HILL CITY, Minn. -- For Harry's Bar and Grill in Hill City, construction on Enbridge's $4 billion Line 3 oil pipeline came at the right time.

When work began Dec. 1 on the 340-mile pipeline across northern Minnesota, the state had just banned indoor dining at Minnesota bars and restaurants for the second time amid a dramatic rise in COVID-19 cases.

But the influx of pipeline workers began ordering takeout and Harry's parked its food truck outside Enbridge's Hill City construction yard.

And when indoor dining resumed in January, pipeline workers helped make up for lost business. Its regular customers, many of them older and at higher risk for COVID-19 complications, were wary about returning, said food manager Randy Ihle.

Harry's Bar and Grill food manager Randy Ihle inspects one of the smokers used by the Hill City restaurant. Barbeque is one of the main features of the menu.  (Clint Austin / caustin@duluthnews.com)
Harry's Bar and Grill food manager Randy Ihle inspects one of the smokers used by the Hill City restaurant. Barbeque is one of the main features of the menu. (Clint Austin / caustin@duluthnews.com)

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"Had (the indoor dining shutdown) gone on longer, and without having the pipeliners come in, we'd probably be in a whole different situation," Ihle said.

Co-owner Kenny Hilton said business was down to about 20% of pre-pandemic levels when Harry's was doing takeout, but had increased to 60%-70% when indoor dining reopened, and credited it largely to new business from pipeline workers.

"I can't think of one business around here that would be anti-pipeline," Ihle said. "They brought a lot of business into this town."

The project, which will ferry 760,000 barrels of oil (31.92 million gallons) per day from Alberta, Canada, to Enbridge's terminal in Superior, Wisconsin, has faced stiff opposition from environmental and Indigenous groups that say the pipeline isn't needed, could lead to a catastrophic oil spill, violates tribal rights and increases reliance on oil at a time when worsening climate change requires a swift transition away from fossil fuels.

For businesses along the route, like Harry's Bar and hotels boarding pipeline workers, it's provided a much-needed boost after more than a year in the pandemic as eating out and travel have decreased substantially.

But Line 3 hasn't been the economic silver bullet some made it out be.

Ahead of construction getting the OK, industry group Minnesotans for Line 3 cast the project as a potential lifeline for the 14 Line 3 counties, and routinely shared the counties' high pandemic-induced unemployment figures.

The project, supporters said, would help jumpstart the economy and bring back much-needed spinoff jobs supported by construction workers shopping and dining along the route.

While the number of people filing for unemployment insurance each week as a percentage of the 2019 labor force continues to fall since construction began Dec. 1, it's declining at a similar — even sometimes slower — rate than Minnesota as a whole, according to data tracked by the Minnesota Department of Employment and Economic Development.

The average unemployment rate for the 14 counties, meanwhile, increased from 4.7% in November to 6.9% in January, the most recent month available. Minnesota's unemployment rate during that time went from 4.3% to 5%.

Asked if Line 3 lived up to the economic impacts supporters promised, Mike Zipko, a spokesperson for Minnesotans for Line 3, said northern Minnesota faces unique economic challenges, even before COVID-19.

He pointed to a study, commissioned by pipeline backers and prepared by the University of Minnesota Duluth Labovitz School of Business and Economics, that projected Line 3 construction would "add $162 million in total economic impact from nonlocal worker spending on meals, lodging and incidentals while working in the study area."

"Line 3 construction’s positive impact extends beyond businesses along the route," Zipko said. "It has created sales tax revenue that benefits communities and counties. Employees of businesses along the route are making more money that gets reinvested back into other local businesses."

As the report warned, most of the economic impact would be temporary.

Although thousands of people are building Line 3, now halfway complete, it will only create 20 permanent jobs.

“Throughout the project, increased demand for equipment, labor and transportation will lead to increased economic activity in the affected counties,” the study said. “After the completion of the project, this additional activity will cease, and the economic impacts will no longer be felt in the region.”

Despite slow start, local union worker target reached

When Enbridge in February filed a report with the state outlining the project's employment figures for the fourth quarter of 2020, of the 4,664 total workers on Line 3, just 1,553 — 33% — were Minnesota residents.

Opponents of Line 3 characterized it as a failure, and pointed to language on the company's website that says 75% of the jobs would be local and half of the construction jobs would be local: "About 8,600 jobs (6,500 of them local) in Minnesota over a two-year period, including 4,200 union construction jobs, half of which are expected to be filled locally."

The nonconstruction jobs in that total, projected in the UMD study, include "support" for 2,800 retail hospitality sector jobs and 1,600 local supplier/manufacturer jobs.

A pipeline worker watches a protest from a Line 3 worksite near Reponen Road near Sawyer on Jan. 22, 2021. (Clint Austin / caustin@duluthnews.com)
A pipeline worker watches a protest from a Line 3 worksite near Reponen Road near Sawyer on Jan. 22, 2021. (Clint Austin / caustin@duluthnews.com)

But Enbridge and union officials say those fourth-quarter numbers were early, only representing the first month of project construction, and have improved in the first quarter of 2021. The first quarter ends this week and detailed numbers for January through March are not yet available.

Enbridge said Line 3's project labor agreement requires half the workers come from its contractor and half come from local union halls.

Dan Olson, the Laborers' International Union of North America of Minnesota and North Dakota's international representative and the Superior Local 1091's business manager, said last week the latest payroll figures showed laborers from Minnesota union locals were making up 50% of the workers along the route.

"In the first quarter — January, February, specifically — we've done a lot better with Minnesota laborers because the project was in full swing or the subcontractors were working," Olson said. "We've done a lot better what the reported 30% was."

That count of members from Minnesota union locals does include members who, like Olson — a Superior resident — may live outside of the state.

Enbridge has said up to 5,200 construction workers were working on the pipeline at the height of construction. The number of workers on the route shrunk in March because of thawing conditions. Work on the pipeline itself will pause from April 1 to June 1 as the ground thaws and dries, but work on pump stations along the route will continue.

As of last week, after many workers had already been sent home for the planned hiatus, Olson said there were 1,400 local union laborers along the route.

In a statement to Forum News Service, Enbridge spokesperson Juli Kellner said fourth-quarter numbers were early and the company is still putting together the most recent figures.

A Line 3 pipeline worker crosses through a line of protesters on a worksite near the intersection of West Moorhead Road and Hohensee Road near Sawyer on Jan. 22, 2021. (Clint Austin / caustin@duluthnews.com)
A Line 3 pipeline worker crosses through a line of protesters on a worksite near the intersection of West Moorhead Road and Hohensee Road near Sawyer on Jan. 22, 2021. (Clint Austin / caustin@duluthnews.com)

"At the height of winter construction, Minnesota benches emptied as union workers filled jobs on the project," Kellner said in an emailed statement. "The Line 3 Project Labor Agreement stipulates that the contractor supplies 50% of the workforce and local union halls provide 50% of the workforce. In many cases, local union halls include membership in neighboring states that was not necessarily counted towards the Minnesota workforce number."

Still, Olson said the winter construction phase provided union members work during a season when there usually isn't any.

"It's unbelievable the shot in the arm that it is," Olson said. "Not just for our members, but everybody."