"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).
Click here to see the July 17, 2020, letter from DNR Director Eichinger to Enbridge Inc.
*Editor's Note: See our June 25, 2020 article, "UPDATED: Judge orders Enbridge to cease Line 5 operations following recent damage."
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