Administrative Law Judge Ann O’Reilly’s long-awaited report on Enbridge’s Line 3’s crude oil pipeline through northern Minnesota came out late Monday with recommendations that are sure to disappoint the pipeline’s indigenous and environmental opponents as well as Enbridge itself.
The recommendations do not offer a thumbs-up or thumbs-down on the proposed 337 mile pipeline from Kitson County to Superior, Wisc. Instead, O’Reilly recommends giving Line 3 tentative approval, hinging on numerous conditions — but conditions that Enbridge surely will oppose.
[Note: I have not read the full report, which was released in the late afternoon. The following analysis relies on initial reads from MN 350, the Youth Climate Intervenors, and the Sierra Club, a group with which I volunteer.]
Significantly, O’Reilly’s 370-page report rejects Enbridge’s preferred route. The recommendations says the only way the project would meet a cost-benefit analysis — and justify a Certificate of Need — would be if the company removed the old Line 3 from its existing trench and used the same trench for the new Line 3.
O’Reilly’s recommendations would both add significant costs to Enbridge and create an unwinable legal conflict with Ojibwe bands.
Enbridge proposed abandoning the old pipeline in the ground and installing the new pipeline along a new route. (That route would cross the Mississippi River twice, including the headwaters.) O’Reilly’s requirement to remove the old pipeline and use the existing trench would — by Enbridge’s estimate — add $1.28 billion in costs. (See page 8-13 in the final environmental impact statement.)
Further, the old Line 3 cross reservation lands. Reusing that same trench is a non starter. Tara Houska, National Campaigns Director of Honor the Earth, said it in a statement: “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.” So even if Enbridge was willing to fork out the extra $1 billion to remove the old pipeline, it’s highly unlikely it would ever get the needed permission from Native nations to build it.
Lastly, O’Reilly’s report is clear that Native nations have the right to say “no” to any new pipeline through their territory. On page 10 of her report, she writes:
Just like the Commission [PUC] cannot bind the federal government, the Commission does not have the authority to require the Indian Tribes to permit the replacement of Line 3 within the Reservations.
The recommendations now go to the Minnesota Public Utilities Commission (PUC), which is expected to cast final votes in June on Line 3’s Route Permit and its Certificate of Need. O’Reilly’s conditions seem to be deal killers, but unfortunately she doesn’t come out and say that. They leave the PUC some wiggle room. It’s still anyone’s guess how the PUC will vote.
Perhaps the only certainty is that there will be litigation regardless what happens.
O’Reilly Confirms Climate Change Impacts
O’Reilly could have rejected Line 3 based on the huge climate change costs that Enbridge shifts to the public. On page 196 of her report, O’Reilly adopts the environmental impact statement’s findings that Line’s 3 “social cost of carbon” would run $287 billion over 30 years.
That alone should be a good enough reason to reject the project. Yet somehow O’Reilly concludes that if Enbridge reuses the existing trench, “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.” (Page 9)
Note the term: “slightly outweigh.” Certainly not a slam dunk. And O’Reilly writes on page 240:
the Project has the potential to increase extraction and consumption of fossil fuels, which are inconsistent with carbon-reduction, climate change, and environmental policies at home and worldwide.
Minnesota Doesn’t Need Line 3
The pipeline could be rejected based on the lack of need. The Minnesota Department of Commerce said as much in formal testimony, one of the stunning developments during this years-long debate.
London Economics International, the Minnesota Department of Commerce’s economic consultant, rejected Enbridge’s analysis for the need for a new Line 3. In written testimony it said, as a group, refineries in Minnesota, North Dakota, South Dakota, and Wisconsin “have been operating at high levels of utilization, which indicates that they are not short of physical supplies of crude oil, and also that they have little room to increase total crude runs.”
Further, “Minnesota demand for refined products appears unlikely to increase in the long term …Minnesota and its neighbors are generally not short of physical supplies of refined products, and are not likely to be short of supplies in the future …” (page 5)
Perhaps the problem in rejecting Line 3 based on “Need” has more to do with Minnesota’s flawed rules governing pipeline review. On page 194, O’Reilly wrote:
It is a bitter pill to swallow, however, that the “need” for this Project is to primarily assist foreign oil producers in transporting their products through (and mostly out of) Minnesota. However, the rule does not prioritize the needs of Applicant’s customers, the people of Minnesota, or the people of neighboring states. Each of these categories has equal priority under Rule 7853.0130(A)
Whatever the logic, O’Reilly’s recommendation put the onus on Ojibwe bands to exercise their legitimate treaty rights to stop Line 3. This, too, is a bitter pill. The Ojibwe, and other indigenous peoples in general, are a small percentage of the state’s population. They don’t have a strong political voice. And when they do exercise their legitimate treaty rights, it always creates a community backlash.
There were other reasons to reject this pipeline. This particular decision could create an unnecessary anti-Ojibwe backlash in northern Minnesota.
17 Conditions for Approval
At the very end of O’Reilly’s report (starting on page 364), she includes 17 conditions for allowing the project to move forward, many of them around insurance coverage, some of them recommended by the Department of Commerce.
Here are a few of them. Enbridge should:
Guaranty the debts and legal obligations of Applicant (including in the event of Applicant’s insolvency); and indemnify and hold harmless the State of Minnesota from and against all losses and damages arising out of the Line 3 pipeline.”
Be required to purchase $100 million of Environmental Impairment Liability (EIL) insurance dedicated specifically to Line 3.
Establish a decommissioning and abandonment fund to ensure the removal of the new Line 3 and the remediation of any environmental damage upon the decommissioning or abandonment of the new line.
Be required to report annually to the Commission about each exposed pipeline segment along Line 3 with identification of how Applicant will meet its Minnesota operating permit conditions, as well as federal requirements.
Be required to prepare and implement a written plan to prevent and mitigate sex trafficking during the construction of the new line.