Enbridge agrees to $177M settlement for 2010 oil pipeline spills

Canadian oil pipeline company Enbridge agreed to a $177 million settlement with the federal government Wednesday to resolve claims from two major oil spills six years ago in Michigan and Illinois.

The settlement was announced by the United States Environmental Protection Agency and Department of Justice. It calls for Enbridge to spend at least $110 million to prevent spills and improve operations across nearly 2,000 miles of its pipeline system in the Great Lakes region.

It also requires the company to pay $62 million in civil penalties for Clean Water Act violations related to the two spills, primarily for dumping more than 20,000 barrels of oil in Michigan's Kalamazoo River in 2010.

The agreement also requires Enbridge to replace its aging Line 3, which carries oil from Alberta through northern Minnesota. Enbridge first applied to the state Public Utilities Commission to replace the pipeline in early 2015

"We are hopeful that the settlement will instill a new sense of urgency at all relevant levels of Minnesota government, from the Governor's office to the agencies to the PUC," said Enbridge spokesperson Shannon Gustafson.

Line 3 was built in the 1960s to transport 760,000 barrels of heavy crude a day from the Alberta oil sands region. Now Enbridge only moves 390,000 barrels per day through the line. By replacing the aging pipe, the company plans to restore the line's original capacity.

But Kathryn Hoffman, an attorney with the Minnesota Center for Environmental Advocacy, said she's concerned that Enbridge could be using the settlement to try to limit the authority of Minnesota's Public Utilities Commission.

"Our concern is that Enbridge will try to hurry the line along, or use the settlement agreement to argue that the PUC is obligated to permit a replacement," she said.

The state is in the early stages of preparing an Environmental Impact Statement for both Line 3 and the Sandpiper pipeline, which Enbridge has proposed to carry 225,000 barrels of oil per day from the Bakken region of North Dakota to Clearbrook, Minn. From there the line would carry 375,000 barrels per day to the company's hub in Superior, Wis.

Together, the two projects would cost over $5 billion to build, generate millions in tax revenue for local governments along the routes, and create thousands of construction jobs.

Enbridge hopes to have the lines in service by early 2019.

But the company's preferred route for the pipelines crosses the headwaters of the Mississippi River and other sensitive lakes and streams. Environmental groups and tribes have proposed alternate corridors that skirt farther to the west and south.

Critics worry that a spill similar to what happened in Michigan, which polluted a 40-mile stretch of the Kalamazoo River, could cause significant damage to wild rice habitat and other high-quality waterways.

Wednesday's settlement is intended to make such a spill less likely. "This agreement puts in place advanced leak detection and monitoring requirements to make sure such a disaster like this one doesn't happen again," said EPA Assistant Administrator Cynthia Giles.

Enbridge's Gustafson said the company has already put in place many of the changes the settlement calls for. "Enbridge has made foundational changes in our operations to make us a safer and better company since the incident in 2010," she said.

But some environmental groups claim the settlement will not deter future negligence.

"A $62 million penalty and promises to maintain pipelines as a penalty for the worst inland oil disaster in U.S. history is woefully insufficient and shows that Congress and the Obama administration must work together to strengthen penalties," said National Wildlife Federation President Collin O'Mara.