Key Permit Used in Keystone XL Pipeline Put On Hold – Potential Far-Reaching Impacts on Other Projects

May 1, 2020 | Insights

By Jon Bull, Ben Rhem, & Alisha Mehta

On April 15, 2020, an order from the U.S. District Court for the District of Montana vacated a key general permit pipeline and utility project owners have used for decades to address Clean Water Act requirements, including the Keystone XL oil pipeline, a proposed 875-mile pipeline that aims to transport crude oil from Alberta, Canada to Montana and Nebraska. The decision centered on the U.S. Army Corps of Engineers (ACOE) Nationwide Permit 12 (NWP-12), a general permit issued by the ACOE in 1977 and reissued periodically, including most recently in 2017, when ACOE reissued 50 NWPs. Subject to limitations, NWP-12 authorizes discharges of dredged or fill materials into waters of the U.S., including wetlands, as a result of construction, maintenance, repair, and removal of utility lines and associated facilities. It is commonly used for linear pipeline or utility construction projects to authorize crossings of jurisdictional streams or wetlands. Projects that meet general and specific conditions of a NWP may proceed without ACOE review or approval; however, certain general conditions of all NWPs and specific conditions of NWP-12 require a project owner to submit a preconstruction notice to ACOE, which triggers project-level review and approval before starting the proposed activity.

The District Court determined that ACOE acted arbitrarily in its decision to reissue NWP-12 without formal consultation with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service. Under the Endangered Species Act (ESA), the court reasoned, ACOE must consider early in the process whether its action as a whole may affect listed species or critical habitat, and if so, must consult with FWS and NMFS on the action. ACOE argued the formal consultation was not required because NWP-12’s general and specific conditions, preconstruction notice requirements, and project-level reviews of noticed projects, ensured that reissuance would not affect listed or critical species. General condition 18 is a condition of all NWPs—it bars the use of a NWP for activities likely to jeopardize threatened or engendered species and requires non-federal permittees to submit preconstruction notice to ACOE if the proposed activity “might” affect listed species or critical habitat. The court determined that ACOE’s reliance on this general condition to avoid going through ESA’s consultation requirements at the rulemaking stage “turns the ESA’s initial effects determination over to non-federal permittees.” On that basis, the court determined that ACOE’s reissuance without consultation improperly delegated its duty to determine whether activities authorized by NWP-12 would will affect listed species or critical habitat. The court’s ruling vacated NWP-12 pending completion of an ESA consultation process and prohibits the ACOE from using NWP-12 to approve wetlands dredging and filling in the interim.

By vacating NWP-12, the court’s decision has far-reaching implications. The ruling prevents the ACOE from approving other pipeline or utility projects through this streamlined permitting process and potentially calls into question authorization for projects relying on NWP-12. Currently, thousands of projects rely on NWP-12 to meet their schedules and budgets. The ruling may also affect several pending projects, such as the Atlantic Coast and Mountain Valley natural gas pipelines on the east coast. Further, although the court’s ruling addressed NWP-12 specifically, ACOE reissued fifty NWPs in 2017 incorporating general condition 18, which the court determined could not support reissuance of NWP-12 without formal consultation under the ESA.

It is expected that the Trump administration, which has outspokenly opposed nationwide injunctions, will appeal the decision to the U.S. Court of Appeals for the Ninth Circuit. Vice President Mike Pence, Assistant Attorney General Jeffrey Clark, and U.S. Supreme Court Justice Neil Gorsuch are all on the record opposing these kinds of nationwide injunctions. If the appeal is unsuccessful, the ACOE will have to issue individual permits for the pipelines’ water crossings until the ESA consultation process is completed, a much more time-consuming process. A broad consultation with federal wildlife agencies could take longer than a year.

The ACOE has already taken action, filing a motion on April 27 requesting the Court to partially stay its decision vacating the NWP-12 pending an ACOE appeal of that decision. The ACOE asks the Court to limit its decision to the Keystone XL pipeline and to consider the motion on an expedited basis, requesting a decision by May 11. On April 28, the District Court judge issued an order denying motion for the stay, but agreed to hear briefings from the government and make a final ruling by May 11.

The case is Northern Plains Resource Council et al. v. U.S. Army Corps of Engineers et al., No. 4:19-cv-00044 (D. Mont. Apr. 15, 2020).

Meet Jon

Jonathan Bull counsels clients on regulatory matters and complex environmental litigation matters in both state and federal courts and in arbitration proceedings. Jon helps clients identify and mitigate environmental risks, navigate permitting processes, and defends clients in administrative enforcement actions. He also leverages his background as both a hydrogeologist and former enforcement attorney with the EPA to appropriately frame and manage environmental operational compliance and liability aspects of company and asset business transactions, including handling of legacy liability and compliance issues. Jon regularly works with land development and construction clients on policy, compliance and enforcement aspects of state and federal programs regulating stormwater discharges, wetlands and jurisdictional waters, dust emissions and protected species and resources.

Meet Ben

Benjamin R. Rhem advises clients in the power generation, oil and gas, and mining industries regarding compliance with federal and state environmental laws. He works regularly before the Texas Commission on Environmental Quality and the United States Environmental Protection Agency. Ben’s practice also extends beyond environmental law, as he assists clients dealing with regulatory issues before Federal Energy Regulatory Commission, Pipeline and Hazardous Materials Safety Administration, the Railroad Commission of Texas, and Mine Safety and Health Administration.

Meet Alisha

Alisha Mehta represents clients in complex permitting and water matters, including real estate developers and special utility districts. In her practice, she regularly counsels clients on transactional and regulatory issues before the Public Utility Commission of Texas, including energy project transactions, regulatory proceedings, contested cases, and rate cases. Additionally, she is experienced in preparing due diligence memorandums and analysis of environmental issues for renewable energy projects.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice.