Photo: An exposed section of Line 4, one of the six pipelines in Enbridge's Mainline Corridor, as it crosses a wetland on the Fond du Lac Reservation.
On May 15, a Minnesota Tax Court judge ruled on Enbridge’s lawsuit against the State of Minnesota, agreeing with the company that the state has been grossly overvaluing the Enbridge oil pipeline system - in some years, by billions of dollars.
Enbridge claims that the MN Department of Revenue’s property tax assessments of Enbridge’s Mainline system have been too high for the past 6 years. They say the State of Minnesota owes them about $55 million in refunds. In his ruling, the judge did not determine exact amounts, but largely agreed with Enbridge’s math.
Many in Minnesota are very concerned about this, because the vast majority of these taxes flowed to individual counties, most of whom are among Minnesota’s poorest and simply do not have the capacity to pay it back. At least two counties, Red Lake and Clearwater, may be required to refund Enbridge an amount greater than their entire annual budget. For example, Red Lake’s current tax levy is $2.9 million but they may owe Enbridge $3.5 million. “I don’t know where we would get the money for it,” said Bob Schmitz, the county’s auditor. “We don’t even have high enough reserves to cover that.”
For many of these counties, Enbridge is by far the largest taxpayer and in some cases the annual property tax from Enbridge’s pipeline system makes up a majority of their entire levy. The affected counties affected are: Aitkin, Beltrami, Carlton, Cass, Clearwater, Hubbard, Itasca, Kittson, Marshall, Pennington, Polk, Red Lake and St. Louis.
The Enbridge Mainline is made up of 6-7 different pipelines, including the existing Line 3, which Enbridge proposes to abandon and build anew. The Mainline corridor currently cuts across the lake country of northern Minnesota, including the Leech Lake and Fond du Lac Reservations, and also trespasses on a small parcel of land belonging to the Red Lake Band, who recently voted to cancel a land exchange deal with Enbridge and evict them from the parcel.
“We disagree with the Minnesota Tax Court’s decision,” the Department of Revenue said in a statement. “This is not the end of the litigation process and we are exploring our options for appeal.” Enbridge claims that the Department of Revenue changed its assessment methodology, but the Department denies that allegation.
Of course, Enbridge is holding a lawsuit in one hand and a new pipeline proposal in the other. Many of the counties along both the existing and proposed new pipeline corridor shave written letters of support for the project, as has the Minnesota Association of Counties. Perhaps they plan to use the money from Enbridge’s new pipeline to help pay off their debt to Enbridge.