Wednesday, December 12, 2018

Shale Law in the Spotlight – Overview of Recent Legal Actions Relating to the Dakota Access Pipeline (Part 1)

Written by Chloe Marie - Research Specialist

The Dakota Access Pipeline began commercial operation in June 2017 after a number of lengthy legal and regulatory processes. Even after oil began to flow through the pipeline, several legal conflicts continued to move forward. In this article, as well as in two planned articles to be published soon, these ongoing legal proceedings will be addressed.

Olin et al. v. Dakota Access, LLC, U.S. District Court for the District of North Dakota

On January 6, 2017, a group of landowners residing in Morton County brought legal action against Dakota Access Pipeline, LLC (Dakota Access) alleging that the pipeline company deceptively prompted some landowners to move quickly to accept easement offers at a price lower than that offered to other Morton County residents. The landowners stated in their complaint that Dakota Access used “misrepresentations, deception, or other unfair tactics” so that certain landowners could sign easement agreements at a $216 price per rod coupled with a 20% signing bonus while other residents were able to receive up to $2,000 per rod from the company.

The aggrieved landowners also pointed out that Dakota Access pressured them into signing the easement agreements by saying that “$216 per rod was the best price they would ever receive for the easements burdening their lands, that other landowners in Morton County would never receive a better price per rod, that other Morton County Landowners would receive a lower price per rod by not promptly signing the easement agreement, and that the Morton County Landowners would lose their signing bonus if they did not promptly sign an easement with Dakota Access.” In addition, the landowners alleged that Dakota Access wrongly declared that if they did not sign the easement agreement, their lands would be condemned anyway using eminent domain. The landowners thus sought indemnification for damages alleging a violation of the Unfair Tactics Statute codified at N.D.C.C. § 49-22-16.1 and claiming an amount in excess of $4,000,000 from Dakota Access.

Dakota Access filed a motion for judgment on the pleadings on April 6, 2017, calling this lawsuit a “case of sellers’ remorse.” Dakota Access argued that no violation of N.D.C.C. § 49-22-16.1 occurred “because the allegations lack particularity, fail to identify any specific misrepresentations of material fact, and are nothing more than mere puffery or sales talk” that does not constitute fraud. Furthermore, Dakota Access emphasized that there is no proven case of fraudulent representations from Dakota Access because the landowners have failed to specifically identify those who have been perpetrating fraud and those who have been victims.

On October 10, 2017, the U.S. District Court for the District of North Dakota granted Dakota Access’ motion for judgment on the pleadings, holding that the alleged misrepresentations do not constitute fraud because the statements were not representations of past or present material fact. More precisely, the court opined that “the Plaintiffs are upset their neighbors got a better price when the agent predicted prices would never be better. However, the Court finds that opinions and predictions as to what future prices will be are simply not actionable as fraud.”

The group of landowners filed an appeal to the U.S. Court of Appeals for the Eighth Circuit on November 7, 2017. On October 18, 2018, the Court of Appeals, located in Saint Paul, Minnesota, heard oral argument on the fraud allegations.

Further information on the Olin et al. v. Dakota Access, LLC case is available at docket no. 1:17-cv-007.

Stay tuned for further legal developments!

This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

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