9th Circuit Ruling Is Critical Reminder to Pipeline Project Participants

Guest Commentary

by Jean-Cyril (JC) Walker and Gregory A. Clark, Keller and Heckman, LLP

Arguably, the October 22, 2012, decision by the U.S. Court of Appeals for the Ninth Circuit in Center for Biological Diversity v. Bureau of Land Management,merely clarifies existing law.  On the other hand, the decision, which vacated and remanded a Bureau of Land Management (BLM) decision granting approval for a natural gas pipeline running from Wyoming to Oregon, underscores how approvals granted by Federal land management agencies can be vulnerable to challenges under the Endangered Species Act (ESA) if the Fish and Wildlife Service does not provide a well-grounded Biological Opinion.

The pipeline at issue, the Ruby Pipeline Project, had been approved by the Federal Energy Regulatory Commission (FERC) and the BLM in 2010 and began operating in July 2011.  To gain approval for the project, which covered Federal lands, Ruby Pipeline LLC (“Ruby”) sought and received a Certificate of Public Convenience and Necessity from the FERC and rights of way and temporary use permits from the BLM under the Natural Gas Act (NGA) and the Mineral Leasing Act (MLA), respectively.  Both approvals were contingent on mitigation measures contained in a separate “conservation action plan” that would be carried out by Ruby.  The mitigation measures were developed by Ruby through negotiation with the Fish and Wildlife Service (FWS), the wildlife agency tasked by the Endangered Species Act (ESA) with reviewing the proposed project.

Under the ESA, Federal agencies are required to ensure, through consultation with the FWS, that any projects they authorize do not jeopardize endangered or threatened species or adversely affect critical habitats.¹  The FWS will prepare a biological opinion setting out whether the project “taken together with cumulative effects, is likely to jeopardize the continued existence of listed species or result in the destruction or adverse modification of critical habitat.”²  Here, the FWS biological opinion determined that the pipeline would adversely affect nine endangered species of fish and five designated critical habitats.  Nevertheless, the FWS issued a “no jeopardy” finding, which the BLM relied on in approving the Ruby Pipeline Project, on the basis of the benefits of the mitigation measures negotiated with Ruby.  Environmental and community groups challenged the BLM decision.

In vacating the BLM decision, the Ninth Circuit focused on the enforceability, or lack thereof, of the mitigation measures.³  The FWS categorized the mitigation measures as “cumulative effects,” which essentially are independent, non-federal activities that are not enforceable under the ESA.  The court found, however, that the mitigation measures were not cumulative effects because their implementation was conditioned on approval of the project.  The FWS should have categorized the measures as part of the enforceable project plan, but because it did not, they could not be considered in the biological opinion.  The Ninth Circuit therefore found the biological opinion arbitrary and capricious under the Administrative Procedure Act.

Critically, the court insisted that only the FWS could enforce mitigation measures under the ESA.  As a condition to the Certificate granted to Ruby, FERC could impose civil penalties of up to $1,000,000 per day for any failure to implement the measures.  Similarly, the MLA authorizes BLM to suspend or terminate a right-of-way grant or temporary use permit, and to require the removal of any facilities within such right-of-way if an applicant fails to comply with the terms and conditions of a permit or grant.  Nevertheless, the court noted that FERC and BLM had broad discretion as to enforcement, and thus it lacked any assurance:

…that the BLM would, for instance, terminate the right-of-way for and require removal of the pipeline—which has already been constructed and is delivering millions of gallons of natural gas per day—in the event that Ruby fails to follow through with the CAP measures.”

Notwithstanding this chilling possibility, the ESA requires more certainty, according to the Ninth Circuit.  Reliance on enforcement under other statutes or by other agencies contravenes the “sequential, interlocking procedural provisions [that] ensure recourse if the parties do not honor or enforce” the mitigation measures.  These provisions include ongoing oversight by the FWS, reconsultation, civil and criminal liability for the taking of endangered species, and in particular citizen suits to enjoin ESA violations.

In other words, the lesson here is “buyer beware!”  Project proponents need to make certain that proposed mitigation measures really count as part of enforceable project plans and are appropriately considered and accounted for by all agencies involved, including in particular, the FWS.

Notes

1. 16 U.S.C. § 1536.

2. 50 C.F.R. § 402.14(g)(4).

3. The Ninth Circuit also held that the FWS acted unreasonably in neglecting in the biological opinion to address the potential impacts of withdrawing significant volumes of groundwater from wells along the pipeline.