Court Orders Dakota Access Pipeline Shut Down

July 7, 2020 | Insights

By Benjamin Rhem, Amy Baird, & Alisha Mehta

On July 6, 2020, Judge James E. Boasberg of the U.S. District Court for the District of Columbia issued a ruling ordering that the Dakota Access Pipeline (the Pipeline) be shut down and emptied by August 5, 2020. The decision vacates an easement granted by the U.S. Army Corps of Engineers (the Corps) that allowed Dakota Access, LLP to build a segment of the Pipeline beneath Lake Oahe in North Dakota and South Dakota. Judge Boasberg’s opinion states that the Pipeline, which has been in operation since 2017, should be turned off until the Corps completes an Environmental Impact Statement (EIS). This process is expected to take 13 months.

The $3.8 billion Pipeline, which spans 1,172 miles from North Dakota to Illinois, was authorized for construction in February of 2017. Under the Obama administration, the Corps was prepared to require a full EIS for the Pipeline. However, the Corps subsequently scrapped its plans for a full EIS review and granted the permits, concluding that running the Pipeline under the Missouri River posed no significant environmental issues. Once these permits were granted, Dakota Access moved forward with the Pipeline, completing construction in April 2017. The Pipeline became commercially operational on June 1, 2017.

The National Environmental Policy Act (NEPA) requires agencies to “consider every significant aspect of the environmental impact of a proposed action.”[1] In order to achieve this goal, NEPA imposed on agencies certain procedural requirements, including the requirement to draft an Environmental Assessment (EA) that provides sufficient evidence for determining whether to prepare an EIS or a finding of no significant impact (FONSI). If any significant environmental impact may result from the proposed agency action, an EIS must be prepared before the agency action is taken.[2] To determine whether an environmental impact is “significant,” an agency is required to examine the context and intensity of the action.[3] There are ten statutory factors to consider when evaluating intensity, including “the degree to which the effects on the quality of the human environment are likely to be highly controversial.”[4]

Here, the Corps published an EA and determined that the Pipeline would not have a significant impact; thus, no EIS was prepared. The plaintiffs in this case, which include the Standing Rock Sioux Tribe and the Cheyenne River Sioux Tribe, requested that the permits associated with the Pipeline be vacated due to a failure to comply with NEPA requirements. Ultimately, the Court found that the Corps had not been able to substantiate its decision to only publish an EA and concluded that the Corps violated NEPA by determining that an EIS was unnecessary. Accordingly, the Court ordered the Corps to perform a full EIS for the entire project.

Significantly, Judge Boasberg commented that when it comes to NEPA, “it is better to ask for permission than forgiveness: if you can build first and consider environmental consequences later, NEPA’s action-forcing purpose loses its bite.” Last, the Court reflected on its responsibility to consider the potential environmental disruption of not vacating the easement. Ultimately, the Court found that vacatur was the only appropriate remedy in this case. The Court also recognized the economic disruption to the parties involved, but stated that the owners of the pipeline assumed much of its economic risk, given their knowledge that an EIS was not completed for the Pipeline.

Energy Transfer, the parent company of Dakota Access, plans to immediately ask the District Court to stay the order and will seek an expedited appeal at the U.S. Court of Appeals if the request is denied. Both Energy Transfer and the Corps argued that the proper procedures were followed in granting the original easement for the Pipeline. In a press release issued in response to the decision, Energy Transfer noted that the pipeline has safely operated for three years and noted that shutting down the Pipeline will cause a significant disruption to numerous other oil and gas distribution and refining operations. Energy Transfer has estimated its loss of revenue alone to be more than $2 billion for the remainder of 2020 and 2021. Finally, Energy Transfer also maintained that shutting down the Pipeline will result in the increased transportation of oil by rail which will displace the transportation of corn, wheat, and soy crops, and potentially present even greater environmental risk than transportation by pipeline.

[1] Balt. Gas & Elec. Co. v. NRDC, 462 U.S. 87, 97 (1983) (quoting Vt. Yankee Nuclear Power Corp v. NRDC, 435 U.S. 519, 553 (1978)).
[2] Grand Canyon Trust v. FAA, 290 F.3d 339, 340 (D.C. Cir. 2002) (quoting Sierra Club v. Peterson, 717 F.2d 1409, 1415 (D.C. Cir. 1983)).
[3] 40 C.F.R. § 1508.27.
[4] 40 C.F.R. § 1508.27(b)(4).

Meet Ben

Benjamin R. Rhem advises clients in the power generation, oil and gas, and mining industries regarding compliance with federal and state environmental laws. He works regularly before the Texas Commission on Environmental Quality and the United States Environmental Protection Agency. Ben’s practice also extends beyond environmental law, as he assists clients dealing with regulatory issues before Federal Energy Regulatory Commission, Pipeline and Hazardous Materials Safety Administration, the Railroad Commission of Texas, and Mine Safety and Health Administration.

Meet Amy

Amy L. Baird represents clients in the energy industry. She does complex commercial litigation for those clients, along with project development, commercial contracts, and regulatory work. Amy’s experience includes the representation of natural gas gatherers, oil and gas producers, interstate and intrastate natural gas pipelines, natural gas liquids and crude oil pipelines, natural gas processors, gas marketers, storage and terminalling operators, merchant power plants, local distribution companies, municipally-owned gas and power distributors, industrial gas and power end users,  cogeneration facilities, and utility regulators.

Meet Alisha

Alisha Mehta represents clients in complex permitting and water matters, including real estate developers and special utility districts. In her practice, she regularly counsels clients on transactional and regulatory issues before the Public Utility Commission of Texas, including energy project transactions, regulatory proceedings, contested cases, and rate cases. Additionally, she is experienced in preparing due diligence memorandums and analysis of environmental issues for renewable energy projects.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice.