The Aggregates Industry Should Take Heed Of The Lessons That Can Be Learned From The Contentious Approval Of The Pipeline.
By Ali Nelson
On June 14, 2017, Judge James Boasberg of the U.S. District Court for the District of Columbia entered an order ruling that the U.S. Army Corps of Engineers improperly granted an easement authorizing the construction of the Dakota Access Pipeline (DAPL). The oil and gas industry has been closely following the dispute over the pipeline, given that it presents issues not uncommon to construction of any major pipeline. But the aggregates industry should also take heed of the lessons that can be learned from the contentious approval of the pipeline and the subsequent lawsuits challenging it.
The DAPL runs 1,168 miles from North Dakota through South Dakota and Iowa to Illinois. Because it was largely constructed on private property, the pipeline required few permits authorizing its construction. In fact, as of July 2016, only one permit was needed to construct the pipeline in its proposed route: an easement from the Corps authorizing the pipeline to cross federal land on either side of the Missouri River at the Lake Oahe reservoir.
Initially, the Corps granted the easement, but the high-profile nature of the dispute prompted President Obama to request that the Corps review the easement. Ultimately, the Corps announced in December 2016 that it would conduct a full environmental review of the pipeline and therefore would not grant the easement until the assessment was complete.
However, once Donald Trump assumed office, he issued a memorandum directing the Corps to expedite review and approval of the pipeline, considering prior reviews and determinations as satisfying the requirements of the National Environmental Policy Act (NEPA). Then, in February, the Corps granted the pipeline an easement allowing it to cross approximately 0.21 miles of federally-owned property at Lake Oahe.
The Standing Rock Sioux Tribe filed several lawsuits against the Corps, each alleging different violations of law, including:
1. Grading and clearing land for the pipeline threatened sites of cultural and historical significance and the Corps failed to engage in tribal consultation as required by the National Historic Preservation Act.
2. Allowing the presence of oil in the pipeline under Lake Oahe would desecrate sacred waters and infringe on the free exercise of religious beliefs in violation of the Religious Freedom Restoration Act.
3. The Corps’ issuance of permits to construct and operate the pipeline under Lake Oahe failed to comply with the procedural requirements of NEPA.
The Tribe’s arguments regarding the National Historic Preservation Act and the Religious Freedom Restoration Act failed, but the court found that the NEPA argument “meets with some degree of success” and it held that “Although the Corps substantially complied with NEPA in many areas, the court agrees that it did not adequately consider the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.”
It further held that to remedy the violations, the Corps would have to reconsider those sections of its environmental analysis upon remand by the court. The court also requested additional briefing and a status conference addressing whether to enjoin the pipeline’s operations until the Corps’ reconsideration is completed.
1. Politics Matter. The the DAPL did not get approved while Obama was in office, but was approved shortly after Trump’s inauguration. And although the President himself cannot issue or deny a permit, he can direct agencies to reconsider certain issues and can greatly influence an agency’s decisions. As Trump has said, “Nobody thought any politician would have the guts to approve that final leg. And I just closed my eyes and said: Do it.” The influence of the different administrations is evident in the outcome.
2. But Procedure Matters More. Federal courts have noted that NEPA “ensures that the agency will inform with public that it has indeed considered environmental concerns in its decision-making process,” but “does not mandate particular consequences.” In other words, NEPA requires federal agencies to consider the environmental impacts of their actions, but does not require those agencies to select the action that has the fewest impacts. The procedural requirements must be satisfied – and if they are not satisfied, the risk of a lawsuit challenging the action is significant.
3. Some Federal Approvals Cannot Be Avoided – But Some Can. The easement authorizing the DAPL to cross federal land turned out to be a roadbock for the pipeline. And while many permitting programs apply to development on public and private lands alike – for instance, a permit is required to dredge or fill a wetland or to “take” a threatened or endangered species regardless of whether that impact occurs on public or private property – a NEPA analysis is only required for federal agency action like granting a significant federal approval or permit. While development on private property can still trigger a NEPA analysis if the permitting action is “major,” development on federal property guarantees that one will be required. Siting a project to avoid federal lands or the requirement of major federal permits can avoid delay and limit the opportunities for litigation.
4. The Power of a Movement Should Not Be Underestimated. The protest by tribal civil rights activists and supporters is undoubtedly the most high-profile Native American protest in recent history. David Archambault III, the chairman of the Standing Rock, has stated that “What happened at Standing Rock is a movement, and you don’t see the benefits of a movement until way later.” The result of the Standing Rock movement may be that the pipeline is not ultimately issued the easement required for the pipeline to run under Lake Oahe, or it may be that a more thorough environmental assessment is completed and the pipeline proceeds as planned. In either case, the movement will have set a precedent for future NEPA analyses that cannot be ignored.
The DAPL therefore may be the highest profile case of its kind, but at its base it illustrates the challenges commonly facing project development. Companies across industries would be wise to be aware of the priorities of the current administration, to comply with required procedures (or avoid them through project siting, to the extent possible), and to recognize the real impact activism opposing a project can have.
Ultimate Lesson Learned
While the new administration may seek to streamline or even eliminate permitting or regulatory hurdles impeding development, those opposing development may be even more aggressive in seeking court action to block or delay it. The underlying caution here is that, regardless of the creation of more “development friendly” permitting agencies, companies must be even more diligent in seeing that the agencies adequately document their decisions. As the pipeline’s lawsuit makes clear, the agencies will not always do this as a matter of course and companies must supply them with the material that they can use to withstand court scrutiny.
Ali Nelson is senior counsel at Husch Blackwell LLP. As a member of the firm’s Energy & Natural Resources team, she has experience advising companies in connection with mining and mineral extraction, regulated transmission projects, coal-fired power plants, and renewable and clean energy projects. [email protected], 303-749-7263.