Federal Judge Orders Dakota Pipeline Shut Down

A federal judge on Monday ruled that the Dakota Access pipeline must be shut down by August 5.

U.S. District Judge James Boasberg issued the order, a stunning legal setback for the Trump administration and the U.S. oil industry, in a 24 page memorandum that held the environmental review for the project fell too far short of National Environmental Policy Act requirements to allow the pipeline to continue to operate while the government undertakes a more extensive review.

Judge Boasberg wrote that there is “clear precedent” for vacating the government’s decision to grant an operating permit to the pipeline and the economic damage the shutdown will cause is outweighed by the deficiencies of the government’s earlier review.

Boasberg had ordered both parties to submit briefs on whether the pipeline should continue operating during the new environmental review.

Lawyers for the pipeline’ owners, Energy Transfer Partners LP, have said a shutdown will cost around $2 billion over the next year and a half. In addition, the defenders of the pipeline argued that shutdown would harm the entire North Dakota oil industry.

“There is no viable pipeline alternative for transporting the 570,000 barrels of Bakken crude that [Dakota Access pipeline] is capable of
carrying each day,” the pipeline’s lawyers said in a brief.

The shutdown could also harm farmers by raising demand for railroad cars.

“Several states also argue that their grain farmers would be harmed by having to pay a premium for railroad cars once oil, which is more valuable by volume, enters that market and drives up prices,” Boasberg argued.

Shares of CSX, operator of the largest railroad network east of the Mississippi, were up 2.5 percent.  Shares of Union Pacific rose 1.5 percent.

Judge Boasberg noted that the coronavirus shutdowns, global recession, and social distancing had led to a dramatic decline in demand for oil, which could mean the economic effects of the shutdown would be moderated. The price of oil was unchanged on Monday but is down 26 percent from a year ago.

The pipeline was the subject of months of protests, sometimes violent, during its construction near the Standing Rock Sioux Reservation that straddles the North Dakota-South Dakota border. The Standing Rock tribe presses litigation against the pipeline even after it began carrying oil from North Dakota across South Dakota and Iowa and to a shipping point in Illinois in June 2017.

Jan Hasselman, an attorney for the Standing Rock tribe, tweeted news of Boasberg’s ruling and said: “Stunning.”

Texas-based Energy Transfer, the pipeline owner, didn’t immediately respond to a message seeking comment.

The $3.8 billion, 1,172-mile (1,886 kilometer) underground pipeline crosses beneath the Missouri River, just north of the Standing Rock reservation. The tribe draws its water from the river and fears pollution. Energy Transfer insisted the pipeline would be safe.

The company last year proposed doubling the capacity from 600,000 barrels per day to as much as 1.1 million barrels meet growing demand for oil shipments from North Dakota, without the need for additional pipelines or rail shipments.

Before the coronavirus pandemic devastated the U.S. oil industry, daily oil production in North Dakota — the nation’s No. 2 oil producer behind Texas — was at a near-record 1.45 million barrels daily. The state’s output has slipped to below 1 million barrels daily amid low energy prices and sparse demand.

The U.S. Army Corps of Engineers in 2018 completed more than a year of additional study of the pipeline, saying the work substantiated its earlier determination that the pipeline poses no significant environmental threats.

Boasberg in June 2017 ruled that the Corps “largely complied” with environmental law when permitting the pipeline but ordered more review because he said the agency didn’t adequately consider how an oil spill under the Missouri River might affect the Standing Rock Sioux tribe’s fishing and hunting rights, or whether it might disproportionately affect the tribal community. That concept, known as environmental justice, aims to ensure development projects aren’t built in areas where minority populations might not have the resources to defend their rights.

Permits for the project were originally rejected by the Obama administration, and the Corps prepared to conduct a full environmental review. In February 2017, shortly after President Donald Trump took office, the Corps scrapped the review and granted permits for the project, concluding that running the pipeline under the Missouri River posed no significant environmental issues. The Corps said that opinion was validated after an additional year of review, as ordered by the court.

Boasberg was appointed to the U.S. District Court for the District of Columbia, which handles many cases involving the federal government, by President Barack Obama. He also serves on the United States Foreign Intelligence Surveillance Court, to which he was appointed by U.S. Chief Justice John Robert, and is Chief Justice of the United States Alien Terrorist Removal Court. In 2014, Boasberg ordered the release of thousands of Hillary Clinton emails found by the FBI during an investigation of Clinton’s private server.

–The Associated Press contributed to this report.