An administrative law judge in Minnesota has created new headaches for Enbridge’s proposed Line 3 pipeline replacement from Alberta to U.S. oil refineries, ruling in favour of the project but against the route the company had proposed.
“Judge Ann O’Reilly shot down Enbridge’s planned new route for the expanded line, which would follow a different path for roughly half of its 543-kilometre length that runs through Minnesota,” CBC reports. “Instead, the judge is recommending ‘in-trench’ replacement of the line along its current route.”
“The ruling is strikingly similar to a recent decision in Nebraska affecting competitor TransCanada Corporation, in which that state’s public utilities commission approved the company’s Keystone XL pipeline but along an alternative route,” the Financial Post notes. “In the case of Keystone XL, TransCanada and those opposed to the pipeline are now gearing up for an appeal of the approval based on the alternative route selection.”
Enbridge said it would review the Minnesota judge’s recommendation. Spokesperson Suzanne Wilton said the company is “pleased that the Administrative Law Judge has listened to the extensive evidence that there’s need for this safety-driven maintenance project.” But Enbridge’s initial comment was rather more critical of the ruling.
“Overall, we are pleased that the ALJ has agreed that there is a clear need for the pipeline,” the company stated. But “our preferred route was selected for several reasons, including respecting the sovereignty of the Tribal communities through which the pipeline corridor currently passes… We don’t agree with that recommendation, and Enbridge continues to believe our preferred route is the best route for Minnesota when all factors are considered.”
While it’s called a pipeline replacement, the C$7.4-billion project would actually double the capacity of the existing, 760,000-barrel-per-day line, CBC notes. That structure, “constructed in the 1960s, has been a source of spills in the past. The company has voluntarily dialled back capacity to address mounting maintenance issues while it pushes ahead with a replacement.”
The state Public Utilities Commission is not obligated to follow the judge’s recommendation in its decision, expected in June, “but the PUC typically weighs an administrative law judge’s opinion heavily when making a decision,” the national broadcaster states. “Both proponents and foes of the project expect extensive litigation before construction is completed.”
The Trudeau Cabinet approved the Canadian section of the Line 3 project in tandem with Kinder Morgan’s Trans Mountain pipeline expansion in November 2016.
At a time when Enbridge’s finances are decidedly shaky, climate and environment groups following the process say O’Reilly’s decision could doom the project.
“Anytime you hear ‘alternate route’, it means more costs and longer delays, and that’s not good news for the pipeline and its investors,” said Greenpeace Canada campaigner Mike Hudema. The alternate route would incur higher costs, he explained, and the ruling comes alongside other hurdles the project already faces.
“Line 3 earned a negative recommendation from the Minnesota Department of Commerce, it lacks consent from impacted Indigenous communities, grassroots resistance on the ground continues to grow, and more and more financial institutions are turning their backs on tar sands projects.”
Honor the Earth National Campaigns Director Tara Houska, commended O’Reilly “for recognizing Enbridge should not be allowed to send its tar sands pipeline through a new route in Minnesota.” But she maintained that “Tribal nations have been crystal clear that a new line is not acceptable; there is no economic need for Line 3 and the risk it poses to Minnesota.”
“At a time when Minnesota’s oil consumption rates are declining and the Minnesota Department of Commerce’s independent analysis shows that this oil is not needed, there’s simply no good reason to allow Enbridge to build a dangerous new tar sands pipeline through our state, regardless of what route it takes,” said Margaret Levin, State Director of the U.S. Sierra Club’s North Star Chapter. “We urge the PUC to listen to the voices of thousands of Minnesotans who have marched, submitted public comment, and testified against Line 3 and reject this dangerous pipeline once and for all.”
In her ruling, O’Reilly determined the project’s benefit to Minnesota based largely on the condition of the current line. Line 3 “is old, needs significant repair, and poses significant integrity concerns for the state,” she wrote. “Accordingly, the judge finds that replacement of the line is a reasonable and prudent action.”
The decision states that, “based upon applicant’s preferred route, the consequences for Minnesota outweigh the benefits of the project.” But that cost-benefit analysis changes “if applicant replaces Line 3 in its current location.” If Enbridge uses the existing route, “the benefits to Minnesota refiners, refiners in the region, and the people of Minnesota slightly outweigh the risks and impacts of a new crude oil pipeline.”
O’Reilly “points out that sticking to the existing pipeline corridor would isolate the risk of a spill, prevent the establishment of a new pipeline corridor in an environmentally sensitive part of the state, and ‘prevent the abandonment of nearly 300 miles of steel pipeline,’” CBC notes. The decision reflects the judge’s concern that Enbridge could abandon not one, but two pipelines through the state if it builds along its preferred route, then eventually decides to shut the new line down.
For now, though, the CBC report gives some sense of how important the new pipeline is to Enbridge’s bottom line. The pipeliner spent US$5.3 million lobbying for the pipeline last year, “nearly five times more than any other interest group spent on lobby efforts in that state in the last calendar year,” writes Parliamentary correspondent John Paul Tasker.
“Amid pricing pressure for Canadian energy goods, Enbridge’s stock has sunk in recent months,” he adds. “Line 3 accounts for nearly a third of the company’s $21-billion in planned capital spending, and an outright rejection would have been financially disastrous for the company.”