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Landowners Lose Challenge to Pipeline Deals

The Eighth Circuit on Thursday rejected landowners’claims that the Dakota Access pipeline developer used unfair tactics to persuade them to sell property for the pipeline's construction.

(CN) – The Eighth Circuit on Thursday rejected landowners’ claims that the Dakota Access Pipeline developer used unfair tactics to persuade them to sell property for the pipeline's construction.

Twenty-one North Dakota landowners and a partnership sued Dakota Access LLC and its agent Contract Land Staff in Bismarck federal court in January 2017. They claimed the developer offered them $180 for each 16.5-foot unit of pipe that crossed their land. 

FILE - In this Oct. 5, 2016, file photo, heavy equipment is seen at a site where sections of the Dakota Access Pipeline were being buried near the town of St. Anthony in Morton County, N.D. The Army has notified Congress Tuesday, Feb. 7, 2017, that it will allow the $3.8 billion Dakota Access pipeline to cross under a Missouri River reservoir in North Dakota, completing the four-state project to move North Dakota oil to Illinois. The Army intends to allow the crossing under Lake Oahe as early as Wednesday, Feb. 8. The crossing is the final big chunk of work on the pipeline. (Tom Stromme/The Bismarck Tribune via AP, File)

The developer warned the landowners that if they declined the offer, their properties could be taken by eminent domain, according to the complaint. It also allegedly assured them that no one else in Morton County would receive a better price. 

However, Dakota Access ended up paying other landowners as much as $2,000 per 16.5-foot unit, the lawsuit alleged.   

U.S. District Judge Daniel Hovland threw out the lawsuit last year, ruling that under a heightened pleading standard the landowners had failed to make clear that the developer had defrauded them.

The Eighth Circuit affirmed in a five-page ruling issued Thursday.

The three-judge panel rejected the landowners’ attempt to revive so-called “non-fraudulent” claims under state law. They said the developer and its agent had harassed and intimidated them to secure their land for the pipeline. 

“Plaintiffs’ additional characterization of Dakota Access’s statements as 'misrepresentation' or 'deception' does not help them. Under North Dakota law, such allegations sound in fraud," U.S. Circuit Judge Jane Kelly wrote for the panel.

Therefore, Judge Hovland was right to consider the state law claims under a broader fraud claim and properly applied a heightened pleading standard under federal law, the St. Louis-based appeals court found.

The Dakota Access pipeline runs 1,172 miles from North Dakota to terminals in Illinois. The project led to an ill-fated attempt by the Standing Rock Sioux tribe and protesters to block construction.They feared the pipeline could desecrate burial grounds and contaminate water. 

The pipeline was finished in April 2017 and was commercially viable within months. 

Landowner Neal Slavick said in a brief phone interview Thursday that he was "not surprised" by the court's ruling. 

Dakota Access attorney Amy Miller and spokeswoman Vicki Granado both declined to comment. 

An attorney for the landowners could not immediately be reached for comment.

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