Suddenly Time—And the Oil Market—Are On the Side of the Standing Rock Sioux

This week’s new Army Corps decision and a fresh lawsuit could delay the Dakota Access pipleline more than makes economic sense.
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The Army Corps of Engineers says it’s not ready to grant an easement for drilling under the river. Photo by Rob Wilson. 

A week ago, I was pessimistic about the Dakota Access pipeline and the Standing Rock Sioux tribe’s attempt to block its construction on treaty lands near the reservation.

Donald Trump had just been elected. And if that weren’t enough to make the pipeline so, then the next group of government regulators will rise from the oil and infrastructure industry and soon take over leadership of the departments of Interior, Energy, Justice, and the Army Corps of Engineers.

My heart sunk because I thought — and still fear — that the police and military power of government — the state of North Dakota and soon Washington, D.C. — would use even greater force to attack Native people and the allies who are opposed to the project.

But then a couple of things happened.

First, on Tuesday, the Obama administration said the Army Corps of Engineers would not make a decision right away. “The Army has determined that additional discussion and analysis are warranted in light of the history of the Great Sioux Nation’s dispossessions of lands, the importance of Lake Oahe to the Tribe, our government-to-government relationship, and the statute governing easements through government property,” a news release said.

This is huge. I know how tempting it is to think President Barack Obama could swoop in and declare the Dakota Access project over. But the federal government doesn’t work that way. Each agency has to have a say, then it has to be debated at the White House, and at each step there has to be a legal basis to support a decision.

This move is brilliant because it ties the decision-making process to an established law that requires federal agencies to consult with tribes.

So if the Army Corps finds that it had not effectively carried out consultation, then it will have the justification to deny the permit to go under Lake Oahe and, more importantly, to deny the necessary easement. It’s clear from the record that the Army Corps did not meet its own standards for consultation: specifically, acknowledging and working with the inherent sovereignty of the tribe impacted. In one of those “only from the federal government” ironies, the Army Corps cites as a reason for its standards the historically bungled process that resulted in there even being a Lake Oahe on the Missouri River. The Army Corps essentially admits that it rushed to build dams, destroyed habitat, and stole Indian land.

Now, fast forward to Jan. 20 and a President Donald Trump. That means his administration would have to untangle the refusal of the permit, the easement under the lake, and the federal-tribal consultation process. That’s not going to be easy. It takes months to rewrite federal regulations, including publication of draft regulations with time for public comment and, of course, the mandated tribal consultation.

At that point a President Trump will wonder if he really won. “Why can’t I just make it so?” He can. But it will take time — perhaps more time than the market will allow.

And that’s the second bit of good news.

This week, Energy Transfer Partners and Sunoco Logistics Partners filed a lawsuit in Washington, D.C., demanding a federal court intervene and order the Army Corps to grant the easement. “Dakota Access Pipeline has been granted every permit, approval, certificate, and right-of-way needed for the pipeline’s construction, said Kelcy Warren, CEO of Energy Transfer Partners. “It is time for the courts to end this political interference and remove whatever legal cloud that may exist over the right-of-way beneath federal land at Lake Oahe.”

So why is this good news? Because this filing represents a whole new potential area of litigation, as well as appeals, that will consume time and, possibly, much-needed transparency through the legal discovery process.

It appears the Dakota Access pipeline has now lost its fight with time. It had promised to deliver oil to refineries by the end of this year. According to Fortune magazine, “shippers with long-term contracts have already started buying the oil for delivery later this year — known as “line fill” — ahead of the expected startup.”  The estimate is a pre-sale of 8 million barrels of oil. That’s now impossible given that the Energy Partners lawsuit will not even get a hearing (the first of many) until early January. So many of those contracts will need to be rewritten, adding uncertainty—and lower oil prices—to the equation.

Meanwhile, the fear at the Oceti Sakowin camp is that Energy Partners will drill anyway. More equipment has been moved into place so that it can tunnel under Lake Oahe right now. But if that happens, if the company is that brazen, it will be declaring war on the Army Corps of Engineers and, more significantly, the authority of a federal judge. Even a President Trump could not save the pipeline from judicial retribution. 

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