Filed 10/25/10   NOS. 4-09-0702, 4-09-0718 cons.

                      IN THE APPELLATE COURT

                            OF ILLINOIS

                          FOURTH DISTRICT

PLIURA INTERVENORS,                     )   Direct
          Petitioner-Appellant,         )   Administrative
          v. (No. 4-09-0702)            )   Review of the
THE ILLINOIS COMMERCE COMMISSION; and   )   Illinois Commerce
ENBRIDGE PIPELINES (ILLINOIS), L.L.C., )    Commission
          Respondents-Appellees.        )   No. 07-0446
-------------------------------------   )
TURNER INTERVENORS,                     )
          Petitioner-Appellant,         )
          v. (No. 4-09-0718)            )
THE ILLINOIS COMMERCE COMMISSION; and   )
ENBRIDGE PIPELINES (ILLINOIS), L.L.C., )
          Respondents-Appellees.        )
_________________________________________________________________

          JUSTICE STEIGMANN delivered the opinion of the court:

          In August 2007, respondent, Enbridge Pipelines (Illi-

nois), L.L.C. (Enbridge Pipelines), filed an application for a

certificate in good standing and other relief pursuant to section

15-401 of the Public Utilities Act (220 ILCS 5/15-401 (West

2008)).   In July 2009, corespondent, the Illinois Commerce

Commission, approved Enbridge Pipelines' application, which (1)

certified it as a "common carrier by pipeline" and (2) authorized

the construction, operation, and maintenance of an oil pipeline.

          Petitioners, Pliura Intervenors and Turner Intervenors

(collectively, Intervenors), appeal, both arguing that the

Commission erred by determining that (1) Enbridge Pipelines was

fit, willing, and able to construct, operate, and maintain an oil
pipeline and (2) a public need for the pipeline existed.   We

disagree and affirm.

                           I. BACKGROUND

         A. The Corporate Structure of Enbridge and Its
                Southern Access Expansion Project

          Enbridge, Inc. (Enbridge), is an energy transportation

and distribution corporation headquartered in Alberta, Canada,

that, among other business interests, has a "liquids transporta-

tion unit."   That unit's purpose, in pertinent part, is to

transport oil from producers and shippers in western Canada to

markets and refineries in the United States and eastern Canada

through an integrated oil pipeline network that spans approxi-

mately 1,900 miles across North America.    Enbridge's oil pipeline

network includes its "Mainline System," which is composed of (1)

the "Lakehead System"--the United States portion of its network

that transports oil to seven Great Lakes states, including

Illinois--and (2) the oil pipeline system of its wholly owned

subsidiary, Enbridge Pipelines.

          In December 2005, Enbridge began its "Southern Access

Expansion Project" (expansion project), which focused on "facil-

ity improvements, expansions, and enhancements designed to ensure

adequate, efficient, and economic transportation service[s] for

producers, and users of crude petroleum."   In April 2007, the

Commission certified two of Enbridge's affiliates as common

carriers by pipeline, which authorized them to construct, oper-

                               - 2 -
ate, and maintain the expansion project.   The first phase of the

expansion project concerned the construction of a new pipeline in

Wisconsin that ran parallel to the Lakehead System.     The second

phase concerned, in pertinent part, a new pipeline from phase

one's termination point to Enbridge's terminal near Pontiac,

Illinois.   Enbridge claimed that when completed, the expansion

project would allow it to transport an additional 400,000 barrels

per day (bpd) to its Pontiac terminal.

               B. Enbridge Pipeline's Application for
                    Certificate in Good Standing

            In August 2007, Enbridge Pipelines filed an application

for certificate in good standing and other relief pursuant to

section 15-401 of the Act (220 ILCS 5/15-401 (West 2008)).    The

application sought approval from the Commission to (1) construct

an oil pipeline extension spanning 170 miles from its terminal

near Pontiac to its 13-million-barrel oil storage facility in

Patoka, Illinois, which it termed its "Southern Access Extension

Project" (pipeline extension) and (2) acquire, when necessary,

private property to construct the pipeline extension under

eminent domain as authorized by section 8-509 of the Act (220

ILCS 5/8-509 (West 2008)).

            In support of its application, Enbridge Pipelines noted

that the United States Department of Energy projected a 30%

increase in United States oil consumption from the 20.7 million

bpd consumed in 2005 to 26.9 million bpd by 2030, based on

                                - 3 -
increases in population and economic activity.   Noting that

Illinois (1) is a leading consumer of energy in the United States

and (2) produced only 3% of the oil required to meet that demand,

Enbridge Pipelines argued that the five refineries located in or

near Illinois required a constant, adequate, and dependable

supply of oil, which its pipeline extension could provide.

           Enbridge Pipelines contended that its pipeline exten-

sion would, in pertinent part, benefit Illinois by increasing its

ability to deliver Canadian oil to various Illinois markets and

refineries.   In particular, Enbridge Pipelines asserted that the

pipeline extension would afford United States refineries an

additional initial capacity of 400,000 bpd for further movement

from its Patoka storage facility to various markets and refiner-

ies in the southern, eastern, and western regions of the United

States.   Enbridge Pipelines further noted that by obtaining and

processing oil from Canada, refineries would enjoy lower supply

costs, dependable sourcing, and expeditious delivery.   Enbridge

Pipelines claimed that such advantages benefit Illinois consumers

in the form of (1) lower prices for petroleum-based products, (2)

increased and consistent oil availability, (3) refinery stability

that results in consistent tax revenues for local economies, (4)

decreased supply disruptions caused by natural phenomenon such as

hurricanes or world insurrection, and (5) additional oil delivery

options through increased competition.


                               - 4 -
            Enbridge Pipeline's application noted that as a pub-

licly traded company on both the Toronto and New York stock

exchanges, Enbridge had a total capitalization of $14.2 billion

and earnings to common shareholders of $616 million.    Appended to

its application, Enbridge Pipelines included Enbridge's 2006

annual report, which documented, in pertinent part, its financial

strength.    In this regard, Enbridge Pipelines (1) represented

that Enbridge had committed the financial capital to construct

the pipeline extension and (2) touted its "clear" commitment

toward that goal.

    C. The Testimony and Evidence Presented to the Commission

            We first note that the initial "direct testimony" in

this case was presented to the Commission in the form of (1)

filed written statements that documented the questions posed by

the respective parties' counsel and the corresponding witnesses'

answers absent the opposing party and (2) direct oral testimony

at a March 2009 hearing before the Commission, in which the

opposing party was afforded the opportunity to cross-examine

witnesses' on their respective written and oral statements.

            1. The Pipeline Extension Director's Testimony

            In October 2007, the director of the pipeline extension

filed his testimony with the Commission, in which he confirmed

that he had verified Enbridge Pipelines' August 2007 application

for certificate in good standing and for other relief.       In


                                - 5 -
adopting the application's content as part of his oral testimony,

the director reiterated that Illinois plays a "major role in the

international and interstate transportation network for crude

petroleum."   The director claimed that the pipeline extension

would enhance Illinois' role by allowing southern Illinois

refineries to satisfy increased demand, which would strengthen

its economy and reduce the instability that volatile markets

inflict on an ever-tightening world oil supply.   With regard to

its financial stability, the director noted Enbridge's (1) prior

construction and current operation of two oil pipelines and one

natural gas pipeline in Illinois and (2) $2 billion investment to

enhance its integrated oil pipeline network.

          The director (1) acknowledged that he could not quan-

tify the specific monetary benefit that would accrue to Illinois

citizens if the Commission approved the pipeline extension, but

(2) characterized Patoka as an "important crude oil hub" that

"will enhance Illinois' position as an important part of this

vital transportation network," and (3) stated that the pipeline

extension was designed to deliver a maximum of 800,000 bpd.

              2. Enbridge Pipeline's Expert Testimony

          In October 2007, Enbridge Pipeline's economics expert,

who was retained to provide testimony regarding the benefits

Illinois would experience if the Commission granted Enbridge

Pipeline's application, filed his written testimony.    The expert


                               - 6 -
explained that the pipeline extension was part of the expansion

project that Enbridge had undertaken.   With regard to that

project, the expert noted the following substantial benefits

Illinois consumers would enjoy: (1) a present-value savings of

$407 million based on the mitigating effect increased oil produc-

tion would have on gasoline prices, distillate, and jet fuel; (2)

improved regional security as dependency on uncertain oil sup-

plies from South American and the Middle East are replaced by a

stable flow of Canadian oil; (3) gains in "regional economies"

based on planned refinery upgrades, oil storage expansion, and

pipeline expansion as the anticipated secure supply of Canadian

oil replaces the recent history of foreign oil disruptions; (4) a

commitment from Illinois refineries to expand their respective

facilities to accommodate the additional oil; (5) increased

security and safety benefits through local and expanded oil

storage facilities; and (6) additional employment opportunities.

          In opining that the Commission should grant Enbridge

Pipeline's application, the expert noted the following:

          "[T]he [pipeline e]xtension *** is extremely

          important to Illinois and its consumers.   In

          addition to providing access to a secure

          source of petroleum for many years to come,

          the [pipeline e]xtension *** will likely

          provide Illinois consumers with substantial


                              - 7 -
          savings in the event of any crisis that oc-

          curs in the future, especially if the tight

          spare capacity that exists today continues,

          as is likely, in the future."

          The expert (1) explained that his $407 million present-

value-savings estimate was based on the 400,000 bpd that would

flow to Patoka--and eventually the "world supply"--if the Commis-

sion approved Enbridge Pipelines' application and (2) acknowl-

edged that he had not confirmed information regarding proposed

refinery upgrades but instead, relied on the representations made

in Enbridge Pipeline's application.

           3. The Commission's Evaluation of Enbridge
                 Pipeline's Financial Stability

          In January 2008, a senior financial analyst in the

Commission's financial-analysis division filed her written

testimony, concluding that "[t]hrough its relationship with

Enbridge ***, Enbridge [Pipelines] is capable of financing the

construction, operation[,] and maintenance of the proposed

pipeline from near Pontiac to Patoka."    In particular, the

analyst noted that as of August 2007, the pipeline-extension cost

was estimated at approximately $500 million.    Enbridge Pipelines

planned to finance these construction costs with short-term

intercompany loans from Enbridge.   After completing the pipeline

extension, Enbridge Pipelines planned to refinance the debt with

a combination of short- and long-term debt capitalization pro-

                              - 8 -
vided by Enbridge.

          The analyst further noted that two investor services

had rated Enbridge as financially stable with either a minimal or

moderate credit risk, whose business risk profile was one of the

lowest in the industry based on its long-term energy contracts.

As of September 2007, Enbridge had $3.2 billion of unused credit

facilities that it planned to use to support Enbridge Pipelines'

short-term financing.   The analyst also opined that based on its

stable credit rating, Enbridge had sufficient access to capital

from debt and equity markets to refinance Enbridge Pipelines'

short-term construction loans.

              4. The Intervenors' Expert Testimony

          In January 2008, the Intervenors' economic expert, who

was retained to evaluate the expert opinions of Enbridge Pipe-

lines' economic expert, filed his written testimony.   That expert

concluded, in pertinent part, that a public need did not exist

for the pipeline extension because Enbridge Pipelines' expert did

not consider all the significant costs and benefits.   Specifi-

cally, the Intervenors' expert noted the following deficiencies:

(1) the analysis failed to consider the costs and benefits of

transporting 400,000 bpd from Pontiac to Patoka, which in essence

"double counts" benefits he had previously attributed to the

expansion project; (2) the claimed benefits from increased oil

production are independent of the location of the pipeline


                                 - 9 -
extension because the analysis does not delineate the Illinois-

specific price impact of the expansion project; (3) the claimed

increased oil-production benefits ignore the negative impacts

regarding the depletion of an exhaustible resource and the

increased production of "greenhouse" gases; and (4) the analysis

does not accurately measure economic benefits because it fails to

"account for economic losses in other areas that result from the

pipeline extension's expenditures."

                D. The Commission's Determination

          In July 2009, the Commission issued its order, meticu-

lously documenting, in pertinent part, the parties' arguments

regarding (1) Enbridge Pipelines' fitness, willingness, and

ability to construct, operate, and maintain the proposed pipeline

extension and (2) whether a public convenience and necessity

required issuance of the certificate in good standing under

section 15-401 of the Act (220 ILCS 5/15-401 (West 2008)).

         1. The Commission's Determination That Enbridge
               Pipelines Was Fit, Willing, and Able

          In determining that Enbridge Pipelines was fit, will-

ing, and able to construct and maintain the proposed pipeline

extension, the Commission relied on its senior financial ana-

lyst's testimony, stating as follows:

               "[The s]enior [f]inancial [a]nalyst[]

          testified [that] '[t]hrough its relationship

          with Enbridge, *** Enbridge [Pipelines] is

                             - 10 -
          capable of financing the construction, opera-

          tion[,] and maintenance of the proposed pipe-

          line from near Pontiac to Patoka.'    ***   In

          support of her opinion, [the analyst] de-

          scribed in detail the analysis she performed,

          and the bases for her conclusions.    She also

          noted that Enbridge operates the world's

          longest crude oil and liquids pipeline system

          in Canada and the [United States].

                  The Commission observes that no similar

          analyses were performed by parties who dis-

          agree with [the analyst's] conclusions re-

          garding [Enbridge's] fitness.

                  As a condition of this [o]rder, Enbridge

          *** shall fulfill its commitments to provide

          such financial support as is reasonably nec-

          essary for the construction and operation of

          the proposed pipeline *** and Enbridge [Pipe-

          lines] shall fulfill its commitments to ob-

          tain such financial support from Enbridge

          ***."

             2. The Commission's Determination That
                      a Public Need Existed

          In determining that Enbridge Pipelines had shown a

public convenience and necessity for the proposed pipeline

                                - 11 -
extension, the Commission quoted the following definition of

"public need":

          "In the context of public need, it is appro-

          priate to look at the larger group of the

          general public to see if it requires the

          service, not whether some components of the

          public are in fact using the service.   Only

          by looking to the public at large can one

          determine whether there is an actual existing

          or expected popular need for the proposed

          service[,] which should not be denied."

          Lakehead Pipeline Co. v. Illinois Commerce

          Comm'n, 296 Ill. App. 3d 942, 955, 696 N.E.2d

          345, 354 (1998).

          Relying on this definition, the Commission determined

that the pipeline extension would provide (1) Illinois, as well

as our nation, additional oil supplies from a friendly ally and

(2) access to a secure and reliable energy supply that assists

our nation in achieving our energy needs, which benefits Illinois

citizens either directly or indirectly.   (The Commission also

determined that the record did not support a finding authorizing

Enbridge to acquire land under eminent domain, a determination

that the parties do not raise in this appeal.)

          This appeal followed.


                             - 12 -
                           II. ANALYSIS

          Before addressing the Intervenors' claims, we briefly

discuss the statutory licensing procedure and our standard of

review.

              A. The Statutory Licensing Procedure

          Section 15-401 of the Act, which describes the require-

ments to operate as a common carrier by pipeline, provides, in

pertinent part, the following:

               "(a) No person shall operate as a common

          carrier by pipeline unless the person pos-

          sesses a certificate in good standing autho-

          rizing it to operate as a common carrier by

          pipeline.   No person shall begin or continue

          construction of a pipeline or other facility,

          other than the repair or replacement of an

          existing pipeline or facility, for use in

          operations as a common carrier by pipeline

          unless the person possesses a certificate in

          good standing.

               (b) Requirements for issuance.   The

          Commission, after a hearing, shall grant an

          application for a certificate authorizing

          operations as a common carrier by pipeline,

          in whole or in part, to the extent that it


                              - 13 -
          finds that the application was properly file-

          d; a public need for the service exists; the

          applicant is fit, willing, and able to pro-

          vide the service in compliance with this Act,

          Commission regulations, and orders; and the

          public convenience and necessity requires

          issuance of the certificate."   220 ILCS 5/15-

          401(a), (b) (West 2008).

                     B. The Standard of Review

          "A reviewing court generally gives substantial defer-

ence to the decisions of an administrative agency because of its

experience and expertise."   Alhambra-Grantfork Telephone Co. v.

Illinois Commerce Comm'n, 358 Ill. App. 3d 818, 821, 832 N.E.2d

869, 872 (2005).   With regard to such decisions, a reviewing

court's powers are limited because it exercises a statutory

jurisdiction pursuant to the Act, rather than general appellate

jurisdiction.   City of Chicago v. Illinois Commerce Comm'n, 264

Ill. App. 3d 403, 408, 636 N.E.2d 704, 707-08 (1993).    Under this

strict statutory standard, a reviewing court's reversal, in whole

or in part, of a Commission's rule, regulation, order, or deci-

sion is limited to the following circumstances:   (1) the Commis-

sion's findings were not supported by substantial evidence, (2)

the Commission lacked jurisdiction, (3) the Commission's determi-

nation violated the state or federal constitution or laws, or (4)


                              - 14 -
the proceedings or manner in which the Commission arrived at its

determination infringed on the appellant's state or federal

constitutional rights.    220 ILCS 5/10-201(e)(iv) (West 2008);

Commonwealth Edison Co. v. Illinois Commerce Comm'n, 398 Ill.

App. 3d 510, 514, 924 N.E.2d 1065, 1074 (2009).    "'Substantial

evidence' means more than a mere scintilla" but "does not have to

rise to the level of a preponderance of the evidence."    Common-

wealth Edison Co., 398 Ill. App. 3d at 514, 924 N.E.2d at 1074.

           "[O]n appeal from an order of the Commission, its

findings of fact are to be considered prima facie true; its

orders are considered prima facie reasonable; and the burden of

proof on all issues raised in an appeal is on the appellant."

Commonwealth Edison Co., 398 Ill. App. 3d at 514, 924 N.E.2d at

1074.   Thus, the Commission's findings and conclusions on ques-

tions of fact will not be disturbed unless they are against the

manifest weight of the evidence.    Illinois-American Water Co. v.

Illinois Commerce Comm'n, 331 Ill. App. 3d 1030, 1036-37, 772

N.E.2d 390, 395 (2002).    "To warrant reversal, the appellant must

show that the opposite conclusion is clearly evident."    Illinois-

American Water Co., 331 Ill. App. 3d at 1037, 772 N.E.2d at 395.

     C. The Intervenors' Claims That the Commission Erred by
            Approving Enbridge Pipelines' Application

            1. The Commission's Determination Regarding
                    Enbridge Pipelines' Fitness

           The Intervenors argue that the Commission erred by


                               - 15 -
determining that Enbridge Pipelines was fit, willing, and able to

construct, operate, and maintain an oil pipeline.   Specifically,

they contend that "[i]t was insufficient for the Commission to

accept [Enbridge Pipeline's] representation without separate

verification that *** Enbridge *** had both the ability and the

obligation to fully fund [the pipeline extension]."   (Emphasis in

original.)   We disagree.

          In this case, the Intervenors essentially urge this

court--without citation to any competent authority--to create a

new statutory requirement within section 15-401(b) of the Act

(220 ILCS 5/15-401(b) (West 2008)) where none presently exists.

Specifically, that as a matter of law, evidence of adequate

funding provided by an applicant's parent organization--which the

Intervenors concede Enbridge can provide--can only be demon-

strated when the parent has indemnified its subsidiary.   We

decline the Intervenors' invitation to do so.

          Here, the Commission's determination that Enbridge

Pipelines was fit, willing, and able to construct, operate, and

maintain the pipeline extension was based, in pertinent part, on

the following evidence: (1) that Enbridge Pipelines is a subsid-

iary of the world's longest crude oil and liquids pipeline system

in Canada and the United States; (2) the business rationale for

the integration of Enbridge's expansion project with Enbridge

Pipelines' extension pipeline; (3) the Commission's financial


                             - 16 -
analysis that Enbridge Pipelines was capable of financing the

pipeline extension through Enbridge; (4) two independent investor

services rated Enbridge's financial stability and credit risk

favorably; and (5) the reasonable and achievable manner in which

Enbridge Pipelines would finance its short- and long-term debt

associated with the construction of the pipeline extension.

          Moreover, realizing the general corporate relationship

and specific financial relationship between Enbridge and Enbridge

Pipelines, the Commission conditioned its approval of Enbridge

Pipelines' application to operate as a common carrier by pipeline

on (1) Enbridge's fulfillment of its commitment to provide such

financial support as is reasonably necessary for the construction

and operation of the pipeline extension and (2) Enbridge Pipe-

lines' acquisition of such financial support from Enbridge.

          Given our standard of review, we conclude that the

Commission's determination that Enbridge Pipelines was fit,

willing, and able to construct, operate, and maintain the pipe-

line extension was not against the manifest weight of the evi-

dence.   See Commonwealth Edison Co., 398 Ill. App. 3d at 514, 924

N.E.2d at 1075 (a reviewing court can neither reevaluate the

credibility or weight of the evidence nor substitute its judgment

for that of the Commission).

  2. The Commission's Determination That a Public Need Existed

          The Intervenors also argue that the Commission erred by


                               - 17 -
determining that a public need for the pipeline existed.   Specif-

ically, they contend that the Commission did not have authority

to consider evidence of regional, national, or global benefits

when determining whether the public convenience and necessity

required issuance of the certificate authorizing the pipeline

extension.   We disagree.

          Though we are not bound by the Commission on questions

of law, we give substantial deference to an interpretation of an

ambiguous statute by the agency charged with the administration

and enforcement of the statute.    Commonwealth Edison Co., 398

Ill. App. 3d at 514, 924 N.E.2d at 1074.   A reviewing court will

not substitute its interpretation of a statutory provision for a

reasonable one adopted by the agency charged with the statute's

administration.   Davis Bancorp, Inc. v. Board of Review of the

Department of Employment Security, 393 Ill. App. 3d 135, 141-42,

911 N.E.2d 1125, 1132 (2009).

          In this case, the Intervenors essentially challenge the

Commission's interpretation of the undefined statutory terms

"public need" and "public convenience and necessity."   In partic-

ular, they argue for a narrow interpretation of those terms by

asserting that the "Commission must consider the public need of

Illinois citizens, not Midwesterners, [United States c]itizens,

or citizens of the world."   However, given the Commission's (1)

broad authority to interpret statutes that it is charged with


                                - 18 -
administering (Commonwealth Edison Co. v. Illinois Commerce

Comm'n, 322 Ill. App. 3d 846, 854, 751 N.E.2d 196, 203 (2001))

and (2) broad interpretation of those terms has been consistently

affirmed by the appellate and supreme court of this state (see

Lakehead Pipeline Co., 296 Ill. App. 3d at 955, 696 N.E.2d at 354

(listing cases that stand for this proposition)), we reject the

Intervenors' claim that the Commission's interpretation was

unreasonable or erroneous.

          Moreover, we similarly reject any notion that because

the Commission's focus regarding public convenience and necessity

was broad, the citizens of Illinois would not experience a

discrete benefit once the pipeline extension was operational.

Here, the evidence presented regarding public convenience and

necessity concerned (1) the location of the pipeline extension,

(2) the additional oil capacity that pipeline extension would

transport, (3) the destination of the oil to a major hub within

Illinois for further travel throughout the United States, (4)

current market factors affecting the stability of alternate

sources of oil, (5) projections of increased oil demands, (6)

increased revenues for local economies, and (7) increased market

competition resulting in lower prices for petroleum-based prod-

ucts.

          Accordingly, we conclude that the Commission's determi-

nation that the pipeline extension would benefit Illinois citi-


                             - 19 -
zens either directly or indirectly was supported by more than a

mere scintilla of evidence.

                           III. CONCLUSION

            For the reasons stated, we affirm the Commission's

judgment.

            Affirmed.

            McCULLOUGH, J., concurs.

            TURNER, J., dissents.




                               - 20 -
          JUSTICE TURNER, dissenting:

          For the following reasons, I respectfully dissent.

          The Commission determined Enbridge was fit, willing,

and able to construct, operate, and maintain an oil pipeline.

The record fully supports that finding.   However, it is undis-

puted the record contains no evidence of Enbridge Pipelines'

independent financial ability.   Instead, the record indicates

Enbridge Pipelines depends solely upon Enbridge for its finances

and obligations.   While the record shows Enbridge's commitment to

finance Enbridge Pipelines for the pipeline's construction and

maintenance, the record does not demonstrate Enbridge's oral

commitment legally requires it to support, maintain, and finance

Enbridge Pipelines.   Moreover, Enbridge did not join Enbridge

Pipelines in the application for the certificate in good stand-

ing, nor did the Commission require Enbridge to become a party as

a condition for approval of the application.   Thus, in my view,

the record fails to support the Commission's finding Enbridge

Pipelines is fit and able to construct, operate, and maintain the

proposed pipeline.    Accordingly, I would reverse the Commission's

order.




                               - 21 -
