A Dane County case that could decide whether Enbridge Inc. can triple the capacity of a tar sands pipeline that runs from Superior to the Illinois border is a step closer to a decision after oral arguments were completed in appellate court last month.
Fears of an oil spill like the 2010 Kalamazoo River disaster set the stage for the protracted court battle after Dane County officials sought to ensure that Canada-based pipeline operator Enbridge has the means to clean up a similar mess here.
The dispute began in 2014 after Enbridge announced plans to increase pumping capacity at 13 tar sands pumping stations along the 454-mile pipeline route between Superior and Flanagan, Illinois, including one in the town of Medina in northeastern Dane County. The upgrade would increase the pipeline’s capacity from 400,000 barrels to 1.2 million barrels a day, more than the controversial TransCanada Corp. Keystone XL pipeline.
Dane County, citing the 843,000-gallon Enbridge spill in 2010 that blighted 35 miles of Michigan’s Kalamzoo River, required the company to purchase $25 million in spill insurance. The Kalamazoo River spill, the largest inland spill in U.S. history, cost $1.2 billion and took four years to clean up.
Enbridge balked at the insurance requirement, claiming that it already carries sufficient coverage.
What is the court case about?
Dane County approved a conditional use permit for the company in 2015 with the insurance stipulation, but while the measure was still under review, the Republican-led state Legislature passed a law — anonymously inserted into the 2015-17 budget — that precluded local governments from requiring a pipeline company to obtain insurance if that company already has coverage for “sudden and accidental pollution liability.”
The county nevertheless passed the conditional use permit with the insurance requirement, and Enbridge took the county to court to have it removed. Dane County Circuit Judge Peter Anderson sided with Enbridge and threw out the requirement.
Does that mean the company is fully insured?
Not necessarily. Enbridge claims to have a $100 million liability insurance policy that meets the “sudden and accidental pollution” criteria, which combined with government cleanup funds, the company maintains, is sufficient to deal with a spill. But the company has yet to reveal the actual insurance policy, claiming it contains proprietary information.
In 2015, however, company officials provided a summary of Enbridge’s policy to an insurance assessor commissioned by Dane County. According to the assessor’s report, the words “sudden and accidental,” when it comes to pollution liability, are highly interpretive in court. And the general liability insurance held by Enbridge contains a “pollution exclusion” that allowed the insurer to avoid $103 million in Kalamazoo River cleanup costs. Those costs were still being litigated in 2015.
The assessor added that larger factors that affect the oil industry could also impact the company’s ability to respond to a spill in the future. A slip in the use of petroleum products due to concerns about climate change, for instance, could weaken the company’s financial standing considerably, leaving it with fewer resources with which to respond to an incident. In addition, a spill response program administered by the federal government and funded with oil surcharges would be diminished with a reduction in oil demand.
Why doesn’t the county just pull the conditional use permit?
Judge Anderson ruled that the rest of the permit must remain in place. The reason: The county didn’t vote on the permit until months after the state invalidated the insurance requirement, but the county approved it anyway, knowing that the requirement was unenforceable.
What are the issues in the appeals court?
The appellate case is actually two cases in one. Dane County is arguing that had the insurance requirement not been included in the permit, the board never would have approved it. And in 2016 seven landowners with property adjacent to the pump station sued Enbridge, arguing that the state law removing the county’s enforcement ability didn’t affect state laws that allow affected property owners to enforce zoning laws. The property owners’ lawsuit claims that the nature of the pumping operation puts their properties at risk because the diluents and high temperatures needed to pump the thick oil deposit, called bitumen, increase the likelihood that pipes will erode and spills occur. Those two cases have been combined because of overlapping issues.
Where does the case stand now?
Oral arguments were held on Jan. 24 before the District 4 Court of Appeals. A decision date has not been set.