The Dakota Access Pipeline and What It Means

On September 9, 2016, 30 minutes after winning and stopping the Standing Rock Sioux Tribe’s (“Sioux” or “Tribe”) request to enjoin the Dakota Access Pipeline (“DAPL”), the Obama administration upended the rule of law. The Departments of Justice, Army and the Interior issued a joint statement that the U.S. Army Corps of Engineers (“Corps”) “will not authorize constructing the Dakota Access pipeline on Corps land bordering or under Lake Oahe until it can determine whether it will need to reconsider any of its pervious decisions regarding Lake Oahe site under the National Environmental Policy Act (“NEPA”) or other federal laws.” The Administration then asked the company to “voluntarily pause all construction activity within 20 miles east or west of Lake Oahe.”

The DAPL is the latest energy touchpoint. Tribes from all over the U.S. are joining the Sioux as they construct a winter encampment on the Corps-managed land. Neil Young has penned a new anthem, “Indian Givers,” arguing “There’s a battle raging on sacred land/our brothers and sisters have to take a stand.” Green Party presidential candidate Jill Stein and movie actress Shailene Woodley (“The Secret Life of the American Teenager”) have been jailed in support of this energy infrastructure protest.

The DAPL is a 4-state, 1,172 mile pipeline built to transport North Dakota Bakken oil to an Illinois refinery by Energy Transfer, a Texas company. None of the pipeline right-of-way is located on Sioux land, but is within ½ mile of the reservation boundary; over 90% of the right-of-way is on private land. Only 3% of the pipeline requires federal approval and only 1% affects federal waters of the U.S. and, thus, the jurisdiction of the Corps.

The $3.8 billion pipeline is 60% complete at a cost of $1.6 billion dollars. The Corps right-of-way at issue is under Lake Oahe, a flood control project managed by the Corps on land that once was part of the Sioux reservation.

The DAPL needed a number of Clean Water Act (“CWA”) permits from the Corps. On July 25, 2016, the Corps issued its Final Environmental Assessment for 200 crossings (37 miles) of jurisdictional water of the U.S. under Nationwide Permit #12 (“NWP 12”). The CWA NWP 12 authorizes pipeline construction where the construction will affect no more than a half-acre of regulated waters at any single crossing. In addition, the Corps had to analyze several Rivers and Harbors Act of 1899 (33 U.S.C. § 408) section 408 permits including the one at issue to cross a federal flood control project, Lake Oahe.

Any “federal action” under NEPA and “federal undertaking” under the National Historic Preservation Act (“NHPA”), like the CWA permits here, triggers compliance with the procedural requirements of NEPA and NHPA. NHPA § 106, among other things, requires federal agencies to “consult” with Native Americans on impacts of “undertakings” to historical and cultural resources. The consultation is required whether or not the action is on reservation land – an historic or spiritual connection to the land suffices. Compliance is the act of consultation; consensus or approval by the Tribe is not required. The Corps approach is to consider each separate pipeline crossing as a single “undertaking” for NHPA purposes, but does not treat the entire pipeline as one undertaking. Therefore, each separate crossing has a narrow geographic focus (“area of potential effect”) for NHPA consultation.

In the Tribe’s injunction request to the D.C. District Court, the Sioux argued that the Corps did not adequately consult and that construction of the pipeline in this area threatens graves and sacred sites. The court in an exhaustive analysis of the Corps consultation action found that “this is not a case about empty gestures . . . the Corps and the Tribe engaged in meaningful exchanges that in some cases resulted in concrete changes to the pipeline’s route.”

For the Sioux, the inadequacy of the consultation was its crossing-by-crossing focus. The Tribe argued that consultation should focus on the entire length of the pipeline. Because the Corps refused this focus for the consultation, the Tribe would not formally consult. The Advisory Council on Historic Preservation, a federally chartered entity with a NHPA-directed role to play in consultations, became involved and disputed the Corps’ assertion that the entire pipeline was not subject to the Corps’ jurisdiction.

The current status of the DAPL is that the several emergency injunctions of construction for portions of the pipeline on either side of Lake Oahe have been lifted. The company continues its pipeline construction on fee land despite the Administration’s renewed request that they voluntarily stand down. The D.C. District Court is poised to consider the case on the merits, while the D.C. Circuit prepares to consider the appeal of the D.C. District Court’s September denial of the injunction. Meanwhile, the Administration has begun a nationwide consultation process with Native Americans to improve the NHPA consultation process. The Corps has told the court that it will make a decision on the Section 408 permit for the Lake Oahe crossing in “weeks not months,” but cautions that its decision could require additional process. This could include supplemental NEPA, an environmental impact statement (“EIS”) or additional NHPA consultation. It is anticipated that such action will occur after the first Tuesday in November.

But this case is bigger than the DAPL. It represents the latest stage in the 350.org “Keep It in the Ground” movement to stop not only oil and gas development but the necessary infrastructure to transport it to market. Over the last few years, oil and natural gas pipelines have faced environmental and climate change opposition across the U.S. In October, climate activists targeted 5 cross-border pipelines transporting Canadian oil sands petroleum to U.S. markets by shutting down valves. The “Keep It in the Ground” movement is an effort with serious safety and economic implications for the oil and gas industry.

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Department of Transportation Proposes Rules Expanding Safety Regulations for Gas Gathering and Transmission Lines

The recent shale boom has greatly increased the amount of natural gas produced and transported across the country’s network of pipelines in recent years. Unfortunately, the increase in production has resulted in several significant environmental and safety incidents, including a widely reported 2010 gas pipeline explosion in San Bruno, California, that killed 8 people and destroyed more than 100 homes. As a result, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), an agency of the Department of Transportation (“DOT”) established in 2004 tasked with regulating gas gathering and transmission lines, issued a major and controversial Notice of Proposed Rulemaking (hereinafter, the “Proposal”) on March 17, 2016, which would revise the safety and monitoring standards pertaining to the regulation of onshore natural gas pipelines.

The stated intent of the Proposal is to clarify and broaden the scope of safety regulations, including the implementation of a standardized Integrity Management (“IM”) regulatory structure that governs risk-based integrity assessment, repair, testing, and validation of gas gathering and transmission lines. The 549-page Proposal addresses congressional mandates set forth in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 and six National Transportation Safety Board recommendations, and contains major and minor changes that are intended to assert the PHMSA’s control over the design, implementation, operation, maintenance, and repair of the pipelines. The PHMSA believes that, in addition to improved public safety, the Proposal will significantly reduce methane and carbon dioxide gas emissions by lowering the number of environmental incidents that have occurred with the increases in production.

However, these benefits will come at a high cost to the industry. Experts expect compliance with these changes to cost the industry more than $40 million dollars a year due to high costs stemming from the age and lack of existing information on many miles of pipelines constructed prior to 1970 and the increased regulation of previously exempt pipelines, additional natural gas gathering pipelines, and pipelines located in moderately populated areas. Further, the Proposal expands the PHMSA definition of a “gathering line”, which will subject many previously unregulated lines to increased testing and monitoring. Industry analysts are also concerned with potential service disruptions related to the implementation of these new regulations.

Comments may be submitted within 60 days after the Proposal is published in the Federal Register as a Notice of Proposed Rulemaking. Due to the number of extensive changes to the current regulatory structure, the Proposal is likely to generate many comments from the industry, environmental interest groups, state regulatory authorities, and safety advocates. As a result, the Proposal could change greatly before it is finalized.

Some of the key components of the Proposal are:

• Increased IM requirements will be required for more categories of pipelines, including many that were previously exempt

• Additional reporting of incidents and unsafe conditions, pressure testing, and new design requirements for previously exempt facilities, including those built prior to 1970

• Removal of reporting exemptions for gas gathering lines

• Increased IM testing, inspection, monitoring and repair criteria for pipelines in densely-populated areas, defined as High Consequence Areas (“HCA”)

• Creation of Moderate Consequence Areas (“MCA”), which will be subsets of non-HCA pipeline locations, defined as an area containing five or more buildings “intended for human occupancy” and certain highway and street rights-of-way, and the required assessment, periodic assessment, and remediation of discovered defects of the same (Note that MCAs will be less heavily regulated than HCAs)

• Increased requirements for collecting, validating, and integrating pipeline data, including the monitoring and recording of the physical and operational characteristics of pipelines where records are currently not available

• Disaster inspections that will require the operator to inspect all pipelines that may have been adversely affected to detect any damages in the event of a natural disaster, such as a hurricane, flood, earthquake, landslide, or other adverse natural occurrence

The Proposal is available as written on the PMHSA website here, and has been provided to the Federal Register for publication. Please contact any of our attorneys at Welborn Sullivan Meck and Tooley, P.C. if you have questions or if you need assistance filing a comment on the Proposal upon its publication in the Federal Register.

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BLM Buries Change to MLA Rights of Way in Wind and Solar Leasing Change

At the end of September 2014, BLM released the proposed rule to create a competitive leasing process for solar and wind energy development on public lands. While most of the proposed rule relates to the renewable energy right-of-way (“ROW”) procedures under the Federal Land Management Policy Act (“FLPMA”) regulations (43 CFR 2800) announced in 2012, buried in the voluminous proposal are changes to oil and gas pipeline rights of way under the Mineral Leasing Act (“MLA”). 43 CFR 2880.

Under the changes to Part 2880, BLM is proposing pre-application requirements and an increase in fees for all oil and gas pipelines 10 inches or more in diameter. (The rule adds similar new requirements for transmission lines of 100kV or greater). According to BLM, changes to Part 2880 are necessary to ensure consistency between MLA ROWs (governed by Part 2880) and the changes proposed for wind and solar ROWs (governed by Part 2800). BLM states that these changes are necessary because authorizations for any pipeline 10 inches or more in diameter are “generally large-scale operations that require additional steps to help protect the public land.”

The changes to Part 2880 include additional bonding requirements (such as identification of acceptable forms of bond), although BLM still retains discretion as to whether a bond will be required. The proposed rule also contains an increase in ROW application processing costs, which are determined based on a proposed table of costs accounting for project components. Under the proposed rule, BLM would be permitted to collect reimbursement from pipeline operators for the actual costs incurred in processing ROW applications, including pre-application expenditures.

The proposed rule also contains detailed pre-application procedures for project proponents, largely aimed at developing coordination between Federal, State, tribal and local governments that may be affected by the project. Specifically, for all pipelines over 10 inches in diameter, the proposed rule calls for a minimum of two pre-application meetings with interested governmental entities.

BLM proposes to require the submittal of a plan of development (“POD”) prior to, or contemporaneously with, accepting the ROW application. The POD should, at a minimum, contain a statement of purpose and need, a description of the proposed location and associated facilities, identification of the federal and state agencies affected and a summary of operation and maintenance and stabilization and reclamation plans. The comment process closed on December 16, 2014 and the rule is expected before the end of 2015.

The net result of these proposed changes will likely be an escalation in up-front project costs, consisting of both increased application and rental fees and an increase in soft costs associated with pre-project planning and coordination. It remains to be seen whether the increase in initial costs will reduce overall project costs through more efficient up-front planning and coordination.

The Federal Register notice with the text of the proposed rule can be found at: http://blmsolar.anl.gov/documents/docs/FR_Competitive_Leasing_Sep_30_2014.pdf

See Related Post: BLM Proposes Renewable Energy Leasing and Rights-of-Way Regulations

For more information about public lands and rights of way, please contact Nora Pincus at npincus@wsmtlaw.com

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