Tariffs, Tunnels, Trouble
What Do Sausage Laws and Pipeline Permits Have in Common?
“That the importation of Canadian oil must be a national purpose is further emphasized by the fact that by imposing high tariffs Congress can, in effect, wipe out importation of any Canadian oil whatsoever.” – Supplemental Reply Brief, Lakehead Pipe Line v. Dehn, April 1954
Like you and everybody else, I’ve been thinking about tariffs this week. And I’ve been thinking about them, as I’m sure others have too, in relation to Line 5. Bear with me.
The big news last week was that four local tribes—the Bay Mills Indian Community, Little Traverse Bay Bands of Odawa Indians, Grand Traverse Band of Ottawa and Chippewa Indians, and the Nottawaseppi Huron Band of the Potawatomi— along with the Environmental Law and Policy Center, the Michigan Climate Action Network, and For Love of Water (FLOW) have taken their appeal of the Michigan Public Service Commission’s (MPSC) approval of the Line 5 tunnel permit to the Michigan Supreme Court.
As fate would have it, the move comes almost 72 years to the day—March 31, 1953, to be exact—when the MPSC granted Enbridge its original permit to construct Line 5. Then, as now, the decision was controversial, so much so that then, as now, it made its way all the way to the Michigan Supreme Court. As I wrote last week, things don’t seem to change much.
The state Supreme Court handed down its decision in the case of Lakehead Pipe Line Co. vs. Dehn in 1954, but the story begins two years earlier. In December 1952, Lakehead’s contractor, the Bechtel Corp., established a headquarters in downtown Saginaw. By February 1953, their land agents had set about acquiring easements from landowners all along the pipeline route. The agents met with stubborn resistance from farmers in the Thumb region, especially in Bay and Tuscola counties, which hug each side of Saginaw Bay. The farmers objected to the miniscule per rod price offered by Lakehead for easements as well as to the harm their farms would likely suffer from construction: crop loss, drain tile damage, and potential flooding. “Our lands would be damaged for a number of years,” one Frankenlust Township farmer stated.
The farmers also claimed the pipeline wasn’t in the public interest since it would simply transport Canadian oil to Canadian markets. Early on, they grumbled to their elected representatives about this and about the terms offered to them by Lakehead’s land agents. In March, the farmers took their cause to the Public Service Commission. At a raucous hearing that month, a large group of them, joined by others from nearby Otsego County, presented a petition signed by nearly 100 farmers. The hearing lasted almost a full day, most of it taken up with the farmer’s grievances, and wound up delaying the Commission’s vote.
The MPSC’s approval of the project a week later granted Lakehead the power of eminent domain, but even that didn’t weaken the farmers’ resolve. Most held out through the spring and summer, even as Lakehead began taking them to court. One Bay County family with a colorful history, the Dehns, proved especially recalcitrant. Litigiousness appears to have been a family trait, as they’d already been parties in three different Michigan Supreme Court cases. The first, in 1908, involved claims of a fraudulent cash register sale to the Dehn brothers for their grocery store and meat market. The second, in 1912, adjudicated a dispute between Charles Dehn and his son Carl over which of them was properly named in a property deed. The third case, two years later—I’m not making this up—arose after Carl and his brother were convicted of selling adulterated sausage at the family grocery store. The Court’s decision in that case helped establish the right of the State to regulate food standards. Win or lose, the Dehns don’t back down.
In October 1953, after Lakehead prevailed in its condemnation of the Dehn property, the family, not backing down, appealed to the Michigan Supreme Court. That Court also ruled in favor of Lakehead. Although they lost their case, the Dehns made a simple and powerful argument that still resonates today: Line 5 is and always has been a matter of the “Canadian use of Michigan land for a Canadian purpose.” The pipeline was never meant to carry Michigan-produced oil to other points in Michigan for the benefit of the citizens of Michigan. For that reason, the Dehns argued that the pipeline falls under the jurisdiction of the Interstate Commerce Act (amended to include oil pipelines in 1906) and the Tariff Act of 1922, which is federal legislation designed to regulate commerce with foreign countries. In fact, Lakehead admitted as much when they filed their tariffs with the Interstate Commerce Commission. The Michigan Public Service Commission, by contrast, derives its authority from Michigan’s Act 16, passed in 1929, to regulate intrastate commerce: oil transport from point to point within the state. The Commission, this argument goes, has no authority to grant Lakehead the power of eminent domain.
Line 5 is and always has been a matter of the “Canadian use of Michigan land for a Canadian purpose.”
The Dehn case matters today because Enbridge cites it frequently in Line 5 court proceedings; for them, it affirms the MPSC’s original declaration that the pipeline is in the public (that is, the state) interest. In its ruling last month upholding the MPSC decision, for example, the Court of Appeals relied heavily, if contradictorily, on the question of public need. Public need, the Court noted, is the first prong in the Commission’s so-called three-part test and “no party argues that the Commission’s adopted three-part ‘test’ of need, reasonableness of design and routing, and safety is unreasonable.”
This statement may be the only thing that the Appeals Court got right. For more than a decade, I’ve been squawking and hollering about this three-part framework. Cooked up long before recent Line 5 legal battles, it is as much a clever Enbridge invention designed to rig the game in its own favor as it is a sound standard of review or a mandate of Act 16. The test has also made it exceedingly difficult for Enbridge’s opponents to get a foothold in the MPSC proceedings and beyond. Interestingly, the Court here appears to identify a potential path not taken by appellants. Alas.
Which is really just to say that we’ve got a tough row to hoe with this latest round of appeals. Any argument to overturn the MPSC tunnel approval is going to be haunted by past bad decisions by both the Public Service Commission and the Michigan Supreme Court. Seventy years ago, the Dehn lawyers thought that tariffs might be the answer to the Line 5 problem. Ironically, some even think tariffs might be the answer (or the danger, depending on your view) now. But we probably shouldn’t pin our hopes on the incoherent and capricious policies of an incompetent administration run by sycophants, buffoons, and cartoon villains. The legal sphere is at least more stable. But that fact presents its own difficulties: courts and judges place tremendous weight on established rules and precedents, even when they’re rooted in bad decisions like the MPSC’s bad decisions in 1953 and 2013 and 2023 or the Michigan Supreme Court’s bad decision in 1954. To be sure, there are procedural cracks and fissures that our smart and dedicated lawyers are already working hard to exploit. But still, I worry that what we really need is an earthquake.