Federal Court Nullifies Nationwide Permit 12 – Ruling has Broad Impacts for Energy Infrastructure Projects

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In a case brought by a coalition of environmental groups opposed to the Keystone XL Pipeline project, Judge Brian Morris of the U.S. District Court for Montana issued a ruling on April 15 nullifying Nationwide Permit (NWP) 12, a longstanding nationwide permit that allows linear projects to cross federally protected waters without having to undergo lengthy Individual Permit reviews for each crossing.

In the near term, this decision has sweeping nationwide consequences for thousands of energy infrastructure projects, placing them in limbo pending a reversal or completion of the lengthy and time-consuming Endangered Species Act consultation process.

The Court found that the Army Corps of Engineers (Army Corps) violated the Endangered Species Act by failing to initiate consultation under Section 7(a)(2) when it reissued NWP 12 in 2017 (the Army Corps originally issued NWP 12 in 1977). Over the years, NWP 12 has been reissued several times, usually with minor changes, and was most recently reissued in 2017.

Like all Army Corps Nationwide Permits, NWP 12 is subject to 32 General Conditions. The Court determined the need for the Army Corps to consult on the issuance of NWP 12 at the programmatic level (the Court characterized the Endangered Species Act consultation requirement as being triggered by “a low threshold”) was not obviated by either General Condition 18 (providing that a NWP does not authorize any activity that is likely to jeopardize the continued existence of a listed species or to destroy or adversely modify its critical habitat) or the need for pre-construction notice requiring Endangered Species Act consultation if a proposed activity might affect any listed species or critical habitat.

The Court remanded NWP 12 to the Army Corps “to initiate consultation under Endangered Species Act Section 7(a)(2) to ensure that the discharge activities authorized under NWP 12 comply with the [Endangered Species Act].”

It also vacated NWP 12 until the required consultation is completed and enjoined the Army Corps from authorizing any dredge or fill activities under NWP 12 pending completion of the consultation process and compliance with all environmental statutes and regulations.

Petitioners also argued the Army Corps’ issuance of NWP 12 violated the National Environmental Policy Act (NEPA) and the Clean Water Act (CWA). Based on its expectation that the Army Corps’ Endangered Species Act Section 7(a)(2) consultation will inform NEPA and CWA analyses, including the likely preparation of an Environmental Impact Statement, the Court denied those claims without prejudice.

An appeal is likely. In the near term, an appeal would likely stay the Court’s decision. Also, because the order is expected to have nationwide applicability, the U.S. Department of Justice will likely seek an order narrowing its applicability. If a stay is not ordered, projects that would have otherwise been authorized under NWP 12 will require CWA Section 404 Individual Permits, which usually entails a lengthy review process lasting several months at a minimum. Presumably, the consultation process ordered by the Court will be expedited, but will nonetheless require a substantial amount of time to complete.

In the near term, this decision has sweeping nationwide consequences for thousands of energy infrastructure projects, placing them in limbo pending a reversal or completion of the Endangered Species Act consultation process.

If upheld, the ruling could have a significant impact for developers and the business plans supporting their projects. The requirement of having to pursue individual permits would increase project costs and potentially delay project construction timelines.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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