The state Commerce Department dealt a setback Monday to a proposed oil pipeline across northern Minnesota, declaring the environmental and socioeconomic risks of letting Enbridge Energy replace its aging Line 3 pipeline across Minnesota outweigh its "limited benefits."
In documents submitted to the state Public Utilities Commission, the Commerce Department argued Enbridge has not established a need for its proposed Line 3.
Enbridge wants to decommission the existing Line 3, which runs from Alberta, Canada, to an Enbridge hub in Superior, Wis. The company would leave it in the ground and build a new line along a different route, south of the existing pipeline corridor.
Activists, however, have been pressing Minnesota officials to deny the permit and kill the project.
The Minnesota Public Utilities Commission will have final word on the project, and expects to decide on whether to grant permits next spring. The commission runs independently of the Dayton administration, but the Commerce Department's view may have influence that final decision. Gov. Mark Dayton on Monday commended Commerce staff for its analysis.
"This document will arouse considerable controversy. That discord should be recognized as part of the wisdom of the process," Dayton said in a statement, adding that he would wait for the "complete record" before offering his personal views.
Commerce on Monday said a report by the global energy consulting firm London Economics International found that refineries in Minnesota and the Upper Midwest are not running short of crude oil and that demand appears unlikely to increase in the long term.
The analysis also said Enbridge's recent expansion of another pipeline should meet the company stated needs to build a new Line 3.
Overall, Enbridge has not established a need for the proposed project in Minnesota as required under state rules, the agency said.
"In light of the serious risks and effects on the natural and socioeconomic environments of the existing Line 3 and the limited benefit that the existing Line 3 provides to Minnesota refineries," Commerce officials wrote, "it is reasonable to conclude that Minnesota would be better off if Enbridge proposed to cease operations of the existing Line 3, without any new pipeline being built."