As we highlighted in our March 2, 2018, post, the US District Court for the Middle District of Louisiana ordered the $750 million Bayou Bridge pipeline to halt construction within the Atchafalaya Basin when it concluded that the US Army Corps of Engineers’ environmental analysis likely violated the National Environmental Policy Act (NEPA) and the Clean Water Act (CWA) due to the following deficiencies:

  • The Corps did not provide sufficient explanation for how the proposed off-site mitigation would compensate for the loss of wetlands impacted by construction; and
  • The Corps failed to sufficiently consider and address historical impacts to wetlands from past pipeline projects in the cumulative effects analysis.

On appeal, however, the US Court of Appeals for the Fifth Circuit overturned the lower court. In a split 2-1 decision, the panel vacated the preliminary injunction, deferring to the Corps’ expertise when it is exercising “complex scientific judgment,” and concluding that the record suffices to justify the Corps’ decision to approve out-of-kind mitigation and that such mitigation would fully offset impacts to wetlands resulting in no substantial cumulative effects. The appeals court attributed, in part, the lower court’s errors to the “expedited judicial process” and the absence of a full administrative record.

The Bayou Bridge Pipeline is designed to carry roughly 500,000 barrels of crude oil per day from the Dakota Access Pipeline to refineries and export terminals in St. James Parish, Louisiana. Because construction of the pipeline would involve discharges of dredged or fill material into wetlands and other waters of the United States, the project required a Corps CWA Section 404 permit. In accordance with NEPA, the Corps prepared an environmental assessment, concluding that the project would not significantly affect the environment and that no environmental impact statement was necessary.

The district court concluded that environmental organizations satisfied the legal standard for a preliminary injunction, by establishing a substantial likelihood of success on the merits for two claims. The Fifth Circuit disagreed on both grounds:

  • Out-of-Kind Mitigation: The proposed pipeline would temporarily impact approximately 450 acres of wetlands in the Atchafalaya Basin, a large wetland habitat for a variety of fish and wildlife species and a critical component of regulating flooding and stream recharge in the region. An additional 150 acres, classified as Cypress/Tupelo swamp wetlands, would be permanently converted from forested wetlands to scrub shrub wetlands. To compensate for all of these unavoidable impacts, Bayou Bridge Pipeline proposed to purchase a significant amount of mitigation bank credits. However, after purchasing all available Cypress/Tupelo swamp credits, the only credits available consisted of wetlands classified as Bottomland Hardwoods. The district court seized on the distinction in wetland classification and held that the Corps failed to explain how off-site or out-of-kind Bottomland Hardwood credits sufficiently mitigated the loss of function and value of the on-site Cypress/Tupelo swamp impacts. The Fifth Circuit disagreed and concluded that the purchase of mitigation credits would provide the optimal replacement of lost aquatic functions and services, consistent with the Corps’ mitigation regulations. According to the appeals court, the Corps appropriately relied on the Louisiana Rapid Assessment Method (LRAM) to determine the appropriate number of mitigation credits to adequately compensate for temporary impacts or the permanent conversion from one type of wetland to another.
  • Cumulative Impacts: Plaintiffs also claimed that the Corps’ cumulative effects analysis was inadequate because it ignored past incidents of noncompliance involving other Corps-permitted pipelines in the area. The lower court agreed and found that the environmental assessment provided no analysis of permit conditions or mitigation to address these cumulative effects. “Cumulative impact” is defined as the “the impact on the environment which results from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions.” 40 C.F.R. § 1508.7 (emphasis added). The Fifth Circuit agreed with the Corps’ conclusion that, due to the purchase of compensatory mitigation, there would be no incremental impact on the environment and thus the Corps was not required to prepare an extensive discussion of cumulative effects. According to the Fifth Circuit, the Corps had acknowledged past impacts and adequately explained how the project would not only remediate unavoidable impacts but would also not interfere with further efforts to restore the watershed.

The dissenting opinion, written by Judge Reavley, argues that the LRAM does not provide an adequate tool for out-of-kind mitigation. The Corps applied the tool to the Bayou Bridge Pipeline’s impacts and determined that the project must purchase 232.8 Cypress/Tupelo acres and 80 Bottomland Hardwoods acres. When the mitigation bank did not have enough Cypress/Tupelo acres available, the Corps approved the purchase of 69 Cypress/Tupelo acres and 243.8 Bottomland Hardwoods acres. Judge Reavley concludes that it was inappropriate for the Corps to treat the two resource types interchangeably because the LRAM does not factor in resource type. Thus, the dissent concludes that the Corps did not meet its regulatory burden to explain out-of-kind mitigation.

The case will now be sent back to the district court to address the merits of plaintiffs’ claims. If plaintiffs succeed, they will likely ask the lower court to shut down the pipeline, which could complete construction as early as October 2018.