Minnesota regulators order a broader look at pipeline route

Minnesota regulators on Thursday ordered a broader search for the best pathway to build a major new crude oil pipeline across the state.

The 3-2 decision by the state Public Utilities Commission was a setback for Enbridge Energy, which wants to build the $2.6 billion Sandpiper pipeline through northern Minnesota to carry North Dakota oil to a terminal in Superior, Wis., that feeds refineries across the Midwest.

The commission ordered further study of the environmental benefits and negatives of six entirely different pipeline routes proposed by critics of Enbridge's project. As proposed, the pipeline would cut through the headwaters of the Mississippi River and a vast area of northern rivers, lakes and wetlands.

"The commission stood up for Minnesotans who love their lake country," said Richard Smith, president of the Friends of the Headwaters, a Park Rapids-based group formed last year to oppose the pipeline through that area.

The six alternate routes, proposed by that group and others, slice from west to east across the state on pathways farther south. Most follow existing pipelines or major highways.

The PUC decision to look closer at them doesn't end consideration of Calgary-based Enbridge's preferred route. That Z-shaped path runs east from the North Dakota border into Clearbrook, Minn., where Enbridge owns a major oil terminal. Then it turns south toward Park Rapids following existing crude oil pipelines, and finally heads east to Superior.

Regulators ordered the state Commerce Department's environmental analysis unit to study the environmental implications of the six all-new routes. One of the alternatives, along an existing natural gas pipeline, had been endorsed last month by the PUC for further study. Proponents of the reroute proposals say they will largely avoid the state's lakes region.

Thousands of property owners along the alternative routes face the prospect that their lands might be affected. Opposition to one of the reroute ideas, through the Detroit Lakes area, already is surfacing.

The Pelican River Watershed District, in a letter to regulators, said a crude oil pipeline conflicts with the millions of dollars it has spent "protecting and restoring our area's lakes and rivers."

The review, which was opposed by Republican PUC appointees David Boyd and Betsy Wergin, likely will delay a final decision on Enbridge's plan, possibly by a year. Enbridge had hoped to win approval for the project early next year and complete it in 2016.

"Every delay in getting to a decision is a delay in the benefits of this project brings in terms of safety, economics and the environment," said Christina K. Brusven, an attorney for Enbridge.

Commissioner Dan Lipschultz, one of the three Democratic appointees who supported the expanded review, said regulators need to address environmental concerns raised by the Minnesota Pollution Control Agency.

"I don't want to rush to a thumbs down any more than I want to rush to a thumbs up," Lipschultz said. "I want to get it right."

It is the first time the commission has ordered a review of an entirely different pipeline route than that proposed by an applicant.

One other concern raised by the two state environmental agencies is that the Sandpiper route could become the pathway for another large crude oil pipeline project proposed by Enbridge.

The 610-mile Sandpiper line would carry oil from the Bakken region of North Dakota. But Enbridge already is seeking easements from property owners along that route for an even larger pipeline to carry Canadian oil. That $2.7 billion project would replace an existing pipeline that has experienced major ruptures and must operate at reduced flow.

"These are very dangerous activities in a very sensitive place," said Frank Bibeau, an attorney from Deer River who represents the environmental group Honor the Earth, which supported studying route alternatives.

"To draw a line on a map because that is where we prefer a pipeline route to go, that is not an actual alternative," added Kevin Pranis of the Minnesota/North Dakota Laborers' Union, whose workers stand to get some of the more than 1,500 construction jobs on the project. "These other proposals are not alternatives, they are just arguments."

Much of the actual regulatory review of pipelines happens before a state administrative law judge, who takes evidence in writing and holds trial-like proceedings and public hearings. The judge ultimately would issue recommendations to the PUC on whether the project was needed and on the best route.

On Thursday, the PUC ordered that process to be stretched out, so that the review of the project's need and the environmental implications of alternatives will be considered first. If Enbridge's original route emerges as the winner in that process, the company would still face a detailed route review of more than 50 small modifications suggested by landowners and others. It also would mean that two rounds of hearings will need to be held.