State of North Dakota Corrects the Record on Impact of Potential DAPL Shutdown

The State of North Dakota recently filed a brief with the United States District Court for the District of Columbia emphasizing the detrimental impact shutting down the Dakota Access Pipeline (DAPL) would cause, and correcting inaccurate statements made in a recent brief filed by several tribes and a report by Dr. Marie Fagan – both of which call for the pipeline’s operation to be suspended.

This comes after a federal judge ruled in March that the U.S. Army Corps of Engineers must conduct an Environmental Impact Statement (EIS) on DAPL, despite its safe operations for three years – safely transporting crude oil from the Bakken region in North Dakota to a the Patoka Oil Terminal in southern Illinois. Further, the Corps had already conducted an Environmental Assessment (EA) on the project before issuing approval, which determined a “Finding of No Significant Impact” (FONSI). Now, activists and tribes are calling for the pipeline to be shut down until the additional review is complete, which could take more than a year.

Suspending DAPL’s operations would be a costly mistake for both the economy of North Dakota and for our nation’s energy security. Below are some key excerpts from the State of North Dakota’s latest brief in support of DAPL:

As an initial issue, North Dakota takes exception to the Tribes’ position that the disruptive consequences on North Dakota and its citizens are of no moment because another state stands to benefit from DAPL’s closure… Because another state may benefit is hardly reassuring to North Dakota, whose producers could lose billions of dollars in 2020 and 2021 if DAPL is shut down, much less provide comfort to the North Dakotans who may lose their livelihoods or solace to all of North Dakota’s citizens who will suffer as state programs are imperiled by drastically reduced tax revenues. Simply put, shutting down DAPL will have a significant impact on North Dakota and its citizens.

North Dakota is set to rebound from this short-term crisis, and a shutdown while North Dakota is at the lowest point of the downturn will only serve to amplify economic losses that have already occurred and prolong the anticipated recovery.

All of North Dakota’s efforts toward rapid recovery, however, will be for naught if the Court orders DAPL to be shut down. Crude oil production in North Dakota was increasing through 2019 and the first months of 2020, averaging more than 1,400,000 bpd in the year leading up the COVID-19 crisis. To return to those levels and maintain the State’s pace toward recovery alongside the global market, North Dakota needs DAPL to remain open. DAPL is still transporting roughly 40% of Bakken production volumes for the State. And, DAPL’s own data suggests that production volumes for June and July are already showing signs of a significant rebound based on increases in nominations for shipments.

North Dakota crude oil producers will lose billions of dollars in 2020 and 2021 if DAPL is shut down. Plaintiffs remarkably claim that any harms resulting from shutting down DAPL would be “minor” and would be “lost in the noise” of the COVID-19 pandemic’s short-term impacts on the demand for crude oil and that now is the “right” time to shut down DAPL. This is wrong, and is unfortunately cavalier about the safety and welfare of North Dakota’s citizens, most importantly because the pandemic’s effects on North Dakota crude oil production are temporary, as evidenced by the fact that production is already beginning to rebound.

Shutting down DAPL in the face of these losses would add far more than “minor” additional harms, including substantial additional job losses and a further reduction in state oil and gas tax revenues. DAPL still is transporting more than a third of Bakken region crude oil production. These shipments are crucial, because it is $5 to $10 cheaper to transport crude oil on DAPL than on other transportation networks, even assuming unrealistically that those networks could transport all of DAPL’s volume.

It is also important to understand that all North Dakota residents—including Plaintiff Standing Rock Sioux Tribe—stand to lose from large reductions in State tax revenues. North Dakota’s general fund supports various public programs and services benefitting all residents, including: Road construction and maintenance; State law enforcement; State parks and recreation areas; Development projects related to the State’s water sources, including the Missouri River; and Healthcare services.

Federal regulators, industry groups, and more than a dozen attorneys general have joined with the State of North Dakota and expressed support with the court that DAPL be able to continue operations while the additional review is conducted. The pipeline was thoroughly studied and permitted before being constructed, and has safely operated for three years. Pipelines like DAPL are the safest, most efficient, and most environmentally-conscious method of transporting the energy that Americans rely on every day. Shutting down DAPL would have severe economic, environmental, and energy security consequences – setting a dangerous precedent for the future of American energy infrastructure development. As North Dakota concluded in their brief:

Simply put, shutting down DAPL would be extremely disruptive to North Dakota’s economy in any economic climate, but the worst possible time to shut down DAPL is in the midst of an economic crisis.