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Dakota Access approval likely after Trump memo, but analysts see court fight

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Dakota Access approval likely after Trump memo, but analysts see court fight

President Donald Trump's executive memo calling for swift federal action on the Dakota Access oil pipeline is likely to elicit a quick approval from the U.S. Army Corps of Engineers on the last portion of the project that needs an easement, but the contentious venture will still probably end up in court, analysts said.

Trump on Jan. 24 signed an action asking the corps to consider rescinding or modifying its Dec. 4, 2016, decision to withhold an easement for a section of Energy Transfer Partners LP's roughly $3.8 billion project that passes near Standing Rock Sioux Tribe land. Under the terms of the memo, the corps would also have to consider withdrawing its intent to prepare an environmental impact statement for the pipeline, which would move crude oil from the Bakken Shale to a hub in Illinois.

Trump's action paves the way for a speedy approval of Dakota Access, but a threatened legal challenge by the tribe could hold up the project's in-service date until about April, said Katie Bays, an energy analyst at Height Securities LLC. She expects Standing Rock to seek an injunction against the project to prevent construction work under the Missouri River, and although the challenge is likely to be denied, it may take "several weeks" to be addressed by U.S. District Court Judge James Boasberg, even on an expedited basis, she said.

Standing Rock has said the pipeline as routed would harm sacred tribal sites and threaten drinking water supplies. Dakota Access rose to national attention after environmental groups, celebrities and other opponents of the project joined tribe members for months-long protests in North Dakota. Standing Rock leadership said in a Facebook post on Jan. 24 that the tribe will take legal action challenging the memo.

Bays said she does not see an injunction coming because the tribe would have to prove there would be irreparable harm without extraordinary relief. "Proving irreparable harm in particular is an incredibly challenging task. ... It's a very, very high bar," she said. "Without that, there's really no way to get an injunction."

FBR & Co. analyst Benjamin Salisbury said Trump might have saved the project from some legal holdups by signing a presidential memo rather than a more sweeping and forceful executive order declaring the pipeline approved. That would have left an avenue for opponents to challenge the thoroughness of the administration's review, since the action fell on Trump's fourth full day in office, he said.

Still, an injunction is a likely next step for opponents to pursue, he said. "Because so much of it's completed, there's almost a sense in which an injunction is the whole ball game."

While Salisbury said litigation and protests are almost certain, predicting an in-service date is more difficult. "We've learned to be cautious on timing when it comes to legal challenges ... and, more recently, civil disobedience."

But Bays said that while there will certainly be protests, they are unlikely to cause delays. "Think about pragmatically what's going on up in North Dakota right now. The pipeline portion of the project is done. ... Horizontal drilling is all that's left," she said. "It's a lot more difficult for the protests to physically disrupt that work."

Trump's presidential memo on Dakota Access was one of five actions signed Jan. 24. A separate memo asked Keystone XL developer TransCanada Corp. to resubmit an application for the pipeline, which would transport oil sands product from Alberta to Nebraska. The U.S. Department of State then has 60 days to reach a final decision on the project using a January 2014 final environmental impact statement, according to the memo. TransCanada said in a statement that it is preparing an application and intends to reapply.

Three other actions are aimed at using U.S. steel for pipelines in the U.S., expediting environmental reviews for high-priority infrastructure projects and streamlining regulations for domestic manufacturing.