Walz orders review of Commerce Department's decision to fight Enbridge pipeline project

With new DFL Gov. Tim Walz in office, the Minnesota Department of Commerce is reviewing its court appeal to block Enbridge's controversial $2.6 billion oil pipeline project.

The Commerce Department last month — under former DFL Gov. Mark Dayton — appealed the state Public Utilities Commission's June decision to allow Enbridge to build the pipeline across northern Minnesota.

The department is now "taking another look" at the appeal, said Steve Kelley, the new Commerce commissioner, at an annual Minnesota Chamber of Commerce event Wednesday evening.

On Thursday, Walz said in a statement that "when two governing bodies are at odds, I need to take time to determine which processes I believe achieve my standard of robustness."

The Commerce Department petitioned the Minnesota Court of Appeals to determine whether the PUC committed a "legal error" by approving the pipeline, which would replace Enbridge's deteriorating Line 3.

The department claimed in its lawsuit that Enbridge hadn't filed an adequate long-term oil-demand forecast as required by state law. The Calgary, Alberta-based company said such claims are not supported by evidence.

The Commerce Department, an arm of the governor's administration, represents the public interest before the PUC, which is an independent agency whose members are appointed by the governor to staggered six-year terms.

Three environmental groups and two American Indian bands also have appealed the PUC's approval of Line 3. They oppose the oil pipeline because they fear it will exacerbate climate change and open a new region of Minnesota lakes and rivers to degradation from possible oil spills.

Enbridge said the new pipeline is needed to replace its aging Line 3, which operates at only 51 percent capacity due to safety reasons. The new Line 3, which would partly follow a new route, would restore full oil flow.

Line 3 supporters on Thursday presented a letter to Walz's office asking that the governor rescind the Dayton administration's appeal. The letter, addressed to Walz and Lt. Gov. Peggy Flanagan, also asked that the remaining permitting process for Line 3 be done "promptly."

The Minnesota Department of Natural Resources and the state Pollution Control Agency still must approve several permits.

The PUC, "after a robust evaluation and careful consideration of a voluminous record," unanimously approved Line 3, said the letter to Walz, which was endorsed by the Chamber of Commerce, construction labor unions, many northern Minnesota elected officials and about 2,500 individuals.

Winona LaDuke, head of environmental activist group Honor the Earth, said there's no need for Walz's Commerce Department to review the appeal.

Honor the Earth also is appealing the decision.

"We've had a robust a process," LaDuke said. "The Commerce Department has spent three years being robust."

Even before the appeals, the Commerce Department contended that there is not enough oil demand to merit the construction of new Line 3.

Before the November election, Walz said he was satisfied with the PUC's decision to move forward with Line 3.

Flanagan, a former state representative, fought the pipeline in the Legislature, in part because it runs through American Indian treaty lands in northern Minnesota. Flanagan is a member of the White Earth Band of Ojibwe, which has appealed the PUC's approval.

The new pipeline, which will ferry Canadian oil to Enbridge's terminal in Superior, Wis., has exposed a fissure in the DFL Party.

Building trades unions, a traditional party anchor, are very much for it; the new Line 3 would create around 4,000 construction jobs, according to Enbridge. But many environmentalists — another key DFL constituency — want Line 3 stopped.

If Enbridge gets its remaining state and federal permits, construction would likely start very soon after. The publicly traded company has told its investors that the new Line 3 will be completed in 2019.

Mike Hughlett • 612-673-7003