Litigation Update: Dakota Access Pipeline Case Gives Supreme Court Chance for Major NEPA Ruling

The Dakota Access Pipeline is the main conduit through which North Dakota’s rich oil reserves reach America’s refineries. On it depend tens of thousands of jobs, billions in government tax revenues, and affordable gasoline for all Americans. But under a January ruling of the D.C. Circuit Court of Appeals, regulators could shut it down at any time, sending gasoline prices soaring.

The case involves a 1.7 mile segment of the pipeline that goes under Lake Oahe in North Dakota. In granting the permit for that segment, the U.S. Army Corps of Engineers determined that the crossing would have no significant environmental impact under the National Environmental Policy Act. In April 2021, the D.C. Circuit disagreed, ruling that the controversy surrounding the Corps’ permit could render significant otherwise insignificant impacts. It then imposed the draconian penalty of vacating the permit and remanding to the agency for more study. Since then, the pipeline has been operating at the forbearance of the Corps, and hence of the Biden administration.

The pipeline’s owners have petitioned the Supreme Court to review the ruling. At stake is not just this pipeline, but the federal government’s ability to authorize major infrastructure projects of all kinds, including the thousands of solar and wind projects that would be required to meet the Biden administration’s clean energy goals.

The National Environmental Policy Act, or NEPA, requires federal agencies to study the significant environmental impacts of virtually everything they do, such as granting a permit for an infrastructure project. Sometimes agencies determine that the action will have no significant impact, and that a full-blown environmental impact statement under NEPA (which could tie the project up in red tape for years) is not necessary. Under the 1989 Supreme Court ruling in Marsh v. Oregon Natural Resources Council, federal courts must defer to agency findings of no significant impact unless the finding is “arbitrary and capricious.” But the D.C. Circuit appears increasingly willing to ignore that admonition and substitute its own judgment for the agencies’.

NEPA is a good governance statute, but since its passage federal courts have turned the process for authorizing infrastructure projects into the most complex, costly, time-consuming, and risky of any advanced democracy. The Dakota Access case puts these problems in stark relief.

In this case, the agency’s finding of no significant impact required years of study and hundreds of pages. The court’s remand could require many more years and millions in taxpayer resources, just to add hundreds more pages to a study of impacts that the agency has already determined to be insignificant. Moreover, any challenger can make a project controversial, simply by stirring up controversy; if that alone can make an environmental impact significant, agencies will be overwhelmed preparing environmental impact statements that they know are unnecessary.

Even worse is the federal courts’ habit of vacating permits for crucial infrastructure projects over minor omissions. Like Dakota Access, many of those projects are already in operation. Disrupting them can have devastating economic consequences, and environmental ones, too: the alternative to Dakota Access is transport by rail, with a far higher risk of a spill.

Federal courts have lost sight of the crucial public interest in effective agency action, which is vital for both modernizing America’s infrastructure and addressing climate change. The public interest in effective agency action should be a primary consideration in shaping any remedy for NEPA compliance, yet the D.C. Circuit doesn’t even mention it. NEPA was not meant to dictate agency decisions, much less paralyze them altogether, as the law too often does today.

This case gives the Court an opportunity for a major ruling on one of the country’s most impactful environmental laws.