Line 5, the MPSC, and Fundamental Transformation
This week saw a flurry of activity on the MPSC’s Line 5 docket. As part of my ongoing effort to read things so you don’t have to, I spent some time this week looking over the new filings. Specifically, Enbridge and the MPSC Staff filed responses to the current appeals to the Administrative Law Judge’s last ruling. Those appeals from the Michigan Environmental Council, the Environmental Law & Policy Center, the Bay Mills Indian Community, and FLOW—all of which, in my view, make some of the strongest arguments they’ve made yet– seek to overturn the ALJ’s exclusion from consideration questions related to public need, the entirety of Line 5, and climate change, among other things.
I’m especially struck by the arguments presented by MPSC Staff in response to those appeals, not only because I suspect they carry particular weight with the Commissioners as I think they have with the ALJ (though I hope I’m wrong about that!) but also because the arguments are, well, just so very bad.
And it’s not just the arguments. I frankly don’t really understand the general mindset the MPSC staff has brought to these proceedings from the beginning, a mindset that, like Enbridge’s, seems to want to limit the scope of review as much as possible. It’s easy to understand why Enbridge would want a severely narrow review, of course. But it’s less easy to understand why those who literally work for and on behalf of the public would want anything less than the most careful, comprehensive review possible. Nevertheless, in their latest, the MPSC staff is oddly melodramatic about the matter, insisting that “without reasonable and legally sound limitations, the Joint Appellants’ anything-goes-approach would expand and weigh down the evidentiary record until it buckles” (p. 7). The metaphor here seems rather overwrought, as if due diligence is just somehow too much to ask of a public agency. Honestly, it just winds up sounding like Staff doesn’t want to have to do any extra work, like a teenager complaining about household chores.
The substance of the Staff’s argument is no better. As has been the case all along, the long and the short of it is that the MPSC Staff, like Enbridge, wants to severely limit the scope of the proceedings. But the argument they present for doing so is, in my opinion, extraordinarily weak. I find it baffling and a little disheartening that it has carried the day with the ALJ so far.
In the latest filing, the MPSC Staff argument begins with a tenuous claim, one that I’ve written about before—going all the way back to 2013. Here’s the latest iteration of the argument in Staff’s filing:
The Commission has historically considered three criteria in deciding whether to approve or deny an Act 16 application: whether (1) the applicant has demonstrated a public need for the proposed pipeline; (2) the proposed pipeline is designed and routed in a reasonable manner; and (3) the construction of the pipeline will meet or exceed current safety and engineering standards. (p. 8)
The claim here is misleading, to say the least. For one thing, “historically” is an exaggeration. The three-part framework cited here appeared for the first time in an MPSC proceeding less than 20 years ago, in the Wolverine pipeline case in 2002. Secondly, as I have explained in detail numerous times, even then these three criteria were never meant to be exclusive. Left out of this citation are the parts of the 2002 ruling that mention the Commission’s “broad authority” as well as the term “generally” (not “only” or “solely” or “exclusively”) that precedes even the enumeration of these three criteria. More troubling still is the fact that the sleight of hand that seems to have transformed these rough, general (but non-exclusive!) guidelines into hard-and-fast, apparently binding criteria was first performed by Enbridge. Eight years ago, they set the stage for what we’re witnessing now—as I predicted at the time. I don’t have space here to rehearse that full story yet again, but you can read it here and here.
Nor is this the only time that Staff looks to that 2002 Wolverine case for a precedent to limit the scope of the proceedings. With regard to that case, Staff argues that “at no point did the Commission examine: (1) any portion of Wolverine’s existing pipeline system not clearly related to the proposed extension; and (2) whether the pipeline could or should extend the operational life of the existing pipeline system” (10). Now, this assertion is technically true, but it is also once again misleading. The reason the Commission did not consider either of those two things in the Wolvernine case is NOT because they were ruled irrelevant or beyond the scope of review. Rather, it’s because those question were never raised by any intervenors. In other words, no one asked the Commission to consider Wolverine’s existing pipeline system or its operational life. The important point, therefore, is that nothing in the Wolverine case explicitly excludes those considerations any more than it permits them. The Wolverine ruling has nothing at all to say on the matter either way.
Staff’s second example of a precedent for limiting the scope of the proceedings is weaker still. Staff claims that in case U-17020, the Phase 2 replacement of Line 6B back in 2012-13, the Commission “did not revisit or reanalyze the public need for those existing systems. Rather, the Commission evaluated the public need for the pipeline segments as an important update to the existing pipeline” (11).
This is a baffling claim. The facts plainly contradict it. Both Enbridge’s application and the ruling clearly make the case for need based on the operation of the entirety of Line 6B, not just the “replacement” of some noncontiguous segments. For example, a key reason Enbridge claimed the replacement project is in the public interest was that it “restores the ultimate pipeline capacity of Line 6B” (p. 8). Similarly, in its approval of Enbridge’s application the Commission cited as the basis for its public need determination the fact that “Line 6B is the only pipeline ‘that can transport the large volumes or types of crude oil and petroleum produced in western Canada or the Williston Basin to refineries served in the region of the Project,’ noting, in particular, the expansion of the Marathon refinery in Detroit (p. 22).
Thus, both Enbridge in its application and the Commission in its ruling quite clearly and quite explicitly considered the public need for Line 6B as a whole as well as existing regional pipeline systems. In arguing otherwise, Staff cites the testimony of an Enbridge witness who referred at one point to the public need for “the project.” But elsewhere—in the Commission’s own ruling, as a matter of fact!—the Commissioners cite the very same Enbridge witness arguing for need based upon restoring “the ultimate capacity of Line 6B” and avoiding what is called “apportionments” on the entire line (the situation where shipper demands exceed pipeline capacity) (p. 7). None of this should this be remotely surprising, of course. It makes no sense in the first place to pretend like it’s even possible to talk about the “need” for a pipeline without talking about the entire pipeline.
In fact, in that same case, Enbridge never asked the Commission, as they are doing now, to exclude consideration of the pipeline as a whole or even to exclude discussion of regional pipeline systems. Quite the contrary: situating the project within that broader context was obviously advantageous to Enbridge’s case. But now that it’s not, they’re trying to change their tune and trying to rewrite MPSC history—aided and abetted by the MPSC staff.
Likewise striking is the fact that in the U-17020 case, Enbridge did not claim, as they’re claiming in the current Line 5 case, that they already have a determination of need for Line 6B. This is a curious fact, given that Line 6B was granted approval in 1969 and Enbridge could have tried then, as they’re doing now, to argue that the pipeline was already determined to be in the public interest. But they did no such thing. One can speculate as to why (for example, the fact that the project faced far less scrutiny and opposition than the Line 5 case), but whatever the case what this means is that Staff is just plain wrong to assert that there is no precedent for a re-determination of need. Here is Staff’s claim on this point
the Joint Appellants do not, and cannot, cite any substantive law that a pipeline that has been determined to be in the public interest must once again prove those benefits in an Act 16 proceeding to continue to operate into the future. (p. 21-22)
But as we’ve just seen, U-17020 is exactly a case where a pipeline that has been determined to be in the public interested once again had to prove those benefits in an Act 16 proceeding to continue to operate into the future. Enbridge didn’t even dispute that point.
Staff has an odd concern with the future in its most recent filing, a concern that leads them to some strange places. Here, for instance, is the next turn their argument takes:
Not only do the Joint Appellants distort “public need” by broadening the “pipeline” under review; they include a new requirement that the applicant demonstrate need for a previously authorized pipeline to continue to operate into the future (p. 12)
Now, this is a very strange framing, as I’ll explain below. But it’s worth noting that there is nothing “new” about such a requirement. Once again, consider U-17020. The demonstration of need produced by Enbridge (and affirmed by the Commission) in that case hinged almost entirely on operating the pipeline into the future. In its application, for example, Enbridge said that it “believes that the upgrades to Line 6B will allow it to meet its shippers’ forecasteddemands for additional pipeline capacity in the future” [emphasis mine]. In sworn testimony, the same Enbridge witness Staff quotes in its most recent filing explained that the project would add additional pipeline capacity “to meet shippers’ current and future transportation requirements” [emphasis mine].
But the real point about Staff’s odd fixation on the future is simply this: how could it be otherwise? Demonstrating need for a pipeline, or even for a segment of a pipeline, by definition implies its operation into the future. At what other time would you seek to operate a pipeline? You don’t apply for approval to construct a pipeline yesterday or last year; you don’t plan to construct a pipeline in order to operate it in the past. Every application before the MPSC is necessarilyfuture-oriented.
Which is why it is completely incoherent for Staff to argue that the Joint Appellants “conflate the public need for the project with the public need for ‘extending’ or ‘continuing’ the life of Line 5” and that the Joint Appellants also “conflate investment in a pipeline with extending the life of a pipeline.” There’s no conflation happening here; these things are simply inseparable. Why would someone assert the public need for something in the past or the immediate present? Why would anyone ever invest in a pipeline if not to extend its life? An investment is literally– by definition— a bet on the future.
In torturing this point, Staff then makes what seems to me a stunningly disingenuous argument, stating that “the life and use of Line 5 is not necessarily dependent on the age of the existing pipeline, but rather economics”:
Although Enbridge may occupy the utility tunnel for 99 years, that does not mean that it necessarily will. That figure is a maximum amount of time, not a statement on how long Line 5 will operate. It is entirely possible that Line 5 could cease to operate regardless of the Commission’s decision in this case. For example, Enbridge might experience a loss of supply, loss of demand, or experience other economic drivers not relevant to this case.
Setting aside Staff’s poor grasp of “economics” (that is, pipeline operators or capitalists of any kind don’t make billion dollar investments in assets that they don’t intend to use for as long as they possibly can), it’s not really clear what Staff is arguing here. That the Commission should take seriously an application to build a pipeline in a tunnel in the bedrock of the Straits of Mackinac that might only be used for a very short period of time? That is absurd on its face.
Enbridge, it’s worth nothing, attempts to make a similar argument that is even more laughable. Enbridge claims that the “sole reason” they seek to relocate the pipeline beneath the Straits within a tunnel is to “fulfill the state policy of better protecting the Great Lakes.” That is, Enbridge seriously tries to argue that the reason for relocating the pipeline is because they entered into an agreement to do so with the state, not because they want to extend the life of the pipeline. But this makes no sense whatsoever since it is obviously the case that the only reason they would ever enter into such an agreement with the state in the first place is so that they could continue to operate the pipeline into the future. Or put differently, the whole point of the tunnel agreement is to better protect the Great Lakes while at the same time extending the life of Line 5. The extension of the operating life of the pipeline is the pre-condition of the tunnel agreement. Without it, there would obviously be no tunnel agreement. It is ludicrous, and frankly insulting to anyone’s intelligence, to pretend otherwise.
This leaves, finally, the question of the permissibility of climate change and greenhouse gas emissions in these proceedings. I’ve already gone on far too long here, so I may need to save that discussion for a separate post. For now, I will just say that Staff’s argument for excluding these things from consideration rests primarily on the claim that doing so “would fundamentally transform the Commission’s review of Act 16 pipeline applications in Michigan, with no basis in precedent or statute.” Now, that claim is probably true. And it’s not really surprising that lawyers and judges would consider themselves as bound by precedent; typically cautious, that’s just how lawyers and judges roll. But the Commissioners need not be bound by precedent and need not be cautious. After all, just as there may be no precedent or statute for considering climate change in Act 16 reviews there is also no precedent or statute expressly prohibiting it.
And here we move from legalities to ethics. At this stage of the climate crisis, it is, frankly, ethically irresponsible not to take into account greenhouse gas emissions. And given the makeup of the current Michigan legislature, dominated by reckless industry-loving Republicans, it’s unlikely that any statutory mandate that regulatory agencies do so is forthcoming. But if we’re serious about addressing this crisis, at some point, someone in a position of authority is going to have to take a stand, even if that means fundamentally transforming the Commission’s review of Act 16 pipeline applications. The MPSC Staff, like Enbridge, might be scared of that transformation, but it’s a transformation we desperately need. And the Commission has the authority to make it.
They just need the courage.