By a “Hairsbreadth” or a Hectare?

The Sierra Club’s NEPA case against the Flanagan South Pipeline just died in the D.C. Circuit. But how close was it to success?

The Flanagan South Pipeline (FSP) was in the news for a while.  Proposed in 2011 and built in under two years, the first oil flowed through it in December 2014.  Enbridge, the owner of the pipeline, purportedly spent over $2.6B on its construction.  At almost 600 miles from Flanagan, Illinois, to Cushing, Oklahoma (traversing Missouri and Kansas in between), FSP is designed to handle 600K barrels of oil per day.  The major depot in Cushing can push that oil to refiners on the Gulf Coast.  That’s, of course, assuming a market for the oil.  FSP was completed just in time for the price of crude to go kaput—making the Bakken, Western Canadian and other plays this pipeline can serve much less attractive.

There’s even reason to think of FSP as a kind of Keystone XL replacement.  Where TransCanada made the mistake of proposing a wholly new pipeline from the Western Canadian tar sands straight toward the refiners on the Gulf Coast, FSP’s builder took the low profile, indirect approach: originating in metro Chicago and following another existing pipeline route, Enbridge (who brought us the Kalamazoo River pipeline failure and spill in 2010) hoped to avoid TransCanada’s mistakes.

Another chapter on FSP came from the D.C. Circuit last week.  The Sierra Club sued the Corps of Engineers and the Bureau of Indian Affairs (BIA) for their many approvals of Enbridge’s plans—needed if it was to be built as designed.  The pipeline would (eventually did) traverse jurisdictional “waters” under the Clean Water Act (CWA) and jurisdictional Indian Lands.  Enter NEPA: all of these federal approvals necessitate some kind of NEPA review (to whatever extent they are discretionary).  The question became: what scope and type of NEPA review?  As we’ve noted more than once at the Lab, new pipelines transporting what is currently traversing an old pipeline can actually be a better bet for the environment.  Pipeline failures are surprisingly common as this graphic from the N.Y. Times demonstrates.

Spills © N.Y.Times.com

Spills © N.Y.Times.com

Federal Approvals Needed

The Corps’s approvals were for CWA § 404 permits for dredging/filling wetlands and other “waters of the United States.”  BIA’s approvals were for rights of way over the Osage territory en route.

As the majority in Sierra Club noted, though, compared to the 2,400 tracts of private land held by 1,700 different owners—each of whom Enbridge negotiated a right-of-way with—the easements BIA negotiated (12.3 total miles) across 34 tracts and the approx. 13.7 miles of jurisdictional waters under the CWA for which § 404 permits were to be issued amounted to less than 5% of the pipeline’s total length.  Sierra Club v. U.S. Army Corps of Engineers (D.C. Cir. 2015) (Slip Opinion) at 12-14.  Sierra Club would like to prompt BIA or, more aptly, the Corps of Engineers into considering the entirety of a societal choice like building FSP as a series of “connected” actions, see 40 C.F.R. § 1508.25(a)(1), as one “approved” or “regulated” by the agencies, see id. at 1508.18(a), or as the “indirect effects” of the federal approvals.  See id. at 1508.8(b).

So in their NEPA analyses, should either the Corps or BIA have had to analyze the environmental consequences of the pipeline as a whole?  The panel in Sierra Club agreed that the answer was “no.”  But a disagreement as to why is potentially far more important.  The majority seemed to think—a long, carefully argued opinion certainly suggests—it was close.  A “hairsbreadth” according to Judge Brown—who wrote separately to say that Sierra Club should’ve lost by a “hectare.” (Slip Op. at 3) But several D.C. Circuit precedents before Sierra Club suggest otherwise.

The D.C. Circuit Made Waves on Segmentation just a Short Time Ago

It was just recently (as the Lab noted here) that the D.C. Circuit remanded a similar case to the Federal Energy Regulatory Commission (FERC) for its failure to analyze a pipeline as a whole—under suspiciously similar circumstances.  Distinguishing that case, Delaware Riverkeeper v. FERC, 753 F.3d 1304 (D.C. Cir. 2014), was no small part of the NEPA analysis in Sierra Club.  FERC owed the world an environmental impact statement (EIS) analyzing the entirety of a pipeline upgrade project and not just the small segment thereof under the permit terms it had judged in the case because: (1) it was a natural gas pipeline, necessitating a certificate of public necessity and convenience from FERC pursuant to the Natural Gas Act regarding the whole pipeline (Slip Op. at 33-35 & n.7-8); (2) Sierra Club failed to “preserve” their segmentation argument from earlier stages of the case, at least as it was presented in these precise terms at the court of appeals (Slip Op. at 37); and (3) while the Corps has an in-house rule on avoiding “segmentation” which slices projects up and avoids assessing their environmental risks and benefits overall, see 33 C.F.R. § 325 App. B(7)(b)(1)-(3), and that rule tracks in substantial part what CEQ has said about “connected” and “cumulative” actions and effects assessment, the court owes deference to the Corps in its interpretation of its own rules and will affirm the agency unless the interpretation is “impermissible.”  (Slip Op. at 38.)

What’s Really at Stake?

A pipeline-wide NEPA analysis could not have analyzed only the localized impact of excavation, disturbance, construction, etc.  While all of that is a significant hit to the local environment with a pipeline of this size—even counting only the 5% of it within federal jurisdictional control—there is a much more obviously national concern at issue: the future of fossil fuels and the “sunk costs” that more infrastructure like FSP represents.  As more calls are made to “leave it in the ground,” the BIA and Corps approach to FSP had a curious way of fencing most of the really national environmental tradeoffs involved out of their field of vision.  What a perverse way to interpret NEPA, no?  The problem is that when courts have intervened to force a more inclusive analysis (which is relatively rare), their reasoning is invariably fact-specific, circumstantial and, thus, resistant to doctrinal synthesis.

Segmentation and the Future of a More “Strategic” NEPA

CEQ issued a long memorandum at the end of 2014 urging action agencies to make NEPA reviews more “strategic.”  {See the Lab’s analysis here.}  If this is going to be our approach to projects like FSP, though, that memo may have been for nothing.

The CEQ rules on aggregating bits and pieces to come up with a “federal action” that merits truly national reflection and deliberation in risk/benefit balancing have remained utterly impossible to apply consistently, rationally, or fairly toward affected stakeholders, the wider public and local communities. There are two main reasons.  First, the rules don’t specify when consolidated, aggregative analysis is most appropriate.  Second, the courts—though they don’t owe deference to agencies’ interpretations of CEQ’s rules—do understand that these “scoping” decisions tend to be a matter of agency self-governance and internal managerial priorities, i.e., factors courts usually try to leave to agency discretion.

As our earlier story argued, segmentation is, therefore, hard.  It is hard because our truly big, society-wide commitments—the ones striking most of the irreversible, potentially game-changing environmental trade-offs—are carved up and distributed into dozens (if not hundreds) of little decisions being made by scores of agencies over decades.

Some courts stick to a strictly deferential posture on scoping choices.  See, e.g., Sierra Club v. Callaway, 499 F.2d 982 (5th Cir. 1974); Morongo Band of Mission Indians v. FAA, 161 F.3d 569 (9th Cir. 1998).  Other courts have been noticeably skeptical of agencies’ scoping.  See, e.g., NRDC v. Callaway, 524 F.2d 79 (2d Cir. 1975); Delaware Riverkeeper Network v. FERC, 753 F.3d 1304 (D.C. Cir. 2014).

Guarding against scoping abuse remains a judicial prerogative.  And courts have employed a variety of criteria, including whether the individuated actions or segments possess “substantial independent utility,” whether the related actions are proximate in time, and the like.  But it might have less to do with segments than with causation as, for example, when the Corps of Engineers is permitting a discharge and analyzing the environmental consequences of that wetland fill—but then refuses to consider the consequences of the permittee’s larger project/intentions.  See, e.g., Sylvester v. U.S. Army Corps of Eng’rs., 884 F.2d 394 (9th Cir. 1989).

The question usually boils down to who is in charge, of what are they in charge, and which environmental risks fairly attach to their choices.  Of course, in the case of FSP the Sierra Club couldn’t even get the agencies to decide who was the “lead” agency for NEPA purposes.  See Slip Op. at 19 n.4.  They were both convinced that they had mere slivers of piping/excavation to consider.  Judge Rogers’ concurrence put it this way:

Little more ink needs to be spilled to conclude that—given federal control over less than 20 miles of the 600 mile pipeline—NEPA cannot compel federal review of the entire, essentially private, pipeline. . . . Here, no instance of federal involvement (alone or collectively) amounted to the “functional equivalent” of a permit . . . . [N]o amount of artful pleading can convert these minor federal engagements into a “connected action” [within the meaning of CEQ’s scoping rule, 40 C.F.R. § 1508.25(a)(1)] that subjects the 580 miles of private pipeline review.

Slip Op. at 1-2.

But is this so obvious?  Taking CEQ’s scoping rules, its “cumulative impact” rule, and cases like Delaware Riverkeeper seriously, one could answer that the Corps’ permissions to Enbridge were the “but for” cause of that pipeline’s being built.  Try routing a pipeline underground from Chicago all the way to Cushing, Oklahoma, without traversing “waters of the United States” and necessitating a Corps CWA § 404 permit.  No permit = no pipeline.  For real progress to be made on this front, thus, CEQ must show some leadership and give the courts real guidance on exercising their prerogative responsibly.  Without that, chaos will probably continue to characterize segmentation.

{Image: Map of Flanagan South}

I teach environmental, natural resources, and administrative law at Penn State Law. Before teaching I was an enforcement lawyer at U.S. EPA. Along the way I've done work for environmental nonprofits and written a fair bit about NEPA.
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