Federal Court Limits NWP 12 Vacatur to New Oil and Gas Pipelines, Denies Stay Pending Appeal

On April 27, in response to the District of Montana’s broad-reaching decision that called into question Nationwide Permit (NWP) 12 as part of a challenge to the Keystone XL project, the US Army Corps of Engineers filed a motion for partial stay pending appeal and also urged the court to sua sponte revise its decision based on the arguments set forth in its motion. In response, the plaintiffs proposed a revised remedy that would narrow the scope of the court’s earlier vacatur and injunction—namely, a partial vacatur that only applies to the construction of new oil and gas pipelines.

The court has now ruled and issued an order amending its prior summary judgment order and ruling on the Corps’ stay request. In doing so, the court:

• Affirmed its prior award of relief, citing precedent from the US Supreme Court and Ninth Circuit. According to the court, a district court should grant the relief to which a party is entitled, even if that party has not demanded it in their pleadings, particularly where the party has requested “such other relief as the court deems just and appropriate.” The court, therefore, found that it “exercised appropriate discretion when it chose to vacate broadly and enjoin the Corps’ authorizations under NWP 12 due to the Corps’ program-level ESA violation.”
• Revised its vacatur of NWP 12 to a partial vacatur that only applies to the construction of new oil and gas pipelines based on its assessment of the “seriousness” of the Corps’ errors and the “disruptive consequences” that would result from vacatur. NWP 12 remains in place during remand for non-pipeline construction activities and routine maintenance, inspection, and repair activities on existing NWP 12 projects, as these type of activities do not pose as great a risk under the ESA.
• Denied a partial stay pending appeal based on its finding that:

1. The Corps is unlikely to succeed on appeal given the court’s determinations that the Corps violated the ESA
2. Any burden in having to process an increased number of individual permits was self-inflicted by the Corps
3. Potential increased permitting and the related compliance costs neither rise to the level of irreparable harm nor outweigh the potential harm to the environment
4. The equities and public interest favor the protected species.

It is now expected that the Corps will file their notice of appeal with the Ninth Circuit, likely with a request to stay. The fate of NWP 12, therefore, remains uncertain. What is not uncertain is the likely influx of litigation.

As predicted, environmental groups have already started pointing to the Keystone XL case as precedent to halt projects in other jurisdictions and require full, individual permits. For example, on April 30, the Sierra Club brought an action is the Western District of Texas challenging the Corps’ permitting of Kinder Morgan’s Permian Highway, an approximate 428-mile-long proposed natural gas pipeline. While similar, this Texas case is slightly different in that the plaintiffs assert the verifications the Corps issued for the project on February 13 to allow it to proceed under NWP 12—more than two months before the vacatur in the Keystone XL case—are no longer valid based on the “[t]he Corps’ failure to comply with the vacatur of NWP 12, its failure to suspend or revoke the February 13, 2020 verifications, and its failure to re-initiate ESA section 7 consultation for the verifications[.]”

If you have any questions regarding the content of this alert, please contact Yvonne Hennessey, chair of the Environmental and Lobbying & Election Law Compliance Practice Areas and co-team leader of the Oil & Gas, Linear Infrastructure, and Energy Markets Teams, at yhennessey@barclaydamon.com or another member of the firm’s Regulatory Practice Area.