The Minnesota Department of Commerce recommended denying the Certificate of Need for the Enbrdige Line 3 tar sands crude oil pipeline in a May 9 filing to the Minnesota Public Utilities Commission (PUC).
Commerce’s filing responds to Administrative Law Judge Ann O’Reilly’s report and recommendations on Line 3, issued in April. One issue to emerge from the back-and-forth is a disagreement between O’Reilly and Commerce on the state’s proper role in evaluating Enbridge Line 3’s “need.” O’Reilly’s report criticized Commerce for not providing an in-depth economic analysis of the project. Commerce responded that it was not required to do its own study, only evaluate Enbridge’s analysis to see if it was sound.
To be clear, both Commerce and O’Reilly found flaws in Enbridge’s economic arguments. O’Reilly appears to have wanted more help from the state than she got.
In this case, Commerce got it right. It reviewed Enbridge’s work to see if it was credible, and it wasn’t. End of story. Reject the pipeline.
The PUC is expected to vote on Line 3 in late June.
O’Reilly’s report rejected Enbridge’s preferred route — which opens a new pipeline corridor in northern Minnesota. It didn’t meet a cost-benefit analysis, she said. But she did leave open the possibility that Enbridge could remove the existing Line 3 and rebuild in the same trench, a proposal with little support from either side of the debate.
O’Reilly Criticizes Commerce Department
O’Reilly was clearly frustrated with Commerce. She wrote that the Department of Commerce Division of Energy Resources (DOC-DER) “has not been overly helpful to the [Judge] and Commission in this case.”
She notes that Commerce hired its outside expert relatively late in the process and she didn’t have time to conduct any stand-alone analysis of need. O’Reilly continues:
Despite [Commerce’s] lack of a stand-alone expert analysis of need, [Commerce] repeatedly advised the public at the public hearings that the agency found no need for the Project – statements that gave the impression that the agency had conducted its own expert analysis of need. When, in fact, [Commerce] only provided criticism of Applicant’s methodologies, but no independent analysis of the need for the Project.
Shifting the Burden of Proof
The key passage to settle this dispute is on page 160 of O’Reilly’s report, stating that Enbridge: “bears the burden to demonstrate, by a preponderance of the evidence, that its Project meets the criteria established in rule and law for the issuance of a [Certificate of Need].”
In Commerce’s official response to the PUC, it simply agreed with O’Reilly that Enbridge bears the burden of proof, then questioned why O’Reilly was pushing for a separate detailed analysis from the state. Commerce writes:
[O’Reilly’s] Report, at times, appeared to shift Enbridge’s burden of proof to DOC DER and other parties by suggesting that parties other than Enbridge needed to have provided more information or to provide particular types of information as evidence. This is not, however, the legal standard. …
While it may be understandable that the [administrative law judge] would have liked additional information from DOC DER witnesses, key findings in the Report show that DOC DER fulfilled its role of identifying weaknesses and flaws in [Enbridge’s] evidence. For example, DOC DER witnesses showed that Enbridge witnesses provided flawed pipeline utilization forecasts. DOC DER witnesses provided important evidence, upon which the Report relied, and from which the Commission may reasonably conclude, that Enbridge failed to meet its burden of proof to demonstrate need for the proposed Project.
Comment: I don’t recall the Department of Commerce ever claiming it had done its own economic analysis. That said, Commerce was not out of line concluding the project isn’t needed and reporting that fact to the public. Enbridge has the resources to do a thorough study. If Enbridge couldn’t make a credible case that the pipeline is needed, then surely it isn’t needed.
Commerce Recommends Added Conditions Should the PUC Approve Line 3
The Department of Commerce also submitted additional findings for the PUC to consider before it could find “need” for the project. It wrote:
Enbridge has not demonstrated that a larger, 36-inch pipeline is needed. Instead, the pipeline diameter should be based on Enbridge’s stated need to replace the original 34-inch diameter Line 3, and therefore, a new Line 3 shall be no larger than a 34-inch pipeline. …
Enbridge shall apply “neutral footprint” objectives to the environmental impacts associated with the Line 3 Replacement Project, including conserving an acre for every acre of natural habitat impacted, planting a tree for every tree that must be removed to build new facilities, and generating a kilowatt -hour of renewable energy for every kilowatt-hour the Line 3
Replacement Project energy operations consume.
Comment: These are heavy barriers for Enbridge to meet. Notably, Enbridge prematurely bought all the 36-inch pipeline it needs for the Minnesota section of the project and started creating pipeline staging areas around the state. Under this new condition, it would be a lost expense.