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February court hearing for DAPL will press Army Corps to decide whether to shutter pipeline

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February court hearing for DAPL will press Army Corps to decide whether to shutter pipeline

Highlights

Appellate court ruling said DAPL operating without necessary federal easement

Court order left it up to Biden, Army Corps to decide pipeline's fate pending EIS

DAPL still slated for capacity expansion by operator Energy Transfer

Houston — A new federal court hearing scheduled for Feb. 10 will press the US Army Corps of Engineers to decide whether to shutter or keep open the Dakota Access Pipeline, or DAPL, which is now operating without the necessary legal permitting.

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US District Judge James Boasberg set the hearing date to discuss how the new Biden administration and his Army Corps plan to proceed with oversight of the major Bakken shale pipeline artery, after the US Court of Appeals for the District of Columbia Circuit ruled on Jan. 26 that the pipeline's federal easement is revoked because the permitting process acted in violation of the law without a more thorough environmental impact review.

The new court ruling made it clear the Biden administration could choose to close the four-year-old, 570,000 b/d pipeline while a more stringent, court-ordered Environmental Impact Statement, or EIS, review is conducted. The study could easily extend into 2022. However, the administration also may allow the pipeline to continue operating while the the study remains pending.

Boasberg previously ordered the pipeline closed last summer before his ruling was undone in the appellate court. But the appeals court has now agreed with Boasberg that the federal easement was granted illegally in early 2017 under the Trump administration, and the court is leaving the interim status of the pipeline's operations up to the Biden-led Army Corps.

The DAPL case is closely watched by industry and environmental observers alike because it could potentially set a standard for attempting to close existing pipelines and other fossil fuel infrastructure.

With greater legal standing, the plaintiffs, led by the Standing Rock Sioux Tribe, also have an injunction seeking to shutter the pipeline pending before Boasberg.

The impetus is now on the Biden administration to decide whether it will allow a major crude oil pipeline to continue operating illegally, said Standing Rock attorney Jan Hasselman of Earthjustice in an interview.

"This will be test," Hasselman said. "The fact that the pipeline company managed to get the pipe in the ground before anyone could stop them doesn't really matter. It shouldn't affect things that much."

While Biden moved quickly on Jan. 20 to cancel the permitting for the controversial Keystone XL Pipeline, he has never publicly weighed in on the DAPL debate. Vice President Kamala Harris and Biden's interior secretary nominee, Deb Haaland, have both supported shutting the pipeline.

"The court put the agency in a bit of a box. It's not clear to me what the options are other than shutting it down ... pending the EIS," Hasselman said. "They're going to have to figure this out very quickly."

The Army Corps, White House and pipeline operator Energy Transfer have not responded to requests for comment.

How did we get here?

In 2016, construction of the DAPL temporarily became the epicenter of the US environmental movement against fossil fuels, as climate activists teamed up with Native American tribes that wanted to protect their lands and waterways.

Headline-grabbing protests, security clashes and arrests ensued.

In December 2016, outgoing President Barack Obama blocked the completion of the pipeline in a largely symbolic gesture that was quickly overturned after Trump was sworn in, and the pipeline came online later in 2017.

Behind the scenes, the legal fights continued over the fast-tracked environmental permitting the pipeline received under both Obama and Trump. Judge Boasberg stunned industry observers when he ordered the pipeline shut in July 2020. One month later, the shutdown order was halted on appeal.

Even with the pipeline's fate in question, operator Energy Transfer has still moved forward with expanding the crude pipeline's capacity by the end of 2021. Early construction work, including surveying and concrete pouring to build new pumping stations, began late last year.

During Energy Transfer's most recent earnings call, Mackie McCrea, who became co-CEO in January, said he did not envision any realistic scenario where the pipeline is permanently closed.

The pipeline is on track to move about 750,000 b/d of crude capacity by the end of September as part of a capacity expansion project, according to Energy Transfer. The company has planned to expand Dakota Access to 1.1 million b/d. But, with the ongoing coronavirus pandemic hurting crude demand, the expansion is taking a phased-in approach.