Controversial District Court Decision Vacating Nationwide Permit 12 and Disrupting Pipeline Industry Appealed to Ninth Circuit

By Johanna Fabrizio Parker, Michael Snyder, Addisah Sherwood, John Breig, Jr.
Benesch

May 22, 2020

Last week, on May 13, 2020, the Army Corps of Engineers (the “Corps”) and TC Energy filed notices of appeal with the United States Court of Appeals for the Ninth Circuit seeking an immediate stay of the Federal District Court’s decision in Northern Plains Resource Council, et al. v. Army Corps of Engineers, et al., wherein Chief District Court Judge Brian Morris vacated federal Clean Water Act Nationwide Permit 12 and enjoined the Corps from using Nationwide Permit 12 to authorize any dredge and fill activities. Judge Morris later issued an amended order to limit the scope of the vacatur such that it only applies to the construction of new oil and gas pipelines.

Pipeline companies face Clean Water Act permitting challenges, uncertainty regarding the timing of pipeline projects, and increased costs and delays pending the outcome in the Ninth Circuit, and thereafter if the District Court’s decision is affirmed.

Overview of Nationwide Permit 12 and its Reissuance 2017:

The District Court’s decision in Northern Plains Resource Council, et al. v. Army Corps of Engineers, et al., created immediate uncertainty for pipeline projects across the nation relying on Nationwide Permit 12 authorization. Nationwide Permit 12 is a widely-used general permit under the Clean Water Act that authorizes discharges of dredged or fill material into jurisdictional waters as required for the construction, maintenance, repair, and removal of utility lines and associated facilities, including oil and gas pipelines.

Nationwide Permit 12, like all Nationwide Permits, is subject to thirty-two General Conditions contained in the Federal Regulations. General Condition18 prohibits the use of any nationwide permit for activities that are likely to directly or indirectly jeopardize threatened or endangered species under the Endangered Species Act or destroy or adversely modify designated critical habitat for such species.

The Endangered Species Act requires the Corps to consider the environmental impacts of its actions. Specifically, §7(a)(2) requires the Corps to determine “at the earliest possible time” whether any action it takes “may affect” listed species and critical habitat. If the Corps’ action “may affect” listed species or critical habitat, the Corps must consult with the U.S. Fish and Wildlife Service and/or the National Marine Fisheries Service.

Every five years the Corps reissues the Nationwide Permits with various changes. The Nationwide Permits were last reissued in 2017, to be effective until 2022. When the Corps last reissued Nationwide Permit 12, the Corps determined that Nationwide Permit 12 complied with the Endangered Species Act because Nationwide Permit 12 would not affect listed species or critical habitat and would result in “no more than minimal individual and cumulative adverse effects on the aquatic environment” under the Clean Water Act. The Corps concluded that its reissuance of Nationwide Permit 12 would have no effect on listed species or critical habitat. Based on its “no effect” determination, the Corps did not consult with the U.S. Fish and Wildlife Service and/or the National Marine Fisheries Service.

Brief summary of Northern Plains Resource Council, et al. v. Army Corps of Engineers, et al.:

The original order vacating Nationwide Permit 12 was issued by the U.S. District Court for the District of Montana on April 15, 2020 inNorthern Plains Resource Council, et al. v. Army Corps of Engineers, et al. Plaintiffs, led by the non-profit conservation group Northern Plains Resource Council, challenged the Corps’ authorization of Nationwide Permit 12’s use to permit the discharge of dredged or fill material into waters of the U.S. in connection with TC Energy’s Keystone XL Pipeline crossings of the Yellowstone and Cheyenne Rivers.

Plaintiffs argued, among other things, that the Corps’ reissuance of Nationwide Permit 12 in 2017 violated the Endangered Species Act. Plaintiffs explained that “regional conditions and project-level consultations” represented “inadequate substitutes for programmatic consultation” because they “fail to adequately analyze” Nationwide Permit 12’s cumulative impacts to listed species, like migratory birds, that cross regions.

Though Plaintiffs’ challenge focused on the Corps’ use of Nationwide Permit 12 to approve pipeline projects like Keystone XL, according to the District Court, “Plaintiffs did not suggest that their harms stemmed only from pipelines, let alone only from Keystone XL.”

In ruling on the parties’ motions for partial summary judgment, the District Court held that the Corps had violated the Endangered Species Act when it reissued Nationwide Permit 12 in 2017, without consulting with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service regarding the effect of Nationwide Permit 12 on Endangered Species Act-listed species. The Court thus vacated Nationwide Permit 12, remanded Nationwide Permit 12 to the Corps for compliance with the Endangered Species Act, and enjoined the Corps from authorizing any dredge or fill activities under Nationwide Permit 12 pending the completion of the consultation process.

The Corps and TC Energy filed motions for a partial stay. Plaintiffs opposed the stay and suggested the District Court instead narrow the vacatur and the associated injunction to apply only to the construction of new oil and gas pipelines. Taking Plaintiff’s lead, on May 11, 2020, the District Court issued an amended order narrowing the scope of its earlier vacatur and injunction by limiting it to “the construction of new oil and gas pipelines” while allowing other projects governed by Nationwide Permit 12 to proceed, including the maintenance of existing pipelines. The amended order keeps Nationwide Permit 12 in place during remand “insofar as it authorizes non-pipeline construction activities and routine maintenance, inspection, and repair activities” on existing Nationwide Permit 12 projects.

Significance of Appeal to Ninth Circuit:

The District Court’s amended order jeopardizes pipeline projects across the nation that relied on Nationwide Permit 12, and thus, the outcome of Northern Plains Resource Council, et al. v. Army Corps of Engineers, et al. on appeal will significantly impact the pipeline industry.

Until the Ninth Circuit makes a determination (and thereafter if the District Court’s amended order is affirmed), oil and gas pipeline developers will have to consider whether to seek authorization for a new pipeline under another Nationwide Permit where applicable, or apply for individual permits under Section 404 of the Clean Water Act, which is typically a more time consuming and costly process. Project-specific permitting may also prompt public participation, and opposition. Another option for pipeline companies to consider is whether the project can be redesigned to avoid impacts to waters of the U.S. altogether, thus obviating the need for a permit under Section 404 of the Clean Water Act, and avoiding the uncertainty surrounding Nationwide Permit 12 at this time.

Case No. CV-19-44-GF-BMM, 2020 WL 1875455, --- F. Supp.3d --- (D. Mont. Apr. 15, 2020).

Case No. CV-19-44-GF-BMM, Dkt. No. 151 (May 11, 2020).

See 82 Fed. Reg. 1860-01, 1985-86 (Jan. 6, 2017).

See 82 Fed. Reg. at 1998-2005 (2017).

See 82 Fed. Reg. at 1999-2000 (2017).

16 U.S.C. § 1536(a)(2); 50 C.F.R. § 402.14(a).

NWP005340 and NWP005324.

82 Fed. Reg. at 1873-74; see also 81 Fed. Reg. 35186-01, 35193 (June 1, 2016).

NWP005324-25.

See May 11 Order at 3.

See April 15 Order at 1 (emphasis added).

See April 15th Order at 21.

See May 11th Order at 6 and 38.