Energy Transfer Partners and Banks Lost Billions by Ignoring Early Dakota Access Pipeline Concerns
By Sharon Kelly
Roughly four years ago, Energy Transfer Partners (ETP) filed a federal application to build a 1,172 mile oil pipeline from North Dakota's Bakken shale across the U.S. to Illinois at a projected cost of $3.8 billion.
Before that application was filed, on Sept. 30, 2014, the Standing Rock Sioux Tribe met with ETP to express concerns about the Dakota Access pipeline (DAPL) and fears of water contamination. Though the company, now known as Energy Transfer, had re-routed a river crossing to protect the state capital of Bismarck against oil spills, it apparently turned a deaf ear to the Tribe's objections.
Following that approach proved to be a very costly decision, a new analysis concludes, with ETP, banks, and investors taking billions in losses as a result.
"This case study estimates that the costs incurred by ETP and other firms with ownership stake in DAPL for the entire project are not less than $7.5 billion, but could be higher depending on the terms of confidential contracts," a new report, "Social Cost and Material Loss: The Dakota Access Pipeline," concludes, noting that the figure represented nearly double the initial project cost. "The banks that financed DAPL incurred an additional $4.4 billion in costs in the form of account closures, not including costs related to reputational damage."
In addition, the company's "poor social risk management" caused taxpayers and "other local stakeholders" to incur at least $38 million in costs, the report concludes.
"This is what it's all about," protestor says. "Sacred water." Not sure guys on left agree. #NoDAPL #DAPL https://t.co/vHPRC2OHU5— Wes Enzinna (@Wes Enzinna)1477599122.0
As opposition to DAPL grew from a handful of locals to a movement attracting thousands of supporters to Standing Rock and backers worldwide, construction fell behind schedule and over budget, with costs rising from a predicted $3.8 billion to at least $7.5 billion, the new report finds. Over that time, Energy Transfer's stock price fell 20 percent—at the same time as the tech investment index S&P 500 grew roughly 35 percent, the report noted. Energy Transfer's stock also underperformed other companies in the same industry.
"Across the board, this project was out of line with the existing principles outlined in the United Nations Declaration on the Rights of Indigenous Peoples and other international standards for resource development near indigenous peoples' lands," Carla F. Fredericks, author of the study and director of Colorado Law's American Indian Law Clinic, said. "The losses in this study underline that companies need to take those principles into account."
Making a 'Material Loss'
The study points to early decisions by ETP as the cause of those losses.
"The Standing Rock Sioux Tribe communicated their opposition to DAPL for three years and they were frustrated by the lack of meaningful consultation from Energy Transfer Partners (ETP), DAPL's parent company, and the U.S. Army Corps of Engineers (USACE)," Fredericks, an enrolled citizen of the Mandan, Hidatsa, and Arikara Nation of North Dakota, and co-author Mark Meaney of the University of Colorado's Leeds School of Business wrote. "In fact, those opportunities for early engagement were ETP's, the USACE's and other investors' missed opportunities to understand the developing social risks that subsequently manifested into intense social conflict and ultimately resulted in material loss."
US / indigenous rights: @UNSR_VickyTauli urges consistent policies for projects like Dakota Access Pipeline https://t.co/fVdVZtcsnG— UN Human Rights (@UN Human Rights)1488560268.0
When it comes to human rights issues, the report's authors dismiss the notion that a company's management can adequately protect shareholders from losses or liability if they use compliance with state and federal laws as their only benchmark.
"Unfortunately, the companies and financiers behind DAPL presumed that compliance with national laws was sufficient for the project to move forward on Sioux territory rather than abiding by international human rights standards," the report finds. "Their lack of attention ultimately resulted in material loss."
The report faults Energy Transfer's management specifically for failing to disclose risks of costly delays due to public opposition to investors at an earlier stage.
"In this case, ETP's reporting concerning the project was silent or exclusively positive until the publication of its third quarterly report on Nov. 9, 2016, in which the company acknowledged that 'protests and legal actions against DAPL have caused construction delays and may further delay the completion of the pipeline project,'" the report finds. "By this time, social pressure had been mounting for months and there is evidence that the company knew of these risks long before they were disclosed to investors."
"The timeline shows that ETP made few good faith efforts to understand and integrate the Standing Rock Sioux Tribe's concerns about the environmental, social, and cultural risks into their operations and that ETP did not disclose known risks to investors until a later date," it adds. "As a result, investors were not aware of the potential for delays and it is possible that this resulted in the overvaluation of ETP's stock price."
It wasn't only ETP's investors that suffered an economic blow due to DAPL. Reported account closures at banks that funded the DAPL project totaled $4.4 billion, including 150,000 personal bank account closures worth $86.2 million, with the remainder coming from city divestments.
"It is reasonable to suggest that the degree of public criticism directed towards banks—relative to the size of the transaction—was greater than expected and was underestimated during the banks' own review of the project's viability," the report says.
DAPL is now flowing oil—but legal battles continue. In early November, Energy Transfer announced that it would seek to expand DAPL's capacity from 525,000 barrels per day to 570,000 barrels a day, spurred by growing oil production from North Dakota's Bakken shale.
The DAPL fight is far from over. Lawsuits and criminal prosecutions of pipeline opponents now include a federal class action filed by five plaintiffs against private security firm TigerSwan and state and county officials, alleging that the defendants violated plaintiff's constitutional rights by closing public roads for prolonged periods in 2016 to 2017, part of an effort to quiet resistance to the DAPL project.
As DeSmog previously reported, the lawsuit "also alleged that, beyond impeding access to sacred grounds for the self-proclaimed 'Water Protectors'—the term also used by [plaintiffs' attorneys] Smith-Drelich and Harcourt in their complaint—the blockade imposed by government and law enforcement did not impact those who lived in the area or employees of Energy Transfer."
Separately, Sophia Wilansky, who was shot three times by rubber bullets and suffered severe arm and hand injuries from what she alleges was a police "flashbang" grenade at Backwater Bridge on Nov. 20, 2016, filed a lawsuit against Morton County law enforcement and other agencies this month. And more than 700 criminal cases brought against the pipeline opponents known as water protectors have been processed, with NPR reporting that "[m]any have had their charges reduced or dismissed."
In November, the Standing Rock Sioux Tribe challenged the adequacy of the Army Corps of Engineers' environmental review of DAPL, arguing that the Corps' assessment of the risks, particularly the risk of an oil spill in Lake Oahe, which is on Sioux land, fell short of required standards and disregarded technical information provided by the Tribe to the Corps.
In July, federal judge Billy Roy Wilson partially dismissed a racketeering lawsuit that was initially filed in August 2017 by ETP against nonprofits Greenpeace and BankTrack, as well as the environmental movement EarthFirst! (as represented by the publishers of a magazine of a similar name).
"While the complaint vaguely attempts to connect BankTrack to acts of 'radical eco-terrorist,' an international drug distribution and money laundering enterprise, and violations of the Patriot Act, BankTrack's actual conduct in this case was allegedly writing a few letters to financial institutions and posting links to the letters on its website," Wilson wrote in a July ruling dismissing claims against BankTrack.
In August, after a ruling that EarthFirst! is an environmental movement too amorphous to be named to a lawsuit and that suing the magazine would be "futile and possibly frivolous," ETP added five individual defendants to its lawsuit, including a Greenpeace staffer.
A proposed new Bakken pipeline, dubbed the Liberty Pipeline, was recently announced by Phillips 66 and Bridger Pipeline LLC. That pipeline would move 350,000 barrels a day of fracked oil from the Bakken shale to Corpus Christi, Texas, near major export terminals.
The authors of the new report had advice for companies contemplating building new pipeline projects or investing in them.
"These losses show how important it is for companies to fully account for environmental, social, and governance risks before projects get going," Meaney said in a statement accompanying the report. "Social risks are clearly overlooked in the market."
#EnergyTransfer's Troubled Pipeline Projects Amass 800+ Violations https://t.co/4dRWiI7JdV @PeopleNotPipes @nokxlpledge— EcoWatch (@EcoWatch)1543795235.0
Reposted with permission from our media associate DeSmogBlog.
- Stopping a Dakota Access Pipeline Leak in Under 10 Minutes? A ... ›
- Investors Want Companies to Disclose Environmental Risk - EcoWatch ›
EcoWatch Daily Newsletter
The Washington Redskins will retire their controversial name and logo, the National Football League (NFL) team announced Monday.
By Alyssa Murdoch, Chrystal Mantyka-Pringle and Sapna Sharma
Summer has finally arrived in the northern reaches of Canada and Alaska, liberating hundreds of thousands of northern stream fish from their wintering habitats.
A Good News Story?<p>On the surface, the <a href="https://doi.org/10.1111/fwb.13569" target="_blank">results from our study</a> appear to provide a "good news" story. Warming temperatures were linked to higher numbers of fish, more species overall and, therefore, potentially more fishing opportunities for northerners.</p><p>Initially, we were surprised to learn that warming was increasing the distribution of cold-adapted fish. We reasoned that modest amounts of warming could lead to benefits such as increased food and winter habitat availability without reaching stressful levels for many species.</p>
Photo of Arctic grayling (left) and Dolly Varden trout (right). Alyssa Murdoch / Lilian Tran / Nunavik Research Centre and Tracey Loewen / Fisheries and Oceans Canada<p>Yet, not all fish species fared equally well. Ecologically unique northern species — those that have evolved in colder, more nutrient-poor environments, such as Arctic grayling and Dolly Varden trout — were showing declines with warming.</p>
Fish Strandings and Buried Eggs<p>Recent news headlines run the gamut for Pacific salmon — from their increased escapades <a href="https://nunatsiaq.com/stories/article/more-pacific-salmon-showing-up-in-western-arctic-waters/" target="_blank">into the Arctic</a> to <a href="https://www.juneauempire.com/news/warm-waters-across-alaska-cause-salmon-die-offs/" target="_blank">massive pre-spawning die-offs</a> in central Alaska. Similarly, results from our study revealed different outcomes for fish depending on local climatic conditions, including Pacific salmon.</p><p>We found that warmer spring and fall temperatures may be helping juvenile salmon by providing a longer and more plentiful growing season, and by supporting early egg development in northern regions that were previously too cold for survival.</p><p>In contrast, salmon declined in regions that were experiencing wetter fall conditions, pointing to an increased risk of flooding and sedimentation that could bury or dislodge incubating eggs.</p>
Headwaters of the Wind River within the largely intact Peel River watershed in northern Canada. Don Reid / Wildlife Conservation Society Canada / Author provided<p>Interestingly, we found that certain climatic combinations, such as warmer summer water temperatures with decreased summer rainfall, were important in determining where Pacific salmon could survive. Summer warming in drier watersheds led to declines, suggesting that lowered streamflows may have increased the risk of fish becoming stranded in subpar habitats that were too warm and crowded.</p>
The Fate of Northern Fisheries<p>The promise of a warmer and more accessible Arctic has attracted mounting interest in new economic opportunities, <a href="https://doi.org/10.1016/j.marpol.2019.103637" target="_blank">including fisheries</a>. As warming rates at higher latitudes are already <a href="https://www.ipcc.ch/sr15/" target="_blank">two to three times global levels</a>, it seems probable that northern biodiversity will experience dramatic shifts in the coming decades.</p><p>Despite the many unknowns surrounding the future of Pacific salmon, many fisheries are currently <a href="https://doi.org/10.1080/03632415.2017.1374251" target="_blank">thriving following warmer and more productive northern oceans</a>, and some <a href="https://doi.org/10.14430/arctic68876" target="_blank">Arctic Indigenous communities are developing new salmon fisheries</a>.</p><p>As warming continues, the commercial salmon fishing industry is poised to expand northwards, but its success will largely depend on extenuating factors such as <a href="https://www.eenews.net/stories/1060023067" target="_blank">changes to marine habitat and food sources</a> and <a href="https://www.yukon-news.com/news/promising-chinook-salmon-run-failed-to-materialize-in-the-yukon-river-panel-hears/" target="_blank">how many fish are caught during the freshwater stages of their journey</a>.</p><p>Even with the potential for increased northern biodiversity, it is important to recognize that some northern communities may be unable to adapt or may <a href="https://thenarwhal.ca/searching-for-the-yukon-rivers-missing-chinook/" target="_blank">lose individual species that are associated with important cultural values</a>.</p>
- New England Fishing Communities Being Destroyed by 'Climate ... ›
- Shrimp Fishing Banned in Gulf of Maine Due to Ocean Warming ... ›
- Atlantic Salmon Is All But Extinct as a Genetically Eroded Version of ... ›
A heat wave that set in over the South and Southwest left much of the U.S. blanketed in record-breaking triple digit temperatures over the weekend. The widespread and intense heat wave will last for weeks, making the magnitude and duration of its heat impressive, according to The Washington Post.
- Hot Weather and COVID-19: Added Threats of Reopening States in ... ›
- 50 Million Americans Are Currently Living Under Some Type of Heat ... ›
- Second Major Heat Wave This Summer Smashes Records Across ... ›
By Joni Sweet
If you get a call from a number you don't recognize, don't hit decline — it might be a contact tracer calling to let you know that someone you've been near has tested positive for the coronavirus.
Interviews With Contact Tracers<p>Contact tracing is a public health strategy that involves identifying everyone who may have been in contact with a person who has the coronavirus. Contact tracers collect information and provide guidance to help contain the transmission of disease.</p><p>It's been used during outbreaks of sexually transmitted infections (STIs), Ebola, measles, and now the coronavirus that causes COVID-19.</p><p>It starts when the local department of health gets a report of a confirmed case of the coronavirus in its community and gives that person a call. The contact tracer usually provides information on how to isolate and when to get treatment, then tries to figure out who else the person may have exposed.</p><p>"We ask who they've been in contact with in the 48 hours prior to symptom onset, or 2 days before the date of their positive test if they don't have symptoms," said <a href="https://case.edu/medicine/healthintegration/people/heidi-gullett" target="_blank">Dr. Heidi Gullett</a>, associate director of the Center for Community Health Integration at the Case Western Reserve University School of Medicine and medical director of the Cuyahoga County Board of Health in Ohio.</p>
“You’ve Been Exposed”<p>After the case interview, contact tracers will get to work calling the folks who may have been exposed to the coronavirus by the person who tested positive.</p><p>"We give them recommendations about quarantining or isolating, getting tested, and what to do if they become sick. If they're not already sick, we still want them to self-quarantine so that they don't spread the disease to anyone else if they were to become sick," said Labus.</p><p>Generally, the contact tracer won't ask for additional contacts unless they happen to call someone who is sick or has a confirmed case of the virus. They will help ensure the contact has the resources they need to isolate themselves, if necessary. The contact tracer may continue to stay in touch with that person over the next 14 days.</p><p>"We follow the percentage of people that were contacts, then converted into being actual cases of the virus. It's an important marker to help us understand what kind of transmission happens in our community and how to control the virus," said Gullett.</p>
Why You Should Participate (and What Happens If You Don’t)<p>A <a href="https://www.thelancet.com/journals/laninf/article/PIIS1473-3099(20)30457-6/fulltext" target="_blank">Lancet study</a> from June 16, which looked at data from more than 40,000 people, found that COVID-19 transmission could be reduced by 64 percent through isolating those who have the coronavirus, quarantining their household, and contacting the people they may have exposed.</p><p>The combination strategy was significantly more effective than mass random testing or just isolating the sick person and members of their household.</p><p>However, contact tracing is only as effective as people's willingness to participate, and a small number of people who've contracted the coronavirus or were potentially exposed are reluctant to talk.</p><p>"Contact tracers have all been hung up on, cussed at, yelled at," said Gullet.</p><p>The hesitation to talk to contact tracers often stems from concerns over privacy — a serious issue in healthcare.</p>
- Anti-Racism Protests Are Not Driving Coronavirus Spikes, Data ... ›
- Cell Phone Tracking Analysis Shows Where Florida Springbreakers ... ›
NASA scientists say that warmer than average surface sea temperatures in the North Atlantic raise the concern for a more active hurricane season, as well as for wildfires in the Amazon thousands of miles away, according to Newsweek.
By Andrea Germanos
Oxfam International warned Thursday that up to 12,000 people could die each day by the end of the year as a result of hunger linked to the coronavirus pandemic—a daily death toll surpassing the daily mortality rate from Covid-19 itself.
- These 6 Men Have as Much Wealth as Half the World's Population ... ›
- Climate Change Forces 20 Million People to Flee Each Year, Oxfam ... ›
By Jun N. Aguirre
An oil spill on July 3 threatens a mangrove forest on the Philippine island of Guimaras, an area only just recovering from the country's largest spill in 2006.
- 15,000 Gallon Oil Spill Threatens River and Drinking Water in Native ... ›
- Mysterious Oil Spill on Massachusetts' Charles River Spurs Major ... ›
- Disastrous Russian Oil Spill Reaches Pristine Arctic Lake - EcoWatch ›