Infrastructure Permitting Tug of War Between Trump Administration and Courts

One of the biggest permitting hurdles that can come up in renewable energy, transmission line, resource recovery and any other infrastructure projects is potential impacts on wildlife.

While the Endangered Species Act (ESA) prohibits the ‘take’ of threatened or endangered species, it allows the US Fish & Wildlife Service (FWS) to permit the ‘incidental take’ – or unintentional take – of a certain number of listed species as long as the take is incidental to, and not the purpose of, carrying out an otherwise lawful activity.

Congress passed the ESA in 1973 to protect endangered and threatened species and their habitat. Section 9 of the Act makes it unlawful for any person, including public and private entities, to ‘take’ an endangered or threatened species without a permit (16 USC section 1538(a)(1)(b)). ESA Section 10(a)(1)(b) authorises the FWS to issue permits to take listed species when the agency finds, among other things, that the taking will be ‘incidental’ to otherwise lawful activities; the impacts of taking will be minimised and mitigated to the maximum extent practicable; and the taking will avoid peril to the affected species (16 USC section 1539(a)(1)(B); 50 CFR section 17.3, 17.32).

The Trump administration’s Department of Interior recently released new guidance to ensure that regional offices consistently address incidental take permits (ITPs) and specifically let companies decide whether to seek such a permit. The guidance reads ‘service staff can and should advise non-federal parties on the law, our regulations and guidance… but it is not appropriate to use mandatory language (eg, a permit is “required”) in the course of that communication’. By leaving the decision up to project proponents, it allows developers to weigh the risks and use their own judgement about whether to seek a permit.

Under the ESA, citizens can sue to enjoin any person alleged to be in violation of the take provision. The government can pursue civil and criminal penalties. The guidance could be a signal that the Trump administration is less likely to enforce the decision not to obtain an ITP. However, future administrations may take a different policy position and citizen groups may take a more active role in enforcing the incidental take provisions of the ESA. Companies should consider these factors when evaluating the risk of not obtaining an ITP, since the consequences can be significant. A court may grant injunctive relief to remedy a violation of the ESA, which could include ceasing or reducing operations during certain times of the year to eliminate harm or threat of harm to protected species.

The administration’s goals are to reduce regulatory burden and speed up the permitting process. However, citizen groups continue to challenge environmental approvals and permits as a tactic to delay or even stop projects. Below is a snapshot of the resulting permit tug of war playing out in the executive and judicial branches.

Executive branch

On 26 April 2018, the FWS issued guidance prohibiting employees from telling developers they must obtain ESA ITPs. Obtaining an ITP is generally within the developer’s discretion (unless federal funding is at stake). The guidance also clarifies the limited circumstances under which habitat modification constitutes a ‘take’ under the Act. In order to constitute a take, all of the following three questions must be answered affirmatively:

• is the modification of habitat significant?;
• does that modification also significantly impair an essential behaviour pattern of a listed species?; and
• is the significant modification of the habitat likely to result in the actual killing or injury of wildlife?

The guidance specifies that an ITP is only needed when an activity is likely to result in the ‘take’ of listed wildlife and the applicant is not otherwise compelled to apply for an ITP.

Judicial branch

On 15 May 2018, a Fourth Circuit appellate court vacated an ITP issued by the FWS to the Atlantic Coast Pipeline’s developers. The ITP allowed development of the Atlantic Coast Pipeline project to take certain threatened or endangered species. According to the Court, the ITP failed to set clear limits on the take of a listed species and, thus, undermined the ESA’s enforcement and monitoring function. Therefore, as this administration seeks to streamline environmental reviews, environmental groups appeal to courts in their continued efforts to use the ESA as a tool to delay or even stop fossil fuel development projects.

The recently issued guidance narrows the circumstances that may trigger the need for FWS to issue an ITP under the ESA but the streamlining may nonetheless be stymied. Less than three weeks later, environmental groups successfully used the appeal of an ITP, a case begun before the guidance was issued, as a ‘roadblock’ to delay the progress of a major infrastructure project.

Less federal regulation leaves state in control

The Trump administration’s move to repeal the 2015 ‘waters of the US’ (WOTUS) rule is another example of an infrastructure permitting a tug-of-war between the executive and judicial branches. Like the ITP guidance, postponing the applicability date and seeking to repeal the WOTUS rule are executive branch rollbacks that enable states to lift permitting roadblocks. Infrastructure projects are enjoying the results. This is currently playing out with the permitting of the new Foxconn Technology Group (Foxconn) facility in Mount Pleasant, Wisconsin. The plant would be the first American manufacturing facility for Foxconn, a Taiwanese company that makes mobile phones and other electronics. It also would be the first liquid-crystal display (LCD) panel factory in North America.

The US Environmental Protection Agency (EPA) and the US Army Corps of Engineers (together, the ‘Agencies’) promulgated a rule in 2015 defining WOTUS to include wetlands with a ‘significant nexus’ to navigable waters. The final WOTUS rule expanded the US Army Corps of Engineers’ jurisdiction to include wetlands not directly connected to navigable waters. The Agencies relied on US Supreme Court case law in adopting the ‘significant nexus’ approach. The rule was challenged by a variety of stakeholders and in 2015 a federal appellate court suspended implementation of the rule nationwide pending the outcome of the litigation. After the change in administration, the Trump-era Agencies finalised a rule pushing the applicability date of the WOTUS rule to 6 February 2020, allowing plenty of time to repeal the rule prior to that date.

When evaluating an application to develop a jurisdictional wetland, the US Army Corps of Engineers must also conduct a threatened and endangered species assessment, among other assessments. By moving to suspend and repeal the rule, the Trump administration ensured that major infrastructure projects would encounter fewer jurisdictional wetlands and thus avoid the rigorous federal permitting process.

In September 2017, the Wisconsin legislature passed a new law creating a manufacturing zone within which Foxconn will operate. The legislation exempts Foxconn from permits that are otherwise required for filling wetlands, straightening streams and disturbing other waterways. It also eliminates Foxconn’s responsibility to create an environmental impact statement.

Foxconn’s development proposal calls for filling of 26 acres of wetlands with dredged materials. The US Army Corps of Engineers determined on 8 December 2017 that the wetlands are ‘isolated wetlands’ not connected to US waters and thus the Corps has no jurisdiction over them. As a result, Wisconsin Department of Natural Resources (WDNR) must ensure that the development meets state requirements. For Foxconn, that means mitigating impacted wetlands on a 2:1-acre ratio by paying into WDNR’s in lieu fee programme to fulfil its obligation.

However, by exempting the area from the permit processes, Wisconsin has eliminated the opportunity for substantive public notice and comment about how the plant impacts wetlands and threatened and endangered species.

Throughout the remainder of Trump’s administration, we expect to see more attempts to streamline infrastructure projects as well as legal challenges to those decisions.