Minnesota utility regulators Thursday rejected calls to again overturn their approval of Enbridge’s new $2.6 billion pipeline, considering whether the oil-market downturns tied to the coronavirus affected the project.
The Minnesota Public Utilities Commission (PUC) voted 4-1 against reconsidering its Feb. 2 blessing of the controversial pipeline, a replacement for Enbridge’s deteriorating Line 3 that would transport Canadian oil across northern Minnesota to Superior, Wis.
“There is no question that COVID-19 has presented a number of unique challenges,” said PUC Commissioner Valerie Means. However, “COVID disruptions would not change the [long-term oil] forecast.”
Pipeline opponents are expected to appeal the PUC’s decision to the Minnesota Court of Appeals.
Enbridge still must get other state and federal approvals for the pipeline, which has been winding through the Minnesota regulatory process for five years. The latest permit timeline means the Calgary, Alberta-based company cannot start construction until, at the earliest, the end of 2020.
As COVID-19 hammered the global economy, oil demand — and prices — collapsed. Demand and prices have rallied in the past month but are still well below the level needed for much of the oil industry to make money.
Canada has been particularly hit hard as its oil fields are particularly costly compared to those in the rest of the world. Several Canadian producers have significantly cut back production, reducing demand for space on Enbridge’s pipeline system.
Environmental groups and two Ojibwe bands asked the PUC to reconsider its vote based partly on the oil-market cave-in this spring, arguing it fundamentally altered long-term demand for oil, particularly from Canada.
Joe Sullivan, who started as a PUC commissioner in April after the PUC approved Line 3, called the reconsideration a “very difficult decision.” Still, “I don’t think the new issues raised are material to the original decision.”
Commissioner Matt Schuerger, though, said the PUC should reconsider its February vote and specifically address COVID-19 effects, as well as new evidence on climate change and the electrification of transportation.
“In my view, it is clear that new issues have been raised and there are contested material facts including COVID-19’s impact on the Canadian oil industry,” Schuerger said.
Schuerger, along with four other commissioners, originally voted for Line 3 in June 2018. But that vote was mooted when the Minnesota Court of Appeals shot down the PUC-approved environmental impact statement (EIS) for Line 3.
The appeals court agreed with pipeline opponents that the EIS needed to include more information about the possibility of an oil spill migrating into Lake Superior.
The EIS was revised and the PUC again approved the pipeline in February. But Schuerger changed his vote, saying significant changes had occurred since the PUC’s June 2018 vote, particularly around climate change and Minnesota’s electric vehicle policies.
Enbridge has said the pipeline is a critical safety enhancement, which the PUC has agreed with. The current Line 3 is corroding and therefore running at only half capacity. The new pipeline — which would be one of the largest Minnesota construction projects in recent history — would restore full oil flow.
Enbridge, in a statement, called Thursday’s PUC decision “another important step forward for the Line 3 replacement project. This decision is consistent with the law and based on full and complete review of the evidence.”
Winona LaDuke, head of the indigenous environmental group Honor the Earth, called the PUC “an embarrassment to Minnesota’s regulatory system. … The PUC needs to get in touch with the new reality: the era of oil is over.”
Environmental groups and some Indian bands have said the pipeline — which follows a new route — would open a new region of pristine waters to the prospect of oil spills, as well as abetting increased greenhouse gas emissions.