Even as the courtroom drama over the Dakota Access pipeline (DAPL) riveted energy industry executives and made national headlines, another Bakken crude system hangs in the balance.
The fate of Marathon's High Plains crude pipeline system in North Dakota and Montana is in limbo after the line was partially shut in December to comply with an order from the Bureau of Indian Affairs (BIA). The agency contends that High Plains is trespassing on Native American land because it failed to renew the right-of-way or obtain a new right-of-way within the Fort Berthold Indian Reservation.
In the latest twist, Marathon has sued the US government for allegedly violating the Administrative Procedure Act and its Fifth Amendment rights after the BIA in March vacated previous orders in the High Plains proceedings.
Marathon thought the High Plains issue was resolved but "it has kind of gotten bounced back… so it is back out on the table," said chief executive Michael Hennigan during the first quarter earnings call of Marathon's midstream arm MPLX. Hennigan also said the situation poses a risk for the company.
The 700-mile High Plains system includes gathering lines and transportation lines and moves Bakken crude to various destinations including to the Johnson's Corner hub and to Marathon's 68,000 b/d refinery in Mandan, North Dakota. It also connects to several key North Dakota rail facilities.
The conflict surrounding the High Plains right-of-way comes as producers in North Dakota are already on edge because of a legal challenge to the 570,000 b/d DAPL, the largest pipeline out of the Bakken shale. Marathon is part owner of that line, which is operated by Energy Transfer, the majority owner.
A US district court last year threw out a key easement that allows DAPL to cross under Lake Oahe in North Dakota and ordered a new environmental review. The same court ruled last month that DAPL can remain in service during the new review that is expected to be complete in March 2022.
Production in North Dakota has dropped sharply from pre-pandemic highs but is still hovering above 1.1mn b/d, according to the most recent state data.
Notification of trespass
Marathon suspended use of the section of the High Plains system on the Fort Berthold Indian Reservation in December as directed by the BIA in a 15 December 2020 "Notification of Trespass Determination" that was affirmed by the agency on 14 January 2021.
The company also said that it fully paid back-rent and past-use payments to Indian landowners as required by the BIA. Those totaled nearly $4mn including $2.2mn for back rent and unauthorized use and $1.7mn in interest, according to a lawsuit filed by Marathon in the US District Court for the District of North Dakota in April.
Subsequently, the BIA moved to vacate the December and January orders "without regulatorily required notice," violating Marathon's Fifth Amendment due process rights, the lawsuit alleges.
The BIA is "seeking to subject Tesoro to entirely new and additional administrative proceedings on the very issues which Tesoro has already fully and finally resolved through its detrimental reliance and compliance," the lawsuit said.
High Plains was previously owned by refiner Tesoro, which changed its name to Andeavor and is now part of Marathon. The lawsuit refers to the pipeline as the "Tesoro High Plains Pipeline."
The BIA has not responded to requests for comment on the lawsuit and has not filed a response to the court as of today.
The pipeline system was built in the 1950s, with the initial right-of-way issued by the BIA in 1953, and subsequently renewed and reissued on multiple occasions through 18 June 2013.
In 2017, after years of negotiations, Tesoro reached an agreement with the Mandan, Hidatsa and Arikara (MHA) Nation for another 28-year renewal of the right-of-way, retroactively effective to June 18, 2013, according to the lawsuit.
Marathon told Argus recently that it has also reached agreements with more than 130 MHA Nation landowners who wish to renew the High Plains right-of-way, and hopes to enter similar agreements with remaining landowners.
Marathon "remains committed to respecting the rights of the MHA Nation and its members" as it works with them to resolve the matter, the company said.
Marathon objects for 'a multitude of reasons"
The company alleges in the lawsuit that the BIA has not yet issued the right-of-way renewal "due to various obstructions and obstacles," despite the company's "extensive renewal efforts."
Marathon also alleges that the 12 March decision by acting secretary for the Interior Department Scott de la Vega purporting to vacate the previous BIA orders and "start the entire administrative process completely anew" was "improper and unlawful for a multitude of reasons."
The acting secretary's decision was issued months after the deadline that BIA had given Marathon to comply with the requirements for full and final satisfaction of the previous orders, the lawsuit alleges.
Marathon also questioned the timing of de la Vega's order and whether he had the proper authority. The company alleges that the decision, dated 12 March, was actually issued on 18 March, citing the date on a certificate of service for delivering the document. The date of 18 March was three days after a new Interior secretary had been confirmed.
In a more recent filing, Marathon asked the court for a temporary restraining order to stop the BIA from conducting proceedings related to the March order. Marathon also alleges that the BIA violated the Freedom of Information Act by withholding documents requested by the company.
The BIA said that it moved to vacate the 15 December 2020 and 14 January 2021 decisions on High Plains "because of due process concerns raised by the interested parties," including the chairman of the Fort Berthold Allottee and Land & Mineral Owners Association, according to a 12 March BIA document which was submitted as part of the Marathon lawsuit.
The parties' due process concerns were compounded because of Covid-19-related BIA office closures and enhanced security protocols in Washington, DC, before and after the presidential inauguration, which substantially hindered mail delivery services, causing documents, filings, and requests by the interested parties to cross each other in the mail, the BIA said in the 12 March document.
By Eunice Bridges
