Court Resuscitates NWP 12 But Only for Non-Pipeline Projects

The United States District Court for the District of Montana breathed partial life back into Nationwide Permit 12 (NWP 12) in its May 11, 2020 decision limiting the scope of its April 15, 2020 vacatur of NWP 12 to new construction of oil and gas pipelines. The order reinstates NWP 12 for authorization of dredge and fill activities in Waters of the U.S. (WOTUS) under Section 404 of the Clean Water Act (CWA) for projects such as electric transmission lines, fiber optic and internet cables and lines, and maintenance and repair activities, but retains the vacatur and injunction of authorization under NWP 12 for construction of new oil and gas pipelines.

The court’s limited reinstatement of NWP 12 is good news for construction of electric transmission and other lines and maintenance/repair activities on existing lines. However, the court’s analysis shines a spotlight on cumulative impacts issues, particularly for projects that involve multiple crossings of WOTUS, and may encourage environmental plaintiffs to pursue legal challenges on this issue under the Endangered Species Act (ESA) and to a lesser extent under the National Environmental Policy Act (NEPA).

On May 13, 2020, defendants the U.S. Army Corps of Engineers (Corps) and TransCanada Energy Corporation (developer of the Keystone XL pipeline) appealed both the April 15, 2020 order and the May 11, 2020 order to the Ninth Circuit.

The Court Defended its Initial Ruling

In his May 11, 2020 decision, Chief Judge Morris defended his nationally applicable vacatur and injunction of the entirety of NWP 12 due to the Corps’ failure to engage in programmatic consultation under Section 7 of the Endangered Species Act when it reissued NWP 12 in 2017. Although Plaintiff, Northern Plains Resource Council, had not requested such broad relief, Judge Morris noted a court should grant to each party the relief to which it is entitled even if the party has not demand that relief in its pleadings. The court relied on Ninth Circuit precedent that the ordinary result is vacatur when rules are found to be unlawful, and asserted it exercised appropriate discretion when it chose to vacate broadly and enjoin the Corps’ NWP 12 authorizations due to potentially widespread harms caused by the Corps’ program-level ESA violation. Northern Plains did not oppose a partial narrowing of the vacatur and injunction.

The Court Found that Partial Vacatur Strikes a Reasonable Balance

Judge Morris first addressed vacatur, and relied upon two factors articulated in Allied-Signal, a D.C. Circuit decision,[1] in deciding whether to depart from or limit the presumptive remedy of vacatur: (1) the seriousness of an agency’s errors, and (2) the disruptive consequences that would result from vacatur.

Under the first factor, the court concluded the Corps committed serious error in failing to engage in programmatic consultation under Section 7 of the ESA, that the scales should tip in favor of the endangered species under the ESA’s “institutionalized caution,” and this caution supports vacatur until the Corps adequately analyzes NWP 12’s impacts to listed species through programmatic ESA consultation.

Under the second factor, the court found that it should focus on potential environmental disruptions, as opposed to economic disruption. The court looked to Judge Boasberg’s decision in Standing Rock regarding consideration of economic interests versus environmental interests in considering vacatur, noting that allegations of financial harm will not have a determinative effect because claims of lost profits and industrial inconvenience are the “nature of doing business, especially in an area fraught with bureaucracy and litigation.”[2]

The court also considered the disruption from vacatur of NWP 12 on other projects that may pose less risk to species, such as construction of electric transmission, internet and cable lines, broadband and fiber optic lines, and to routine maintenance, safety and repair of projects that have already been built. For example, maintenance projects would include repair of natural gas pipelines to ensure safety, vegetation removal along electric lines to prevent forest fires, and placement of protective matting to prevent rutting from service vehicles. The court concluded that impacts from such projects are typically limited and do not involve the potentially severe risk of impacts to listed species and critical habitats as do major pipelines such as Keystone XL.

Judge Morris found that a partial vacatur that applies to construction of new oil and gas pipelines strikes a reasonable balance under the Allied-Signal factors while still reducing the potential harms to listed species and critical habitat that those projects pose. The court noted that the option of individual permitting remains available for new pipeline projects, and the need to protect listed species and critical habitat until ESA consultation is completed outweighs any disruption or permitting delays that would result and represents “the nature of doing business” in this area.

The Court Found that Narrowed Injunctive Relief Strikes an Appropriate Balance.

The court then considered whether to limit its injunction of NWP 12. Judge Morris analyzed the four-factor test[3] for injunctive relief while noting that it need not address the latter three factors but can rest its decision on the first factor, a finding of likely irreparable injury. The Ninth Circuit recognizes that the ESA removes the latter three factors from courts’ equitable discretion and requires the court to presume that the balance of interests weighs in favor protecting listed species. The court supported its conclusion by addressing the latter three factors “in an abundance of caution,” and perhaps to strengthen the likelihood of being upheld on appeal.

The court noted the record showed that irreparable injury is likely if developers, not just Keystone XL, continue to build new, large-scale oil and gas pipeline projects. However, other projects such as electric transmission and cable lines and routine maintenance and repair activities pose less of a risk. Thus, the court narrowed its injunctive relief to the same scope to which it narrowed its vacatur relief.

The Court Denied a Stay Pending Appeal.

The court denied motions for a stay pending appeal, finding that the Corps and TransCanada did not make a strong showing that they are likely to succeed on the merits, any burden imposed on the Corps by having to process more individual permits is a “fault of the Corps’ own making” and does not justify a stay, the partial vacatur and limited injunction lessen any burden, and the balance of equities and public interest tip in favor of protecting listed species and critical habitat under the ESA.

Judge Morris noted that the court could presume no irreparable injury to an agency when it fails to evaluate the environmental impact of a proposed action, but chose not to apply such a presumption, instead following the U.S. Supreme Court’s approach in Amoco,[4] finding that, even without such a presumption, the balancing of harms will usually favor the issuance of an injunction to protect the environment when injury is sufficiently likely. In this case, Judge Morris found that an increase in the number and size of oil and gas pipelines increases the risk of an accident or harm to the environment in the construction and development of these pipelines, monetary injury is not normally considered irreparable absent a threat of being driven out of business, and Keystone XL possesses no inherent right to maximize revenues by using a cheaper, quicker permitting process, particularly when its preferred process does not comply with the ESA.

The Court Concluded that the Public Interest and Balance of Equities Always Tips in Favor of Listed Species and Critical Habitat Under the Endangered Species Act

Judge Morris concluded the balance of equities and public interest factors always tip in favor of the protected species when evaluating a request for injunctive relief to remedy an ESA procedural violation. The court found that its narrowing of the vacatur and injunction will avoid harms to the public from burdens on projects other than oil and gas pipelines and will avoid harms to listed species and critical habitat from such pipelines, but will allow other projects to proceed under NWP 12 authorization. The court concluded that the public’s interest in ensuring that the Corps follows the ESA “trumps any purported tax and energy security benefits of new oil and gas pipelines” and the public interest is best served when the law is followed, and quoted the Supreme Court that “beyond doubt Congress intended endangered species to be afforded the highest of priorities.”[5]

Implications for Affected Industries

The court’s narrowing of its vacatur and injunction responds to and alleviates some of the general outcry and criticism regarding Judge Morris’s sweeping April 15, 2020 order. The key issues on appeal will likely be focused on cumulative impacts to listed species and critical habitat from new oil and gas pipelines, particularly those that involve multiple crossings of WOTUS, and the predominance of the ESA’s mandates. The court’s analysis provides a blueprint for challenges of cumulative impact coverage under the ESA due to its strong substantive mandate and to a lesser degree under NEPA, which is primarily procedural and does not mandate a particular outcome.

NWP 12 is once again a viable CWA permitting mechanism for construction through WOTUS for electric transmission, internet, cable and fiber optic lines, and for routine repair, inspection and maintenance activities for such facilities. The court’s language leaves some uncertainties that the Corps will need to address. It is unclear if extensions or looping of existing pipelines will be treated as “new” pipelines and excluded from NWP 12 authorization. Further, although the express language of NWP 12 also includes “removal” of such facilities, neither of the court’s orders includes that specific activity in either its prohibition or allowance of authorization under NWP 12. Corps districts may choose to construe the court’s narrowing of the vacatur and injunction expressly to “new” pipelines, and its silence regarding removal, to not prohibit them from using NWP 12 to authorize removal activities associated with pipelines and other facilities that meet the terms and conditions of the NWP.

We will follow the appeal to the Ninth Circuit and provide further updates as this case progresses.

Should you have questions regarding this article or the proceedings discussed, please contact Joan Drake at jdrake@modrall.com.

 

[1] Allied-Signal, Inc. v. U.S. Nuclear Regulatory Comm’n, 988 F.2d 146, 150-51 (D.C. Cir. 1993).

[2] Standing Rock Sioux Tribe v. U.S. Army Corps of Eng’rs, 282 F. Supp. 3d 91, 104 (D.D.C. 2017), involving the similarly controversial Dakota Access Pipeline project (“DAPL”). For further information and insight on the ongoing DAPL litigation, please see our reporting at: https://www.modrall.com/2016/11/22/dakota-access-controversy-standing-rock-sioux-tribe-v-u-s-army-corps-of-engineers-policy-review-of-federal-governments-tribal-consultation-obligations-and-why-this-matters-to-us/;https://www.modrall.com/2017/04/11/dakota-access-pipeline-project-update/https://www.modrall.com/2017/08/22/dakota-access-pipeline-project-update-corps-nepa-analysis-flawed-part/; https://www.modrall.com/2018/06/01/update-on-dakota-access-pipeline-litigation/; and https://www.modrall.com/2020/05/12/revisiting-and-updating-the-dakota-access-pipeline-controversy/. In addition, a more scholarly discussion can be found at: https://www.modrall.com/2018/01/17/black-snakes-essential-infrastructure-dakota-access-pipeline-standing-rock-sioux-tribe-v-u-s-army-corps-engineers-federal-governments-tribal-consultation-obligations-m/, first published by the Rocky Mountain Mineral Law Foundation. 

[3] eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006) (the four factors a plaintiff for injunctive relief must satisfy are: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction).

[4] Amoco Production Company v. Village of Gambell, 480 U.S. 531 (1987).

[5] Tenn. Valley Auth. v. Hill, 437 U.S. 153, 174 (1978). 

 

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