District Court Orders Shutdown of Dakota Access Pipeline by August 5

A significant opinion involving the Dakota Access Pipeline was issued July 6 in Standing Rock Sioux Tribe v. United States Army Corps of Engineers, Case No. 1:16-cv-01535 pending in the United States District Court for the District of Columbia.  The decision vacated the Dakota Access pipeline easement running beneath Lake Oahe during a remand for development of an environmental impact statement (“EIS”) and ordered that Dakota Access shut down the pipeline by August 5, 2020.  

In a prior opinion, the District Court found that the Army Corps of Engineers (the “Corps”) violated the National Environmental Policy Act (“NEPA”) in determining that an EIS for the pipeline easement running under Lake Oahe was unnecessary.  Because of this, the matter was remanded for completion of an EIS. 

During remand, the District Court considered the status of the easement and the oil – namely, whether the pipeline easement should be vacated and the flow of oil halted during remand. The District Court’s analysis focused on application of Allied-Signal v. United States Nuclear Regulatory Commission, 988 F.2d 146 (D.C. Cir. 1993), which provided a two-factor test (the “Allied-Signal Factors”) on whether to vacate a deficient agency action during remand.  The first Allied-Signal Factor evaluated the seriousness of the deficiencies of the Corps’ decision not to require an EIS.  The second Allied-Signal Factor considered the disruptive consequences if the pipeline easement was vacated during remand.  While the District Court acknowledged the significant disruptive consequences, it concluded that the first Allied-Signal Factor “weighs strongly” in favor of vacatur “given the seriousness of the Corps’ NEPA error.”  The District Court further relied the presumption that vacatur on remand is “ordinary practice.”  Concluding that vacatur was the “only appropriate remedy,” the District Court vacated the easement and ordered the pipeline to be shut down and emptied within 30 days. 

This decision is likely to result in considerable economic and environmental consequences, including substantial job losses.  The District Court concedes that it “will cause significant disruption to [the Dakota Access Pipeline], the North Dakota oil industry and potentially other states.”  It reflects the challenging regulatory environment surrounding pipeline projects both now and in the future.  It also sets the tone for obtaining future federal permits for pipeline operations:  “When it comes to NEPA, it is better to ask for permission than forgiveness.”  The District Court’s decision magnifies the significant impact that a successful challenge to a federal agency’s decision under NEPA can practically impose.  Here, the remedial obligations extend well beyond the environmental review of the federal agency – in this case, vacating the decision to issue an easement under the Mineral Leasing Act. This result emphasizes the importance of the analysis under NEPA and the risks that may be imposed on pipeline businesses and operators acting in reliance on a federal agency’s decision under NEPA.

In response to the District Court’s decision, Dakota Access filed an emergency motion seeking a provisional stay of the District Court’s order, which was denied.  Dakota Access has filed a Notice of Appeal, and it will seek a stay pending appeal.