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Washington Watch: Dakota Access Pipeline is Still Operating — for Now

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On an April morning, in a courtroom just blocks from the Capitol, a federal judge was waiting for the decision of the U.S. Army Corps of Engineers (Corps). Last year, the judge vacated an easement issued by the Corps, which allowed the Dakota Access Pipeline (DAPL) to cross under a riverbed (through land owned by the federal government) and ordered the Corps to prepare an environmental impact statement (EIS) before considering whether to re-issue the easement. Now, after months of deliberations, the Corps was to report its decision — whether to force DAPL to shut down or, alternatively, remain open, during preparation of the EIS. Surprisingly, the Corps reported no decision, but that stakeholder consultations would continue, and a decision might come later. The Biden administration had “punted.” How this happened, and what might occur next, is discussed below.

Background

The Dakota Access Pipeline is owned by Dakota Access LLC, which in turn is owned by a group of energy companies. DAPL is designed to transport up to 570,000 barrels per day (bpd) of crude oil produced in the Bakken and Three Forks formations, from Stanley, North Dakota, to an oil tank farm near Patoka, Illinois (about 80 miles east of St. Louis). The route traverses 1,170 miles and, where possible, parallels existing pipelines, power lines or roads, with 99.98 percent of pipeline route over private land and 0.02 percent through federal land, including, most notably, under Lake Oahe, a reservoir created in 1958 when the Corps built a dam on the Missouri River near Pierre, South Dakota.

DAPL is opposed by the Standing Rock Sioux Tribe, one of nine successors to the Great Sioux Nation. Today, the Tribe’s reservation consists of approximately 3,500 square miles stretching from just south of Bismarck, North Dakota, to just north of Pierre, South Dakota, and has a population of 4,153. The Tribe’s reservation is adjacent to Lake Oahe.

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Essence of the Dispute

The Dakota Access Pipeline was required to obtain from the Corps an easement to place DAPL on federal land adjacent to and under Lake Oahe. As such, the Corps’ limited jurisdiction over DAPL became the focal point of opponents’ efforts to stop the development and operation of the pipeline. Essentially, the Tribe opposes DAPL’s water crossing near the reservation because any spill could adversely affect its water supply, harm fishing and hunting rights. Additionally, the Tribe argues that the pipeline raises environmental justice concerns.

On the other hand, Dakota Access maintains that DAPL cannot affect the Tribe’s water supply or fishing/hunting rights. First, no part of the Dakota Access Pipeline contacts water from the Missouri River or Lake Oahe because the pipeline is buried at least 95 ft below the riverbed. Second, DAPL crosses the Missouri River almost 70 miles from the new water supply inlet for the Tribe. Third, DAPL surpasses federal safety requirements and is among the most technologically advanced and safest pipelines ever built. As for environmental justice, DAPL follows the same route in this area as the Northern Border Pipeline, which has operated beneath Lake Oahe since its construction in 1982, and 12 other pipelines cross the Missouri River north of DAPL.

Litigation and Politics

The National Environmental Policy Act (NEPA) required the Corps to analyze environmental issues before issuing the easement. In July 2016, the Corps issued an environmental assessment, finding that, because of mitigation measures (including horizontal directional drilling), the Dakota Access Pipeline’s water crossing would “not significantly affect quality of the human environment” and that an EIS was not required. This upset the Tribe, which filed a preliminary injunction to prevent further construction and staged protests (along with others) to stall work on the pipeline in North Dakota. Eventually, the judge denied the Tribe’s request. However, the Obama administration unilaterally issued a statement that the Corps would not grant the necessary easement until after the Corps reviewed its permitting decision — the Obama administration effectively granted the injunction denied by the judge.

In November 2016, Donald Trump was elected president. On Jan. 18, 2017, the Obama administration issued notice that an EIS (a more expansive environmental review) would be conducted prior to issuing any easement to Dakota Access. Trump took office two days later and directed the Corps to reconsider whether an EIS was necessary; the Corps reconsidered, determined that an EIS was not required and granted the easement.

More Litigation

With easement in hand, the construction was completed, and the Dakota Access Pipeline began commercial operations. The Tribe went back to court, argued that the Corps had violated NEPA and convinced the judge to direct the Corps to conduct more NEPA analysis. In February 2019, the Corps completed its remand analysis. The Tribe was not satisfied and argued that the Corps had not remedied underlying NEPA violations. The judge agreed, remanded the proceeding to the Corps with instructions to prepare an EIS, vacated the easement, and ordered the pipeline to be shut down and emptied of oil by Aug. 5, 2020. This was the first time a judge had vacated on NEPA grounds an easement already in use. The Corps and Dakota Access appealed.

On Jan. 26, 2021, the DC Circuit affirmed the judge’s decision to vacate the easement and require the Corps to prepare an EIS, but not shutting down and emptying the pipeline. The court explained that shutting down (and emptying) the pipeline is not a necessary consequence of the vacatur, but could be ordered — if the judge made the findings required for injunctive relief, which he had not yet done.

In early February, the judge scheduled a hearing to discuss next steps. The Corps sought a two-month extension to brief the new Biden administration officials and allow the officials sufficient time to learn the background of the litigation. The judge agreed. On April 9, the Corps reported that it had not yet made a decision. Essentially, the Biden administration made a political decision to leave DAPL’s short-term fate in the hands of the judge, while the Corps prepared the EIS (which will take about 18 months and likely decide the long-term fate).

Next Steps

The judge could issue an injunction requiring DAPL to shut down and empty. To do so he must find, among other things, that the threatened injury to the Tribe outweighs the damage to Dakota Access, which estimated that it would cost $24 million to empty the pipeline and another $67.5 million per year to maintain an inoperable pipeline. The judge would also need to find that the injunction is in the public interest. The state of North Dakota would argue that it is not: DAPL transports more than 40 percent of the crude oil produced in the state; shutting down the pipeline would reduce State tax revenues by as much as $2 billion during a two-year budget period.

The Dakota Access Pipeline has an opportunity to present additional information to the trial judge. Furthermore,
Dakota Access filed a request for all the appellate judges in the DC Circuit to reconsider en banc the Jan. 26 opinion. The request was denied. The Tribe is reportedly trying to convince the Biden administration to scuttle the pipeline on other grounds. There will be more developments, but the real news will come in 18 months, when the Corps issues the EIS. In the meantime, DAPL remains operational.

Washington Watch is a regular report on the oil and gas pipeline regulatory landscape. Steve Weiler is partner at Dorsey & Whitney LLC in Washington, D.C. Contact him at weiler.steve@dorsey.com.

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