Once large infrastructure projects, such as oil and natural gas pipelines, receive federal government approval, they are often the target of legal challenges from opposition groups.  Opponents repeatedly argue that the environmental review, pursuant to the National Environmental Policy Act (NEPA), was insufficient. If a court finds deficiencies in the government’s NEPA analysis, can a court halt construction or cease operations even after years of project design, permit approvals at all levels of government, and tens of millions of dollars in investment? This question was at the heart of the ongoing litigation involving the controversial Dakota Access Pipeline (DAPL), and, on October 11, Judge James Boasberg determined “no,” the court would not shut down the pipeline. This case is important precedent for projects being challenged under NEPA. The same issue is at play in the Sabal Trail case currently under review by the US Court of Appeals for the DC Circuit.  See Sierra Club, et al. v. FERC, No. 16-1329 (D.C. Cir. filed Sept. 21, 2016).

In the DAPL case, two tribes – the Standing Rock Sioux Tribe and the Cheyenne River Sioux Tribe – filed suit in July 2016 attempting to block construction and operation of a segment of the pipeline passing beneath Lake Oahe. Two weeks after the oil pipeline became fully operational, Judge James Boasberg of the US District Court for District of Columbia found three deficiencies in the US Army Corps of Engineers’ (Corps’) NEPA review. The court found the Corps failed to adequately address the degree to which the pipeline’s effects are likely to be highly controversial, the impacts of a potential spill on fish or wildlife, and the environmental justice impacts of a spill on Indian tribes. As noted in our earlier Nickel Report post, the court did not require pipeline operations to cease, and instead delayed the question of an appropriate remedy until after further briefing by the parties.

In his decision, Judge Boasberg relied on a two-part test provided by DC Circuit precedent to determine whether or not the court should vacate the Corps’ deficient action. See Allied-Signal v. U.S. Nuclear Regulatory Commission, 988 F.2d 146, 150–51 (D.C. Cir. 1993). Under the Allied-Signal test, the court evaluates:

  1. The seriousness of the deficiencies in the agency action; and
  2. The disruptive consequences of vacating the agency approval.

Judge Boasberg explained that, with regard to the first factor, in cases in which the agency’s reasoning is “so crippled as to be unlawful,” vacatur is generally appropriate. If the action, however, is “potentially lawful but insufficiently or inappropriately explained,” remand without vacatur may be imposed. Although the court found gaps in the Corps’ environmental analysis, Judge Boasberg stated “they are far from incurable.” The Corps need only better articulate its reasoning as to why expert reports did not present a substantial controversy; explain to a greater extent the consequences of a spill on Lake Oahe’s fish and wildlife; and provide a more robust analysis regarding impacts to minority communities to justify preparing an environmental assessment instead of a more extensive environmental impact statement. In light of the Corps’ substantial compliance, the court found that the Corps had a significant likelihood of being able to substantiate its prior conclusions and determined that the first part of the test weighed in favor of allowing operations to continue.

In assessing the disruptive consequences of vacatur, the court agreed that it was appropriate to consider financial harm, but made it clear the court will not necessarily give determinative effect to claims of economic injury. Judge Boasberg was also skeptical of DAPL’s predictions of economic devastation following a temporary shutdown. “Although courts have declined to vacate improper agency actions when doing so would be an ‘invitation to chaos,’ … in this case vacatur would be, at most, an invitation to substantial inconvenience.” The court found that, while stopping the flow of oil would have some disruptive effect, the second part of the test tipped “only narrowly” in favor of the defendants.

After weighing the equities in the Allied-Signal test, the court ultimately held that vacatur was not the appropriate remedy. But the court ordered the Corps to give “serious consideration to the errors” identified by the court. “Compliance with NEPA cannot be reduced to a bureaucratic formality, and the Court expects the Corps not to treat remand as an exercise in filling out the proper paperwork post hoc.”