The legal long shot that could shut down Dakota Access

By Mike Soraghan | 04/09/2024 06:28 AM EDT

The Standing Rock Sioux Tribe is eyeing a legal strategy that hinges on the pipeline developer’s federal debarment.

Activists gather outside the Army Corps of Engineers office.

Activists gather outside the Army Corps of Engineers office in 2017 at a protest held by the Standing Rock Sioux Tribe. The tribe is mulling a new strategy in its long legal fight against the Dakota Access pipeline. Alex Wong/AFP via Getty Images

The tribe fighting to shut down the Dakota Access pipeline has new ammunition in its long legal battle: The operator needs a federal easement, but it’s barred from doing business with the government.

Energy Transfer has been operating Dakota Access for years under a lake managed by the federal government. But its original easement was struck down by a court — and the Standing Rock Sioux Tribe argues that the company’s federal “debarment” means it isn’t eligible for a new one.

Experts say it’s a legal long shot — but not an impossible one.


“It’s plausible, possible, but maybe not probable,” said Robert Meunier, who was a top debarment official at EPA and led the Office of Management and Budget’s Interagency Suspension and Debarment Committee. Still, he said, “It sounds like that company may have a major problem.”

The debarment — which has not been previously reported — stems from Energy Transfer’s checkered environmental record, which includes spills, leaks and an explosion during construction of pipelines in Pennsylvania. It provides a new opening for a legal case that could have far-reaching repercussions: Dakota Access carries about 6 percent of the country’s daily oil production and plays an outsize role in the national debate over climate and domestic energy production.

Tribal officials have contacted EPA, which issued the debarment, to outline their objections and have laid out their arguments in public filings.

But the tribe has not yet formally raised the issue in their litigation with the Army Corps of Engineers. Notably, the judge in the existing case ordered the pipeline “drained of oil” in 2020, only to be overruled by a higher court.

“We’re gathering our quivers and our arrows to continue to fight and stop the Dakota Access pipeline in any way we can,” Doug Crow Ghost, the tribe’s water resources director, said in an interview. “We’re trying to figure out how this debarment can play a role in a lawsuit.”

Construction of the 1,172-mile Dakota Access pipeline inspired intense protests by thousands of people in 2016 and 2017. The bitter fight spurred a debate about tribal treaty rights and the costs of the United States’ newfound abundance of oil.

Tribal officials have tried for years to shut down the pipeline by arguing that the Army Corps did an inadequate environmental review when granting the original easement for Lake Oahe, the tribe’s primary water supply. For the first time, they may go after Energy Transfer directly, suggesting that the company’s environmental record could haunt its highest-profile asset.

Energy Transfer is a sprawling Dallas-based empire of oil and gas infrastructure led by a major former President Donald Trump donor, Kelcy Warren, and has more than 125,000 miles of pipelines. A spokesperson for the company did not respond to requests for comment. The Army Corps also did not respond to requests for comment.

EPA officials declined to comment on whether the debarment action might lead to the Army Corps shutting down Dakota Access.

“EPA’s Suspension and Debarment Program does not make determinations about how exclusions are applied,” spokesperson Remmington Belford said in an emailed statement.

‘Trying to get it right’

EPA proposed debarment of Energy Transfer and three corporate affiliates in October 2022. While the decision hasn’t been finalized, the company is barred from new federal contracts in the meantime.

The debarment resulted from the company’s no-contest plea to criminal environmental charges stemming from the construction of the Mariner East 2 methane pipeline and a pipeline explosion northwest of Pittsburgh in 2018.

Such debarments are commonly understood to prevent companies from contracting to sell goods or services anywhere in the federal government. But the tribe is arguing that a pipeline easement amounts to a contract with the Army Corps, making Energy Transfer ineligible.

Robert Saunooke, a North Carolina lawyer who has long represented tribes, said EPA’s debarment should prevent the corps from issuing a permit, but said he doesn’t expect tribes to get a fair hearing in U.S. courts.

“I think it’s a novel approach,” Saunooke said. “I don’t think the court will rule in their favor.”

The tribe’s strategy couldn’t get out of the starting gate if Dakota Access had an existing easement. But its easement was canceled in 2021 after an appeals court agreed with U.S. District Judge James Boasberg that the Army Corps’ environmental reviews of the project had been inadequate, particularly in addressing the risks of spills and leaks.

The easement has not been reinstated. But the Army Corps, which operates Lake Oahe as part of a vast Missouri River flood control project, has allowed oil to continue to flow across its land.

The Army Corps is currently weighing whether to grant Energy Transfer a new easement for the pipeline. As part of that, the agency issued a new analysis last year, called a draft environmental impact statement (DEIS). It discounts much of Energy Transfer’s spill record as irrelevant.

The tribe cited the debarment in its December comments to the corps on the DEIS. The 416-page comment begins with the statement, “The Dakota Access Pipeline is unsafe and is operating illegally. It must be shut down immediately.”

The comments also hinted at potential challenges based on treaty rights, insufficient spill response planning and damage to burial grounds during construction.

The Army Corps did not recommend any specific course of action in the DEIS. Instead, it laid out several options for the 1.02-mile portion of the pipeline that runs under Lake Oahe. Those include allowing the pipeline to operate as is, shutting it down, adding features to protect groundwater and rerouting it.

A recommendation on the easement could come in a final EIS. Michael Connor, assistant secretary of the Army for civil works, told lawmakers in February that the Army Corps is “still on track” to issue the document this fall.

“I understand the frustration with how long it’s taken,” Connor told the Senate Environment and Public Works Committee. “As an example, though, when we try and take a shortcut and do an environment assessment as opposed to an EIS, we then get litigation and setbacks. … We’re trying to get it right.”

The agency’s decision on the easement could be issued 30 to 60 days after a final EIS, putting it shortly before or after the presidential election. Standing Rock officials are expecting that the Army Corps will decide to restore the easement agreement and allow Dakota Access to keep operating.

While most debarment cases are finished in 30-45 days, the Energy Transfer case has dragged on for a year and a half, suggesting extended negotiations.

The debarment was disclosed by Energy Transfer in a filing with the Securities and Exchange Commission in 2023, and in several such filings since. In those filings, the company said none of the four corporate entities targeted have federal contracts but added that it cannot predict whether EPA will expand the debarment to other Energy Transfer entities. The company’s annual report lists more than 350 subsidiaries.

If EPA did expand the debarment, it could hit the company far afield of Dakota Access. Energy Transfer regularly sells oil to the U.S. Strategic Petroleum Reserve. The company’s terminal in Nederland, Texas, is one of four directly connected by pipeline to the SPR facilities. On March 13, Energy Transfer’s Sunoco subsidiary was awarded a contract to sell 1 million barrels into the reserve for $77.43 a barrel.

Debarment is technically not supposed to be punitive against companies, but instead protective of taxpayers. Still, it is also considered a serious black mark on a company’s record, making it difficult to get loans, insurance or other services from other businesses.

Debarment rules are complex. But Meunier said government officials have significant discretion to reduce the scope of a debarment or exempt companies, including to avoid causing problems for federal agencies. They can also broaden it to prevent companies from circumventing the debarment.

If Dakota Access keeps its easement, the Standing Rock tribe could challenge the Army Corps’ decision in court.

“There’s a lot of different ways this could turn out,” Meunier said.