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U.S. judge denies Dakota Access motion to reconsider pipeline shutdown order

The Supreme Court option is even a bigger long shot," said Coleman, who has expertise in environmental and energy cases. The process to get a stay order, allowing the pipeline to run, could take the full 30 days Dakota Access has to empty the pipeline, he said.

Reuters | Updated: 08-07-2020 04:54 IST | Created: 08-07-2020 04:54 IST
U.S. judge denies Dakota Access motion to reconsider pipeline shutdown order

A federal judge denied an emergency request by owners of the Dakota Access oil pipeline (DAPL) for the court to reconsider its order to shut and drain the 570,000 barrel-a-day line within a month, court records showed on Tuesday. The pipeline, operated by Energy Transfer, is the largest out of the Bakken shale region in North Dakota, one of the biggest oil producing patches in the United States. Without the pipeline, the region's production capacity will be constrained.

Native American tribes led by the Standing Rock Sioux and environmental groups protested DAPL's construction because a portion of the pipeline runs beneath South Dakota's Lake Oahe. The reservoir is a source of drinking water for the Standing Rock Sioux Tribe. The tribes opposed the emergency request, saying the company was trying to rush legal process and deny opponents adequate time to respond.

Energy Transfer said on Monday that if the request was denied, its next move would be to pursue a stay and expedited appeal with the U.S. Court of Appeals to delay the process of shutting the pipeline. The U.S. District Court of D.C. on Monday ordered pipeline owner consortium Dakota Access LLC, controlled by Energy Transfer, to stop operations and empty DAPL pending an environmental review that could take a year.

The court said the U.S. Army Corps of Engineers violated national environmental law when it granted an easement to Energy Transfer to build and operate beneath Lake Oahe because the it failed to produce an adequate Environmental Impact Statement. As well as contesting the need for the environmental review, Energy Transfer is trying to prevent the pipeline's closure while the review takes place.

The company likely faces a months-long appeals process at a higher court on the review, legal experts say. And if it can't secure a stay, it will not only have to shut the line but empty 5.8 million barrels of crude oil by Aug. 5, analysts said. Energy Transfer said in legal filings this week that it could take an estimated three months to empty the line, putting it in jeopardy of violating the court order.

Energy Transfer has previously estimated the costs related to shutting down the pipeline at about $67.5 million per year and said a prolonged closure would actually increase the risk of a spill under Lake Oahe. During a shutdown, potentially corrosive products would likely gather in the lowest point of the pipeline below the lake, Energy Transfer said in May. That, in turn, could increase the risk of a potential leak when the pipeline resumes operation.

There's a higher possibility than on the district court level that the appellate court will grant a stay, said James Coleman, a law professor at Southern Methodist University. But Dakota Access will need to show that the order forcing the pipeline to shut was wrong and that it would cause significant financial harm to the company or other beneficiaries, he added. "It's still a long shot. The Supreme Court option is even a bigger long shot," said Coleman, who has expertise in environmental and energy cases.

The process to get a stay order, allowing the pipeline to run, could take the full 30 days Dakota Access has to empty the pipeline, he said. The Department of Justice could also appeal the district court's decision and apply for a stay directly to Chief Justice John Roberts, analysts at Height Capital Markets said in a note, adding Roberts would be likely to grant the request.

"We expect the DOJ will appeal the district court decision by the end of the week or early next and anticipate the circuit court will decide on the motion for a stay before the Aug. 5 shutdown date," the financial research group said. (Editing by Simon Webb and Aurora Ellis)


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