Pushing Back on the PUC, Part III: Friends of the Headwaters Finds Gaping Holes in Enbridge’s Promises

This is the last in a series reviewing responses to Enbridge’s last-minute promises to improve its Line 3 pipeline project. The PUC adopted Enbridge’s promises with no pubic scrutiny. Previous blogs hare reviewed responses from Native tribes and state agencies. This last blog will look at the Friends of the Headwaters response.

Enbridge promised the Minnesota Public Utilities Commission (PUC) that it would have the financial backing to clean up a worst-case crude oil spill from its Line 3 expansion project in Minnesota. That was one of several hurried promises Enbridge made to secure needed PUC votes.

The promises might look good on paper, but there is no guarantee they will deliver results. The Friends of the Headwaters says Enbrdige’s promises lack critical details, minimize the size of catastrophic spill, and put future Minnesotans at-risk for footing the clean-up bill.

The promises “will do little to prevent an insolvent Enbridge from avoiding its [clean-up] responsibilities,” the Friends said in a legal filing to the PUC. The problem, the Friends say, is that Enbridge hasn’t even provided an estimate for what it would cost to clean up a disastrous spill — and that’s the essential first step in providing financial accountability.

Consider your car or home insurance. Those policies impose an upper limit to what you can collect in the event of an accident. You choose a policy that balances what you can afford with how much coverage you want. So how can Enbridge insure Minnesotans that it could cover the clean up of a catastrophic oil spill if it can’t even tell us what those costs would be? Continuing the metaphor, absent a cost estimate for a worst-case scenario, Enbridge’s incentive is to minimize its premium.

Friends of the Headwaters joins Native tribes and state agencies in criticizing Enbridge’s Line 3 deal sweeteners, including its supposed clean-up guarantee.

By accepting Enbridge’s “promises,” the PUC failed to follow procedures. The PUC allowed Enbridge to change its proposal after the legal record had closed; it gave no opportunity to regulators or the public to review and critique them prior to the PUC’s vote.

The Friends’ response shows just how little thought the PUC gave Enbridge’s proposals before giving them the green light.

Weighing Costs and Benefits

Headwaters of the Mississippi at Lake Itasca. (Photo courtesy of Bsstu through Wikimedia Commons.)

The PUC needed to weigh four criteria in deciding whether to approve Line 3’s Certificate of Need. One of those criteria is whether: “the consequences to society of granting the certificate of need are more favorable than the consequences of denying the certificate …”

It appears the PUC adopted Enbridge’s financial assurances for spill cleanup and other deal sweeteners to give the Commission the thin veneer of justification to approve the project.

The Friends of the Headwaters offers a devastating critique of Enbridge’s promises and the PUC’s decision. Here are verbatim excerpts from its filing.

Enbridge Fails to Capture True Costs of Worst-Case Spill

According to Friends’ response to the PUC:

Obviously, the first step in any consideration of financial assurance or financial responsibility has to be an estimate of the potential costs of a worst-case spill. Enbridge’s compliance filing … acknowledges that the goal is to assure that Enbridge can appropriately respond “to a full-bore pipeline rupture at maximum design capacity … Enbridge does not, however, give us a number or even a range of numbers to evaluate. …

We know that the costs of the 2010 Kalamazoo dilbit spill are approaching $1.4 billion. A draft report dated July 16, 2018 from multiple organizations led by Michigan Technological University estimated that the costs of a worst-case oil spill from Enbridge’s light crude Line 5 pipelines under the Straits of Mackinac would be $1.868 billion.  If these reflect the numbers that would follow a worst-case spill along the new Line 3 route, then Enbridge’s claims that they are now and always will be more than able to cover those potential costs are not credible.

Enbridge Uses Unrealistic Disaster Response Times

According to Friends of the Headwaters response to the PUC:

Enbridge’s [estimated spill size] … will almost certainly be too low. The reason is that Enbridge assumes that its active leak detection and response controls are going to work, estimating that the maximum amount of time between a rupture and valves being closed will be 13 minutes. That is far too optimistic an assumption. It was 17 hours, not 13 minutes, between the rupture and closing off the pipeline in [Enbrdige’s] 2010 Kalamazoo spill. Nor is Enbridge’s assumption consistent with analogous federal requirements for worst-case planning. …

Enbridge’s “historic discharge data” from Kalamazoo certainly does not support a maximum shutdown response time of 13 minutes, nor does Enbridge’s “new and improved” leak detection and response technology—Computational Pipeline Monitoring (CPM) and Supervisory Control and Data Acquisition (SCADA)—guarantee that shutdown response time will be so prompt. The fact is that leak detection technology does not always work.

Enbridge Has Not Yet Disclosed How its Will Model a Worst-Case Spill

According to Friends of the Headwaters response to the PUC:

The third problem is that most of the information needed to estimate the cost of a worst-case spill scenario is not disclosed, and Enbridge has apparently given itself until October 31, 2018 to provide that information. For example, the High Consequence Areas (HCAs) where Enbridge plans to calculate its estimates someday are not identified. …

There is also little indication that Enbridge plans to evaluate the full range of potential human health consequences.

Enbridge’s “Decommissioning Trust Fund” Language Offers Little Assurance

According to Friends of the Headwaters response to the PUC:

The PUC made it quite clear that one of the “benefits” of granting a Certificate of Need was the assurance that the costs of decommissioning both the old and new Lines 3 would not fall to Minnesota taxpayers. Instead of explaining how it would propose to accomplish that, however, Enbridge used its compliance filing to explain why it cannot or should not be done. …

The “decommissioning trust” should be set up the same way as hazardous and solid waste facilities set up trust funds to cover closure and post-closure costs, … The PUC should not countenance Enbridge’s attempt to wriggle out of this requirement.

Comment: It’s clear that Enbridge’s last-minute promises leave Enbridge a lot of wiggle room. These promises required more detail and more public scrutiny. The PUC failed the citizens of Minnesota by adopting them so hastily.

Click here for the full Friends of the Headwaters response.

Here are the two previous blogs in the series:

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