Commerce: Enbridge’s Oil Spill Insurance Inadequate for Line 3 and Mainline System

The flaws in the Minnesota Public Utilities Commission’s (PUC’s) decision to approve the new Enbridge Line 3 crude oil pipeline are becoming more and more apparent. The latest is the PUC buying into Enbridge’s last-minute promise to have adequate insurance to cover a major oil spill.

According to the Minnesota Department of Commerce, Enbridge’s oil spill insurance coverage is not only inadequate for a new Line 3, it appears inadequate for Enbridge’s entire mainline system through northern Minnesota.

The PUC made a rushed decision on Enbridge Line 3. It allowed Enbridge to make last-minute changes to its proposal, including a promise to have adequate insurance coverage to clean up a major oil spill.

The PUC allowed Enbridge to add these new promises after the public hearing record officially closed. The PUC accepted draft promises without giving regulatory agencies or the public time to comment. The PUC trusted Enbridge to fill in the details around its promises after it voted to approve the project.

Well, it turns out to have been a reckless decision for Minnesota’s environmental protection, as the Minnesota Department of Commerce’s most recent filing with the PUC shows:

The Department concludes that Enbridge’s current GL [General Liability] insurance coverage applicable to the Enbridge U.S. Mainline System and, potentially, a new Line 3, include significant exclusions for insurance coverage related to damages caused by a crude oil spill. Enbridge’s current policies with the exclusions will not comply with the terms and conditions in the Department’s insurance recommendations. Therefore, the policies will not meet the CN [Certificate of Need] conditions required by the Commission in its oral decision on June 28 as to the proposed Project.
Comment: This is an important new development and raises major questions outside of Line 3. Commerce is saying that not only is Enbridge’s insurance inadequate to cover a major spill from a new Line 3, but it suggests that the oil spill insurance coverage for Enbridge’s entire mainline system through Minnesota is inadequate. The PUC needs to address this question immediately.

Enbridge Plays Insurance Hide and Seek

Rose Whipple, one of the Youth Climate Intervenors, spoke against Line 3 at the May Block (Line 3) Party at the PUC.

Enbridge filed its official insurance proposal July 16. According to the Department of Commerce, Enbridge’s plan failed to include critical information on its current general liability insurance coverage. Since Enbridge did not offer the information voluntarily, Commerce had to go through the legal motions to compel Enbridge to turn it over.

To recap: First, the PUC broke the rules and let Enbridge change its proposal at the last minute. Next, the PUC approved Line 3 assuming Enbridge would provide the details for its last-minute promises. Next, Enbridge omits key insurance information from its proposal. Next, and only after being pressed, does Enbridge provide its insurance information. And, finally, it turns out that Enbridge’s current policy has “significant exclusions for insurance coverage related to damages caused by a crude oil spill.” This is a huge red flag, raising legitimate concerns about Enbridge’s ability and commitment to clean up any future major oil spills in Minnesota.

Commerce’s Demands

The PUC needs to require Enbridge to make a series of changes in its insurance plan, Commerce says. Enbridge’s General Liability insurance policies should include “language that provides clear and unambiguous coverage for damages arising out of crude oil spills.” Policy terms “should not include language that would be impractical or impossible to implement.” Enbridge needs “to include tribes in Minnesota as additional insureds,” as the PUC required in its original order, Commerce wrote

Significantly, Commerce is sticking up for members of the public and other official intervenors who the PUC excluded from the debate on these insurance provisions. Commerce writes that the PUC should order that Line 3 construction should not start “until Enbridge has filed a revised insurance proposal, subject to review and comment by other parties … ” [Emphasis added.]

Comment: Enbridge was not forthcoming with its insurance coverage and failed to include tribes in its coverage as the PUC order required. Further, the Department of Commerce has concerns that Enbridge’s proposal fails to use “clear and unambiguous” language, and has elements that are “impractical or impossible to implement.” So here is the question to the PUC: “On what basis are you trusting Enbridge to live up to any of its promises?”

For more background, see earlier blogs:

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