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Federal Court Denies Preliminary Injunction Attempting to Halt Critical Petroleum Pipeline Project

On October 4, 2020, Judge Michael Truncale of the Eastern District of Texas issued a 33-page opinion denying a preliminary injunction that would have prevented V&E’s client, Jefferson Energy Companies, from completing the last stages of construction on its 14-mile pipeline that will connect the largest refinery in North America to Jefferson’s crude oil and refined products logistics terminal at the Port of Beaumont, Texas.

In a suit filed September 10, 2020, a landowner along the pipeline’s route sought declaratory and injunctive relief under the Clean Water Act, the Endangered Species Act, the National Environmental Policy Act and the Administrative Procedure Act. The landowner challenged a U.S. Army Corps of Engineers general permit (Nationwide Permit 12 or NWP 12) that allows for streamlined authorization of utility lines in waters and wetlands subject to federal jurisdiction under the Clean Water Act when they have no more than minimal environmental effects, as well as the Army Corps’ verification that Jefferson’s project qualified for NWP 12.

Thus, the landowner’s claims included arguments specific to the Jefferson pipeline, but also attacked the validity of the NWP 12 program as a whole. The case was closely watched because the NWP 12 permit is used thousands of times every year for construction of a wide variety of water, sewer, natural gas and liquids pipelines, communication and electric lines and other utility lines.

After a two-day preliminary injunction hearing held less than two weeks after the complaint was filed, Judge Truncale issued a comprehensive opinion denying preliminary injunctive relief as to each of the plaintiff’s claims, concluding that the landowner had not established any of the four elements required to obtain a temporary restraining order or preliminary injunction.

On the merits, the plaintiff had argued that the NWP 12 permit program as a whole violates the Endangered Species Act (ESA), based on an alleged failure to undertake consultation with the U.S. Fish & Wildlife Service when the permit was last issued in 2017. Judge Truncale ruled that the plaintiff (a steel company) lacked standing to raise this challenge, because it had no concrete interest in ESA-protected species and had not alleged that any ESA-protected species or critical habitat were present on its property.

The plaintiff had also asserted Clean Water Act violations pertaining to NWP 12’s “one-half acre rule,” which limits use of the streamlined NWP 12 permit to activities that do not result in the loss of more than one-half acre of jurisdictional waters or wetlands for each “single and complete” project. The landowner challenged the Corps’ decades-old interpretation of its regulations, under which conversion from one type of wetlands to another is not a “loss” of waters that counts toward the one-half acre limit. The plaintiff also attacked the Corps’ longstanding position that, for linear projects like pipelines, each separate and distant water crossing is its own “single and complete” project with its own half-acre limit.

Again siding with the Army Corps and Jefferson, Judge Truncale concluded that the landowner had not shown a likelihood of success on those claims, under the “unambiguous terms of the Corps’ regulations” that conversion of wetlands does not constitute a “loss” of jurisdictional waters and that the Corps’ longstanding interpretation of the “single and complete” project requirement for linear projects was reasonable. The Court also concluded that even if all of the pipeline’s separate water crossings were treated as one single and complete project, the total “loss of waters” across all 14 miles of pipeline was still only one-quarter of an acre, well below the half-acre threshold.

Ultimately, the Court held that the landowner plaintiff “fail[ed] to carry its burden on a single factor” that a party seeking a preliminary injunction must prove—including irreparable harm, the balance of equities and the public interest—and thus found “no basis to issue a temporary restraining order or a preliminary injunction.”

The cross-office, cross-practice trial team advising Jefferson was led by partners Jeremy Marwell and Chris Popov. Also playing key roles were partners Larry Nettles and Mike Wigmore, counsel Brandon Tuck and Corinne Snow, senior associates James Dawson and Matt Hoffman and associate Josh Windsor.

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