The Canadian government has invoked a 1977 treaty with the United States to trigger formal government-to-government negotiations over the fate of Line 5, a vital petroleum pipeline for Canada that faces a threat of shutdown from the State of Michigan.
The move escalates a dispute in which U.S. President Joe Biden’s administration has been reluctant to intervene. Last May, U.S. Secretary of Energy Jennifer Granholm told reporters the White House had no plans to get involved, saying it would be up to the courts to settle.
“The Biden administration will not be able to duck this issue any longer,” Toronto international trade lawyer Lawrence Herman said on Monday.
The development – which is the first time the Transit Pipelines Treaty has been invoked – follows a breakdown in court-ordered mediation talks last month between Enbridge Inc. and Michigan, where Governor Gretchen Whitmer has ordered Line 5 to cease shipping petroleum along the bottom of the state’s Straits of Mackinac waterway, citing the risk of spills.
Ms. Whitmer, a Democrat and ally of Mr. Biden, is up for re-election in 2022.
Enbridge says it remains committed to mediated settlement of the Line 5 dispute
Michigan tells court more Line 5 mediation talks with Enbridge would be unproductive
Gordon Giffin, a former U.S. ambassador to Canada now acting as legal counsel for the Canadian government, informed a federal U.S. judge in Michigan on Monday by letter that Canada has “through diplomatic channels” formally invoked Article 9 of the 1977 treaty to request negotiations.
The agreement was drawn up at time when Washington was concerned about ensuring there would be no obstacles to shipping petroleum from Alaska to the lower 48 states.
In a statement explaining this development, Foreign Affairs Minister Marc Garneau said Canada “is firmly committed to ensuring its energy and economic security.”
Mr. Giffin asked Janet Neff, the U.S. district judge presiding over the Enbridge-Michigan legal dispute, to suspend court proceedings while formal negotiations between Canada and the United States take place. “It is neither necessary nor proper for this court (or any other domestic court) to make any determinations that could undermine, conflict or interfere with the obligations and processes established by the treaty,” he wrote in his letter.
The treaty was designed to ensure uninterrupted transmission of petroleum between the two countries. It says the only justifications for impeding the flow are natural disasters or emergencies – and only temporarily.
If formal negotiations fail to resolve the matter, Canada has the right under the treaty to request binding arbitration.
The conflict over this pipeline, which carries western Canadian oil through Michigan and back into Canada, is a departure from typical trade disputes between the two countries, such as whether Canadian softwood is unfairly subsidized. Federal Natural Resources Minister Seamus O’Regan has declared a shutdown of Line 5 would threaten Canada’s energy security and its continued operation is “non-negotiable.”
Enbridge Line 5 carries up to 540,000 barrels a day from Alberta and Saskatchewan through two Great Lakes states and re-enters Canada at Sarnia, Ont. It supplies more than 65 per cent of Quebec’s crude oil needs and about 50 per cent of the petroleum Ontario’s refineries use to make gasoline and other fuels.
The 68-year-old Line 5 divides into two pipelines that rest on the lake bed as they cross the straits, before merging back into one.
Derek Burney, a former Canadian ambassador to Washington, said he backed Canada’s decision, but called it a “dramatic exercise of diplomatic power.”
“It’s a very sad commentary on the state of the [Canada-U.S.] relationship if we have to invoke a treaty in order to assert our rights,” he said. “But if you can’t get the attention of the American administration … you don’t have much choice.”
The matter has been in the hands of a federal U.S. court for many months, and the two sides have been urged to try to solve it themselves. Enbridge has proposed rerouting the Mackinac crossing underground below the straits to reduce the environmental risks.
But on Sept. 15, Michigan told the court it saw no further use for mediation talks with Enbridge.
In November, 2020, in fulfilment of a campaign pledge, Ms. Whitmer revoked an easement permit granted in 1953 that allows Line 5 to cross the environmentally sensitive straits. She called the pipeline a “ticking time bomb.”
Ms. Whitmer gave Enbridge until May 12, 2021, to comply.
But Calgary-based Enbridge argued in court that only the federal government can pass judgment on the safety of a pipeline.
In a statement on Monday, Ms. Whitmer criticized Prime Minister Justin Trudeau for invoking treaty rights over the pipeline, saying she is “profoundly disappointed” that Canada is trying to help “a private oil company keep crude oil running indefinitely through Michigan’s Straits of Mackinac.”
She urged Mr. Trudeau to reconsider. “Rather than taking steps to diversify energy supply and ensure resilience, Canada has channelled its efforts into defending an oil company with an abysmal environmental track record.”
In his statement on Monday, Mr. Garneau said Canada also backs Enbridge’s proposal to reroute the pipeline deep under the Straits of Mackinac.
Enbridge has proposed a US$500-million tunnel below the straits to shield the Great Lakes from possible accidents.
Enbridge spokeswoman Tracy Larsson on Monday said the company remains open to further mediation and said that the alternative to the pipeline is shipping fuel by truck, trains or barges. “These other modes burn far more fuel in order to move it, releasing more greenhouse gases into the environment, and would increase safety risk along each of those transportation modes,” she warned.
Toronto-based trade lawyer Mark Warner says he’s not sure that state-to-state arbitration will resolve the matter in Canada’s favour. He pointed to Article 4 of the 1977 treaty, which says “appropriate governmental authorities” will still have the power to make decisions affecting the pipeline for the sake of “environmental protection” and “pipeline safety.”
Enbridge says Line 5 has never leaked into the Straits of Mackinac, but critics say it has leaked elsewhere along the route.
They also point to 2010, when another pipeline operated by Enbridge, Line 6B, ruptured and released 3.3 million litres of oil into a tributary of the Kalamazoo River.
That became one of the largest inland oil spills in U.S. history and took five years to clean up.
A University of Michigan computer-modelling study in 2016 concluded that more than 1,120 kilometres in Lake Huron and Lake Michigan would be vulnerable to oil spills if the pipelines beneath the Straits of Mackinac were to rupture.
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