’ West Virginia’s 72-hour temporal restriction,” citing federal law requiring that “if any part of a project requires an individual permit, then ‘the NWP does not apply and all portions of the project must be evaluated as part of the individual permit process.’”

As part of its rationale for waiving a state-issued CWA Section 401 water quality certification, the West Virginia Department of Environmental Protection (WVDEP) had cited special state-specific conditions added to the NWP 12 permit. WVDEP had earlier withdrawn the CWA 401 it issued to MVP after facing a court challenge.

Management for MVP, a joint venture of EQT Midstream Partners LP, NextEra US Gas Assets LLC, Con Edison Transmission Inc., WGL Midstream and RGC Midstream LLC, said the developers were “disappointed” with the court’s decision, which affects a 160-mile stretch of the project route in West Virginia.

“The MVP team is evaluating options to understand its ability to continue with construction activities that do not include stream and wetland crossings along this portion of the route,” the company said.

“During the past few months, the West Virginia Department of Environmental Protection has proposed modifications to its Section 401 Nationwide Permit certification that, among other things, clarify that a 72-hour limitation does not apply to dry-cut crossing methods and other environmentally protective crossing methods requiring more than 72 hours to complete,” and said crossing methods approved by the Federal Energy Regulatory Commission or state regulators were exempt from the 72-hour requirement.

Those proposed modifications have gone through a public comment period and once completed, MVP plans to secure a new NWP 12 from the Army Corps by early next year, management said.

“With ongoing evaluation of its construction plan, MVP continues to target a full in-service during the fourth quarter 2019,” the company said. “MVP is committed to the safety of its communities, to the preservation and protection of the environment, and to the continued responsible construction of this important natural gas infrastructure project that will serve homes and business in the Mid-Atlantic and Southeast United States.”

Analysts with ClearView Energy Partners LLC called the Fourth Circuit’s decision a “major setback” for both the Army Corps and MVP. “We had thought the July 3 re-issued NWP 12 enjoyed good prospects of being upheld, given the Fourth Circuit lifted the earlier stay of construction on Aug. 29.”

Similar to the Aug. 3 stop work order, “we anticipate that FERC is likely to issue a broad stop work order, halting construction on all incomplete water crossings (unless there are strong environmental reasons not to do so). MVP would likely also be barred from starting construction on new crossings until these issues are resolved.”

Last week, MVP raised its cost estimate for the 2 Bcf/d Appalachia-to-Southeast project to $4.6 billion from around $3.5 billion, citing ongoing legal challenges, permit issues, work stoppages and inclement weather as key contributing factors.

Environmental groups have been relentless in their challenges of MVP and other pipeline projects, pursuing a death-by-a-thousand-cuts legal strategy as seemingly narrow permitting issues have morphed into sweeping stop work orders, leading to major delays as the courts have been persuaded to intervene.

Environmental groups cheered the Fourth Circuit’s decision Tuesday.

The latest court decision “shows polluting corporations trying to run roughshod through Appalachia will be held accountable,” Sierra Club executive director Michael Brune said. “In their haste to make a quick buck, MVP rushed essential processes because they knew there was no way their dirty project would ever satisfy commonsense protections for water and health. Now, FERC must require MVP to immediately stop construction on the pipeline.”

“By vacating permit after permit for the MVP, the Fourth Circuit has been forced to do what the federal government should have been doing all along: protecting the public and the environment from this harmful and unneeded pipeline,” said general counsel Anne Havemann of the Chesapeake Climate Action Network. The latest court decision “is just one in a string of decisions invalidating MVP's federal permits. The public deserves no less than for regulators to take a real look at the impacts of this massive project. Once they do, we're confident they will conclude that there is simply no safe way to build the Mountain Valley Pipeline.”

A limited work stoppage occurred in June when the Fourth Circuit stayed the NWP 12 after a Sierra Club challenge. In early August, FERC ordered the company to cease all construction after the Fourth Circuit vacated key permits from the U.S. Forest Service and the Bureau of Land Management.

Despite stemming from issues affecting only portions of the pipeline crossing federal lands, the stop work order wasn’t lifted for most of the project route until Aug. 29. Last month, the project was forced to stop work on a small stretch at a river crossing in West Virginia after a judge ordered it to review a pending appeal filed by landowners and environmental organizations.