This week, the U.S. District Court for the Middle District of Louisiana granted a preliminary injunction, halting construction of the $750 million Bayou Bridge Pipeline. Judge Shelly D. Dick concluded that the U.S. Army Corps of Engineers, in authorizing the project, did not provide sufficient explanation for how the proposed off-site mitigation would compensate for the loss of wetlands impacted by construction. In addition, the Court found the Corps’ environmental analysis failed to sufficiently consider and address historical impacts to wetlands from similarly situated pipelines. Thus, the Court held that these deficiencies likely violated the National Environmental Policy Act (NEPA) and ordered the 162-mile oil pipeline to halt construction within 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. As we recently saw with the D.C. Circuit’s decision to vacate authorizations for the Sabal Trail Pipeline, this is another example of courts and environmental organizations relying on errors in a federal agency’s NEPA analysis to justify enjoining pipeline construction or operations.

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 Clean Water Act Section 404 permit. In addition, due to proposed alterations to Corps civil works projects the Bayou Bridge Pipeline had to obtain permission from the Corps pursuant to Rivers and Harbors Act Section 408.

In accordance with NEPA, the Corps prepared separate environmental assessments for both the 404 permit and the Section 408 approval, concluding that the project would not significantly affect the environment and that no environmental impact statement was necessary. Environmental organizations challenged the Corps approvals contending that:

(i) the Corps failed to perform a sufficient environmental analysis of the potential impact of oil spills in the Atchafalaya Basin;

(ii) the Corps selected a mitigation banking approach where off-site or out-of-kind mitigation credits would be used without any consideration or analysis of whether other alternatives would be feasible, such as permittee-responsible mitigation; and

(iii) the Corps failed to consider the cumulative effects of historical noncompliance from other pipeline projects.

Pending the outcome of plaintiffs’ claims, plaintiffs moved for a limited preliminary injunction seeking to prevent construction of the pipeline in the Atchafalaya Basin. To satisfy the legal standard for this extraordinary remedy, plaintiffs must establish a substantial likelihood of success on the merits, in addition to other factors.

With regard to potential oil spills, both environmental assessments relied on a spill model developed in accordance with Pipeline and Hazardous Materials Safety Administration regulations and considered the risk of oil spills every 200 feet along the entire pipeline route. In light of this analysis, the Court found the Corps gave “extensive and appropriate” consideration to potential oil spills within the Atchafalaya Basin, and held that plaintiffs were not likely to succeed on this claim.

According to Corps regulations, compensatory mitigation “should be located where it is most likely to successfully replace lost functions and services.” 33 C.F.R. § 332.2(b)(1). The proposed pipeline would impact approximately 600 acres of wetlands, of which, approximately 150 acres would be permanently impacted. To compensate for these unavoidable impacts, Bayou Bridge Pipeline proposed to purchase a significant amount of mitigation bank credits, however, the credits predominantly consisted of wetlands classified as Bottomland Hardwoods, rather than Cypress/Tupelo swamp. The Court seized on this 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. Without any explanation, the Court found it lacked information that would allow it to defer to the Corps’ determination and found plaintiffs had a substantial likelihood of success on this claim.

Finally, plaintiffs 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 environmental assessment acknowledged that the project would contribute to the cumulative effect of wetland loss and alteration and that many actions were taken in the past with little consideration of wetlands impacts. Despite this, the Court found that the environmental assessments provided no analysis of permit conditions or mitigation to address these cumulative effects. Thus, the Court concluded that plaintiffs demonstrated a substantial likelihood of success on claims two and three.

Even though Bayou Bridge Pipeline informed the Court that a delay of the project would cost more than $950,000 per day or $25 million per month, the Court found that the evidence of monetary losses was not supported by underlying data, and issued the injunction. Bayou Bridge Pipeline has sought review of the Court’s decision in the U.S. Court of Appeals for the Fifth Circuit.

As stated in our earlier blog post addressing the D.C. Circuit’s Sabal Trail decision, this case is another example of the greater scrutiny of NEPA documents by environmental groups and the courts and demonstrates that even relatively minor defects in the environmental analysis can halt the development or operation of a project. Thus, it is important for project proponents to plan accordingly and work closely with regulatory agencies to ensure that they develop comprehensive environmental analyses.