Enbridge Line 5, constructed in 1953, is a crude oil and natural gas liquids (NGL) pipeline that originates in Superior, Wisconsin; crosses the Straits of Mackinac; and exits the United States at Marysville, Michigan, where it terminates in Sarnia, Ontario.
In 2019, the Bad River Band of the Lake Superior Tribe of Chippewa Indians of the Bad River Reservation filed a lawsuit against Enbridge Energy Company and Enbridge Energy, L.P. in connection with Enbridge’s operation of Line 5 across an approximately 12-mile portion of the Bad River Reservation in Wisconsin. The Band alleged that easements along that portion had expired in 2013. In addition to seeking shutdown of the pipeline, the Band sought profit-based damages related to the alleged trespass of Enbridge Line 5.
Enbridge asked NERA Director Dr. Laura T.W. Olive to provide an objective framework by which to calculate the quantum of profit damages potentially owed to the Band in the event the court found Enbridge to have trespassed on the reservation and concluded an award of profit damages would be appropriate.
Dr. Olive proposed the well-known barrel-mile cost allocation method widely used for regulated ratemaking purposes and by income tax authorities to allocate pipeline property across geographic routes. She concluded that the most appropriate and objective method to calculate the share of profits attributable to the at-issue parcels was to apply that capacity-weighted distance allocation factor (e.g., barrel-miles) to total profits for the Lakehead System. The court agreed with Dr. Olive’s proposed method.
The case before United States District Court for the Western District of Wisconsin, Bad River Band of the Lake Superior Tribe of Chippewa Indians of the Bad River Reservation v. Enbridge Energy Company and Enbridge Energy, L.P., Case No. 3:19-cv-602, is under appeal.