Tag: liability

Enbridge Kalamazoo cleanup now set at $1.157 billion and growing

The cost of Enbridge’s cleanup from the spill at Marshall, Michigan in 2010 is now $1.157 billion the company said Friday as it released its second quarter results. That is an increase of $35 million from the estimates Enbridge released at the end of 2013 and the first quarter of 2014.

As of June, 2014, Enbridge faces possibly $30 million in fines and penalties from the United States government.

In its quarterly report Enbridge said

EEP   [Embridge Energy Partners] continues to perform necessary remediation, restoration and monitoring of the areas affected by the Line 6B crude oil release. All the initiatives EEP is undertaking in the monitoring and restoration phase are intended to restore the crude oil release area to the satisfaction of the appropriate regulatory authorities.

On March 14, 2013, as previously reported, the United States Environmental Protection Agency ordered in Enbridge to undertake “additional containment and active recovery of submerged oil relating to the Line 6B crude oil release.”

new Enbridge logoEnbridge says it has “completed substantially all of the EPA order, “with the exception of required dredging in and around Morrow Lake and its delta.”

“Approximately $30 million of the increase in the total cost estimate during the three months ended June 30, 2014 is primarily related to the finalization of the MDEQ approved Schedule of Work and other costs related to the on-going river restoration activities near Ceresco,” Enbridge reported.

Enbridge also said it is working with the Michigan Department of Environmental Quality “to transition submerged oil reassessment, sheen management and sediment trap monitoring and maintenance activities from the EPA to the MDEQ, through a Kalamazoo River Residual Oil Monitoring and Maintenance Work Plan.”

Enbridge also said that costs may still go up, saying there continues to be the potential for “additional costs in connection with this crude oil release due to variations in any or all of the cost categories, including modified or revised requirements from regulatory agencies, in addition to fines and penalties and expenditures associated with litigation and settlement of claims.”

Enbridge said that “a majority of the costs incurred in connection with the crude oil release for Line 6B are covered by Enbridge’s comprehensive insurance policy…. which had an aggregate limit of  $650 million for pollution liability.” So far, Enbridge has recovered $547 million of the $650 million from its insurers. Enbridge is suing its insurers to recover the rest of the money.

That means that “Enbridge and its affiliates have exceeded the limits of their coverage under this insurance policy. Additionally, fines and penalties would not be covered under the existing insurance policy,” the company said.

Insurance renewed

Enbridge said it has “renewed its comprehensive property and liability insurance programs under which the Company is insured through April 30, 2015 with a liability aggregate limit of $700 million, including sudden and accidental pollution liability, with a deductible applicable to oil pollution events of $30 million per event, from the previous $10 million.”

It adds:

In the unlikely event multiple insurable incidents occur which exceed coverage limits within the same insurance period, the total insurance coverage will be allocated among Enbridge entities on an equitable basis based on an insurance allocation agreement among Enbridge and its subsidiaries.

All Enbridge figures are in US dollars

The Northern Gateway Joint Review Panel required Enbridge that “its Northern Gateway’s Financial Assurances Plan must provide a total coverage of $950 million for the costs of liabilities for, without limitation, cleanup, remediation, and other damages caused by the Project during the operations phase. The plan should include the following components and minimum coverage levels.” (That figure in Canadian dollars)

BC refuses to answer questions from Douglas Channel Watch, because province hasn’t filed Gateway evidence

Updated with comment from Douglas Channel Watch and DCW questions to province.

The province of British Columbia is refusing to answer questions from the Kitimat group Douglas Channel Watch about the Northern Gateway pipeline project  because, the province’s lawyer says, BC hasn’t filed any evidence and so doesn’t have answer questions through the Joint Review Process.

In a filing on May 28, Christopher Jones, counsel for BC before the JRP says:

the province of British Columbia wishes to advise that it will not be responding to this information request as the Province has not filed evidence in this proceeding.

In the letter  Jones invites Douglas Channel Watch to contact him so the group can ask questions from the “appropriate offiicial.”

The fact that the province is brushing off Douglas Channel Watch raises an even larger question, why hasn’t the province filed any evidence in one of the biggest environmental, economic and political stories in provincial history?

The filing from Douglas Channel Watch was an attempt to find out who would be financially responsible for any oil spill resulting from a pipeline breach near Kitimat that could threaten the District’s water supply, a major issue with the Kitimat based environmental group.

In an early filing with the Joint Review Panel Enbridge said.

Regardless of whether or not insurance covers losses and liabilities of Northern Gateway and/or third parties, Northern  Gateway would make good the damages which it has caused. Recovery ofthese costs under Northern Gateway’s procured insurance programs would be governed by the general laws of insurance, the terms and conditions of the insurance policies and Northern Gateway’s obligations to its insurers regarding the reporting, investigation and adjustment of its incurred costs in making good the damages.

Enbridge then goes on to list the standard exclusions from insurance policies.

      • Criminal intent
      • Wilful misconduct or intent
      • Deliberate destruction
      • Intentional violation of any statute, rule, ordinance or regulation
      • Non-compliance with reporting and notification requirements
      • Breach of contract
      • Unfair trade, competition or deceptive acts
      • Nuclear liability
      • War, terrorism, rebellions, civil war or civil strife

 

In their questions to the province, Douglas Channel Watch emphasized the phrase that Enbridge would “make good the damages which it has caused.” Douglas Channel Watch then emphasized the insurance exclusion for war, terrorism or civil strife.

The group was then asking the province what its responsibility would be, especially when a pipeline goes through forested areas, which come under the jurisdiction of the Ministry of Lands and Forests.

Douglas Channel Watch is specifically concerned that

In the upper Kitimat River and Hoult Creek valleys there are very large logging clear cuts on steep slopes. The proponent intends to locate its pipelines near the bottom of these clear cuts

The main question to the province from Douglas Channel Watch is that if a landslide results from a clear cut in a geologically unstable area, and that landslide breaches the pipeline, who is responsible for the cleanup, asking these questions, which the province refused to answer:

  • Could this allow the proponent to avoid paying for third party damages and clean up costs if an avalanche and/or debris slide which initiates in a logging clear cut… for example, a 2,000,000 litre full bore diluted bitumen pipeline rupture into Hoult Creek or the Kitimat River?
  • Would not those damages to third parties and clean up costs then be paid by the party responsible ?
  • Would the responsible party be the Government of BC for allowing the pipelines to be located in areas which violate safe logging practices where linear infrastructure may be impacted?
  • If the Government of Canada imposes a decision to allow the proponents project over the objections of the Government of BC or the recommendation of the Joint Review Panel, would the Government of Canada then be the responsible party?

 

Murray Minchin of Douglas Channel Watch responded by noting. “It may be true the Prov of BC hasn’t submitted evidence, but they have been involved in the JRP process”  by filing questions to Enbridge.

Meanwhile, Douglas Channel Watch is organizing a public forum called North Coast Reality Check at the Kitimat Riverlodge Recreation Centre on June 8 from  7 pm to  9 pm.

In a news release, Minchin, says presentations will be given by DCW members highlighting many serious issues Enbridge prefers not to talk about, such as geological and marine hazards, corrosion in double hull tankers, and socio-economic impacts of the Northern Gateway proposal.

Response from BC to IR from Douglas Channel Watch   (PDF)

Douglas Channel Watch Information Request to Government of BC  (PDF)

BC Government questions to Enbridge

Province of BC Information question No 1 Northern Gateway project (PDF)

Province of BC Information Request 2  (PDF)