Biden Holds Key to Dakota Access Pipeline Fate After Ruling (1)

President Joe Biden has an opening to move quickly against Energy Transfer LP’s Dakota Access pipeline in the wake of a new court decision affirming the need for more review.

The U.S. Court of Appeals for the District of Columbia Circuit on Tuesday refused to revive a key pipeline easement, which a lower court tossed last year due to inadequate environmental analysis. The D.C. Circuit didn’t order Dakota Access to shut down, but its ruling provides fresh legal cover for Biden to step in and halt operations—if he chooses to.

“The D.C. Circuit has given the Biden administration a great out on this,” ClearView Energy Partners analyst Christine Tezak told Bloomberg Law, saying the president could frame the court decision as forcing his hand on the issue.

Other legal observers say Biden might opt to stand down to save political capital, especially because Dakota Access opponents could instead secure a shutdown order in separate, ongoing proceedings in federal district court.

The district court on Wednesday morning shifted the pressure to the president, scheduling a Feb. 10 status hearing for government lawyers to explain how they play to proceed.

The White House didn’t respond to questions Tuesday about its plans. The president is set to unveil a suite of climate-focused policies, including a freeze on federal oil and gas leasing, on Wednesday.

Federal Trespassing

Dakota Access, unlike other highly contentious pipeline projects, has been in service, shipping oil from North Dakota to Illinois since 2017.

Without a valid easement, the pipeline is trespassing on federal land. While the Trump administration declined to bring an enforcement action to address the encroachment, the Biden administration could change course.

The Standing Rock Sioux Tribe and others last week sent a letter urging Biden to order the Army Corps to halt Dakota Access operations within the first 10 days of his administration. Those calls got louder Tuesday after the D.C. Circuit affirmed the Army Corps didn’t adequately study the pipeline’s impacts under the National Environmental Policy Act, or NEPA.

The D.C. Circuit briefly addressed shutdown prospects in its opinion, which says “it may well be” that federal law or regulations require the Army Corps to “vindicate its property rights” by halting operations. But the court declined to answer the question, calling it “a matter for the Corps to consider in the first instance, though we would expect it to decide promptly.”

Judge David Tatel, who penned the unanimous opinion, emphasized that the onus is on the Army Corps to make a decision on how to address the invalid easement. “To do otherwise,” he wrote, “would be to issue a de facto outgrant without engaging in the NEPA analysis that the Corps concedes such an action requires.”

That part of the opinion seems to signal that allowing Dakota Access to stay in service wouldn’t comply with the National Environmental Policy Act, giving the Biden administration wide clearance to pick up where Obama-era officials left off, Tezak said.

The Obama administration approved initial federal permits for Dakota Access in 2016 but responded to public outcry by withholding the project’s easement and launching a broader environmental review process. The Trump administration ditched the review and granted the easement.

‘Encouragement’ for Biden?

Southern Methodist University energy law professor James Coleman agreed that the D.C. Circuit’s opinion could be interpreted as “encouragement” for the Biden administration to halt the flow of oil through Dakota Access.

“If there was an instinct to dodge this for a while, this makes it harder to do,” he said.

But he added that the court’s comments on the issue amount to dicta—judges’ remarks that aren’t considered binding because they aren’t central to a ruling. “It’s not crystal clear what they’re asking for,” he said.

Some legal observers remain skeptical that Biden will step in.

“There was a very definitive commitment on the Keystone issue,” FiscalNote Markets analyst Katie Bays said, referring to Biden’s decision to nix a permit for the Keystone XL pipeline on his first day in office. “But there has also been radio silence on some of these other pipeline projects, and I don’t think that’s an accident.”

Instead of further upsetting labor interests that generally favor pipeline projects, Biden’s team is more likely to leave the Dakota Access issue in the hands of the courts, she said.

“I don’t think he’s looking to pick fights on energy infrastructure,” Bays said. “What we’ve seen for the last week, this really aggressive posture toward fossil energy, this is an opening drive. This is your attempt to set a tone. It’s not the way that you get to play for 60 minutes.”

—With assistance from Ari Natter (Bloomberg News).