Special Report: Rover Headed to Court Over Fish & Wildlife's Demand for Full Mitigation?

Last week we reported on the U.S. Fish and Wildlife Service's (FWS) December 23, 2016 letter to the Federal Energy Regulatory Commission (FERC) regarding Energy Transfer Partners' Rover Pipeline draft Migratory Bird Conservation Plan. The FWS notified the FERC that, in its view, Rover's draft Migratory Bird Conservation Plan was not sufficient to mitigate the effects of the Rover project on migratory bird and migratory bird habitat. Consequently, the FWS recommended that FERC not accept Rover's draft plan as "final." This was required, in the FWS's opinion, because Rover's plan did provide for the full, $16,293,680 in compensatory mitigation that FWS had calculated was required to fully mitigate Rover's "unavoidable impacts to habitat." Yesterday, Rover responded to the FWS's December 23rd recommendation to FERC in a strongly worded rebuttal that sets the stage, at least potentially, for litigation to resolve the legitimacy of the FWS's requirement of "full mitigation."

Rover Asserts that FWS Has No Legal Authority

In its November 21, 2016 filing forwarding the draft final Migratory Bird Conservation Plan to FERC for review, Rover stated its intent to voluntarily contribute $5 million for mitigation for unavoidable impacts to "forested resources." Significantly, Rover denied that FWS had any authority to require mitigation for any type of migratory bird habitat, and that its request  for the $16,293,680 in compensatory mitigation was not valid, in that the Migratory Bird Treaty Act (MBTA), the relevant statute, did not require or even address such mitigation for migratory bird habitat.

As we noted last week, the FWS has acknowledged the lack of statutory authority in the MBTA, but instead has relied on an Executive Order, several international treaties and other federal statutes as the basis for recommending that FERC require such mitigation. As we noted last week, these mitigation payments are viewed by the pipeline industry as coercive and not well founded -- so much so, that one former Deputy Chief of the FWS Office of Law Enforcement has termed them as akin to a "criminal enterprise" that would be "investigated under the Racketeer Influenced and Corrupt Organizations Act."

Last week, we described Rover's November 21 objection to FWS's recommendation that Rover be required to pay the $16,293,680 of "full mitigation" as a "relatively mild objection" that masked "the heated controversy underlying these types of "voluntary" payments.   Yet Rover's response yesterday  is   a full-throated attack on the FWS's legal authority to request such payments, and may foreshadow Rover's seeking redress in federal court, if FERC were to accept FWS's recommendation and require Rover to pay the $16,293,680 that FWS has determined to be the full mitigation.

In its response to the FWS yesterday, Rover repeated its willingness to make a $5 million voluntary contribution for mitigation measures. Rover also voiced its view that the estimated $16 million that Rover would spend to clear trees, prior to the start of full construction, in order to minimize the killing of migratory birds, should be included among Rover's mitigation measures. (The FWS has previously rejected this accounting, noting that the tree clearing expense was a construction expense unrelated to habitat mitigation).

Rover May Seek Redress in Federal Court

Rover also asserted that the FWS's December 23rd letter to FERC mischaracterized the requirements of the final Environmental Impact Statement (FEIS) for the Rover Project, and also mischaracterized Rover's commitment to pay compensatory mitigation, and noted that the FWS's approval or concurrence with Rover's Migratory Bird Conservation Plan was not required for FERC to find the plan was complete. In this regard, Rover argues that the FWS's role should be merely advisory in the FERC approval process, and that its actions that purport to make its recommendations binding were "inappropriate and unsupported by law."

Significantly, Rover noted that FWS's December 23rd letter urged FERC to "not consider the [Rover's Migratory Bird Conservation Plan] for the Rover Project to be final" unless it includes Rover's commitment to the entire dollar amount of compensatory mitigation sought by the USFWS." Rover stated that this action is so coercive that it constitutes a "final agency action" under the the Administrative Procedure Act. This is significant in that "final agency action"

is the predicate which allows an aggrieved party to seek redress under the Administrative Procedure Act.

The rest of Rover's letter reads like the first draft of a Complaint to be filed in federal court, describing the relevant case law and how the FWS's actions to compel Rover to pay for "full mitigation" are unsupported by any legal authority, including the international treaties and  Executive Order upon which the FWS purports to rely. Rover's letter concludes, somewhat ominously, by stating that the FWS's actions are "inappropriate, unsupported, unable to be lawfully acted upon by the action agency, and challengeable under the Administrative Procedure Act as a final agency action."

What's Next for Rover?

It's hard to predict how the FWS and FERC will react to Rover's letter. The letter suggests that Rover is prepared to litigate the lawfulness of the FWS's "full mitigation" policy. The FWS may want to avoid the possibility that its policy would be found to be illegal, and would choose instead to accept Rover's offer of $5 million. Likewise, FERC might be loathe to become a party -- literally -- to any litigation, and will opt to disregard the FWS's recommendation regarding full mitigation. Rover has made a convincing case that it might choose to litigate, but perhaps would accept a middle ground as to the full mitigation sought by the FWS.