Economy
Indigenous band could have been more help, says judge in Wisconsin Line 5 dispute
Fresh nuts, bolts and fittings are ready to be added to the east leg of the pipeline near St. Ignace as Enbridge prepares to test the east and west sides of the Line 5 pipeline under the Straits of Mackinac in Mackinaw City, Mich. on June 8, 2017. North America’s existential debate about the virtues and dangers of oil and gas pipelines faces a critical test today in Wisconsin. THE CANADIAN PRESS/AP, Detroit News, Dale G Young
By James McCarten in Washington
The Indigenous band in Wisconsin that’s trying to shut down the Line 5 pipeline got a chilly reception Thursday from a federal court judge who is dismayed they aren’t doing more to help Enbridge Inc. avoid an ecological disaster.
The Bad River Band of the Lake Superior Chippewa has asked district court Judge William Conley to order the pipeline shut down, fearing that heavy flooding last month could cause the line to spring a leak on their territory.
But from the outset of Thursday’s hearing, it was clear Conley — who ordered the two sides to work together last fall on finding a solution to their impasse — doesn’t believe the band is holding up its end of the bargain.
“The band has not helped itself by refusing to take any steps to prevent a catastrophic failure,” Conley said as the hearing got underway. “You haven’t even allowed simple steps that would have prevented some of this erosion.”
The day-long hearing ended without a decision on the band’s request for an injunction — and with the clear sense Conley is disinclined to grant one. “It’s an extraordinary request to make when the band is doing nothing,” he said.
But band lawyer Riyaz Kanji said he was pleased during an otherwise discouraging day that the judge gave indications he would establish a threshold for erosion damage that would trigger a shutdown.
“Unfortunately, from our point of view, he didn’t set that today — he’s not shutting it down,” Kanji said. “But we will remain hopeful that he will set a standard that will protect the river and its precious resources.”
Conley, who has already ruled that the band was entitled back in 2013 to revoke permission for the pipeline, was also unwilling to grant the injunction on the grounds that Enbridge no longer has the right to access the area.
“The harder thing to hear was that the judge appears unwilling … to issue an injunction because of Enbridge’s continuing trespass on the band’s lands,” Kanji said.
“It sounds like he’s thinking more in terms of financial penalties.”
In court documents, Enbridge has accused the band of being focused on a single outcome: the permanent closure of the pipeline on their territory “while refusing much less extreme alternative measures.”
The band argues that several weeks of flooding along the Bad River last month has washed away so much of the riverbank and supporting terrain that a breach is “imminent” and a shutdown order more than justified.
Enbridge insists the dangers are being overstated — and even if they were real, the company’s court-ordered contingency plan, which spells out the steps it would take, would be a far more rational solution.
“Enbridge will pre-emptively purge and shut down the line well in advance of any potential rupture,” the company says in its court brief, adding that the area remains under constant 24-hour video surveillance.
“Any flooding and erosion has not, and would not, catch Enbridge by surprise.”
But Enbridge has been rebuffed in its efforts to perform remedial work on the site, which would include using sandbacks and trees to fortify the riverbanks — a decision band chairman Mike Wiggins defended Thursday.
The band has the right under federal law to enforce its own water quality standards, which were “developed by careful evaluation of our relationships, as a people, with different parts of our hydrology in the Bad River watershed,” Wiggins told a news conference after the hearing.
“What was kind of put forward today was, ‘None of that stuff should matter. None of that stuff should exist. When Enbridge came knocking, you should have just let them do whatever they want,'” he said.
“We disagree.”
Heavy flooding that began in early April washed away significant portions of the riverbank where Line 5 intersects the Bad River, a meandering, 120-kilometre course that feeds Lake Superior and a complex network of ecologically delicate wetlands.
The band has been in court with Enbridge since 2019 in an effort to compel the pipeline’s owner and operator to reroute Line 5 around its traditional territory — something the company has already agreed to do.
But the flooding has turned a theoretical risk into a very real one, the band argues, and time is now of the essence. Lawyers for the band and its supporters were scheduled to hold a news conference after the hearing.
Line 5 meets the river just past a location the court has come to know as the “meander,” where the riverbed snakes back and forth multiple times, separated from itself only by several metres of forest and the pipeline itself.
At four locations, the river was less than 4.6 metres from the pipeline — just 3.4 metres in one particular spot — and the erosion has only continued.
The neighbouring state of Michigan, led by Attorney General Dana Nessel, has been waging its own war against Line 5, fearing a leak in the Straits of Mackinac, the ecologically delicate waterway where the pipeline crosses the Great Lakes.
“The alarming erosion at the Bad River meander poses an imminent threat of irreparable harm to Lake Superior which far outweighs the risk of impacts associated with a shutdown of the Line 5 pipeline,” Nessel argues in her brief.
“Without judicial intervention, it is likely that this irreparable harm will be inflicted not only on the band, but also on Michigan, its residents, and its natural resources.”
The economic arguments against shutting down the pipeline, which carries 540,000 barrels of oil and natural gas liquids daily across Wisconsin and Michigan to refineries in Sarnia, Ont., are by now well-known.
Line 5’s defenders, which include the federal government, say a shutdown would cause major economic disruption across the Prairies and the U.S. Midwest, where it provides feedstock to refineries in Michigan, Ohio and Pennsylvania.
It also supplies key refining facilities in Ontario and Quebec, and is vital to the production of jet fuel for major airports on both sides of the Canada-U.S. border, including Detroit Metropolitan and Pearson International in Toronto.
A lengthy statement issued Tuesday by the Canadian Embassy warned of severe economic consequences of shutting down the line, as well as the potential ramifications for bilateral relations.
“The energy security of both Canada and the United States would be directly impacted by a Line 5 closure,” the statement said. Some 33,000 U.S. jobs and US$20 billion in economic activity would be at stake, it added.
“At a time of heightened concern over energy security and supply, including during the energy transition, maintaining and protecting existing infrastructure should be a top priority.”
Talks have been ongoing for months under the terms of a 1977 pipelines treaty between the two countries that effectively prohibits either country from unilaterally closing off the flow of hydrocarbons.
This report by The Canadian Press was first published May 18, 2023.
— With files from The Associated Press
Business
Trump, taunts and trade—Canada’s response is a decade out of date
From the Fraser Institute
Canadian federal politicians are floundering in their responses to Donald Trump’s tariff and annexation threats. Unfortunately, they’re stuck in a 2016 mindset, still thinking Trump is a temporary aberration who should be disdained and ignored by the global community. But a lot has changed. Anyone wanting to understand Trump’s current priorities should spend less time looking at trade statistics and more time understanding the details of the lawfare campaigns against him. Canadian officials who had to look up who Kash Patel is, or who don’t know why Nathan Wade’s girlfriend finds herself in legal jeopardy, will find the next four years bewildering.
Three years ago, Trump was on the ropes. His first term had been derailed by phony accusations of Russian collusion and a Ukrainian quid pro quo. After 2020, the Biden Justice Department and numerous Democrat prosecutors devised implausible legal theories to launch multiple criminal cases against him and people who worked in his administration. In summer 2022, the FBI raided Mar-a-Lago and leaked to the press rumours of stolen nuclear codes and theft of government secrets. After Trump announced his candidacy in 2022, he was hit by wave after wave of indictments and civil suits strategically filed in deep blue districts. His legal bills soared while his lawyers past and present battled well-funded disbarment campaigns aimed at making it impossible for him to obtain counsel. He was assessed hundreds of millions of dollars in civil penalties and faced life in prison if convicted.
This would have broken many men. But when he was mug-shotted in Georgia on Aug. 24, 2023, his scowl signalled he was not giving in. In the 11 months from that day to his fist pump in Butler, Pennsylvania, Trump managed to defeat and discredit the lawfare attacks, assemble and lead a highly effective campaign team, knock Joe Biden off the Democratic ticket, run a series of near daily (and sometimes twice daily) rallies, win over top business leaders in Silicon Valley, open up a commanding lead in the polls and not only survive an assassination attempt but turn it into an image of triumph. On election day, he won the popular vote and carried the White House and both Houses of Congress.
It’s Trump’s world now, and Canadians should understand two things about it. First, he feels no loyalty to domestic and multilateral institutions that have governed the world for the past half century. Most of them opposed him last time and many were actively weaponized against him. In his mind, and in the thinking of his supporters, he didn’t just defeat the Democrats, he defeated the Republican establishment, most of Washington including the intelligence agencies, the entire corporate media, the courts, woke corporations, the United Nations and its derivatives, universities and academic authorities, and any foreign governments in league with the World Economic Forum. And it isn’t paranoia; they all had some role in trying to bring him down. Gaining credibility with the new Trump team will require showing how you have also fought against at least some of these groups.
Second, Trump has earned the right to govern in his own style, including saying whatever he wants. He’s a negotiator who likes trash-talking, so get used to it and learn to decode his messages.
When Trump first threatened tariffs, he linked it to two demands: stop the fentanyl going into the United States from Canada and meet our NATO spending targets. We should have done both long ago. In response, Trudeau should have launched an immediate national action plan on military readiness, border security and crackdowns on fentanyl labs. His failure to do so invited escalation. Which, luckily, only consisted of taunts about annexation. Rather than getting whiny and defensive, the best response (in addition to dealing with the border and defence issues) would have been to troll back by saying that Canada would fight any attempt to bring our people under the jurisdiction of the corrupt U.S. Department of Justice, and we will never form a union with a country that refuses to require every state to mandate photo I.D. to vote and has so many election problems as a result.
As to Trump’s complaints about the U.S. trade deficit with Canada, this is a made-in-Washington problem. The U.S. currently imports $4 trillion in goods and services from the rest of the world but only sells $3 trillion back in exports. Trump looks at that and says we’re ripping them off. But that trillion-dollar difference shows up in the U.S. National Income and Product Accounts as the capital account balance. The rest of the world buys that much in U.S. financial instruments each year, including treasury bills that keep Washington functioning. The U.S. savings rate is not high enough to cover the federal government deficit and all the other domestic borrowing needs. So the Americans look to other countries to cover the difference. Canada’s persistent trade surplus with the U.S. ($108 billion in 2023) partly funds that need. Money that goes to buying financial instruments can’t be spent on goods and services.
So the other response to the annexation taunts should be to remind Trump that all the tariffs in the world won’t shrink the trade deficit as long as Congress needs to borrow so much money each year. Eliminate the budget deficit and the trade deficit will disappear, too. And then there will be less money in D.C. to fund lawfare and corruption. Win-win.
Business
Trade retaliation might feel good—but it will hurt Canada’s economy
From the Fraser Institute
To state the obvious, president-elect Donald Trump’s threat to impose an across-the-board 25 per cent tariff on Canadian exports to the United States has gotten the attention of Canadian policymakers who are considering ways to retaliate.
Reportedly, if Trump makes good on his tariff threat, the federal government may levy retaliatory tariffs on a wide range of American-made goods including orange juice, ceramic products such as sinks and toilets, and some steel products. And NDP Leader Jagmeet Singh said he wants Canada to block exports of critical minerals such as aluminum, lithium and potash to the United States, saying that if Trump “wants to pick a fight with Canada, we have to make sure it’s clear that it’s going to hurt Americans as well.”
Indeed, the ostensible goal of tariff retaliation is to inflict economic damage on producers and workers in key U.S. jurisdictions while minimizing harm to Canadian consumers of products imported from the U.S. The hope is that there will be sufficient political blowback from Canada’s retaliation that Republican members of Congress will eventually view Trump’s tariffs as an unacceptable risk to their re-election and pressure him to roll them back.
But while Canadians might feel good about tit-for-tat retaliation against Trump’s trade bullying and taunting, it might well make things worse for the Canadian economy. For example, even selective tariffs will increase the cost of living for Canadians as importers of tariffed U.S. goods pass the tax along to domestic consumers. Retaliatory tariffs might also harm productivity growth in Canada by encouraging increased domestic production of goods that are produced relatively inefficiently here at home compared to in the U.S. Make no mistake—once trade protections are put in place, the beneficiaries have a strong vested interest in having the protections maintained indefinitely. While Trump will be gone in four years, tariffs imposed by Ottawa to retaliate against his actions will likely remain in place for longer.
The U.S. president has substantial leeway under existing legislation to implement trade measures such as tariffs. While Trump has several legislative options to impose new tariffs against Canada and Mexico, he’ll likely use the International Emergency Powers Act (IEEPA), which grants the president power to regulate imports and impose duties in response to an emergency involving any unusual and extraordinary threat to national security, foreign policy or the economy. According to Trump’s rhetoric, the emergency is illegal immigration and drug traffic originating in Canada and Mexico.
However risible Trump’s emergency claim might be when applied to Canada, overturning any action under the IEEPA, or some other enabling legislation, would require a legal challenge. And in fact, because no president has yet used the IEEPA to impose tariffs, the legality of Trump’s actions remains in doubt. In this context, a group of governors sympathetic to Canada’s position (and their own political fortunes) might spearhead a legal challenge to Trump’s tariffs with encouragement and support from the Canadian government.
To be sure, any legal challenge would take time to work its way through the U.S. court system. But it will likely also take time for domestic opposition to Trump’s tariffs to gain sufficient political momentum to effect any change. Indeed, given the current composition of Congress, it’s far from clear that a Team Canada effort to rally broad anti-tariff support among U.S. politicians and business leaders would bear fruit while Trump is in office.
While direct retaliation might be emotionally satisfying to Canadians, it would likely do more economic harm than good. And while a legal challenge will not obviate the immediate economic harm Canada will suffer from Trump’s tariffs, it might help limit the ability of Trump (and any future president) to use trade policy for political leverage in our bilateral relationship. After all, there’s no guarantee that the next president will not be a Trump acolyte.
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