It’s been a busy few weeks in the pipeline world. Since May 9, we’ve had six major events involving four pipelines: Atlantic Coast (ACP), Dakota Access, Keystone XL, and Atlantic Sunrise:
- ACP had barely finished celebrating a Supreme Court victory in being allowed an easement through federal land on the Appalachian Trail when the whole project was canceled, with only about 10 percent of it constructed.
- Dakota Access made new headlines when a federal judge ordered it shut down while the Army Corps of Engineers went back and redid its environmental analysis.
- A federal judge stopped Keystone XL construction in an order that also applied to every other new oil and gas pipeline in the U.S. (the Supreme Court put the kibosh on the nationwide injunction, but upheld it as to Keystone.)
- Atlantic Sunrise was the issue in the D.C. Circuit’s 10-1 decision throwing out FERC’s notorious practice of issuing “tolling orders.” After approving a pipeline, FERC uses tolling orders to allow the pipeline to condemn property, build, and even start operating, while keeping landowners from going to court to challenge FERC’s decision.
Since Niskanen has been involved with all these pipelines except Keystone, we have been following these developments closely.[1]
So, what does this all mean? It would be easy to say that it represents a whole new era in pipeline development—as some have been enthusiastically proclaiming—but I don’t think so. These events are not all of a piece. As a legal matter, they should be divided into two categories: the first has the three pipelines where the relevant issues concerned federal environmental permits/review (ACP, Dakota Access and Keystone) and the second category has the one pipeline (Atlantic Sunrise) where the issue was FERC’s practices under the Natural Gas Act.
As to the first category–federal permitting and the attendant environmental review–people have been suing federal agencies over their failure to comply with environmental laws for 50 years, with no discernable impact on agency behavior. Take the Army Corps of Engineers, the common culprit in Keystone, Dakota Access, and ACP. In Dakota Access, the Corps granted an easement under Lake Oahe on the Missouri River without doing the necessary analysis under the National Environmental Policy Act (NEPA); in Keystone, the Corps issued a nationwide permit for building pipelines through streams and wetlands without doing the necessary analysis under NEPA or under the Endangered Species Act. ACP was canceled in large part because courts had also thrown out a Corps’ streams and wetlands permit (along with the U.S. Fish & Wildlife Service’s review under the Endangered Species Act) and, most importantly, the delay caused by these lawsuits (and dozens of others) against ACP bought time for the environmental community to persuade Virginia to enact a law requiring 100% clean energy by 2045, which completely undercut ACP’s purpose. [2]
The Corps (“Proudly improving on Mother Nature since 1802”) believes its raison d’etre is to build things. When it isn’t building them itself, it hands out authorizations to build through streams and fill in wetlands (“404 permits”, named for the Clean Water Act provision requiring them) like candy. So, what the Corps did with Keystone, Dakota Access, and ACP is standard operating procedure and, as it has done for decades, it will just shrug and take the losses as a cost of doing business.
Nevertheless, two significant changes may come from these decisions, but both would be procedural–and temporary. First, the Keystone decision invalidated an entire category of 404 permits. While the Supreme Court limited the injunction to just that case, pipeline opponents can (and presumably will) use the judge’s ruling in as many pipeline fights as possible by seeking preliminary injunctions based on the decision. But even if other judges adopt this approach, the Corps will eventually redo its faulty analyses. (And when the Corps inevitably reaches the same conclusions and reissues the permit, everyone goes back to court .)
Second, shutting down Dakota Access was a breakthrough in what remedy a court may order when it throws out the next Corps or other agency (take notice, FERC) pipeline decision. Though, like Keystone, this would be a temporary reprieve, it may have a permanent impact if enough other courts start doing it. The joint agency/pipeline calculus has always been, “To get this operating sooner, we can skip doing X, Y, or Z, and just issue the permit; if a court says we shouldn’t have, and we have to do things over again, no biggie – the pipeline is already built, and now we have all the time in the world to go back and fill in the blanks.” If other courts adopt a “shut down the pipeline in the interim” remedy for Corps and other agency mishaps, the calculus would become, “if we have to do it over again, the court might shut down the pipeline in the interim, and we have to weigh that risk against just following the law from the start.”
So much for the usual suspects! Now on to FERC and Natural Gas Act, where the Atlantic Sunrise decision eliminating tolling orders could significantly change FERC’s pipeline process, although this comes with two caveats. Again, this is a procedural change, not a substantive one. Pipelines will not be able to seize people’s land before they have a chance to get into court, but whether that will make any difference to the outcome is debatable. Getting to court is fine, but since it will take close to two years before the case is decided, landowners won’t be better off unless they can get the court to immediately “stay” FERC’s decision (or at least stay its eminent domain authority). And getting a stay out of the D.C. (or any) Circuit is much easier said than done.
But let’s assume a landowner is successful in getting a stay. Nothing in the Atlantic Sunrise decision changes the Natural Gas Act’s substantive criteria, nor does it change the deference courts typically give agency determinations. We still need to get courts to understand the many problems in how FERC interprets and applies the Natural Gas Act. This decision helps landowners only to the extent (and only if the certificate is stayed), that the pipeline is not already built and operating by the time the court decides the case. Even if the law is the same, facts on the ground are important, and what judges decide as to a pipeline on the drawing board and one already in operation may be two very different things.
That was why Dakota Access was so surprising: getting a court to stop a project in operation is a lot more difficult than stopping one that has not broken ground. And it will come to the true test at some point when the issue is not–as in Dakota Access–something a court can or will let the agency fix while the pipeline is operating. What happens when FERC approves a pipeline when it has no legal authority to do so? Would a court order the pipeline to shut down permanently? Or shut down and then the pipeline must also be dug up? That would be something truly novel.
So, as always with legal precedents, we need to see what happens in subsequent cases. I’m pleased with this run of good weather, but it will be some time before we know whether the climate for pipeline development has really changed.
[1] Note: We represent landowners whose property ACP was trying to take (and who are extremely relieved), and separately submitted an amicus brief in the Supreme Court’s ACP case. We also submitted an amicus in the Atlantic Sunrise case, and we started our whole pipeline project almost exactly three years ago with an amicus in the Iowa Supreme Court on Dakota Access. (And, oddly enough, in a previous lifetime I was briefly involved with Keystone back in 2009.) But we cannot claim any credit for any of these victories; that goes to a whole bunch of other very smart lawyers whom we were glad to assist on behalf of landowners when possible.
[2] ACP was intended to deliver gas to Virginia and North Carolina to meet what ACP claimed would be a significant increase in gas-fired electricity. But the new law led ACP’s parent, Dominion Energy, to concede in March that “significant build-out of natural gas generation facilities is not currently viable.”