In a hotly anticipated ruling on May 11, the federal district court that just a few weeks ago stunned and stalled a wide range of industries by vacating the U.S. Army Corps of Engineers’ (“Corps”) Nationwide Permit (“NWP”) 12, narrowed the scope of its original order, but not in the way many anticipated. The court’s amended order now limits the vacatur of NWP 12 to the construction of new oil and gas pipelines only, and limits its injunction against the Corps’ verification of preconstruction notifications (“PCNs”) under NWP 12 to projects involving the construction of new oil and gas pipelines. Thus, while companies in the renewable energy, electric transmission, telephone, cable and other utility line industries can brief a sigh of relief, the pipeline industry faces a difficult permitting environment for at least the remainder of 2020 and likely well into 2021. 

Brief Background of the Order

The original order was issued by the federal district court for the District of Montana on April 15, 2020, in the case of Northern Plains Resource Council et al. v. U.S. Army Corps of Engineers et al.  The case involved a challenge by plaintiffs to the Corps’ authorization of the use of NWP 12 to permit the discharge of dredged or fill material to waters of the U.S. in connection with the construction of TC Energy’s Keystone Pipeline. The court held that the Corps had failed to comply with the Endangered Species Act (“ESA”) by not consulting with the U.S. Fish and Wildlife Service (“USFWS”) and National Marine Fisheries Service (“NMFS”) regarding the effect of NWP 12 on ESA-listed species when it reauthorized NWP 12 and the other NWPs in 2017. But in an order that surprised many, the court granted even wider relief than the plaintiffs had requested by vacating NWP 12 and enjoining the Service from authorizing any dredge or fill activities under NWP 12 until the Corps could complete proper consultation under the ESA and other environmental statutes.  Further background on the case, NWP 12, and the original order can be found in our previous QuickStudy on this topic. 

Corps’ Motion for Stay of Original Order

The implications of the court’s order were significant and widespread.  Just days after the original order, Corps Headquarters issued a directive to its Regulatory Districts nationwide directing them not to verify any pending PCN’s for compliance with NWP 12 until further notice.  Project proponents from all affected industries were left with numerous questions about how the order would affect PCNs already approved for projects not yet constructed, self-certifications for projects not yet commenced, applicability of other PCNs as alternative means of authorization to enable projects to move forward, and many related issues. Further clarification was not forthcoming from the Corps. However, on April 27 the Corps filed a motion asking the court to stay the effectiveness of its order pending appeal to the Ninth Circuit, which it planned to file on May 12.  Recognizing the vast impact of the order, the plaintiffs filed a response in which they opposed the stay but suggested that the court narrow the vacatur of NWP 12 and the associated injunction to apply only to the construction of new oil and gas pipelines.

The Amended Order

The court adopted the plaintiffs’ suggestions, and on May 11, issued an amended order that remands NWP 12 to the Corps for compliance with the ESA. Until such compliance is achieved, the amended order vacates NWP 12 only as it relates to construction of new oil and gas pipelines, and enjoins the Corps from authorizing dredge or fill activities under NWP 12 for the construction of new oil and gas pipelines. However, the amended order makes clear that NWP 12 remains in place during remand as it relates to, and the Corps may authorized dredge or fill activities for, non-pipeline construction activities and routine maintenance, inspection, and repair activities on existing NWP 12 projects.

The court explained its decision not to grant the full stay requested by the Corps by noting that the Corps has already issued more than 38,000 PCN verifications under NWP 12 since its reissuance on March 19, 2017, and plaintiffs would suffer substantial harm if construction of Keystone XL and other oil and gas pipelines were allowed to continue under NWP 12. By focusing its relief on new oil and gas pipelines, the court asserted that it would prevent the Corps from relying on NWP 12 for the types or projects “that likely pose the greatest threat to listed species.”  Meanwhile, the narrower scope of the order will allow other types of projects such as maintenance and repair of electric, internet, and cable lines and wires to continue using NWP 12, which will “minimize potential disruption to existing [non-pipeline] projects and smaller-scale projects while ensuring appropriate protection” for ESA-listed species and their critical habitats.  

Conclusion

The amended order provides a welcome reprieve to the regulated community outside of the oil and gas industry. Countless new projects such as wind farms and transmission lines had faced difficult and uncertain prospects as they scrambled to find alternative permitting strategies that would enable them to proceed with construction while ensuring compliance with the Clean Water Act. Those projects can now proceed under the clear guidance provided in the amended order. But for developers of oil and gas pipelines, the amended order is a significant blow. Those projects will now be forced to avoid impacts to waters of the U.S. by costly re-routing, horizontal directional drilling, or other techniques. Where those options are not technically or economically feasible, they may need to obtain individual permits from the Corps, a process which can take upwards of a year and require extensive inter-agency consultation and public notice and comment. It is not unreasonable to expect that a ruling will be issued in the Corps’ appeal to the Ninth Circuit, or that the Corps could complete its reissuance of NWP 12 on remand, before a project that begins the individual permit process now could obtain its final permit. But most near term projects will likely need to begin the process now, as there are no guarantees as to how or when the appeal or reissuance will turn out.