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Home Columns, Opinions & Misc. Enbridge needs to pledge to cover losses

Enbridge needs to pledge to cover losses

DNR director requests that Enbridge pledge to cover
all losses related to Line 5 dual pipelines

Eichinger asks parent company to assume obligation

LANSING, Mich. – Today, Michigan Department of Natural Resources 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. Eichinger requested that Enbridge Inc. enter into a written agreement with the State of Michigan to provide sufficient financial assurances to cover any loss, including a catastrophic release from the dual pipelines.

“As recent events have reminded us, we must get these pipelines that transport crude oil out of the Great Lakes as soon as possible,” said 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 Line 5 dual pipelines in the Straits of Mackinac requires Enbridge Energy Company Inc., the corporate successor to Lakehead Pipe Line Company, to compensate the State of Michigan for all damages and losses caused by the operation of the pipelines, and to provide insurance, bond or surety liability coverage.

Under former Gov. Rick Snyder, Enbridge signed an agreement to fulfill that requirement, but only signed as a subsidiary of Enbridge Inc. The subsidiary does not have sufficient resources to cover the costs of a spill. Additionally, in an expert report titled An Analysis of The Enbridge Financial Assurances Offered to the State of Michigan On Matters Related To The Operation of the Enbridge Line 5 Pipeline At the Straits of Mackinac (Oct. 29, 2019), American Risk Management Resources Network (ARMRN) concluded that Enbridge Inc. is not subject to the indemnity language under the 1953 Easement. To address this deficiency, in his letter to Enbridge, 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 Eichinger’s full letter here.

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