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Dakota Access Order Creates Unworkable Standard, Agency Says (1)

Aug. 26, 2020, 9:30 PM; Updated: Aug. 26, 2020, 11:15 PM

A district court’s decision to require added environmental review for the Dakota Access oil pipeline creates an impossible standard for infrastructure development, the Army Corps of Engineers told the D.C. Circuit.

“If not corrected, the district court’s decision will create a new, heightened standard of judicial review that will be impossible for agencies to meet as they consider vital infrastructure projects that excite opposition from some sector of society,” lawyers for the agency said Wednesday.

The Army Corps made the arguments in a new brief to the U.S. Court of Appeals for the District of Columbia Circuit, which is deciding the pipeline’s fate after a lower court in July issued an unprecedented order requiring it to shut down pending further environmental review.

Pipeline operator Energy Transfer LP made similar arguments, saying the lower court’s order would discourage infrastructure investment, waste government resources on “needless” reviews, and create economic and environmental harms “far beyond the astronomically unlikely spill risk that Plaintiffs claim they seek to prevent.”

Halting Dakota Access operations could cause billions in financial losses to Energy Transfer, oil and gas producers, North Dakota, and others, the company argued, adding that drillers without other transport options would need to shut in thousands of wells, at a cost of $5 billion to $7.5 billion through 2021.

The shutdown order is on hold while the D.C. Circuit weighs expedited appeals from the Army Corps and Energy Transfer.

Legal Precedent

Energy Transfer and government lawyers argued Wednesday that the U.S. District Court for the District of Columbia misapplied legal precedent when it ordered the Army Corps to conduct an in-depth environmental impact statement (EIS).

Members of the Standing Rock Sioux Tribe have argued that a pipeline leak could contaminate their drinking water and ancestral lands. Other tribes and environmental groups have echoed those arguments.

“The district court applied the wrong legal standard,” Justice Department lawyers representing the Army Corps told the D.C. Circuit. “It ruled against the Corps even though the record shows that the Corps analyzed the Tribes’ criticisms and rationally concluded that the effects of its action are not ‘highly controversial’ or significant.”

The Army Corps did a less detailed type of review, an environmental assessment, when it approved the pipeline’s route across Lake Oahe, a dammed section of the Missouri River, near the Standing Rock Indian Reservation.

But U.S. District Judge James E. Boasberg said recent legal precedent clarified the circumstances in which agencies must complete an EIS. The more in-depth level of analysis was required to address technical disputes about the risk and impacts of a potential oil spill from Dakota Access, he said.

Boasberg “ignored the fact that the risk of any oil spill reaching the waters of Lake Oahe is extremely low,” the Army Corps told the D.C. Circuit.

Energy Transfer stressed that the district court’s mandate to halt the flow of oil through Dakota Access marked new territory for National Environmental Policy Act, or NEPA, cases.

“The disruptive effects here are enormous and unprecedented,” lawyers for the company said. “This is the first NEPA decision to order an operational pipeline shut down during remand to the agency.”

The Standing Rock Sioux, Cheyenne River Sioux, and other tribes have until Sept. 16 to respond.

Nagging Risk for Pipeline

Though the three-judge panel hearing the case has allowed Dakota Access to keep operating for now, it warned in its Aug. 6 order that, “At this juncture, appellants have failed to make a strong showing of likely success on their claims that the district court erred in directing the Corps to prepare an environmental impact statement.”

Related proceedings that could disrupt pipeline operations are still playing out in district court. When the D.C. Circuit froze the lower court’s shutdown order, it left intact part of the July decision that vacated a federal easement for Dakota Access, and put the district court in charge of fielding arguments about whether that scrapped permit should halt the flow of oil.

The Army Corps is set to give the district court an update next week on whether the pipeline should be allowed to stay in service without the easement.

Dakota Access has been in service three years, moving crude from North Dakota shale fields to an Illinois oil hub.

The case is Standing Rock Sioux Tribe v. Army Corps of Engineers, D.C. Cir., No. 20-5197, 8/26/20.

(Adds details on Energy Transfer brief in paragraphs 4-5, 13-14.)

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

To contact the editors responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com; Chuck McCutcheon at cmccutcheon@bloombergindustry.com

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