The Wisconsin Supreme Court will soon rule on Enbridge v. Dane County. At the heart of the legal battle is whether Dane County can require Enbridge to carry environmental impairment liability insurance on a high-pressure pumping station that is being added to an existing Enbridge pipeline to move billions of gallons of tar sands oil through Dane County.
Many of the legal arguments on both sides of the case are derived from the risk management and insurance report on the proposed Enbridge pumping station that I provided to Dane County in April 2015. The root cause of much of the confusing testimony in this case is the result of using my report for things it was never intended to address and attributing research activities to me during the drafting process of the report that never happened. I will clarify some of the points of confusion below.
Within my report, I recommended that the conditional use permit (CUP) issued to Enbridge by Dane County to build and operate a pumping station should include requirements that Enbridge carry commercial general liability insurance and $25 million of environmental impairment liability insurance. Enbridge should also be required to verify that it carries this required insurance coverage over the operational life of the pumping station. Enbridge did not embrace these insurance requirements in the CUP and litigation ensued, eventually landing at the Wisconsin Supreme Court.
It is important to note that my report to Dane County was completed months before a new state law, Wis. Stat. 59.70 (25), was enacted in July 2015 to restrict a county’s ability to require additional insurance on an interstate pipeline company. My report was not updated or changed after the passage of that statute. Despite the obvious timing problem, my report is now being used to show in legal arguments that Enbridge meets the insurance requirements in the new statute. I have never evaluated the insurance policies of Enbridge to confirm compliance with Wis. Stat. 59.70 (25). Therefore, my report should not be used by anyone for this purpose. But it is commentary from my report that forms the basis of many of the arguments in this case.
As a clear point of reference, this is the actual state law regarding county-imposed insurance requirements on pipelines that triggered the litigation that is now before the Wisconsin Supreme Court:
Wis. Stat. 59.70 (25) INTERSTATE HAZARDOUS LIQUID PIPELINES. A county may not require an operator of an interstate hazardous liquid pipeline to obtain insurance if the pipeline operating company carries comprehensive general liability insurance coverage that includes coverage for sudden and accidental pollution liability.
To qualify for this exemption to the Dane County-required insurance, Enbridge must prove to someone with insurance knowledge and authority that:
1. Enbridge “carries comprehensive general liability insurance” and,
2. That the comprehensive general liability insurance policy provides specific coverage for "sudden and accidental pollution liability.”
To prepare my report in 2015, Enbridge provided me a cursory overview of their 2014 liability insurance, which was enough for me to make my insurance recommendations to the county.
Enbridge could easily prove to Dane County that the firm carries comprehensive general liability with sudden and accidental pollution liability insurance on the pumping station, if in fact it did have this coverage. But the company has chosen not to do so. As a reason for the refusal, Enbridge has claimed repeatedly that the insurance on the company is a trade secret. Some parts of insurance policies insuring a company may be a trade secret, but most parts of insurance policies are not trade secrets at all. The comprehensive general liability policy is a standard insurance industry policy form that has been sold by hundreds of different insurance companies to millions of customers. Tens of millions of comprehensive general liability policies have been purchased over the years. The type of general liability insurance prescribed in the Wisconsin statute is not a trade secret.
It is very easy for anyone to evaluate if a company carries a COMPREHENSIVE general liability insurance policy or the more common policy form, a COMMERCIAL general liability insurance policy. Special expertise is not required. In bold print on the top of the first page the insurance policy it will show either comprehensive general liability insurance or commercial general liability policy as the title of the insurance policy form. Samples of these two distinct types of general liability insurance can be seen here. Evaluating the type of general liability insurance policy that Enbridge carries does not involve divulging trade secrets.
The acronym CGL has been used a lot by Enbridge in testimony to refer to the general liability insurance that Enbridge carries. CGL is insurance slang that is commonly used to describe the two distinctly different types of general liability insurance shown above that share the same acronym. By using insurance slang instead of the actual name of the policy form, Enbridge camouflages in its testimony to the court the identity of the specific form of general liability insurance the company actually carries.
Only the comprehensive general liability policy form qualifies under Wis. Stat. 59.70 (25). Enbridge has provided testimony in court that the firm carries a commercial general liability policy. If that is accurate, then Enbridge clearly does not qualify for exemption from the Dane County imposed insurance requirements under Wis. Stat. 59.70 (25).
The second part of qualifying for the state exemption to county-imposed environmental insurance is to show that the comprehensive general liability insurance policy insuring the pumping station includes coverage for “sudden and accidental pollution liability.” A comprehensive general liability insurance policy under exclusion f automatically includes some coverage for losses caused by sudden and accidental pollution events, exactly as required under Wis. Stat. 59.70 (25). Therefore, if Enbridge carries the comprehensive general liability insurance policy as specifically prescribed in the statute, and nothing has been done within the insurance policy to eliminate coverage for the pumping station, Enbridge would clearly be exempted from the imposition of the additional insurance requirements in the Dane County conditional use permit.
The statue requires that the company “carries” the prescribed insurance, not that it had purchased a liability insurance policy five years ago. Therefore, the Enbridge insurance summary from 2014 policies that I reviewed for my report should be totally irrelevant in any discussion related to the exemptions created by Wis. Stat. 59.70 (25).
Commentary taken out of context in my report, to Dane County which keyed off the 2014 insurance coverage that Enbridge had purchased, forms the basis of the Enbridge argument before the Supreme Court that the firm qualifies for the exemption from county-imposed insurance requirements under Wis. Stat. 59.70 (25). Nothing in my report should relied upon to support that conclusion.
If Enbridge would simply prove that it has the specific type of liability insurance that meets the requirements in Wis. Stat. 59.70 (25), the matter before the Wisconsin Supreme Court in Enbridge v. Dane County resolves itself in a matter of minutes.
David J. Dybdahl is a chartered property and casualty underwriter and president of American Risk Management Resources Network, LLC, located in Middleton.
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