A regulatory system gone belly-up: Deconstructing Line 3’s ‘Independent Monitors’

Initially posted on May 3, 2020 as part of an occasional series which explores how government regulatory agencies are biased towards corporate interests. I was updating it and inadvertently unpublished it. Still a timely issue, so reposting it.

Line 3 current route (orange) and proposed route (green).

Consider the following thought experiment.

Imagine that a company wanted to build a crude oil pipeline 355 miles through northern Minnesota, crossing some of the state’s cleanest waters. That pipeline would carry tar sands crude oil, a particularly dirty form of fossil fuel and difficult to clean up when it spills.

Imagine that government regulators approved the project, but required the company to pay to hire Independent Environmental Monitors to oversee construction on behalf of the state. These monitors would be the on-the-ground representatives for the Minnesota Pollution Control Agency (MPCA), the Minnesota Department of Natural Resources (DNR) and other departments.

Now imagine, in an unprecedented move, that government regulators put Tribal Nations and environmental groups in charge of selecting and training the Independent Monitors. This, regulators said, would bring more credibility to the process, as it would assure construction would meet the highest possible environmental standards.

What do you think would happen next?

As I imagine it, the pipeline company would blow a corporate gasket, argue the process was deeply biased, and do whatever it could to change the rules.

Now let’s return to reality. Here’s what actually happened.

The Minnesota Public Utilities Commission (PUC) approved Line 3 Route Permit required Enbridge to pay for third-party Independent Monitors to oversee the pipeline’s construction. They would be eyes and ears on the ground for the state’s regulatory agencies (e.g. the Minnesota Pollution Control Agency, the Minnesota Department of Natural Resources, etc.)

In reality, however, the PUC put Enbridge — not Native Nations and environmental groups — in charge of both selecting and training the Independent Monitors, as if Enbridge wouldn’t have any bias in these decisions. Under the plan, state agencies would review and sign off the hires.

According to the PUC-approved plan, the monitors report directly to state agencies and are under their control. Yet as a practical matter, it seems that the Independent Monitors would be beholden to Enbridge, as Enbridge chose them for these jobs and indirectly pays their salaries. This relationship could affect a monitor’s judgement in the field. If they are sticklers for the rules, could they get dropped from consideration for future jobs?

Enbridge would seem to have its own incentives to avoid recommending monitors who aggressively enforce the rules, as its goal is to keep the project moving on schedule.

Independent Monitors initially had a weak charge. They will “work in a review function to verify that environmental compliance is being achieved and to assess the success of Enbridge’s compliance program.”

In practical terms, that meant Independent Monitors wouldn’t have the power to stop construction if they see a major permit violation. Instead, they would report the problem both to Enbridge staff and the state agency they work for. This, according to the plan, would “allow Enbridge the opportunity to timely address the issue.”

[An updated version of Enbridge’s monitor staffing plan (October, 2020) gives monitors the authority “to order the halt of a specific non-compliance activity.” That’s a good change.]

Having Enbridge train the Independent Monitors seems bizarre. One would think that state agencies such as the MPCA and DNR would be in the best position to train Independent Monitors on their rules and permit conditions.

State regulators deferred to Enbridge’s judgement, showing an abundance of trust in a company they’re supposed to be regulating.

It’s not surprising that Enbridge would want this monitoring system. What’s surprising is that state regulators agreed to it. They seem blind to their pro-industry bias in these decisions, a bias that has permeated the Line 3 review process.