U.S. judge gives conditional green light to Line 3 pipeline project

A judge in Minnesota has given a conditional green light to a Canadian energy company's plan to expand a crude oil pipeline connecting the Alberta oilsands to American refineries  — but not in the location Enbridge wanted.

The administrative law judge's report recommends the expansion project be allowed to proceed, as long as it sticks to the line's current corridor and not the revised route the pipeline company pitched.

"Line 3 ... is old, needs significant repair, and poses significant integrity concerns for the state," says the report for the state's Public Utilities Commission on Enbridge's application to replace and expand the Line 3 pipeline. "Accordingly, the judge finds that replacement of the line is a reasonable and prudent action."

Judge Ann O'Reilly shot down Enbridge's planned new route for the expanded line, which would follow a different path for roughly half of its 543 km length that runs through Minnesota. Instead, the judge is recommending "in-trench" replacement of the line along its current route.

"The ... judge finds that, based upon applicant's preferred route, the consequences for Minnesota outweigh the benefits of the project, as it is proposed," says the decision. "This cost-benefit analysis changes, however, if applicant replaces Line 3 in its current location.

New route rejected

"In such a circumstance, 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."

The judge points out that sticking to the existing pipeline corridor would isolate the risk of a spill, prevent the establishment of a new pipeline corridor in an environmentally sensitive part of the state and "prevent the abandonment of nearly 300 miles of steel pipeline."

"In-trench replacement mitigates, to a large degree, the detrimental impacts that abandonment of an old line and creation of a new oil pipeline corridor would have on the State."

In a statement issued Monday evening, Enbridge said it was "pleased" the judge accepted the need for "this safety-driven maintenance project," but put off commenting on the route recommendation.

"We will be taking time to review, in more detail, the recommendation that we use the existing right-of-way, and will have additional comments to follow," said Enbridge's statement.

Greenpeace Canada, meanwhile — which opposes the project — predicted the route change would be enough to doom the project.

Greenpeace predicts Line 3's failure

"Anytime you hear 'alternate route' it means more costs and longer delays and that's not good news for the pipeline and its investors," said Greenpeace Canada campaigner Mike Hudema in a statement. "In addition to greater costs that would be associated with the alternative route, Enbridge's pipeline still faces several hurdles it cannot overcome.

"Line 3 earned a negative recommendation from the Minnesota Department of Commerce, it lacks consent from impacted Indigenous communities, grassroots resistance on the ground continues to grow, and more and more financial institutions are turning their backs on tar sands projects."

The Trudeau cabinet gave the green light to both the embattled Trans Mountain pipeline project and Line 3 — the largest project in the history of Enbridge — on the same day in November 2016. And while work on Line 3 has already started on the Canadian side of the border, the regulatory agency tasked with approving construction through Minnesota had before today held off granting necessary permissions amid intense local opposition.

The state's Public Utilities Commission will issue its final ruling in June, but the PUC typically weighs an administrative law judge's opinion heavily when making a decision.

Both proponents and foes of the project expect extensive litigation before construction is completed.

Project is not out of the woods yet

"As both Kinder Morgan and [Prime Minister] Justin Trudeau are discovering, tar sands pipelines are a reputational, political and economic liability," said Hudema. "Europe's two biggest banks have now publicly refused to provide project financing for new tar sands pipelines like Line 3 and Keystone XL.

"Meanwhile, the viability of Kinder Morgan's (Trans Mountain) pipeline is teetering on the edge of collapse in the face of delays, First Nations' court challenges and public opposition. So, the question for Minnesota regulators in June is, why take on the risk when there is no future for tar sands pipelines?"

Enbridge hopes to replace the entire span of the aging Line 3 pipeline, which carries oil from a terminal near Hardisty, Alta., through northern Minnesota to Superior, Wis., where it travels on to U.S. refineries for upgrading.

The $7.4-billion project would nearly double the pipeline's current volume to 760,000 barrels a day. The existing line, constructed in the 1960s, has been a source of spills in the past. The company has voluntarily dialled back capacity to address mounting maintenance issues while it pushes ahead with a replacement.

Enbridge spent $5.3 million U.S. on lobbying efforts in Minnesota last year, according to a review of lobbying records by CBC News. That figure is nearly five times more than any other interest group spent on lobby efforts in that state in the last calendar year.

Amid pricing pressure for Canadian energy goods, Enbridge's stock has sunk in recent months. Line 3 accounts for nearly a third of the company's $21-billion in planned capital spending and an outright rejection would have been financially disastrous for the company.

Despite opposition from environmentalists and some Indigenous groups in the state, a coalition of business and labour groups called Jobs for Minnesotans have been urging the PUC to sign-off on construction, saying the replacement would better protect the environment from leaks, ensure the region's energy supply and create 8,600 well-paying jobs with a total economic impact on the state of $2 billion U.S.