ST. PAUL — The Minnesota Court of Appeals dealt a blow to environmental groups and Native American communities in the state Monday, June 14, ruling that the owner and operator of the Line 3 oil sands pipeline demonstrated a sufficient need to build a replacement line during the permitting process.

At issue was whether the Canadian energy company Enbridge relied on the correct type of demand forecast in seeking what is known as a certificate of need for the controversial project. Litigants in the case, including the Minnesota Department of Commerce, argued it did not, and that the state Public Utilities Commission erred in granting the certificate.

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In a decision filed Monday, however, the three-judge panel that heard the case upheld the PUC's decision to issue both the certificate and a routing permit for the replacement line in Minnesota, 60% of which is already complete. Construction could have been halted had things gone the other way, activists said previously, at least until the permits were reissued.

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"While reasonable minds may differ on the central question of need for replacement Line 3, substantial evidence supports the commission's decision to issue a certificate of need," Judge Lucinda E. Jesson wrote. "Finally, the commission reasonably selected a route for the replacement pipeline based upon respect for tribal sovereignty, while minimizing environmental impacts. Accordingly, we affirm."

Jesson and Judge Michael Kirk ruled in the commission's favor with Judge Peter Peter M. Reyes, Jr. dissenting.

The 340-mile pipeline cleared another legal hurdle one week to the day that protestors rallied near Park Rapids against its construction. Some 1,000 people descended on an Enbridge pump station there, just south of Itasca State Park, some of whom chained themselves to excavation equipment.

Opponents of the new pipeline, which would follow a slightly different route across northern Minnesota than the existing one, say it will contribute to climate change and threatens to spill oil on lands where Native American tribes hold treaty rights. In its current state, Enbridge and regulators have concurred, the older pipeline poses substantial spill risks of its own. Replacing it would mitigate them and create construction jobs in the process, they say.

Joel Smith, president and business manager of the Minnesota and North Dakota chapter of the Laborers International Union of North America, reiterated that point in a statement Monday.

"Opponents had their day in court, and now it's time to work together to ensure that the project is completed in a safe and timely manner," he said.

In the case decided Monday, tribes and environmental groups argued, among other things, that the impact of electric vehicles on future demand for refined petroleum products like gasoline was not adequately addressed in the permitting process. They blasted the court for upholding "illegal permits" in a joint statement that morning, and called on the Biden administration to shut the project down.

“We are sorely disappointed in this decision that allows the state of Minnesota under Gov. [Tim] Walz to continue to shove a pipeline through Ojibwe lands and waters at a time of escalating climate crisis," said Winona LaDuke, executive director and co-founder of the environmental organization Honor the Earth.

During oral arguments in March, Jesson and Reyes appeared to question whether Enbridge used the correct forecast. The judges said it seemed to focus more on the capacity sought by "shippers," or entities wishing to transport crude oil by pipeline, than on the future demand for crude oil itself from refineries.

Attorneys for Enbridge argued in response that many shippers are themselves refineries. Jesson ultimately wrote that while "we agree that Enbridge did not submit an energy demand forecast in the same form or with the same information as it has done in previous proceedings ... nothing in the certificate-of-need statute requires an applicant to submit a forecast in a particular form or with particular information."

As a result, Jesson wrote, the court could not conclude that the PUC legally erred in accepting Enbridge's forecast. Reyes disagreed, and in his dissent said the case "is about substitution".

"Substituting supply for demand. Substituting 'shippers' for 'refineries.' Substituting 'pipeline capacity' for 'crude oil.' Substituting conclusory, unsupported demand assumptions for reviewable 'long-range energy demand forecasts.' And substituting an agency’s will for its judgment," he wrote.

Challengers in the case included the Red Lake, White Earth, and Mille Lacs bands, the Minnesota Department of Commerce, Honor the Earth, the Youth Climate Intervenors, Friends of the Headwaters, and the Sierra Club. A separate appeal of the Minnesota Pollution Control's approval of a water permit for the project, and involving many of the same parties, is ongoing.

The $3 billion replacement project has already wrapped construction in Canada, Wisconsin and North Dakota and, according to Enbridge, is on track to come online in the fourth quarter. When complete, it will have the capacity to transport approximately 760,000 barrels of Canadian oil per day to the Enbridge terminal in Superior, Wis.