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July 22, 2020
Contact: Ed Golder, GolderE@Michigan.gov
DNR reiterates request that Enbridge cover all losses related to the Line 5 dual pipelines
Enbridge CFO testified that the company is not obligated to cover losses
Today, Michigan Department of Natural Resources Director Dan Eichinger sent a letter to Enbridge Inc., following up on his request 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.
In response to Eichinger’s original request, which he sent on Friday, July 17, Enbridge Inc. stated that it was already committed to providing the requested financial assurance. The company also submitted a letter to the State of Michigan on July 20, 2020 and pledged to take “full responsibility for the clean-up of any incident in Michigan or anywhere along our pipeline system.” Eichinger raised several concerns about this pledge in his letter to Enbridge Inc. and again asked the company to sign a written agreement.
“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,” said Eichinger. “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.”
“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,” said Gov. Gretchen Whitmer. “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.”
One of the concerns Eichinger raised was that Enbridge Inc.’s Chief Financial Officer for U.S. operations, Mr. Chris Johnston, testified in Minnesota that as a Canadian parent company, Enbridge Inc. is not contractually obligated to cover the indemnity and other financial assurance commitments of its subsidiaries. Minnesota Administrative Law Judge Ann O’Reilly accepted Mr. Johnston’s testimony, and recommended that Minnesota obtain a guarantee and indemnity/hold harmless agreement from Enbridge Inc., the parent company, to cover the financial liabilities of the Line 3 Applicant. Enbridge Inc. provided a guarantee/indemnity for the State of Minnesota. Eichinger requested an indemnity agreement in his letter to Enbridge Inc.
In his July 17 letter to Enbridge Inc., Eichinger requested an agreement that includes the following:
- 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, 2020, 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 Director Eichinger’s full letter here.
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