US court orders shutdown of Dakota pipeline: Update 3

Adds details on Energy Transfer motion to stay

A federal judge today ordered Energy Transfer to shut down the 570,000 b/d Dakota Access crude pipeline (DAPL) and drain oil from the line within 30 days, as a result of a long-standing legal battle over its environmental permitting.

The shutdown will cut off a major conduit of crude from the Bakken shale basin in North Dakota to the US midcontinent and the Gulf coast. It is a major defeat for the oil industry and the administration of president Donald Trump.

US district court judge James Boasberg also threw out a federal easement allowing the pipeline to cross under the Missouri river, citing the "seriousness" of errors underlying the project's permit.

A new environmental review is expected to take about 13 months, according to the court.

The ruling is a win for the Standing Rock Sioux tribe and other Native American groups who contend in the underlying lawsuit that the Army Corps of Engineers failed to adequately study certain issues related to potential oil spills from the pipeline, which went into service in June 2017.

Energy Transfer filed an emergency motion to provisionally stay the court's decision and set an expedited briefing schedule for a motion to stay pending appeal.

A temporary stay is warranted because the ruling requires the shutdown of a major interstate pipeline requiring a number of expensive steps before the court is likely to have a ruling on the stay motion, Energy Transfer said.

In particular, a number of time-consuming and expensive steps are required to shut the pipeline down safely and empty it of oil in a process that "would require well more than 30 days," the company said.

Energy Transfer said earlier today thatBoasberg's ruling is not supported by the law or the facts of the case and that the judge exceeded his authority in ordering the shutdown.

If the line is shut, billions of dollars in tax and royalty revenue will be lost by state, local and tribal governments in North Dakota, South Dakota, Iowa and Illinois, the company said. "Farmers will suffer as crude transportation will move to rail, displacing corn, wheat and soy crops that would normally be moved to market" by rail, Energy Transfer said.

Opponents of the pipeline said the ruling was historic. "It took four long years, but today justice has been served at Standing Rock," said attorney Jan Hasselman who represents the tribe as part of the Earthjustice environmental law group. "If the events of 2020 have taught us anything, it is that health and justice must be prioritized early on in any decision-making process if we want to avoid a crisis later on" he said.

Boasberg on 25 March ordered the Army Corps of Engineers to conduct a new environmental review for the contested DAPL easement and said it would consider a request to cease operations on the line during the study.

DAPL moves Bakken crude to Patoka, Illinois, where it connects to another Energy Transfer pipeline to Nederland, Texas.

Industry groups told the district court in recent filings that a sudden shutdown of DAPL would be detrimental to the North Dakota economy and would lead to widescale shut-ins of the state's oil production, in part because there is not enough rail takeaway capacity to replace the pipeline flows. They also said that the court should consider the impacts of a DAPL shutdown under normal conditions, because any shutdown of the pipeline is likely to outlast the temporary market dislocations caused by the Covid-19 pandemic and the resulting recession.

US energy secretary Dan Brouillette said it is disappointing that "an energy infrastructure project that provides thousands of jobs and millions of dollars in economic revenue has been shut down by the well-funded environmental lobby" using the US court system to further its agenda.

Boasberg said in the ruling today that "at least some immediate harm to the North Dakota oil industry should be expected from a DAPL shutdown, even if its effects are tempered by a decreased demand for oil." But the court also said those effects "do not tip the scales decisively in favor" of keeping the line open during the new environmental review.

About three dozen US lawmakers asked the court to shut down the line while the new environmental review is pending. The lawmakers — all Democratic members of the House or Senate — said that shutting the line will ensure that federal agencies abide by requirements under the National Environmental Policy Act (NEPA).

The initial startup of DAPL was delayed for months in 2016 and 2017 amid large protests led by the Standing Rock tribe and regulatory delays. Since its startup in June 2017, the line has been expanded amid record-high production in North Dakota and growing demand to export US crude.

Energy Transfer is planning to nearly double capacity on the line to 1.1mn b/d by adding pumping stations.

The judge's ruling on DAPL comes just a day after another large US pipeline project was cancelled. The developers of the $8bn Atlantic Coast natural gas pipeline said they are pulling out of the project after years of permitting delays drove up construction costs and threatened its economic viability.

By Eunice Bridges