Updated, 4:41 p.m. and 6:25 p.m., 7/22/20
The Michigan Department of Natural Resources (DNR) announced Wednesday that it has sent another letter to Canadian oil company Enbridge Inc., requesting again that it enter into a legal agreement to pay for any future oil spills from its controversial Line 5 pipeline after Enbridge refused to do so.
The state also took aim at claims made in Enbridge’s written response earlier this week, which DNR Director Dan Eichinger called “false and misleading.”
Gov. Gretchen Whitmer expressed her dismay over Enbridge’s actions in the joint statement.
“I’m shocked at Enbridge Inc.’s refusal so far to sign a written agreement promising to cover the costs of an oil spill in the Great Lakes if this unthinkable event were to happen,” Whitmer said. “When I was a kid, my parents taught me: ‘You break it, you pay for it.’ It seems that’s the bare minimum Enbridge Inc. owes every Michigander so long as the company continues to pump crude oil through the Straits of Mackinac.”
Eichinger sent his initial letter to Enbridge on Friday. In it, the DNR requests a confirmation from the company on whether it will enter into the proposed financial agreement with the state within a week.
But the company quickly released a statement on Friday claiming that Enbridge “already [has] an agreement with the State of Michigan to provide these assurances.” As the DNR repeatedly points out, this lies in conflict with both the conclusions of a state-commissioned report and Enbridge’s own testimony on another pipeline in Minnesota.
“We would pay all costs related to an incident and we have signed an agreement with the State to provide financial assurances that we are able to do that. And we are willing to meet to discuss it at any time,” Enbridge spokesperson Ryan Duffy said Wednesday.*
Eichinger’s follow-up letter on Wednesday reiterates the state’s request for a financial assurance contract, noting once again that Enbridge’s parent holding company, Enbridge Inc., is not presently contractually obligated to pay for any Line 5 oil spills in the environmentally-sensitive Straits of Mackinac.*
“If Enbridge Inc. is really committed to providing financial assurance to the people of Michigan, they’ll enter into a written agreement to that effect,” Eichinger said Wednesday. “We will continue working around the clock to get these pipelines that transport crude oil out of the Great Lakes as soon as possible. While we continue this work, Enbridge Inc. 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.”
Attached to his follow-up letter to Enbridge, Eichinger also includes his own point-by-point reactions to what he says are “the most significant mischaracterizations and misstatements” made by Enbridge in its written response to the state on Monday.
“In their letter, Enbridge makes a number of claims that are false or misleading,” Eichinger writes.
The company continued to reiterate its claim that Michigan already has a written financial assurance agreement with Enbridge.
It also repeated this language in a response letter to the state on Wednesday:
“The Enbridge entity that has signed the agreements with the State of Michigan has repeatedly demonstrated it has the financial strength alone to satisfy the financial assurances in the agreement. In addition, Enbridge, Inc. will take full responsibility for the clean-up of any incident in Michigan or anywhere along our pipeline system,” the letter from Enbridge U.S. Operations Vice President Mike Koby reads.*
In reality, Eichinger points out, the state only has indemnity agreements with the U.S. subsidiaries of Enbridge that own and operate Line 5.
“Enbridge, Inc., as a Canadian parent company, is not contractually obligated to cover the indemnity and other financial assurance commitments of its subsidiaries,” he writes, quoting Enbridge’s own CFO of U.S. Operations Chris Johnston.
Any contribution of funds from Enbridge Inc. to cover damages from a Line 5 oil spill would, therefore, be “a purely voluntary endeavor.”
Eichinger pushed back on other statements from Enbridge that repeatedly overlook concerns about its parent company not specifically being on the hook for a pipeline rupture.
He argues that the Second Agreement, made between Enbridge and Republican former Gov. Rick Snyder in 2018 for an underground tunnel-encased pipeline to replace Line 5, “makes only cursory reference” to financial assurances and is not a satisfactory replacement for a legal commitment.
Enbridge’s insistence that it has pledged “full responsibility” for any oil spill cleanups in Michigan, according to Eichinger, “falls well short of an actual written, legally binding commitment to provide such financial assurance protections.”
The DNR is currently in the process of reviewing Enbridge’s compliance with the 1953 easement, which Whitmer ordered last June after negotiations with the company fell through. There is not yet a timeline in place for the review’s completion.
A number of environmental groups released statements Wednesday afternoon following the joint press release from Whitmer and the DNR.
“Enbridge’s refusal to guarantee financial responsibility for a Line 5 failure comes on the week of the 10th anniversary of Enbridge’s Line 6B Kalamazoo River oil spill, caused by the same negligence that Enbridge continues to demonstrate today,” said Oil & Water Don’t Mix campaign coordinator Sean McBrearty.
That incident on July 25, 2010 remains the second-largest inland oil spill in U.S. history. It is second only to a 1991 oil spill in Grand Rapids, Minn., which also was caused by an Enbridge-owned pipeline.
“Enbridge’s history of spills and misrepresentations requires a much stronger response from the governor on Line 5 than we have seen to date. If this latest development isn’t the last straw for Gov. Whitmer, you have to wonder what it will take for her to finally act,” McBrearty said.
The National Wildlife Federation (NWF) also called for the urgent decommissioning of Line 5 and urged Whitmer to act.
“Even 10 years after the tragic oil spill in Kalamazoo, Enbridge is once again making irresponsible decisions that put our Great Lakes at risk and they continue to prove they cannot be trusted,” said Beth Wallace, NWF Great Lakes freshwater campaigns manager.
“Michigan can’t afford to have another Enbridge disaster and their continued refusal to meet the most basic of requirements for assurances means Governor Whitmer must protect citizens by removing this nearly 70-year-old pipeline. We urge Governor Gretchen Whitmer to use her executive powers to protect our Great Lakes and act to remove Line 5 immediately before it is too late.”
The east leg of the dual Line 5 pipeline remains shut down under court order this week as federal regulators investigate damage to an anchor support. The west leg was allowed to restart operations on July 1, following an investigation that demonstrated no damage to that leg of the pipeline.