A standoff over operation of the Line 5 pipeline that carries crude oil and natural gas liquids through the Straits of Mackinac in Michigan has gotten more tense as the state threatens to seize profits from operator Enbridge Inc. after it failed to shut the pipeline on May 12. 

Canada's federal government has entered the dispute and wants to keep the pipeline open and Enbridge is moving forward with preconstruction work on the pipeline's replacement tunnel after receiving its first permits. The Michigan Dept. of Environment Great Lakes and Energy approved Enbridge’s application for the first permits for tunnel preconstruction work in January. Arup is attached to the project as its design engineer and Jay Dee Contractors Inc., Livonia, Mich. and the U.S. unit of Japan's Obayashi Corp. were named in March 2020 to build the tunnel through a joint venture called Great Lakes Tunnel Constructors.

Enbridge, a Calgary, Alberta-based multinational energy provider, owns the 68-year-old underwater line, and has said it has no plans to close the 4-mile section that runs along the bottom of the straits between Lake Michigan and Lake Huron.

Citing concerns over spills and the environmental damage they could cause, Michigan Gov. Gretchen Whitmer (D) in November set a May 12 deadline for shutting the pipeline down, saying the easement that allowed Enbridge to operate it since 1953 has been revoked.  

Enbridge has since sued the state in federal court and said its easement is still in effect, despite any action from Whitmer.

Whitmer sent a letter on May 11 to Enbridge asserting the state would seize all profits derived from what it terms as Enbridge’s wrongful use of state-owned bottomlands beneath the straits.

“If the state prevails in the underlying litigation, Enbridge will face the prospect of having to disgorge to the state all profits it derives from the wrongful use of the easement lands following (the May 12 deadline),” Whitmer wrote in the letter.

Enbridge Won't Stop Pipeline

Ryan Duffy, a spokesperson for Enbridge, said the company will not abide by the May 12 deadline.

“We will not stop operating the pipeline unless we are ordered by a court or our regulator, which we view as highly unlikely,” he said.

With gas prices already surging in Michigan to levels not seen since 2018, a line shutdown would have grave commercial and international consequences, Duffy said.

“A shut down of Line 5 has serious, broad ramifications and raises substantial federal and international questions relating to interstate and international commerce,” he said in an email. “That is why the case is in federal court where the judge has ordered mediation. We are confident that one of these paths will produce a resolution.”

In a congressional hearing on the eve of the deadline, Michigan Oil and Gas Association President and CEO Jason Geer said without the Line 5 pipeline, 14,000 barrels of oil per day would need to be transported by truck or rail, with not enough drivers or truck capacity to handle such a load.

“Two-thirds of our state’s production for oil and gas is in northern Michigan,” Geer said. “We have to be able to get that production to refineries, so without Line 5 this becomes a much greater challenge for us.”

Canada is asserting that a 1977 treaty between itself and the U.S. prohibits Michigan, or any state, from taking unilateral action to close the pipeline. Ottawa also said that if the pipeline is shut down it would have serious consequences for U.S.-Canadian relations.

“This case raises concerns regarding the efficacy of the historic framework upon which the U.S.-Canada relationship has been successfully managed for generations,” a court briefing from Canada’s federal government said, and "threatens to undermine important aspects of that cooperative international relationship,"

Canada Lobbies for Line 5

The brief was filed May 11 in federal court in Western Michigan in support of continuing discussions over the pipeline’s future.

“This brief supports the continued mediation between Enbridge and the State of Michigan, underlines that Line 5 is a critical energy and economic link between Canada and the United States, and conveys Canada’s belief that the U.S. federal court is the proper jurisdiction to hear the case between Michigan and Enbridge,” said Seamus O’Regan, minister of natural resources for Canada.

O’Regan said the governments of Alberta, Saskatchewan, Ontario and Quebec cooperated on the brief.

“We are continuing to work together to defend Line 5, leaving no stone unturned in defending Canada's energy security and the workers who built this country,” he said.

Enbridge’s Duffy said the pipeline is safe despite Whitmer’s concerns over two incidents in 2018 and 2019 in which the pipelines were struck and a coating designed to protect them was damaged.

“Line 5 is operating safely, reliably and is in compliance with the law,” Duffy said. “The State of Michigan has never presented any concrete evidence to suggest otherwise. The U.S. agency in charge of pipeline safety, the Pipeline and Hazardous Materials Safety Administration (PHMSA), has confirmed on multiple occasions that the pipelines are fit for service.”

The agency most recently ruled on the safety of the line in 2020 and said it had not identified any integrity issues after scrapes were discovered along the pipeline and a support structure earlier that year. 

New Tunnel

The scrapes the agency investigated were found to have been caused by surveying work Enbridge was performing prior to construction of a new tunnel for Line 5. A deal was struck in 2018 by Enbridge and former Michigan Gov. Rick Snyder (R) to replace the pipeline’s underwater portion with a new segment that would be contained inside a tunnel to be drilled through bedrock beneath the straits.

Duffy said Enbridge is still seeking other permits needed to build the $500-million Great Lakes Tunnel project, which would include both lines and space for regular maintenance as the tunnel is envisioned to be large enough for trucks to drive through.

“In the meantime, Line 5 must stay open,” he said. “It is a critical piece of North American energy infrastructure that benefits both Canada and the U.S.”

Hillman agreed. “Given Canada’s commitment to and investment in the Great Lakes, it is our view that the proposed Great Lakes Tunnel Project will enhance the protection of these waters.”

House Transportation Committee Chair Jack O’Malley (R) of Lansing said he also supports building a tunnel.

“Housing the pipeline in a tunnel is a forward-thinking and safe solution,” he said during a May 11 congressional hearing on Line 5.