By Vipal Monga and Paul Vieira 

TORONTO -- Michigan Gov. Gretchen Whitmer threatened to seize profits from Canadian pipeline company Enbridge Inc. if the company continues to operate a pipeline through the Great Lakes after a Wednesday deadline.

In a letter sent to Enbridge on Tuesday, Gov. Whitmer and Daniel Eichinger, director of the state's natural resources department, reminded the company the state had revoked a permit that allowed the Line 5 pipeline to run along the bottom of the Straits of Mackinac, between Lake Michigan and Lake Huron. The governor has given the company until May 12 to shut the pipeline.

Michigan has said the pipeline poses an environmental risk and that any spill from it would threaten the Great Lakes. Enbridge has said that section of the 68-year-old pipeline has never leaked and that it is taking steps to protect the lakes after negotiating a plan with former Gov. Rick Snyder to encase the pipes in a tunnel below the lake bed.

Enbridge has refused the order, arguing in a lawsuit that Michigan doesn't have the authority to close the line, which transports oil and natural gas liquids from Superior, Wis., to refineries in Michigan, Ohio, Pennsylvania, Ontario and Quebec.

"Enbridge's continued occupation and use of State-owned bottomlands in the absence of a valid and effective easement constitutes an intentional trespass," said the governor in her letter. She said the state would, if it wins in court, require the company to disgorge "all profits derived from its wrongful use of the State's property" after the May 12 deadline.

Enbridge said it would continue pursue its lawsuit and will keep operating the pipeline.

"Our responsibility is to the people of Michigan and the Great Lakes region," an Enbridge spokesman said. "Enbridge will continue to deliver via Line 5 safe, reliable and affordable energy to fuel to the region's economies."

The potential closure of the 645-mile pipeline has become a major issue for Midwestern states and for Canada. The state of Ohio has already filed a brief siding with Enbridge in the case, and, on Tuesday, Canada weighed in with its own brief in support of the company.

Officials in Ottawa say closing the pipeline would cut off almost half the supply used to make gasoline, jet fuel and home heating oil for residents in central Canada. The closure could lead to higher fuel costs and thousands of job losses in refineries, officials said.

In its filing, Canada said there should be no shutdown until the U.S. and Canadian officials work to resolve the matter, as allowed under the terms of a 1977 treaty between the North American countries. The brief said Canada has initiated discussions with the U.S. to resolve this matter.

That treaty prohibits authorities in either country from blocking pipelines that ship oil and gas across the border unless there is an emergency. Canada's lawyers said the treaty came about because of U.S. efforts to transport oil-and-gas products from Alaska through Canada to the Lower 48 U.S. states.

"Canada is seeking a mutually agreeable solution that also respects environmental and safety concerns. But neither this court nor any state court should act in a way that bypasses and undermines the treaty," said a legal brief filed by the Canadian government in the U.S. District Court of the Western District of Michigan on Tuesday.

Canada's Natural Resources Minister Seamus O'Regan said the government supports the continued mediation between Enbridge and the state of Michigan, under the supervision of the U.S. District Court of the Western District of Michigan. "We remain confident this will lead to a solution," the minister said in a statement.

Although Canadian officials, including its ambassador to the U.S. Kirsten Hillman and Mr. O'Regan, have reached out to counterparts in Washington, the White House has so far been reluctant to intervene.

At a White House press briefing on Tuesday, Energy Secretary Jennifer Granholm said the Biden administration wouldn't weigh in on Line 5.

"It's in court right now, so that's where it sits," she said. "It will be decided in court."

Write to Vipal Monga at vipal.monga@wsj.com and Paul Vieira at paul.vieira@wsj.com

 

(END) Dow Jones Newswires

May 11, 2021 18:06 ET (22:06 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.
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