Complaints Filed Against Enbridge Line 3

TUESDAY, MAY 11, 2021

Complaints filed by landowners in northern Minnesota, are accusing Enbridge Inc. of not being forthright about remediation efforts associated with its Line 3 pipeline replacement project.

Back in 2018, the company pledged to either remove the old pipeline themselves (using its own funds) or drain and clean the pipe, paying landowners to keep it buried. The “landowner’s choice” program is actually a condition in Enbridge’s new Line 3 permit.

Enbridge reports that the cost of removing an old pipeline can exceed $1,000 per linear foot but is offering landowners $10 per linear foot to keep it in place. For a 40-acre holding, the retention payment would amount to about $13,200.

However, landowners are now saying that Enbridge has failed to provide enough information for them to make an “informed decision,” citing the lack of information regarding payment amounts should they agree to retain the old pipeline on their property.

“Enbridge has more or less phrased it as a take-it-or-leave-it offer,” said Evan Carlson, an attorney representing landowners who filed a complaint with the Minnesota Public Utilities Commission.

Carlson declined to report on how many complaints Minnesota PUC has received.

In response to the filings, Enbridge has responded saying that the complaints are groundless, issuing a statement that it “has been communicating for months with landowners, making them aware of their options.” The company also added that it “has not withheld information from any of the landowners either on the existing right of way or the Line 3 replacement right of way. Claims to the contrary are entirely false.”

Enbridge also adds that roughly 75% of landowners have already opted to retain the old pipeline.

The PUC has since directed the Minnesota Department of Commerce to appoint an independent liaison for the program, the costs of which are reimbursed by Enbridge. The PUC has also called for Enbridge to hire an independent third-party engineer to help landowners with questions about pipeline removal and oil pollution remediation, although the company stands by its statement that it had already provided landowners with contact information for the Department of Commerce's liaison, as well as a description of the third-party engineer.

A PUC filing in November reveals that the public liaison for the program reported that 12 landowners made information requests, while 11 had third-party engineer assessments. At the time, one complaint was also reported to have been received about the program, but no further details were provided.

Line 3 History

Extending from Edmonton, Alberta, to Superior, Wisconsin, the Line 3 crude oil pipeline stretches approximately 1,097miles and was built in the 1960s. The pipeline was originally built to transport 760,000 barrels per day of light, medium and heavy crudes. In 2010, Enbridge voluntarily limited the line to 390,000 barrels per day of light crude only.

As the infrastructure has aged however, putting it at risk for corrosion due to failures in its protective coatings, Enbridge first announced its plans to replace the infrastructure back in 2017.

According to Enbridge officials at the time, Line 3, unlike a number of the company’s other pipelines, was protected with a tapecoat, which has since been found to have disbonded from the pipeline steel. Enbridge says the coating failure has sped corrosion rates, causing concerns over deterioration in the line.

Enbridge intends to replace the existing 34-inch diameter pipeline with a new 36-inch diameter pipeline for 13 miles in North Dakota, 337 miles in Minnesota, and 14 miles in Wisconsin. The project is expected to help maintain Enbridge’s high safety standards, reduce future maintenance activities and create fewer disruptions to landowners and the environment, as well as restore the historical operating capabilities of Line 3.

Permit application documentation also revealed that Enbridge planned to construct the new pipeline of high-strength GX-70 steel, with a nominal wall thickness of 0.515 inches (with stretches made of thicker pipeline when necessary, such as segments installed via road bore or horizontal directional drilling).

Additionally, the mainline would be coated with 14 mils of epoxy bonding and stretches installed via trenchless methods would be coated with 50 mils. The new pipeline is expected to initially transport 760,000 barrels per day again. Although, its full design capacity will be capable of transporting 844,000 barrels per day.

When the replacement project was announced in August 2017, Enbridge reported that the first segment would be built in the Canadian section of the project, comprising about a quarter of the total length, starting at the line’s origin in Alberta.

Only a month after the project announced it would be launching construction, Line 3 hit its first hurdles in Minnesota where some state officials said that Enbridge hadn’t established a need for its Line 3 Replacement Project.

At the time, the project still required two approvals from the state of Minnesota: a certificate of need and a route permit. In parts of Minnesota and Wisconsin, Enbridge planned to reroute the line along existing pipeline and electric transmission line rights-of-way.

According to the Minnesota Department of Commerce, a market analysis conducted by London Economics International indicated that Minnesota refineries and those elsewhere in the region had been operating at high utilization, meaning that the limitations on Line 3 are not adversely affecting operations in the region. The analysis at the time predicted that demands in the region weren’t likely to grow in the long term.

In October, Enbridge filed with Minnesota's Public Utilities Commission, calling the state’s assessment of the situation “flawed,” and that it "failed to account for the negative economic impact to Minnesota if Line 3 were to be shut down."

“This is an essential project for Minnesotans that will ensure environmental protection of our important natural resources, as well as ensure the safe transportation of crude oil to refineries in Minnesota and neighboring states,” Guy Jarvis, Enbridge Executive Vice President in charge of liquid pipelines, told CBS Minnesota at the time.

By April of the following year, Minnesota administrative law Judge Ann O’Reilly recommended that, if the Enbridge Line 3 replacement were to move forward, the new pipeline follows the route of the old, rather than the company’s preferred route, as that way travels near the headwaters of Mississippi River.

The judge’s recommendation that the line replacement follow its current course—which shares space with five other lines from Alberta—would lower the environmental risks, along with preventing the abandonment of nearly 300 miles of pipeline.

At the time, Enbridge had already begun construction in Canada and Wisconsin.

In June, Minnesota’s Public Utilities Commission voted unanimously to approve the Line 3 replacement project a day after questioning company officials about the necessity of the project.

Opponents of the pipeline project gathered at the PUC meetings to call for its rejection, though an administrative law judge and PUC staff had already recommended its approval, with certain stipulations. The PUC’s five commissioners implied early in a meeting that they would approve a certificate of need, but the permit could come with strings attached.

The permit arrived with stipulations that Enbridge establish a trust fund to bankroll the proper decommissioning of the new pipeline when it reaches the end of its service life decades from now, and that the company remove the old pipeline where property owners request that it do so, a concession the company had already promised.

By August, a pair of environmental groups challenged the approval of the Line 3, arguing that the environmental impact statement approved earlier that spring was insufficient. Specifically, the two groups argued that the EIS for the project did not adequately account for potential spills and did not take into account a survey related to tribal matters. Some tribal leaders in Minnesota also expressed concerns about the possibility of the pipeline being routed on tribal lands.

Two years later, in November 2020, the United States Army Corps of Engineers and PUC granted a construction stormwater permit for the Enbridge Energy’s Line 3 crude oil pipeline replacement, marking what was believed to be the last hurdle in launching construction on the $2.6 billion project.

However, the Red Lake and White Earth Bands of Chippewa tribes requested that the PUC stay its approval of the project, pointing out that the influx of construction workers would put residents along the route at higher risk of COVID-19. A consolidated appeal made by environmental and tribal groups was pending before the Minnesota Court of Appeals.

“It’s unfortunate that Minnesota is issuing permits for an unnecessary tar sands pipeline during a global pandemic that is particularly hitting hard Native and non-native communities and fragile healthcare systems along the route even though the appeals process is still underway,” Winona LaDuke, Executive Director of Honor the Earth, said at the time. “This is just reckless and irresponsible government that will have consequences for all sides.”

According to Enbridge, during construction the pipeline will bring a $2 billion boost to the Minnesota economy, with $1.5 billion of that in Enbridge spending alone. Additionally, the project is also slated to bring about $334 million in payroll to workers (about 50% of that to local workers), and a $162 million construction-related gain for local economies, as a result of non-local workers in Minnesota, through purchase of local products/materials and use of local hotels, restaurants and services.

Following the granted permit in November, the stay filed by Red Lake Band of Chippewa, White Earth Band of Ojibwe, the Sierra Club, and the Native American-led environmental group Honor the Earth, was denied by the PUC on Dec. 9, 2020. A petition to reconsider the stay was also denied on Dec. 23, 2020.

The groups also requested an injunction to suspend construction until their lawsuit could be heard, citing “irreparable harm” if work on the project continued.

Following this attempt, U.S. District Court Judge Colleen Kollar-Kotelly denied the request at the beginning of the month. In her ruling, Kollar-Kotelly pointed out that the plaintiffs failed “to demonstrate a likelihood of success on the merits and that they will suffer irreparable harm.”

At the beginning of February, prior to Kollar-Kotelly’s rejection of work suspension, the PUC also voted 3-1 to approve an updated, court-ordered environmental impact statement that officials report successfully addresses the impacts of a potential spill in the Lake Superior watershed.

In the same 3-1 vote, the utility regulators agreed to reissue a certificate of need and a route permit that had been vacated by an earlier court decision.

Commissioner Valerie Means, Chairwoman Katie Sieben and Commissioner John Tuma all voted to approve the revised environmental impact statement, while Commissioner Matt Schuerger is still in opposition of the project.

Both approvals clear the way for Enbridge to obtain two remaining major state and federal permits and some minor permits.

Later that month, Enbridge’s release of its 2020 earnings report, the company revealed that the price tag for its Line 3 replacement project has gone up from CA$8.2 billion to CA$9.3 billion.

Enbridge President and CEO Al Monaco released several comments on the matter, saying that the new cost was updated to reflect winter construction, increases to environmental protections, regulatory and permitting delays and COVID-19 protocols, among other things.

An in-service date was originally slated for 2018, and is now set for the fourth quarter of this year. That service date brings with it an estimated $200 million in EBITDA this year.


Tagged categories: Construction; Laws and litigation; Lawsuits; NA; North America; Oil and Gas; Ongoing projects; Pipelines; Program/Project Management; Project Management

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