Federal Enbridge settlement could affect timelines of Minnesota pipelines

Enbridge Energy hopes a settlement with the U.S. Justice Department over two pipeline spills will spark a "sense" of urgency in the company's much-delayed quest to replace a major oil pipeline across northern Minnesota.

Enbridge's plans for the replacement pipeline — as well as a new oil pipeline — are winding through the regulatory process in Minnesota. A decision is expected in fall 2017. But Enbridge wants the replacement pipeline completed by 2017's end, and says that with the state's timeline, the project wouldn't be built until 2019.

On Wednesday, the U.S. Justice Department announced a consent decree, with Calgary-based Enbridge agreeing to pay $177 million and improve pipeline safety, resolving claims from oil spills in Illinois and Michigan in 2010.

The consent decree also said Enbridge "shall" replace "Line 3," a 292-mile pipeline that carries Canadian crude oil from Neche, N.D., to Superior, Wis. The decree said Enbridge should replace the pipeline "as expeditiously as practicable after receiving required regulatory approvals and permits."

If Line 3 isn't replaced by Dec. 31, 2017, Enbridge will be saddled with additional safety requirements, according to the settlement agreement.

"We believe that the Department of Justice is agreeing in the consent decree with the company that it's very important that Line 3 is finished in an expedited manner," said Lorraine Little, a spokeswoman for Enbridge in Minnesota.

Enbridge plans to spend $2.6 billion to replace the 1960s-vintage Line 3 and an additional $2.6 billion on a new pipeline — called Sandpiper — that would carry crude from North Dakota's oil fields to Superior. Both pipelines would run southeast from Clearbrook through the Park Rapids area.

Enbridge's current Line 3, which runs roughly parallel to U.S. Hwy. 2, has a history of leaks and suffers from "very significant" corrosion and seam cracking, an Enbridge attorney said last year.

But environmental groups and American Indian tribes oppose both Enbridge pipelines along the proposed Park Rapids route, fearing a leak that would pollute pristine northern waters, including wild rice lakes and the Mississippi River headwaters.

In December, the Minnesota Public Utilities Commission (PUC) authorized a full environmental impact statement for the new Line 3, on top of its usual regulatory review. That decision came two months after the Minnesota Court of Appeals said the environmental study was necessary. Enbridge said the pipeline would be unreasonably delayed, but failed to get PUC to expedite the review process.

"We'll certainly deal with the issue as expeditiously as possible, but we need to be as thorough and complete as possible," said Daniel Wolf, PUC's executive secretary.

Attorneys who pushed for the environmental study say they doubt Enbridge's agreement with the U.S. Justice Department would affect regulatory proceedings in Minnesota.

"Nothing in this agreement can or should be used to to shortcut any processes," said Kathryn Hoffman, legal director for the Minnesota Center for Environmental Advocacy in St. Paul.

With the settlement announced Wednesday, Enbridge will spend at least $110 million to prevent oil spills and improve operations across its 2,000-mile pipeline system in the Great Lakes region.

The company will also pay civil penalties of $62 million for Clean Water Act violations — i.e. discharging 20,082 barrels of oil in Marshall, Mich., and 6,427 barrels in Romeoville, Ill.

Mike Hughlett • 612-673-7003