A flurry of activity in courtrooms and boardrooms over a two-day period this week dealt significant blows to the oil and gas pipeline industry.
Once the dust settled, two things were clear: the Atlantic Coast pipeline is no longer moving forward, and the Dakota Access pipeline is on hold.
The onslaught of lawsuits by environmentalists and Native American tribes against pipeline projects in recent years has proven effective in creating hurdles for an administration and industry keen on rolling back regulations. This week’s rulings mark the latest obstacles.
“This series of cases has shown maybe a potential tipping point, but it’s definitely not something that just sprung … out of the air this past week. This is something that has really been building up for a long time,” said Rachel Pierson, managing director and head of research at Beacon Policy Advisors in Washington.
“Some of the Trump administration’s attempts to expedite permitting for pipelines and other infrastructure has actually even increased some of the delays by allowing openings for these court battles,” she added. “It has definitely become a process where these builders are facing more and more delays, but it’s not specific to just pipelines. It’s something that’s increasing across all infrastructure.”
Environmentalists cheered the results from Sunday and Monday, while energy executives warned of long-term damage.
“It certainly has a potential to send a chilling effect throughout the entire pipeline industry which then has the potential to limit the growth of energy infrastructure,” said Robin Rorick, vice president of midstream and industry operations at the American Petroleum Institute.
The cascade began on Sunday, when the two companies behind the 600-mile Atlantic Coast pipeline backed out of the multibillion-dollar project, citing persistent legal battles, regulations and ballooning costs.
The following day, a federal judge ruled that the Dakota Access pipeline had to be shut down temporarily while the Army Corps of Engineers works to prepare an environmental impact statement for a rule relaxation that allowed it to cross the Missouri River.
That same day the Supreme Court reinstated the use of a permit that’s used to fast-track pipeline construction, except in the case of the Keystone XL pipeline.
Environmentalists hailed the sequence of events as victories that were won because of the nation’s environmental laws.
“A more democratic, inclusive, sustainable energy economy is possible if we follow our laws and listen to the people our decisions impact the most,” House Natural Resources Committee Chairman Raúl Grijalva (D-Ariz.) said in a statement. “Any company thinking of trying to repeat the playbook these companies used to cut corners and steamroll impacted families is now on notice.”
The energy industry, meanwhile, is blaming the setbacks on what it sees as an unnecessarily complex regulatory process, particularly when it comes to permitting.
A permit played a significant role in the decision by Duke Energy and Dominion Energy to cancel their Atlantic Coast pipeline plans over the weekend. A federal judge ruled in April that the Army Corps of Engineers did not follow environmental requirements when it reissued a permit used by the two companies and others to speed up construction.
The American Petroleum Institute says more than 70 projects nationwide were affected by the decision in April.
But just a day after the Atlantic Coast pipeline was abandoned, the Supreme Court reinstated the use of the permit but without extending it to the Keystone XL pipeline, the subject of the original case.
“Today the Supreme Court rejected the Trump Administration’s attempt to skirt the law and ignore environmental protections to ram through a dirty pipeline project,” Marcie Keever, legal director for Friends of the Earth, said in a statement. “For years concerned Americans have fought against this climate-destroying pipeline and today we are one step closer to defeating it for good.”
In statements on both the Atlantic Coast pipeline and Dakota Access pipeline, Energy Secretary Dan Brouillette pointed the finger at the “environmental lobby.”
“It is disappointing that, once again, an energy infrastructure project that provides thousands of jobs and millions of dollars in economic revenue has been shut down by the well-funded environmental lobby, using our Nation’s court system to further their agenda,” he said in a statement.
Some analysts say the developments with the Atlantic Coast and Dakota Access pipelines aren’t likely to affect infrastructure in the short term but may stunt future growth.
“In terms of pricing, the impact isn’t as great because obviously these pipes are still under construction,” said Eugene Kim, research director of Wood Mackenzie’s Americas Gas Research team.
He noted that fewer pipelines mean more fuel may have to be transported by other means like rail, a method that critics oppose due to safety concerns.
“Without [the Dakota Access pipeline] you’re going to have to restart rail exports.”