Revisiting the PUC’s tortured logic to approve Line 3 regardless of its massive climate damage

The Minnesota Public Utilities Commission (PUC) wrote in its Certificate of Need for Enbridge Line 3 that benefits of approving it outweighed the costs.

It could only come to that conclusion by completely ignoring climate damage.

There are clear signs in the record that Commissioners were grasping at straws to justify approving Line 3 in spite of its clear and significant climate damage.

Here’s a quick recap state recommendations to the PUC on Line 3’s climate damage.

The Minnesota Department of Commerce prepared Line 3’s environmental impact statement (EIS) which concluded that the project would generate $287 billion in climate damage globally over three decades (see Chapter 5, page 466).

Administrative Law Judge (ALJ) Ann O’Reilly took public and expert testimony on Line 3’s Certificate of Need and issued a report to the PUC with findings of fact and recommendations. That report adopted the EIS’s climate damage estimate (see page 196).

The Minnesota Pollution Control Agency (MPCA) validated Line 3’s climate damage estimates in a letter to the PUC (page 2), supporting O’Reilly’s analysis. Regarding climate damage, it states: “Only the No Build option would avoid this very significant cost to society.”

Nonetheless, the PUC ignored the climate damage estimates and approved the pipeline.

File: Protest outside Gov. Tim Walz’ mansion

In its initial Line 3 Certificate of Need (2018), the PUC offered two arguments for ignoring climate damage.

First, the PUC dismissed the science behind the climate damage estimates, technically referred to as the “social cost of carbon” (SCC).

The PUC wrote that the EIS’s climate damage studies came up with differing numbers. They “do not consistently disclose the details of their analysis, and often rely on proprietary models and data, a thorough assessment of the reasons for this variability is not possible,” the PUC said.

The PUC cherry picked this fact from the EIS (Chapter 5 page 466) to cast doubt on climate science. Yet look five pages earlier in the EIS, page 461, and you find a paragraph the PUC conveniently omits from its analysis:

EPA [Environmental Protection Agency] and other federal agencies use the SCC [social cost of carbon] to estimate the climate benefits of rulemaking. … The SCC is meant to be a comprehensive estimate of climate change damages. It includes changes in net agricultural productivity; human health; property damages from increased flood risk; and changes in energy system costs, such as reduced costs for heating and increased costs for air conditioning. Given current modeling and data limitations, however, it does not include all important damages. Nonetheless, EPA … reports that the SCC is a useful measure to assess the benefits of CO2 reductions.

Line 3 EIS

Two important takeaways here.

1. The federal government is confident enough in the social cost of carbon analysis to use it in its rule making.
2. If anything, the EIS’s underestimates climate damage because “it does not include all important damages.“

The PUC argued that pipelines themselves don’t cause climate damage, people driving cars cause climate damage.

Here’s how the PUC put it:

The Commission recognized the potential impacts of global climate change [from Line 3], but after carefully reviewing the record concluded that denying the certificate of need would not significantly reduce the demand for crude oil and would therefore not significantly reduce climate change impacts. [Emphasis added]

Line 3 Certificate of Need, 2020, page 13

Problem 1: The PUC failed to explain to the public how it reached its conclusion that Line 3 wouldn’t add to climate damage. The PUC offered a vague reference to “carefully reviewing the record.” That makes the decision sound more substantial than it was. If the PUC were transparent, it would have acknowledged that it accepted Enbridge’s analysis over that of state experts.

In a PUC filing, Enbridge wrote: “There is no Evidence the Project will Have an Impact on Climate Change.” That’s essentially what the PUC decided.

PUC Commissioners should have viewed Enbridge’s analysis with greater skepticism and given state expert analysis more credit. Enbridge has a huge financial stake in ignoring climate damage, just like Big Tobacco had a huge financial stake in ignoring the cancer risks from cigarettes back in the ’60s and ’70s.

Problem 2: The PUC dismissed a key EIS finding: The PUC ruled Line 3 EIS “adequate,” yet it ignored its climate damage estimate. If PUC disagreed with that finding, it had the opportunity to call the experts who prepared the EIS to ask them questions. Commissioners could have requested EIS modifications to clarify the climate damage analysis. They did not.

In its climate damage assessment, the EIS doesn’t make a distinction between the pipeline and people driving cars as the PUC tries to do. For some reason, the PUC felt the need to protect Line 3 from climate damage criticism.

Problem 3: The PUC dismissed the Administrative Law Judge’s findings on state energy policy. According to Administrative Law Judge O’Reilly’s report:

Minnesota’s renewable energy policy encourages a shift away from non-renewable energy sources, such as fossil fuels. The ALJ finds that this Project does not advance Minnesota’s progressive environmental policies and goals.

ALJ Report on Line 3, page 208

In contast, the PUC wrote: “granting the certificate of need was consistent with all applicable laws and policies, including Minnesota’s energy policy.” [Emphasis added.]

Problem 4: The PUC contradicted the Minnesota Department of Commerce. Commerce told the PUC Enbridge had failed to prove the future demand for crude oil justified building a new pipeline.

So why risk any climate damage at all for a pipeline we don’t need?

The PUC rejected Commerce’s analysis. It effectively replaced the $287 billion climate damage with $0 in its cost-benefit analysis.

The reasons why the PUC rejected so many state experts and downplayed climate damage remains a mystery.

Whatever the reasons, they reflect a deep systemic problem at the PUC that needs to be addressed.

An earlier version of this blog stated that the PUC had dropped an argument made in its 2018 Certificate of Need for Line 3 in the final order it adopted in 2020. The 2020 Certificate of Need incorporated the 2018 language. The blog has been updated to correct this error.