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Oil Will Start Flowing Through the Dakota Pipeline Any Moment Now

Mother Jones

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This story was originally published by High Country News and is reproduced here as part of the Climate Desk collaboration.

As of this week, Bakken oil is expected to flow through the Dakota Access Pipeline under Lake Oahe near the Standing Rock Sioux Reservation. This development comes as court proceedings continue over the high-profile battle over the pipeline that drew thousands of protestors to North Dakota last year. As law enforcement officers and Indigenous activists faced off near the construction site, the conflict played out in real time on social media, capturing international attention.

A District of Columbia court has yet to rule on the Standing Rock Sioux and Cheyenne River Sioux tribes’ claims that the Army Corps of Engineers violated environmental, historic-preservation and religious-freedom laws in its approval of the pipeline. A ruling is likely still several weeks away. The tribes have tried for temporary restraining orders to stop the flow of oil until the case is decided, but judges have rejected those as well. Dakota Access, LLC, is required to update the court weekly on whether the pipeline operations have begun; on March 20, the company said they expected oil to flow this week.

The fact that the pipeline’s backers, Energy Transfer Partners, appears to be prevailing is not surprising. Although the Obama administration had put DAPL on hold in December and called for further environmental review, then-President-elect Donald Trump vowed to push the project through once he took office. But national attention the protests brought to the flaws of the current consultation process—the federal government’s responsibilities to consult with tribes before approving major infrastructure projects that affect tribal lands—may still bear fruit on future disputes. And recent legal proceedings remind us how difficult it is for tribes to argue for religious freedom in court.

Following Trump’s late-January executive order to allow the pipeline to be finished, the Cheyenne River Sioux, located just south of the Standing Rock Reservation, filed a motion for a restraining order against the pipeline. Unlike the Standing Rock Sioux complaint based more around environmental and historic preservation violations, Cheyenne River’s argument claims the government violated the Religious Freedom Reformation Act (RFRA). “The Lakota people believe that the mere existence of a crude oil pipeline under the waters of Lake Oahe will desecrate those waters and render them unsuitable for use in their religious sacraments,” court documents say.

RFRA has an unreliable track record for tribes in court. Congress created the law in 1993 in part as a response to two cases in which courts sided with the government. In 1988 Lyng vs. Northwest Indian Cemetery Protective Association allowed the Forest Service to construct a logging road in California that would have disrupted an area sacred to several tribes. In 1990 Employment Division vs. Smith allowed two Native Americans in Oregon to be fired for failing a drug test because they had used peyote as an element of religious ceremony. But experts say RFRA’s original intention, to protect tribes from similar infringements, isn’t really bearing out in court. The most recent major failure was the case of the Snowbowl ski resort in Arizona in which reclaimed wastewater was being used to make snow on mountains sacred to several tribes. The tribes argued a violation of RFRA and ultimately lost.

RFRA has, however, worked for corporations such as Hobby Lobby. In 2014, the Supreme Court ruled family-owned corporations should not be required to cover employees’ contraception because doing so may infringe on a company’s religious beliefs. Part of the challenge for tribes, says University of Colorado law professor Charles Wilkinson, is one of translation. “Most Americans are not used to the nature of tribal religions, of having ceremonies on particular land areas as being significant to their religion,” Wilkinson says. Court documents show Cheyenne River’s attorneys explaining how the tribe views the pipeline:

“Although there can be no way of knowing when this prophesy emerged into the Lakota worldview, Lakota religious adherents now in their 50s and 60s were warned of the Black Snake by their elders as children. The Black Snake prophecy is a source of terror and existential threat in the Lakota worldview…. Lakota adherents believe that the Black Snake poses an existential threat because it will cause critical imbalance in an essential resource of the Cheyenne River Sioux Tribe: the natural, ritually pure waters of Lake Oahe.”

“You can kind of get that sense, there’s some question raised in opposing parties arguments of ‘Do they really believe this,'” says Monte Mills, a University of Montana law professor. In court in February, Judge James Boasberg reportedly questioned how a pipeline would desecrate the Missouri River if the oil itself never touched the water.

The most lasting impact of the Dakota Access battle might be greater federal attention to the process through which the U.S. government is supposed to consult tribal governments about proposed infrastructure projects that might impact those nations, says Wilkinson. “(Tribes) see consultation as almost a four-letter word,” Wilkinson says. “It’s so often just checking a box.” A 38-page memo from former Obama administration Interior Solicitor Hilary Tompkins in December described in detail the ways in which the government failed to consult tribes that may be affected by the pipeline. At one point, Tompkins notes that a draft Environmental Assessment for DAPL “failed to even identify the reservation on its maps and incorrectly said the Standing Rock Sioux Tribe had no issue with the project.” (The Trump administration suspended the memo and removed it from the Interior website in February.)

Similarly, a 73-page report released in January by the Corps of Engineers, the Department of Justice and the Department of Interior about consultation—not limited to DAPL—highlighted flaws in the process, after seeking comment from 59 tribes across the country. The report includes problems with the way the federal government “tends to look at (infrastructure) projects in a segmented way…For example, in the Dakota Access Pipeline review, four different states, three separate districts of the Army Corps of Engineers, and the Fish and Wildlife Service each looked at different parts of the project, but did not coordinate the impacts to Tribes.” That report requested further action from several federal agencies by April 2017, in establishing better consultation processes.

“Many federal statutes require consultations with states, counties and tribes,” Wilkinson says. “Maybe one way or another Standing Rock could be valuable as raising that issue.”

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Oil Will Start Flowing Through the Dakota Pipeline Any Moment Now

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Inside the Scandal Rocking the Fantasy Sports World

Mother Jones

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You’ve almost certainly seen the commercials. Turn on the TV or browse the Internet, and you’ll be bombarded with ads for daily fantasy football leagues that offer huge potential winnings each week of the season. But in recent days, the two largest daily fantasy sites—DraftKings and FanDuel—have been rocked by scandal. Now, the companies are facing a lawsuit, a state probe, and possible congressional hearings.

The controversy started last week, after a DraftKings employee won $350,000 in a FanDuel contest after inadvertently publishing information showing how many competitors had drafted certain players—before that information was supposed to be made public.

Earlier this week, New York Attorney General Eric Schneiderman opened an investigation into the business practices of DraftKings and FanDuel, seeking to determine whether employees at the sites won payouts based on access to internal information. In separate letters to each company obtained by the New York Times, Schneiderman demanded information on how both companies operated, their policies surrounding employee participation in fantasy games, and what access employees had to sensitive data.

And on Thursday, a class action lawsuit was filed in a federal court in New York against the two powerhouse fantasy sites, alleging that the companies “fraudulently induced” players to pay fees to participate in contests without acknowledging that employees participated in matches and had access to confidential, non-public information.

DraftKings CEO Jason Robins defended his company’s response to the data leak, saying in an interview with the Boston Globe that he runs a “very ethical company.”

An investigation of the daily fantasy sports industry, which gaming firm Eilers Research estimates will generate about $2.6 billion in entry fees this year alone, could disrupt the largely unregulated business. Lawmakers have called for hearings and Federal Trade Commission intervention into a world that walks the line between traditional fantasy leagues and online sports gambling.

And it all began with a mishap. Let’s start at the beginning:

What are fantasy sports, anyway? For years, fantasy leagues have captivated audiences, giving people a new way to follow their favorite professional sports. Basically, participants enter a league, draft athletes to their rosters, and compete in weekly or nightly matches against others based on their players’ statistical performances. So, for instance, it’s football season, so you get together with a few buddies and act as your own general manager—every time one of the players on your team scores a touchdown or kicks a field goal in real life, you get points in your fantasy league. In the United States, about 31 million people participate in fantasy football leagues. You often play for free, for money, or for bragging rights.

What makes daily fantasy leagues such as DraftKings and FanDuel different? Unlike the typical office pool, at DraftKings and FanDuel, participants must drop an entry fee—anywhere from 25 cents to $1,000—into contests and draft a fresh team on a nightly or weekly basis to compete against hundreds of opponents. The stakes are higher: Competitors can win as much as $2 million, depending on the size of the competition. What’s unique about daily fantasy sites is the inclusion of a “salary cap.” Participants are given a limited budget to draft a lineup of players. That means it’s important to predict which undervalued players will perform well that week.

Who’s making money off this? While participants have the chance to win millions of dollars in these competitions, the reality is, you’re more likely to lose the money you’ve put in than to gain anything substantial. An analysis by the Sports Business Journal showed the disparity between the most successful competitors and the rest of the field. The top 1.3 percent of participants in the daily fantasy baseball economy accounted for 91 percent of all player profits. And while the majority of small-time players lose about $10 per month on games, a few—5 percent of the field known as the “big fish”—accounted for 75 percent of the losses. “Hence, the DFS economy depends heavily on retaining the big fish,” Ed Miller and Daniel Singer wrote.

Eilers Research partner Adam Krejcik told Bloomberg in September that DraftKings and FanDuel would bring in a combined $60 million in entry fees in the first week of the NFL season, compared to the $30 million the sports bookies in Las Vegas would handle. At the same time, the two companies, which are each valued at more than $1 billion, hauled in a combined total of nearly $800 million in funding from investors. Those investors included New England Patriots owner Robert Kraft, Dallas Cowboys owner Jerry Jones, Fox Sports, Comcast/NBC, Major League Baseball, and the National Basketball Association, among others.

This summer, Disney (which owns the majority of ESPN) pulled out of a potential $250 million investment deal with DraftKings. But ESPN subsequently reached an advertising agreement with DraftKings, making it the network’s exclusive fantasy partner. After the scandal came to light, ESPN partially distanced itself from the company, and Outside the Lines host Bob Ley announced the network would stop airing segments sponsored by DraftKings on its original programming. ESPN told media outlets such as Deadspin and CNN Money that it would be evaluating how it incorporates DraftKings into its programming “day-to-day.” â&#128;&#139;

OK, so what’s the current controversy all about? The scandal surfaced after Chris Grove, editor of legalsportsreport.com, reported that Ethan Haskell, a content manager at DraftKings, had inadvertently released lineup data for his employer’s most popular contest—the Millionaire Maker—before it was supposed to go public but after games started at FanDuel.

Before the scandal hit, employees at FanDuel and DraftKings were barred from competing in their own companies’ events, but they were still allowed to compete elsewhere. So when Haskell came in second place in a million-dollar FanDuel competition and raked in $350,000, eyebrows were raised. Questions swirled about employees’ access to data that can be used to gain a competitive advantage—in this case, information about the percentage of participants who drafted certain players.

No evidence has surfaced suggesting that Haskel actually used that information to gain an advantage. In a statement on Tuesday, DraftKings said that after a “thorough investigation,” the fantasy site found “this employee could not have used the information in question to make decisions about his FanDuel lineup” because he did not see the data until after all FanDuel lineups were finalized.

“This clearly demonstrates that this employee could not possibly have used the information in question to make decisions about his FanDuel lineup,” DraftKings stated. “Again, there is no evidence that any information was used to create an unfair advantage and any insinuations to the contrary are factually incorrect.”

A FanDuel spokesperson told ESPN that 0.3 percent of its prize money had been won by DraftKings employees—though that still amounts to at least $6 million. Both companies have now banned their employees from participating in any daily fantasy events for money. DraftKings enlisted former US Attorney John Pappalardo to conduct an internal investigation, and FanDuel has asked former US Attorney General Michael Mukasey to “review the facts and evaluate our internal controls, standards, and practices,” according to a company statement.

How exactly could non-public information skew the results? In daily fantasy sports, data is crucial. Participants make roster decisions based largely on which players are doing well at that point in the season and how much value they are likely to offer at their going “salary.” The complaint in the lawsuit against DraftKings and FanDuel explains why it would be so valuable to know how often each player is drafted: “Because the goal is to beat the other players, a player with statistical data about ownership percentages of competitors would have an edge over players without this data in many ways, including the ability to make rosters with enough players different from competitors’ rosters.â&#128;&#139;”

While DraftKings says it found no evidence indicating the employee in question used that information to his advantage, the lawsuit suggests that employees’ ability to access such information and the company’s awareness that employees participated in these outside competitions constitutes wrongdoing. DraftKings and FanDuel declined to comment on the lawsuit.

What are the legal implications of all this? Marc Edelman, an associate professor of law at the City College of New York, told Mother Jones that while the most recent scandal doesn’t necessarily reflect “insider trading,” it lifts the curtain on the “lack of institutional walls in place” on online fantasy groups. Sports legal expert Michael McCann wrote on SI.com that if the companies “knowingly” failed to prevent their employees from making money off their access to non-public data, other users could argue that both DraftKings and FanDuel “are engaged in anti-competitive conduct that violates antitrust law.”

It’s no surprise then that an investigation is under way in New York, which has one of the stronger consumer protection laws in the country. McCann noted that the Federal Trade Commission could also dive into the case and explore “whether insider knowledge in the DFS industry poses an anticompetitive, consumer-harmful practice in violation of federal trade regulations.” Massachusetts Attorney General Maura Healey has said she will not pursue an investigation into DraftKings, which is headquarted in Boston. Healey noted that no federal or state law prevents the company from operating.

The lead plaintiff in the lawsuit, a Kentucky-based fantasy player named Adam Johnson, argues that DraftKings breached its duties by “failing to prevent persons with inside information and data by virtue of their employment at other DFS sites from competing” against other players. The complaint alleges that DraftKings also “willfully failed to disclose” that employees with access to non-public information could compete at other sites, causing financial damage to players. The lawsuit alleges that by letting employees at both sites play in competitors’ contests, both companies “committed negligence and/or fraud.”

Why isn’t this considered sports gambling? In 2006, Congress passed legislation that outlawed online gambling. Fantasy sports, however, were left in the clear and exempted from the law. Lawmakers were apparently persuaded by an intense lobbying campaign from the professional sports industry, which argued that success in fantasy sports requires skill, not chance. As a result, it’s legal and largely unregulated.

What’s going to happen now? Lawmakers may now reconsider whether fantasy sites should be regulated. New Jersey Rep. Frank Pallone, Jr., (D) recently made the argument that the rise in popularity of daily fantasy sites supports the case for the legalization of sports gambling nationwide. He and Sen. Bob Menendez, (D-N.J.) wrote a letter to FTC director Edith Ramirez asking whether the commission could regulate and set for rules the industry.

“Like professional sports betting, fantasy sports should be legal, but both are currently operating in the shadows,” Pallone said in a statement.

Other lawmakers have joined the fray. Senate Minority Leader Harry Reid (D-Nev.), who once oversaw the Nevada Gaming Commission, told the Huffington Post that Congress should scrutinize the fantasy sports industry in light of its “scandalous conduct.” And Rep. Hakeem Jeffries (D-N.Y.) requested that the House Judiciary Committee hold a hearing to examine whether the multi-billion dollar industry should be allowed to police itself.

The New York Times and the Boston Globe have penned editorials calling for regulation. Fantasy enthusiasts are calling for changes, too: Cory Albertson, who, along with his playing partner Ray Coburn, has won millions from fantasy sports, declared in an op-ed in the Wall Street Journal, “Let’s cut to the chase here: Playing daily-fantasy sports games for money is gambling. And it should be regulated.â&#128;&#139;”

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Inside the Scandal Rocking the Fantasy Sports World

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