Is the Minnesota Public Utilities Commission (PUC) being a) hoodwinked, b) hornswaggled, or c) bamboozled by Enbridge, or all of the above?
At the center of the bamboozle is Enbridge’s pledge to provide a “Decommissioning Trust Fund.” It would be a financial reserve to pay for the removal and/or clean up of the newly approved Line 3 once it has outlived its useful purpose.
It’s a little understood proposal — because it’s only been around for a week. After years of debate over Line 3, Enbridge made a last-minute pitch of deal sweeteners to try to woo PUC approval. (Along with the Decommissioning Trust Fund, Enbridge promised to include a Parental Guaranty for Environmental Damages; Landowner Choice Program (for removing old pipeline); Neutral Footprint Program; and General Liability and Environmental Impairment Liability Insurance.)
The problem is, these proposals came in after the contested case hearing was done and the record closed. Line 3 opponents had no chance to review or comment on these proposals. At the time of the PUC vote, Enbridge’s Trust Fund proposal was thin. The PUC told Enbridge to submit more details and on July 16, Enbridge filed its Decommissioning Trust Fund Proposal. The Minnesota Department of Commerce responded days later, seeking significant changes in what appears to be a complicated and inadequate plan.
Canadian vs. Minnesota Law
Enbridge’s plan asks the PUC to mimic the Canadian trust fund model rather than Minnesota/U.S. laws and regulations. This is asking a lot. According to Enbridge’s plan:
Thus, establishing a similar pipeline decommissioning trust in the U.S. may require changes to federal and state law. Required legislative changes and otheraspects of the creation and funding of the trust could take years, as discussed further in this document.
Enbridge’s explanations for why the Canadian model is better is poorly written and hard to follow. It doesn’t make a clear argument about why its proposal is best for Minnesota. Further, Enbridge’s proposed law changes and long delays should raise red flags for Minnesotans.
Enbridge’s proposal includes a side-by-side comparison of U.S. and Canadian laws. Here are at least two examples where it appears Enbridge gets a financial benefit from following the Canadian model:
Under Minnesota/U.S. model, Enbridge would have to remove more of the old pipeline: The Canadian National Energy Board (“NEB”) requires that pipeline companies fund their abandonment trusts “to provide for removal of 20% of the pipeline on agricultural lands and continued maintenance of all remaining pipeline (including 80% of pipeline on agricultural land and 100% of pipeline not on agricultural land).” Under the proposed Minnesota/U.S. model, Enbridge would have to remove 100% of the pipeline.”
- Under Minnesota/U.S. model, Minnesota appears to get a greater benefit from any surplus funds: The Canadian model would allow the trustee to distribute surplus funds “to any of the beneficiaries and to an Orphan Pipeline Fund.” (Note: Enbridge is a listed beneficiary, so it appears Enbridge could receive some of the surplus funds.) Under the U.S. model, “surplus funds may be distributed to a MN abandoned pipeline fund that will be established and maintained for the purpose of funding reclamation of any other abandoned Enbridge pipelines in Minnesota.”
The Minnesota Department of Commerce’s letter points out other concerns and requests changes to Enbridge’s plan. It says:
- Enbridge’s plan needs to be consistent with, and require no changes to, state or federal laws.
- Is not controlled by Enbridge Inc. or any present or future affiliated entity;
Is established only for the purpose of deactivating, monitoring, and removing the pipeline together with remediation of the soil at the time Line 3 is taken out of service in Minnesota;
Includes collections over the expected 50-year life of Line 3 project in Minnesota at least to equal approximately $1.5 billion (USD), as adjusted for inflation.
How Did We Get Here?
The PUC failed to follow the rules and allowed Enbridge to change its proposal after the contested case hearing was done and the official record closed.
The PUC failed to see the obvious: If Enbridge were serious about making a good-faith offer to create a Decommissioning Trust Fund for the new Line 3, it would have done so at the beginning of the process and allowed comment. This 11th hour proposal seems to be a way for the company to shoehorn a bad deal through the PUC.
The Sierra Club and other organizations filed a Complaint with the PUC, saying Enbridge should not have been allowed to change its proposals after the hearings were over. The complaint reads in part:
After the development of one of the most extensive evidentiary records [ever] before the Commission and at the eleventh hour before a final Commission decision, Enbridge seeks to strengthen its application … by introducing into the record new commitments it promises to adopt — although they still remain to be developed in sufficient detail for the Commission and the parties to review. At this point, however, it remains totally unclear how that can be done — not just as a practical matter, but as a legal matter. The findings of an Administrative Law Judge (“ALJ”) were that, based on the evidentiary record, the environmental and socio-economic impacts and risks of Enbridge’s proposed project for a new Line 3 pipeline (“Project”) outweigh its very limited benefits.
This procedural error should be one part of a larger legal challenge to the PUC’s decision.