Appellate court affirms Minnesota regulators' approval of new Enbridge pipeline

The Minnesota Court of Appeals has affirmed the state's approval of Enbridge's controversial new pipeline, a blow to environmental groups and Ojibwe tribes trying to halt its construction.

Opponents of the project, a replacement for the current Line 3, had appealed the Minnesota Public Utilities Commission's 2020 approval of a certificate of need for the $3 billion-plus, 340-mile pipeline across northern Minnesota. They had hoped the appellate court would halt or otherwise delay the pipeline's construction.

On Monday, a three-judge panel handed down its decision, with judges Lucinda Jesson and Michael Kirk upholding the commission's decision and Peter Reyes Jr. dissenting.

"While reasonable minds may differ on the central question of need for replacement Line 3, substantial evidence supports the commission's decision to issue a certificate of need," Jesson wrote in the majority opinion.

Enbridge's current Line 3 is corroding and operating at only half-capacity.

Calgary-based Enbridge said the ruling "is an important acknowledgement of the Minnesota Public Utilities Commission's thorough review of the Line 3 replacement project — and confirmation that commissioners appropriately approved" its permits.

The Public Utilities Commission (PUC) declined to comment. Pipeline opponents were disappointed with the decision, though some said they weren't surprised.

"I guess I didn't have any hope in our court — I wanted to, but I did not," said Dawn Goodwin, a leader of RISE Coalition, an indigenous-led group opposing Line 3. "The good thing is that one of those judges gave a powerful dissent."

Pipeline opponents are likely to petition the state Supreme Court to review the appellate court decision, but any high court ruling on Line 3 would likely come long after the pipeline is completed.

Nearly 4,000 construction workers are building the 340-mile new Line 3, which is more than 60% completed. Enbridge is scheduled to begin shipping Canadian oil during the fourth quarter.

Meanwhile, protests along the pipeline route have ramped up, with about 2,000 people showing up last week for a large rally. Nearly 180 people were arrested and 68 more received citations, according to northern Minnesota law enforcement agencies.

In their appeals, the Minnesota Department of Commerce, along with several pipeline opponents, challenged Enbridge's long-term oil demand forecast, which the PUC accepted when it approved the company's new Line 3.

The appeal lodged by several environmental groups and Ojibwe bands included other challenges to the PUC's Line 3 approval, including whether the project's environmental review adequately considered the effects of an oil spill in the Lake Superior watershed.

The Commerce Department and pipeline foes have long argued that oil demand — including from Canada — will fall as the world migrates from fossil fuel, including by adopting electric vehicles. Enbridge's forecast didn't properly account for that transition, they say.

Specifically, Commerce and pipeline opponents have argued that under state law, Enbridge instead must factor in total "energy demand" — meaning Enbridge should have considered the demand for gasoline and other refined products.

Enbridge has maintained that PUC rules call for a forecast based on demand for the transportation of oil, including from oil producers. The appellate court rejected that reasoning.

Jesson wrote that the "bulk" of Enbridge's demand forecast "does not satisfy the energy demand forecast requirement." Still, she wrote, "portions of the report are reasonable evidence of future demand."

The court actually agreed with the Commerce Department and other appellants that state law "implicitly requires" that an "energy demand forecast" be submitted by an applicant for a new oil pipeline.

But the law is also vague, the majority justices concluded. Nothing in it requires a pipeline applicant to provide a forecast in a particular form or with any particular information.

Thus, the court said it cannot conclude that the PUC "legally erred" in accepting Enbridge's demand forecast — as the Commerce Department has argued.

The court concluded that Enbridge's flawed forecast, along with the support of oil shippers and the Flint Hills refinery, still provided evidence of "energy demand" for new Line 3. Koch Industries-owned Flint Hills, which runs a big refinery in Rosemount, submitted several letters to the PUC in support of Line 3.

The court's majority concluded that "in view of the totality of the record before the (PUC), and deferring as we must to its expertise, we cannot conclude that the (PUC's) findings on Enbridge's energy-demand forecasts … are unreasonable."

Reyes, in his dissenting opinion, wrote that the PUC "committed legal errors and acted arbitrarily or capriciously" in granting Enbridge a certificate of need.

Specifically, the commission "wrongly interpreted" what constitutes a long-range energy forecast by defining energy demand as the pipeline capacity that oil shippers "will be willing and able to support."

The PUC's "misinterpretations of law" in turn caused an erroneous demand evaluation that is "not supported by substantial evidence" and that relied on data supplied by Canadian oil producers.

Also, the PUC failed to evaluate $287 billion in "societal costs" — from greenhouse gas emissions — that the new Line 3 would enable, Reyes wrote.

"The PUC approved a new pipeline that benefits Canadian oil producers but traverses 340 miles of Minnesota land … with no benefit to Minnesota," Reyes wrote, particularly singling out potential harms to Ojibwe bands' treaty rights.

The Red Lake Band of Chippewa and the White Earth and Mille Lacs bands of Ojibwe challenged the PUC's approval before the appellate court, as did Indigenous environmental group Honor the Earth and three other environmental groups: Friends of the Headwaters, the Sierra Club and Youth Climate Intervenors.

Reyes concluded that the PUC's approval of new Line 3 should be reversed and remanded back to the commission.

Enbridge has long argued that its corridor of pipelines across northern Minnesota is so full that it can't meet oil shippers' demands — a condition that will continue for years, it says. The PUC agreed, as it did with Enbridge's contention that new Line 3 is needed to improve safety.

Enbridge says the new Line 3, built partially along a new route, will be safer and restore the full flow of oil. Pipeline opponents say it will expose new regions of lakes, rivers and wild rice waters to oil-spill degradation and will exacerbate climate change.

The PUC unanimously approved Line 3 in 2018. It reapproved the project in early 2020 after the appeals court rejected the pipeline's environmental impact statement. The second PUC vote was 3-1 after Commissioner Matt Schuerger reversed his vote to no.