Injecting politics into another pipeline project, the Obama Administration has managed to delay the Dakota Access Pipeline (DAPL) but this time the incoming Trump Administration will likely fast track DAPL’s approval if the federal courts don’t approve it first. There is a hearing to review the matter Friday in a Washington federal court.
DAPL is a 1,168-mile, crude oil pipeline system designed to carry up to 570,000 barrels per day of U.S. light sweet from the Bakken and Three Forks production region of North Dakota to Patoka, Illinois. The primary end market for the crude is Nederland, Texas via ETCO. North Dakota’s crude production was 960,000 barrels a day in September 2016.
The proposed pipeline route does not go through the Standing Rock Indian Tribe reservation but rather just above it. Still, the tribe contends it goes through sacred lands and might affect their main water source. Environmental groups opposed to fossil fuel development have joined the tribe in fighting the pipeline.
On Sunday the US Army Corps of Engineers announced that it would not approve an easement for the Dakota Access Pipeline (DAPL) and would instead conduct a full Environmental Impact Statement (EIS) analysis and study potential alternate routes. You can read the full Army Corps decision memo here.
DAPL’s developer (Energy Transfer Partners and Sunoco Logistics) on Monday asked a federal judge for an expedited ruling that would allow the pipeline construction, which is largely completed, to continue. There is a hearing scheduled Friday before US District Judge James Boasberg in Washington. Judge Boasberg is an Obama-appointed federal judge, but he has already ruled in favor of DAPL on a previous decision. (Boasberg is also the judge that had ordered the State Department to release 14,000 Hillary Clinton emails.)
We believe DAPL has a very good chance for a favorable ruling in the federal courts, if not from Judge Boasberg, then from the Court of Appeals. The Army Corps announcement on Sunday was highly unusual. First, it did not deny the pipeline’s approval but instead said “the proposed location merits additional analysis” including a study of alternative routes.
Second, it is important to note that the Army Corps has already approved the pipeline and federal courts twice have upheld those previous approvals as legal. In its memo announcing the decision to further study the pipeline location, the Army Corps admitted that its “previous decisions [approving the pipeline] comported with legal requirements.” DAPL has complied with all of the requirements of the law and the easement approval should be a routine agency action.
Third, the Army Corps changed its tune under pressure from the Obama White House. After the DC Circuit Court of Appeals upheld a lower court ruling that rejected a request from the Standing Rock tribe for an injunction on the pipeline, the Obama Administration took extraordinary actions. The Department of Justice, Department of Interior and the Army Corps issued a letter that suspended the pipeline approval process until further robust consultations took place with the Standing Rock and other tribes on how the federal government approves projects affecting tribes. The law already requires public input from affected tribes (steps the Army Corps completed which were upheld by two federal courts) but the Obama Administration stalled the project to see if the federal government needed to do more.The law would have to be changed in order to require additional tribal input measures.
The Obama Administration delays are designed to frustrate DAPL’s developer and attempt to find some compromise between the developer and the Standing Rock tribe. In addition, environmental groups have joined the tribe in protesting the pipeline and are pressuring the Administration to reject the pipeline altogether.
DAPL was probably not the right pipeline for environmental groups to rally around in the hopes of stopping it like the Keystone XL project. The legal requirements for approval by the non-partisan Army Corps are very straightforward and provide little room for interpretation.
We believe a federal court will find that the Administration’s actions and delay tactics were “arbitrary and capricious” which is the legal standard for overturning an administrative decision. DAPL has a very good case but said the delays have already cost hundreds of millions of dollars. In addition, DAPL has a $2 billion deal to sell a stake in the project to Enbridge and Marathon but those companies can walk away in early January if the federal approval is not made. However, it seems unlikely the deal will be scuttled with the new Administration about to take office next month.
President –Elect Trump has said during the campaign and as recently as last week that he supports DAPL project. If the federal courts do not approve, we expect that a new Trump Administration will take action to quickly approve DAPL.
Environmental groups believe that the Army Corps announcement to undertake a full EIS that can take a year to complete will prevent a fast approval by the incoming new Administration. However, we think the Trump Administration will simply cite the previous Army Corps approvals and federal court decisions upholding those approvals as its rationale for a quick approval. Certainly, the Standing Rock tribe and environmental groups will litigate the decision to approve but Courts have sided with DAPL on every previous legal challenge.
