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01.11.2021 Legal News

NEPA Challenges to Permits Lead to Project Delays

The United States District Court for the Western District of Washington recently entered an order vacating U.S. Army Corps of Engineers permits issued pursuant to the Clean Water Act (CWA) and Rivers and Harbors Act (RHA).  The Order serves as an important reminder to permittees and industry that NEPA cannot be ignored, and, despite the vast deference afforded to them by courts, agency permitting decisions are not incontrovertible.

The National Environmental Policy Act (NEPA) is often summarized simply as requiring an agency to abide by certain procedural requirements that require it to take a “hard look” at the environmental impacts and consequences of its actions before taking those actions.  NEPA requires federal agencies to prepare environmental impact statements (EISs) whenever they propose major federal actions that would significantly affect the quality of the human environment.  On its face, NEPA’s policy statement is a strongly phrased directive on the need for the United States to preserve and safeguard the natural environment in the interest of harmony with and the benefit of humans.  The operative provisions of the Act carry out that policy by imposing procedural obligations an agency must meet before taking an action that may have significant environmental consequences.  In that respect, it is a hurdle to agency actions, not a complete barrier.

In the case at hand, environmental groups challenged water permits issued by the Corps related to the construction of a portion of the Kalama Manufacturing and Marine Export Facility—a proposed methanol refinery with an associated export terminal and pipeline.  The project sits on approximately 90 acres, is funded by a $2 billion loan from the U.S. Department of Energy and, if completed, would be one of the largest fracked gas-to-methanol refineries in the world. 

Before the court were cross motions for summary judgment related to the permits authorizing the discharge of dredge and fill materials into the Columbia River.  The permits were necessary for construction of the export terminal portion of the facility, consisting of a dock, methanol pipelines, inert gas and vapor return lines, a stormwater system, and associated structures.  The basis for the challenge was the Corps’ findings in its Environmental Assessment (EA) and its failure to conduct an EIS prior to issuance of the permits.  Ultimately the court granted partial summary judgment in favor of the environmental groups.  The court vacated the permits and held the Corps was obligated under NEPA to take into account the indirect and cumulative greenhouse gas emissions resulting from the project.  The court held the failure of the Corps to consider “reasonably foreseeable” greenhouse gas emissions beyond the states of Oregon and Washington was arbitrary and capricious, ultimately ordering the Corps to conduct an EIS.  Importantly, there was an EIS conducted for the project in 2016 and a draft EIS conducted in 2009 by another agency, but the court held the failure of the Corps to conduct its own EIS, instead relying on and considering an already-completed EIS by the State Department of Ecology, was arbitrary and capricious.

This Order is important for several reasons.  First, while this is a high-profile project with significant public interest, environmental groups or private interest challengers can be just as successful using a NEPA or APA challenge on the local level with smaller projects.  Second, the Order highlights the most likely way agency action will be overturned when successfully challenged: the agency did not follow necessary procedural obligations.  As past newsletter articles have discussed, agency decisions are given considerable deference by the courts.  That makes it difficult to overturn these decisions based on substance.  Finally, while the Order resulted in a considerable setback and cost for the potential permittee, it did not prohibit the proposed action.  Instead, the agency must now work to correct the procedural error. 

It is likely the project here will go forward and ultimately be constructed after the EIS, but similar challenges to smaller projects can often create too much of a burden for potential permittees and stymie the action indefinitely if the permittee is not fully aware of its options in responding to challenges.  A well-reasoned response to a procedural challenge under NEPA can be the difference between a delay in a project and the cancellation of the project.

Columbia Riverkeeper v. U.S. Army Corps of Engineers, No. 3:19-cv-06071 (W.D. Wash. Nov. 23, 2020) (Order on Cross Motions for Summary Judgment)