Enbridge reaches US$177M settlement with U.S. Government for 2010 pipeline spills

Enbridge Inc. has reached a US$177−million settlement with the U.S. government, including US$62 million in civil penalties, for two major pipeline spills in 2010.

Of that amount, US$61 million is for the Line 6B pipeline rupture in Michigan that sent more than 3.19−million litres of crude into the Kalamazoo River and a tributary creek, resulting in one of the costliest onshore oil spills in U.S. history.

The U.S. Justice Department said the pipeline leak wasn’t detected for at least 17 hours despite triggering numerous alarms in Enbridge’s control room, with the resulting oil slick travelling 56 kilometres downstream before it was contained.

Enbridge (TSX:ENB) has estimated cleanup costs to be about US$1.2 billion, including more than $551 million on response personnel and equipment and $227 million on environmental consultants.

In the settlement between Enbridge and the U.S. Department of Justice and the U.S. Environmental Protection Agency, the company has also agreed to pay US$1 million in penalties for a pipeline rupture two months later in Illinois that sent at least 1.02−million litres of oil into tributaries of the Des Plaines River.

In addition, the settlement includes a commitment for Enbridge to spend US$110 million on measures to prevent spills and improve operations across more than 3,200 kilometres of its pipeline system in the Great Lakes region.

"This agreement puts in place advanced leak detection and monitoring requirements to make sure a disaster like this one doesn’t happen again," said Cynthia Giles, assistant administrator at the EPA’s enforcement branch, in a statement.

Enbridge chief executive Al Monaco said in a statement that the company has made improvements to how it operates.

"The learnings from our experience have made us a better company and the way we think about safety has changed," said Monaco.

"Over the past six years, we’ve intensified our focus on the safety and integrity of our systems enterprise−wide and we’ve invested significantly in our people, processes, equipment and technology."

Enbridge said the settlement also requires the company to replace the entire 459 kilometres of the Line 6B pipeline, which it completed in 2014.

Last year, Enbridge reached a settlement with the State of Michigan that included US$75 million on further river upgrades on top of the spill cleanup, and in 2014 the company reached a US$6.8 million settlement with landowners on a class−action lawsuit.