Enbridge v. Dane County

Supreme Court will begin hearing arguments over pipeline next week

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On a July afternoon, in the waning days of Wisconsin’s 2015 budget session, the Legislature’s Joint Finance Committee passed Motion 999 — a last-minute amendment containing 67 miscellaneous items. There were no listed sponsors, and there was no debate.

“The anonymous nature of even the sponsor of the bill is something that really does fly in the face of democratic accountability,” says UW-Madison political science professor David Canon. Introducing a Motion 999 at the end of the budget process has since become a common way for Wisconsin lawmakers to avoid public scrutiny. “It leads to laws getting passed that don’t have any kind of public vetting.”

Buried on page 18 of the 2015 motion was a very specific two-sentence measure about pipeline insurance.

The amendment, now known as Act 55, prohibits any Wisconsin town or county from “imposing insurance requirements on an operator of an interstate hazardous liquid pipeline if the pipeline operating company carries comprehensive general liability insurance coverage that includes coverage for sudden and accidental pollution liability.”

There is no record of who wrote the measure.

“It’s not required to have any author identified. It’s not required to have any hearing on the issue, and it’s not required to have any separate vote on the amendment,” says Peter Anderson, risk management subcommittee chair of the tar sands campaign for the 350 Madison Climate Action Team.

The amendment was introduced just 14 days before Enbridge Energy Company was set to appeal a conditional use permit approved by the Dane County Zoning Committee. The permit required the company to carry an additional $25 million in pollution insurance in order to operate its new Waterloo pump station near the town of Medina.

“A 999 amendment appears out of nowhere,” Anderson notes. “Two months after the conditional-use permit passed. The company denies any role in it.”

But because the Legislature used out-of-date language, Dane County continues to insist the company must get extra insurance. Enbridge sued and the case will be heard by the state Supreme Court starting March 26.

Eleven years ago, crude oil from the Alberta Tar Sands first made its way into Dane County.

That’s when Enbridge completed construction of Line 61, a pipeline capable of pushing 400,000 barrels of oil a day from Superior to Illinois. The line cuts through eastern Dane County, with the Waterloo pump station just over the Jefferson County line.

Now the company is looking to triple capacity to 1.2 million barrels a day along the route. “They put pump stations in for this very gooey stuff, to move it through the same pipe faster,” explains Anderson.

Enbridge completed its new Waterloo station in 2015. The company just needed a conditional use permit from Dane County’s Zoning & Land Regulation Committee to use it.

350 Madison advised the committee to require Enbridge to purchase additional insurance to help protect nearby landowners from spills. Just five years earlier, an Enbridge pipeline in Michigan had ruptured, pouring 1 million gallons of tar sands oil into the Kalamazoo River. It was the largest and most expensive inland oil pipeline spill in U.S. history, with cleanup costs surpassing $1 billion.

“With something like this that crosses state lines, you don’t have the legal authority to say no,” says Anderson. “We can say, ‘When things go wrong, we want to protect ourselves.’”

The county hired insurance consultant David Dybdahl, president of American Risk Management Resources Network LLC in Middleton, to help determine an appropriate insurance requirement.

“What I recommended to Dane County was the purchase of true environmental impairment liability insurance, EIL insurance,” Dybdahl says. “It covers claims arising from pollution release. That’s what it’s for.”

The county followed the recommendation, requiring Enbridge to purchase $25 million in EIL insurance to get its conditional use permit for the new, more powerful Waterloo station.

And that’s when the state Legislature passed its anonymous budget amendment.

“Why is that part of the budget?” Dybdahl asks. “I’m sure there’s somebody in the Capitol who knows exactly who slipped that in at the midnight hour. It would be interesting for them to raise their hand.”

Anderson points out that weakened campaign finance laws in Wisconsin make it hard to tell if a campaign contribution from Enbridge or an associated company led to the last-minute motion.

“All the disclosures that would normally have been made in the past to show these kinds of pathways are now able to be hidden,” he says.

But if the Legislature was aiming to help Enbridge expand its pipeline through Dane County, it did a careless job, suggests Anderson.

The amendment stated that a county can’t impose heftier insurance requirements on companies that have general liability insurance with “sudden and accidental” coverage.

But sudden and accidental coverage doesn’t really exist anymore, says Dybdahl, noting that it’s been replaced by more restrictive “time-limited” coverage.

Dybdahl’s not surprised the term “sudden and accidental” made it into Act 55. “That’s what Enbridge said they had in its annual statement. So that was public,” he says. “They said they had sudden and accidental coverage as part of the general liability insurance policy.”

The term “sudden and accidental” is often used in a generic way to refer to pollution coverage, Dybdahl says.

Wisconsin’s budget law suddenly thrust that specific type of insurance into the spotlight.

“It only became important because Wisconsin passed a law that said, ‘If you have sudden and accidental insurance, you don’t have to provide other environmental insurance to a subdivision of the state,’” he says. “The specific law in Wisconsin is referring to a type of insurance that has not been readily available since 1986.”

Enbridge claims it does indeed have sudden and accidental coverage.

“Enbridge carries more than $900 million in general liability insurance, which includes sudden and accidental pollution liability,” company spokesperson Jennifer Smith writes in an email.

But the company has yet to show its policy to the county’s Zoning & Land Regulation Committee. Because no proof of compliance with Act 55 was provided to the committee, Dane County denied the permit, which prompted Enbridge to sue.

“The company waves its hands in the air and says, ‘Oh, we have it, trust us judge,’ never producing the actual insurance policy,” Anderson says. “You have to think that if they had sudden and accidental, they would have produced it. It would have been so much simpler.”

Dybdahl adds that Enbridge should be required to show that its policy meets the conditions of Act 55 every year because policies change each time they’re renewed.

“What was going on in 2015 is pretty irrelevant to what’s going on in 2019. Those policies have changed three times,” he says. “I don’t know what they have today. And no one does. They say it’s a trade secret. They do not want to divulge what they have.”

In May 2018, the 4th Circuit Court of Appeals ruled that Enbridge would have to show proof that it meets insurance requirements to trigger an exemption under Act 55. The company then petitioned the state Supreme Court to take the case. The high court agreed and oral arguments are scheduled to begin March 26. Anderson fears the conservative majority will rule in Enbridge’s favor without ever compelling the company to provide its policy.

“This case stinks to high heaven,” he says. “We’re going to lose unless there’s enough coverage of what’s going on in the back room.”

In addition to the case brought by Enbridge, 350 Madison helped seven landowners near Waterloo station file suit against Enbridge over the permit. They’re being represented pro bono by Tom Burney from Illinois and Patricia Hammel from Madison, who also represented people arrested at Standing Rock. The landowners’ case has been consolidated with the Enbridge v. Dane County case.

“The landowners are saying [Enbridge] should obey the conditional use permit,” Anderson says. “The county has the right and the obligation to impose whatever conditions it sees fit that are reasonable and necessary to protect the landowners.”

Now 350 Madison is raising public awareness about the case.

“Our only hope is if there’s enough public attention and pressure,” Anderson says. “Unless the public becomes very engaged, I would be very pessimistic.”