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Dire Straits – Crude Oil under the Great Lakes – what will the Courts do about a 61+ year old pipeline?

2 Oct 2015

pipelineEnbridge (the operator of the pipeline that leaked into the Kalamazoo River in 2010) has been assuring the State that there is no reason to worry about its pipelines under the Straights of Mackinac.  A 2014 University of Michigan report concluded that because of mixed currents, within 20 days of a spill from one of the two pipelines, oil would cover a roughly 50 mile stretch between Beaver Island in Lake Michigan to the West and as far Southeast as Rogers City in Lake Huron.  This news catalyzed an effort by the State to review its 62 year old agreement allowing the two pipelines which reportedly carry some 23 million gallons of oil under the Straits of Mackinac each day.

In June a state panel issued a 64-page Michigan Petroleum Pipeline Task Force Report which expressed unease with Enbridge’s assertion it could use the pipelines forever.  The report concluded that the Task Force had “inadequate information at this time to fully evaluate the risks.”   The Task Force recommended independent studies of the risks, alternatives for the safe transport of oil, and an accounting of the costs of responding to a spill from Enbridge Line 5 (the pipelines that flow under the Straits.

It seems as if Michigan’s regulators are not so willing to take Enbridge at its word.  The Attorney General has begun asking Enbridge for documentation and re-requesting when he does not get everything he asked for.  Enbridge appears to have jumped at the change to sign an agreement not to pump heavy crude (the problem in the 2010 spill) through the Straits without giving the State 180 days notice. This cost them nothing as they weren’t using the pipelines for heavy crude and had no plans to do so.  This gave the Task Force the chance to check the first item off its “to do list.”  Enbridge also rushed into place a “dress rehearsal” for a spill which made the front pages of the newspapers. Of course, this exercise was planned and Enbridge’s vendors themselves admit that in some cases equipment would have to be brought from Detroit – a 5 hour car trip in good weather.

While the federal government largely controls pipeline operations, the State’s negotiators in the 1950’s did an OK job with the easement they drafted (see here). The easement has some shortcomings like a bond of $100,000 and a flat insurance amount of $1 Million and no reopeners for changed regulations but it also requires the pipeline to “eliminate any oil or substance which may escape” from a leak or break and to indemnify the State from all damages or losses and the insurance required must be acceptable to the State covering the pipeline’s liability.  Particularly in light of the recent Volkswagen environmental scandal, it seems as if Michigan is taking its environmental stewardship of the Great Lakes even more seriously than usual.  The problem is that unless there is some evidence of a breach of the easement’s standards (as has been alleged regarding the spacing of the pipeline supports) or an imminent threat of a release, there isn’t much that State regulators can do.

While the easement gives the State some say over what Enbridge does, ultimately,  Michigan and federal law will  apply.  As noted by the Task Force, Michigan law gives the State a lot of power after there’s been a spill from a pipeline but not nearly as much over a threatened spill.  The law allows the State to step up and deal with a “threat of release” but there are precious few cases explaining what that means.  When dealing with a “threat” – even one with consequences as potentially huge as a release into the Straits of Mackinac, the Courts have demanded  quite a bit before granting any sort of injunctive relief.  It’s fair to say that unless the pipeline actually begins to leak, there is almost nothing the Courts will do under Michigan law except to hold Enbridge to the somewhat vague terms of a 60+ year old easement.

 

 

What I did on my summer vacation – Michigan’s water heritage

18 Sep 2015

eagleThis summer, Michigan’s Office of the Great Lakes (OGL) released its draft Water Strategy for the State of Michigan – and has been holding review sessions throughout the Summer to discuss it.  The Strategy discusses a number of ideas and sets goals including: protecting and restoring aquatic ecosystems, ensuring clean and safe waters, supporting water-based recreation, promoting water-based economies and investing in water infrastructure.

While there are many worthwhile goals and ideas, today, I’m going to focus on the goal of supporting water-based recreation.  Michigan is a water paradise with more boats than just about any other state, the longest freshwater coastline in the Country, nice beaches (see here) and you’re never more than 6 miles from a Great Lake, an inland lake or a river or stream.

As the summer drew to a close,my family spent a weekend in the quad cities area of Michigan and we spent a morning at the Shiawassee National Wildlife Refuge.  The Refuge contains more than 9,800 acres of marsh, bottomland hardwood forest, and grasslands.  It’s known locally as the Shiawassee Flats and includes a number of rivers which flow into the Shiawassee River which meets the Tittabawassee River to form the Saginaw River.

We spent our morning with Captain Wil Hufton of Johnny Panther Quests.  He runs an “eco-tour” business and took us up and down the Refuge and it was a lot of fun and very interesting. We saw hawks, egrets, herons and many other birds. The highlights were definitely seeing bald eagles in the wild as well as deer running along the river bank. Wil told us about the history of the area from the logging days through Michigan’s industrial era all the way to today. He educated us about changes in the river system and the challenges the system faces and has overcome.

Jon Allan, the  Director of the OGL, has spoken a lot about getting back in touch with our aquatic roots.  Now, I can see what he’s talking about.  I know my family enjoyed our eco-tour t and I would highly recommend taking a Johnny Panther eco-tour if you have plans to be in the Saginaw area some early morning or late evening.

 

What will be the top stories of 2015?

23 Jan 2015

edit_calendar_ssk_47433454Happy new year!  I know it’s almost February but as this is my first blog post of the year, I thought (particularly after hearing the State of the Union and the State of the State speeches)  I’d predict the big stories of 2015 in no particular order:

  • Wetland Rules – the EPA and the Army Corps of Engineers finally proposed rules in 2014  to address the fallout of the Rapanos case.  The proposal was met with a firestorm of disapproval, particularly from the farming world.  Will they ever finalize them?
  • Brownfield TIF Legislation – after all that work last year, will the Legislature take up streamlining this program and expanding it to allow Michigan to be even more competitive in redeveloping brownfields?
  • EPA Greenhouse Gas Rules vs. Congress – in September, 2013, EPA issued a proposal for carbon pollution from new power plants; in June  2014, EPA issued a proposal to cut carbon pollution from existing power plants – the GOP and coal and oil interests in Congress have fought this for some time.  Will the rules be adopted and enforced?  Will there be enough time for electricity generators to get alternative plans in place before being forced to shutter their oldest, least efficient and most polluting plants?
  • Keystone Pipeline – President Obama and Congress have been locked in a politically charged dispute over the Keystone XL pipeline for almost 3 years now – he seemed to indicate in the State of the Union that he’d veto legislation – will he?
  • Energy Policy – Governor Snyder has pushed for an energy policy, legislation is expected this year and the Governor recently mentioned an intention to develop a new energy agency that would make Michigan more competitive for business.  What that will entail in light of the likely changes due to federal regulations will be interesting to see – will Michigan upgrade or discard its renewable portfolio standard? Can Michigan reduce electrical cost while improving both reliability and environmental performance?
  • Water Policy – the Governor’s long-awaited great lakes policy is expected this year.
  • Pipelines – in addition to the Keystone pipeline, there has been a lot of interest in pipelines in, under and around the Great Lakes – could there be federal and state changes there?
  • Detroit’s Water Authority – it is supposed to morph into a regional authority – as I said previously, the easy part was getting to the agreement last year – will the hard work succeed or will it fail, causing major shockwaves for roughly half of the State’s population?

Water, water … recycling?

9 Dec 2014

6_weekWe here in Detroit  had far more rainfall this past summer than we usually get and between the long, cold winter and all the rain, our lake levels are nearing their normal levels.  Meanwhile, in the southwest, drought conditions continue to grow.  So much so that there’s a flurry of deeper well drilling in California. In Texas, some communities are installing mega-treatment and cycling water from their wastewater treatment plant back to their drinking water systems, under a trial permit.  San Diego’s Sea World announced it was using treated saltwater in its toilets.

I’ve blogged about so-called “toilet-to-tap” before.  At that point, it was more on the model of Orange County’s program – where treated water was discharged back into an aquifer from which drinking water was taken.  That program is a way of speeding up the water cycle we all learned about in elementary school.  Some call it “showers to flowers” and it is being expanded.  In Texas, it looks like they are taking a more direct approach.

At least one gentleman I know has decried this as dangerous due to the possibility of industrial and other contaminants finding their way into the public’s drinking water.  And, he’s right – there is a risk – but, as we have seen recently, there are risks to taking drinking water from a lake or river  which receive runoff and NPDES discharges.  Virtually all the water we see at the tap has been through a person’s body or has been impacted by some industrial or farming operation – it’s only a question of how much natural and professional treatment it receives prior to discharge, how long ago, how much dilution occurs and how much treatment before it’s put back into the drinking system.

The World Economic Forum has identified water as a key issue for the future.  There simply isn’t much freshwater on the planet as this video shows. As the video shows, some 80% of our water gets used for power generation and farming.  How we protect and conserve and, in some cases, recycle, this resource may be the story of the next 50 years.

Free Riders, the United Nations, “Affordable” Water and the Daily Show

18 Nov 2014

waterEt tu, Jon Stewart?  I was dismayed to read of the United Nations’ visit and evaluation of Detroit’s recent, well publicized water shut-off initiative.  I suspect that it’s a waste of time; interesting, but a waste.   First of all, the federal bankruptcy judge supervising the Detroit Bankruptcy refused to rule against the City on its now-revised shut-off program.  I am not certain what authority the UN has in Detroit (I suspect none), it is possible that the UN could assert that the United States has violated some treaty.  It is interesting that the UN human rights declaration does not discuss water.  A commentary to that declaration does state that  “the human right to water entitles everyone to sufficient, safe, acceptable, physically accessible and affordable water for personal and domestic uses“ and notes that it can be a violation when arbitrary or unjustified disconnections occur or when there are discriminatory or unaffordable increases in water tariffs.

that the shut-offs fell disproportionately on the poor while ignoring those businesses with the ability to pay seems backward and should have been the protesters’ focus

It is the word “affordable” that is crucial here.  The UN documents do not state that government provided water must be free.  In fact, as I noted in my earlier blog post and as the New York times noted previously, not letting market forces set water prices can lead to, in some cases, dramatically bad outcomes.  Water in Detroit cannot be provided for free without a dramatic shift in how we pay for municipal services (i.e., raising taxes).  At present, a significant segment of the population has been taking water for free and leaving the rest of us to pay for it.  This is a classic “free rider” problem and it has led to exactly the sorts of problems that economists predict – an inability to provide the good (in this case water and sewer service) at a reasonable cost.  The bottom line, getting the water to drinkable state (see this video which estimates that it takes $9 Million/year) isn’t free nor is the cost of maintaining the delivery system. So, if we want to have a world class system (vs this sort of jury-rigging), we need to find a way to pay for it.

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Michigan Pipelines Under Review

29 Oct 2014

pipeline

Spills from pipelines were very newsy over the last couple of years.  There was the Kalamzoo River oil spill and a number elsewhere.  As with most things, eventually the public and news media tire of it and move on to something else.  A recent Indiana spill into Lake Michigan barely made any news.  Interestingly, this summer, the State of Michigan created a Michigan Petroleum Pipeline Task Force to review issues relating to pipelines transporting petroleum products around the State.  Despite federal jurisdiction by the  federal Pipeline and Hazardous Materials Safety Administration, the Task Force is looking at issues including:

  • Michigan’s emergency management preparedness for spills,
  • Coordination of permitting issues for pipeline upgrades and replacement, and
  • The creation of a state website to serve as an information clearinghouse for residents who have questions or concerns about pipelines.

The Task Force’s members are Co-Chairs: Dan Wyant, Michigan Department of Environmental Quality and Bill Schuette, Michigan Attorney General, and John Quackenbush,  Michigan Public Service Commission, Keith Creagh, Michigan Department of Natural Resources, Jon Allan, DEQ’s Office of the Great Lakes, Kirk Steudle, Michigan Department of Transportation and Col. Kriste Kibbey Etue, Michigan State Police.

As Michigan is looking at pipeline risks and preparedness, so should you.

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Lake Erie – so is it Ohio’s fault?

22 Aug 2014

t1_11246_1533_LakeErie_143_250mThe recent shutdown of Toledo’s water system due to an algal toxin in the water caught everyone’s attention.  Our friends at Dragun note that the Toledo water problem was triggered by some odd weather, but the algal source problem remains out there.   The MDEQ announced this month a five point plan to protect the lake: (more…)