On April 15, the U.S. District Court for the District of Montana held that the Army Corps of Engineers failed to comply with the Endangered Species Act consequently must reconsider its Nationwide Permit (NWP) 12, which authorizes discharges under Section 404 of the Clean Water Act associated with the construction, maintenance or repair of pipelines, electrical lines, cable lines, and other utilities. The case, Northern Plains Resource Council v. U.S. Army Corps of Engineers, No. 4:19-cv-0044-BMM, challenged the Army Corps’ approval of TC Energy Corporation’s NWP 12 pre-construction notification (PCN), which the company had prepared to proceed with its Keystone XL Pipeline project in Montana. Despite this somewhat narrow focus, the court’s decision to vacate the widely-used general permit is quickly having nationwide effects, as the Army Corps has directed all of its regions to stop processing PCN verifications under NWP 12 indefinitely.
At issue in the case was whether the Army Corps conducted the requisite analyses when it re-issued NWP 12 in 2017, including a formal consultation with federal wildlife agencies in accordance with Section 7(a)(2) of the Endangered Species Act. Section 7(a)(2) of the Endangered Species Act requires all federal agencies to determine “at the earliest possible time” whether a proposed action may affect an endangered or threatened species. If the proposed agency action “may affect” a listed species, then the federal agency must consult with the U.S. Fish and Wildlife Service and National Marine Fisheries Service. When the Army Corps last re-issued NWP 12 in 2017, the Agency did not undergo this formal consultation because it determined that the issuance of the general dredge-and-fill permit would have “no effect” on listed species based on the fact that the permit includes a general condition that prohibits use of the nationwide permit for activities that are likely to jeopardize listed species or adversely impact critical habitat for such species.
The court rejected this reasoning, noting that “the Corps cannot circumvent ESA Section 7(a)(2) consultation requirements by relying on project-level review or General Condition 18.” Op. at 16. The court explained that this general permit condition fails to ensure that the Corps fulfills its obligations under the Endangered Species Act because it effectively “delegates the Corps’ initial effect determination to non-federal permittees” and delays the determination until a particular project arises instead of occurring at the required “earliest possible time” (i.e., when the NWP is reissued). Op. at 19. The court further noted that the Army Corps’ own Decision Document in support of re-issuing NWP 12 notes that the temporary and permanent fills authorized by NWP 12 “may affect” listed species and critical habitat, indicating that “the low threshold for Section 7(a)(2) consultation” had been met and formal consultation should be have been completed before re-issuing the nationwide permit. Op. at 13.
Given these deficiencies, the court remanded NWP 12 to the Army Corps for compliance with the Endangered Species Act and vacated the general permit pending completion of the required consultation process. Although it is questionable whether this decision applies outside of Montana, there was immediate concern that this decision could have more widespread impacts given the nationwide nature of the dredge-and-fill permit. These concerns are materializing as the Army Corps has reportedly instructed its regions to cease processing NWP 12 verifications until further notice in light of last week’s decision. As such, any pending NWP 12 PCNs are now on hold for the foreseeable future. It is less clear whether this case and the subsequent agency guidance impacts NWP 12 projects that do not require PCN (i.e., projects that require “self-certifications,” which includes projects that impact less than 1/10-acres of jurisdictional waters). Nevertheless, given the number of companies that seek coverage under NWP 12 for construction, maintenance and repair of utility lines, including pipelines and electric transmission lines, this nationwide stay is significant. While companies may consider seeking individual permits under Section 404 of the Clean Water Act as an alternative to the nationwide permit, the individual 404 permitting process is often protracted and expensive. In addition, depending on the project, companies may be able reconfigure their project to avoid impacts to jurisdictional waters or to seek coverage under other nationwide permits instead of NWP 12. Yet, these other Army Corps’ nationwide permits may receive similar legal scrutiny in the future, given the programmatic focus of this NWP 12 decision.
Finally, it is notable that the Army Corps is due to re-issue NWP 12 in 2022. Putting aside whether the Army Corps or TC Energy Corporation appeal this decision to the 9th Circuit, the Army Corps will need to consider whether they engage in the Section 7(a)(2) consultation in connection with that new nationwide permitting process.
