Nationwide Permit for Pipelines and Utility Projects Vacated on ESA Grounds

On April 15, 2020, the United States District Court for the District of Montana issued a decision in Northern Plains Resource Council v. U.S. Army Corps of Engineers, vacating Nationwide Permit (“NWP”) 12, a general permit issued by the Army Corps of Engineers (“Corps”) for pipelines and other utility projects. The case was brought, in part, to challenge the application of NWP 12 to the Keystone XL Pipeline, but the court’s decision to invalidate NWP 12 has implications for utility projects nationwide, as well as potential ramifications for all projects relying on NWPs.

The Clean Water Act (“CWA”) authorizes the Corps to issue NWPs, which streamline the permitting process for activities that the Corps determines will have minimal adverse environmental effects. NWP 12, which the Corps reissued in 2017, authorizes discharges of dredged or fill material into waters of the United States associated with the construction, maintenance, repair, and removal of utility lines and associated facilities (which may include access roads to utilities).

Plaintiffs challenged the decision of the Corps to reissue NWP 12, alleging that the reissuance violated the Endangered Species Act (“ESA”), the CWA, and the National Environmental Policy Act (“NEPA”). Plaintiffs also challenged the application of NWP 12 to the Keystone XL Pipeline.

The court agreed with plaintiffs that the reissuance of NWP 12 violated the ESA. Section 7 of the ESA requires the Corps to determine whether its actions “may affect” listed species and critical habitats; if so, the Corps is required to undertake a consultation with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service. When the Corps reissued the NWPs in 2017, it did not undertake such a consultation. Instead, the Corps determined that none of the fifty NWPs that were reissued or the two new NWPs that were issued would impact listed species or habitats, because General Condition 18 – which applies to all NWPs – prohibits an activity that is “likely to directly or indirectly jeopardize the continued existence” of a listed species or its critical habitat; requires federal agencies to comply with the ESA; and requires non-federal permittees to notify the Corps if any listed species or critical habitat “might be affected.”

The court held that the Corps’ failure to initiate an ESA section 7 consultation was arbitrary and capricious. The court concluded that the Corps cannot circumvent the ESA’s requirements by relying on General Condition 18 or on project-specific review. The court further concluded that requiring parties to assess whether their projects would impact listed species constituted an impermissible delegation of the Corps’ obligations under the ESA. The court noted that the Corps lost a comparable lawsuit when it reissued NWP 12 in 2002, and had engaged in consultation when it reissued NWP 12 in both 2007 and 2012; the agency appeared to offer no reason for its change of position. As stated by the court:

The Corps itself has acknowledged that the discharges will contribute to the cumulative effects to wetlands, streams, and other aquatic resources. There exists “resounding evidence” from experts and from the Corps that the discharges authorized by NWP 12 may affect listed species and critical habitat. (citations omitted).

The court therefore vacated NWP 12 and remanded it to the Corps for compliance with the ESA. The Corps is enjoined from authorizing any dredge or fill activities under NWP 12 pending completion of the ESA consultation. In short, the court issued a nationwide injunction barring the applicability of NWP 12 until the Corps conducts the required consultation and, presumably, issues a determination in compliance with the ESA, NEPA, and the CWA.

The court denied the CWA and NEPA claims without prejudice, based on its remand of the ESA claim for Corps compliance, in the hope that the consultation process would inform the Corps’ decisions under those statutes. It also stayed the claims challenging the application of NWP 12 to the Keystone XL Pipeline, pending further action by the Corps.

The court’s decision could have significant impacts on current and future pipeline, electrical transmission, and renewable energy projects that rely on the use of NWP 12. Projects that plan to rely on NWP 12 are effectively enjoined. Until ESA consultation is complete, project developers will need to determine whether their proposed activities may be authorized under a different NWP or whether they will need to obtain individual permits under the CWA. In addition, because the Corps also failed to undertake ESA consultations on all other reissued or new NWPs by relying on General Condition 18, projects relying on other NWPs that “may affect” listed species and critical habitats may be vulnerable to challenges on ESA grounds. As a result of this decision, projects relying on NWP 12 could face significant delays while ESA consultation is underway, and projects relying on other NWPs could face litigation challenges and concomitant delays.

It is likely that the Corps will seek to stay the nationwide application of this decision. Even if successful, however, the potential for challenges to NWPs will remain.