By Alex Reep

Recall the hyper-controversial Keystone XL pipeline project which triggered a decade-long international movement of environmentalists and Indigenous leaders[i]? What if I told you that construction on an eerily similar pipeline extension project restarted only weeks ago on October 1st in the Midwest? Similar to Keystone XL, Enbridge Inc’s Line 3 pipeline expansion project will cross more than 330 miles of Minnesota to bring 1 million barrels of tar sands oil from Alberta, Canada to Superior, Wisconsin each day[ii].

Map of the Enbridge Line 3 Pipeline Replacement Project — Minnesota Public Utilities Commission

It’s no wonder why Indigenous leaders are deeply concerned about a project that would cross 800 wetlands, 200 bodies of water, and Northern Minnesota’s wild rice beds to become the largest tar sands pipeline in the world. The project poses immense risk to water resources, fragile ecosystems, ancestral lands, Indigenous communities, and to the climate crisis. Basically, there are negative externalities in the production (in-situ mining of tar sands), transportation (spill risk), and construction (damaged ecosystems in pipeline path) of the Line 3 project.

This all being said, not everyone opposes the project — particularly those in power who have an economic stake in the game, namely oil industry leaders who argue that the project is necessary to create jobs and to provide reliable energy.  Reuters reports that the project is “celebrated by trade unions … and Canada’s energy sector,” because it creates jobs and has the potential to increase the price of Canadian crude oil[iii]. The Canadian Association of Petroleum Producers (CAPP) states that “successful completion of L3RP will put an additional 370,000 billion dollars of Canadian oil on the global marketplace”[iv]. This represents a huge boost to the oil industry, at a time when the United States should be reducing its dependence on fossil fuels entirely.

Simply put, the Biden Administration needs to revoke the federal permit for the Line 3 Pipeline.

Oil Spills

First of all, Line 3 will deliver bitumen, a form of oil that is much more difficult and expensive to clean up than non-tar sands oil. Secondly, Enbridge has a tragic, decades-long history of spilling oil, as the tabulated data on Enbridge Liquid Spills from 1996 to 2014 demonstrates (Source: ALERT, 2014).

• In 1991, the original Line 3 pipeline ruptured and spilled 1.7 million gallons of crude oil onto the Prairie River[v]. Fortunately, the river was frozen at the time, but the spill could have contaminated the water used by millions who live downstream on the Mississippi River.
• In 2010, Enbridge Energy Partners’ Line 6B pipeline ruptured in Michigan, causing the second largest inland oil spill in US history and inflicting irreparable damage on aquatic ecosystems and the lives of those who lived nearby[vi].
• These repeated spills are concerning enough that, on June 3, 2019, the Minnesota Court of Appeals “ordered further proceedings to consider the potential impact of an oil spill into the Lake Superior watershed”[iv].
• As recently as October 8, 2019, the Minnesota Public Utilities Commission issued an order, which found Line 3’s Environmental Impact Statement (FEIS) to be “Inadequate on Remand”[vii].

Land Rights

Although concerns over oil spills are entirely valid, they encapsulate only a potential risk to the future. In the meantime, the drilling happening right now to develop the pipeline has already inflicted serious damage to waterways, causing erosion and contamination to rivers. A major challenge in protecting Indigenous lands from development is the lack of formal land ownership titles. The Line 3 extension is set to plow through the Fond Du Lac and Leech Lake reservations, where the Ojibwe tribes have the right to hunt, fish, and gather, according to the 1855 Treaty of Washington[viii]. The pipeline will also intersect 300 km of First Nation reserves in Manitoba territory[ix]. Despite the fact that Section 35(1) of Canada’s Constitution Act, 1982, recognizes Aboriginal rights and affirms Aboriginal peoples’ interests in their traditional lands, Anishinaabe activists say that the pipeline violates the terms of past treaties[x].

Although Indigenous people have cared for these lands for thousands of years, tradition has been ignored. Fortunately, all hope is not lost. Theoretically, clear property rights can lead to Pareto efficient outcomes. According to the Coase Theorem, issuing property rights may be a strategy to solve some of the negative externalities that would result from the Line 3 pipeline expansion. If Indigenous tribes had formal land titles across all of their pipeline-impacted territories, they would better be able to negotiate with Enbridge and obtain either compensation or the ability to terminate the project entirely. These tribes could then be equipped with clear Liability and Negligence Rules, in the event that their property rights are violated or if Enbridge breaches protocols and does not exercise sufficient care in action.

Climate Change

The Line 3 pipeline project is dirty business, from start to finish. At the beginning of the pipeline, Alberta’s boreal forest is clear cut by Enbridge and hot steam is pumped underground to liquefy the tar sands for oil extraction[xi]. Recall that Line 3 will bring one million barrels of tar sands oil from Canada to Wisconsin each day? The Union of Concerned Scientists found that a gallon of gas made from these tar sands oil emits 15% more carbon dioxide than gas made from conventional oil[xi]. In their report “A Giant Step Backwards,” 13 environmental groups estimated that the Line 3 expansion would add 193 million tons of carbon dioxide emissions into the atmosphere each year, which is the equivalent of creating 50 new coal-fired power plants or adding 38 million additional gasoline vehicles onto roads[xii].

The graph below demonstrates greenhouse gas emissions, measured in million tons per year of carbon dioxide (source: PriceofOil.org).

As long as the pipeline is in operation, it will cause immeasurable negative externalities to the ecosystems in Canada and across the Midwest, to air and water quality, to the lives of people who live near the proposed pipeline expansion, and to those who are directly and indirectly affected by the fossil fuel industry’s exacerbation of the climate crisis (ie. everyone everywhere). Given this historic and ongoing damage, it is clear that those with regulatory control, like the Minnesota Pollution Control Agency and the Biden Administration, did not fully consider the long-term climate impacts of the project when granting project approval.

Recommendations

1. The Biden Administration must revoke the federal permit for the Line 3 pipeline and honor Indigenous land rights.
2. Stakeholders can no longer discount the future throughout the Line 3 pipeline development, as it biases project analysis towards gains in the present, accelerates resource exploitation, allows the project to continue, and seriously damages future generations. Project leaders should consider conducting a sensitivity analysis to determine assumptions made as the discount rate is selected and applied.
3. In the case of Enbridge’s profit grabbing pipeline expansion project, government intervention is required to restore efficiency and social optimality through the use of economic interventions and regulations. A tax should be imposed on both the production and consumption of gas made from Line 3 tar sands oil. Revenue from these taxes should be reinvested into renewable energy technology, the electrification of the Midwestern power grid, and restoration of the lands that have already been damaged by Line 3 construction.
4. In the event that market-based approaches, like taxes, are not feasible, the U.S. government should also consider employing a Command-and-Control approach, like placing a production quota on the amount of oil that Enbridge is allowed to mine and move.
5. The U.S. government can negotiate with Enbridge Inc. to agree on target pollution-reduction strategies that may give Enridge a more sustainable image.
6. In order to help the general public internalize and understand the many negative externalities associated with the production, transportation, and consumption of oil, governmental actors and community leaders should launch educational campaigns to inform people about the consequences of the Line 3 pipeline and their use of gasoline. As a result, people may drive less, boycott Enbridge oil, advocate for Indigenous land rights, and organize to protect the ecosystems around them.
7. But, finally, it would just be really cool if Biden snatched back that federal permit.

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Alex Reep is a Master of Development Practice candidate, focused on how scientific research can inform policy solutions for environmental protection and food security. 

The views expressed in this article do not necessarily represent those of the Berkeley Public Policy Journal, the Goldman School of Public Policy, or UC Berkeley.

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[i] Brady, Jeff, and Neela Banerjee. 2021. Developer Abandons Keystone XL Pipeline Project, Ending Decade-Long Battle. June 9. https://www.npr.org/2021/06/09/1004908006/developer-abandons-keystone-xl-pipeline-project-ending-decade-long-battle.

[ii] Enbridge Inc. n.d. Line 3 Replacement Project. https://www.enbridge.com/projects-and-infrastructure/public-awareness/minnesota-projects/line-3-replacement-project.

[iii] Williams, Nia. 2021. Enbridge’s long-delayed Line 3 oil pipeline project to start up Oct. 1. September 29. https://www.reuters.com/business/energy/enbridge-completes-line-3-oil-pipeline-replacement-project-starts-linefill-2021-09-29/.

[iv] Canadian Association of Petroleum Producers. 2019. Crude Oil Forecast, Markets, and Transportation. https://www.capp.ca/wp-content/uploads/2019/11/2019_Crude_Oil_Forecast_Markets_and_Transportation-338794.pdf

[v] Kraker, Dan, and Kirsti Mahron. 2021. 30 years later, echoes of largest inland oil spill remain in Line 3 fight. March 3. https://www.mprnews.org/story/2021/03/03/30-years-ago-grand-rapids-oil-spill.

[vi] Riesterer, Joseph. 2019. The Enduring Legacy of the 2010 Kalamazoo River Oil Spill. July 12. https://beltmag.com/kalamazoo-river-line-6b-oil-spill/.

[vii] Minnesota Public Utilities Commission. 2019. Line 3 Pipeline Replacement. https://mn.gov/commerce/energyfacilities/line3/

[viii] US Dakota War . n.d. Minnesota Treaty Interactive. https://www.usdakotawar.org/history/treaties/minnesota-treaty-interactive.

[ix] Romanow, Jacqueline T. 2015. An Economic Analysis of the Proposed Enbridge Line 3 Expansion Project.Winnipeg: University of Winnipeg.

[x] Government of Canada. 2021. INAN – Section 35 of the Constitutional Act 1982. https://www.canada.ca/en/immigration-refugees-citizenship/corporate/transparency/committees/inan-jan-28-2021/inan-section-35-consitution-act-1982-background-jan-28-2021.html

[xi] Union of Concerned Scientists. 2013. What Are Tar Sands? December 18. https://www.ucsusa.org/resources/what-are-tar-sands#:~:text=Tar%20sands%20(also%20known%20as,gasoline%20and%20other%20petroleum%20products.

[xii] OCI Team. 2020. A Giant Step Backward: Carbon Impact of the Line 3 Pipeline. January 29. http://priceofoil.org/2020/01/29/line-3-climate-impact/.