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Enbridge settles cleanup of Michigan oil spill for $75M

Jim Lynch
The Detroit News

State officials are announcing Wednesday a $75 million settlement with Enbridge Energy to finalize cleanup terms with the Canadian pipeline owner responsible for 2010's massive Kalamazoo River oil spill.

The agreement comes five years after an underground pipeline near Marshall ruptured, releasing more than 800,000 gallons of heavy crude oil into a nearby creek and, eventually, the river. It was the largest inland oil spill in U.S. history, which has some environmental groups questioning if the settlement goes far enough.

For many who lived along the affected 38-mile stretch of the Kalamazoo, the disaster meant health concerns, fish advisories, moving out of the area, loss of access to the river, loss of business and, in some cases, loss of their homes.

Since the spill, Enbridge has spent hundreds of millions of dollars on cleanup work and compensation for those affected.

Dan Wyant, director of Michigan's Department of Environmental Quality, described the deal as a "huge win for Michigan." But the department couldn't say where it ranks among environmental settlements in Michigan history.

"It's a rare kind of settlement, because it focuses very specifically on the river," Wyant said in an email. "There are so many things we've wanted to do to help the Kalamazoo River, work that has needed to be done for decades, but there wasn't a revenue source to make it happen.

"We are excited that this agreement brings those long-overdue improvements directly to the water body impacted by the spill. It's a resolution everyone should feel good about, because it will mean a healthier, more accessible river for everyone to enjoy."

But some see the $75 million agreement — which is not a fine — as being too small.

"Obviously they should pay for all of the cleanup they can do, all of the costs the state and local officials incurred ...," said James Clift, policy director for the Michigan Environmental Council. "Is this settlement big enough to discourage this sort of corporate behavior in the future? To me, it's a little low."

The settlement package — which ends any further legal action against Enbridge for the 2010 spill — includes $40 million in already-completed projects and $35 million in work yet to be done:

■$30 million in wetland compensation — restored and newly acquired acreage.

■$18 million for removal of the Ceresco Dam (completed in 2014) and restoration work on the surrounding mile of the Kalamazoo River.

■$10 million for five already-created recreational access sites along the river.

■$5 million for stream restoration throughout the watershed.

■$12 million in reimbursement to the state, as well as assurances Enbridge will pay future oversight costs.

A condition of the agreement ensures all of the money will be earmarked for restoration and improvement of the affected watershed. The money cannot be diverted to unrelated areas of the state budget.

"This settlement will help to restore affected waterways and wetlands, as well as provide improved access for families to enjoy the beauty of the Kalamazoo River," Bill Schuette, Michigan's attorney general, said in a statement.

Enbridge officials estimate the spill will eventually cost the firm $1.2 billion. The figure includes the state settlement as well as projected potential penalties from federal regulators.

It's unclear how much the Alberta-based company itself will wind up paying. When the incident occurred, Enbridge was insured for $650 million. A current claim totaling $103 million is still outstanding. If it is approved, Enbridge will have reached its $650 million cap and will be responsible for all payments beyond that figure.

"Enbridge is pleased to have reached this settlement with the State of Michigan, and it underscores our commitment to restoring the affected river system and working with people who use this natural resource ...," the company said in a statement. "We have moved into a new phase with the State of Michigan for long-term monitoring and invasive species control along the Kalamazoo River. We will continue our long-term presence in the area and will work in the best interests of the affected communities and river system."

Stressing fix over penalty

An Enbridge pipeline ruptured just before 6 p.m. on July 25, 2010, in an area beneath Talmadge Creek — roughly a half-mile from Marshall. Despite system alarms, more than 17 hours passed before the line was completely shut down. Traces of oil were detected as far away as near Morrow Lake — 38 miles west.

Investigators with the National Transportation Safety Board said the rupture was caused by "corrosion fatigue cracks that grew and coalesced" in the 30-inch diameter pipeline. In addition, Enbridge was faulted for "pervasive organizational failures" that included allowing the "well-documented" crack defects that led to the line bursting.

Wayne State professor Noah Hall helped found the Detroit-based Great Lakes Environmental Law Center and said he is not surprised by the kind of agreement hammered out between Enbridge and the state. It's an approach that stresses project completion over civil penalties and cuts to the heart of what government perceives to be the role of environmental law.

If its purpose is to keep the economy moving while minimizing environmental damage and cleaning up when problems occur, the state's settlement is likely to be seen as appropriate, Hall said. If the purpose is to act as an environmental steward, then the state's failure to "throw the book" at Enbridge might be a disappointment, he said.

"To some extent, the amount Enbridge has had to pay has already been pretty significant, largely due to the fact that a public resource, the Kalamazoo River, has been damaged ...," Hall said. "But it's a microcosm of the BP disaster. Do you want to shut BP down, put them out of business and stop oil drilling in the Gulf of Mexico? Or is the purpose to make them clean up the mess and get back to business?"

State officials said they want to see the settlement judged by how it has transformed the Kalamazoo River from its condition just after the spill.

"Some people and some groups will look at this settlement and say it looks small, like more money is more justice," said Brad Wurfel, DEQ's spokesman. "In fact, this settlement is huge ...

"We didn't have a funding source to do all this work, but everyone knows it has needed to get done for decades. ... And we think that as more people go and see it for themselves, they'll quickly appreciate that the restored Kalamazoo River is an emerging recreational and natural resource gem."

Jim Hensley casts his fishing line off 15 Mile Road recently in Marshall, Mich. "I eat everything I catch here, haven't had a problem once they opened this neck of the river back up," he said.

Locals credit rehab efforts

Many in the affected area are willing to credit Enbridge with the work done.

Marshall resident Jesse Jaycox, a regular on the Kalamazoo River, described himself as "ornery" when the spill occurred five years ago. In the earliest days of the accident, he could be seen driving around town with a billboard in the back of his truck that read: "What is big oil gonna do to save the Kalamazoo?"

The anger has grudgingly morphed into admiration.

"I never in my life could have imagined the river looking like it does now," Jaycox said. "I could not imagine them cleaning up the mess the way they have and addressing the issue the way they have."

Stephen Hamilton, president of the Kalamazoo River Watershed Council, has a similar view. "I think they did quite possibly the best they could," Hamilton said. "Although they complained and balked at times, they did everything the (Environmental Protection Agency) insisted that they do."


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