BISMARCK - A federal judge will issue what could be a precedent-setting decision after hearing arguments Thursday on whether a Texas company needed consent from American Indian tribes to drill two pipelines through tribally owned minerals under North Dakota's largest body of water.
After nearly five hours of testimony and legal arguments in U.S. District Court in Bismarck, Judge Daniel Hovland took the matter under advisement, allowing drilling under Lake Sakakawea to continue until he issues his ruling while also lamenting the lack of legal opinions offered by attorneys and previous case law on the issue.
"It sounds like I'm going to be left to interpret this with no guidance from anybody," Hovland said.
Paradigm Energy Partners LLC has already completed a $125 million oil pipeline under the lake and is boring the hole for a companion $16.6 million natural gas pipeline over the objections of the Mandan, Hidatsa and Arikara Nation, otherwise known as the Three Affiliated Tribes.
The tribes issued a cease and desist order Aug. 8 ordering Paradigm to stop all construction immediately under the lake. They said the company hadn't provided assurance that the oil pipeline, which stretches nearly 9,000 feet at least 100 feet below the lakebed on the Fort Berthold Reservation, posed no threat to their water resources.
Paradigm responded by suing MHA Chairman Mark Fox and Tribal Police Chief Nelson Hart on Aug. 19, arguing they had no authority to halt construction. Four days later, Hovland granted a temporary restraining preventing the tribe from stopping construction and allowing boring for the gas pipeline to resume.
Thursday's daylong hearing on Paradigm's request for an injunction against the tribe ended without a firm timeline for Hovland's ruling, but the judge noted that the restraining order expires on Monday or Tuesday and he can extend it for 14 days for "good cause."
"Certainly, in my view, good cause exists because I've got a multitude of issues to sort through," he said.
Attorneys for both sides argued about whether Paradigm needed the tribes' consent to install the two pipelines, which will be owned by Sacagawea Pipeline Co., a joint venture between Paradigm, Phillips 66 and Greywolf Midstream LLC. Greywolf holds a 12 percent interest in the oil pipeline and is a subsidiary of the MHA-owned Missouri River Resources, giving the tribe a stake in the project.
Paradigm CEO Troy Andrews testified that Fox, the tribal chairman, had been outspoken that the tribe should get more value out of the oil pipeline. But Andrews said he didn't recall Fox or other tribal officials raising the issue of consent until a tribal council meeting on June 9, less than a week after boring started on the oil pipeline.
"I definitely thought they were very supportive and on board with the project, for sure," he said.
Fox countered that he informed Paradigm about the consent requirement as early as August 2014 during a Missouri River Resources board meeting and also brought it up "numerous times" in casual and formal conversations.
"That was always understood," he said.
Tribal officials said Paradigm offered up to $2 million during a June 9 council meeting to resolve the right-of-way and other issues related to the pipelines.
"And I believe they said they had a check there," Tribal Attorney Caleb Dog Eagle recalled.
Andrews said that while the company never believed it needed the tribes' legal consent, "I wanted to get a deal done."
When Paradigm came back a week later with the same request, tribal officials said they felt the company hadn't fulfilled the council's request that it reach out to the tribes' more than 15,000 members to gauge support for the pipelines.
Attorneys for Paradigm argued that the company already had the authority to drill under the lake through its easement from the U.S. Army Corps of Engineers.
"The key here is that these are valid authorizations," attorney Andrew Emrich said.
But lawyers for the tribes said the Fort Berthold Reservation Mineral Restoration Act of 1984 restored the mineral rights under the lake to the tribe, and Paradigm has no right to invade them without consent.
"They tried to get our consent, they didn't get it, and they bored anyway," attorney John Fredericks III said. "So as far as we're concerned, they're trespassers."
Paradigm Chief Operating Officer Criss Doss said the work stoppage in August cost the company $750,000, and it stands to lose $12.6 million - and potentially go under - if it's unable to finish the gas pipeline by a Nov. 1 deadline to remove equipment from a landowner's property on the east side of the lake.
"We can't afford any delays at all," he said.
The Pipeline and Hazardous Materials Safety Administration continues to investigate claims made by workers that the pipeline was not properly inspected before it was installed under Lake Sakakawea. Doss said 109 welds were recoated because they weren't done right the first time.
"There were not defects in the coating when it was stuck under the lake," he said.
Attending the hearing in support of the MHA Nation was Standing Rock Sioux Tribal Chairman Dave Archambault II, whose tribe is awaiting a judge's decision by Sept. 9 on its request for an injunction to halt construction on the Dakota Access Pipeline across the Missouri River just north of the Standing Rock reservation.