Why a Pipeline Case Could Change How Energy Projects Fight State Regulations

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The Supreme Court will decide whether energy companies can wait years to move lawsuits from state to federal court—a decision that could reshape how states enforce environmental laws against federally permitted projects. This ruling will determine whether pipeline operators and other energy companies can use federal courts as a refuge from aggressive state enforcement actions, sometimes years after a lawsuit begins.

At stake is whether states can challenge energy infrastructure within their borders and whether companies can wait to see how litigation is going in state court before jumping to federal court, where federal law and federal agency expertise might prove more favorable to their interests.

The case centers on Line 5, an aging crude oil pipeline that crosses the Straits of Mackinac in Michigan, but the implications extend to every state where energy projects clash with local environmental concerns. Industry groups are watching closely. Environmental advocates and state regulators fear this ruling could strip away one of their few remaining tools to hold federally permitted projects accountable under state law.

The Removal Deadline and Equitable Tolling

Federal law allows defendants to move civil cases from state courts to federal courts under certain circumstances. The district court agreed that equitable tolling could extend the removal deadline. This created a disagreement between different federal appeals courts. The Sixth Circuit has joined the restrictive camp, and the high court has stepped in to resolve the conflict.

The formal legal question is whether district courts can apply “equitable tolling”—a legal principle allowing courts to extend deadlines in special circumstances—to extend the removal deadline when extraordinary circumstances prevented timely filing. The practical question is whether energy companies with federal permits can strategically delay removal until they see whether state court is going their way, then move to federal court if things look bad.

Line 5: A Pipeline in Dispute

The line supplies petroleum feedstocks to Midwest refineries. It has become a focal point of environmental and political conflict. Incidents fueled concerns among Michigan officials and environmental groups about operating an aging pipeline in an ecologically sensitive area containing one of the world’s most important freshwater resources.

Michigan’s Governor argued that Enbridge’s continued operation of Line 5 posed an unacceptable risk of catastrophic oil spill. Enbridge responded by arguing that Michigan’s claims were overruled by federal law, including the federal Pipeline Safety Act and the Submerged Lands Act.

Enbridge removed the Governor’s lawsuit to federal court, claiming the case involves federal law. The federal district court refused to send the case back to state court. The Attorney General voluntarily dismissed her state court case to consolidate with the Governor’s federal case. The parties later agreed to put the Attorney General’s case on hold while the federal court considered removal questions in the Governor’s case.

Enbridge’s Late Removal Argument

Enbridge had not timely removed the Attorney General’s original lawsuit within the 30-day window required by federal statute. Enbridge argued it could remove the case based on equitable principles—fairness and justice rather than strict statutory compliance. The district court accepted this argument. The Sixth Circuit panel disagreed sharply.

The Circuit Split

A defendant’s ability to remove a lawsuit years after filing could depend entirely on which circuit covers the state where the case was filed. In the Fifth Circuit, covering Louisiana and Texas, companies like Enbridge could remove cases late. In the Second and now Sixth Circuits, covering New York and the Midwest, they could not.

Courts that allowed equitable tolling emphasized that the removal deadline doesn’t affect which court has power to hear a case. Those courts reasoned that Congress had not clearly stated the removal deadline was immune from equitable exceptions.

Courts that rejected equitable tolling focused on Congress’s specific language, structure, and history in the removal statute. They noted that Congress had set a mandatory 30-day window, used the word “shall” to emphasize its binding nature, and included specific exceptions in limited circumstances. Those courts concluded that the statute’s text and structure argued against allowing deadline extensions.

Arguments from Both Sides

Michigan Attorney General Nessel’s response brief argues that the removal statute’s text and structure make clear Congress’s intent to establish firm, mandatory deadlines. The Attorney General argues that states should have strong protections against losing cases to federal court, since removal transfers jurisdiction from state to federal court and thereby shifts power between sovereigns.

Amicus Briefs and Stakeholder Positions

Business groups have filed briefs supporting Enbridge, arguing that equitable tolling is necessary to protect defendants’ federal interests in cases raising significant federal questions. These groups emphasize that defendants shouldn’t be penalized with loss of federal forum simply because they fail to meet a strict procedural deadline, particularly when federal law is at issue.

A coalition of state attorneys general has argued that permitting late removal would severely hamper state enforcement of consumer protection, environmental, and antitrust laws. States emphasize that the removal statute’s strict deadlines are needed to protect state court authority and prevent defendants from using removal as a strategic tool to avoid unfavorable state proceedings.

Environmental groups have filed briefs opposing Enbridge’s position, arguing that allowing removal would make it easier for energy firms to avoid state environmental enforcement. These groups contend that state environmental laws fill gaps left by federal regulation and that permitting removal would undermine state efforts to protect sensitive ecosystems like the Great Lakes.

Former Federal Energy Regulatory Commission commissioners have filed a brief addressing related concerns about power between state and federal government. Their brief emphasizes Congress’s long-standing design of agencies to balance different interests, suggesting that federal energy regulation is designed as a careful balance, not as a trump card that should allow firms to avoid all state regulation.

Federal Permits and State Environmental Law

Across the country, federal permits and state regulations collide over pipelines, liquefied natural gas facilities, power plants, and transmission lines. In many cases, federal agencies have approved projects that state officials oppose on environmental or public safety grounds. When a defendant can remove state litigation to federal court effectively determines which regulatory system—state or federal—will have the final say.

Federal courts, applying federal law and trusting federal agencies’ decisions, may be more likely to override or cancel state laws than state courts applying state environmental law and state public trust doctrine. Federal judges often emphasize that uniform national policy requires federal supremacy over local concerns. State courts may be more sympathetic to state environmental interests and more willing to recognize state common-law doctrines like public trust and nuisance.

Permitting late removal threatens to undermine state enforcement of environmental laws. Energy firms can use federal permits as a shield against state regulation, arguing that they already have federal approval and federal oversight. Allowing removal means that state courts won’t be able to develop state law remedies for state law violations, and that federal courts will make the ultimate decision about arguments that federal law overrides state law.

The federal government has delegated significant rulemaking and permitting authority to agencies like FERC and the Pipeline and Hazardous Materials Safety Administration. Congress has not entirely overridden state regulation of pipelines. States retain authority over land use, environmental protection, and safety in areas not directly contradicting federal law. This ruling will partially determine how readily federal courts will find such conflicts and override state law.

Federal-State Conflicts Over Infrastructure

In January 2026, the Trump administration issued an energy emergency order directing federal agencies to expedite permitting for projects, including the Line 5 tunnel project that Enbridge has proposed. This executive action has accelerated federal environmental review of the tunnel plan and raised tensions between federal and state priorities for development.

Michigan officials have challenged the emergency order, arguing that it unlawfully takes away state power and ignores statutory requirements for environmental review. The state’s legal challenge to the emergency order proceeds in parallel with the high court case, further illustrating the federal-state conflicts that frame the Enbridge dispute.

The Sixth Circuit’s remand of the Enbridge case to Michigan state court in June 2024 set the stage for renewed litigation in state court on the underlying merits of Michigan’s claims. State court is now considering whether Enbridge’s operation of Line 5 violates the public trust doctrine, constitutes a public nuisance, or violates the Michigan Environmental Protection Act. This ruling on the removal statute will determine whether these state proceedings will continue or whether Enbridge can successfully move the case to federal court, where arguments that federal law overrides state law may receive more favorable treatment.

Possible Approaches and Outcomes

The narrowest ruling would focus specifically on whether equitable tolling applies to removal deadlines and wouldn’t address broader questions about the statute’s interpretation. A broader ruling might address whether Congress’s use of mandatory language and specific exceptions manifests a clear intent to prohibit equitable tolling, potentially affecting how courts interpret other federal statutes with similar language.

The most significant ruling would address what happens when a defendant raises substantial federal questions but fails to meet the removal deadline. Enbridge has argued that federal interests in resolving federal questions should weigh heavily in the analysis. Michigan has argued that procedural compliance and concerns about power between state and federal government should be paramount.

Under current law in most circuits, if a firm doesn’t remove a case to federal court within 30 days, it’s stuck in state court. State court will decide whether federal law overrides the state’s claims. If the justices side with Enbridge, the firm could wait. It could litigate in state court for months or years, see how things are going, and then—if state court seems likely to rule against it—argue that exceptional circumstances justify removing the case to federal court. Federal court would then decide the question, potentially with more deference to the federal agency that issued the permit.

This is about whether states can meaningfully enforce their own environmental laws against federally permitted projects, or whether federal permits effectively immunize firms from state regulation.

Timeline and Implications

Oral arguments on February 24, 2026, are scheduled for two hours, suggesting the justices view the case as significant and complex. A ruling will likely be issued by the end of June 2026, before the end of the current term.

This ruling will immediately affect the Enbridge case itself. If the justices side with Michigan, the case will remain in state court for resolution on the merits. If they side with Enbridge, the federal district court will regain jurisdiction and will have to address the federal questions that Enbridge has raised.

Beyond this single case, the ruling will shape how defendants nationwide approach removal strategy in cases involving federal agencies, federal permits, and alleged conflicts with federal law. For operators and other firms, a favorable ruling could transform their litigation strategy in state enforcement actions. For state officials and environmental advocates, an unfavorable ruling could significantly diminish their ability to enforce state environmental law against federally permitted projects.

This ruling will determine whether the 30-day removal deadline is truly mandatory—a bright line that protects state court jurisdiction and forces defendants to make quick decisions about forum—or whether it’s flexible enough to accommodate defendants who want to keep their options open. This flexibility, if the justices grant it, will matter most to the firms with the resources to litigate in multiple forums simultaneously, to monitor how cases are proceeding, and to make strategic decisions about when to invoke federal jurisdiction. State attorneys general and environmental groups fear this will give firms an unfair advantage they can only use one direction: firms can always avoid state court if it looks unfavorable, but states can never avoid federal override once a firm invokes it.

Oral arguments next month will reveal how the justices view this balance. Do they see the 30-day deadline as a firm rule that protects state sovereignty and prevents strategic manipulation? Or do they see it as a guideline that should yield to federal interests when substantial federal questions are at stake? The answer will determine not only the fate of Line 5, but the power dynamic between state environmental enforcement and federal policy for years to come.

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