By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends most of her time in India and other parts of Asia researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as writes occasional travel pieces for The National.
The Department of Justice, the Department of the Army, and the Department of the Interior waded into the controversy over construction of the Dakota Access oil pipeline (DAPL) yesterday, shortly after U.S. federal court judge James E. Boasberg denied a request for a preliminary injunction to halt its construction in his Standing Rock Sioux Tribe v U.S. Army Corps of Engineers ruling.
DAPL is designed to transport light sweet crude oil from the Bakken Shield in North Dakota — an area not served by existing pipelines — through South Dakota, Iowa, and Illinois. Oil from this source is currently largely shipped by train. Energy Partners L.P. is building the pipeline, alongside an affiliate company, and the refiner, Phillips 66, owns 25% of the DAPL project, according to the Wall Street Journal. Those behind the project emphasize that it represents a $3.78 billion investment and will create 8,000-12,000 jobs.
From the joint statement by the three federal agencies:
We appreciate the District Court’s opinion [denying the injunction]. . . . However, important issues raised by the Standing Rock Sioux Tribe and other tribal nations and their members regarding the Dakota Access pipeline specifically, and pipeline-related decision-making generally, remain. Therefore, the Department of the Army, the Department of Justice, and the Department of the Interior will take the following steps.
The Army will not authorize constructing the Dakota Access pipeline on Corps land bordering or under Lake Oahe until it can determine whether it will need to reconsider any of its previous decisions regarding the Lake Oahe site under the National Environmental Policy Act (NEPA) or other federal laws. Therefore, construction of the pipeline on Army Corps land bordering or under Lake Oahe will not go forward at this time. The Army will move expeditiously to make this determination, as everyone involved — including the pipeline company and its workers — deserves a clear and timely resolution. In the interim, we request that the pipeline company voluntarily pause all construction activity within 20 miles east or west of Lake Oahu.”
Federal Agencies Anticipated District Court Ruling
The three agencies clearly anticipated that Judge Boasberg’s decision would not grant the tribe the injunctive relief it asked for and thereby halt the pipeline’s construction. So, they almost certainly prepared this statement to deflect protests that have arisen over construction of the pipeline, spearheaded by the Standing Rock Sioux tribe and that have drawn participants from more than 250 tribes and various environmental organisations. Between 3000 and 4000 “protectors” as they’ve chosen to call themselves (as opposed to being described as protestors) have congregated at the protest camp.
The statement has been well-received by the tribal leadership. “A public policy win is a lot stronger than a judicial win,” said Standing Rock Sioux Tribal Chairman Dave Archambault II. “It’s a win for all Indians. It’s a win for indigenous people,” as reported by the West Central Tribune.
The key question is, how much of a win does the agency statement actually represent?
Well, as with so many other aspects of policy during the Obama administration, the devil is truly in the details. So, while headlines are declaring the pipeline blocked — and it certainly looks like construction in a small portion of it will be delayed, for the time being — but please be aware of the following points.
First, the three agency decision only halts construction in a limited area, and only if the pipeline company elects to “voluntarily” comply. From the three agency statement:
The Army will not authorize constructing the Dakota Access pipeline on [Army Corps of Engineers] land bordering or under Lake Oahe until it can determine whether it will need to reconsider any of its previous decisions regarding the Lake Oahe site under the National Environmental Policy Act (NEPA) or other federal laws. Therefore, construction of the pipeline on Army Corps land bordering or under Lake Oahe will not go forward at this time. The Army will move expeditiously to make this determination, as everyone involved — including the pipeline company and its workers — deserves a clear and timely resolution. In the interim, we request that the pipeline company voluntarily pause all construction activity within 20 miles east or west of Lake Oahe.
Note that the pipeline’s route extends over 1172 miles, but the agencies only ask for construction to be halted within a forty mile span — e.g., 20 miles east and west of Lake Oahe. At the moment, construction on more than 48% of the pipeline is already completed. Now, to be sure, the pipeline cannot proceed until the bottleneck over Lake Oahu is resolved. But in the interim while this is being discussed, the pipeline company can continue construction on the remainder of the DAPL — which it must do to meet its January 2017 completion deadline and honor supply contracts. And, it is not even clear, according to DeSmogBlog, that the pipeline company will agree to stop construction even on the limited Lake Oahu section of DAPL.
Second, federal regulatory authority over construction of the DAPL is limited– and much more so than you might expect. This is in part due to the project’s design. Only 1% of the pipeline will traverse federal lands, and the rest is built solely on private land. It would not be unreasonable to expect the federal government to have greater regulatory control over what gets built on federal lands, as compared to private property. But even if that is surely the case, you might say, surely the necessary regulatory process that proceeded DAPL’s construction would require extensive appraisal and permitting, especially since the pipeline crosses under the Missouri River and once completed, according to Energy Transfer’s own estimates, approximately 470,000 gallons of oil will flow through the pipeline per day, with an overall capacity of 550,000 barrel per day or more. That, by my calculation could make for one hell of an oil spill if anything were to go wrong.
Well, if you thought that the federal government was looking out for the public interest here, you would be wrong. To quote from Judge Boasberg’s ruling (p.2):
A project of this magnitude often necessitates an extensive federal appraisal and permitting process. Not so here. Domestic oil pipelines, unlike natural-gas pipelines, require no general approval from the federal government. In fact, DAPL needs almost no federal permitting of any kind because 99% of its route traverses private land.
Let’s just pause here to take that statement in. And remember, this comes directly from Judge Boasberg’s ruling. It’s stunning that this is true, given the potential environmental consequences of a DAPL failure. So please indulge me while I repeat the judge’s language: “Domestic oil pipelines, unlike natural-gas pipelines, require no general approval from the federal government. In fact, DAPL needs almost no federal permitting of any kind because 99% of its route traverses private land.”
Why is there no comprehensive federal oversight of DAPL? The answer, no doubt, is that the industry managed to slip in an exemption for itself from comprehensive upfront federal regulation in this area (although I will concede I have yet to delve further into what is undoubtedly a murky area to report on how such an exemption came to be in place).
The Army Corps of Engineers does have authority to regulate a domestic oil pipeline such as DAPL where it crosses a waterway. Again I quote from Boasberg’s ruling (p. 2):
One significant exception, however [e.g., to this lack of an extensive federal appraisal and permitting process] concerns construction activities in federally regulated waters at hundreds of discrete places along the pipeline route. The Corps needed to permit this activity under the Clean Water Act or the Rivers and Harbors Act – and sometimes both. For DAPL, accordingly, it permitted these activities under a general permit known as Nationwide Permit 12.
Although only 1% of the pipeline traverses public lands, the requirement to permit activity under the Clean Water Act or the Rivers and Harbors Act gives the Corps of Engineers authority over 3% of the length of the DAPL. Yet the authority to regulate the DAPL where it crosses a waterway does not extend to allow the Corps of Engineers to regulate the entire pipeline.
Back to the three agency statement and a third major point to bear in mind. That statement only announces a pause in the DAPL’s construction, in the limited area around Lake Oahe. The agencies retain complete discretion to decide when and under what terms to go back to the status quo and allow building the controversial Lake Oahu section go forward. There is thus plenty of time for yesterday’s announcement to be walked back after protestors break camp and go home. It’s likely that won’t occur until after the election — perhaps as a lame duck decision in the rump-end of the Obama administration. Or it may be deferred until after Hillary Clinton or Donald Trump is inaugurated. But I predict that walked back it indeed will be.
More “Conversations”: Is this Just Another Listening Tour?
I can’t neglect to mention that three agency statement also announces what some might regard as a much wider concession to the concerns of the Sioux and other tribes. Again, I quote from that statement:
Furthermore, this case has highlighted the need for a serious discussion on whether there should be nationwide reform with respect to considering tribes’ views on these types of infrastructure projects. Therefore, this fall, we will invite tribes to formal, government-to-government consultations on two questions: (1) within the existing statutory framework, what should the federal government do to better ensure meaningful tribal input into infrastructure-related reviews and decisions and the protection of tribal lands, resources, and treaty rights; and (2) should new legislation be proposed to Congress to alter that statutory framework and promote those goals.
Now, will these upcoming discussions, conducted no doubt initially with much fanfare during the run-up to the election, amount to anything substantive? To put the question another way, does this pledge represent a sincere desire to reconsider policy? Or is this just another conversation, yet another listening tour?
Sioux Tribal Chairman Archimbault has clearly decided, at minimum, to spin this in the best possible way. “Our voices have been heard,” Archambault said, according to Indian Country Today Media Network. “The Obama administration has asked tribes to the table to make sure that we have meaningful consultation on infrastructure projects. Native peoples have suffered generations of broken promises and today the federal government said that national reform is needed to better ensure that tribes have a voice on infrastructure projects like this pipeline.”
We’ll just have to wait and see.
What Happens When The Agencies Eventually Act and This Issue Gets Tossed Back To The Courts
I should pause for a moment to address the substance of Judge Boasberg’s ruling because the Sioux legal action is still ongoing in his court. The denial of the preliminary injunction is by no means the last step in the process. Let’s begin with the judge’s own summary of his ruling (as cited above, p. 2):
This case also features what an American Indian tribe believes is an unlawful encroachment on its heritage. More specifically, the Standing Rock Sioux Tribe has sued the United States Army Corps of Engineers to block the operation of Corps permitting for the [DAPL]. The Tribe fears that construction of the pipeline, which runs within half a mile of its reservation in North and South Dakota, will destroy sites of cultural and historical significance. It has now filed a Motion for Preliminary Injunction, asserting principally that the Corps flouted its duty to engage in tribal consultations under the National Historic Preservation Act (NHPA) and that irreparable harm will ensue. After digging through a substantial record on an expedited basis, the Court cannot concur. It concludes that the Corps has likely complied with the NHPA and that the Tribe has not shown it will suffer injury that would be prevented by any injunction the Court could issue. The [motion for a preliminary injunction] will thus be denied.
Judge Boasberg disposes of several arguments in his 58 page option and I will only quote briefly from a few sections (and thus not address all arguments systematically and comprehensively; for readers so interested, it is necessary to read the full opinion). What I will quote, however, suggests that the Judge does not think the plaintiff will prevail on the merits of its claims, and this does not augur well for the Sioux’s position as litigation proceeds.
In particular, Judge Boasberg notes (pp. 47-48):
The limited nature of the [Army Corps of Engineers’] jurisdiction, in fact, reinforces the reasonableness of the its decision not to consider the effects of the entire pipeline on historic properties before issuing the DAPL permitting…. The Corps here ultimately determined that the route taken by the pipeline through private lands, up to a certain point approaching a federally regulated waterway, is driven by factors that have little to do with the discrete activities that the Corps needs to permit.[emphasis added] The Court cannot conclude otherwise on this record. As such, it cannot hold the Corps’ decision arbitrary, capricious, or otherwise unlawful.
And in a further section, Boasberg writes (p. 52):
… The Tribe has not sued the [pipeline company] here for any transgressions; instead, this [motion for a preliminary injunction] seeks to enjoin Corps permitting of construction activities in discrete U.S. waterways along the pipeline route. Such relief sought cannot stop the construction of DAPL on private lands, which are not subject to any federal law. Indeed, Standing Rock does not point the Court to any law violated by the private contracts that allow for this construction or any federal regulation or oversight of these activities. From the outset, consequently, no federal agency had the ability to prevent DAPL’s construction from proceeding on these private lands. At most, the Corps could only have stopped these activities at the banks of a navigable U.S. waterway. An injunction of any unlawful permitting now can, at most, do the same.
In fact, the judge appears to regard the DAPL as a fait accompli (p. 51-53):
[The pipeline company], as has been explained, began its construction work on private lands long before it had even secured the Corps permitting that the Tribe now seeks to enjoin…. In many places, this work is already complete…. There is, moreover, no sign that [the pipeline company] will pull back from this construction on private land if this Court enjoins the [permitting necessary] for the 3% of DAPL’s route subject to federal jurisdiction. Quite the contrary; the company has indicated that it has little choice but to push ahead in the hopes of meeting contract obligations to deliver oil by January 2017. . . .
…. Powerless to prevent these harms given the current posture of the case, the Court cannot consider them likely to occur in the absence of the relief sought here. Put simply, any such harms are destined to ensue whether or not the Court grants the injunction the Tribe desires. As Standing Rock acknowledges, [the pipeline company] has demonstrated that it is determined to build its pipeline right up to the water’s edge regardless of whether it has secured a permit to then build across. . . . Like the Corps, this Court is unable to stop it from doing so.
To cut to the chase, after reviewing Judge Boasberg’s reasoning for denying the preliminary injunction, it looks extremely unlikely that the judge believes as matter of law that the plaintiffs– the Standing Rock Sioux– would prevail on proving the merits of their underlying case.
Cui Bono: Who Is Backing the Pipeline?
Given my cynicism over the significance of what the three agencies announced, I am now going to address another anti-DAPL approach activists have taken by targeting the banks that have financed its construction. Might this be an avenue through which construction of DAPL could be addressed? Amy Goodman of Democracy Now has reported on this money trail and I will here quote at length from a September 9 interview that she conducted with Hugh MacMillan, a a senior researcher with Food & Water Watch, who traced these financial connections. The transcript from the full program can be found here.
As just one example of this separate tack, Goodman reports that on Wednesday in Minneapolis, dozens protested at U.S. Bank Plaza, against U.S. Bank’s stop funding of the pipeline. Goodman reports that U.S. Bank has extended a $175 million credit line to Energy Transfer Partners, the company behind the pipeline (citing a LittleSis investigation).
AMY GOODMAN: Meanwhile, Saturday was the first day of a two-week call for actions against the financial institutions that are bankrolling the Dakota Access pipeline project.
We turn to Part 2 of our conversation with Hugh MacMillan, a senior researcher with Food & Water Watch whose new investigation reveals the dozens of financial institutions that are bankrolling what’s called DAPL, the Dakota Access pipeline. I began by asking Hugh what’s most important to understand about the corporate structure of the pipeline company.
HUGH MACMILLAN: Dakota Access, LLC, is a joint venture of Phillips 66 and a joint venture of two members of the Energy Transfer family—Energy Transfer Partners and Sunoco Logistics. Enbridge and Marathon Oil have bought into this, this joint venture. Together, they now have about a 37 percent stake in the pipeline, in the Dakota Access pipeline.
AMY GOODMAN: How are the banks involved?
HUGH MACMILLAN: Well, that’s—they are banking on this company and banking on being able to drill and frack for the oil to send through the pipeline over the coming decades. So they’re providing the capital for the construction of this pipeline.
AMY GOODMAN: And explain what the banks are. Which banks are they? And how are they involved?
HUGH MACMILLAN: Well, I’ve got a list of the 17 banks that are specifically providing financing for this project. And it’s also coupled together with a Energy Transfer—Energy Transfer Partner project to convert an existing pipeline that would connect to the south end of the Dakota Access pipeline and run oil all the way down to the Gulf Coast, where there are refineries and also export infrastructure.
AMY GOODMAN: Can you tell us that list of 17 banks?
HUGH MACMILLAN: I can. Citibank is the bank that’s been running the books on the project, and that’s the bank that beat the bushes and got other banks to join in. So, we have Wells Fargo, BNP Paribas, SunTrust, Royal Bank of Scotland, Bank of Tokyo-Mitsubishi, Mizuho Bank, TD Securities, ABN AMRO Capital, DNB First Bank—and that’s actually a bank based in Philly; it’s not the DNB Bank based in Norway, which is actually provided several hundred million to the Energy Transfer family separately—and ICBC London, SMBC Nikko Securities and Société Générale.
AMY GOODMAN: Now, it’s Citibank—is that right?—that’s running the books, as the report points out, for Energy Transfer and Sunoco Logistics, which own the Dakota Access pipeline?
HUGH MACMILLAN: That’s right, by and large. So they have the largest share, and they’ve spearheaded the effort. So, what we published in LittleSis was the 30-plus banks that have provided general financing for Sunoco Logistics and Energy Transfer Partners. Through working with Rainforest Action Network, we were able to—who has access to Bloomberg Terminal, we were able to determine these 17 banks that I just listed, who are providing the direct financing for the Dakota Access project and, in addition, for an Energy Transfer Partners project to extend this pipeline on down to Texas. So, collectively, this pipeline would run from near the Canadian border on down to the Gulf Coast of Texas over 1,800 miles.
AMY GOODMAN: So, Hugh MacMillan, as we wrap up, what do you think is most important for people to understand about the corporate structure of the company, Dakota Access pipeline, that is building the Dakota Access pipeline?
HUGH MACMILLAN: Well, I think it’s important to see the forces behind this particular pipeline as the same forces behind numerous other pipelines across the country, both for—both to support fracking for tight oil as well as fracking for shale gas, all toward maximizing production of oil and gas, when the science is clear that we need to maximize what we keep in the ground. Our current policy has not made that switch. And if you look at the Department of Energy’s Quadrennial Technology Review published a year ago, you’ll see, under clean energy technologies, permeability manipulation is included, along with improved understanding of well integrity and improved understanding of injections and how they’re causing earthquakes, such as occurred over the weekend. The Quadrennial—
AMY GOODMAN: In Oklahoma.
HUGH MACMILLAN: That’s right, in Oklahoma. The Quadrennial Technology Review speaks of a future mastery of the subsurface toward maximizing production.
While much of the reporting on the three agency statement overstates its significance, some of the protectors harbor no illusions as to what the announced federal policy shift actually represents. After all, Native Americans in general and the Sioux in particular have suffered through a long history of the US government saying one thing, even signing on some seemingly binding dotted line– and then doing another.
“This is a momentary victory. It does not kill the pipeline. It does not stop the entire pipeline, but at least we are protecting the river for the time being and so that’s something to celebrate,” said Dallas Goldtooth, Indigenous Environmental Network, as reported by the West Dakota Fox affiliate
Whether this means that the protectors will pack up their tents and go home while conversations with the federal agencies continue remains to be seen. The New York Times reported:
It was unclear on Friday how long the government-ordered pause in construction around Lake Oahe might last, or whether the move had given the Standing Rock Sioux any greater odds of prevailing. But on Friday morning, tribal members said they had lived on the land for generation upon generation, and were prepared to stay through the fall, the winter and beyond.
“They’ll be here for years,” said Jana Gipp, a member of the Standing Rock Sioux, as she surveyed the camp’s tents and teepees from a grassy bluff. “They won’t give this up.”
Again I say, we can only wait and see.