The Corps’ NWP 12 for Pipelines and Transmission Lines is Vacated and Enjoined
The United States District Court for the District of Montana, Great Falls Division, issued an order on April 15, 2020 in the ongoing litigation regarding permitting of the Keystone XL pipeline that has far-reaching implications for pipeline, electric utility line, and other utility line projects beyond the Keystone project. This client alert provides a summary of the case and its implications for affected industries, and an overview of the court’s legal findings.
The order vacates the Corps of Engineers’ Nationwide Permit No. 12 (“NWP 12”), remands NWP 12 to the Corps for completion of the consultation process under the Endangered Species Act (“ESA”), and enjoins the Corps from authorizing any dredge and fill activities under NWP 12 pending completion of the consultation process and compliance with all environmental statutes and regulations. There is substantial controversy among legal scholars about whether a single district court should be able to issue an injunction that is applicable nationwide, but it has been done before and the injunction applies nationwide for now.
NWP 12 is a commonly used form of authorization by the Corps pursuant to Section 404 of the Clean Water Act (“CWA”). NWP 12 authorizes “[a]ctivities required for the construction, maintenance, repair, and removal of utility lines and associated facilities in waters of the United States, provided the activity does not result in the loss of greater than 1/2-acre of waters of the United States for each single and complete project.” (Emphasis added.) A “utility line” is defined to include pipes and pipelines that carry gases, liquids, liquescent or slurry substances, cables, electric transmission lines, telephone and internet lines, and the like.
The order enjoins the use of NWP 12 because the Corps failed to consult with U.S. Fish and Wildlife Service (“FWS”) under the ESA on whether the use of NWP 12 “may affect” listed species when the NWP was reissued in 2017. The Corps faced this same issue in prior NWP reissuances (e.g., 2002, 2007, and 2012). In 2005, a federal district court found that the Corps should have consulted with FWS when it reissued NWP 12 in 2002. The Corps initiated formal programmatic consultation when it reissued NWP 12 in 2007 and again in 2012. The current administration chose not to pursue ESA consultation prior to reissuing the NWPs in 2017.
The crux of the issue focuses on the way that the Corps interprets the “single and complete project” provision of NWP 12. NWP 12 authorizes fill in Waters of the United States (“WOTUS”) for activities related to linear utility lines such as pipelines and transmission lines that each result in no more than 1/2 acre of fill in WOTUS for each “single and complete project.” The Corps’ interpretation is that every single crossing of a WOTUS of a pipeline or transmission line is itself a “single and complete project” for purposes of application of the NWP. Thus, NWP 12 can be used multiple times to authorize many waterway crossings by the same pipeline. For Keystone, there were 1,200 crossings that were each authorized by NWP 12.
The court’s focus was on the cumulative effect of such an approach on listed species, and the Corps’ lack of consultation with the FWS on this issue prior to issuing the NWP in 2017. The NWP reissuance was dependent on the Corps’ conclusions that the NWP would result in “no more than minimal individual and cumulative adverse effects on the aquatic environment,” and that it complied with the ESA by finding that NWP 12 would not have an effect on listed species.
The Corps asserted that its Pre-Construction Notification (“PCN”) provision and NWP Condition No. 18 ensure that the Corps’ case by case review under NWP 12 is sufficient to ensure no effect on listed species. The PCN provision requires the project proponent to submit a PCN, and bars the proposed fill from occurring until the Corps confirms authorization, if the project triggers certain criteria, including more than 1/10 acre of fill. Condition 18 provides that no fill is authorized under a NWP and consultation with the FWS is required if a proposed activity “may affect” a listed species or critical habitat. The Corps concluded these provisions were adequately protective and would result in no effect to listed species. Judge Morris concluded there was substantial evidence to the contrary, and that project-specific analyses cannot substitute for the Corps’ obligation to address this potential effect when it reissues a NWP that applies nationwide.
This order may be appealed or the Corps may choose to proceed with consultation under the ESA and reissuance of NWP 12. Appeals can take months to years depending on the circumstances. Appeals from the United States District Court for the District of Montana are to the Ninth Circuit, which is typically seen as friendly to environmental plaintiffs. Consultation under the ESA, along with a new NEPA process, could take as long or longer. In either event, until the court’s injunction is overturned or stayed, or the geographic extent of its effectiveness is expressly limited, NWP 12 is enjoined throughout the country. In the meantime, work on the Keystone project outside of WOTUS is continuing.
The Court’s Key Legal Findings
Plaintiffs Northern Plains Resource Council, et al. raised five issues on appeal. Two of the claims relate to the Corps’ verification of authorization under NWP 12 for crossings of the Yellowstone River and Cheyenne River. Three of the claims relate to the Corps’ reissuance of NWP 12 in 2017. The claims assert violations of the ESA, the National Environmental Policy Act (“NEPA”), and CWA. Plaintiffs and defendants filed motions for summary judgment.
The court granted summary judgment to the plaintiffs on the ESA claims, but denied without prejudice all motions for summary judgment regarding the NEPA and CWA claims. The court found it did not need to determine the NEPA and CWA claims in light of its remand, vacatur, and injunction of NWP 12 due to ESA violations. The court noted that the Corps may need to modify its NEPA and CWA determinations based on its ESA consultation.
The court applied the Administrative Procedures Act Section 706(2)(A) standard of review that instructs a reviewing court to hold unlawful and set aside agency action deemed arbitrary capricious, an abuse of discretion, or otherwise not in accordance with law. The court noted that, to find the Corps’ actions arbitrary and capricious, the court must decide whether the Corps “considered the relevant factors and articulated a rational connection between the facts found and the choice made.”
The court found that the Corps’ failure to initiate programmatic consultation under ESA Section 7(a)(2) prior to reissuing NWP 12 violated the ESA. A programmatic consultation with the relevant resource agencies (here, FWS) under Section 7 of the ESA is appropriate to address potential impacts of programs that “provide a framework for future proposed actions.” While noting that the Corps’ decisions are entitled to deference, the court concluded the Corps’ “no effect” determination and failure to initiate Section 7 ESA consultation were arbitrary and capricious because there was “resounding evidence” that the Corps’ reissuance of NWP 12 “may affect” listed species and their habitat, including the Corps’ own admissions that that discharges authorized by NWP 12 will result in incremental contributions to cumulative impacts.
First, the court found there was evidence that the impacts of NWP 12 include, among other things, conversion of WOTUS to upland, sedimentation, pollution, wetland degradation, and habitat fragmentation that result in affects to listed species and their habitat. In support of its finding, the court looked to the Corps’ statements in its past authorizations of NWP 12, its decision documents for the 2017 reissuance, and declarations provided by experts. The court noted that the ESA’s citizen suit provision allows the court to consider evidence outside the administrative record, citing 16 U.S.C. § 1540(g) and Western Watersheds Project v. Kraayenbrink, 632 F.3d 472, 497 (9th Cir. 2011).
Second, the court found that the Corps cannot circumvent ESA consultation requirements by relying upon project-level reviews or NWP General Condition No. 18. Project-level review does not relieve the Corps of its duty to consult at the programmatic level and consider the effect of the entire agency action prior to NWP reissuance. Relying on project-level review can lead to piecemeal harm to species and destruction of habitat through failure to make a cumulative analysis of the program as a whole. Further, under General Condition No. 18, the permittee makes the initial “may effect” determination when it decides whether it needs to submit a PCN. While the court “certainly presumes” the Corps and permittees will comply with all applicable statutes and regulations, that presumption does not allow the Corps to delegate its duties under the ESA to non-federal permittees, particularly since the ESA requires the federal agency to make the “may affect” determination “at the earliest possible time.”
In light of its ESA findings, the court did not address in depth the NEPA and CWA claims, but provided some interesting remarks. First, the court acknowledged the Corps had prepared an Environmental Assessment (“EA”) rather than a lengthier Environmental Impact Statement (“EIS”) and issued a Finding of No Significant Impact (“FONSI”) on the NWP 12 reissuance. The court noted that “[a]rmed with more information, the Corps may decide to prepare an EIS because NWP 12 represents a major federal action that significantly affects the quality of the human environment.” The court also opined that the Corps’ ESA consultation will inform its CWA assessment of NWP 12’s environmental effects, and that the Corps’ CWA compliance determination may change after the consultation brings more information to light.
Implications for Affected Industries
Industries that use and depend upon pipelines, transmission lines, and the like will be adversely affected by this injunction. NWP 12, which has been a commonly used CWA permitting tool for discharges of dredged and fill material in WOTUS not only for new construction, but also for maintenance, repair and removal activities, is no longer available for the foreseeable future. The Corps will need to consider discharge of fill material for construction, maintenance, repair, and removal of pipelines and transmission line crossings under individual permits unless the work can be authorized under one or more other NWPs or district-specific general permits. Individual permits trigger project-specific NEPA review and compliance, which take time and involve public input that opens doors for project opponent to raise objections. Other NWPs may be useful depending on the circumstances, such as NWP 3 (maintenance and repair), NWPs 18 and 19 (minor discharges and dredging), NWP 39 (commercial and institutional developments), and NWP 51 (renewable energy facilities including transmission lines).
In the meantime, work outside of WOTUS may continue. The adverse effect of the injunction will be lessened in the west and southwest portions of the county due to the recent rulemaking limiting the regulatory definition of WOTUS. Under that rulemaking, no CWA Section 404 authorization is needed for fill in ephemeral waterways, such as arroyos that are common in the west and southwest U.S., because they are no longer considered WOTUS subject to the Corps’ CWA regulatory jurisdiction.
Modrall Sperling’s Natural Resources group assists clients with Clean Water Act compliance. For further information, contact Joan Drake at firstname.lastname@example.org, Walter Stern at email@example.com, Stuart Butzier at firstname.lastname@example.org, Christina Sheehan at email@example.com, and Sarah Stevenson at firstname.lastname@example.org.
 NWPs are intended to be used to authorize only those discharges that will result in minor direct, indirect, and cumulative impacts, and to provide a speedy and efficient permit verification mechanism for such activities. There are currently 54 NWPs, each of which addresses a category of work in WOTUS that the Corps has concluded will result in only minor impacts. The Corps has typically reviewed, revised, and reissued the NWPs every five years, with programmatic NEPA and other regulatory compliance completed prior to reissuance. Thus, the authorizations for categories of work are issued at the national level, and project-specific review by Corps district staff involves verifying that a specific proposal meets the terms and conditions of one or more NWP. More information on the Corps’ NWP program is at: https://www.usace.army.mil/Missions/Civil-Works/Regulatory-Program-and-Permits/Nationwide-Permits/.
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