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New York (CNN Business)The Dakota Access Pipeline must shut down by August 5 during an in-depth environmental review of the controversial project, a district court ruled Monday in a defeat for the Trump administration.
The rare shutdown of an operating pipeline marks a major win for the Standing Rock Sioux Tribe and environmental groups that have fought fiercely for years against the oil pipeline.
In its decision, the United States District Court for the District of Columbia vacated an easement granted by the US Army Corps of Engineers that allowed Dakota Access to build a segment of the pipeline beneath Lake Oahe in North Dakota and South Dakota.
The court had previously ruled the Corps violated the National Environmental Policy Act when it granted the easement because it had failed to produce an Environmental Impact Statement.
Now, the court is saying the pipeline must be shut down and emptied while the environmental impact report is prepared. The Corps has said it will take approximately 13 months to create such a report.
"Fearing severe environmental consequences, American Indian Tribes on nearby reservations have sought for several years to invalidate federal permits allowing the Dakota Access Pipeline to carry oil under the lake," Judge James Boasberg wrote in the ruling. "Today they finally achieve that goal — at least for the time being."
Stretching more than 1,100 miles, the pipeline carries crude from the Bakken shale oil field of North Dakota to a key hub in Illinois, where it can be transported to refineries on the Gulf Coast or East Coast.
The court acknowledged that the shutdown will cause "disruption," but said the "seriousness of the Corps' deficiencies outweighs the negative effects of halting the oil flow for the thirteen months" the review is estimated to take. The National Environmental Policy Act of 1970 (NEPA) requires agencies to consider the environmental consequences of their actions, including permit approvals.
"Today is a historic day for the Standing Rock Sioux Tribe and the many people who have supported us in the fight against the pipeline," said Mike Faith, chairman of the Standing Rock Sioux Tribe, said in a statement. "This pipeline should have never been built here. We told them that from the beginning."
Energy Transfer (ET), which developed the pipeline, did not immediately respond to a request for comment. Shares of the energy company tumbled 7% Monday, a sharp selloff compared with a broad rally in the stock market. Analysts say Energy Transfer will likely appeal the shutdown order.
If Biden wins, pipeline could be in trouble
The ruling marks a setback for President Donald Trump's energy dominance agenda. Within days of taking office in January 2017, Trump signed executive actions that advanced both Dakota Access and the Keystone XL pipeline.
"The court's frustration with what it regards as the Trump administration's lackadaisical handling of NEPA reviews has finally boiled over," Bob McNally, president of consulting firm Rapidan Energy Group, told CNN Business in an email.
The ruling suggests the fate of the pipeline could now be linked to the November presidential election.
"If Donald Trump wins DAPL could restart after 10-12 months assuming a robust NEPA review was followed," said McNally, a former energy official under President George W. Bush. "If [Joe] Biden wins, we think DAPL is effectively dead."
After months of protests and lawsuits, the Dakota Access Pipeline started operating in June 2017. The $3.7 billion project spans 1,172 miles and carries crude from North Dakota's shale fields to Illinois.
Opponents have argued the pipeline could contaminate drinking water and destroy burial and prayer sites of Native Americans.
"It took four long years, but today justice has been served at Standing Rock," said Jan Hasselman, an Earthjustice attorney representing the Standing Rock Sioux Tribe, said in a statement. "If the events of 2020 have taught us anything, it's that health and justice must be prioritized early on in any decision-making process if we want to avoid a crisis later on."
'Terrible ruling'
Supporters of Dakota Access slammed the decision.
"Today's order to shut down Dakota Access jeopardizes our national and energy security and raises significant concerns for the future of American energy infrastructure investment," Craig Stevens, a spokesman for the GAIN Coalition, which promotes key infrastructure investments, said in a statement.
Stevens noted that since launching three years ago, the Dakota Access Pipeline has safely transported more than half a million barrels of crude per day.
"Despite its safe operation and having received the necessary permits and approval from both state and federal regulators, Judge Boasberg has decided to side with environmental activists to shut in our nation's critical natural resources," Stevens said.
Republican Senator Kevin Cramer of North Dakota warned of "devastating consequences" to his state and to the nation's energy security.
"This terrible ruling should be promptly appealed," Cramer wrote in a statement.
The ordered shutdown of Dakota Access comes just a day the cancellation of the Atlantic Coast Pipeline, a natural gas pipeline announced in 2014. Dominion Energy and Duke Energy (DUK) said they decided that ongoing delays, litigation and expected cost increases threatened the viability of the project, which faced intense criticism and legal challenges from environmental and other groups.
Richmond, Virginia-based Dominion (D) is pledging to become a "pure-play" regulated clean energy company. The utility announced a $10 billion deal Sunday to sell natural gas transmission and storage assets to Warren Buffett's Berkshire Hathaway (BRKA).
The American Petroleum Institute, which represents oil and gas companies said the ruling proves America's permitting system is broken.
"Between the Atlantic Coast Pipeline cancellation and now the ruling to shut down the Dakota Access Pipeline -- we are deeply troubled by these setbacks for US energy leadership," said Mike Sommers, CEO of the American Petroleum Institute. "Our nation's outdated and convoluted permitting rules are opening the door for a barrage of baseless, activist-led litigation, undermining American energy progress and denying local communities the environmental, employment and economic benefits modern pipelines provide."
