Federal Court Vacates Corps of Engineers Permit for Keystone XL Pipeline — and Jeopardizes Thousands of Other Projects Nationwide

A U.S. District Court in Montana has ruled that the U.S. Army Corps of Engineers violated the Endangered Species Act when it issued Nationwide Permit (NWP) 12 in 2017 to authorize qualifying utility line projects. Several environmental organizations challenged the Corps’ authorization under that permit of the controversial Keystone XL Pipeline’s crossing of several streams. Agreeing with them that the Corps had not complied with its obligations under the Endangered Species Act, the court vacated NWP 12 and the Corps’ authorization of the pipeline. The court couched its ruling in such sweeping terms, though, that it effectively called into question the validity of Corps NWP 12 authorization of thousands of other utility line projects throughout the country. More than that, the court’s reasoning might apply as well to the other 51 Corps nationwide permits and thus jeopardize tens of thousands of projects of various sorts—residential, commercial, and institutional projects, maintenance activities, linear transportation projects, hydropower projects, certain types of mining, agricultural activities, and stormwater management projects—approved under those permits.

Background

The Clean Water Act and Rivers and Harbors Act generally prohibit discharges of dredged or fill materials into navigable waters or wetlands without a permit from the Corps. The Corps may issue individual permits on a case-by-case basis. Or it may issue NWPs for whole categories of activities that then can be authorized one by one with relatively less or no paperwork. NWPs generally cover “small stuff”—activities that are limited in size, adhere to prescribed conditions, and individually or cumulatively cause only minimal adverse environmental effects. They are intended to simplify the permit process for covered activities so the Corps can focus its resources on projects likely to have more significant environmental effects. Some NWPs require a project proponent to notify the Corps before construction (“pre-construction notification”), which affords the Corps the opportunity to object, impose project-specific conditions, or require an individual permit. The Corps typically issues several thousand individual permits and several tens of thousands of NWP authorizations annually.

The Endangered Species Act (ESA) aims to protect and recover fish, wildlife, and plant species threatened with extinction. It calls on the National Marine Fisheries Service (for marine species) and U.S. Fish and Wildlife Service (for all other species) to list species determined to be threatened or endangered and generally prohibits any person from “taking” listed species without a permit. The Act also calls on all federal agencies to ensure that any actions they authorize, fund, or carry out, including issuance of permits for projects, are not likely to “jeopardize” the continued existence of any listed species or result in the “destruction or adverse modification” of designated “critical habitat” of any such species. Toward this end, whenever a federal agency’s action “may affect” listed species or critical habitat, the agency must “consult” with the pertinent Service about that action. The consultation generally leads to the Service issuing a “biological opinion” whether the action would jeopardize a species or adversely modify its critical habitat. The Service also assesses whether the action would result in taking members of the species, and, if so, it includes an “incidental take statement” prescribing measures to minimize the effect of the take. If the federal agency and its permittees act in compliance with those measures, then any take resulting from the activities is not prohibited.

Decision

Upon reissuing NWP 12 in 2017, the Corps found that its action would have “no effect” on listed species or critical habitat and thus it need not consult with the Services under the ESA. The Corps predicated its finding on General Condition 18 of its NWPs, which specifies that NWPs do not authorize any activity likely to directly or indirectly jeopardize the continued existence of a listed species or destroy or adversely modify critical habitat, requires a permittee to submit pre-construction notification if any listed species or critical habitat might be affected by its project, and precludes such permittee from beginning work until notified by the Corps that the requirements of the ESA have been satisfied. Upon reviewing a pre-construction notification, the Corps will determine whether the project may affect listed species or critical habitat and decide whether to initiate consultation on the project with the pertinent Service accordingly.

In 2019, several environmental groups sued the Corps to set aside its approval of stream crossings by the long embattled Keystone XL Pipeline, arguing in part that the Corps failed to consult with the U.S. Fish and Wildlife Service as required when it reissued NWP 12.

In Northern Plains Resource Council v. U.S. Army Corps of Engineers, the district court agreed. Observing that ESA regulations provide for “programmatic consultation” on broad agency programs, plans, and the like, and that the Corps had initiated programmatic consultation on its issuance of earlier versions of NWP 12 in 2007 and 2012, the court decided that the Corps should have again engaged in programmatic consultation in 2017 since there was “resounding evidence” that its reissuance of NWP 12 “may affect” listed species and their critical habitat. The court ruled the Corps’ finding that the reissuance would have no such effect to be arbitrary and capricious. “The Corps cannot circumvent [the requirement for programmatic consultation],” said the court, “by relying on project-level review or General Condition 18.” “Programmatic review of NWP 12 in its entirety,” the court explained, “provides the only way to avoid piecemeal destruction of species and habitat.” Moreover, “General Condition 18 fails to ensure that the Corps fulfills its obligations under [the ESA],” the court found, “because it delegates the Corps’ initial effect determination to non-federal permittees” by leaving it to them to determine if they need to submit pre-construction notifications because their projects “might affect” listed species.

Based on these findings, the court (1) remanded NWP 12 to the Corps for compliance with the ESA, (2) vacated NWP 12 pending completion of the consultation process and compliance with all environmental statutes and regulations, and (3) enjoined the Corps from authorizing any dredge or fill activities under NWP 12 pending that completion.

Implications

This decision, while made only by one district court, may well throw the Corps’ entire regulatory program into disarray. While the ruling does not explicitly say so, it appears to affect NWP 12 nationwide. That alone would preclude use of the permit for thousands of projects to construct, operate, or maintain utility lines of various sorts (pipelines, electric transmission lines, etc.) across the nation. Corps Headquarters has, “[o]ut of an abundance of caution,” directed its districts not to verify any pending NWP 12 pre-construction notifications until further direction while it reviews the decision to determine its next steps. To the extent the court’s reasoning applies to some or all of the Corps’ other NWPs, tens of thousands of other activities annually authorized under those NWPs appear vulnerable to similar challenges and thus may be stymied as well. While project proponents could resort to applying for individual permits as an alternative to the NWPs, that process typically is much more expensive, difficult, and time-consuming. Moreover, if the Corps is deluged with individual permit applications, the difficulties and delays will only mount.

What happens next? The Corps appears to have several options:

1. The Corps may ask the court to modify or clarify its order to extend only to activities in Montana. Given the Justice Department’s increasing criticism of nationwide injunctions, this seems a likely next step.

2. The Corps may appeal the district court’s decision to the Ninth Circuit Court of Appeals and, in the process, seek a stay of the decision pending the outcome of the appeal.

3. The Corps could promptly initiate programmatic consultation with the Services on NWP12, and perhaps on some or all of the other NWPs. Any such consultation would take many months or perhaps a year or more to complete.

4. As the current set of NWPs will expire in 2022 anyway, the Corps could develop and propose a new set of NWPs as soon as possible and initiate programmatic consultation on them.

Absent a limitation or stay of the decision, project proponents across the nation likely face regulatory uncertainties and problematic choices for many months to come.

David Ivester

Briscoe Ivester & Bazel LLP

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San Francisco, CA 94104

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