There’s a general incredulity when looking at the 1953 agreement made between Lakehead Pipe Line Company and the State of Michigan.
The 15-page easement mostly sets out the specifications to allow two pipelines “over, through, under and upon” the bottomlands of the Straits of Mackinac, and the rights of the state to oversee them.
The Conservation Commission at the time received a sum of $2,450 for the easement, and additionally required a liability policy for bodily and property damage for $1 million and a $1 million surety bond for the state to hold until the pipe’s “abandonment.”
The easement leaves much to be desired as far as oversight is concerned — a conspicuous lack of an end date for one — so it’s no wonder that Snyder-era administrators lobbied hard for a new agreement in 2018, which would decommission the now 67-year-old pipeline in favor of a new one run through a utility tunnel hollowed beneath the Straits.
The agreement, done at the 11th hour into Snyder’s lame-duck term, required that Enbridge carry $900 million of liability insurance and set aside another $1.878 billion to clean up a potential spill, as well as fund $500 million toward the construction project and turn it over to the state.
The clean-up insurance was part of the sell, and administrators at the time said they checked Enbridge’s account, and were impressed by the number of zeros in there.
But now, after an gubernatorial change to Gov. Gretchen Whitmer, who vowed to “shut down” Line 5, and several years of top-level legal scrapping over the validity of the agreement, scrutiny now turns to that promise.
The “now” we’ll revisit, but the crux of the scrutiny comes from an American Risk Management Resources Network report commissioned by Whitmer’s administration that said that Enbridge Inc. (the parent company) may not be legally bound to its subsidiary’s — Enbridge Energy Company’s — promises to cover damage caused by a pipeline spill.
The subsidiary accounts don’t have those impressive zeros.
Michigan Department of Natural Resources Director Dan Eichinger sent a letter on July 17, asking the parent company to assume the indemnity obligations of its subsidiary; carry $900 million in liability insurance; put the State of Michigan on its policy and directly pledge $1.878 billion in financial assurance (annually adjusted for inflation.)
Enbridge spokespeople maintain they already made the pledge, and don’t need another one.
Also, the governor’s report was given in October 2019 and released in wake of the Michigan Court of Claims ruling that the Legislature did not violate the Constitution when it enacted a 2018 law creating an authority to oversee and operate the proposed tunnel.
So why fan these particular flames now?
We won’t pretend to know the state’s strategy but can surmise that the 10th anniversary of Enbridge’s Line 6b Kalamazoo River spill had something to do with it.
By the time the July 25, 2010 rupture was cleaned up, almost a million gallons of tar sands oil and crude had been removed from the river, making it one of the largest spills in history. The cleanup carried a $1.2 billion price tag, which Enbridge paid, plus more in legal settlements and fines for failed pipeline inspections.
In 1953, our state asked for $1 million to preserve our Great Lakes water ecosystem and water supply.
What our disastrous history has taught us is that the cost is so much more than we think it will be.
Adjusted for inflation, $1 million in 1953 is equal to $9.6 million in 2020 — a drop in the proverbial bucket.
We don’t doubt that the move is another swipe in the tangle of legal and public opinion battles between Whitmer’s administration and Enbridge’s Great Lakes Tunnel, which has the support of Michigan’s Legislature.
But the 67-year-old pipelines continue to age in the meantime, and testing our agreements by fouling our waters serves no one.