Oil Spill Risk Faces Legal Hurdles
Michigan DNR Director Dan Eichinger sent a letter to Enbridge, Inc., requesting that the corporation enter into a written agreement with the state of Michigan to provide financial assurances to cover all damages and losses caused to property or individuals due to operation of the Line 5 dual pipelines through the Straits of Mackinac.
“As recent events have reminded us, we must get these pipelines that transport crude oil out of the Great Lakes as soon as possible,” says Eichinger. “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.”
The 1953 easement allowing placement of the pipelines requires Enbridge, the corporate successor to Lakehead Pipe Line Company, to compensate the state for damages and provide insurance, bond or surety liability coverage. Under former Governor Rick Snyder, Enbridge signed an agreement to fulfill that requirement, but only as a subsidiary, which does not have sufficient resources to cover the costs of a spill.
Also, the American Risk Management Resources Network concluded that Enbridge is not subject to the indemnity language under the 1953 easement. To address this deficiency, Eichinger has requested an agreement that includes the following language.
- Enbridge Inc., the parent company, agrees to assume the indemnity obligations of Enbridge Energy Company, Inc. (successor to Lakehead Pipe Line Company).
- Enbridge Inc. agrees to a minimum of $900 million in liability insurance.
- Enbridge Inc. names the state of Michigan as an additional insured party on the identified policies so that Michigan’s right of recovery is not derivative.
- Enbridge Inc. will directly pledge its own assets for the remainder of the financial assurance requirements (to meet or exceed $1.878 billion, annually adjusted for inflation).
On June 25, Ingham County Circuit Court Judge James S. Jamo granted Attorney General Dana Nessel’s motion for a temporary restraining order requiring Enbridge Energy to cease all transport operations of its Line 5 twin pipelines.
Read the letter at Tinyurl.com/PipelineLetter.