Following Dane County, Wisconsin's vote to require Enbridge Corp. to take out $125 million in insurance against a possible spill for its proposed pipeline expansion of Line 61, how could community-based interception affect the future of pipeline projects nationwide? During today's OnPoint, Howard Learner, executive director of the Environmental Law & Policy Center, explains why he believes Dane County has the legal authority to require Enbridge to take out insurance. He also talks about how this case could tee up future community-based action.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Howard Learner, executive director of the Environmental Law & Policy Center. Howard, thank you for coming back.
Howard Learner: Good to join you.
Monica Trauzzi: So, Howard, Enbridge has proposed an expansion of Line 61. It's a pipeline that runs through Wisconsin and carries oil sands product. This has become a point of controversy in the Midwest. What exists currently and what is Enbridge seeking to do in its expansion?
Howard Learner: The Midwest is crisscrossed by pipelines, Enbridge and other companies, and those pipelines are moving oil across the region. Oil has to move, whether it's through trains, or trucks, or ships, or pipelines, and we need to make sure that it's being done more safely with appropriate and aggressive federal agency oversight, not self-regulation by the industry, and we need to make sure that the best technology is being used. What happened in Dane County is when the county looked at Enbridge's permit request the county thought that Enbridge's insurance was not sufficient in light of an accident.
Unfortunately, in Michigan there was a major pipeline spill, an Enbridge pipeline, back in 2010. It took a billion dollars to clean it up. There have been a lot of problems with that and Dane County said, "Let's make sure that Enbridge has what we think is the right amount of insurance."
Monica Trauzzi: So, Dane County was sort of seen as the last hurdle for Enbridge in getting this expansion through. So now the county has requested this $125 million in insurance against a possible spill. The big question is, does the county have the legal authority to do that?
Howard Learner: And we believe Dane County -- that's where Madison, the state capital, is located in Wisconsin. We believe they have the legal authority to do so. They're not regulating safety. What they're regulating is economics, and the purpose here is to make sure that if, unfortunately, there is a pipeline spill, there's adequate insurance so that Enbridge can pay the cost of cleaning it up. It's the polluter pays principle, and it's that any business should fully incorporate the economic risk of its activities. So, the insurance industry then will price its policy to Enbridge accordingly. If the insurance industry believes that Enbridge has very good performance, and there's not much likelihood of a spill, the insurance premiums will be lower. If the insurance people who do that assessment think there are concerns here it will be higher, but that's part of the economics that ought to go with Enbridge. It ought not to be put on the public, and that's what's Dane County's been concerned about.
Monica Trauzzi: Where do things go from here in terms of litigation?
Howard Learner: Well, first of all, Enbridge has a choice, which is to recognize that the county is requiring it to pay reasonable insurance given the track record of Enbridge in the Midwest, which is disturbing. We've had canaries in the coal mine. We've had canaries that have really been a problem in the coal mine. The Enbridge pipeline that burst on the Kalamazoo River area in Michigan in 2010 took more than three years to clean up, a billion dollars of cleanup costs, ecological damage, community damage. This is a real problem and the recent NTSB report said that PHMSA, the federal agency, had been leaving too much self-regulation to the industry, allowed Enbridge to do too much of its own thing, and that Enbridge didn't report the problem soon enough. Looking at that history, Dane County and other counties are saying, "Wait a minute. There's a risk here of a spill and we want to make sure that Enbridge is responsible, or the other pipeline companies are responsible, not the general public." That's part of the cost of doing business, to make sure that if there's any problem there's adequate insurance to cover it.
Monica Trauzzi: This is an important story because it demonstrates how community-based interception can make a difference.
Howard Learner: That's right.
Monica Trauzzi: Could this tee up what we see happening in other parts of the country when it comes to pipeline expansion?
Howard Learner: Absolutely. This isn't, don't build the pipeline. This is about, let's make sure fair costs are being allocated in the right way so that, whether it's a pipeline or whether it's a railroad, if there are costs to be cleaning up from a problem they're being absorbed, through insurance, by the company, they're not being dumped on the public. When we look at trains, we just saw the tremendous and horrific explosion of the trains, the oil tanker cars, by Galena, Illinois. Thankfully, that was in a fairly unpopulated area. We all are thankful that that didn't happen in a major city or a place like Chicago where there would be many people around. But what this is, counties and cities are stepping up. They're looking at a federal government, in terms of the regulatory agencies, that really do need to step up their game, become more aggressive, become more effective, and not just allow the pipeline companies to, in effect, self-regulate. The counties are saying, "We want to protect the people in our communities." That's traditional police powers of counties, and cities, and economic regulation to make sure that sufficient insurance coverage is available.
Monica Trauzzi: And you're not arguing against the pipeline expansion. I'm curious how Line 61 has contributed to Wisconsin's economy.
Howard Learner: When you talk about improving and existing pipeline, there's a certain number of jobs, construction jobs, of people doing the work, but as a practical matter there are not a lot of operator jobs. There aren't a lot of royalty payments or other things like that being paid out going forward. This is not a big economic engine. What this does is, it imposes a risk. It imposes the risk of a spill that, as we saw on the Kalamazoo River, can be extraordinarily costly, and that ought to be paid by Enbridge or the other pipeline company, not put over on the public.
Monica Trauzzi: How does this compare to what we're seeing on Keystone XL?
Howard Learner: Keystone is its own battle. It's its own set of issues, and there's been, obviously, enormous attention focused, pro and con, on the Keystone pipeline, but the reality is there are pipelines crisscrossing the Midwest, and the rest of America, that are carrying oil, and we need them to move oil. We're going to move oil in this country for a while, whether it's through trucks, or ships, or pipelines, or trains, but we need to make sure that the safety standards are better, that the federal oversight agencies are not just reviewing the paper records of the company, allowing them to self-regulate, but aggressively overseeing them for safety reasons. We need to make sure that the agencies have the money, the resources, for inspectors to do a good job of that, and we need to make sure that the most modern technologies are being used. We have, in the Midwest, some very old pipelines. For example, a 60-year-old pipeline that's underwater in the Straits of Mackinac, that connects Lake Michigan and Lake Huron, it's where the lower peninsula connects to the upper peninsula of Michigan, and the Straits of Mackinac would be a terrible place if there were to be a spill. That's a place where pipeline safety matters enormously. And we also need to make sure that economics point Enbridge and others in the directions of maximum safety and high performance.
Monica Trauzzi: All right. We'll end it there. This will be very interesting to watch ...
Howard Learner: It will be.
Monica Trauzzi: ... with potential litigation coming. Thank you for coming on the show.
Howard Learner: You're welcome.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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