Ninth Circuit Declines to Reinstate Streamlined Water Permitting Process for New Pipelines

The energy sector is facing further setbacks in obtaining streamlined Clean Water Act (CWA) permits to construct new oil and gas pipelines that cross jurisdictional waters. On May 28, 2020, the Ninth Circuit denied an emergency request from the Department of Justice (DOJ) and industry groups to stay the decision of the U.S. District Court for the District of Montana vacating a federal CWA general permit, Nationwide Permit No. 12 (NWP 12), for new oil and gas pipeline construction of the Keystone XL pipeline in Northern Plains Resource Council v. U.S. Army Corps of Engineers.

Nationwide Permits

Nationwide permits (NWP) are a type of CWA general permit issued on a national basis authorizing specific activities that will have minimal individual and cumulative adverse environmental effects. Individual permits, on the other hand, require normal permitting processes, including public notice and comment, review under the National Environmental Policy Act, and submission of a CWA 404(b)(1) alternative analysis, among other requirements. NWPs provide a streamlined permitting process whereby much individual review is eliminated because the NWP imposes conditions designed programmatically to minimize the impacts of a specific category of activity and requires individual project review where specified circumstances occur. So long as the specific programmatic and general conditions set forth by the general permit are met, work may proceed with limited administrative process to obtain coverage thereunder, although preconstruction notification and project-specific Army Corps review are required upon the occurrence of specific conditions before verification can occur. NWPs are reviewed and re-authorized every five years. NWPs, authorized by the CWA, are a critical component of the Corps’ CWA regulatory program, and several thousand applications for coverage under NWPs are submitted to the Corps annually.

NWP 12 is one of 52 NWPs. It authorizes discharges of dredged or fill material that result in the loss of up to one-half acre of jurisdictional waters associated with the construction, maintenance, repair, and removal of utility lines and associated facilities, which includes electric transmission lines, oil and gas pipelines, telephone, cable TV, and internet cables. Pipeline developers depend on this streamlined process to avoid more time-consuming, expensive individual permitting processes for projects crossing jurisdictional waters. NWP 12 is subject to 32 general conditions, as well as regional conditions imposed by the Corps across the country and conditions imposed by the states in certifying compliance of Corps permits with state water quality standards. NWP 12 requires pre-construction notification and project specific verification of coverage by the Corps under specified circumstances.

The District Court Vacaturs

The Northern Plains Resource Council (NPRC) challenged NWP 12 in connection with TC Energy Corporation’s use of that authority to discharge dredged or fill material to waters of the U.S. in conjunction with its construction of portions of the Keystone XL pipeline. Among other claims, NPRC argued that the Corps violated the federal Endangered Species Act (ESA) when it failed to consult with the U.S. Fish and Wildlife Service (USFWS) and National Marine Fisheries Service (NMFS) in reissuing this general permit in 2017.

Under ESA Section 7(a)(2), federal agencies engaged in actions that “may affect” an endangered species, including permit issuance, are required to consult with the USFWS and NMFS before that action may be performed. When it reissued the 52 NWPs in 2017, including NWP 12, the Corps determined it unnecessary to consult with the wildlife agencies programmatically on the endangered species impacts of reissuing NWP 12, in part because the Corps imposed General Condition 18 (GC 18) for all NWPs. GC 18 prohibits the verification of coverage under NWP 12 or any NWP if the proposed activity or project is likely to “directly or indirectly jeopardize the continued existence of a threatened or endangered species or a species.” Applicants for coverage under any of the NWPs must provide pre-construction notification and obtain specific Corps verification NWP coverage for any case where any endangered species “might be affected or is in the vicinity of the activity.” GC 18(c). The Corps’ determination not to consult programmatically on the 2017 NWP reissuance package was inconsistent with the 2007 and 2012 reissuances where the Corps did consult with the wildlife agencies.

The district court, in a surprising opinion granting wider relief initially than requested, ruled that reissuing NWP 12 without programmatic consultation violated the ESA because the general permit would affect endangered species. Further, the District Court found the Corps reliance on GC 18 at the individual project level insufficient to satisfy the Corps’ ESA Section 7 obligations. Therefore, the failure to conduct a programmatic consultation three years prior when NWP 12 was issued rendered the NWP defective, meaning that it was unavailable for the Keystone XL project. Although the District Court’s initial ruling vacated NWP 12 in its entirety, the district court narrowed the scope of its initial ruling on May 11 to cover only the construction of new oil and gas pipelines until the ESA consultation is complete. The narrowed Order left intact NWP 12 approvals of all existing projects (including pipelines), their routine maintenance and repair, and allows NWP 12 approvals of new non-pipeline construction projects (e.g., for non-pipeline utilities). The district court’s decision did not invalidate any other NWP.

Ninth Circuit Denial of Stay

The DOJ sought an emergency stay in the Ninth Circuit, arguing “the district court’s highly disruptive order prevents the Corps or private parties from relying on NWP 12 for proposed activities related to the construction of oil and gas pipelines anywhere in the country—not only large pipelines like Keystone XL but also small intra-state pipelines or even smaller regional projects.” TC Energy Corporation also sought an emergency stay, challenging the pointed, arbitrary restriction placed on the oil and gas industry and arguing that other utility projects could have the same impacts on protected species. TC Energy also argued that district court “improperly” presumed irreparable harm from a procedural violation of the ESA.

In a brief order denying the stay, the Ninth Circuit determined that the DOJ and industry “have not demonstrated a sufficient likelihood of success on the merits and probability of irreparable harm to warrant a stay pending appeal.”

Impacts: NWP 12 and Beyond

The Ninth Circuit’s denial of the emergency motion to stay the vacatur is the first of what may be many procedural maneuvers in the Ninth Circuit and beyond to limit the impact of the district court’s decision. The Ninth Circuit will continue with its previous briefing schedule on whether a stay is appropriate and eventually hear the merits of the District Court’s vacatur, so these issues may be reviewed on a more thorough basis. Unless the Northern Plains decision is overturned on appeal, NWP 12 will not be available to authorize new pipeline construction until a programmatic consultation with the USFWS and NMFS is completed.

At this point, the only sure ways for new oil and gas pipelines to obtain CWA Section 404 authorization until the appeal process is complete or the Corps undertakes and completes programmatic consultation is to pursue an individual Section 404 permit or a Regional General Permit if applicable. The individual permit process generally takes more time and effort; losing this streamlined permitting process will likely result in severe schedule disruptions for oil and gas pipeline construction nationwide.

Final Thoughts

Ironically, Northern Plains leaves pipeline project developers and endangered species protections in essentially the same place they were under NWP 12 before it was vacated. The level and extent of ESA consultation on an individual permit is nearly identical to that which occurs under NWP 12 pursuant to GC #18(c) if NWP 12 had been left in place. There is no programmatic consultation on individual permits—only an individual project-specific Section 7 consultation to the extent that the project may affect ESA-listed species. In fact, even if a programmatic consultation is carried out for the 2017 suite of NWPs, GC #18 still requires the individual consultation on projects if it might affect listed species. (Note, however, that the district court found fault with GC #18, too, because it allows the applicant for NWP coverage, rather than the Corps, to make an initial determination of whether the project “might affect” listed species.)

Although this decision hits the energy industry and pipelines initially, its potential impact extends well beyond NWP 12 and leaves vulnerable the entire suite of NWPs. Northern Plains focused solely on NWP 12, but the reality is that the Corps reissued the entire NWP package in 2017 without a programmatic consultation under ESA Section 7. Thus, the legal deficiency the District Court identified in Northern Plains may very well serve as a template for challenges to controversial projects across the NWP program. Therefore, the renewable energy, electric transmission, telephone, cable and other utility sectors should likewise carefully evaluate legal risk of proceeding under NWP 12 or other NWPs. Otherwise, seeking an individual permit or rerouting the project to avoid jurisdictional waters may be necessary, albeit time- and resource-intensive.

We also note that the impacts of this decision may be tempered to some degree if the Trump Administration’s new definition of “waters of the U.S.” goes into effect on June 22 as scheduled; the Trump Administration’s Navigable Waters Protection Rule, scales back the types of waters subject to CWA permitting (e.g., eliminating ephemeral streams). And the Corps could simply initiate consultation on the NWPs to eliminate the issues raised in Northern Plains.

Finally, from a procedural perspective, the issue of whether district courts such as the Northern Plains court may properly issue nationwide injunctions is under increasing scrutiny and may be ripening for Supreme Court review.

For questions or further discussion, please contact the authors or Sheila Harvey, Pillsbury’s Energy Industry Team leader.