MINNEAPOLIS — The Minnesota Court of Appeals has reversed a state regulator's decision to grant a certificate of need for Calgary-based Enbridge's proposed Sandpiper oil pipeline.
The appeals court sent the issue back to the Minnesota Public Utilities Commission to conduct an environmental review and reconsider whether a certificate should be granted.
Minnesota regulators granted the certificate in June, saying the $2.6-billion, 980-kilometre pipeline from North Dakota's Bakken oil fields to Superior, Wisc., was necessary and in the public interest. A lengthy environmental review of the project was set to take place as officials determined the pipeline's final route.
But a three-judge panel of the appeals court said Monday that the certificate constituted a major governmental action, so state law requires the environmental impact statement be completed before that certificate is granted.
No one disputed that the pipeline would be subject to environmental review, but the timing of a review was at issue.
Traditionally, the certificate of need and routing permit proceedings for pipelines are conducted at the same time. But last fall, the commission decided to conduct the certificate of need proceedings first, setting the project schedule back by about a year.
The Friends of the Headwaters argued that conducting certificate of need proceedings before completing an environmental impact statement violated the Minnesota Environmental Policy Act. The appeals court agreed.
The court also said that conducting an environmental impact statement early in the process ensures "decision-makers are fully informed regarding the environmental consequences of the pipeline, before determining whether there is a need for it. Moreover, completion of an EIS at the initial certificate of need stage seems particularly critical here because once a need is determined, the focus will inevitably turn to where the pipeline should go, as opposed to whether it should be built at all."
Honor the Earth, an environmental group based on the White Earth Ojibwe reservation in northern Minnesota, hailed the decision as a "huge victory for citizen and environmental groups."
Critics have said the risk of leaks from Sandpiper is too high, including where the route would run through the headwaters of the Mississippi River.
Enbridge (TSX:ENB) has argued that Sandpiper is needed to move the growing supply of North Dakota crude oil safely and efficiently to market. The company has said the project would also ease rail congestion and create about 1,500 construction jobs.
"We stand behind the work of the Department of Commerce in its environmental review of the Sandpiper Pipeline Project. We support the Public Utilities Commission's decision to unanimously issue a certificate of need. We stand with our project supporters — the workers, counties, labourers, and landowners and their surrounding communities that have steadfastly supported this project," Lorraine Little, an Enbridge spokeswoman in Duluth, Minn.
"We will evaluate our options for next steps with this important project."
Graham White, an Enbridge spokesman in Calgary, said it's too soon to say how the court's decision may affect Sandpiper's targeted 2017 startup date.
The Minnesota Public Utilities commission is reviewing the decision in consultation with the Minnesota Attorney General's Office, spokesman Dan Wolf said in a statement.
"The commission will be carefully evaluating its options and considering how to proceed relative to next steps and timeline."
North Dakota regulators have already approved Sandpiper.
— With files from The Canadian Press
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