As Canadian pipeline operator Enbridge continues to seek final approval to begin construction of a tunnel project intended to replace an exposed section of pipeline running through the Great Lakes, environmentalists gathered on Monday to share a report detailing how much the line’s failure could cost Michigan taxpayers.
Oil and Water Don’t Mix, a coalition of organizations committed to securing a shutdown of the Line 5 dual pipelines running through the Straits of Mackinac, where Lake Michigan and Lake Huron meet, collected multiple analyses from over the past nine years into a single document to highlight the risks and potential costs of an oil spill.
Line 5 transports up to 22.68 million gallons of crude oil and natural gas liquids through the Straits of Mackinac each day, with one University of Michigan researcher pointing to the region as the worst place for a Great Lakes Oil Spill.
“The proposed Line 5 tunnel is not just an environmental risk, but it’s a massive financial threat to the people of Michigan” Sean McBrearty, the campaign coordinator for Oil and Water Don’t Mix, told reporters.
While arguments against the tunnel project have largely been focused on the environmental impacts, McBrearty said the conversation has not addressed the costs taxpayers could face should the tunnel fail.
After gaps in the pipelines’ protective coating were discovered in 2014, Enbridge would reach an agreement with the state to build a utility tunnel beneath the lakebed aimed at containing any potential oil spills.
However, the report points to language in the 2018 agreement between Enbridge and the Mackinac Straits Corridor Authority, created by former Gov. Rick Snyder to oversee the construction of the tunnel, noting the authority will “accept ownership of the Tunnel.”
“Ownership can be transferred to the state of Michigan through the Mackinac Straits Corridor Authority,” McBrearty said. “That means that Michigan taxpayers, not Enbridge, could be responsible for the catastrophic … cleanup, water system repairs, tourism losses, public health emergencies and multibillion dollar infrastructure disruptions if something goes wrong.”
"The proposed Line 5 tunnel is not just an environmental risk, but it's a massive financial threat to the people of Michigan."Sean McBrearty, the campaign coordinator for Oil and Water Don’t Mix
Enbridge spokesperson Ryan Duffy also pointed to the tunnel agreements, noting that the company has agreed to “defend, indemnify, protect and hold harmless the Authority and the State of Michigan, and all of its officers, officials, agents, contractors providing expert advice to the [Mackinac Straits Corridor Authority], and employees” from any liability tied to the design, operation or maintenance of the tunnel and the replacement pipeline segment housed within.
“The bottom line is this: Enbridge takes full responsibility and pays for all costs related to any incident anywhere along our system. Under the terms of our easement, the State of Michigan is fully indemnified from any costs associated with our operations,” Duffy said in a statement. “The 2018 agreements with the State also require us to maintain the financial tools and resources necessary to cover incident response and clean-up costs, and we certify our financial strength to the State of Michigan.”
However, the report raises questions about Enbridge’s ability to cover the cost of a major spill, pointing to a 2019 analysis by American Risk Management Resources Network, LLC on behalf of the Department of Attorney General, Department of Natural Resources and the Department of Environment, Great Lakes and Energy.
As of August 2019, Enbridge’s Canadian parent company, Enbridge Inc. had the financial resources to cover $1.87 billion in damages tied to a Line 5 oil spill, with the analysis placing that “on the low end” of the potential cost of a major release.
However, the analysis advises against accepting the parent company’s assets as proof of financial assurance, noting that only the company’s subsidiaries – Enbridge Energy, Limited Partnership, Enbridge Energy Company, Inc. and Enbridge Energy Partners, L.P. – are signatories on the agreement, and subject to the indemnity agreement.
Should these subsidiaries go bankrupt, taxpayers are left to foot the bill, Oil and Water Don’t Mix argues in the report.
Additionally, Enbridge’s liability insurance covers $940 million, the report notes, while the federal oil spill trust fund covers $1 billion, leaving the state to cover at least $3.6 billion when using a 2018 projection from Michigan State University’s Institute for Public Policy and Social Research, which places the damage from a Line 5 oil spill at $5.6 billion.
“The worst case scenarios are far more costly,” McBrearty said. “Up to $45 billion has been identified in economic losses if the straits shipping channel shuts down. Nearly $5 billion in tourism losses alone have been identified. Hundreds of millions in water system shut down and emergency public health impacts. Decades of environmental cleanup and restoration, and all of this is before we even consider a tunnel failure which Michigan, not Enbridge, would own.”
We note that Enbridge is a sponsor of WCMU. We report on them as we do with any other organization.
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