On October 4, 2021, the Canadian government informed the U.S. District Court for the Northern District of Michigan that Canada would formally invoke Article IX of the 1977 Transit Pipelines Treaty in response to the state of Michigan’s revocation on November 13, 2020, of the 1953 easement it issued for the Line 5 pipeline.
Michigan revoked the easement because of environmental concerns over the pipeline. This pipeline, operated by the Canadian oil and gas company Enbridge, carries crude oil and natural gas liquids under the Straits of Mackinac, which connect Lake Michigan to Lake Huron in the Upper Peninsula of Michigan. The 1977 treaty ensures that crude oil will flow between the two countries so long as the pipelines involved are compliant with various rules and regulations.
Michigan provided notice to Enbridge of its revocation of the easement through its Department of Natural Resources (MDNR) and ordered Enbridge to shut down the Line 5 pipeline by May 2021. The MDNR provided two broad grounds for the revocation, the first being Enbridge’s violation of the public trust doctrine and the second its violations and breach of the standard of care set forth in the 1953 easement. The MDNR’s description of the public trust doctrine derives from the 2005 case Glass v. Goeckel, where the Michigan Supreme Court held that the state must protect and preserve the waters and lands of the Great Lakes. The MDNR’s description of the violations and breach by Enbridge revolves around compliance issues with the pipeline, including improper pipeline spans, improper pipeline coatings, the improper curvature of the pipeline, and unreasonable risks involving the operation of the pipeline.
The Canadian government countered the position of the MDNR by stating that the Line 5 pipeline has operated safely since its construction, and that the shutdown of the pipeline would cause a disruption to Canada’s economy and its energy security. Along with the support of the Canadian government, Enbridge has also provided information in support of the continued operation of the pipeline. Officials from the highest offices of Canada, including the natural resources minister and the prime minister, have voiced their support for mediation between Enbridge and Michigan. However, on October 4, 2021, the Canadian government intervened in the ongoing mediation between Enbridge and Michigan by invoking the 1977 Transit Pipeline Treaty.
Article IX of the treaty provides a framework for dispute resolution between the parties; specifically, the dispute is to be handled through arbitration if it cannot be resolved through negotiation. The arbitration process set forth in Article IX requires a panel of three arbitrators, with one chosen by each party and the third to be chosen either by the two nominated arbitrators or by the International Court of Justice. Functionally, the invocation of the treaty on this matter takes the case out of the hands of the U.S. federal courts and places responsibility for the negotiations on the governments of Canada and the United States.
While the Canadian position is clear, the United States is still determining its response. According to the MDNR, the pipeline was built in a busy shipping lane, and ships’ anchors have previously damaged the pipeline. The MDNR is concerned that the risk of further anchor strikes and the inherent risks in operating the pipeline could lead to a catastrophic environmental event. In testimony to the Canadian House of Commons’ Special Committee on the Economic Relationship between Canada and the United States, however, an official of Natural Resources Canada argued that the closure of Line 5 would require a massive increase in truck and rail transport to continue the delivery of the gas and oil needed in Canada.The United States Army Corps of Engineers (USACE) has also undertaken an environmental review of a proposed tunnel to house an upgraded version of the Enbridge Line 5 pipeline. White House spokesperson Karine Jean-Pierre announced on November 9, 2021, that President Biden would not make a decision on the tunnel and new version of the pipeline until the USACE review is complete, a process that generally takes two years. However, she also stated that the USACE’s environmental review was a separate issue from the ongoing legal dispute between Enbridge and Michigan over the existing pipeline and would not comment on that case. Jean-Pierre added that there were no new developments in the U.S. government’s talks with the Canadian government about the existing pipeline and that the White House “expect[s] the U.S. and Canada to engage constructively on it.”