Dane County officials want Enbridge Energy to buy insurance or a performance bond that would guarantee availability of cleanup money in the event of a spill of the tar sands petroleum from its pipeline and pumping station near Marshall.
Officials are worried about a repeat of a 2010 spill that fouled 35 miles of Michigan’s Kalamazoo River and led to an ongoing cleanup effort with an estimated price tag of $1.21 billion.
But the Calgary-based company is insisting that local governments can’t require financial guarantees because pipeline safety is regulated exclusively by federal law.
Enbridge is tripling the capacity of its Line 61, which runs from Superior to the Illinois border, by adding horsepower to 12 pumping stations, including one in the town of Medina near Marshall in the northeast part of the county.
The county Zoning and Land Regulation Committee meets Tuesday to consider the conditions it will place on a permit Enbridge needs to do the work.
Committee chairman Patrick Miles said he’s not sure what the committee will do given the risk of a costly court battle over a demand for insurance or bonding.
He acknowledged that the federal government would be in charge of ensuring cleanup but said the county could play a role.
“If they have some financial surety committed to a cleanup, it would give some comfort that if they go belly up or run out of resources or go bankrupt, there’s some resources for a cleanup,” Miles said.
Miles said he shares the concerns of environmental advocates about the climate change implications of expanding pipeline capacity and the relatively high energy cost of extracting tar sands oil, but he sees no way to address those things in the county permit approval process.
Enbridge said it has never accepted the kind of financial condition county staff included as an option for the proposed permit at Miles’ request. The company has already received local permits for upgrading the other 11 pumping stations, and none of the communities asked for financial assurances, said spokeswoman Becky Haase.
However, the company has already made one special allowance for the Dane County site.
At the request of the town of Medina, Enbridge agreed to build a bermed spill containment area twice the size of those in other communities, Haase said. The structure will be designed to hold 2.1 million gallons, the amount that would be released in a 60-minute spill at the increased flow rate, she said.
Enbridge agreed to the condition in the town permit as a “good neighbor” gesture, Haase said.
Containment structures at the other 11 sites will be expanded to accommodate higher flow, but they’ll still have only a 30-minute capacity, she said.
1.2 billion barrels daily
Pipeline safety regulations are governed by federal law, and local governments are forbidden from adding their own, county attorney David Gault said.
However, federal law leaves open the possibility for local regulation on cleaning up spills, including bonds or insurance, Gault said.
Amy Back, Enbridge senior legal counsel, in an Oct. 14 letter to the county, disagreed. She wrote that any regulation of an interstate pipeline such as the Enbridge line is “preempted by federal law and therefore is not a permissible condition of approval.”
The pump station improvements will mean Line 61 will be able to carry an average 1.2 billion barrels of tar sands petroleum a day starting next year, Haase said. The oil originates in western Canada and North Dakota. The pipeline cuts across Wisconsin on its way to Gulf Coast refineries.
The Sierra Club Wisconsin chapter is concerned that there’s been insufficient government oversight and that pipelines might not stand up to increased pressure from the new pumps.
Conservation program director Elizabeth Ward faulted the state Department of Natural Resources for failing to conduct an environmental assessment, but the agency maintains it approved the planned higher capacity before the pipe was installed in 2007.
Largest spill in U.S.
The company paid $3.6 million in federal fines as a result of the 2010 Kalamazoo River spill near Marshall, Michigan, the largest oil pipeline failure in U.S. history.
The cleanup remains incomplete, but the company has revamped its safety procedures, Haase said.
The Michigan spill released an estimated 840,000 gallons of thick crude into a wetland that drains to the river. The cleanup has been complicated because the oil stuck to sand, sticks and debris churned up by heavy rains, Haase said.
Oil usually floats on water, but the debris carried it down to the riverbed making cleanup more difficult, she said.
Enbridge president Mark Maki said that after the spill, the company increased its insurance liability coverage to $700 million, short of the $1.21 billion cleanup cost.
“If you go back over our history, the Marshall incident was without question really a confluence of a number of very, very difficult and bad events in terms of what it cost ultimately,” Maki said in a Nov. 3 earnings call. “So we just don’t see a lot of value in insuring for another Marshall.”
In an SEC filing, the company indicated it expected around $40 million in fines from the U.S. Environmental Protection Agency for violations of the Clean Water Act.
The Michigan spill occurred because start-up of pumps weakened and then ruptured a section of pipe, Haase said. The company control center in Edmonton, Alberta, which monitors all the company’s lines, misread signals showing a pressure drop in the line, she said.
Operators restarted pumps a number of times believing there was a bubble in the line. The spill went on for 17 hours and three work shifts before it was shut down.
Haase said the control center operates under tighter protocols and the company has invested $4.4 billion in safety and maintenance since the spill.
“I’d love to say I guarantee it won’t ever happen again, but I can’t say that,” Haase said.