Minnesota Commerce Department asks appeals court to block Enbridge pipeline

The Minnesota Department of Commerce Friday filed a court appeal to block Enbridge's controversial Line 3 oil pipeline from moving forward.

The department alleges that the Minnesota Public Utilities Commission (PUC) approved the $2.6 billion project in June even though Enbridge hadn't filed an adequate long-term oil demand forecast as required under state law, according to a filing with the Minnesota Court of Appeals.

"The Department requests that the court of appeals determine whether the Commission committed legal error," the filing said. Enbridge, in a statement, said the Commerce Department's claims "are not supported by evidence or Minnesota law."

Three environmental groups and two American Indian bands earlier this week also filed with the Minnesota Court of Appeals, claiming, too, that Enbridge's oil demand forecast for Line 3 was inadequate.

The Commerce Department, an arm of the governor's administration, represents the public interest before the PUC, an independent agency.

"I strongly support my Commerce Department's appeal of the Public Utilities Commission's Order," Gov. Mark Dayton said in a statement Friday. "Enbridge failed to provide a future demand forecast for its product, which is required by state law. Instead, the company presented its analysis of the future oil supply from Canadian tar sands extractions."

Enbridge, in a statement, called Dayton's remarks "very disappointing and erroneous." The company's "expert presented multiple detailed future forecasts all of which showed demand … [for] Line 3 is needed for years to come."

Asked to comment on the appeal, Gov.-elect Tim Walz said in a statement: "There is only one Governor at a time and Governor Dayton used his authority to appeal the PUC's determination." Walz's spokeswoman, Kayla Castañeda, said Dayton's office notified the transition team shortly before the announcement.

The PUC, in a statement Friday, says it stands by its Line 3 judgment.

Enbridge's new pipeline would replace its current Line 3, which is aging and operating about half capacity due to safety issues. New Line 3 would restore the full flow of oil. The PUC, in unanimously approving a new Line 3, cited the current pipeline's deterioration along with concerns about the reliability of Minnesota's future oil supply.

The new 330-mile pipeline, which would ferry Canadian oil to Enbridge's terminal in Superior, Wis., has been opposed by environmental groups and some Ojibwe bands who fear it will exacerbate climate change and open a new region of Minnesota lakes and rivers to degradation from possible oil spills.

Building trades unions and several northern Minnesota counties have favored the new pipeline, which is expected to create thousands of construction jobs and other economic spinoffs.

The Commerce Department's decision to sue another branch of state government is unusual. "I think the decision of the Commerce Department and Gov. Dayton is significant," said Scott Strand, an attorney for Line 3 opponent Friends of the Headwaters, which has also appealed the PUC's approval.

Minnesota Senate Majority Leader Paul Gazelka, R-Nisswa, condemned the Commerce Department's appeal. "It's disappointing the Dayton administration is using the courts to once again block the construction of a newer, safer pipeline," he said in a statement.

Before construction begins, Enbridge must still get several other state and federal permits.

If construction starts, the state and other groups appealing the pipeline could ask for a court injunction to temporarily halt the project. To do that, they must show among other things that construction would cause irreparable harm and that their case is likely to succeed on its merits.

The Commerce Department has contended since 2017 that there isn't enough demand to merit a new Line 3.

The department has criticized Enbridge's forecasts for assuming that future global oil demand would be sufficient to soak up oil production in western Canada — as projected by Canadian oil producers. The department has also argued that demand for gasoline will fall as electric vehicles take off.

Enbridge has concluded that even if electric vehicles captured 75 percent of the North American auto market by 2035, its corridor of six pipelines across Minnesota — including Line 3 — would still be operating at full capacity. The company has also noted that its pipelines are currently so full they are rationing oil from Canadian producers.

In June, the PUC concluded it had approved Enbridge pipelines in the past based on oil forecasts with a similar methodology to the one used for Line 3. The PUC found, too, that there was insufficient evidence to conclude long-term oil demand would be dampened by the rise of electric vehicles and carbon-reduction efforts to counter climate change.

Mike Hughlett • 612-673-7003