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Anti-Pipeline Playbook Snags Biggest Victories Yet. What’s Next?

July 7, 2020, 10:01 AM

Developers are scrambling to keep the Dakota Access pipeline in service, and environmentalists are eyeing new legal advantages in the wake of a watershed court decision ordering the embattled project to halt the flow of oil in 30 days.

Energy Transfer LP, which built and operates Dakota Access, is working to quickly control the fallout from the ruling, vowing to pursue an appeal and ask the U.S. District Court for the District of Columbia to freeze its shutdown order in the meantime.

Pipeline opponents, meanwhile, are celebrating their biggest victory yet in their yearslong campaign to slow down the development of oil and gas infrastructure across the country, and they’re looking to build on the momentum.

The Dakota Access decision—which forces a temporary shutdown expected to last months while the Army Corps of Engineers expands its environmental review—came just a day after another major pipeline met its demise.

Dominion Energy Inc. and Duke Energy Corp. announced Sunday that they were pulling the plug on the Atlantic Coast natural gas project, which just won a critical victory at the U.S. Supreme Court but was still beleaguered by legal uncertainty and delays.

“The headwinds are definitely against pipeline construction,” said University of Richmond law professor Noah Sachs, who has tracked both cases.

Here’s What to Watch in the Courtroom:

The Trump administration hasn’t yet signaled its next steps on Dakota Access. Energy Transfer has already pushed to freeze the shutdown order, which would allow the company to keep Dakota Access in service while it pursues an appeal.

The company’s success at the U.S. Court of Appeals for the District of Columbia Circuit depends on lucking out with a favorable three-judge panel reviewing the case, said Bloomberg Intelligence analyst Brandon Barnes. The panels are randomly assigned.

Barnes added that Monday’s district court decision relies heavily on D.C. Circuit precedent, making it an uphill climb for Energy Transfer to mount a successful challenge over the American Indian tribes fighting the project.

Southern Methodist University law professor James W. Coleman warned, however, that environmental advocates could become like the Greek character of Icarus, flying “too close to the sun” and attracting the Supreme Court’s attention via their recent legal victories over the Atlantic Coast, Keystone XL, and Dakota Access pipelines. The Supreme Court isn’t seen as being favorable to environmental interests in National Environmental Policy Act cases.

Ultimately, the Army Corps of Engineers could decide to reissue the contested permit after it completes a new round of environmental review, though that possibility narrows if President Donald Trump doesn’t win a second term. If the agency does reissue the permit, Sachs said to expect more litigation.

“This thing’s not over yet,” he said. “I could easily see it going another two or three years.”

Are Other Pipelines in Danger?

This week’s developments on Dakota Access and Atlantic Coast sent a clear message: Pipeline projects face a difficult road ahead.

Environmental groups, tribes, and landowners have increasingly turned to federal courts to block proposed projects, and have seen the strategy pay off.

The fact that the district court was willing to force Dakota Access to shut down means that developers are no longer in the clear once they’ve completed construction, as was previously the conventional wisdom, Coleman said.

Indeed, environmental activists were quick to set their sights on other existing pipelines in light of the Dakota Access ruling. Among them: Enbridge Inc.'s Line 3 and Line 5 oil conduits in the Upper Midwest and Canada.

But Center for Biological Diversity attorney Jared Margolis, who is litigating against the Keystone XL pipeline, downplayed the likelihood of a surge of cases targeting projects that are already in the ground. He noted that the Dakota Access situation was unique in that the Obama administration acknowledged back in 2016 that the project required additional analysis, and Trump officials changed course.

“There’s this underlying notion that they knew it and went ahead anyway,” he said. “That’s not going to be the case in looking at other existing pipelines.”

One environmental lawyer said he’s hopeful the ruling will create some pragmatic changes to how construction and litigation play out concurrently.

“I hope that the outcome is that it forces counsel who are advising those companies to be more willing to think about ways of allowing litigation to occur and reach a final outcome before any major construction begins,” William S. Eubanks II of Eubanks & Associates LLC said.

What Are the Broader Impacts on Environmental Litigation?

The Dakota Access ruling has implications beyond the pipeline context. It could prove useful for plaintiffs, for example, in other cases in which a judge has identified a legal violation in a permit but hasn’t decided whether to scrap the permit.

The decision marks the first time a court has shut down a major pipeline for violations of the National Environmental Policy Act.

Though the default consequence for a federal agency violating NEPA is for a court to vacate the flawed decision, judges often balance that outcome against other considerations, including how disruptive it would be to scrap a contested permit. The Dakota Access decision shows that analysis won’t always work out in the pipeline company’s favor, University of Minnesota law professor Alexandra Klass said.

“It gives pause to this idea that once a project is built and running, there’s not going to be any adverse consequence with regard to environmental review,” she said.

Vermont Law School professor Hillary Hoffmann said the Dakota Access case serves the environmental community in another way, by providing a model for how big advocacy groups can partner with tribes and other affected communities to focus on social justice in litigation. Earthjustice represents the Standing Rock Sioux Tribe in the case.

“There’s a growing synergy of interests between tribes and large environmental nonprofits,” she said, adding that Earthjustice and other groups are using their leverage to help people most affected by environmental degradation. Hoffmann worked on an amicus brief supporting the shutdown of Dakota Access.

“Social justice and environmental justice are are all part of the environmental movement now,” she said.

The case is Standing Rock Sioux Tribe v. Army Corps of Engineers, D.D.C., No. 1:16-cv-01534, 7/6/20.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloombergindustry.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergindustry.com; Renee Schoof at rschoof@bloombergindustry.com

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