Michigan wants Enbridge to pledge funds in case of oil spill
Traverse City – Michigan sought a written pledge Friday from Enbridge Inc. to cover costs that would arise if oil were to leak from its dual pipelines that extend across a channel linking two of the Great Lakes, although the Canadian pipeline company said it had already made such a promise.
Department of Natural Resources Director Dan Eichinger asked Enbridge to carry $900 million of liability insurance and set aside about $1.88 billion in additional assets for use as needed in the event of a catastrophic spill.
The twin pipes run along the bottom of the 4-mile-long (6.4-kilometer-wide) Straits of Mackinac, which connects Lake Huron and Lake Michigan. They make up one segment of Enbridge’s Line 5, which carries oil and liquids used in propane between Superior, Wisconsin, and Sarnia, Ontario.
Enbridge says the underwater section, laid in 1953, is in good condition and has never leaked. Environmental groups and Democratic officials including Gov. Gretchen Whitmer contend it is a hazard that should be shut down, which Attorney General Dana Nessel is seeking in a lawsuit pending in state court.
Enbridge negotiated a deal with former Republican Gov. Rick Snyder’s administration in 2018 to decommission the twin pipes after replacing them with a new pipe that would be housed in a tunnel to be drilled beneath the straits. The company plans to begin construction next year and is seeking state and federal permits.
The agreement with Snyder included a pledge to hold the state financially harmless for any damages from a Line 5 spill. But the deal was signed by Enbridge Energy Company Inc., a subsidiary of Enbridge Inc., which is based in Calgary, Alberta. Enbridge Energy is the corporate successor of Lakehead Pipe Line Company, which received a state easement to place the pipes in the straits 67 years ago.
In his letter to the parent company, Eichenger said Enbridge Energy doesn’t have the resources to cover costs of a major spill. A state-commissioned report last year found that Enbridge Inc. is not legally bound to abide by financial pledges made by its subsidiary in 1953, he said.
The report noted that the chief executive of one Enbridge subsidiary had testified in 2018 at a Minnesota hearing on different pipeline that Enbridge, Inc. is “not contractually obligated to stand behind the indemnity agreements of a subsidiary.”
“As recent events have reminded us, we must get these pipelines that transport crude oil out of the Great Lakes as soon as possible,” Eichinger said in a statement. “In the meantime, Enbridge must provide full financial assurance to the people of Michigan that the company will meet its obligations in the event there is a spill or some other disastrous damage to the Great Lakes.”
A state judge ordered a temporary Line 5 shutdown last month after Enbridge reported damage to a steel anchor holding a section of one pipe in place. The judge later allowed oil to resume flowing through the other underwater pipe.
In a statement, Enbridge said it “pledges to take full responsibility for the cleanup of any incident in Michigan or anywhere along our pipeline system.”
Spokesman Ryan Duffy said one of the agreements signed with the Snyder administration included a provision that “the Enbridge entity or entities that own and operate Line 5, or the parent companies” of such entities, would “maintain in force financial assurance mechanisms that meet or exceed” $1.88 billion.
That figure came from an independent analyst’s estimate of costs from a worst-case spill in the straits. Enbridge said it disagreed with the report’s methods and conclusions but would keep that sum of money available to deal with a spill if needed.
“Since we already have an agreement with the State of Michigan to provide these assurances, if the State would like to sit down and discuss our financial assurances, we would be happy to do so,” the company said.
The Chippewa Ottawa Resource Authority, which represents Native American tribes with fishing rights in the straits area, backed the state’s request for an airtight promise from Enbridge’s parent company.
“The Straits is more than a waterway; said Bryan Newland, chairman of the Bay Mills Indian Community. “They are a place of ongoing significance to the way of life of for the Tribes since time immemorial.”