Lessons From Dakota Access

LESSONS FROM DAKOTA ACCESS

Like many of our clients, we’ve been watching the back-and-forth over the Dakota Access Pipeline (DAPL) with considerable interest. And we’re still watching—even now, with construction at the hotly debated Lake Oahe crossing underway, the project still faces risks of injunction from the federal bench, pursuant to a February 9th request filed by the Cheyenne River Sioux Nation of South Dakota.

Nevertheless, even with the matter not entirely settled, the case offers a fascinating and informative look at the challenges and risks faced by companies engaging in the construction of facilities and infrastructure—particularly when that construction is subject to extensive federal and local approvals and regulation, and when multiple overlapping jurisdictions are involved.

To Recap

In July of 2016, the Army Corps of Engineers granted Dakota Access LLC permission for DAPL to cross Lake Oahe, a dammed section of the Missouri River located just upstream from the tribal lands of the Standing Rock Sioux Tribe. This permission was granted under Section 408 of the Rivers and Harbors Act and Section 404 of the Clean Water Act.

Two days after this permission was granted, the Standing Rock Sioux Tribe filed suit against the Army Corps of Engineers, asserting that the Corps had not appropriately consulted with the tribe per Section 106 of the National Historic Preservation Act—an obligation the tribe believed to be triggered by the Section 408 permission. The tribe filed a motion for a preliminary injunction to stop construction of the pipeline in the area, but that motion was denied by both the district court and on appeal to the District of Columbia circuit.

In the meantime, DAPL (and the tribes’ efforts to stop its construction at the Lake Oahe crossing) became a national (and international) cause and months of protests began at the site.

Not coincidentally, the Corps began to reassess its earlier permission, eventually asserting that construction of the pipeline at this location would require a specific easement, per requirements in the Mineral Leasing Act—and that this easement would require additional review under the National Environmental Policy Act.

Cue a counter-claim from Dakota Access (November 15, 2016) and then, abruptly, a December 4th announcement from the Corps in which they declared that their decision on the easement for the Lake Oahe section of DAPL would be deferred pending additional review and the preparation of an Environmental Impact Statement. On December 5th, Dakota Access challenged the delay, requesting summary judgment on their earlier cross-claim: asserting that the original Section 408 decision amounted to the granting of an easement for the original pipeline route.

Briefings around this motion were still underway when President Donald J. Trump issued a January 25, 2017 Executive Order directing the Corps to reconsider its decision to require additional review; on February 7th, the Corps reversed itself and allowed construction to proceed.

Key Takeaways

Dakota Access suffered some pitfalls, and enjoyed some luck. The pitfalls weren’t entirely of their own making. The luck was, well, luck—but it represents a fine example of the ways that a change in Presidential administration (and governing philosophy) can impact the fortunes of the industry.

First pitfall: politics. While there is no indication that the Corps did anything legally wrong in its initial July 25, 2016 approval of the pipeline route, and in fact, even in the December 4th order halting construction the Corps re-asserted this point, the Obama administration was sufficiently sensitive to the politics and optics of the matter that it directed reconsideration of the DAPL route. Would this have been different had the matter not arisen in an election year? Difficult to say with certainty.

Second pitfall: tribal government and tribal lands. The relationship between the U.S. federal government and sovereign tribes is historically fraught and intensely complex, with layers of jurisdiction and authority that are often unclear, relying as they do on interpretation of treaties and agreements that can date to the 19th century and earlier. While tribal claims in this case are still subject to litigation, the lesson is clear: assume nothing. Some have argued that in this case, Dakota Access would have been well-advised to encourage the Corps to pursue a more thorough process in granting the initial routing permission—anticipating the significant financial and reputational risk of a public controversy.

Stroke of luck: the election. The election of Donald J. Trump as President shifted all of the winds into Dakota Access’s favor. It’s not a plot twist many were anticipating.

The EDGE Advantage

With tenured experience in all aspects of environmental consulting, including Section 404 and 408 permitting, pipeline routing, and tribal consultation and National Historic Preservation Act Section 106 consultation, EDGE is a crucial partner to leaders in the midstream energy business, nationwide.

Our diverse experience in permitting, compliance, and agency and tribal consultation—and our deep understanding of the complexities and reputational risks of historical, cultural, and tribal laws and regulations—makes EDGE an essential partner in even the earliest stages of project planning.

While DAPL seems at this point to be proceeding to completion, the name of the pipeline and the company that is building it have become a rallying cry for activists across the nation and around the world. While it is difficult to quantify the costs to reputation, the costs to the project (delays, lawsuits, legal maneuvering) have been far from trivial.

When time is tight and stakes are high, bring further insight to bear.