Two months ago, we issued a post regarding oral arguments before the U.S. Court of Appeals for the Sixth Circuit in National Wildlife Federation v. Secretary of the Department of Transportation. That case asked whether approval of pipeline spill response plans by the Pipeline and Hazardous Materials Safety Administration (PHMSA) triggered consultation and review processes under the Endangered Species Act (ESA) and the National Environmental Policy Act (NEPA). In an opinion released on Friday, June 5, 2020, the Sixth Circuit answered that question in the negative. The court’s decision avoids adding another substantial burden to the review process for response plans, and, since it reaches the same result as the only other appellate court to consider the question, the decision likely will not attract the attention of the Supreme Court.

PHMSA’s regulations require onshore pipeline operators to submit plans to respond to a “worst case discharge” under 49 C.F.R. Part 194, which implements part of the Clean Water Act, 33 U.S.C. §1321(j)(5)(D). That same part of the Clean Water Act establishes six criteria each response plan must satisfy, and, if a plan meets those criteria, PHMSA “shall” approve it. Id. § 1321(j)(5)(E)(iii). If not, PHMSA must require amendments to the plan. Id. § 1321(j)(5)(E)(ii). Other agencies, like the U.S. Coast Guard, perform similar functions for response plans submitted by vessels or facilities other than onshore pipelines.

PHMSA and its sister agencies have not included ESA or NEPA review as part of the response plan approval process, in large part because both of those statutes activate only when an agency has some “discretionary” power over the outcome. See, e.g., 50 C.F.R. § 402.03. The plaintiffs in this case disagreed, asserting that PHMSA (and other similarly situated agencies) have the discretion to approve or reject a proposed plan and therefore that both ESA and NEPA review are required. It was on that basis that plaintiffs sued PHMSA following its approval of two response plans for an interstate pipeline passing through Wisconsin and Michigan. After the plaintiffs prevailed in the district court, the Sixth Circuit heard arguments on appeal in early April on whether the Clean Water Act gave PHMSA enough or the right kind of discretion to require ESA and NEPA review.

Our prior post noted that Judge Thapar asked whether there was some line between exercising “judgment” in applying the Clean Water Act and a stronger “discretion” that would require a broader analysis of environmental impacts. It seems he found that line, as the first sentence of his opinion for the court, joined by Judge Larsen, holds that “[d]iscretion and judgment are not the same thing.” In his view, the mandatory approval required by the Clean Water Act, indicated by use of the word “shall,” implied that no discretion existed. And that remained true even if PHMSA had to exercise some basic judgment in deciding whether the response plan met the six Clean Water Act criteria (or what amendment might be needed to meet them). Further, the court found that the Clean Water Act did not allow PHMSA to approve or reject plans based solely on impacts to endangered species, the focus of the ESA, or for the even wider range of environmental consequences examined under NEPA.

Distinguishing between discretion and judgment might be more difficult in future cases challenging different agency actions. For now, though, this decision should provide pipeline operators with more confidence that their response plans will not trigger many more months or years of detailed studies prior to approval. We will update you to the extent any further developments arise.

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Photo of Catherine D. Little Catherine D. Little

Catherine Little has been advising oil and gas pipelines, terminals and LNG facilities on energy and environmental administrative law for over 25 years at all levels of federal, state and local government, with particular emphasis on regulatory compliance, litigation and enforcement defense and…

Catherine Little has been advising oil and gas pipelines, terminals and LNG facilities on energy and environmental administrative law for over 25 years at all levels of federal, state and local government, with particular emphasis on regulatory compliance, litigation and enforcement defense and administrative adjudication under the Pipeline Safety Act, Natural Gas Act, Clean Water Act (including wetlands), Oil Pollution Act and National Environmental Policy Act. Her team has sought appellate review for enforcement matters with favorable results and works closely with industry and regulators alike to obtain favorable results for their clients. Catherine also regularly counsels clients with respect to pipeline construction and design issues, permitting, confidential investigations, spill and release reporting and response.

Photo of Annie M. Cook Annie M. Cook

Annie Cook’s practice focuses on administrative, environmental, and oil and gas transportation laws. Annie counsels clients on regulatory issues, compliance and litigation strategy, construction and siting, and permitting and enforcement defense relating to the Pipeline Safety Act, the Natural Gas Act, the Clean…

Annie Cook’s practice focuses on administrative, environmental, and oil and gas transportation laws. Annie counsels clients on regulatory issues, compliance and litigation strategy, construction and siting, and permitting and enforcement defense relating to the Pipeline Safety Act, the Natural Gas Act, the Clean Water Act, the Oil Pollution Act, National Environment Policy Act, TCSA, and related state and local laws.  Her team also represents clients regarding related transportation security issues and in responding to inquiries and investigations from the Department of Transportation’s Office of Inspector General.. Annie’s clients include owners and operators of oil and natural gas pipeline and related storage, terminal, and LNG facilities as well as other energy industry stakeholders.

Photo of Houston Shaner Houston Shaner

Houston Shaner helps his clients secure cost-effective outcomes, from shaping regulations in the notice-and-comment phase through permitting, daily compliance and internal investigations. And when his clients require litigation, Houston is ready to defend their interests in court or before agencies.