Pipeline spills forced Enbridge to take a ‘hard look in mirror’
$177M settlement with U.S. brings total cost of massive cleanup to $1.2B
Canada’s largest pipeline company Enbridge Inc. has reached a US$177-million settlement with the U.S. Department of Justice and the Environmental Protection Agency over two pipeline spills in the summer of 2010 that released more than 26,500 barrels of oil into rivers in Michigan and Illinois, bringing the total cost of the controversial cleanup to more than US$1.2 billion.
Enbridge Energy Partners (EEP), a U.S. subsidiary of the Calgarybased pipeliner, said Wednesday it has agreed to pay US$62 million in fines, reimburse the U.S. government US$5.4 million for its cleanup efforts and spend US$110 million to prevent spills in the future.
Those costs are in addition to the US$75 million Enbridge agreed to pay to the state of Michigan in a 2015 settlement. The company said it has now spent US$1.2 billion in fines, settlements and cleanup efforts, as a result of the spills.
Environmentalists, including at the New York-based Natural Resources Defense Council, called the US$177-million settlement a “slap on the wrist,” but the penalties announced Wednesday are significantly larger than what agencies in Canada have handed out for similar pipeline spills.
Plains Midstream Canada, for example, agreed in 2014 to pay $1.3 million in penalties and pleaded guilty to charges relating to two spills in Alberta in 2011 and 2012 that were similar in size to the Enbridge spills in Michigan and Illinois.
“From the beginning, Enbridge and EEP made a commitment to the people of Michigan that we would clean up and restore the Kalamazoo River and surrounding areas, and cover the costs. We’ve done that,” Enbridge president and CEO Al Monaco said in a news release.
Brad Shamla, Enbridge vicepresident of U.S. operations, said, during a conference call, that the company accepted the penalties and called the experience “very humbling ” for Enbridge, which he said has since revamped its safety protocols.
“This incident caused us to take a long, hard look in the mirror,” Shamla said. “You can’t go through something like that and not change.”
The two spills happened within months of each other in the summer of 2010 on the company’s Lakehead pipeline system, which is a network of 14 pipelines that deliver 1.7 million barrels of oil per day from Canada to the United States.
First, an Enbridge line spilled 20,082 barrels of oil into the Kalamazoo River in Michigan in July. Then, as the company was trying to clean up and deal with heavy criticism, a further 6,427 barrels spilled in Illinois from another line in the system.
It was one of the largest onshore oil spills in U.S. history, affecting 4,435 acres (1,795 hectares) of nearby shoreline. The spill affected water quality, fish and wildlife, and closed the Kalamazoo River to recreational activities for 22 months.
Enbridge was sharply criticized for its handling of both spills — including in a National Transportation Safety Board review of the incidents, which infamously likened the company’s response to the fictional and comically inept Keystone Kops of silent film fame.
Under the terms of the settlement announced Wednesday, Enbridge will need to replace 482 kilometres of pipelines in the area and “take major actions to improve its spill preparedness and emergency response programs.”
“It requires Enbridge to take robust measures to improve the maintenance and monitoring of its Lakehead pipeline system, protecting lakes, rivers, land and communities across the upper Midwest, as well as pay a significant penalty,” U.S. Justice Department assistant attorney general John Cruden said in a news release.
Enbridge has already filed applications to replace much of its line between Neche, N.D., and Superior, Wis., and has included the US$2.6billion cost of the replacement in its long-term capital plan.
Shamla said on Wednesday that its decision to replace that stretch of pipeline was “not directly” a result of the spills in Michigan and Illinois.