Dakota Access oil pipeline: What happens now?

The U.S. Army Corps of Engineers' announcement Sunday halting construction of the Dakota Access pipeline was met with jubilation among protesters. 

In the biggest blow yet to the much-contested pipeline, the Corps denied an easement for the pipeline to cross Lake Oahe, a Corps reservoir on the Missouri River in North Dakota and the major source of water for the Standing Rock Sioux reservation. That segment remained the only contested portion of the 1,172-mile pipeline, which is almost complete.

Tribal members and others have protested the project for months, worried that a pipeline breach could threaten the drinking water supply.

Protesters celebrate as Army halts Dakota Access pipeline work

"Although we have had continuing discussion and exchanges of new information with the Standing Rock Sioux and Dakota Access, it's clear that there's more work to do," Jo-Ellen Darcy, the Army's assistant secretary for civil works said in a statement Sunday afternoon. "The best way to complete that work responsibly and expeditiously is to explore alternate routes for the pipeline crossing."

Darcy said the pipeline should undergo an environmental impact statement — a process that could drag on for months. The decision means construction will likely not be completed during President Obama's remaining weeks in office.

President-elect Donald Trump's administration, widely viewed as more friendly to energy interests, could reverse the Corps' decision after he takes office Jan. 20.

Standing Rock Sioux Tribal Chairman David Archambault has said he sees a re-route as a major victory, but many protesters have vowed to continue the fight until the $3.8 billion project is shut down.

Could that happen?

Pipeline owner Energy Transfer Partners and its backers don’t think so —  four states and the Army Corps of Engineers granted permits for the pipeline, and construction is more than 92% complete — but opponents remain hopeful.

Here are a few of the areas opponents are focusing on as paths to a possible shutdown.

How the Dakota Access pipeline battle unfolded

1. Standing Rock wins in court

The tribe filed a federal lawsuit against the Army Corps of Engineers during the summer shortly after the agency signaled its intent to approve an easement for drilling under Lake Oahe, a more than 200-mile-long reservoir on the Missouri River that extends from South Dakota into North Dakota.

The tribe asked for an immediate injunction on two grounds:

• That the Corps failed to adequately consult with the tribe to identify historically significant sites along the pipeline route.
• That granting the easement would do irreparable harm to tribal history; parts of the Standing Rock Reservation already were flooded with the creation of the lake in the 1960s.

U.S. District Judge James Boasberg rejected both arguments Sept. 9, saying the tribe was offered the chance to consult but refused until the process neared an end, and that it had no proof the current route would cause irreparable harm.

That doesn’t mean the case is over. The ruling was restricted to the tribe’s claims on alleged violations of the National Historic Preservation Act.

The underlying lawsuit also argues that the Corps’ permitting process violated the Clean Water Act, National Environmental Policy Act and the Rivers and Harbors Act. None of those claims has been fully litigated.

2. The federal government delays or stops the project

Sunday's announcement that more study of the pipeline is required offers another avenue for opponents.

Delays and re-routes add financial strain to pipeline projects and create more openings for opposition, according to Jane Fleming Kleeb of Bold Nebraska.

Kleeb’s group helped push for a re-route of the Keystone XL Pipeline around Nebraska’s Sandhills and the Oglala Aquifer in 2011. That forced that pipeline’s owner, TransCanada, to further study environmental impacts and effects on natural resources and to negotiate with more landowners, she said.

“Whenever a re-route happens, it reopens all those discussions,” Kleeb said.

The continued delays of Keystone XL forced a review hearing at the South Dakota Public Utilities Commission in 2015. Ultimately, President Obama chose to deny a permit for KeystoneXL, and TransCanada has filed a lawsuit.

3. Re-routes or delays could endanger the project’s financial feasibility

Delays alone could do major financial damage to Energy Transfer Partners. The company indicated as much in court filings in the Standing Rock lawsuit.

In an Aug. 18 declaration to the court, Joey Mahmoud, Dakota Access vice president, wrote that the company had committed to completing the pipeline by Jan. 1.

“The long-term transportation contracts give shippers a right to terminate their commitments if (Dakota Access Pipeline) is not in full service per the contract deadline,” Mahmoud wrote.

A delay in the start of operations would cost about $913 million, Mahmoud wrote, rising to more than $1 billion by 2018. Stopping work would cause “grave and irreparable impacts to DAPL (the Dakota Access Pipeline), its workers, the landowners, economy, both the state and federal government and the environment.”

Opponents now speculate that financial harm from protest-related delays alone could be enough to stop the pipeline’s completion.

“It’s pretty clear they’re not going to have oil flowing on Jan. 1,” said Lorne Stockman, research director of the non-profit outfit Oil Change International. “It’s going to happen. They’re going to have to renegotiate those contracts.”

When the project was announced in 2014, the price of oil was $70 to $80 a barrel. The long-term contracts common in the pipeline industry might be more difficult to lock in with oil at $45-$50 a barrel, Stockman said.

The embrace of natural gas and the ramp-up of U.S. energy production have played into the extended price slump, and energy analysts are concerned about long-term lows. The chief financial officer of Royal Dutch Shell, Simon Henry, had said the world will hit peak oil demand within five to 15 years.

“The world in which they would renegotiate those contracts is not the world in which they negotiated the original contracts,” Stockman said.

However, company spokeswoman Vicki Granado said the January date would not affect shipping volumes or the project as a whole.

“There is no Jan. 1 deadline,” Granado wrote in email.

4. Iowa landowners win in court

Most of the attention focused on the Dakota Access Pipeline has been aimed at protest camps in North Dakota, where thousands have visited and hundreds have been arrested in clashes with law enforcement.

But opponents have another front line in their battle against the pipeline: the cornfields and courtrooms of Iowa.

The state has had its own protests and arrests as well, said a former state lawmaker and radio host who opposes the pipeline, Ed Fallon.

“We’ve had more people arrested in Iowa over this than we’ve ever seen, even going back to the Vietnam War,” Fallon said.

Pipeline opponents are using an eminent-domain law that Fallon championed in 2006 in hopes of booting Dakota Access from the state. The law says eminent domain can be used only to take property for defined public purposes.

Water, electricity, and natural gas delivery are explicitly included in the statute. Crude oil is not.

Des Moines lawyer Bill Hanigan represents 15 landowners in a half-dozen Iowa counties where land was taken for pipeline construction through eminent domain.

Hanigan’s clients argue that both Iowa law and the U.S. Constitution bar the use of eminent domain to condemn property for a crude-oil project.

“Crude oil has no value unless it’s refined. It’s a raw material,” Hanigan said. “We need lumber to build homes, so would we condemn farms to build someone a private highway to haul lumber?”

Hanigan believes the already-built pipeline beneath his clients’ property and every barrel of oil that flows through it are considered trespassing.

Hanigan believes the Iowa case, which will be heard later this month, has the potential to shut down the project, but he doesn’t think either side has a clear path to victory — in Iowa or anywhere else.

“It ain’t over,” Hanigan said. “It’s still a big shooting match.”

Contributing: Kevin Hardy, The Des Moines Register. Follow John Hult on Twitter: @ArgusJHult