A recent federal court ruling on the use of Nationwide Permit 12 (NWP 12), in connection with the Keystone XL pipeline project in Montana, threatens the feasibility of current and future development projects nationwide as the U.S. Corps of Engineers (Corps) braces for an increase in individual Clean Water Act (CWA) permit review. The Montana court vacated NWP 12 and two days later, the Corps issued guidance to each of its regional regulatory offices to suspend all NWP 12 verifications until further notice.

The ruling, issued in Northern Plains Resource Council v. U.S. Army Corps of Engineers, No. 4:19-cv-00044-BMM (D. Mont.), held the Corps failed to consult with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service (the Services) when it reissued a new set of Nationwide Permits in 2017. Section 7(a)(2) of the Endangered Species Act (ESA) requires agencies to consult with the Services when federal action “may affect” an endangered or threatened species. 50 C.F.R. § 402.14. In the past, the Corps regularly consulted with the Services before reissuing NWP 12, but 2017 marked a departure from this practice when the Corps determined that General Condition 18 for project-specific consultation in the NWP would satisfy Section 7 on its own. The court found this to be a) arbitrary and capricious and b) an impermissible delegation of Agency duty to individual permittees.

This decision has left industry reeling as it reassesses permitting options for current and future projects and developments. In particular, NWP 12 is used to authorize “the construction, maintenance, repair and removal of utility lines and associated facilities in waters of the United States, provided the activity does not result in the loss of greater than 1/2-acre of waters of the United States for each single and complete project.” When NWP 12 was reissued in 2017, the Corps estimated that it would be used for “11,500 projects per year.” Now, without the use of NWP 12, developers may be required to obtain individual CWA Section 404 permits from the Corps, (a process involving burdensome federal review taking up to a year to complete), for something as minor as a utility cable crossing a stream.

On April 27, the U.S. Department of Justice (DOJ) filed a motion, on behalf of the Corps, requesting the court stay the portions of the order that vacated NWP 12 so that it did not apply to projects outside of the Keystone XL pipeline. The main argument for doing so is that the plaintiff did not seek “to have NWP 12 broadly enjoined; rather, they seek narrowly tailored relief to ensure adequate environmental review of oil pipelines, especially Keystone XL.” The following day, the court denied any temporary stay on its order until it ruled on the motion itself, but it did grant an expedited briefing. DOJ has indicated that if the court does not rule on the motion by May 11, 2020, it will file a notice of appeal to the Ninth Circuit the next day.

Currently, the ruling does not affect other Nationwide Permits or State Programmatic General Permits, but this new precedent could put them at risk of similar litigation. The Corps estimates that there are approximately 5,500 preconstruction notices (PCN) awaiting verification. If those PCNs were to be processed as individual 404 permits, the Corps believes it would take its regulatory offices one and a half years to complete those permits alone. This threatens to tie up construction in an industry already facing the challenges of the COVID-19 pandemic. As the full impact of this decision is yet to be determined, developers with projects involving NWPs should keep a close eye on this litigation as it progresses and seek out creative solutions to permitting, such as applying for other NWP authorizations as we await updates.