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Risks Linger for Dakota Access Pipeline Despite Biden Reprieve

April 10, 2021, 12:02 PM

The threat of a shutdown still looms over Energy Transfer LP’s Dakota Access pipeline even after the Biden administration announced it wouldn’t take action against the project.

“It’s like a stay of execution or a continuation of trial—every day free or every day alive is a victory,” Southern Methodist University energy law professor James Coleman told Bloomberg Law. “But there continues to be uncertainty.”

The Army Corps of Engineers revealed its position Friday during a hearing at the U.S. District Court for the District of Columbia, saying it won’t take action against the oil pipeline “at this time.”

But the agency left open the possibility of future enforcement, which could include ordering Dakota Access to halt service, as it monitors the pipeline’s compliance with safety conditions after two courts determined the project had been permitted in violation of federal environmental law.

Separately, the district court is now weighing American Indian tribes’ latest request for a court-ordered shutdown.

“We’ll keep fighting in both the judicial forum as well as the political forum,” Earthjustice lawyer Jan Hasselman, representing the Standing Rock Sioux Tribe, said during a press conference Friday. “Today’s answer from the Army Corps was not their last word on the subject. The question of shutdown remains on the table.”

At the same time, fresh proceedings in the U.S. Court of Appeals for the District of Columbia Circuit are set to start April 12 as Dakota Access petitions for reconsideration of a recent ruling against the pipeline.

All Eyes on District Court

The federal court proceedings are the most likely place for the tribe to get traction given the Biden administration’s refusal to take action now, energy analysts said after the hearing.

Dakota Access, which has shipped oil from North Dakota to Illinois for nearly four years, has been operating without a valid federal easement since last summer when district court Judge James E. Boasberg scrapped the authorization for violating the National Environmental Policy Act. That means the project is encroaching on federal property as it crosses the Missouri River in North Dakota.

The D.C. Circuit affirmed the ruling in January and directed Boasberg to decide whether the pipeline should shut down while the Army Corps conducts a broader environmental review. The judge, in turn, pressed the Biden administration to share its views. But with the Army Corps’ inaction, the decision falls back to the district court, where tribes have a pending request for a court-ordered shutdown.

“I would have thought there would be a decision one way or the other at this point,” Boasberg said of the Army Corps on Friday. “So I agree it seems to me that I need to go ahead and decide the briefed motion.”

The Army Corps has no objection to the district court deciding the issue now, Justice Department lawyer Ben Schifman told the court.

Legal Standard

Boasberg already ordered the pipeline to stop service once, but the D.C. Circuit narrowed the decision and kept Dakota Access online, reasoning that the lower court judge had applied the incorrect legal test. He now approaches the same question, but must apply a Supreme Court precedent that says injunctions aren’t always appropriate in cases of NEPA violations.

The tribes will have to show that keeping Dakota Access in service would irreparably harm them, and that the harm would outweigh impacts to other parties, ClearView Energy Partners analyst Christine Tezak wrote in a note to clients.

The Army Corps filed its brief on the motion last year, under President Donald Trump, and argued that the tribes’ request should be denied. The agency on Friday didn’t request an opportunity to update its position on the matter. Dakota Access will file some updated legal declarations by April 19 addressing the economic harm it says would accompany a pipeline halt.

“They are certainly not out of the woods,” Coleman said of Dakota Access. “They have every reason to be worried about what decision this court would make here.”

Hasselman of Earthjustice speculated that the district court could decide the pending shutdown request as soon as May.

Higher Courts

While the district court wrangling plays out, Dakota Access plans to launch a new line of attack in the D.C. Circuit on April 12, asking the appeals court’s full suite of active judges to review the January ruling from a three-judge panel that the pipeline’s federal easement violated NEPA.

Boasberg said Friday he’d have to consider whether the company’s rehearing petition affects his ability to resolve the pending shutdown motion. Hasselman called the petition a “Hail Mary” legal tactic.

“The appeals court was very clear that it was turning the matter back over the district court to make a determination about the injunction,” he said.

Dakota Access is likely to land before the D.C. Circuit again—regardless of the outcome of the rehearing petition—if Boasberg eventually issues an order disrupting pipeline operations. And if an appeal is unsuccessful, Dakota Access may take the issue to the U.S. Supreme Court.

“Really what this case is becoming is layers of appeals,” FiscalNote Markets analyst Katie Bays told Bloomberg Law. “There’s so much else going on that mitigates the impact of any single action either in the district court or the D.C. Circuit.”

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

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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