Enbridge negotiations with Red Lake Band show shift on tribal land issues

For decades, the Red Lake Band of Chippewa was unaware that Enbridge's oil pipelines crossed its land. So was Enbridge.

Now a tiny piece of Enbridge's northern Minnesota pipeline corridor is in legal limbo, more so since the beginning of the year.

The Red Lake land controversy opens a window onto a larger issue, that of tribal compensation for pipeline rights of way — and permission for granting them in the first place.

Historically, tribes in Minnesota and across the country were paid a relative pittance for easements for pipelines, power lines and other infrastructure, say Indian law attorneys. But over the past 15 years or so, tribes have asserted their bargaining power.

"There has been a real awakening by tribes in understanding the value of rights of way," said Keith Harper, a lawyer at Kilpatrick Townsend in Washington, D.C., who has long represented tribes in land issues.

In the past decade, deals in Minnesota and Wisconsin alone have started at $10 million.

Yet a movement has also grown in recent years among some tribes to reject pipelines outright — regardless of the money.

Red Lake started asserting its property rights with Enbridge around 2007, and after years of tough negotiations, the band's tribal council approved a land swap with Enbridge in December 2015. As part of the deal, Calgary, Alberta-based Enbridge would pony up $18.5 million, a sum 50 times greater than the company's original offer.

But in January, the Red Lake Tribal Council rescinded the agreement. The $18.5 million has never changed hands, since federal regulators are still reviewing the deal. So Enbridge now faces the prospect of rerouting its pipelines around the Red Lake land — a task that would cost at least $10 million.

The tribe could take Enbridge to court to remove the pipelines, but it hasn't decided on any action. "We haven't even discussed anything since the vote," said Darrell Seki Sr., the Red Lake band's chairman. "My own thought is that they move their lines off of our land."

Enbridge said in a written statement that it "believes there is a legally binding document in place, and we expect that the band will stay true to our agreement."

Enbridge's corporate predecessor built its first pipeline across northern Minnesota in 1950, and started shipping oil from Canada to Superior, Wis. By the early 1970s, the company had constructed three more pipelines on the same route. All four traversed the Leech Lake and Fond du Lac Indian reservations.

It took 40 years for everybody to find out. In the 1980s, the U.S. Bureau of Indian Affairs (BIA) discovered that Enbridge's pipelines appeared to be in trespass, according to a document posted on the Red Lake Tribal Council's Facebook page. Nothing happened for 20 years, until the BIA "rediscovered" the issue in 2007, the document said.

Soon after, negotiations commenced between Enbridge and the tribe, with the company initially offering $350,000 to settle the matter, according to another document posted on Red Lake's Facebook page. The tribe asked for $10 million, an amount it would eventually raise to $21 million.

Enbridge agreed to pay $18.5 million — including compensation for years of trespassing — and swap land it owns for the Red Lake parcel. Specifically, Enbridge would exchange 164 acres adjacent to the main Red Lake reservation.

The swap nature of the deal is important, since Indian nations can only sell land with Congressional approval. Tribal land is held in trust by the U.S. government. The BIA, an arm of the Department of the Interior, must approve removing and adding land into trust.

Marty Cobenais, a Bagley resident and Red Lake tribal member, contends the Enbridge swap is essentially a sale, an argument he brought to the Red Lake Tribal Council in January. He also contends that the Enbridge deal is against Red Lake's own constitution.

After hearing Cobenais, the council voted to rescind the agreement. The exact reason is unclear. But Cobenais said there's concern that the BIA would not approve adding Enbridge's 164 acres into Red Lake's trust land.

Seki said that within the last year, he met with the Interior Department's deputy director of trust services and two of its solicitors to discuss the Enbridge swap. He said he was told that congressional action would be needed to approve putting the land into trust and the swap itself.

"I believe it's never going to happen under the Trump administration," Seki said.

In addition to administrative roadblocks, tribal antagonism to pipelines — already well established in 2015 — has only heated up since.

In late 2016, opposition to construction of the Dakota Access pipeline ignited large protests in North Dakota, led by members of the Standing Rock Sioux tribe who were concerned about damage to their drinking water from oil leaks.

The Leech Lake Band of Ojibwe won't permit a new pipeline on its land. In other words, the new Line 3 can't run along the Enbridge corridor next to the old Line 3. And pipeline companies can't use eminent domain to force tribes to grant them an easement.

So, Enbridge's proposed route for its new Line 3 doesn't cross any Indian reservations. But the new route opens a new region of lakes, rivers and wild rice waters to possible degradation from an oil spill, tribes and environmental groups contend.

A decade ago, Minnesota tribes were more amenable to the idea of new pipelines. Enbridge proposed building two new pipelines along its four-pipeline corridor. In 2009, both the Leech Lake and Fond du Lac tribes agreed, but at a considerably higher price than in the past.

Both bands negotiated new 20-year right of way agreements with Enbridge for all six pipelines. The payment to Leech Lake was around $10 million. The Fond du Lac Band of Lake Superior Chippewa didn't disclose its settlement amount, but it's believed to be around $17 million.

In comparison, Enbridge paid Fond du Lac "a grand total of $1,537.50" under a long-term easement approved by the BIA in 1974, the band claimed in a 2009 filing with the Minnesota Public Utilities Commission.

Last fall, Enbridge agreed to another tribal right of way deal that appears to set the bar considerably higher.

The Lac Courte Oreilles Band of Lake Superior Chippewa agreed to a new 25-year easement for two Enbridge pipelines that run from Superior through its reservation in northwestern Wisconsin. Annual payments over the agreement's term will amount to around $60 million.

Enbridge is trying to get a new deal with the Bad River Band of Chippewa in northern Wisconsin, which also hosts an Enbridge pipeline. Easements on part of that line expired in 2013. In January 2017, after negotiations apparently failed, the band suddenly told Enbridge to remove the pipeline.

Paul Eberth, director of Enbridge's Line 3 replacement project, said the company is in "mediation" with the Bad River tribe, but declined to give specifics. The tribe didn't return a call for comment.

Then there is Red Lake.

"The BIA cannot approve the agreement at this point because there's really nothing to approve anymore," said Routel, the Mitchell Hamline law professor.

The Red Lake band can move to essentially evict the company through tribal court or U.S. District Court — likely a tough fight. Or both sides could renegotiate a deal.

Enbridge won't comment on its legal alternatives.