With less than two weeks before the alleged deadline, it’s time for the company to stop the doubletalk and set the record straight.

The company behind the Dakota Access Pipeline (DAPL) owes its investors a straight answer: does it face a January 1 contractual deadline with its shippers, or doesn’t it? Company spokespeople have told the court that they do, but told the press that they don’t. Now, with less than two weeks before the alleged deadline, it’s time for the company to stop the doubletalk and set the record straight.

In a sworn declaration submitted to a federal court on August 2, Joey Mahmoud, a Vice President of Dakota Access, LLC (and also an Executive Vice President of Energy Transfer Partners (ETP), a co-owner of Dakota Access) clearly stated that the pipeline’s long-term shipping contracts would expire on January 1:

“In connection with its long-term transportation contracts with 9 committed shippers, Dakota Access has committed to complete, test and have DAPL in service by January 1, 2017. The long-term transportation contracts give shippers a right to terminate their commitments if DAPL is not in full service per the contract deadline…and loss of shippers to the project could effectively result in project cancellation.” [Emphasis added.]

The legal team representing Dakota Access doubled down on the claim in late November, warning the court of the financial harm that the company faces if the pipeline is not completed on January 1 and…

“…those who have contracts to purchase oil from Dakota Access exercise their rights to cancel due to the delay.” [Emphasis added.]

Yet in repeated statements to the press, the company has flatly denied that it faces any deadline on January 1. A November 4 story in the Sioux Falls Argus Leader quoted Energy Transfer Partners spokeswoman Vicki Granado contradicting Mahmoud’s declaration, telling a reporter point blank, “There is no Jan. 1 deadline.” She repeated the claim in a story published on December 1, 2016, saying flat out:

There is nothing contractual tied to the January 1 date. That was an initial in-service target date. The contractual dates are further out and pose no issue to the project.”

The two accounts of the deadline simply can’t be reconciled, and there is no indication that either newspaper story was corrected. Which raises two important questions: who is Dakota Access misleading, and why has it engaged in this kind of obfuscation?

The conflicting accounts represent more than an innocent error; in each case, the company carefully calibrated its statements to achieve a specific goal. Dakota Access first mentioned the January 1 deadline as a part of a legal strategy to convince the court to speed up its deliberations: the company wanted the court to believe that the January 1 deadline posed dire financial consequences. Granado’s statements, in contrast, served to mollify investors, reassuring them that January 1 had absolutely no contractual significance. And since the company hasn’t made its contracts public, these contradictory statements have left investors and the court wondering which ETP spokesperson is speaking on the level.

But the deception is more than just another black mark on the pipeline’s record. It may carry legal ramifications as well.

The original mention of a January 1 deadline came from sworn testimony in federal court. The declarant, Mr. Mahmoud, had good reason to be familiar with the terms of the shipping contracts. If he misinformed or misled the court about the details those contracts, he may potentially face serious repercussions, including accusations of perjury.

Just as importantly, though, the company’s duplicitous statements about the contract deadline may have misled investors about a material risk to the company’s business prospects. And because ETP is a publicly traded company listed on the New York Stock Exchange (NYSE), this sort of deception may carry financial and legal consequences. NYSE rule 435(5) prohibits the circulation of false or misleading rumors “of a sensational character which might reasonably be expected to affect market conditions.” Further, SEC rule 10b-5, covering “Employment of Manipulative and Deceptive Practices,” declares that it is unlawful “To make any untrue statement of a material fact…in connection with the purchase or sale of any security.”

And as it turns out, just about anything ETP says in public right now could have a bearing on the “purchase or sale” of company stock. On November 21—the day before the Dakota Access legal team doubled down its claim about the importance of January 1 to the company’s finances—the company that controls ETP announced its intention to sell a controlling interest in the firm to a sister company, Sunoco Logistics Partners. The proposed $21 billion sale immediately proved controversial, with ETP share prices falling by 7 percent on the day the deal was announced. Some investment analysts lambasted the move as little more than a backdoor way to slash ETP’s payments to shareholders, since Sunoco pays lower dividends than ETP. Advocates for investors are now considering suing ETP over the proposed deal, questioning whether it was in shareholders’ best interests.

In that context, ETP’s contradictory and misleading statements about the January 1 deadline could have materially affected investors’ perceptions of the company’s value. And that’s true no matter whether the January 1 contractual deadline really exists. Some investors may have taken the company’s court declaration at face value, downgrading their assessment of the company’s prospects based on the risk that it could lose shippers at the beginning of the year. Other investors may have relied on the company’s statements to the press, discounting the consequences of a missed deadline. In either case, some investors may have been misled about ETP’s financial health as a result of credible public statements by ETP representatives.

The company owes the public and its shareholders a clear and transparent accounting of whether it faces contractual deadlines on January 1. If they do, ETP owes the press, the public, and its investors a forthright explanation of why a company spokesperson denied its existence. And if the deadline isn’t real, the company will have to face any legal consequences for misleading the court.

Either way, investors now have an additional reason to doubt the candor, integrity, and commitment to transparency of the company backing the Dakota Access Pipeline.

December 20, 2016