In a report that could carry significant weight with state regulators, an administrative law judge said Enbridge has demonstrated a need for its proposed new oil pipeline across northern Minnesota.

However, Judge Ann O'Reilly said in the report released Monday that the pipeline — a replacement for Enbridge's current Line 3 — should not be built on the company's preferred route. Instead, a new Line 3 should be constructed parallel to the existing pipeline.

Those recommendations could make the controversial pipeline project more complicated. The current Line 3 crosses the reservations of two American Indian bands, both of which are opposed to any new pipeline. Getting tribal consent would be a tough task for Enbridge.

O'Reilly submitted her report to the state's Public Utilities Commission (PUC), which is expected to rule in June on Enbridge's proposal. Her 367-page report on Line 3 encompassed dozens of hearings statewide and thousands of pages of testimony and comments from pipeline proponents and opponents. Its conclusions are recommendations.

O'Reilly found that Enbridge has established a "reasonable need" to replace Line 3 "due to its age, the need for repairs and significant integrity issues." She noted, too, that "apportionment," or rationing, exists on Enbridge's pipeline system, a condition that will continue. Basically, Enbridge's customers can't get all the oil they need due to a lack of capacity.

However, O'Reilly ruled that Enbridge has not established that the possible "consequences to society" of its proposed new route for Line 3 outweigh the benefits.

Enbridge's new route would not cross any Indian reservations, but it would go through pristine waters where at a certain point, no oil pipelines exist.

So, O'Reilly recommended that Enbridge build the new pipeline basically in the same trench as Line 3.

"In such a circumstance, the benefits to Minnesota and regional [oil] refiners, and the people of Minnesota, slightly outweigh the risks and impacts of a new crude oil pipeline," she wrote.

Calgary, Alberta-based Enbridge, in a statement, said it was "pleased" that O'Reilly "listened to the extensive evidence that there's need" for a new Line 3. The company also said it's reviewing the judge's decision in more detail. It declined to comment on O'Reilly's route recommendation for Line 3.

Line 3 is part of a six-pipeline corridor across northern Minnesota that transports oil from Alberta to Enbridge's big terminal in Superior, Wis. Enbridge's corridor crosses lands governed by the Leech Lake Band of Ojibwe and the Fond du Lac Band of Lake Superior Chippewa.

Leech Lake has been adamantly against any new pipeline on its reservation, including alongside the current Line 3.

Fond du Lac has opposed a new Line 3 in general.

In her report, O'Reilly noted Leech Lake's position and that Enbridge's current easements through the Leech Lake reservation expire in the years leading up to 2029. While it will be difficult for Enbridge to renew those easements, O'Reilly wrote, the company could include a new Line 3 in its overall easement negotiations with Leech Lake.

As for Fond du Lac, under a 2009 agreement with the band, Enbridge has the right until 2029 to replace its existing Line 3 within its current right of way on the Fond du Lac reservation, O'Reilly wrote.

Thus, "in trench replacement of Line 3 is not an impossibility," she concluded.

Environmental groups objected to O'Reilly's conclusion that there's a need for a new Line 3, but praised the decision not to create a new path for Line 3.

"We commend Judge O'Reilly for recognizing Enbridge should not be allowed to send its tar sands pipeline through a new route in Minnesota, but we stand with the Leech Lake Band and the Department of Commerce," said Tara Houska, national campaigns director for the indigenous environmental group Honor the Earth.

In September, the Minnesota Department of Commerce concluded that Enbridge has enough capacity in its six-pipeline corridor across northern Minnesota to meet long-term demand without a new Line 3.

Houska said O'Reilly has essentially "handed authority" to the Leech Lake band to deny Line 3. The Leech Lake band could not be reached for comment.

Administrative law judges like O'Reilly rule on aspects of contested cases before the PUC. In the Line 3 case, the PUC will decide whether to grant Enbridge a "certificate of need" and a route permit for Line 3. O'Reilly basically said the company should be given a certificate of need but not the route permit it wants.

The new, $2.6 billion Line 3 would replace a 1960s vintage pipeline that is operating at just over half of its capacity of 760,000 barrels per day due to safety reasons.

The new Line 3 would restore the flow of 760,000 barrels per day, though the pipeline would have a capacity of 844,000 barrels. Enbridge would need a separate blessing from the PUC at a later date if it wanted to increase the flow.

Mike Hughlett • 612-673-7003