Yahoo Finance Enbridge's (ENB) Line 5 Dispute Heads to Michigan State Court
Enbridge Inc. ENB has failed to file for federal jurisdiction for the lawsuit filed by Michigan’s attorney-general against its Line 5 pipeline within the time frame specified in the United States Code (“USC”). The U.S. Court of Appeals for the Sixth Circuit has, therefore, decided that the case should be heard in state court. Michigan’s attorney general had filed a lawsuit to shut down Enbridge’s Line 5 pipeline over safety concerns.
Enbridge’s Line 5 pipeline is a 645-mile-long pipeline that runs from Superior, WI, to Sarnia, Ontario, Canada. The pipeline transports oil products to refineries in the Midwest region in the United States and the Canadian provinces of Ontario and Quebec. As per Enbridge, the pipeline is a vital part of the pipeline network that carries nearly 540,000 barrels per day of light crude oil, light synthetic crude and natural gas liquids from Western Canada to Ontario.
The ruling by the U.S. Court of Appeals for the Sixth Circuit can be considered a jurisdictional victory for attorney general Dana Nessel, who filed the lawsuit in July 2019. Nessel had failed to convince the District Court for the Western District of Michigan to shut down Line 5, following which she filed an appeal for the case to be heard at state court.
The appellate court decided that the case should be heard at state court as Enbridge appealed to move the case to federal court, nearly 887 days after receiving the Attorney General’s complaint. As per the USC, the defendant can move the case to a different court within 30 days and Enbridge had clearly surpassed the 30-day time frame. Further, the court stated that the law’s time limits for removal are mandatory and do not allow for equitable exceptions. Following these developments, the case will be reverted to Michigan’s 30th Circuit Court for the County of Ingham.
The government of Canada has submitted an amicus brief asking the U.S. government to honor the commitments made under the 1977 U.S.-Canada Transit Pipeline Treaty and assure that Line 5 should remain operational. The U.S. Justice Department has also advocated for keeping the pipeline operational in a related case of land rights dispute between Enbridge and the indigenuous Chippewa Indians.
Although the appellate court denied Enbridge’s filing to hear the case in a federal court, the company has argued that the dispute should be settled according to federal law as the pipeline's safety is regulated by the Pipeline and Hazardous Materials Safety Administration.
Despite Enbridge's failure to move the case to federal court, the company remains confident that Michigan state courts will not impede Line 5 pipeline’s operations in response to Dana Nessel's lawsuit.
Zacks Rank and Key Picks
Currently, ENB carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the energy sector are Archrock Inc. AROC, SM Energy SM and Hess Midstream Partners LP HESM. Archrock and SM Energy presently sport a Zacks Rank #1 (Strong Buy) each, while Hess Midstream carries a Zacks Rank of #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
SM Energy is an upstream energy firm operating in the prolific Midland Basin region and the South Texas region. For 2024, the company expects its production to increase from the prior-year reported figure, signaling a bright production outlook.
Hess Midstream owns, operates, develops and acquires a wide range of midstream assets, providing services to Hess Corporation and other third-party customers. The partnership has a stable fee-based revenue model secured via long-term commercial contracts. Since Hess Midstream operates through 100% fee-based contracts, it is exposed to minimal commodity price risks.
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