Minnesota Judicial Center street sign, Capitol complex
PUC weighed risks, majority finds; dissent challenges pipeline’s benefit to state
In the face of vigorous opposition from environmental groups and Indian tribes, the Minnesota Court of Appeals on Monday gave a green light to Enbridge Energy to construct the Line 3 pipeline through northern Minnesota, replacing an existing line.
Actually, it’s a green light to continue, since the line is about 60% done.
The case comes to the court on certiorari appeal from the state’s Public Utilities Commission, which in 2020 granted Enbridge a certificate of need and selected its route. Monday’s ruling affirmed the PUC’s decisions.
The PUC “lean[ed] heavily on the comparative risk of continuing to operate existing line 3,” observed the court in a 58-page decision written by Judge Lucinda Jesson and joined by Judge Michael Kirk, a retired judge sitting by appointment. Judge Peter Reyes was part of the vigorous opposition with his 20-page dissent.
The majority opinion notes that the PUC received substantial input before rendering its decisions. Writes Jesson:
“In addition to everyday Minnesotans—some in favor and some opposed to replacement Line 3—the commission heard from interested groups, including multiple Indian tribes with interests impacted by existing Line 3 or that would be impacted by the replacement pipeline; environmental organizations opposed to replacing the pipeline; trade organizations that hoped to use the pipeline and unions that hope to build it; and the Department of Commerce, which asserted a lack of need for the replacement pipeline.
And the commission deliberated against a backdrop of a deteriorating existing pipeline and a federal consent decree directing Enbridge to replace existing Line 3, if it could obtain state authority to do so.”
The deterioration of the pipeline poses safety risks and also reduces the amount of crude oil that refineries can receive, leading those operations to obtain crude by other sources, including truck or rail deliveries, the court noted.
In May 2020, the PUC determined that a revised Final Environmental Impact Statement (FEIS) was adequate and granted the certificate of need and routing permit. (The PUC denied requests to revisit the May order.) The state Department of Commerce, several tribes and four environmental organizations joined in the appeals.
Judicial review of the PUC, grounded in the separation of powers between branches of government, is largely deferential to the expertise of the executive branch, Jesson explained. As the ruling states:
“[W]hile reasonable minds may differ on the central question of need for replacement Line 3, substantial evidence supports the commission’s decision to issue a certificate of need. Finally, the commission reasonably selected a route for the replacement pipeline based upon respect for tribal sovereignty, while minimizing environmental impacts.”
With the deference mandated in the Constitution and the Minnesota Administrative Procedure Act, the court may reverse, remand or modify an agency decision only if it is unconstitutional, in excess of the agency’s authority, based on procedural or other errors of law, arbitrary or capricious, or unsupported by substantial evidence. The court reviews questions of law de novo—anew—but it applies a substantial-evidence standard to factual findings and quasi-judicial application of the law to the facts.
The court must decide whether the agency has adequately explained how it reached its conclusion and whether the conclusion is reasonable under the record. If the agency ruling is supported by substantial evidence, it is affirmed.
On Monday, the court first found that there was no basis to reverse the commission’s decision that the revised FEIS was adequate.
The revised FEIS addressed the impact of a potential oil spill on the Lake Superior watershed, which was absent from the first FEIS, and adequately explained its decision, the court found. Its analysis showed that oil from a spill would more likely be deposited on land than reach Lake Superior.
Next, the court determined that the relators did not establish a basis to reverse the commission’s decision to grant a certificate of need. The application of these factors is at the crux of the relator’s arguments on appeal, Jesson wrote.
The so-called “need-criteria rule” (Minnesota Administrative Rule 7853.0130(A)) sets forth various factors to be considered by the commission but does not assign a weight to any. Given the deference afforded the commission, the court reviews the PUC’s evaluation of those factors by asking whether it adequately explained its determination and whether that determination is reasonable, given an examination of the record as a whole. The court did not defer to commission on questions of law.
The rule requires the commission to evaluate the accuracy of the applicant’s “long range energy demand forecast,” a contentious issue.
Relators argued that the forecast was inadequate, but the court declined to set aside the PUC’s factual determination that the energy forecast was satisfactory. It determined that the commission adequately explained its conclusion that denial of the certificate of need would adversely affect energy supply.
The court said that although it may have made different findings, that is not the standard to apply.
The decision then turned to the PUC’s consideration of the safety of Line 3. It found that the PUC did not abuse its authority.
The court also said that the commission found that either granting or denying the certificate of need would have consequences for the environment, but to grant it was more favorable.
Furthermore, the court noted in a footnote, the PUC determined that it didn’t matter whether the certificate of need was denied or allowed because either choice would also adversely affect indigenous populations. The PUC took cultural and spiritual relationships with the natural environment into account, the court found.
“When balancing harms and predicting future demand, the commission is due deference,” the court concluded.
Judge Peter Reyes vehemently dissented. He writes:
“[T]he PUC approved a new pipeline that benefits Canadian oil producers but traverses 340 miles of Minnesota land, which among other negative consequences will affect hunting, fishing, and other rights of relators Red Lake Band of Chippewa Indians and White Earth Band of Ojibwe, with no benefit to Minnesota. Such a decision cannot stand. Enbridge needs Minnesota for its new pipeline. But Enbridge has not shown that Minnesota needs the pipeline. I would therefore reverse.”
The relator’s next step is to seek review at the Supreme Court. But the time for further review of the case is short—the pipeline could be completed before the court has time to issue an opinion.
As the Star Tribune reported, nearly 4,000 construction workers are building the 340-mile new Line 3, which is more than 60% completed.
Enbridge is scheduled to begin shipping Canadian oil during the fourth quarter, the paper reported. Protests along the pipeline route have increased, with about 2,000 people attending a large rally last week. About 180 arrests were made, the newspaper reported.