Updated: 1:05 p.m.
A federal judge on Monday sided with the Standing Rock Sioux Tribe and ordered the Dakota Access pipeline to shut down until more environmental review is done.
U.S. District Judge James Boasberg said in April that the pipeline, which has been in operation three years, remains “highly controversial” under federal environmental law, and a more extensive review is necessary than the environmental assessment that was done. In a 24-page order Monday, Boasberg wrote that he was “mindful of the disruption such a shutdown will cause,” but said he had concluded that the pipeline must be shut down within 30 days and drained of oil while the environmental review happens.
“Clear precedent favoring vacatur during such a remand coupled with the seriousness of the Corps’ deficiencies outweighs the negative effects of halting the oil flow for the thirteen months that the Corps believes the creation of an EIS will take,” Boasberg wrote.
Crude from North Dakota's Bakken oil field began flowing through the $3.78 billion pipeline in June of 2017, after thousands of protesters gathered for months near the Standing Rock Sioux reservation in an effort to stop the project.
“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 Standing Rock Tribal chairman Mike Faith. “This pipeline should have never been built here. We told them that from the beginning.
The project initially stopped after the Obama administration denied permits for the DAPL crossing of the Missouri River in December 2016, and ordered a full environmental impact statement.
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President Trump reversed the order soon after taking office in January 2017 and permits for the project were issued.
The Standing Rock Sioux Tribe challenged the permits in court, contending the federal government did not adequately analyze the potential environmental impact of the pipeline crossing the Missouri River, and Judge Boasberg ruled in March 2020 the USACE must conduct a full environmental review.
Boasberg had ordered both parties to submit briefs on whether the pipeline should continue operating during the new environmental review.
Energy Transfer, the company that owns the pipeline which transports about 570,000 barrels of oil a day, said in court filings it could lose as much as $643 million in the second half of 2020 and $1.4 billion in 2021 if the pipeline was shut down.
Dakota Access said “producers would have to shut-in between 3,460 and 5,400 wells, stranding up to 34.5 percent of North Dakota crude production.”
Tribes responded that those projections are “wildly exaggerated” because, following “a precipitous collapse in oil prices, demand, and production” caused in part by the COVID-19 pandemic, “production in North Dakota is down significantly, with more than 5,000 wells shut down.
Dakota Access Pipeline owner, Dallas, Texas-based Energy Transfer said it will seek a stay of the order and if the stay is not granted will pursue an expedited appeal at the Federal Court of Appeals.
"We will be immediately pursuing all available legal and administrative processes and are confident that once the law and full record are fully considered, Dakota Access Pipeline will not be shut down and that oil will continue to flow," the company said in a statement.
A North Dakota oil industry official said if the ruling stands, it could have a long term effect on the North Dakota oil industry, already hit hard by slumping crude prices caused by the COVID-19 pandemic.
"You've got to scramble to find new markets, you've got to scramble to find more storage, so the long term impact on drilling and completions is real in terms of North Dakota's economy and jobs," sayd Ron Ness, President North Dakota Petroleum Council.
Thousands of North Dakota Bakken oil wells have been shut down because of the low prices, but the state is still producing about one million barrels of oil a day according to the most recently available data. Much of 570,000 barrels per day now transported by the Dakota Access Pipeline could shift to rail transportation.
"Rail facilities are available and have virtually been dormant for the most part, but I suspect starting today you're going to see the ramp-up of rail, because pre-DAPL, we were shipping almost 700,000 barrels a day by rail," said Ness.
Shipping oil by rail is more expensive, and would further dampen interest in North Dakota oil production, he said.
In court documents, the U.S. Army Corps of Engineers indicated the environmental review could be completed in 13 months, a timeframe significantly shorter than the average environmental review which takes several years.