2017-06-29 / Front Page

State Terminates Its Contract on Line 5 Analysis

It Is Necessary, ‘Not a Stall Tactic,’ Says Local Rep Shepler
By Wesley Maurer, Jr.

The state has terminated its contract for a Line 5 pipeline risk analysis, citing a conflict of interest with an employee of the contractor, just days before a draft report was to be delivered. A second report, to identify oil transport alternative to Line 5, which is being prepared by another company, is on schedule to be delivered to the state by the end of this month and posted online. Public feedback sessions are scheduled in July, including one in St. Ignace Tuesday, July 25.

The terminated contract was with Det Norske Veritas, Inc. (DNV-GL), hired last July to assess the risks to the Great Lakes posed by the pipeline, which has the capacity to carry 22,680,000 gallons per day of crude oil and natural gas liquids through two 20-inch pipes 250-feet under the Straits of Mackinac. The state’s decision was made Wednesday morning, June 21.

The terminated contract may prolong the state’s program to address environmental hazards posed by the underwater pipeline, but it won’t stall it.

“We’re in full evaluation mode,” said Andrea Bitely, the public information officer for Attorney General Bill Schuette, Wednesday, concerning efforts by the staff of five state agencies who comprise the project team led by Mr. Schuette to study the pipeline. They include the Michigan Agency for Energy, Department of Environmental Quality, Department of Natural Resources, and Michigan Public service Commission.

State officials say the terminated contract is not a political escape hatch designed to hide looming spill hazards from the 60-year-old pipeline, despite some challenges from citizen environmental groups who have been growing impatient with the state’s plodding assessment.

The conflict of interest was of a serious nature, Ms. Bitely said. The employee wasn’t just someone writing up the report, she noted, “he was doing the work.”

Chris Shepler, whose family owns Shepler’s Mackinac Island Ferry and a local representative on the Pipeline Safety Advisory Board, which consults the state agency task force, said the contract termination was necessary.

Nobody has seen the draft report, he said, so nobody is hiding anything in it.

“I agree with what the state is doing,” he told the Town Crier Wednesday, June 21. “This is not a stall tactic.”

DNV-GL notified the state project team of a possible conflict of interest and offered an internal resolution, but the state rejected it, Mr. Shepler said.

“I know the state attorney general takes conflict of interest very seriously,” he added. “I can assure you that there should be no skepticism. This could have got really ugly.”

Mr. Shepler said he is as concerned as anyone about the pipeline’s potential for contamination of the Straits of Mackinac.

“My stance is to get that thing out of the lake as fast as possible,” he said, “but as a businessman, I see potential problems with some of the alternatives. Enbridge will find another way to deliver that oil,” he added, and he wants to be assured that an alternative to the pipeline is environmentally safe and practical.

He also understands the frustration with the time the state is taking to analyze the situation, “but I know from the material I have seen it is something you can’t do over night. The state is doing a really good job of figuring this out.”

“My feeling is the days are numbered for the pipe,” he said. It is just a matter of time before they are going to have to move it.

He said he does not know if the Pipeline Safety Advisory Board will be convened to discuss the contract issue. The board just met June 12 in Petoskey.

GNV-GL and Dynamic Risk Assessment Systems, Inc. were hired by the state last July to conduct two studies of the pipeline, one, to be done by GNV-GL, to assess the economic and environmental risks posed by the pipelines submersion under the Straits of Mackinac and the other, to be done by Dynamic Risk Assessment Systems, to explore how else Enbridge could get its oil and natural gas from Alberta, Canada, to Sarnia, Ontario.

The conflict of interest did not surprise environmental groups who protested the state’s hiring of two companies who had done work for Enbridge in the past.

“Citizens groups have been sounding the alarm bells for months about the massive conflicts of interest between big oil companies and the departments that are charged with regulating them, and this cancellation raises more questions than it answers,” said David Holtz, who chairs the Sierra Club Michigan Chapter and is the campaign coordinator of the protest group Oil & Water Don’t Mix. “The State of Michigan owes all citizens a full account of how and why this study was allowed to continue, even in light of the massive conflicts of interest. Michiganders deserve answers.”

Liz Kirkwood, executive director of the environmental group For the Love of Water, reiterated a call for immediate shut down of Line 5.

“This study was tainted by huge conflicts of interest and a complete lack of transparency from the state, all with Line 5 continuing to pose a clear danger to our Great Lakes, our economy, and our way of life,” she said in a statement issued after the terminated contract with DNV-GL was announced.

Phil Bellfy, chairman of a state petition drive to shut down Line 5, called Keep Our Lakes Great, is threatening a lawsuit over the affair.

“From Day one, Enbridge had a representative on the committee and has known everything that is going on,” he said. “I don’t believe they ever had any intention of shutting down Line 5, regardless of what the risk analysis reported. This has been a dog and pony show since the beginning. It’s all a public relations stunt.”

He told the Town Crier he believes the report has been seen by state and pipeline officials and the termination of the contract is designed to hide the findings from the public.

“We have been waiting for this report, thinking that the state was going to do the right thing,” Mr. Bellfy said, expressing frustration over its demise. “I plan to file a suit with the Mackinac court forcing the DEQ to abide by the 1953 easement and shut down the pipeline.”

The state stresses that the DNVGL’s draft report has not been seen by anyone in Michigan and Mr. Shepler notes that nothing has been paid on the study.

Contract termination has been cited under a provision of breach of contract, and any obligation for payment will need to be studied further.

Nick Assendelft, public information officer for the Michigan Agency for Energy, speculated that there are some provisions in the contract that stipulate some payment, but said that will have to be worked out by the agencies and the contractor.

Enbridge is paying for both studies. The risk assessment study was proposed by DNV-GL to cost $756,000. The proposals for both studies can be found on The St. Ignace News Web site, www.stignacenews.com, under the Documents tab.

Enbridge, which owns the pipeline, issued its own media response to the contract development, with its communications representative, Ryan Duffy, saying the company supports the state’s actions to terminate the contract.

“Enbridge is disappointed to learn of these developments with one of the state’s independent contractors,” he said. “It is important this process is independent and without conflict.”

He added, “We, too, are investigating what may have happened in the contracting process.”

The Alternative Transportation Assessment

Dynamic Risk Assessment System’s draft report is proceeding and will be delivered to the state project team by the end of this month. Their draft alternative analysis will be posted on the Michigan Petroleum Pipeline website, www.mipetroleumpipelines.com, for public review and comment when it is received.

“Public discussion of the alternatives analysis will help inform next steps regarding the risk analysis on Line 5,” said Keith Creagh, director of the Michigan Department of Natural Resources, in a joint statement issued by the Michigan Petroleum Pipeline Task Force Wednesday, June 21, to announce the contract termination. “Fundamental to the state’s actions is a shared commitment to protecting our Great Lakes.”

Representatives from Dynamic Risk Assessment Systems will present their findings to the public on July 6, 2017, beginning at 5:00 p.m. at Holt High School, 5885 Holt Road. Later in July, the state will hold three public feedback sessions on the report, July 24 in the Lansing area and Traverse City and July 25 in St. Ignace.

Sensitive to the skepticism expected from public watchdog groups, Heidi Grether, director of the Michigan Department of Environmental Quality, said in the state task force announcement, “We took the initiative to terminate the contract based on our commitment to the complete integrity and transparency of this report. Ultimately the state will have to decide how to proceed with Line 5 and we can’t do that if there is any doubt regarding the nature of the information.”

Mr. Schuette, the attorney general, added, “The evaluations of Line 5 were supposed to be independent, not tainted by outside opinions or information, but that’s not what happened. Instead, our trust was violated and we now find ourselves without a key piece needed to fully evaluate the financial risks associated with the pipeline that runs through our Great Lakes, this is unacceptable. Terminating the contract is the only option we have to maintain the integrity of the risk analysis.”

Valerie Brader, executive director of the Michigan Agency for Energy, also stressed the conflict of interest issue.

“The State put strict rules in place that required both contractors to avoid any appearance of impropriety,” she said. “We are disappointed that those requirements were not followed by DNV-GL, as that rendered the work essentially unusable to us,” said. “That led to us making today’s decision to terminate the contract.”

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