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FEATURE: Dakota Access Pipeline fight will heat up again in two federal courts

Highlights

Army Corps of Engineers must update status by Aug. 31

Federal judge could still order DAPL closure

DAPL continues to operate on 570,000 b/d system

Houston — The Dakota Access Pipeline will continue to flow crude oil for now, but the legal battle heats back up again soon as the fight to shutter the pipeline continues in two separate federal courts.

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A three-judge panel of the US Court of Appeals for the DC Circuit ruled on Aug. 5 that the pipeline could remain open for now -- the same day that was the initial deadline for the 570,000 b/d crude system to be closed. But, as part of a mixed-bag ruling, the panel also kicked the case back to the judge, James Boasberg, who ordered the pipeline shuttered to potentially make a stronger argument for its unprecedented closure.

The oil and gas industry and environmentalists are closely watching the case that could determine whether a three-year-old crude pipeline, which serves as the main crude artery from the Bakken Shale, can permanently be closed after it's built and is up and running. The legal argument is that the pipeline's construction should never have been allowed because permitting allegedly was fast-tracked by the US Army Corps of Engineer and the pipeline-friendly Trump administration without undergoing the proper environmental reviews.

"What makes this case so unusual is the pipeline is already built," said James Coleman, an energy law professor at Southern Methodist University. "There really aren't many precedents."

What comes next

While the shutdown injunction case is back in the hands of Judge Boasberg, of the US District Court for the District of Columbia, the three-judge appeals panel is expediting legal arguments over the ruling that forces the Corps of Engineers to conduct a stronger assessment and draft an Environmental Impact Statement, called an EIS, which couldn't be completed until 2021 at the earliest. Although the appeals court let the pipeline continue to operate in the meantime, the court also upheld the yanking of the pipeline's federal water permit.

That means the Corps of Engineers has until Aug. 31 to detail the options it is considering on how -- or how not -- to justify keeping the pipeline safely flowing while its environmental permitting remains vacated. The lead plaintiffs, the Standing Rock Sioux Tribe, and their legal representation at Earthjustice, contend the pipeline is now operating illegally because the permitting was lost.

The strong assumption is the Corps of Engineer will let the pipeline to stay open, said attorney Jan Hasselman of Earthjustice.

"Everyone always assumed that vacating the permit meant shutting down the pipeline, and it's almost like the goalpost got moved," Hasselman said. "That's certainly the conversation we'll have with the appeals court."

In the appellate court, initial arguments are due on Aug. 26 and all replies are due by the end of September. The three-judge panel ordered an "expedited" court schedule this year.

"I can't remember this ever happening before," Hasselman added. "We'll be litigating the same case in two different courts at the same time."

The Corps of Engineers and the US Department of Justice, which is representing the Corps in court, both declined comment.

The appeals panel said Boasberg failed to make the necessary findings to justify the closure of a pipeline under a four-part injunction test. Boasberg now has the option of making that more stringent ruling, which potentially could satisfy the appellate court.

Coleman believes the odds are in favor of Boasberg pushing forward with a stronger shutdown order as desired by Standing Rock and Earthjustice.

"He (Boasberg) has already done the analysis, so he could act much more quickly," Coleman said.

The four-part legal test must show the plaintiffs would suffer irreparable harm if the pipeline stays open, that other remedies don't suffice, that the public interest would not be harmed, and that the balance of potential hardships were considered for both the plaintiffs and defendants.

"We need to go persuade the district court that the injunction test is satisfied," Hasselman said.

Instead, the defense led by pipeline operator Energy Transfer argues the irreparable harm is suffered by the people of North Dakota and other states as their jobs and state services are taken away by the possible pipeline closure and the loss of the oil revenues.

In a myriad of court filings, DAPL proponents said a potential shutdown could lead to famine, floods, fires, fatalities and much more. The nation's geopolitical security would be threatened and the elimination of a major crude outlet would trigger greater environmental emissions from oil transport by rail and truck, worse health outcomes, poor education funding, and the potential for oil explosions near population centers on roads and railways.

Energy Transfer declined comment, but during its Aug. 5 earnings call, general counsel Tom Mason called the appellate court order "good news," despite the decision to withhold the key water permit.

Election wildcard

A ruling to keep the pipeline open for now coupled with President Donald Trump winning reelection in November likely would translate to a permanent win for DAPL, lawyers and legal analysts said.

However, if former Vice President Joe Biden wins and carries a Democratic administration into office, then everything could change, Coleman said. In the earnings call, Mason declined to "speculate" on a Biden presidency.

If a Biden administration takes over an environmental study for DAPL, then the pipeline could be defeated through a negative review outcome, Coleman said. And, if the pipeline is ordered closed when and if Biden takes office, then there would be tremendous pressure within his party to keep it permanently shuttered, he said.

Biden hasn't personally weighed in on DAPL, but his vice presidential selection, US Senator Kamala Harris, has publicly supported the pipeline shutdown.