Enbridge Must Reroute Line 5 Pipeline but Wins More Time, US Appeals Court Rules

A U.S. appeals court has upheld a ruling that Canadian energy firm Enbridge Inc. is liable for trespassing with its Line 5 pipeline on land belonging to a Native American tribe in Wisconsin. The court, however, reversed a lower court's tight deadline for moving the pipeline and ordered a recalculation of the financial damages owed to the tribe.

Details of the Ruling

The decision, issued Thursday by the 7th U.S. Circuit Court of Appeals in Chicago, addresses a June 2023 order from a federal district judge. The original order required Enbridge to pay the Bad River Band of the Lake Superior Tribe of Chippewa Indians $5.15 million in restitution and remove a 12-mile section of the pipeline from its reservation within three years.

Writing for a three-judge panel, Circuit Judge Michael Scudder found the three-year timetable was "too aggressive." The court directed the lower court to establish a new timeline, urging that the rerouting occur "as soon as possible." The decision cited the risk of harming consumers and potential international fallout with Canada, referencing a 1977 U.S.-Canadian treaty on transit pipelines, as reasons for extending the deadline.

"Make no mistake: Enbridge must remove the pipeline from the [tribe’s land]," Judge Scudder wrote, emphasizing that the extension "does not reflect our approval of the company’s behavior."

Financial and Operational Impact

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The appeals court also ordered a recalculation of the $5.15 million damage award, stating the district judge abused his discretion by "double-counting." The original calculation improperly combined Enbridge's profits from the trespass with the economic benefit it gained by deferring the rerouting expenses, according to the ruling.

For Enbridge, the ruling is a mixed outcome. While the company still faces the significant operational and capital expense of rerouting a critical pipeline, the extended timeline provides more flexibility and avoids a near-term shutdown of the line, which transports up to 540,000 barrels of oil per day from Canada through the Great Lakes region.

Background of the Dispute

The Line 5 pipeline was constructed in 1953. While Enbridge held easements for the pipeline over some tribal parcels through 2043, its rights-of-way for other parcels expired in 2013. After negotiations between the company and the tribe failed, the Bad River Band sued Enbridge in 2019.

The tribe has raised environmental concerns, warning that riverbank erosion near the pipeline poses a significant risk. The appeals court also sided with Enbridge on one point, refusing to hold the company liable for nuisance, ruling that the claim was preempted by federal law.