The Canadian government is formally intervening in a legal battle over the future of Enbridge Inc. ’s Line 5 pipeline, a major cross-border conduit for oil from Western Canada to customers in Ontario and Quebec, warning a U.S. court that Michigan’s effort to shut it down unilaterally would not only disrupt Canada’s energy supply but damage bilateral relations.
“The proposed shutdown would cause a massive and potentially permanent disruption to Canada’s economy and energy security,” lawyers for Canada argue in a legal brief filed Tuesday.
“Further, such unilateral action by a single state would impair important U.S. and Canadian foreign policy interests by raising doubts about the capacity of the government of the United States to make and uphold commitments without being undermined by an individual state,” the Canadian government said.
“Canada’s ability to rely on bilateral treaties are at the heart of the U.S.-Canada relationship.”
Michigan Governor Gretchen Whitmer has revoked an easement permit first granted in 1953 that allows Line 5 to cross the Straits of Mackinac waterway, citing the risk of oil spills and calling it a “ticking time bomb.” She gave Enbridge until May 12 to comply and warned the company it would be breaking the law after that.
Calgary-based Enbridge has defied her order and challenged it in court, saying the company will not shut down the line, which carries up to 540,000 barrels a day, unless a judge decrees it. The two sides have been in mediation since April.
In another development Tuesday, Ms. Whitmer threatened to sue Enbridge for “all profits it derives from wrongful use” of the Straits crossing after May 12.
In a letter to Enbridge, she warned that if Michigan prevails in court and the permit revocation is upheld, the company would face legal claims for “trespass and unjust enrichment.” She told Enbridge executive vice-president Vern Yu that continued operation of the crossing is at the company’s own risk.
In the Canadian government’s amicus brief filed with the United States District Court for the Western District of Michigan, Ottawa cited a 1977 bilateral agreement known as the “Transit Pipelines” treaty. In this pact, it said, the United States “undertook a solemn and reciprocal commitment to Canada ... not to interfere with the operations of international [oil and gas] pipelines” without specific justifications including emergencies or natural disasters.
Canada has previously warned it is prepared to invoke the 1977 treaty, which calls for binding arbitration to settle disputes. In the legal brief, Ottawa said it’s already in talks with Washington about its rights under the agreement.
“Canada is seeking a mutually agreeable solution that also respects environmental and safety concerns. But neither this court nor any state court should act in a way that bypasses and undermines the treaty. This court should hold this case in abeyance pending the outcome of the treaty process,” the government’s brief said.
The lead lawyer acting for the Canadian government is Gordon D. Giffin, a former U.S. ambassador to Canada.
Canada also warns in the brief of “severe and adverse impacts” to its economy if the pipeline is forced to shut down. “Line 5 supplies approximately 66 per cent of Quebec’s crude oil needs and about 50 per cent of the [petroleum] used by Ontario’s refineries to make gasoline and other fuels.”
Furthermore, Canada said, a pipeline closing would “strand up to 400,000 barrels per day of oil originating from Western Canada,” adding the rail system may not have capacity to carry such a large volume.
Ms. Whitmer’s bid to shut down Line 5 was an election promise she made in the 2018 gubernatorial race, and her concern is focused on the point where it crosses the Straits, a major waterway in northern Michigan. Her order revokes an easement permit for the crossing first granted in 1953.
The pipeline has never leaked oil in the Straits since it began operating in 1953. But in 2010, another pipeline operated by Enbridge, Line 6B, ruptured and released petroleum into a tributary of the Kalamazoo River, becoming one of the largest inland oil spills in U.S. history.
The Official Opposition on Tuesday urged Prime Minister Justin Trudeau to immediately invoke the 1977 Canada-U.S. pipeine treaty. Conservative natural resources critic Greg McLean and foreign affairs critic Michael Chong said it’s time for Canada to formally seek arbitration under the 1977 pact, which U.S. President Joe Biden voted for as a junior senator.
“The governor of Michigan is trying to shut down Enbridge Line 5, regardless of the outcome of mediation and the court process, in a blatant violation of the Transit Pipelines Treaty that President Joe Biden supported as a senator,” the MPs said.
Ms. Whitmer is attracting public support from leading Democratic allies in more than a dozen states, a sign of the challenges Mr. Biden could face in trying to intervene on the matter.
Federal Natural Resources Minister Seamus O’Regan said Canada believes the continuing mediation between Enbridge and Michigan is the best route to a solution. “Line 5 ... remains the safest, most efficient way to transport fuel to refineries and markets and is a reliable source of energy for Michigan, Ohio, Pennsylvania, Ontario and Quebec.”
Alberta Energy Minister Sonya Savage said Tuesday she was pleased Ottawa decided to step in, and said governments across Canada must continue to advocate for the pipeline’s survival.
Energy producers and industry workers have faced several challenging years, she said, and uncertainty over Line 5′s fate has added to those woes.
“But what is the most concerning to us in Alberta – as it should be for everyone – is the dangerous precedent that a shutdown of a safely operating pipeline would set for future oil and gas infrastructure projects,” she said in a statement.
The Consumer Energy Alliance (CEA), a pro-industry U.S. advocacy group, estimated this week that a Line 5 shutdown would cost Michigan, Ohio, Indiana and Pennsylvania a combined US$20.8-billion in economic activity and risk some 33,000 jobs. About two-thirds of that hit would be to Ohio – more than four times the impact to Michigan.
Green Party Leader Annamie Paul, however, said she backs a shutdown of Line 5 for environmental reasons, and said Canada should prepare contingency plans to mitigate the consequences. “This is not the first pipeline project to be shut down between the U.S. and Canada and it won’t be the last,” Ms. Paul said in a statement.
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