Cities and counties of the west have joined the state of North Dakota in filing friend of the court briefs in the U.S. Circuit Court of Appeals for Washington, D.C., which is deciding whether a lower court’s order to shut down the Dakota Access Pipeline while more study is conducted should be allowed to stand.
The Western Dakota Energy Association filed the brief on behalf of eight counties and five cities, which include Williams and McKenzie counties as well as Williston and Watford City.
“After reading other motions and briefs about the impacts to the industry and state government, we felt it was essential to include in the record the devastating economic impact (shutdown of Dakota Access) would have on our member cities, counties, and school districts,” WDEA Executive Director Geoff Simon said.
The brief was written by Timothy McCrum with the Crowell and Moring law firm in Washington D.C. It argues that citizens of the West will be irreparably harmed if Dakota Access is forced to shut down while a lengthier Environmental Impact Statement is performed in the place of the Environmental Assessment that has already been completed.
“The seven counties through which DAPL passes received a total of more than $7.5 million in property tax revenue from DAPL alone in 2018,” McCrum writes.
In addition, McCrum points out, municipalities and county governments also receive, through funding “buckets” filled by oil and gas revenue, money to support school districts, road projects, water development and flood control projects, research projects that support agriculture, such as at the Williston Research Extension Center, and other things like the environmental performance of energy-producing assets themselves.
Wildlife habitat is also restored from oil and gas tax revenue, outdoor recreational opportunities improved, conservation practices supported, and a host of other programs and services that support the influx of workers who have come to work in the oil and gas industry.
All that doesn’t count substantial royalty payments paid to individual landowners and the resulting benefits of that to local economies.
The timing of a shutdown right now, after the West’s oil and gas sector has taken staggering blows from a pandemic-induced downturn, would only exacerbate an already dire situation, McCrum adds.
As a result of the extraordinary collapse in oil prices and demand destruction from the COVID-19 pandemic, oil-and-gas tax revenue has fallen off a cliff — from approximately $225M in February 2020 to less than $50M in June 2020,” McCrum writes.
That has forced political subdivisions to reduce workforce and delay infrastructure projects. Planting a Dakota Access shutdown on top of that would prolong the recovery of the oil and gas sector, potentially resulting in more lay-offs at a time of already record-high unemployment.
“(Shutting down) DAPL’s 570,000 barrel-per-day takeaway capacity will likely add at least $5.00 per barrel to the cost of shipping North Dakota crude—i.e., an additional one billion dollars per year,” McCrum writes. “That additional cost would make it nearly impossible for North Dakota to compete with other oil-producing regions in the country, thereby stopping our communities’ recovery in its tracks.”
A prolonged shutdown, meanwhile, could even lead to an exodus of oil and gas industry from the Bakken to other shale plays, thus doing permanent damage to the state’s long-term prospects.
“That threat is of major concern to the cities, counties and school districts that WDEA represents, and the tens of thousands who live in those communities,” McCrum writes.
Meanwhile, Dakota Access is likely to succeed on appeal, as demonstrated in other motions and briefs before the court, so it is a lot of damage for something that is unlikely to stand.
The lower court also failed to apply all of the required tests for the remedy it ordered.
That evaluation should have given more weight to the overwhelming public interest in continued operation of Dakota Access, McCrum argues, but also, because the court not only vacated the permit, but issued an injunction, it should have engaged in the four-factor test that Supreme Court cases have repeatedly instructed lower courts to use. That includes a requirement that the remedy does no harm to public interest.
“(The lower court) gravely erred in concluding the public interest in preventing the severe and widespread economic and social harm from DAPL’s closure would not outweigh the exceedingly low risk of an accident in the
approximately 13 months it may take the Corps to correct the procedural error the court identified (which, through its appeal, the Corps will demonstrate was no error at all),” WDEA wrote. “This Court can, and should, correct that error.”