The Dakota Access Pipeline fight is far from over

No matter what, the Standing Rock Sioux Tribe just got an incredible victory — but the pipeline might still be built.

Dan Nanamkin of the Colville Nez Perce Native American tribe drums with a procession through the Oceti Sakowin camp after it was announced that the U.S. Army Corps of Engineers won’t grant easement for the Dakota Access oil pipeline. CREDIT: AP Photo/David Goldman
Dan Nanamkin of the Colville Nez Perce Native American tribe drums with a procession through the Oceti Sakowin camp after it was announced that the U.S. Army Corps of Engineers won’t grant easement for the Dakota Access oil pipeline. CREDIT: AP Photo/David Goldman

Water protectors are celebrating.

House Speaker Paul Ryan is fuming.

And Energy Transfer Partners is promising that the Dakota Access Pipeline will go forward as planned.

On Sunday, the Army Corps of Engineers determined that one piece of the pipeline needs a full environmental impact study (EIS), a months-long process that looks at whether the line is appropriately sited, where alternative routes could go, and who will be impacted. The EIS is required for a length of the pipeline that would run under Lake Oahe on the Missouri River, a half mile north of the Standing Rock Reservation.

But what comes next for the $3.7-billion pipeline, capable of transporting half a million barrels of oil daily across four states, is not simple.

On one side, you have money, President-elect Donald Trump, and a network of fossil fuel infrastructure. On the other, you have protesters, lawyers, and time.

Trying to Trump this decision would be a bad idea

In the immediate aftermath of the announcement, environmentalists were quick to wonder if this was yet another Obama administration decision that the president-elect can reverse come January 20.

There is good reason to be concerned. Trump has publicly come out on the side of the pipeline, even reaffirming his support Monday and saying the administration will “review the full situation” after the inauguration. Trump is personally invested in both ETP and a company that will eventually own 25 percent of the completed pipeline. He clearly wants the project to go forward.

Ordering his administration to reverse the Army Corps’ decision (even though, to be clear, he could do so) would be a mistake, legal experts say.

“It can be undone, and it can be undone pretty quickly,” Shannon Buccino, director of the land and wildlife program at the Natural Resources Defense Council, told ThinkProgress. “But [the administration would] have to justify that decision, they can’t do it arbitrarily.”

There is a mountain of paperwork to get through

Tribe members and supporters, including many indigenous groups, have been protesting the Lake Oahe section for months, clashing with militarized authorities and drawing national attention to the project. They have also sued the Army Corps over its handling of the permit process.

The Standing Rock Sioux Tribe has argued that the Army Corps “violated multiple environmental and historic preservation statutes, focusing on the decision to reroute the pipeline from Bismarck, North Dakota to the doorstep of the Standing Rock reservation without an adequate environmental analysis and consultation.”

Their lawsuit — along with the protests — is what triggered the Army Corps’ review of their permitting decision. Ultimately, the agency concluded that “a decision on whether to authorize the Dakota Access Pipeline to cross Lake Oahe at the proposed location merits additional analysis, more rigorous exploration and evaluation of reasonable siting alternatives, and greater public and tribal participation and comments.”

Native American tribes are sovereign states, and permitting agencies are required to consult with the tribes on any environmental issues.

In addition, it simply makes sense to conduct a full environmental review for a project of this size, said Jan Hassleman, an attorney with Earthjustice who is representing the tribe.

“The very idea that you would build a 1,200 mile long pipeline without an environmental impact statement strikes most people as… absurd,” Hassleman told ThinkProgress.

There will be a hearing later this week regarding the tribe’s lawsuit. Hassleman said he wasn’t sure what to expect from the company at this point. ETP has already announced that it will challenge the Army Corps’ decision in court — it could also just move ahead with construction.

“I would be pretty shocked, but I have seen some pretty shocking things,” Hassleman said. “I wouldn’t have expected that they would sic pitbulls on protesters or drench them with fire hoses in subzero temperatures.”

The most likely outcome of the EIS is that the pipeline is, in fact, rerouted. There is an alternative route that ETP considered that takes the line 10 miles north of Bismarck.

“It would be very odd to go through this process and come to the end and say, we got this right, and we are going to put this on the tribe’s doorstep,” Hassleman said.

Time — and money — is on pipeline opponents’ side

ETP is in a bit of a sticky situation. Delays could put the project’s financing at risk (it has told the court that if the project is not completed by January 1, shipping contractors could back out). But if it moves ahead with construction without a permit, its bank financing could be at risk, since financing agreements almost always stipulate that the loan party must be in good standing.

“Some of the urgency that the company has shown — setting dogs on protesters, that kind of thing — it may have more been out of fear, concern that if they do not move forward quickly, they will lose their contracts,” said Clark Williams-Derry of the Sightline Institute, co-author of a November report on the high-risk financing behind the pipeline.

In addition to the contractual issues — which are only at risk should the other parties choose to invoke cancellation clauses — the pipeline is not on solid financial footing. Market forces are already undermining the financial viability of a pipeline bringing crude oil from North Dakota.

“The financial environment for ETP looks a lot more risky today when they were first proposing the pipeline,” Derry-Williams said.

His analysis suggests that “DAPL’s capacity could become superfluous by mid-2017” and that “DAPL may represent a substantial overbuilding of the Bakken region’s oil-transport infrastructure.”

ETP’s own CEO, Kelcy Warren, has said that overbuilding is part and parcel of the oil industry. But there are multiple market factors at work against the pipeline. Since Dakota Access was proposed in 2014, oil prices have fallen dramatically, even while production from the Bakken formation has decreased.

CREDIT: Energy Information Administration
CREDIT: Energy Information Administration

“The world has changed so radically in the last two and a half years,” Williams-Derry said. In 2014, when DAPL contracts were drawn up, oil from the Bakken formation was flowing freely — and oil prices were over $100/barrel. As of Friday, oil was trading at about $46/barrel.

“There is a risk that prices will go up and a risk that prices will go down. It’s not like you know for sure which way the market is going. What this points to is not a certainty of oil prices, what this points to is how risky oil investments are,” Derry-William said.

It’s not all bad news for DAPL. OPEC, the international oil production group, recently agreed to limited production, thrusting global oil prices back up, at least temporarily. Meanwhile, new data from the Energy Information Administration shows that oil exports from the United States have gone up 1,000 percent since 2009. Continued exports, along with a perhaps artificially buoyed market, could keep production from North Dakota high enough to avoid bottoming out DAPL’s bottom line.

But Williams-Derry said that this current market volatility is, while far from predictive, certainly worrying for investors in the project.

“I think the shippers should be shaking right now,” Williams-Derry said. “They could wind up paying for oil they are not producing.”

A crowd gathers in celebration at the Oceti Sakowin camp after it was announced that the U.S. Army Corps of Engineers won’t grant easement for the Dakota Access oil pipeline. CREDIT: AP Photo/David Goldman
A crowd gathers in celebration at the Oceti Sakowin camp after it was announced that the U.S. Army Corps of Engineers won’t grant easement for the Dakota Access oil pipeline. CREDIT: AP Photo/David Goldman

The big winner is the Standing Rock Sioux Tribe, on behalf of all indigenous communities

Environmentalism rarely gets a straightforward win. The Keystone XL permit rejection opened the doors for a multi-billion dollar lawsuit against the United States. The Shell decision to back out of the Arctic did not stop drilling there. The Paris climate agreement is on shaky ground.

But the Standing Rock Sioux Tribe might have just triggered a complete rethinking of how the U.S. government interacts with the Indian nations.

“This is not just an amazing victory for Standing Rock and the Oceti Sakowin — but also for the many other Tribal Nations, grassroots Indigenous communities and millions of Americans around the country who have stood in solidarity with us here in person, at rallies around the country, and through phone calls and letters,” said Dallas Goldtooth, from the Indigenous Environmental Network. “This is a victory for organizing.”