Friday, March 6, 2020
Mackinac Straits Corridor Authority
James R. Richardson
Mackinac Straits Corridor Authority members:
Your meeting today discusses the proposed Enbridge oil tunnel, a project that may or may not happen depending on the outcome of court decisions and whether Enbridge actually intends to construct a tunnel.
We strongly urge you to not waste more public funds and put all activities toward permitting an oil tunnel on hold unless and until Enbridge demonstrates conclusively through signed agreements and financial transparency that Michigan taxpayers won’t be on the hook for billions of dollars in damages from a catastrophic Line 5 pipeline rupture.
There is no end date for the dangerous twin Line 5 pipelines operating in the open waters of the Great Lakes. The Enbridge-Corridor Authority sweetheart deal doesn’t even guarantee that Enbridge will build an oil tunnel in the Straits of Mackinac but it does put Michigan taxpayers at risk for damages from a Line 5 pipeline that will continue to operate in the open waters of the Great Lakes and can rupture at any moment.
A 2018 spending request from the former Snyder administration pegged the initial bill for Michigan taxpayers at $4.5 million, money intended for the Corridor Authority despite promises from Enbridge and the former governor that the proposed oil tunnel would be cost-free for Michigan taxpayers. But that's small change compared to the liability risk Michigan taxpayers face because of the sweetheart tunnel deal with Enbridge. If there’s a catastrophic oil spill the State of Michigan could be left holding the bag for up to $45 billion dollars in unfunded liability under the Enbridge tunnel agreements.
An Analysis of the Enbridge Financial Assurances report to the State of Michigan by financial experts, the American Risk Management Resources Network, documents how the Enbridge-Snyder agreement on Line 5 may not be legally enforceable. The report looked specifically at Enbridge’s pledge that the company has $1.878 billion to cover cleanup costs if its Line 5 pipeline ruptured in the Straits of Mackinac, contaminating the Great Lakes.
Enbridge’s corporate structure is such that it could avoid liability because the agreement was signed by Enbridge Energy, Limited Partnership, Enbridge Energy Company, Inc. and Enbridge Energy Partners, L.P., the subsidiaries that operate the pipeline, while the company’s assets are controlled by Enbridge Inc., the parent company based in Canada. The parent company is not responsible for liabilities incurred by its subsidiaries, the analysis said.
An examination of company records and statements indicates the parent company’s responsibility to cover cleanup costs would be a “purely voluntary endeavor,”, according to the state’s financial assurances analysis.
Enbridge says that we should trust them to honor their word about covering damages from a Line 5 pipeline rupture and they cite the sweetheart deal with the Corridor Authority and a federal law they claim guarantees that Michigan’s taxpayers would not be on the hook for the cost of a catastrophic pipeline rupture. As usual, Enbridge is not telling the truth.
The truth is the Oil Pollution Act of 1990 would cap Enbridge’s liability at $350 million and may not even require that in the event of a rupture involving a third party--as would be the case in anchor strikes involving Line 5--or “an act of God.” Enbridge cites its Second Agreement with the Corridor Authority in defending their promise to cover oil spill damages. But that agreement--negotiated by a former Snyder administration official now with a law firm that billed the state more than $232,000 for work related to the Enbridge deal--is riddled with escape hatches. The Second Agreement language on liability indicates Enbridge has the option of deciding whether its parent company or its subsidiaries will maintain liability coverage capped at $1.878 billion. The decision on which Enbridge entity is liable for oil spill damages is entirely up to Enbridge.
The truth is Enbridge--the parent company--has not signed any agreements with the State of Michigan that would guarantee taxpayers would not be on the hook for damages.
The truth is Enbridge’s ability to pay if Line 5 ruptures is an open question that has never been independently confirmed by the State of Michigan.
The truth is that as a corporation headquartered in Canada, Michigan’s ability to access Enbridge’s assets in the event of a catastrophic oil pipeline rupture may be limited.
The Mackinac Straits Corridor Authority should not be a front for Enbridge but should look out for Michigan taxpayers and our Great Lakes. The Corridor Authority must ensure Enbridge guarantees in writing that the parent company has legal liability for a Line 5 rupture. The Corridor Authority must require Enbridge to have guarantees of payments for all oil spill victims backed by a bond or liability insurance specifically for Line 5. The insurance must name the State of Michigan as an additional insured in order to protect Michigan taxpayers. The Corridor Authority must require more thorough and comprehensive financial data from Enbridge beyond what is in the agreements.
Unless or until those prudent measures are taken, the Corridor Authority should halt any activities related to permitting the tunnel.
Sean McBrearty, Oil & Water Don’t Mix
Oil & Water Don’t Mix Steering Committee
Chippewa Ottawa Resource Authority, Clean Water Action, FLOW (For Love of Water), Groundwork Center for Resilient Communities, League of Women Voters of Michigan, Michigan Climate Action Network, Michigan Environmental Council, Northern Michigan Environmental Action Council, Sierra Club, Straits Area Concerned Citizens for Peace, Justice and the Environment, Straits of Mackinac Alliance, Sunrise Movement, TC 350