The Midwest is a new market for companies with leases in Alberta, Canada's tar sands fields, which constitute the largest untapped oil supply in the world outside Saudi Arabia.
Enbridge Energy and other pipeline companies have been in a race to tap the Gulf and East Coast markets, and soon enough, companies with leases in the tar sands will have access to the entire U.S.
In May 2007, Enbridge Energy applied with Minnesota's Public Utilities Commission to construct pipelines with the capacity to pump at least 450,000 gallons of the dirtiest oil on the planet into Minnesotans' gas tanks, increasing the state's greenhouse gas emissions. The commission unanimously approved the project, called the Alberta Clipper, in 2008.
One person who has benefited from this black gold rush is Phyllis Reha, a member of Minnesota's Public Utilities Commission. She had stock in a large onshore exploration company with leases in the tar sands, Canadian Natural Resources, when she approved Enbridge's Alberta Clipper Project, according to financial disclosure reports. Reha also had stock in Exxon Mobile, which awarded Enbridge a contract in 2009 to carry chemical diluents to its Kearl tar sands project.
With stocks in Chevron, Commissioner J. Dennis O'Brien stands to gain financially from a tar sands boom as well. O'Brien, an education lawyer who worked in Governor Tim Pawlenty's law firm, also has stock in Devon, which has holdings in the tar sands.
A spring 2010 newsletter to employees of Zeigler, a dealer for the construction-machine outfitter Caterpillar, states that the Alberta Clipper Project was a significant source of revenue for the company. Zeigler was one of Enbridge's subcontractors.
O'Brien had stock in Caterpillar at the time he approved the project, according to disclosure reports.
Richard Painter, a University of Minnesota law professor who worked as the chief ethics lawyer under President Bush, says on the federal level, there's a conflict of interest if a regulator has stocks in the very industries or companies they oversee.
Commissioners would not respond to questions about the Alberta Clipper Project, citing pending litigation. In a statement, spokesman Dan Wolf says that although the commission approves pipelines, it doesn't regulate the products they carry, therefore the commissioners are free to buy oil stocks.
"Each of the Commissioners is in full compliance with these and all other applicable provisions of law and rule to which they are subject," the statement reads.
The tar sands oil, which is strip-mined from Canada's boreal forest, requires heavy refining. It's called bitumen, and it's so deep in the ground that an American geologist once proposed to nuke it out. Once extracted, it has the consistency of peanut butter.
The Minnesota Center for Environmental Advocacy has taken the project to state and federal court, arguing that the environmental review on the pipelines was inadequate.
In St. Paul's federal courthouse on a hot August day, U.S. District Court judge Donovan Frank began the hearing against the Alberta Clipper project by talking about the Gulf Coast leak. Obviously, he'll decide the case that's in front of him, he says, but the BP disaster has been in the news lately.
Just weeks before this hearing, one of Enbridge's pipelines in Michigan had ruptured, spilling about one million gallons of crude. Sarah Burt, an attorney for EarthJustice, explains that there's been no discussion of the potential environmental impact of chemical diluents, which one of the new pipelines transports to the tar sands fields to break up the planet's most vicious form of crude.
"This is more of a hypothetical concern," Burt says. "But, as we've seen in the news, pipelines do rupture."
An Enbridge attorney tells the judge the BP oil spill is "all the more reason we need to look for onshore sources of oil."
On Tuesday, Judge Frank issued a ruling siding with Enbridge.
Enbridge has been under fire for its safety record. On September 15, Congress hauled its executives in for hearings for its spill in Michigan. That was just a week after one of its lines ruptured and spilled 256,000 gallons near Chicago.
In Minnesota, Enbridge pipelines have logged about a dozen spills in the past decade.
The Public Utilities Commission can't claim it didn't know about the problems. The commission had a firsthand look at Enbridge's safety record during hearings for the Alberta Clipper Project.
"Meetings in Polk and Clearwater counties, originally scheduled for November 29, were postponed following an explosion at Enbridge's Clearbrook, Minnesota facility," the docket reads.
Three weeks before the explosion, a pinhole leak was discovered on the pipeline. It was a cold day, and in repairing the pipe, workers put an open flame heater near it.
When the line restarted, oil began spewing out of a loose coupling, igniting around the heater. A fireball lit up the sky, followed by a loud bang.
Two Enbridge employees died in the explosion. All told, about 15,000 gallons of oil escaped from the damaged line.
In August, the Department of Transportation fined Enbridge $2.4 million for violations of federal pipeline safety regulations for the Clearbrook explosion.
Lorraine Grymala, an Enbridge representative, says that for all the miles of pipeline Enbridge operates, its spill rate is half the industry's average. Across the world, the company operates about 15,000 miles of pipeline.
"We shipped about 4 billion barrels of product between 2005 and 2009. During that time we spilled roughly 40,000 barrels," Grymala says. "But that means we safely delivered about 99.99 percent of the volumes without incident."
Utility companies had unusual access to regulators under Governor Tim Pawlenty, says Bruce Bomier, who served on the state's Environmental Quality Board. The board lost its watchdog authority over utilities like pipeline operators in 2005.
"I think there was a dogma of eliminating review and regulation that was bouncing up against serious environmental issues," Bomier says. "And we will pay for it. Just like we're paying for the economic meltdown."