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Dakota Access Still Faces Existential Threats Despite Court Win

May 24, 2021, 9:31 AM

The Dakota Access oil pipeline faces continued threats to its existence, even after surviving another shutdown battle in federal court.

It’s familiar territory for the embattled Energy Transfer LP project that seems perpetually unable to shake off legal and political hazards. A federal district court last week refused to halt the oil pipeline—an important win for Dakota Access—but an appeal or agency action could change its fate.

“I would still hold my breath,” said James Coleman, an energy law professor at Southern Methodist University in Dallas. “If you’re a pipeline investor, you’re used to holding your breath at this point.”

The ruling eliminates the biggest threat to the pipeline, but Dakota Access still lacks a key federal easement to cross Lake Oahe in North Dakota and is encroaching on federal land as a result. The Biden administration has declined to take any enforcement action against the project for now, but has left open the possibility.

At the same time, the Army Corps of Engineers is working on a court-ordered environmental review that could jeopardize the pipeline’s fate once the analysis is complete in 2022. And legal risks persist if the Standing Rock Sioux Tribe and other opponents choose to appeal the latest district court ruling.

The pipeline has shipped oil from North Dakota to Illinois for four years.

‘Only Threat of Stoppage’

Pipeline opponents haven’t offered specifics on their next steps, but Standing Rock Chairman Mike Faith pledged that the tribe “will continue our fight until justice prevails.”

Bloomberg Intelligence analyst Brandon Barnes said he expects any court appeal to favor Dakota Access, making the administrative process “the only threat of stoppage.” The Army Corps over the next year will analyze oil spill risks and consult with Indigenous tribes and others affected by the pipeline to determine whether to grant a new federal easement.

And while the Biden administration has for now decided against using its enforcement authority to halt the pipeline, it could change course if Dakota Access or another pipeline has a serious spill or other issues, Coleman said.

“The government’s always such a black box,” he said. “They could change their mind again.”

Dakota Access opponents could also get creative in the courtroom and raise an Administrative Procedure Act claim that challenges the Army Corps’ inaction in response to the pipeline’s encroachment on federal land, Christi Tezak of ClearView Energy Partners said in an analysis last week.

Last week’s district court ruling referenced a January appellate decision that said Army Corps inaction may amount to a “de facto outgrant"—effectively permitting the crossing of federal land without engaging in a review process outlined in agency regulations. The Army Corps has previously argued it has discretion to issue an outgrant, require project removal, or take no action at all.

‘Paper Victory’

Since 2017, federal judges have issued three different decisions concluding Dakota Access was permitted in violation of the National Environmental Policy Act. Critics say allowing the pipeline to stay in service despite those flaws renders tribes’ victories hollow.

“That is a paper victory at best, and the plaintiffs are owed so much more than that after suffering the consequences associated with the DAPL siting, construction, and operation for four years now,” Vermont Law School professor Hillary Hoffmann said.

Center for Biological Diversity litigation director Eric Glitzenstein blamed the U.S. Supreme Court for “dramatically stacking the deck” against environmental plaintiffs in a pair of decisions—Monsanto Co. v. Geertson Seed Farms in 2010 and Winter v. Natural Resources Defense Council in 2008—that set high legal bars for securing injunctions based on NEPA violations.

The latest Dakota Access decision “helps to crystallize just how devastating they’ve been for environmental law,” Glitzenstein said.

District Judge James Boasberg, who issued last week’s ruling, acknowledged the tribes’ “undeniable frustration” from winning their case but failing to clear the high legal bar for results. He closed his opinion with criticism of the Army Corps for failing to take any decisive action on the pipeline.

“For now, it suffices to note that by ducking the controversy surrounding the Oahe crossing, the Corps actively tolerates DAPL’s continued operation underneath a key federal waterway that it lacks the necessary authorization to traverse,” Boasberg wrote. “That, of course, is a political decision outside this Court’s area of inquiry. Whether the Corps formally acknowledges such decision or not, this is the outcome it now owns.”

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

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com

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