Dakota Access faces unclear path to completion

The developers of the Dakota Access crude pipeline are entering uncharted legal territory and the potential for long delays after President Barack Obama's administration recent decision to block completion of the 470,000 b/d project.

The US Army Corps of Engineers blocked the project on 4 December by denying it the easement it needs to install pipeline under Lake Oahe, a dammed portion of the Missouri river in North Dakota. The agency now plans to conduct an exhaustive review called an environmental impact statement before deciding whether to grant the easement.

Energy Transfer Partners and Sunoco Logistics Partners are developing the $3.8bn project, which would transport crude from the Bakken formation into Illinois. The companies last month told a judge that the corps' delay in issuing the easement have cost them $450mn. Further delays could threaten the project's survival, they said, because it has contracts with nine shippers to bring the pipeline into service by 1 January.

But the corps' latest actions have thrown up obstacles that – barring some intervention by Congress - could take time to resolve and have created new opportunities for litigation from pipeline opponents, legal experts say, even with a new administration in the White House that supports the project. President-elect Donald Trump wants the 1,172-mile (1,886km) pipeline to be constructed, his transition team says.

The more exhaustive environmental review, if completed, would need to include a consideration of alternative pipeline routes such as an earlier proposed route near Bismarck, North Dakota. The new review also would have to discuss the treaty rights of the Standing Rock Sioux tribe, which opposes the pipeline, and the risks an oil spill could cause to the tribe's water and fishing rights.

Completing that environmental review is likely to take six months to a year because of the amount of time it would take to develop, put out for comment and finalize, consultancy group ClearView Energy Partners managing director Kevin Book said. That review would not preclude the potential for approving the existing easement.

The Trump administration could halt preparation of the new environmental review relatively quickly, by reaching a finding that an earlier corps' review of the pipeline was already sufficient. But there are potential pitfalls to this approach because environmentalists and the Standing Rock Sioux tribe could bring lawsuits to challenge that decision.

"It is going to be a minefield. They are going to have to walk pretty carefully, because they would have to justify a decision to reverse action," environmental group the Natural Resources Defense Council land and wildlife director Sharon Buccino said.

Another option for the Trump administration would be to quickly complete the more exhaustive environmental review of the project before issuing an easement, which pipeline opponents could also challenge in court. Buccino said there could be political costs if the new administration tries to rush through approval of the project, which has prompted large protests.

Dakota Access' developers, aware of the delays associated with the new environmental review, yesterday asked a federal court to find that the corps months ago already authorized the pipeline and that construction under Lake Oahe can proceed.

The corps has acknowledged it authorized the water crossing on 25 July under a century-old law called the Rivers and Harbors Act, but it says the project still needs another easement issued under the Mineral Leasing Act. Dakota Access argues the notion it still needs a separate approval from the corps is a "fiction" used to justify a "raw political calculation" to block the pipeline.

Congress could try to pass legislation that would deem the easement approved, which might insulate the pipeline from further legal challenges. Lawmakers tried that approach with the 830,000 b/d Keystone XL crude pipeline project, but they ultimately were unable to force Obama to approve the project.

Even if the developers of Dakota Access secure the required regulatory approvals, crews still will need 90-120 days to drill under Lake Oahe and install pipeline and then bring the pipeline into service. That timeline assumes legal attempts to halt the project are unsuccessful and that protesters do not impede construction.