Photo: Judge Ann O'Reilly receives testimony from a public commenter at the East Lake Community Center in McGregor MN, October 2017, Rob Wilson Photography
On April 23, 2018, the Administrative Law Judge (ALJ) for Minnesota’s review of the proposed Line 3 replacement pipeline, Ann O’Reilley, issued her final report. In 400+ pages and 2500+ footnotes, the report summarizes almost 5 years of regulatory process and several mountains of evidence, including a 5000+ page Environmental Impact Statement, transcripts from scores of public meetings, tens of thousands of public comments, countless rounds of legal argument by more than a dozen formal intervening parties, a 12-day courtroom trial with more than 50 expert witnesses, and more. It documents the ALJ’s legal conclusion on how the Public Utilities Commission (PUC) should interpret the relevant laws to make a permit decision. And what a conclusion it is!
ALJ O’Reilley says the PUC should APPROVE a new pipeline but DENY Enbridge’s proposed new route, and instead require them to remove existing line 3 and replace it “in-trench.” Ironically, her attempt at compromise proposes the only option that all parties dislike. Water protectors and tribes are determined to stop any new pipeline. And Enbridge is fixated on a new corridor – that has been their goal since day one.
So what does this mean, and what happens next? After a couple of weeks of letting the dust settle, we now offer our thoughts: In short, this is both an enormous victory and a huge loss at the same time, and it creates a total mess.
On one hand, the main objective of our 5 years of resistance has been to stop the new corridor…and for the first time, we have a clear path to victory. In rejecting Enbridge’s proposed new route, O’Reilley relies on expert conclusions from the state’s environmental agencies - Department of Natural Resources and Pollution Control Agency - that in-trench replacement will have the least impact (Findings of Fact 307-309).
Her report also calls Enbridge’s bluff in many ways. She cuts through many layers of dishonesty to point out that:
- this is not a replacement at all, but a proposal to abandon the old line and build a new, bigger one in a different place (4)
- Enbridge's claim that removal of the old pipe would be too risky makes no sense because they are constantly doing work in that crowded corridor (1051, 1074)
- although they deny it, Enbridge clearly plans to put more than 1 pipeline in the proposed new corridor, as evidenced by their recent purchase of easements that give them the right to build 4 pipelines in some places (395-401)
- the desire for a new corridor is clearly driven by Enbridge’s negotiation challenges with the tribes, which is not Minnesota’s problem to fix:
“Given Leech Lake’s current position on Line 3, it is reasonable to assume that Applicant may have difficulty renewing its current easement for the existing Lines 1, 2, 3, 4, 13, and 67 in the years leading up to 2029. Therefore, it is understandable why Applicant would want to create a new corridor where it can obtain perpetual easements from private landowners and avoid tribal lands altogether. It is also reasonably foreseeable that Applicant will seek to re-route its existing lines outside of the Leech Lake and Fond du Lac Reservations in the near future” (475).
“Applicant’s ability or inability to obtain tribal approval for its pipelines is a matter outside of the scope of this proceeding”(477). “Expense and difficulty in negotiating with the Tribes is a reality that Applicant has created for itself. Applicant’s business decisions are not the responsibility of the Commission to fix by opening a new corridor for Applicant for the relocation of Existing Line 3 (and potentially future lines running through these Reservations), simply because negotiations with the Tribes may be protracted and difficult” (1394).
Enbridge and its shippers have said repeatedly that the additional cost (estimated $1.28 billion) and disruption to service (estimated 9-12 months) required by in-trench replacement make that option unreasonable, so it’s not clear that the pipeline Judge O’Reilley recommends is one they even want to build. Similar uncertainties with Kinder Morgan’s TransMountain Pipeline expansion and TransCanada’s proposed Keystone XL pipeline mean that we now have a realistic path to stopping all 5 of the new tar sands pipelines proposed in the last decade (Enbridge’s Northern Gateway and TransCanada’s Energy East projects were both recently cancelled after prolonged campaigns). This is a position of strength and potential success that many of us never thought possible, at least before the historic siege at Standing Rock.
On the other hand, the ALJ still recommends approval of a new Line 3, concluding that if replaced in-trench, the benefits to Enbridge and their customers outweigh the impacts to water, wild rice, public health, treaty rights, human rights, climate change, etc. We disagree! As water protectors, we stand opposed to any new fossil fuel infrastructure anywhere. The existing Line 3 is leaking, but that is not a reason to replace it, that’s a reason to shut it down yesterday. A new pipeline would ensure more decades of poison and violence concentrated once again on tribal lands and Indigenous people.
It is very unclear how this will all play out. The existing Line 3 corridor cuts across the reservations of the Leech Lake and Fond du Lac Bands of Chippewa, and both are strongly opposed. Leech Lake has stated that they absolutely will not allow any new pipeline on their reservation, and will defend their lands “by any means necessary.” They issued a press release denouncing the Judge’s recommendation as “horrific” and “a clear attack on sovereignty and tribal communities” that “puts undue burden on the Leech Lake Band to hold the risk of the pipeline replacement and to revoke the permit.” The ALJ disagrees, says that her recommendation “does not, in any way, infringe on the sovereignty of the Indian tribes,” because they appear to have the power to block the project (1396). But only the federal courts can decide if that is true. Also, the easements that allow Enbridge to cross the reservations will expire in 2029, and Leech Lake has already said it does not intend to renew and wants the pipes removed as soon as possible.
Existing Line 3 also crosses a small parcel of land owned by the Red Lake Band of Ojibwe, although separate from its reservation. Enbridge’s mainline corridor has been trespassing on this property for decades, and after first agreeing to an $18m land exchange deal in 2015, the Red Lake Band recently passed a resolution cancelling that deal, and another taking steps to evict Enbridge, following the lead of the Bad River Band of Chippewa in neighboring Wisconsin.
And then there’s the issue of the Consent Decree between Enbridge and the federal government. In 2016, as part of a settlement punishing Enbridge for its catastrophic spill on the Kalamazoo River in 2010 (although on an entirely different pipeline), the US Department of Justice included a requirement that Enbridge must also replace its decrepit Line 3 pipeline, if it receives approvals to do so. Because of this, it’s also unclear if Enbridge would even be ABLE to walk away now, if Minnesota approves a project with conditions it finds unacceptable (FOF 346-347).
So what’s next? Despite an immediate drop in their stock prices after the ALJ report was released, Enbridge claimed it a victory because it concludes economic need, and is now pushing the PUC to overrule her and approve the new route. All intervening parties filed exceptions to the ALJ Report this week, and exceptions to the DOC’s draft route permit are due next week. The PUC is scheduled to make their final decision in June. How they will rule is anyone’s guess, but all signs seem to point to an even more drawn out legal battle.
P.S. Judge O’Reilley also shows that Enbridge has a complex corporate structure that shields the parent company from liability, so that in their current proposal (although they have been “less than transparent” about it), they would not be responsible for spill or cleanup costs in any way. She recommends, as part of any permit approval, a requirement that Enbridge purchase an unusually strong insurance policy in order to protect the State from liability:
“An expectation that Enbridge, Inc., would cover Applicant’s losses if Applicant were to become insolvent, simply because Applicant is in the “family” of Enbridge, Inc. entities, is misguided and fanciful. Applicant’s witness clearly admitted that Enbridge, Inc. will not be liable for spills or cost of cleanup for Line 3. This is because Enbridge, Inc. remains insulated from Applicant’s liabilities through a complicated corporate structure of limited partnerships, limited liability companies, and subsidiaries” (983).
“In sum, the ALJ finds that Applicant has provided no evidence of its own financial viability or creditworthiness.” (993).
“Moreover, the ALJ specifically finds that Applicant has been less than transparent about the Applicant and the complicated corporate structure which ultimately insulates Enbridge, Inc. from liabilities related to the Line 3 and the Mainline System. The ALJ, therefore, recommends that the Commission exercise significant caution when relying upon Applicant’s assurances of financial responsibility. (997).