[Senate Hearing 115-741]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 115-741

                  PIPELINE SAFETY IN THE GREAT LAKES:
                    INCIDENT PREVENTION AND RESPONSE
                   EFFORTS AT THE STRAITS OF MACKINAC

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION
                               __________

                            AUGUST 20, 2018
                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             
                             
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                Available online: http://www.govinfo.gov
                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
55-192 PDF                WASHINGTON : 2024   


       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                   JOHN THUNE, South Dakota, Chairman
ROGER WICKER, Mississippi            BILL NELSON, Florida, Ranking
ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
TED CRUZ, Texas                      AMY KLOBUCHAR, Minnesota
DEB FISCHER, Nebraska                RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas                  BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska                 EDWARD MARKEY, Massachusetts
DEAN HELLER, Nevada                  TOM UDALL, New Mexico
JAMES INHOFE, Oklahoma               GARY PETERS, Michigan
MIKE LEE, Utah                       TAMMY BALDWIN, Wisconsin
RON JOHNSON, Wisconsin               TAMMY DUCKWORTH, Illinois
SHELLEY MOORE CAPITO, West Virginia  MAGGIE HASSAN, New Hampshire
CORY GARDNER, Colorado               CATHERINE CORTEZ MASTO, Nevada
TODD YOUNG, Indiana                  JON TESTER, Montana
                       Nick Rossi, Staff Director
                 Adrian Arnakis, Deputy Staff Director
                    Jason Van Beek, General Counsel
                 Kim Lipsky, Democratic Staff Director
              Chris Day, Democratic Deputy Staff Director
                      Renae Black, Senior Counsel

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on August 20, 2018..................................     1
Statement of Senator Peters......................................     1
    Letter dated August 16, 2018 to Senator Gary Peters from June 
      Thaden, Secretary, Northern Michigan Environmental Action 
      Council....................................................     2
    Comments from Rick Kane, OP, CHMM, CPP, Director--Technical 
      Advisor, FLOW (For Love Of Water); Jim Carruthers, Mayor, 
      Traverse City; and Jim Olson, President FLOW (For Love of 
      Water).....................................................     3
    Report entitled, ``Sunken Hazard: Aging Oil Pipelines Beneath 
      the Straits of Mackinac an Ever-Present Threat to the Great 
      Lakes'' by Jeff Alexander and Beth Wallace, National 
      Wildlife Federation........................................    13

                               Witnesses

Hon. Howard ``Skip'' Elliott, Administrator, Pipeline and 
  Hazardous Materials Safety Administration......................    32
    Prepared statement...........................................    33
Rear Admiral Joanna M. Nunan, Commander, U.S. Coast Guard Ninth 
  District.......................................................    40
    Prepared statement...........................................    41
Scott Lundgren, Chief, Emergency Response Division, Office of 
  Response and Restoration, National Ocean Service, National 
  Oceanic and Atmospheric Administration, U.S. Department of 
  Commerce.......................................................    44
    Prepared statement...........................................    46
David Bryson, Senior Vice President, Operations, Liquid 
  Pipelines, Enbridge............................................    64
    Prepared statement...........................................    66
Mike Shriberg, Ph.D., Great Lakes Regional Executive Director, 
  National Wildlife Federation...................................    69
    Prepared statement...........................................    71
Chris Hennessy, Construction Market Representative, Michigan 
  Laborers-Employers Cooperation & Education Trust...............   119
    Prepared statement...........................................   121
Larry J. Bell, President, Bell's Brewery, Inc....................   122
    Prepared statement...........................................   124
David Murk, Pipeline Manager, Midstream and Industry Operations, 
  American Petroleum Institute...................................   125
    Prepared statement...........................................   127

                                Appendix

Response to written questions submitted by Hon. Gary Peters to 
  David Bryson...................................................   143

 
                  PIPELINE SAFETY IN THE GREAT LAKES:
                    INCIDENT PREVENTION AND RESPONSE
                   EFFORTS AT THE STRAITS OF MACKINAC

                              ----------                              


                        MONDAY, AUGUST 20, 2018

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                 Traverse City, MI.
    The Committee met, pursuant to notice, at 10:09 a.m. at the 
Dennos Museum Center at Northwestern Michigan College, Milliken 
Auditorium, 1701 E. Front Street, Traverse City, Michigan, Hon. 
Gary Peters presiding.
    Present: Senator Peters [presiding].

            OPENING STATEMENT OF HON. GARY PETERS, 
                   U.S. SENATOR FROM MICHIGAN

    Senator Peters. Well, good morning, everyone, and welcome 
to this hearing. This is a special oversight hearing of the 
Senate Committee on Commerce, Science, and Transportation. 
Certainly I'm very happy to be here in Northern Michigan. I'm 
sure all of our witnesses and everyone here are enjoying a 
wonderful Northern Michigan day. There is no better place to be 
than there. And I hope that we have some great testimony and a 
great conversation. And I appreciate the attendance here today 
for this hearing.
    I would like to first off take a moment to thank the Dennos 
Museum for their gracious facilitation of this hearing, and I 
hope you all have an opportunity to tour some of the exhibits 
here afterwards after the hearing, not during the hearing, but 
after the hearing, it would be great to tour those exhibits.
    I also want to acknowledge the many comments and questions 
that have been submitted for the hearing record from the 
community. We'll keep the hearing record open for a few days 
following this hearing as well for anyone who would like to 
submit any other comments or questions. The questions will be 
submitted to the witnesses for answers. All that is being put 
forward will be part of the permanent record in the U.S. Senate 
on this very important topic.
    I had the opportunity to read through many of these last 
night, and I'm grateful for all of them. I heard from the 
Chippewa Ottawa Resource Authority, representing very diverse 
Tribes, including the Bay Mills Indian Community, Grand 
Traverse Band of Ottawa and Chippewa Indians, Little River Band 
of Ottawa Indians, Little Traverse Bay Bands of Odawa Indians, 
and Sault Ste. Marie Tribe of Chippewa Indians. Also I have 
comments from the International Union of Operating Engineers, 
Michigan Technological University, the Michigan League of 
Conservation Voters, the Sierra Club, For Love of Water, 
Michigan Environmental Council, Groundwork Center for Resilient 
Communities, Great Lakes Business Network, Michigan Pipeline 
Petroleum Task Force.
    [The information referred to follows:]

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                         Constituents Comments
         Rick Kane QEP,CHMM,CPP, Director--Technical Advisor, 
                        FLOW (For Love Of Water)
    I want to directly note a couple of issues about Line 5 as I will 
most-likely only be able to introduce myself, give you a face, 
hopefully on Saturday, but in the future you may want to discuss the 
following in more detail.
    I conduced a cursory alternatives review of the pipeline network a 
little over 2 years ago for FLOW and concluded that given 12 to 18 
months; the industry could adjust the pipeline network to easily meet 
priority needs. I believe this is even truer today, as other pipeline 
operators have made strategic moves to gain or protect business in the 
event that Line 5 is decommissioned. Many erroneous assumptions and 
media releases exist because the pro Line 5 advocates keep the focus on 
Line 5 only and not the adaptability of the pipeline system without 
artificial restraints on pipeline locations, state boundaries, 
ownership and outlets to export markets. The alternatives assessment 
conducted by Dynamic Risk consultants is fundamentally flawed in the 
assumptions used to build their scenarios because they limited the 
scope of the system definition.
    The human safety risk outside of the Straits has been totally 
missed by also keeping the focus of studies only on the Straits. Line 5 
transports natural gas liquids (NGLs) approximately 20 percent to 30 
percent of the time. The main component of the NGLs is propane. The 
Dynamic Risk study calculated a scenario to determine if an NGL release 
and resultant vapor cloud explosion in the Straits would impact the 
Mackinac Bridge. Fortunately, the calculations showed that the flame 
envelope would fall just short of the Bridge. But, a certified 
organization needs to calculate potential human impacts along the whole 
route of Line 5. The pipeline is constructed to much lower standards 
above and below the Straits, is not subject to the same level of 
integrity management and has experienced numerous leaks and repairs. An 
NGL release would far surpass a submerged underwater release in 
distance. Citizens along the route, emergency responders and regulators 
should know what they could be dealing with in Ironwood, Manistique, 
Engadine, Naubinway, St. Ignace, Mackinac City, Indian River, West 
Branch, Linwood, Bay City, Vassar and especially Marysville Michigan. 
Evacuation and impact distances could be more than 1 mile with extended 
burn times due to the distance between shutoff valves and operating 
pressures. Experts need to do the calculations for public transparency.
    The NGL transportation risk is currently the top issue the with 
proposed Mariner 2 East pipeline project. This is the same concern with 
Line 5; however, Line 5 is 63 years old, has already experienced leaks 
and is built to lower standards outside of the Straits. See attached 
article.
    It is easy to forecast that if a ``solution'' (tunnel?) is granted 
for the Straits crossing, the next step which is not being discussed 
will be to incrementally replace sections of Line 5 above and below the 
Straits. This approached is very problematic as affected citizens are 
too often not informed and regulators allow the pipeline operators to 
fly ``under-the-radar''. This approach will be much easier if the 
permitting requirements for pipelines are eased according the second 
attached article.
    As background, I am ``retired'' but actually volunteering on a 
number of environmental projects. Prior to retirement I was the 
Director of Environment, Transportation Safety and Security for a 
global chemical company. I also served as the Chairman of the Chemical 
Sector Coordinating Council, the industry partner with the Department 
of Homeland Security and directly assisted in coordinating Federal 
response to several major hurricanes, disasters and cyber security 
incidents. I am currently a member of the EPA/USCG Area Committee.
                                 ______
                                 
                  Jim Carruthers, Mayor, Traverse City
The Honorable Gary Peters,

    I'm writing you as the Mayor of Traverse City and as a member of 
the Great Lakes and St. Lawrence Cities Initiative, a bi-national 
coalition of U.S. and Canadian mayors working to advance the protection 
and restoration of the Great Lakes and St. Lawrence River.
    The Great Lakes contain 20 percent of the world's fresh water and 
is a drinking water source for over 35 million people. One in every 
five jobs in Michigan are linked to the high quality of fresh water in 
our lakes. Tourism, our main economy in Traverse City and throughout 
Michigan, brings in billions of dollars in revenue. Agriculture, our 
fisheries industry, shipping and other industrial uses depend on a 
healthy and clean Great Lakes ecosystem. Many species of plants and 
animals, some of which are threatened or are endangered, make the Great 
Lakes their home. These are all reasons why I see the importance for 
protecting this most valuable natural resource, which should also be a 
top priority of our State and Federal representatives.
    The 65-year-old Line 5 that runs under the Straits of Mackinaw 
(which when built had a 40 year life expectancy) is a growing threat to 
water quality. A breach of this line would not only be a catastrophe to 
lakes Michigan and Huron, but also to Traverse City and the entire 
Great Lakes region. Our economy relies on our clean fresh water and if 
that were to change, life as we know it in Northern Michigan would also 
change, devastating what makes life here so special.
    Protecting our natural resources is one of the reasons I became 
involved in politics. Protecting the largest fresh water resource in 
the world is why I say involved and is why I'm writing you today. The 
Enbridge Line 5 pipeline under the Straits of Mackinaw is of great 
concern to many of us who rely on this fresh water resource. As a 
representative of the people of Traverse City, I'm writing to share 
with you my deepest concerns for not protecting our Great Lakes.
    Prevention and response efforts should have been dealt with years 
ago. It's time for a complete shout down of this line before disaster 
happens. Shutting down this line is important to our economy and I hope 
that it is important to you as our representative as well. Enbridge has 
other means to move oil and gas without putting our Great Lakes at 
risk.
    Please do the right thing and support shutting this line down. Your 
constituency supports this and so do many mayors and representatives 
from across the Great Lakes region. Line 5 must be shut down so as not 
to destroy life as we know it in Michigan.
                         Oil & Water Don't Mix
    The testimony Senator Peters and everyone should most focus on 
Monday is not what Enbridge says or any bland, dispassionate assurances 
from government officials, but what our eyes see and our minds know: 
every day Line 5 is in the Mackinac Straits is a day when Michigan's 
future can be drowned in a sea of oil. The only safe and reliable 
response to Line 5 is to shut it down.
                                 ______
                                 
              Jim Olson, President, FLOW For Love of Water
Dear Senator Peters (Gary),

    First, thank you for holding this community meeting. There are 
crucial issues and critical timing matters in Northern Michigan and 
around the state--most not surprisingly related to water. Members of 
FLOW For Love of Water's staff will attend. Unfortunately, I'm 
scheduled to meet with Michigan Citizens for Water Conservation on 
Saturday for it's annual meeting. As lead attorney in the 9-year case 
to 2009, and presently helping them address the Nestle water taking 
near Evart, Michigan, now under contested case petitions, I cannot miss 
the meeting. With your permission, I will send a letter offering 
thoughts about water and related issues, including Nestle, Flint, 
Detroit shut-offs, groundwater, algal blooms, and Line 5.
    Second, thank you for holding the Line 5 Senate Committee meeting 
here in Traverse City on Monday. I plan to attend and look forward to 
the discussion. Is important to keep separate the PHMSA and Emergency 
Response Planning matters under Federal law, and the larger questions 
concern crude oil transport in or under the Great Lakes and connecting 
waters. The rules are more stringent under state law, based on exercise 
of state sovereign control and ownership of state bottomlands and 
waters since admission to Union in 1837--equal footing doctrine--and 
the State's roll and duty under the public trust doctrine that allows 
licensing of some uses of bottomlands, but only if consistent with 
public trust standards under common law or the Great Lakes Submerged 
Lands Act. It is my view, that Federal law while addressing safety and 
response measures must first and foremost honor the state sovereignty, 
Federal navigational interests, and citizen legal rights and uses, as 
well as tribes, under the public trust doctrine and the applicable 
treaties with the tribes and their relationship with these waters. One 
way to do this is to make very clear that these state concerns and area 
of control are broader than the narrower safety or building code and 
inspection role of PHMSA and the assurance of emergency planning on its 
and the Coast Guard's part. To be sure, these are important in even to 
a devastating spill or release, a very real risk, but they do not 
address the broader risk, siting, alternative questions that fall 
within the jurisdiction of Michigan and other States.
                                 ______
                                 

                     Mariner East 2 Pipeline Risks

    Written by: Kirk Jalbert, Manager of Community-Based Research & 
 Engagement with technical assistance from Seth Kovnant / Published in 
                          FracTracker Alliance

    Dr. Kirk Jalbert has authored an analysis of the explosion risks of 
the Mariner East proposal of Sunoco Pipeline. His analysis of a 20 inch 
diameter pipeline transporting ethane would have a blast radius of 
1,171 feet. He estimated 105,419 people to live within the Mariner East 
2's thermal impact zone. The threat to these individuals could be a 
significant consideration as to eminent domain power and who would be 
the primary and paramount beneficiary of such a pipeline.
Mariner East 2: At-Risk Schools and Populations
    In September, the Pennsylvania Department of Environmental 
Protection (DEP) rejected a number of permits for wetland crossings and 
sedimentation control that were required for Sunoco Pipeline's proposed 
``Mariner East 2'' pipeline. According to Sunoco, the proposed Mariner 
East 2 is a $2.5 billion, 350-mile-long pipeline that would be one of 
the largest pipeline construction projects in Pennsylvania's history.
    If built, Mariner East 2 could transport up to 450,000 barrels 
(18,900,000 gallons) per day of propane, ethane, butane, and other 
liquefied hydrocarbons from the shale fields of western Pennsylvania to 
export terminals in Marcus Hook, located just outside Philadelphia. A 
second proposed pipeline, if constructed, could carry an additional 
250,000 barrels (10,500,000 gallons) per day of these same materials. 
Sunoco submitted revised permit applications to PADEP on Tuesday, 
December 6th.
    The industry often refers to ethane, propane and butane 
collectively as ``natural gas liquids.'' They are classified by the 
Federal government as ``hazardous, highly volatile liquids,'' but that 
terminology is also misleading. These materials, which have not been 
transported through densely populated southeast Pennsylvania 
previously, are liquid only at very high pressure or extremely cold 
temperatures. At the normal atmospheric conditions experienced outside 
the pipeline, these materials volatilize into gas which is colorless; 
odorless; an asphyxiation hazard; heavier than air; and extremely 
flammable of explosive. This gas can travel downhill and downwind for 
long distances while remaining combustible. It can collect (and remain 
for long periods of time) in low-lying areas; and things as ordinary as 
a cell phone, a doorbell or a light switch are capable of providing an 
ignition source.
    Many who have followed the proposed Mariner East 2 project note 
that, while much has been written about the likely environmental 
impacts, insufficient investigation has been conducted into safety 
risks to those who live, work and attend schools in the proposed 
pipeline's path. We address these risks in this article, and, in doing 
so, emphasize the importance of regulatory agencies allowing public 
comments on the project's resubmitted permit applications.
The Inherent Risks of Artificially Liquified Gas
    Resident of Pennsylvania do not need to look far for examples of 
how pipeline accidents pose serious risk. For instance, the 2015 
explosion of the Enterprise ATEX (Appalachia to Texas) pipeline near 
Follansbee, WV, provides a depiction of what a Mariner East 2 pipeline 
failure could look like. This 20-inch diameter pipeline carrying liquid 
ethane is similar in many ways to the proposed Mariner East 2. When it 
ruptured in rural West Virginia, close to the Pennsylvania border, it 
caused damage in an area that extended 2,000 feet--about \1/2\ square 
mile--from the place where the pipeline failed.
    In another recent instance, the Spectra Energy Texas Eastern 
methane natural gas pipeline ruptured in Salem, PA, this April as a 
result of corroded welding. The explosion, seen above (photo by PA NPR 
State Impact), completely destroyed a house 200ft. away. Another house, 
800ft. away, sustained major damage and its owner received 3rd degree 
burns. These incidents are not unique. FracTracker's recent analysis 
found that there have been 4,215 pipeline incidents nation-wide since 
2010, resulting in 100 reported fatalities, 470 injuries, and property 
damage exceeding $3.4 billion (``incident'' is an industry term meaning 
``a pipeline failure or inadvertent release of its contents.'' It does 
not necessarily connote ``a minor event'').
Calculating Immediate Ignition Impact Zones
    It is difficult to predict the blast radius for materials like 
ethane, propane and butane. Methane, while highly flammable or 
explosive, is lighter than air and so tends to disperse upon release 
into the atmosphere. Highly volatile liquids like ethane, propane and 
butane, on the other hand, tend to concentrate close to the ground and 
to spread laterally downwind. A large, dispersed vapor cloud of these 
materials may quickly spread great distances, even under very light 
wind conditions. A worst-case scenario would by highly variable since 
gas migration and dispersion is dependent on topography, leak 
characteristics, and atmospheric conditions. In this scenario, 
unignited gas would be allowed to migrate as an unignited vapor cloud 
for a couple miles before finding an ignition source that causes an 
explosion that encompasses the entire covered area tracing back to the 
leak source. Ordinary devices like light switches or cell phones can 
serve as an ignition source for the entire vapor cloud. One subject 
matter expert recently testified before a Municipal Zoning Hearing 
board that damage could be expected at a distance of three miles from 
the source of a large scale release.
    The Federal government's ``potential impact radius'' (PIR) formula, 
used for natural gas (methane) isn't directly applicable because of 
differences in the characteristics of the material. It may however be 
possible to quantify an Immediate Ignition Impact Zone. This represents 
the explosion radius that could occur if ignition occurs BEFORE the gas 
is able to migrate.
    The Pipeline and Hazardous Materials Safety Administration (PHMSA) 
provides instructions for calculating the PIR of a methane natural gas 
pipeline. The PIR estimates the range within which a potential failure 
could have significant impact on people or property. The PIR is 
established using the combustion energy and pipeline-specific fuel mass 
of methane to determine a blast radius: PIR = 
0.69*sqrt(p*dcaret2). Where: PIR = Potential Impact Radius 
(in feet), p = maximum allowable operating pressure (in pounds per 
square inch), d = nominal pipeline diameter (in inches), and 0.69 is a 
constant applicable to natural gas.
    The Texas Eastern pipeline can use the PIR equation as-is since it 
carries methane natural gas. However, since Mariner East 2 is primarily 
carrying ethane, propane, and butane NGLs, the equation must be 
altered. Ethane, propane, butane, and methane have very similar 
combustion energies (about 50-55 MJ/kg). Therefore, the PIR equation 
can be updated for each NGL based on the mass density of the flow 
material as follows: PIR = 0.69*sqrt(r*p*dcaret2). Where: r 
= the density ratio of hydrocarbons with similar combustion energy to 
methane natural gas. At 1,440 psi, methane remains a gas with a mass 
density 5 times less than liquid ethane at the same pressure:
    The methane density relationships for ethane, propane, and butane 
can be used to calculate an immediate-ignition blast radius for each 
hydrocarbon product. The below table shows the results assuming a 
Mariner East 2-sized 20-inch diameter pipe operating at Mariner East 
2's 1,440psi maximum operating pressure:
    Using these assumptions, the blast radius can be derived as a 
function of pressure for each hydrocarbon for the same 20in. diameter 
pipe:
    Note the sharp increase in blast radius for each natural gas liquid 
product. The pressure at which this sharp increase occurs corresponds 
with the critical pressure where each product transitions to a liquid 
state and becomes significantly denser, and in turn, contains more 
explosive power. These products will always be operated above their 
respective critical pressures when in transport, meaning their blast 
radius will be relatively constant, regardless of operating pressure.
    Additional information on these calculations can be found in the 
Delaware County-based Middletown Coalition for Community Safety's 
written testimony to the Pennsylvania Legislature.
Living in the Mariner East 2 Immediate Impact Zone
    Using the above calculations, FracTracker has created a new map of 
the Mariner East 2 pipeline using a highly-detailed GIS shapefile 
recently supplied by the DEP. On this map, we identify a 1,300ft radius 
``buffer'' from Mariner East 2's proposed route (the averaged Immediate 
Ignition Blast Radius for ethane, propane, and butane). However, we 
must recognize that this buffer represents a best case scenario in the 
event of a major pipeline accident. We then located all public and 
private schools, environmental justice census tracts, and estimated 
number of people who live within this buffer in order to get a clearer 
picture of the pipeline's hidden risks.
Proposed Mariner East 2 Immediate Impact Zone with At-Risk Schools and 
        Populations
Populations at Risk
    In order to estimate the number of people who live within the 
impact zone, we first identified census blocks that intersect the 
hazardous buffer. Second, we calculated the percentage of that census 
block's area that lies within the buffer. Finally, we used the ratio to 
determine the percentage of the block's population that lies within the 
buffer. In total, there are an estimated 105,419 people living within a 
reasonable projection of the proposed Mariner East 2's impact zone. The 
totals for each of the 17 counties in Mariner East 2's trajectory can 
be found in the interactive map. The top five counties with the 
greatest number of at-risk residents are:

        Chester County (31,632 residents in PIR)
        Delaware County (17,791 residents in PIR)
        Westmoreland County (11,183 residents in PIR)
        Cumberland County (10,498 residents in PIR)
        Berks County (7,644 residents in PIR)
Environmental Justice Areas
    Environmental justice designations are defined by the DEP as any 
census tract where 20 percent or more of the population lives in 
poverty and/or 30 percent or more of the population identifies as a 
minority. These numbers are based on data from the U.S. Census Bureau, 
last updated in 2010, and by the Federal poverty guidelines. Mariner 
East 2 crosses through four environmental justice areas:

        Census Tract 4064.02, Delaware County
        Census Tract 125, Cambria County
        Census Tract 8026, Westmoreland County
        Census Tract 8028, Westmoreland County
        
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    DEP policies promise enhanced public participation opportunities in 
environmental justice communities during permitting processes for large 
development projects. No additional public participation opportunities 
were provided to these communities. Furthermore, no public hearings 
were held whatsoever in Cambria County and Delaware County. The hearing 
held in Westmoreland County took place in Youngwood, nine miles away 
from Jeanette. Pipelines are not specified on the ``trigger list'' that 
determines what permits receive additional scrutiny, however the policy 
does allow for ``opt-in permits'' if the DEP believes they warrant 
special consideration. One would assume that a proposed pipeline 
project with the potential to affect the safety of tens of thousands of 
Pennsylvanians qualifies for additional attention.
At-Risk Schools
    One of the most concerning aspects of our findings is the 
astounding number of schools in the path of Mariner East 2. Based on 
data obtained from the U.S. Department of Education on the locations of 
schools in Pennsylvania, a shocking 23 public (common core) schools and 
17 private schools were found within Mariner East 2's best-case impact 
zone. In one instance, a school was discovered to be only 7 feet away 
from the pipeline's intended path. Students and staff at these schools 
have virtually no chance to exercise their only possible response to a 
large scale release of highly volatile liquids, which is immediate on-
foot evacuation.
Middletown High School in Dauphin County in close proximity to ME2
    One reason for the high number of at-risk schools is that Mariner 
East 2 is proposed to roughly follow the same right of way as an older 
pipeline built in the 1930s (now marketed by Sunoco as ``Mariner East 
1.''). A great deal of development has occurred since that time, 
including many new neighborhoods, businesses and public buildings. It 
is worth noting that the U.S. Department of Education's data represents 
the center point of schools. In many cases, we found playgrounds and 
other school facilities were much closer to Mariner East 2, as can be 
seen in the above photograph. Also of note is the high percentage of 
students who qualify for free or reduced lunch programs at these 
schools, suggesting that many are located in disproportionately poorer 
communities.
Conclusion
    Now that PADEP has received revised permit applications from 
Sunoco, presumably addressing September's long list of technical 
deficiencies, the agency will soon make a decision as to whether or not 
additional public participation is required before approving the 
project. Given the findings in our analysis, it should be clear that 
the public must have an extended opportunity to review and comment on 
the proposed Mariner East 2. In fact, public participation was 
extremely helpful to DEP in the initial review process, providing 
technical and contextual information.
    It is, furthermore, imperative that investigations into the 
potential impacts of Mariner East 2 extend to assess the safety of 
nearby residents and students, particularly in marginalized 
communities. Thus far, no indication has been made by the DEP that this 
will be the case. However, the Pennsylvania Sierra Club has established 
a petition for residents to voice their desire for a public comment 
period and additional hearings.

Seth Kovnat is the chief structural engineer for an aerospace 
engineering firm in Southeastern PA, and regularly consults with regard 
to the proposed Mariner East 2 pipeline. In November, Seth's expertise 
in structural engineering and his extensive knowledge of piping and 
hazardous materials under pressure were instrumental in providing 
testimony at a Pennsylvania Senate and House Veterans Affairs and 
Emergency Preparedness Committee discussion during the Pennsylvania 
Pipeline Infrastructure Citizens Panel. Seth serves on the board of 
Middletown Coalition for Community Safety and is a member of the 
Mariner East 2 Safety Advisory Committee for Middletown Township, PA. 
He is committed to demonstrating diligence in gathering, truth 
sourcing, and evaluating technical information in pipeline safety 
matters in order to provide data driven information-sharing on a 
community level.

NOTE: This article was modified on 12/9/16 at 4pm to provide additional 
clarification on how the 1,300ft Immediate Impact Zone was calculated.
                                 ______
                                 
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    Senator Peters. And I could certainly go on with a long 
list of comments that have been presented, but, rather, I think 
I will mention what I think is what almost all of the 
stakeholders felt in reading the writings, and that was Mayor 
Jim Carruthers here, of Traverse City, and he wrote, quote, 
``Our economy relies on our clean, fresh water, and if that 
were to change, life as we know it in Northern Michigan would 
also change, devastating what makes life so special here.''
    [Applause.]
    Senator Peters. So that is why we're here today, and first 
and foremost, to talk about the Great Lakes. And here in 
Michigan, as you've heard from the audience, the Great Lakes is 
a way of life for us. It's really part of our DNA, and next to 
our people, without question the most important and precious 
resource that we have. Not only do the lakes provide drinking 
water for 40 million people, but they're an economic engine for 
our state and our Nation, supporting more than a half a million 
jobs in Michigan alone, from commercial shipping and 
agriculture to fishing, boating, tourism. The Great Lakes are 
deeply intertwined with our state and our people. And we know 
that an oil spill in the Great Lakes would be absolutely 
catastrophic for our environment and for our economy.
    As Ranking Member of the Subcommittee with jurisdiction 
over the Federal pipeline safety policy, I called this hearing 
to take a closer look at the Federal and industry response to 
the April vessel strike in the Straits of Mackinac to get some 
answers to some potentially tough questions, questions that I'm 
often asked by Michigan residents, not just here in Traverse 
City, but in every area of the state. It doesn't matter where I 
travel in the state, people always bring up Line 5 as part of 
their concerns.
    We know that Michiganders are both deeply invested and 
deeply concerned about the continued existence of Line 5, an 
aging pipeline in the Straits of Mackinac, one of the most 
vulnerable locations in the entire Great Lakes. If you're 
looking for the worst absolute place for an oil disaster to 
occur, it would be the Straits of Mackinac.
    And I have several statements for the record that have been 
sent, as I've already mentioned.
    While pipelines are typically a very safe and efficient 
method of transporting energy resources that we all use, the 
reality is accidents do happen. As Michigan Tech's recent risk 
analysis noted, a Line 5 oil spill in the Straits of Mackinac 
could reach hundreds of miles of shoreline in Michigan, 
Wisconsin, and Ontario. It could cost the state nearly $2 
billion, some estimates much higher, to say nothing of the 
countless lives and livelihoods around the Great Lakes that 
would be shattered as a result.
    Some have called this analysis purely hypothetical, but 
after the most expensive pipeline break in the history of the 
United States on land on the Kalamazoo River, Michiganders know 
better than anyone else what happens when a pipeline fails.
    [Applause.]
    Senator Peters. I certainly don't want to wait until the 
next disaster to consider what could have we have done to 
prevent it. That's why I've authored positions in--provisions, 
rather, in legislation, such as the 2016 PIPES Act, and in the 
past and present Coast Guard reauthorizations that are intended 
to protect the Great Lakes, bolster pipeline safety, and 
response planning, and prevent harm.
    Mr. Elliott, as the Administrator of PHMSA, I certainly 
appreciated working with you last April toward a temporary 
shutdown of the damaged Line 5 during the severe weather. I 
appreciate your efforts there and your willingness to actively 
engage with the folks from Enbridge.
    This hearing is intended in that same spirit, to invite 
testimony that will inform our understanding of safe pipeline 
operations to prevent another disaster like the Kalamazoo River 
spill and to ensure the Great Lakes are protected for 
generations to come.
    This hearing is an opportunity for Michiganders who want 
answers to hear directly from each of the witnesses. And so 
again I want to thank you for your willingness to be here.
    First, Administrator Elliott, who is the Administrator for 
the Pipeline and Hazardous Materials Safety Administration in 
Washington, D.C. He is the gentleman in charge of ensuring that 
our pipelines are indeed safe all across the country.
    Administrator Elliott, I want to extend my appreciation for 
your leadership and your responsiveness to my questions in the 
days and weeks following the vessel strike in April. And thank 
you for being here today. And I want to particularly thank you 
for taking another day in Michigan tomorrow to visit the 
Kalamazoo spill site. And I look forward to your testimony and 
our continued work together.
    Rear Admiral Nunan, I also want to thank you for your swift 
response.
    Rear Admiral Nunan is the Ninth District Commander for the 
United States Coast Guard responsible for the Great Lakes 
region. And I want to again thank you for your swift response 
when I asked for answers from the Coast Guard back in April. 
You brought many folks together to answer those questions and 
immediately respond to them, and we appreciate your service in 
District 9 and keeping us safe here in the Great Lakes as well. 
And again thank you to all the men and women of the Coast Guard 
who are keeping us safe today in the station here in Traverse 
City and stations all across the Great Lakes.
    [Applause.]
    Senator Peters. And, Mr. Lundgren, I'm grateful to have 
NOAA's presence here.
    Mr. Lundgren is the Emergency Response Division Chief, 
Office of Response and Restoration, from the National Oceanic 
and Atmospheric Administration in D.C.
    I appreciate your expert scientific expertise on oil spill 
response and restoration, which will be interesting to hear in 
this hearing. I've long been concerned that our scientific 
capacity and understanding of oil in freshwater systems is not 
simply at the same level of our understanding of oil's 
performance in saltwater systems, which means the danger here 
in the Great Lakes are even greater than they are in the ocean, 
as significant as that is. And I look forward to hearing your 
comments here today.
    So enough about introductions. Let's get to some testimony.
    Administrator Elliott, if you could start us off with your 
testimony. And we do have a clock if you could try to contain 
those within 5 minutes, we'd appreciate it.

           STATEMENT OF HON. HOWARD ``SKIP'' ELLIOTT,

        ADMINISTRATOR, PIPELINE AND HAZARDOUS MATERIALS

                     SAFETY ADMINISTRATION

    Mr. Elliott. Thank you. And good morning, Senator Peters. I 
appreciate the opportunity to testify here today about pipeline 
safety in Michigan.
    During my 40-year railroad career, I responded to dozens of 
derailments and other incidents to learn from what had happened 
and to work to improve safety for employees and the public. 
That's also the reason why I accepted my current role at 
PHMSA--why I accepted my current role at PHMSA, because I 
remain committed to public safety.
    PHMSA's mission is to protect people and the environment by 
improving the safe transportation of energy products and other 
hazardous materials that are essential to our daily lives. Our 
ultimate goal is to have zero incidents.
    Although we're here today because of concerns about 
pipeline safety, I must acknowledge, as you did, that pipeline 
safety has greatly improved over the last 2 decades. Today, 
energy products are safely moved by pipeline 99.997 percent of 
the time, and part of that improvement is due to PHMSA's 
responsibility to create and enforce pipeline safety 
regulations and to inspect pipeline operators and systems 
across our Nation. But we're not here to talk about past 
accomplishments, we're here to address today's concerns.
    During my 10 months at PHMSA, I've reviewed many of our 
responses to pipeline incidents, including those leading up to 
this hearing, and I'm satisfied that PHMSA's actions were 
prompt, thorough, and effective, but let me summarize why I 
believe that.
    PHMSA's action after the major Enbridge pipeline failure 
occurring in 2010 included corrected action orders that 
directed the operator to review its integrity management 
requirements for the entire U.S. portion of its Lakehead 
pipeline system. Enbridge reported spending $2.5 billion to 
comply with PHMSA's orders. Systemwide testing required by 
PHMSA led to the repair of numerous areas of concerns before 
these faults could cause further releases. Enbridge ultimately 
replaced the entire line, 6B pipeline, after assessments 
revealed integrity concerns.
    These incidents have also raised concern over the integrity 
of Enbridge Line 5, especially the segment that traverses the 
Straits of Mackinac. Recently, gaps in support under the 
pipeline, areas of coating loss, and dents resulting from an 
anchor drag have deepened this concern. In each case, PHMSA 
acted decisively upon notification in executing its industry 
oversight function.
    PHMSA engineers reviewed the best, most current, inspection 
data available and found no evidence that structural integrity 
was compromised to a point necessitating a full shutdown of the 
pipeline, but to ensure the accuracy of our own assessment to 
the lines in this very sensitive area, PHMSA took the extra 
step of engaging the Oak Ridge National Laboratory to conduct 
an independent assessment of the data. Their expert, after 
careful review, confirmed PHMSA's initial findings.
    It was also noted that the twin 20-inch-diameter lines 
running along the bottom of the straits were designed to a 
higher than normal standard with pipe thickness three times 
that of other lines in the Lakehead System, and of seamless 
construction, eliminating the risk of cracking along 
longitudinal welds, a big concern of ours. These design factors 
came into play after the April--April anchor drag that caused 
three dents in the pipeline. Hence, its inspection and 
evaluation of video footage and data from multiple in-line 
inspections conducted both before and after the incident did 
not identify damage sufficient to warrant complete pipeline 
shutdown.
    However, PHMSA engineers evaluated and closely monitored 
the plan for ensuring ongoing line integrity, including 
reducing internal pipeline pressure until completion of 
repairs. And Enbridge recently completed the dent repairs to 
PHMSA's satisfaction.
    Since the first incidents, PHMSA has performed more than 
450 days of work focused on the safety of the Enbridge Lakehead 
System, including many days onsite at the Straits of Mackinac. 
We're also conducting currently ongoing comprehensive 
integrative inspection of their entire Lakehead System.
    During all of this, PHMSA has worked closely with Enbridge 
in the State of Michigan. My staff has praised the Michigan 
Public Service Commission as among the most professional 
organizations that they work with. I must also acknowledge the 
responsiveness and professionalism of the U.S. Coast Guard. We 
have some excellent safety partners in these organizations.
    Senator Peters, we plan to enhance those relationships and 
to communicate regularly with you to assure that we're working 
diligently and efficiently to ensure pipeline safety in 
Michigan. PHMSA strives to ensure the operators maintain their 
infrastructure to the highest levels and that they protect 
against its risks, but let me be clear, it is the operators 
that have the constant proximity, the resources, and the 
primary responsibility for ensuring the safety of their assets. 
We'll continue to hold operators accountable for safe 
operations of their pipelines, and we'll continue to pursue 
improvements through as many avenues as we can, from inspection 
and enforcement to education, technology, and innovation.
    Thank you. And I'm happy to respond to your questions.
    [The prepared statement of Mr. Elliott follows:]

  Prepared Statement of Hon. Howard ``Skip'' Elliott, Administrator, 
         Pipeline and Hazardous Materials Safety Administration
I. Introduction
    Senator Peters, thank you for having me to your beautiful state to 
testify before the Senate Subcommittee on Surface Transportation and 
Merchant Marine Infrastructure, Safety, and Security on the safety of 
Enbridge's Lakehead System pipelines.
    The mission of the Pipeline and Hazardous Materials Safety 
Administration--PHMSA--is to protect people and the environment by 
advancing the safe transportation of energy and other products that are 
essential to our daily lives. After working for decades in the freight 
rail industry, a great deal of it working to improve public safety, I 
believe that safety is the result of effective, smart regulations that 
hold operators accountable for their systems--but I also know that it 
takes more than just regulations to improve safety performance.
    PHMSA's team for pipeline safety oversees more than 2.7 million 
miles of our Nation's energy pipeline systems, including 3,437 miles of 
Hazardous Materials pipelines in Michigan alone.
    During my railroad career, I responded to, and often visited again 
afterwards, the sites of more derailments and other man-made and 
natural disasters than I can remember. To inspire commitment, as for 
many other things, there is no more effective means than first-hand 
observation. Here in beautiful Michigan, I am very understanding of 
your concerns of the catastrophic effects a pipeline oil spill could 
have on the environment.
    Our goal--which I believe is attainable--is zero pipeline 
incidents, and I know that when regulators, industry, and the public 
collaborate, we can find new paths forward to achieve that goal.
    Our pipeline oversight program is based on three fundamental 
tenets:

   PHMSA's primary roles are to establish minimum safety 
        standards and take enforcement actions against operators if 
        they are not in compliance with these standards.

   PHMSA can impact safety culture and operator performance 
        beyond minimum compliance with the regulations. PHMSA concurs 
        with the National Transportation Safety Board (NTSB) that 
        Safety Management Systems are the next big step toward broad 
        safety improvement.

   Pipeline operators must understand and manage the risks 
        associated with their pipelines, including taking actions to 
        prevent pipeline spills and minimizing the impact of any spills 
        should they occur.
II. PHMSA Response to Enbridge Incidents
    The spills that occurred on the Enbridge Lakehead System lines in 
Michigan were a failure in Enbridge's risk management and incident 
response procedures.\1\ While the pipeline failures, including those in 
Marshall, Michigan, and Grand Marsh, Wisconsin, caused damage to the 
area, PHMSA has worked with Enbridge and our partner Federal agencies 
to improve our prevention, emergency response practices, and future 
strategies to learn the lessons of these incidents.
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    \1\ Enbridge experienced several significant, successive spills on 
Lines 2, 6A, and 6B in 2010-2012. The largest occurred on the evening 
of Sunday, July 25, 2010, when Line 6B ruptured in Marshall, Michigan. 
Enbridge confirmed the pipeline rupture on Monday July 26, at 11:45 
a.m. PHMSA and other Federal officials were not made aware of the 
incident until 1:33 p.m. (EST.), the time when Enbridge notified the 
National Response Center. The failure released approximately 20,000 
barrels of crude oil that spilled into Talmadge Creek and the Kalamazoo 
River.
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    PHMSA's immediate response to the Enbridge Line 6B spill in 2010 
was to dispatch two investigators to the release site and one 
additional investigator to the Enbridge control center in Edmonton, 
Alberta, Canada. Several more inspectors worked on-site to address both 
PHMSA and NTSB's investigative responsibilities. Our inspectors 
investigated Enbridge's compliance with regulations related to 
maintaining the integrity of the line and control room procedures, and 
examined Enbridge's response to the incident, including its leak 
detection capabilities, emergency shut-down systems, and its 
notification procedures and practices. PHMSA also investigated 
Enbridge's conduct and compliance with pipeline safety laws, including 
whether Enbridge promptly notified the National Response Center of the 
spill, had an adequate leak detection system and related control room 
procedures, and whether its pipeline integrity program met PHMSA's 
safety standards.
    PHMSA quickly coordinated with community leaders and first 
responders, as well as with members of the NTSB, Region 5 
representatives of the Environmental Protection Agency, congressional 
staff, and emergency personnel engaged in the response efforts. The 
Department and PHMSA also attended and spoke at community meetings, met 
directly with community leaders, and participated in briefings for 
local officials.
    In response to the findings, PHMSA took swift action to ensure the 
safety of the area. Within three days of the Marshall spill, PHMSA 
issued a Corrective Action Order (CAO) to Enbridge requiring specific 
steps to ensure the safety of the pipeline before they would be allowed 
to restart the line. The steps included a requirement to develop and 
submit for PHMSA approval a written gradual step-by-step restart plan 
for Line 6B, and develop and submit for approval an integrity 
verification and remedial work plan for Line 6B.
    PHMSA continued to monitor the situation and later updated the CAO 
with additional integrity information and repair expectations. As 
inspections and repairs progressed, PHMSA continued to seek additional 
information and hold Enbridge to the necessary high standards before 
the line restart. During remediation, PHMSA oversaw the pipe removal, 
the repairs, and all testing.
    Due to the widespread extent of the failures, PHMSA went beyond the 
standard incident response to inspect, investigate, review, and respond 
in a way that would ensure that any issues that contributed to failures 
would be remedied. PHMSA took a holistic approach to responding to and 
investigating these failures, and looked beyond the failed lines to 
examine Enbridge's entire Lakehead system.
    PHMSA reviewed the whole Lakehead System in the Great Lakes Region 
and addressed safety issues on a company-wide basis, making a broader 
safety commitment for the entire region. In addition to a Notice of 
Probable Violation with proposed penalties of $3.7 million,\2\ PHMSA 
issued a Consent Order to Enbridge in 2012 that focused on specific 
safety measures that would ensure the short-and long-term safety of the 
system.\3\
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    \2\ Enbridge paid the proposed penalty, and a Final Order closing 
the case was issued on September 7, 2012.
    \3\ PHMSA issued a Corrective Action Order (CAO) to Enbridge on 
July 28, 2010, (amended on September 22, 2010), directing the company 
to take a number of measures, both immediate and long term, to ensure 
the pipeline was safe to re-start, and to ensure continued safe 
operation. In 2012, PHMSA issued an additional Consent Order that 
instituted the Lakehead Plan to improve the safety record of Enbridge's 
pipeline system. The Lakehead Plan required significant safety 
improvements.
---------------------------------------------------------------------------
    PHMSA's Consent Order required Enbridge to review its integrity 
management system for the entire U.S. portion of its Lakehead pipeline 
system, including the two pipelines running beneath the Straits of 
Mackinac. Specifically, PHMSA required Enbridge to analyze the health 
of its entire pipeline system, using in-line inspections and 
hydrostatic pressure testing, and to address any problems found.
    The Consent Order also required Enbridge to establish a safety 
improvement plan for the Lakehead Pipeline system. As part of the 
Consent Order, Enbridge and its contractors reviewed and significantly 
improved its Facility Response Plans, including the one applicable to 
the Straits of Mackinac, developed the initiatives to improve its 
safety management system culture and training, revise emergency 
procedures, and step up the integrity management program for all 1,900 
miles of the Lakehead system. Enbridge reported it spent $2.5 billion 
in complying with PHMSA's Corrective Action Orders.
III. Prevention
    Enbridge's mandated system-wide testing discovered and repaired 
numerous areas of concern before these faults caused the pipeline to 
leak or rupture. Though Pipeline 6B only failed in one location, 
Enbridge replaced the entire line based on the results of in-line 
inspections and verification digs. Enbridge completed the final 
replacement construction of Line 6B in 2014. Enbridge has committed to 
replacing Line 3 as well, and while this replacement was not 
specifically required by PHMSA's Lakehead Plan Consent Order, PHMSA 
supports Enbridge's proposal to replace the line.
    Before closing the Consent Order against Enbridge, PHMSA took 
additional steps to validate the safety of the Lakehead System. PHMSA 
contracted with Oak Ridge National Laboratory (ORNL), an independent 
third-party expert, in 2015 to review the latest Enbridge internal 
inspections of the Straits of Mackinac pipeline crossings to determine 
whether they indicated the presence of any potentially injurious 
defects. The ORNL report was completed in May 2016 and did not indicate 
any conditions of immediate concern, confirming PHMSA's decision not to 
require further corrective actions at that time. The experts also 
looked at in-line results from previous inspections to support that 
validation.
    While PHMSA terminated the Consent Order in 2016, PHMSA continues 
to monitor the implementation of the Enbridge's Lakehead Plan. The 
plan's comprehensive approach continues to produce significant safety 
improvements to the overall system that include additional remotely-
operated valves, enhanced control room operations and leak detection, 
increased internal inspections, confirmatory hydrostatic pressure 
testing on specific pipelines, and pipe replacement, along with 
enhancements to the operator's organizational safety culture.
Line 5
    While Enbridge's previous spills have led to widespread concern 
over the safety of Line 5, I want to take a moment to emphasize that 
Line 5 was designed and constructed to significantly higher safety 
standards than the lines that had failed. Typically, our regulations 
allow a pipeline to be operated at a pressure that produces a hoop 
stress of 72 percent of the specified minimum yield strength of the 
steel pipe. In the case of the Line 5 crossings at the Straits of 
Mackinac, the twin pipelines were designed and have been operated at a 
maximum pressure that produces a hoop stress of only 25 percent of the 
specified minimum yield strength of the steel pipe. This is primarily 
due to the thickness of the wall of the pipeline, which is more than 
three times the thickness of the failed Line 6B. Because of these 
differences, PHMSA believes Line 5 has a much lower risk of failure.
    PHMSA continues to require Line 5 to meet or exceed our pipeline 
safety regulation, policies, and procedures. As part of our actions 
related to the Lakehead Plan, PHMSA conducted reviews of Enbridge's 
internal inspections, maximum operating pressure determinations, and 
capacity increase modifications for Line 5 and did not identify any 
compliance issues. Enbridge has publicly committed to additional 
activities to monitor and inspect the pipeline segments crossing the 
Straits of Mackinac. PHMSA will continue to track Enbridge's progress 
on these commitments.
    PHMSA engineers are attending, in person, Enbridge's hydrostatic 
pressure tests of the crossings, and PHMSA is monitoring Enbridge's 
compliance with the Congressional mandate for annual inspections of 
pipeline water crossings over 150 feet deep. We will take appropriate 
action should Enbridge not comply or the additional inspections 
identify a safety issue. Enbridge continues to inspect Line 5 
biannually, using a remotely operated vehicle with cameras to view the 
bottom conditions and determine whether maintenance work is required on 
structural supports. This includes replacement and additions as 
necessary, to meet the requirements of the State of Michigan permit 
granting Enbridge the right to install the pipelines across the lake 
bottom.
    We have a strong partnership with Michigan's Public Service 
Commission and include State inspectors in our integrated inspections 
of any interstate natural gas transmission operators that operate in 
Michigan. In November 2017, we held a meeting with interstate agents, 
including Michigan, to review our interactions and develop plans and 
methodologies for working together in the future. We anticipate 
continuing that with annual meetings. In addition, we have enhanced 
communications with the Michigan Public Service Commission regarding 
activities associated with Enbridge and the Line 5 crossings.
    Finally, PHMSA is in the process of completing a major integrated 
inspection of the Lakehead System. Inspectors are looking at all 
aspects of the system's operation, including integrity management, 
control room management, design and construction, and corrosion. So 
far,\4\ PHMSA inspectors have spent a total of 286 combined days on 
this inspection, with 200 of those days in the field. These integrated 
inspections are risk-based and data-driven--each inspection is designed 
to look at the risk profile of the individual pipeline operator and 
focus on the greatest risks to safety.
---------------------------------------------------------------------------
    \4\ As of July 31, 2018
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    These inspections give us yet another way to ensure that Enbridge 
is always pursuing necessary safety improvements. Our inspectors 
provide timely inspection feedback to Enbridge, keeping them informed 
of any potential safety issues that they find, and giving them the 
safety information they need as quickly as possible.
IV. Response Readiness
    My goal as Administrator is to keep moving the pipeline industry 
towards the goal of zero incidents--but I know that it's also vital to 
be prepared to mitigate the effects of failure.
    Emergency response readiness and planning is already a large part 
of what PHMSA does. Our Oil Spill Preparedness and Emergency Support 
Division reviews oil spill response plans \5\ and helps plan for, 
participates in, and observes and evaluates pipeline oil spill 
exercises for operators such as Enbridge, Buckeye, Mark West and 
others--in cooperation with the Coast Guard, EPA and Michigan DEQ.
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    \5\ required under the Federal Water Pollution Control Act, as 
amended by the Oil Pollution Act of 1990
---------------------------------------------------------------------------
    PHMSA has strong relationships with other organizations involved in 
responding to pipeline incidents and emergencies. When PHMSA responds 
to an incident, its primary concerns are public safety and determining 
an operator's compliance with PHMSA's regulations. However, when a 
spill occurs in a body of water, the Coast Guard and EPA are 
responsible for ensuring that the responsible party cleans it up.
    PHMSA has a long history of working closely with local emergency 
officials in response to pipeline emergencies and its staff effectively 
participates in incidents where there is an Integrated Command System 
and is often requested to share information and support the 
investigations of other agencies. Additionally, PHMSA works to actively 
participate in training and drills held by other agencies to ensure 
seamless emergency response coordination.
    In 2014 and 2016, the U.S. Coast Guard held full-scale PREP 
exercises in Michigan, and Enbridge served as the responsible party for 
both exercises.\6\ PHMSA participated in both exercises and provided 
feedback. Following the 2014 Indian River exercise, and with PHMSA's 
strong encouragement, Enbridge agreed to conduct an equipment 
deployment exercise in the Straits of Mackinac in 2015. The initial 
planning for the exercise began in February 2015, and Enbridge 
conducted monthly planning meetings and conference calls. PHMSA staff 
participated in the planning meetings, conferences, and workshops.
---------------------------------------------------------------------------
    \6\ The 2014 exercise was held in Indian River, MI. The 2016 
exercise was held in Marysville, MI, on the St. Clair River, which is 
the international border. This exercise included CANUSLAK.
---------------------------------------------------------------------------
    The drill included Enbridge, the Coast Guard, the Environmental 
Protection Agency, PHMSA, Marine Pollution Control (Oil Spill Response 
Organization--OSRO), Michigan Department of Environmental Quality, 
Michigan State Police, U.S. Fish and Wildlife, National Oceanographic 
and Atmospheric Administration (NOAA) Scientific Support Coordinator, 
local and tribal emergency managers, other pipeline companies, and 
local media.
    As part of the drill, Enbridge provided Incident Command System 
(ICS) refresher training and liaison training, and the Coast Guard 
Public Information Assist Team provided Risk Communication and Joint 
Information Center (JIC) training.
    The drill itself consisted of a full-scale equipment deployment 
exercise to test and evaluate Enbridge's Superior Response Zone 
Integrated Contingency Plan, Straits of Mackinac Tactical Response Plan 
and consistency with the Coast Guard Sector Sault Ste. Marie Area 
Contingency Plan and the Environmental Protection Agency Region 5 
Geographic Response Plan under a Unified Command. Enbridge also held 
demonstrations of Shoreline Cleanup and Assessment Techniques (SCAT) 
and oiled wildlife care.
    These drills are a vital part of response preparation, and PHMSA 
experts provide valuable input to these drills, and will continue to 
participate in them regularly.
    PHMSA also collaborates with the International Joint Commission 
(IJC). The International Joint Commission prevents and resolves 
disputes between the United States of America and Canada \7\--in 
particular, ruling on applications for approval of projects affecting 
boundary or transboundary waters. The IJC assists the two countries in 
the protection of the transboundary environment, and PHMSA is happy to 
assist with safety and environmental impact expertise when needed.
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    \7\ under the 1909 Boundary Waters Treaty
---------------------------------------------------------------------------
    I also want to thank my PHMSA team and our partners at the Coast 
Guard for such a prompt and thorough response to the recent anchor 
strike on Line 5. I understand that the incident raised some concerns, 
but PHMSA has been working closely with Enbridge as the best strategy 
was developed to repair the dents. PHMSA does not believe the dents 
present any immediate or near-term threat; nonetheless, the agency 
requested that Enbridge operate Line 5 at reduced pressure until the 
damage is remediated. Our on-site team has been monitoring the coating 
repair activities and, if necessary, will enforce the provisions in our 
regulations that require the application of cathodic protection to 
those spots to mitigate the effects of external corrosion. We've been 
coordinating closely with the Coast Guard as well to ensure the 
complete safety of the line.
IV. Proactive Actions
Regulatory Reform
    PHMSA is also committed to reviewing the effectiveness of our 
oversight program by conducting a comprehensive evaluation of current, 
in-progress, and planned regulations and is working within the 
Department of Transportation as part of a One-DOT approach to ensure 
that the regulatory budget meets President Trump's ``two-for-one'' 
Executive Order.
    Beyond identifying opportunities to reduce unnecessary regulatory 
burdens on public and private sector stakeholders, our goal is to use 
the regulatory reform efforts as an opportunity to remove unnecessary 
roadblocks to new technologies that can increase safety. I believe we 
can improve the way operators can achieve safety. We want operators to 
put additional resources where they will have the maximum safety 
impact, such as greater investment in safety research and development 
and technology-based safety enhancements.
    As always, our focus is ultimately on safety performance. It is the 
responsibility of the oil and gas industry to understand and manage the 
risks of their systems. The current regulatory climate gives us all a 
unique opportunity to work together to optimize our regulations for 
safety. As PHMSA Administrator, I will continue to push industry to not 
wait, but to invest in and accelerate their pipeline safety efforts 
now, making substantive safety improvements best suited to their 
systems, and without specific direction from regulations.
Research and Development
    In that vein, our own Research and Development program is a key 
tool in technology-driven safety improvements, and I am very proud of 
all the ways our R&D program supports new technology to further improve 
pipeline safety. Since its inception, PHMSA's R&D program has worked on 
implementing a collaborative and coordinated research strategy with 
stakeholders who share PHMSA's safety goals.
    Our program sponsors research projects that can provide near-term 
solutions to improve safety, reduce environmental impacts, and enhance 
the reliability of the Nation's pipeline transportation system. Since 
2002, we have invested nearly $93 million dollars in 270 R&D projects. 
Among them, 22 patent applications and 28 new pipeline technologies 
have since hit the market, including above-ground, radar-based pipeline 
mapping and a nondestructive testing method for pipelines that cannot 
accommodate traditional in-line inspection tools. We've also invested 
over $800,000 on a project in leak detection systems,\8\ a vital part 
of preventing large-scale spills, especially in high-consequence areas.
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    \8\ PHMSA's project 560, Improving Leak Detection System Design 
Redundancy & Accuracy
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V. Looking Ahead
Lessons Learned
    The lessons learned from these incidents spanned a wide range of 
safety topics, from control room operations, to pipeline maintenance, 
to spill response.
    In 2014, PHMSA published an advisory bulletin, ``Pipeline Safety: 
Lessons Learned From the Release at Marshall, Michigan.'' \9\ The 
bulletin informed operators of the deficiencies that contributed to the 
Marshall spill, specifically integrity management, control center 
operations, and public awareness.
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    \9\ https://www.phmsa.dot.gov/regulations-fr/notices/2014-10248
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    Through the bulletin, PHMSA encouraged operators to review their 
own IM programs for similar deficiencies and to take corrective action, 
as well as consider training their control room staff as teams to 
recognize and respond to emergencies or unexpected conditions. The 
advisory also encouraged operators to evaluate their leak detection 
capabilities to ensure adequate leak detection coverage during 
transient operations and assess the performance of their leak detection 
systems following a product release to identify and implement 
improvements as appropriate. Additionally, the bulletin encouraged 
operators to review the effectiveness of their public awareness 
programs and whether local emergency response teams are adequately 
prepared to identify and respond to early indications of ruptures.
    PHMSA learned that we needed to adjust regulations where control 
room management is concerned, which we did last year.\10\ Our efforts 
to improve our regulations provide additional guidance on how control 
room operators work as teams, and included a component for team 
training in operator qualifications.
---------------------------------------------------------------------------
    \10\ PHMSA's ``Pipeline Safety: Operator Qualification, Cost 
Recovery, Accident and Incident Notification, and Other Pipeline Safety 
Changes'' final rule was published on January 23, 2017.
---------------------------------------------------------------------------
    We've also conducted several workshops to share the lessons 
learned, including workshops on risk modeling, risk management, and 
improving the ability to detect pipeline seam defects.\11\ These 
workshops help improve both our oversight and the knowledge base of the 
industry on managing risk. We are also planning a risk modeling 
workshop for later this year, to present the results of our work on 
improving the use of risk models to manage pipeline safety.
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    \11\ Records of PHMSA's public meetings and workshops are available 
here: https://primis
.phmsa.dot.gov/meetings/
---------------------------------------------------------------------------
Safety Management Systems (SMS)
    As you know, I believe that the Safety Management Systems (SMS) 
approach is a core part of our safety mission--and a key part of SMS is 
applying lessons learned. While the goal of SMS is to prevent accidents 
and incidents from ever occurring, we pursue that goal by learning from 
the accidents that do happen and proactively using that information.
    To be effective, SMS requires PHMSA to move beyond the role of 
being just a regulator--to push operators to identify and target their 
own risks, and to encourage a company-wide culture that makes safety 
the number one priority, always.
    For an SMS culture to permeate through all levels and areas of the 
pipeline industry, we need ways to share and analyze data, allowing all 
of us to see emerging trends to inform best practices. Just over a year 
ago, PHMSA established the Pipeline Safety Management System Working 
Group to tackle that problem--to identify SMS implementation 
performance metrics to measure both progress and challenges. The 
working group is made up of members of our gas and liquid pipeline 
advisory committees, and similarly includes representatives from each 
of our stakeholder groups.
    Our Pipeline Safety Management Group will continue to work to 
encourage operators to implement SMS and support industry efforts to 
develop new SMS tools. We all share the same goal of zero pipeline 
incidents, and I believe that the more we collaborate, the safer our 
Nation's pipelines will be.
Underlying Principles
    It is the responsibility of pipeline operators to understand and 
manage the risks associated with their pipelines. While PHMSA pursues 
safety by impacting operating behavior and performance, front-line 
responsibility for safety is placed clearly in the hands of the 
industry.
    PHMSA's primary role is to establish minimum safety standards 
(defined in the regulations by required risk control practices) and to 
verify that the operators perform to these standards. We set the rules, 
but we don't assume compliance. We verify compliance through our 
inspections and take action as necessary if we find non-compliances. 
However, compliance is necessary, but not sufficient if we want to 
improve performance.
    PHMSA also impacts industry performance beyond minimal compliance 
by improving the industry-wide knowledge base, participating in 
standards organizations, supporting R&D projects, promoting technology 
transfer and technical knowledge sharing though public workshops, and 
through direct executive level interactions with operators to review 
operator performance and discuss concerns and areas for improvement.
Regulatory Efforts
    I understand the importance of moving forward PHMSA's Safety of 
Hazardous Liquid Pipeline rulemaking. The Marshall rupture occurred 
during the last stages of a planned shutdown and was not discovered or 
addressed for over 17 hours. As a result, in part, of the rupture, 
we've determined that additional safety standards are needed, including 
the expansion of IM regulations to more hazardous liquid pipelines.
    This rulemaking would amend the Pipeline Safety Regulations to 
improve protection of the public, property, and the environment by 
improving safety protections and filling regulatory gaps. This rule is 
one of our highest priorities and will be completed as quickly as 
possible.
    The Marshall rupture was unconfirmed for many hours, but as soon as 
it was confirmed, the failed segment of the pipeline was immediately 
isolated using remote-controlled valves. Because of this and other 
large-scale incidents, PHMSA has determined that additional minimum 
Federal safety standards are needed to mitigate events involving large-
volume, uncontrolled releases of gas and hazardous liquids.
    We are currently developing a notice of proposed rulemaking for 
Pipeline Rupture Detection and Mitigation for Onshore Populated and 
High Consequence Areas that will newly define these large-scale events 
as ``ruptures'' and require operators to identify and isolate ruptures 
on their system within certain time frames.
    The overall intent is that rupture detection metrics will be 
integrated with valve placement to improve overall incident response in 
populated or environmentally sensitive areas. Rupture response metrics 
would focus on mitigating large, unsafe, uncontrolled release events 
that have a greater potential consequence.
VI. Conclusion
    Safety is the Department of Transportation's highest priority. I 
assure you that the Department will remain vigilant in ensuring the 
safety and integrity of all pipelines under its jurisdiction. PHMSA 
holds all pipeline operators accountable for the safe operation of 
their pipelines, and we will continue to pursue our goal of a safe 
pipeline system through as many avenues as can, from transition 
inspection and enforcement, to education and technology innovation.
    Thank you and I am happy to respond to your questions.

    Senator Peters. Thank you, Mr. Elliott.
    Admiral Nunan, we'd love to hear from you.

  STATEMENT OF REAR ADMIRAL JOANNA M. NUNAN, COMMANDER, U.S. 
                   COAST GUARD NINTH DISTRICT

    Admiral Nunan. Good morning, Chairman Peters. It is my 
pleasure to be here today to discuss the Coast Guard's oil 
spill response plans and capabilities on the Great Lakes, and 
to provide detail on how the Coast Guard responded to the 
dielectric fluid discharge in the Straits of Mackinac. I ask 
that my written testimony be entered into the record.
    Senator Peters. It will be. Thank you.
    Admiral Nunan. The Coast Guard has brought authorities that 
reside in a variety of statutes, and we complement these with 
well-established interagency and industry relationships to 
provide rapid and effective response in the event of a release 
or spill in the marine environment.
    Guided by the National Contingency Plan, the Coast Guard 
and its response partners focus national planning and 
preparedness concepts on a specific geographic scope for each 
Federal region. Further bolstering the national response 
capability in the Great Lakes, the Coast Guard enjoys a long 
history of cooperation with the Canadian Coast Guard. Under the 
auspices of the bilateral Canada-United States Joint Marine 
Pollution Contingency Plan, the U.S. and Canadian Coast Guards 
have established a coordinated system for response preparation 
and planning in the contiguous waters along shared marine 
borders. These international plans proved invaluable to 
responders during the 2015 response to the Argo, a barge that 
sank in Lake Erie in 1937 that began leaking hazardous 
substances.
    As a learning organization, the Coast Guard couples lessons 
learned from real-world responses with research and development 
to apply the latest technology and best practices to marine 
spill response efforts. As part of a multiyear Coast Guard 
research and development project centered in the straits, we 
recently issued our first ever Federal On-Scene Coordinators 
guide to oil and ice, which provides responders the best 
available options for addressing oil spills in winter 
conditions.
    Through further research and development, along with 
interagency and industry partnerships, we are addressing oil 
spill research needs unique to the Great Lakes to improve 
response capability throughout the region. Along the same 
lines, the Coast Guard administers the Oil Spill Removal 
Organization, or OSRO, classification program. Through this 
program, the Coast Guard provides clear standards for OSROs to 
follow as they work together to foster a robust network of 
marine environmental response providers in each Captain of the 
Port Zone.
    To supplement industry's response capabilities, the Coast 
Guard maintains an inventory of oil spill response equipment 
throughout the Great Lakes region, which is readily available 
for deployment. In the event of a spill in a location where 
there are limited OSRO resources, this equipment allows the 
Coast Guard to act promptly to contain the spill.
    As you know, in April 2018, Coast Guard Sector Sault Ste. 
Marie responded to a spill of dielectric fluid in the Straits 
of Mackinac. After receiving a report of the discharge, the 
Commander of Coast Guard Sector Sault Ste. Marie initiated an 
interagency response in accordance with the Northern Michigan 
Area Contingency Plan and established a unified command.
    Under the supervision and direction of the unified command, 
OSROs contracted by the responsible party worked over several 
weeks to remove residual dielectric fluid from the cables and 
capped them.
    There is a bright spot to this unfortunate event: it 
provides a fine example of Federal, Tribal, State, local, and 
industry cooperation through both advanced planning and 
execution to respond to an environmental threat.
    The Coast Guard is dedicated to the protection and 
preservation of the resources in the Great Lakes region. 
Through an established network of partners across all spectrums 
of both the public and private sectors, the Coast Guard 
continues to explore and develop optimal response and 
mitigation methods for oil spill discharges and hazardous 
material releases. With the sustained support of the 
administration, Congress, and the public, we will continue to 
protect the people and the valuable resources of the Great 
Lakes region.
    Thank you for the opportunity to testify before you today 
on these important matters. And I look forward to answering 
your questions.
    [The prepared statement of Admiral Nunan follows:]

    Prepared Statement of Rear Admiral Joanna M. Nunan, Commander, 
                    U.S. Coast Guard Ninth District
Introduction
    Good morning Mr. Chairman, Ranking Member, and distinguished 
Members of this Committee. It is my pleasure to be here today to 
discuss the Coast Guard's oil spill response plans and capability on 
the Great Lakes, and to provide detail on how the Coast Guard responded 
to the dielectric fluid discharge in the Straits of Mackinac. The Coast 
Guard's Ninth District, headquartered in Cleveland, Ohio, oversees four 
Sectors, four Marine Safety Units (MSUs), two Marine Safety 
Detachments, forty-seven boat stations, two air stations, and two 
seasonal air facilities across the Great Lakes region. Sector Lake 
Michigan, Sector Sault Ste. Marie, Sector Detroit, Sector Buffalo, and 
the MSU in Duluth are all granted Captain of the Port (COTP) Authority. 
The Coast Guard Captains of the Port also serve as the Federal On-Scene 
Coordinators (FOSCs) during responses to oil spills and hazardous 
substances in the coastal zone within their Captain of the Port Zones.
Background
    In April 2018, Coast Guard Sector Sault Ste. Marie responded to a 
coastal zone spill of dielectric fluid in the Straits of Mackinac, a 
waterway connecting Lake Michigan with Lake Huron, resulting from a 
suspected anchor strike on subsurface high-voltage cables. While the 
resulting spill of less than 1,000 gallons was classified as minor per 
the National Contingency Plan, the overall incident called attention to 
a high-potential ``what if'' scenario regarding a worst case discharge 
(WCD) from two Enbridge subsurface 20'' crude oil pipelines located 
nearby, which were also suspected of being struck by an anchor but did 
not rupture.
    After receiving a report of a discharge of dielectric fluid, the 
Commander of Coast Guard Sector Sault Ste. Marie, the pre-designated 
FOSC for the area, initiated a response in accordance with the Northern 
Michigan Area Contingency Plan. The FOSC established a unified command 
on April 3, 2018, comprised of the Coast Guard, Michigan Department of 
Environmental Quality (MI DEQ), American Transmission Company (ATC, who 
was the Responsible Party), local, and tribal representatives.
    Numerous other partners were also involved with the response, 
including the Pipeline and Hazardous Materials Safety Administration 
(PHMSA), Environmental Protection Agency (EPA), U.S. Fish and Wildlife, 
U.S. Department of Agriculture, and adjacent utilities' owners 
Enbridge, TransCanada, and Consumers Energy.
    Under the supervision and direction of the unified command, Oil 
Spill Removal Organizations (OSROs) contracted by the Responsible Party 
worked over several weeks to remove residual dielectric fluid from the 
cables and conducted multiple underwater assessments using 
commercially-owned remotely operated vehicles. All residual product was 
removed from the ATC cables on April 29, at which time the cables were 
capped. Assessments conducted on wildlife, habitat, environmental, and 
cultural resources indicated no detectable impacts. Both Coast Guard 
and National Transportation Safety Board (NTSB) investigations into the 
cause of the incident are pending.
Oil Spill Response Authorities
    The Coast Guard continually works to prevent and prepare to respond 
to oil spills and hazardous substance releases in the Great Lakes. The 
underlying authorities for spill response in the marine environment 
reside in a variety of statutes, including the Federal Water Pollution 
Control Act (FWPCA) and the Oil Pollution Act of 1990 (OPA 90), and are 
codified in 33 U.S.C. Sec. Sec. 1251-1327 and 33 U.S.C. Sec. Sec. 2701-
2762. These statutes provide the President the authority to respond to 
a discharge or substantial threat of a discharge of oil or a hazardous 
substance. They also lay out a framework of plans to prevent and 
respond to pollution threats, including establishment of a National 
Contingency Plan (NCP), Area Contingency Plans (ACP), Vessel Response 
Plans, and Facility Response Plans. This multi-layer system encompasses 
participants on the national, regional, area, vessel, and facility 
level.
    The NCP (40 C.F.R. Part 300) provides the overarching framework 
with respect to organizational structure and procedures for, preparing 
for, and responding to oil, hazardous substance, pollution, and 
contaminant discharges and releases. The NCP defines ``lead agency'' as 
the agency that would provide the FOSC ``to plan and implement response 
actions under the NCP.'' In the coastal zone, the NCP applies to 
discharges into or on the navigable waters of the United States, on the 
adjoining shorelines, the waters of the contiguous zone, into waters of 
the exclusive economic zone, or that may affect natural resources 
belonging to, appertaining to, or under the exclusive management 
authority of the United States.
    In accordance with the NCP, Regional Contingency Plans (RCPs) take 
the national concepts for planning and preparedness and narrow them to 
a specific geographic scope for each Federal region. The RCPs also 
describe the mechanisms by which the Regional Response Team (RRT) 
assists FOSCs before a response, through planning and training 
activities; and during a response, through organizational and 
coordination assistance.
    In the Great Lakes region, the EPA Regions 2, 3, and 5 RCPs contain 
the response jurisdiction delineations between inland (EPA-led) and 
coastal (Coast Guard-led) zones. The RCPs also lay out RRT procedures, 
response tactics, resource protection, wildlife procedures, and the 
standard protocols for approving the use of alternative response 
technologies for the United States' portions of the Great Lakes.
Oil Spill Preparedness Efforts
    RRTs coordinate interagency planning efforts to ensure the 
application of protocols throughout the Great Lakes region align with 
the NCP and RCPs, promoting consistency of planning and preparedness at 
the local, regional, and the national level. ACPs contain specific oil 
and hazardous substance spill response, incident management, and all-
hazards preparedness elements for smaller geographic regions within the 
areas covered under the RCPs. While the Coast Guard is primarily 
responsible for the development of coastal zone ACPs, they are 
developed with broad stakeholder input through Area Committees (ACs).
    Through lessons learned following significant spill responses, such 
as Deepwater Horizon and the Kalamazoo River pipeline discharge of 
2010, the Coast Guard re-examined ACPs nationwide to ensure that they 
addressed worst case discharge scenarios for products transported 
through a variety of modes, including rail and pipelines. The Service 
initiated a national ACP revitalization project to encompass these 
planning factors and standardize ACPs across all COTP zones. In 
conjunction with this effort, the Coast Guard's Ninth District 
developed a joint Great Lakes Area Contingency Plan (GLACP) template 
which was released in April 2015. The GLACP template provided enhanced 
and standardized guidance for all ACPs developed within COTP zones 
throughout the Great Lakes region. In July 2015, the Coast Guard 
executed the GLACP template's concepts in response to the Cleveland 
Public Power oil spill, ensuring a coordinated and effective 
interagency response. During 2016-2017, all Great Lakes COTP zones 
revised their respective ACPs to reflect the GLACP template. All ACPs 
were subsequently reviewed by the Ninth Coast Guard District staff and 
approved in 2017.
    The National Preparedness for Response Exercise Program (PREP) is a 
unified Federal effort that satisfies the OPA 90 exercise requirements 
of the Coast Guard, EPA, Department of Transportation (DOT), and Bureau 
of Safety and Environmental Enforcement (BSEE). In April 2016, the 
Coast Guard announced significant updates to the PREP guidelines. The 
PREP guidelines, originally released in 1994, summarize OPA 90 exercise 
requirements and associated policies in a convenient guidebook. While 
following PREP guidelines is not a regulatory requirement, PREP was 
developed to assist industry in meeting the exercise requirements for 
oil pollution response plans.
    In addition to exercise requirements for industry, the Coast Guard 
also administers the voluntary OSRO Classification Program, which was 
created to streamline industry efforts to meet regulatory requirements 
established under OPA 90. Entering into an agreement with a Coast 
Guard-classified OSRO may exempt a plan holder from providing and 
repeatedly updating extensive lists of response resources in their 
response plans. There are currently OSROs with Coast Guard 
classification across the Great Lakes region.
    The Service enjoys a long history of cooperation with the Canadian 
Coast Guard in executing responsibilities to prepare for, and respond 
to, oil and hazardous substance incidents. Under the auspices of the 
bilateral Canada--United States Joint Marine Pollution Contingency Plan 
(CANUS JCP), the U.S. and Canadian Coast Guards established a 
coordinated system for planning and preparing to respond to harmful 
substance incidents in the contiguous waters along shared marine 
borders. This joint plan supplements each nation's response system, 
coordinates the interface of these systems for boundary areas, and 
includes five geographic annexes that specify response procedures under 
the authorities of the Canadian Coast Guard Assistant Commissioners and 
Coast Guard District Commanders.
    In 2008, the Great Lakes Geographic Annex (CANUSLAK) to the CANUS 
JCP was updated to provide geographic-specific guidance as well as to 
address emerging risks associated with oil sands marine transport and 
potential incidents involving non-floating oils. The CANUSLAK Annex 
covers the international boundary waters of the Great Lakes and is the 
joint responsibility of the Canadian Coast Guard Central and Arctic 
Region and the Coast Guard's Ninth District. U.S. and Canadian Coast 
Guard responders successfully executed the plans within the annex 
during the 2015 response to the ARGO, a barge that sank in Lake Erie in 
1937 that began leaking hazardous substances. The CANUSLAK Annex was 
renewed and re-signed in August 2016.
    Through the bilateral U.S.-Canadian Maritime Transportation of 
Hydrocarbons and Their By-Products Working Group, the U.S. Coast Guard 
continues to improve plans and response techniques for a variety of 
products, including oil sands and non-floating oils. The initial focus 
of the working group is response in fresh water, including the Great 
Lakes and its tributaries, and the Saint Lawrence River and Seaway 
System. The working group aims to enhance existing U.S.-Canadian 
cooperation in oil spill prevention, preparedness and response.
Oil Spill Response Resources
    Generally, the burden of response lies with the Responsible Party 
(RP) in an oil spill clean-up. The Coast Guard ensures that the cleanup 
is conducted in accordance with the all applicable laws and 
regulations. However, as the lead Federal response agency for oil 
spills in the coastal zone, the Coast Guard is required to take 
immediate action to mitigate spills if the RP is unwilling or unable to 
take action, or if the actions of the RP are determined to be 
insufficient. During a spill response in which the Coast Guard has 
assumed Federal control, equipment is contracted using the Oil Spill 
Liability Trust Fund leveraging a variety of pre-arranged acquisition 
agreements. The Coast Guard then seeks recovery of these costs from the 
RP, if known.
    Through the OSRO Classification Program, in conjunction with 
statutory and regulatory requirements, the Coast Guard has fostered a 
robust network capable of responding to marine environmental incidents 
with sufficient resources and trained personnel in each COTP zone. As a 
result, the Coast Guard must maintain only a minimal inventory of 
government-owned oil spill response equipment. In the Great Lakes 
region, the Coast Guard maintains two Spilled Oil Recovery Systems 
(SORS) onboard the Coast Guard Cutters ALDER and HOLLYHOCK, which are 
readily available for deployment. The SORS are exercised annually to 
provide operational training for personnel and to ensure the equipment 
functions properly. In addition to the cutters equipped with SORS, 
there are over thirty prepositioned trailers outfitted with containment 
boom and other oil spill response equipment throughout the Coast 
Guard's Ninth District. In the event of a spill in a location where 
there are limited OSRO resources, this equipment allows the Coast Guard 
to act promptly to contain the spill.
Research and Development for Fresh Water Oil Spills
    The Coast Guard's Research, Development, Test, and Evaluation 
(RDT&E) Program provides critical support to the Coast Guard's Marine 
Environmental Protection mission. The Service conducts research in 
close coordination and cooperation with Federal research partners, 
academia, and industry in an ongoing effort to enhance spill response 
effectiveness through the application of emergent technology.
    The Coast Guard's current RDT&E portfolio includes projects 
exploring advancements in offshore in-situ burning, improvements in the 
near shore/inland Estimated Recovery System Potential calculator, and 
submerged oil recovery tools. The Coast Guard is also researching the 
nuances of mechanical recovery of oil sands products in both fresh and 
saltwater and improved methods for recovering oil on, in and under the 
ice.
    In addition to projects sponsored by the RDT&E Program, the Coast 
Guard serves as the chair for the 15-member Interagency Coordinating 
Committee on Oil Pollution Research (ICCOPR). OPA 90 directed the 
establishment of ICCOPR to coordinate a comprehensive program of oil 
pollution research, technology development, and demonstration among 
Federal agencies. Through its member agencies, ICCOPR continues to 
promote oil pollution research and development by leveraging 
partnerships with industry, state and local governments, and academia 
to enhance oil pollution prevention, preparedness, and response 
capabilities.
    Finally, the Great Lakes Restoration Initiative (GLRI) has provided 
appropriations to various organizations since 2010 to improve knowledge 
and response capabilities with respect to oil and hazardous substance 
discharges in fresh-water and frozen environments.
Emerging Challenges
    The dynamic environment in the Great Lakes presents unique 
challenges to responding to oil spills and hazardous substance 
releases. It is critical that both OSROs and government responders have 
access to the training, equipment, and research necessary to ensure the 
safety and security of both our natural resources and our citizens. Oil 
discharges in freshwater and ice conditions require unique equipment 
and expertise, which the Coast Guard continues to develop and exercise 
in conjunction with federal, state, local, academia, and industry 
partners.
Conclusion
    The Coast Guard is dedicated to the protection and preservation of 
the resources in the Great Lakes region. Through an established network 
of partners across all spectrums of both the public and private sector, 
the Coast Guard continues to explore and develop optimal response and 
mitigation methods for oil spill discharges and hazardous substance 
releases. With the sustained support of the Administration, Congress, 
and the public, we will continue to protect the people and the valuable 
resources of the Great Lakes region.
    Thank you for the opportunity to testify before you today on these 
important issues, and I look forward to answering your questions.

    Senator Peters. Thank you, Admiral.
    Mr. Lundgren.

              STATEMENT OF SCOTT LUNDGREN, CHIEF,

        EMERGENCY RESPONSE DIVISION, OFFICE OF RESPONSE

            AND RESTORATION, NATIONAL OCEAN SERVICE,

        NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION,

                  U.S. DEPARTMENT OF COMMERCE

    Mr. Lundgren. Senator Peters, thank you for the opportunity 
to testify today. I am pleased to testify as Chief of the 
Emergency Response Division within NOAA's Office of Response 
and Restoration on NOAA's role in oil spill preparedness, 
response, and restoration in the Great Lakes region.
    The Great Lakes are a national treasure and a critical 
feature of the region's economy and natural environment, from 
transportation and recreation to wildlife and habitat. Clearly, 
this very important freshwater resource deserves the highest 
level of protection and care. When these resources are 
threatened by spills, my office at NOAA provides expert 
leadership, training, and time-critical services.
    NOAA has three primary response and restoration roles: 
spill response, damage assessment, and interagency coordination 
and leadership, as mandated by the Oil Pollution Act of 1990 
and the National Contingency Plan. I'll speak to each in a 
little bit more detail.
    First, spill response. In response to a spill in the Great 
Lakes, the Coast Guard may call on our Scientific Support 
Coordinator, or SSC, collocated at the Ninth Coast Guard 
District in Cleveland, for scientific input, advice, and 
products for critical decisions. The SSC also connects 
responders with additional NOAA services for more complicated 
spill scenarios.
    Second, damage assessment. When oil spills damage natural 
resources, NOAA conducts a natural resources damage assessment 
with other natural resource trustees on behalf of the public. 
This process assesses the damage and plans restoration actions 
to compensate for those natural resource losses, including loss 
for recreational use. We have a Great Lakes Regional Resource 
Coordinator to lead the agency's assessment activities in the 
region, and NOAA's damage assessment remediation and 
restoration program does this work in collaboration with other 
Federal, State, and Tribal trustees.
    Third, interagency coordination and leadership. NOAA 
represents the Department of Commerce in spill response 
decisions through the 15-agency National Response Team and the 
Federal, State, Tribal Interagency Region 5 Regional Response 
Team covering the lakes. We also serve as one of the three 
rotating vice chairs of the Interagency Coordinating Committee 
on Oil Pollution Research.
    Moving to regional collaborations, we maintain strong 
connections to other NOAA programs in the region, such as the 
NOAA Great Lakes Environmental Research Laboratory, the 
National Weather Service, Office of National Marine 
Sanctuaries, and several others. We draw on their expertise, 
models, data, and services in our work.
    Rear Admiral Gallaudet, the Acting NOAA Administrator, 
wanted to relay that he paid a visit to the Thunder Bay 
National Marine Sanctuary just this past week in Alpena, 
Michigan, with its economically and historically significant 
collection of shipwrecks that you and he discussed in the 
recent ``Blue Economy'' hearing.
    And then beyond NOAA, we collaborate widely with other 
State, Federal, and international partners with roles that 
relate to our response and restoration charge.
    I'd also like to highlight NOAA's work on models, tools, 
data, and data systems. In addition to those strong regional 
connections I mentioned, our regional coordinators rely on a 
broader team of multidisciplinary oil and chemical spill 
experts. These scientists develop and maintain important model 
and data systems that bring the latest science to bear on the 
challenges of response and restoration. Our models and tools 
include GNOME, that serves as our oil transport and fate model; 
ERMA, our real-time mapping application used by the Coast Guard 
as a common operating picture for environmental response; and 
DIVER, our powerful solution to manage complex environmental 
data. The Regional Great Lakes DIVER was recently tailored to 
meet the needs of the St. Louis River Area of Concern in 
collaboration with Minnesota and Wisconsin.
    One NOAA geospatial product, called the Environmental 
Sensitivity Index, or ESI, compiles shoreline, biological, and 
human use sensitivity information so that appropriate oil spill 
response actions can be planned. The Great Lakes ESI maps were 
made in the late 1980s and early 1990s, and as is now the case 
nationally, the ESI data are updated as resources from partners 
allow.
    I'm pleased to indicate that NOAA recently received funding 
from the EPA through the Great Lakes Restoration Initiative to 
update ESI maps for both the Straits of Mackinac and the St. 
Clair-Detroit River System.
    Preparedness and training is another important NOAA 
function. We train responders on oil and chemical spill 
science. In 2015, NOAA contributed significantly to a 
collaborative planning, training, and exercise series focusing 
on the Straits of Mackinac, and just two weeks ago, NOAA 
conducted a three-day course on assessing oil shorelines in 
Mackinaw City.
    In conclusion, NOAA serves a key role in applying science 
operationally to spill response and restoration. NOAA's suite 
of products, services, and research, combined with the 
expertise of our personnel, are critical in mitigating harm, 
allocating resources, and restoring affected coastal 
environments in the unfortunate event of a spill, all 
contributions important for protecting the Great Lakes.
    Thank you, Chairman, for inviting me to testify today. And 
I look forward to your questions.
    [The prepared statement of Mr. Lundgren follows:]

    Prepared Statement of Scott Lundgren, Chief, Emergency Response 
 Division, Office of Response and Restoration, National Ocean Service, 
  National Oceanic and Atmospheric Administration, U.S. Department of 
                                Commerce
    Senator Peters, thank you for the opportunity to testify on oil 
spills from pipelines in the Great Lakes. My name is Scott Lundgren and 
I am the Chief of the Emergency Response Division within the Office of 
Response and Restoration at the National Oceanic and Atmospheric 
Administration (NOAA), within the Department of Commerce. My testimony 
today will focus on NOAA's role in emergency response to oil and 
chemical spills and, more specifically, oil spill preparedness and 
response in the Great Lakes region.
    The U.S. Coast Guard National Response Center reports that several 
thousand incidents occur in the U.S. each year in which oil or 
chemicals are released into the environment as a result of accidents or 
natural disasters. On average, NOAA provides scientific support to 
Federal responses for between 120-170 of these incidents each year. 
Spills in our waters can harm people, ecological resources, and 
waterways, with potential for widespread economic impacts.
    The Great Lakes are a national treasure and are the largest 
freshwater system on Earth, with about 21 percent of the world's supply 
of surface freshwater. They provide drinking water for 40 million 
residents of the United States and Canada. The lakes are also a 
critical feature of the region's economy and natural environment--from 
transportation and recreation to wildlife and habitat. As a major 
transportation corridor, 160 million tons of maritime cargo is 
transported within the region or to overseas destinations. The Great 
Lakes support commercial, recreational, and tribal fisheries that 
contribute $7 billion annually to the United States and Canada.
    Clearly, the Great Lakes are a very important freshwater resource 
and deserve our protection and care. When these resources are 
threatened by oil, chemicals, marine debris, and other hazards, NOAA's 
Office of Response and Restoration, within the National Ocean Service, 
provides expert leadership, training, and time-critical services.
NOAA's Response and Preparedness Role
    As the Federal On-Scene Coordinator, the U.S. Coast Guard has the 
primary responsibility for managing coastal oil spill response and 
clean-up activities in the coastal zone. For larger and more 
complicated spills, the U.S. Coast Guard relies on NOAA for scientific 
support. As a result, NOAA has provided support for nearly 4,000 marine 
and inland oil and chemical spills, including many major international 
spills.
    During an oil spill, NOAA's Scientific Support Coordinators make 
their technical and scientific expertise available to the U.S. Coast 
Guard. A team of 12 NOAA Scientific Support Coordinators are located 
around the country, generally aligned with U.S. Coast Guard District 
areas of responsibility. They are ready to respond around the clock to 
any emergency involving the release of oil or hazardous substances into 
the coastal, marine, Great Lakes, and related areas. The Scientific 
Support Coordinator is also the Federal On-Scene Coordinator's gateway 
to NOAA resources, including NOAA's Scientific Support Team. NOAA's 
Scientific Support Team is an assembly of experts that draw on NOAA 
forecasts, data, models, or services during nearly every response. On a 
large incident response, many NOAA programs and support staff may 
deploy to support field operations.
    NOAA has three critical roles in spill response and damage 
assessment, mandated by the Oil Pollution Act of 1990 and the National 
Oil and Hazardous Substances Pollution Contingency Plan:

  1.  Spill response. During the emergency response, NOAA provides 
        scientific expertise in the fields of biology, chemistry, 
        oceanography, toxicology, and economics to the Federal On-Scene 
        Coordinator. We specialize in predicting pollution transport 
        (trajectory modeling) for spilled oil, tracking observations of 
        oil on water, and assessing highly valued or sensitive 
        environmental areas. NOAA also coordinates required emergency 
        consultations for protected resources (such as threatened and 
        endangered species). These services support critical 
        operational decisions during the response and determination of 
        clean-up priorities. NOAA's decision support services in the 
        Great Lakes are informed by our core capabilities in 
        hydrodynamic modeling, baseline monitoring, applied research, 
        water level forecasting, navigation services, and spill 
        preparedness training. NOAA has historically responded to 120-
        170 oil and chemical spills each year, with Fiscal Year 2017 
        setting a record number of 205 incidents. This year we are on 
        track for a similar number of calls.

     In the event of an exercise or spill in the Great Lakes, the U.S. 
        Coast Guard will coordinate through the NOAA Scientific Support 
        Coordinator in Cleveland, co-located with the 9th Coast Guard 
        District, to access NOAA science and services. The NOAA 
        Scientific Support Coordinator for the Great Lakes Region would 
        serve on the staff of the Federal On-Scene Coordinator 
        directly.

  2.  Damage Assessment. As a natural resource trustee, NOAA conducts a 
        joint Natural Resource Damage Assessment with other federal, 
        state, and tribal trustees to assess and restore natural 
        resources injured by an oil spill. NOAA biologists, 
        toxicologists, policy analysts, information specialists, 
        attorneys, geologists, environmental engineers, and economists 
        work together to accomplish this assessment. The Natural 
        Resource Damage Assessment process also assesses the lost uses 
        of natural resources, such as recreational fishing, canoeing, 
        and swimming, with the goal of restoring these or other 
        resources.

     The NOAA Regional Resource Coordinator in Ann Arbor leads the 
        Natural Resource Damage Assessment process in the Great Lakes 
        region. To date, NOAA and other trustees have recovered $10.4 
        billion for restoration of critical habitats, fisheries, 
        protected species and recreational uses nationwide.

  3.  Interagency coordination and leadership. NOAA represents the 
        Department of Commerce in spill response decision-making 
        activities through the 15-agency National Response Team. With 
        over 30 years of experience and using state-of-the-art 
        technology, NOAA provides expertise and a suite of products and 
        services for making science-based spill response decisions. 
        NOAA develops tools such as field-oriented job aids to assist 
        preparedness for response communities. In addition, NOAA 
        promulgates standards for observing oil, assessing shoreline 
        impact, and evaluating and selecting cleanup technologies that 
        have been widely accepted by response agencies.
Collaborations on Oil Spill Response and Restoration
NOAA, Federal Agency, and Industry Collaborations
    The Office of Response and Restoration maintains strong 
relationships with other NOAA programs and offices. We host 
preparedness trainings and coordinate the transition from damage 
assessment to restoration. Our collaborators within NOAA include:

   The Great Lakes Environmental Research Laboratory in Ann 
        Arbor, MI and its Lake Michigan Field Station in Muskegon, MI

   National Weather Service River Forecast Centers and Weather 
        Forecast Offices

   Office of National Marine Sanctuaries

    The Office of Response and Restoration collaborates with NOAA 
laboratories throughout the country for research and preparedness 
projects, including in the Great Lakes region. For example, in May 
2016, our office held a Science of Oil Spills course in Ann Arbor, 
Michigan, at the NOAA Great Lakes Environmental Research Laboratory 
(GLERL) facility. The course focused on oil spill science in the Great 
Lakes and inland waters and was attended by 35 students from the U.S. 
Coast Guard, the U.S. Environmental Protection Agency (EPA), industry, 
state agencies, and tribal representatives.
    During oil spill response, the Office of Response and Restoration 
collaborates with multiple offices and programs in planning and 
conducting response activities. Forecasts from the National Weather 
Service allow NOAA oceanographers to develop accurate, up-to-date 
predictions of where the oil will go. The U.S. Coast Guard also relies 
on the National Weather Service forecasts to plan aviation, marine, and 
shoreline operations and to keep responders safe. Depending on the 
location of the spill or the resources at risk, the NOAA Office of 
National Marine Sanctuaries will also provide support for oil spill 
response. This includes specialized marine archeological support for 
spills that involve or may affect underwater cultural resources. In 
2015, during the chemical spill from the historic sunken barge Argo, 
the U.S. Coast Guard relied on the Screening Level Risk Assessment 
Package that was developed by Office of Response and Restoration and 
the Office of National Marine Sanctuaries. This effort, which is also 
supported by GLERL, identifies and prioritizes sunken wreck oil spill 
risks based on archival research, and was used to help identify the 
barge as the Argo.
    Following the Exxon Valdez oil spill, Congress authorized NOAA's 
Damage Assessment, Remediation, and Restoration Program (DARRP) to 
assess, restore, and protect coastal environments, including the Great 
Lakes, impacted by oil spills, chemical waste releases, and vessel 
groundings. DARRP is administered by three NOAA programs: the Office of 
Response and Restoration conducts scientific assessments, the Office of 
General Counsel negotiates legal matters, and the NOAA National Marine 
Fisheries Service Office of Habitat Conservation implements restoration 
projects. DARRP has completed work on the Argo barge spill and is 
currently in the post-settlement (restoration) phase of the Enbridge 
pipeline release case, in which approximately 843,000 gallons of oil 
spilled into a creek of the Kalamazoo River. Current restoration 
activities include the creation and improvement of a park and river 
access.
    NOAA also provides training to individuals in industry and 
government on the scientific aspects of oil and chemical spill 
response. In September 2015, NOAA organized a Straits of Mackinac 
Preparedness for Response Exercise Program (PREP) exercise as a 
collaborative initiative in response to the increasing risk of oil 
spills in the Great Lakes. The goal of NOAA's training is to transfer 
scientific expertise and experience to the broadest possible audience. 
Successful training promotes more efficient planning and spill 
response. In Fiscal Year 2017, we trained over 2,000 people in oil and 
chemical spill response and planning.
International Collaborations
    International collaborations are also vital in protecting natural 
resources and economies along the United States border. NOAA 
participates in international conferences, meeting and preparedness 
drills, as well as response activities with other governments. The 
Great Lakes region represents a 1000-mile international border and 
requires a strong partnership with the Canadian government. Oil imports 
from Canada, mostly oil sands, increased by over 40 percent between 
2010 and 2015. In 2013, NOAA as well as oil sands experts from Canadian 
agencies and organizations participated in an Oil Sands Products Forum 
in Seattle, Washington. The focus of the forum was on how to prepare 
better for and effectively respond to a spill of oil sands products.
    As NOAA experts assess the impacts from oil sands spills such as 
the Enbridge pipeline spill, their studies both inform restoration for 
past spills and help guide response for the next spill. We've been 
working with the response and restoration community around the country 
and internationally to incorporate these lessons into spill response, 
including at recent meetings of the West Coast Joint Assessment Team 
with industry and trustees, and the International Spill Control 
Organization. Additionally, international agreements between the United 
States and Canadian Coast Guards include a Great Lakes regional annex 
(called CANUSLAK) for joint pollution contingency plans. NOAA and other 
U.S. and Canadian agencies routinely exercise the plans in response to 
spills that affect the maritime border.
    Finally, NOAA is a permanent member of the conference committee for 
the International Oil Spill Conference held every three years. The 
conference provides a vital forum for professionals from the 
international spill response community, private sector, government, and 
non-governmental organizations to tackle the greatest challenges in oil 
spill response facing the international community.
Oil and Chemical Spill Models and Tools
    Some of the more widely distributed tools that NOAA develops 
include a suite of oil trajectory forecasting tools known as 
GNOMETM (General NOAA Operational Modeling Environment). 
This set of tools, used for NOAA's oil spill response support, helps us 
predict the fate and transport of pollutants (such as oil) in water. 
The tools are also publicly available for use by the broader academic, 
response, and oil spill planning communities. Additionally, we jointly 
develop, with the EPA, a suite of tools known as CAMEO (Computer Aided 
Management of Emergency Operations), which are designed to assist 
emergency responders and planners in events involving hazardous 
chemicals. Freely available to emergency planners and responders, CAMEO 
programs are among the most highly downloaded products we create.
    Additional tools that NOAA provides include ERMA (Environmental 
Response Management Application) and DIVER (Data Integration 
Visualization Exploration and Reporting). ERMA is designed to aid in 
spill preparedness and planning, assist in coordinating emergency 
response efforts and situational awareness, and support the Natural 
Resource Damage Assessment process Great Lakes ERMA supports coastal 
pollution cleanup and restoration efforts across the region by 
integrating static and real-time data, such as ESI maps, ship 
locations, weather, and currents, in a centralized, easy-to-use format 
for environmental responders and decision makers. DIVER is a data 
warehouse and query tool providing natural resource trustees and the 
public with extensive information on environmental pollution, sampling, 
and restoration efforts. NOAA has worked jointly with the states of 
Minnesota and Wisconsin to tailor the functions of Great Lakes DIVER to 
the specific needs of the St. Louis River Area of Concern and recently 
gave a demonstration of the project at the St. Louis River Summit in 
Minnesota.
    Environmental Sensitivity Index (ESI) maps are also used as a tool 
to identify oil-sensitive resources and habitats in advance of 
emergencies so that appropriate response actions can be planned. While 
the maps principally capture information on shoreline types, biological 
resources, and socioeconomic resources based on their sensitivity to 
oil, they are also used by resource managers for other purposes such as 
environmental compliance and all hazards planning. ESI maps in the 
Great Lakes were created between 1985-1994 and are updated as resources 
allow. NOAA recently received funding from EPA through the Great Lakes 
Restoration Initiative to update Great Lakes ESI maps in two areas: The 
Straits of Mackinac and the St. Clair-Detroit River System. These areas 
include pipeline crossings that have generated public concern.
Oil Pollution Research
    NOAA is an active participant and the current Vice Chair of the 
Interagency Coordinating Committee on Oil Pollution Research (ICCOPR). 
The committee was established by the Oil Pollution Act of 1990 to 
coordinate Federal research efforts on oil pollution research topics, 
and consists of 15 member agencies. ICCOPR's 2015-2021 Research and 
Technology Plan helps to guide the oil pollution research efforts of 
the member agencies and inform others working in the oil pollution 
research field of Federal interests and priorities. NOAA supports a 
renewed commitment by ICCOPR and its member agencies to focus on the 
most pressing research needs--particularly deepwater releases and 
releases in cold or icy waters.
Conclusion
    NOAA serves a key role in providing scientific support for 
emergency response incidents. NOAA's suite of scientific products, 
services, and research and the expertise of our personnel are critical 
in mitigating harm, allocating resources during a response, restoring 
affected natural resources, and informing overall decision making for 
response and recovery. These contributions are important for the 
protection of the Great Lakes and other U.S. waters. Thank you for 
allowing me to testify on NOAA's response efforts.

    Senator Peters. All right. Thank you.
    And thank you to all three of our witnesses for your 
opening statements.
    I'd like to open my questions by going back to the incident 
that we had in April because I think there are a lot of lessons 
learned. You talked about some of those lessons in your 
testimony, but I think there were also some gaps that I'm very 
concerned about.
    And, Admiral Nunan, I wanted to direct this question to 
you. The Coast Guard has primary responsibility, as you 
mentioned in your testimony, as a unified command, to clean up 
release of a substance in the environment. In this case, it was 
the release of electric transmission fluid from the lines. And 
we know that we had an anchor strike on those lines as well as 
an anchor strike on Line 5. And just to put this in context, I 
think everybody in the audience knows this is everybody's 
nightmare scenario, where you have an anchor strike that 
damages these pipes to bring it open.
    So my question, though, is to you, is, To what extent, 
although your focus, as the unified command, was on the cable 
break, which had released material, to what extent was Line 5 a 
focus for the command structure?
    Admiral Nunan. Chairman Peters, the unified command, as you 
mentioned, did stand up for the mineral oil spill. In the 
unified command, we also coordinated with Enbridge, with PHMSA, 
with the State of Michigan. So they were all there 
participating in the unified command setup and were able to, 
you know, provide the most up-to-date information, including 
Enbridge was able to do some diagnostic testing in their line, 
which determined that there was not a breach in their line.
    We also, within hours of the report of a mineral oil leak, 
we were able to do overflights, so we were able to overfly the 
area, and did that daily along with shoreside and waterborne 
patrols that there was never an indication of any sheen.
    So that is the linkage, is really bringing all the partners 
together in that unified command to look at the whole area.
    Senator Peters. So the unified command was able to do a 
quick assessment, and you're stating for the record that Line 5 
was a priority, part of that unified command, to see if that 
was indeed damaged? It was--did it go beyond just Enbridge's 
assessment?
    Admiral Nunan. It went--we had the--PHMSA was part of the--
participated in the event, so we had the Federal regulator of 
pipelines, we had Enbridge doing diagnostic testing, and we had 
the overflights, and shore and waterborne patrols. So that was 
our comprehensive look.
    Senator Peters. So what I have heard, and so I would like 
to have your response on the record, is that although there was 
internal diagnostics done of the pipeline, you never know for 
sure what's happening until you actually get eyes on. You have 
to have visual inspection to get a really 100 percent sense of 
what's happening there.
    I have heard that it's because the focus was on the cables 
for the Coast Guard, that that may have delayed actually 
getting visual inspection onto Line 5. Would that be your 
assessment, that it would have happened quicker had it not been 
for the focus on the cable strike?
    Admiral Nunan. The--the unified command, I don't think I 
would explain it like that. I think that the unified command 
standing up did provide quite a bit of focus on the entire 
region and any other issues that may have occurred. So I think 
that the diagnostic testing, the ability for Enbridge and PHMSA 
to be able to determine if there was any breach in their line, 
was probably the most important piece. As far as visual 
inspections, I don't think that was needed for the initial 
response. Eventually, we did have some ROVs that were able to 
do visual inspections, but that's not typically critical for 
the early response efforts.
    Senator Peters. So--and I think that's an important 
distinction, but one has to be a little concerned, is that your 
initial inspection is that there wasn't a breach at that 
moment, you had flyovers, you had Enbridge reporting it, and 
then you--then you turn your focus to cleaning up what you know 
is actually in the water, which is the cable strike and the 
material from that. So the strike on the pipeline could, 
though, have been a ticking time bomb at that point because we 
had not had visual inspection, but that was not the focus of 
your unified command.
    Based on your authorities, I'm not critical of your work 
there, and the men and women who are in the Coast Guard, but 
those are--that's just in line with the way your authorities 
work.
    Admiral Nunan. Well, the way that our authorities work, as 
a Federal On-Scene Coordinator, is primarily in the response to 
a spill, but the way that we get to that place really leads up 
to it in all the planning and preparation we do ahead of time 
with our Area Committee. The Northern Michigan Area Committee 
has over 50 participants; that's everything from Federal, 
State, local, industry, Tribal, environmental participation. So 
all of the planning we do, all of the exercises we do, all of 
the communications we have I think support having an overall 
strong focus on that area and how we would respond. And so I 
thought we--I think we were in a very good position to have the 
right people to determine if there was an issue, and if there 
was, we were completely stood up.
    Senator Peters. Administrator Elliott, in this incident in 
April, do you feel that PHMSA had the available needed legal 
authority to compel Enbridge to take action back in April if 
you felt it was appropriate? Do you have the legal authority to 
do that?
    Mr. Elliott. I do. And we have, you know, several levels, 
Senator, that we can follow, from emergency order authority to 
corrective action orders to safety orders. So we have several 
means at our disposal that allow us to work with the operator, 
including shutdown if warranted.
    Senator Peters. So including a shutdown. So could you walk 
us through the process that your agency uses to determine 
whether or not to exercise that authority, particularly a 
shutdown?
    Mr. Elliott. Well, in--in this specific case, Senator, so 
the anchor strike occurred April 1, and it was several days 
later, April 3, I believe, that Enbridge first became aware of 
impact or suspected impact to their pipe.
    Senator Peters. Several days after the impact they became 
aware of it?
    Mr. Elliott. Yes. I think it was on the third that they 
became aware of it. They notified PHMSA of their suspicion. 
Enbridge was working then with our engineering staff. They took 
the steps of, at that point, shutting down the pipeline and 
doing some internal control room tests to see if there were any 
anomalies that indicated that, because of the anchor strikes, 
there were any integrity issues with the pipeline.
    Subsequent, they started the pipeline back up, and that was 
for a good reason. One, then they did a pressure test with the 
line followed by some fairly sophisticated in-line inspection 
capability. And I do want to stress that in this case, given 
the depth of the pipeline and the ability not to get a visual 
inspection of the pipeline as early as perhaps we would like, 
the use of in-line inspection tools gives us the best--our 
engineering staff--gives us the best understanding, and I think 
Enbridge as well, as to what kind of anomalies existed. It was 
through these in-line inspection runs that Enbridge performed 
that they were able to actually identify the dents.
    Enbridge, subsequently after that, continued to perform 
some additional tests, then calculations. They ultimately were 
able to bring in a remote operated vehicle that was actually 
the first physical examination of the outside pipeline. And 
then, of course, after that, as you know, we were able to get--
Enbridge was able to get some divers down to actually do some 
more physical, closer up assessment of the pipeline.
    So it was that information that was fed to our engineering 
staff working with them on where they were at in lowering the 
pressure of the line that made our determination that we 
weren't going to issue an order at that point to shut the line 
down.
    Senator Peters. Well, I want to get to the visual 
inspection in a moment because it did take quite a bit of time 
for that to happen, which I believe was completely unacceptable 
for the long time that was involved.
    [Cheering and applause.]
    Senator Peters. But before getting into some of the details 
of how we can expedite that in the future, if that's necessary, 
I first want to know, how can--because it sounds as if Enbridge 
voluntarily reports a lot of information, if I'm hearing you 
correctly, they're reporting that. To what extent can that 
actually be independently verified by your inspectors and other 
staff? Are we just taking the word of Enbridge or are we 
actually verifying that?
    Mr. Elliott. Well, Senator, we're verifying the data that 
Enbridge provides, and we're actually----
    [Audience disruption.]
    Mr. Elliott.--we do not independently do those in-line 
inspections, so we have to use the data that's available from 
the operators. Our engineering team will look at that data. 
They will consult with, in this case, with Enbridge operators 
to help make our decision.
    Senator Peters. So your folks were onsite for Line 5 early 
on actually verifying those----
    Mr. Elliott. We did send staff, inspection staff, up to 
work both in the incident command and to do consultation with 
Enbridge.
    Senator Peters. Part of the unified command. How quickly 
were they onsite?
    Mr. Elliott. I think it was probably several days after our 
first notification on the third.
    Senator Peters. Several days.
    Mr. Elliott. Yes.
    Senator Peters. So several days----
    [Audience disruption.]
    Senator Peters. So I'm asking these questions because I 
also want to make sure that we're coordinating properly between 
the Coast Guard, PHMSA, all the agencies, which is important, 
as the Admiral mentioned, but it also has to be done on a very 
timely basis obviously, because if it is, although you 
immediately assess, as the Admiral has testified, you 
immediately assess whether or not there's a strike, and that's 
the prudent thing to do immediately, but I'm concerned that we 
had these two operations that were going on with the primary 
focus of the known spill, which does make sense, but we have a 
unique situation here with a potentially catastrophic break 
that could have occurred. And so that's what leads to my 
questions related to the visual inspection, which my 
understanding took two and a half weeks or so before that 
occurred.
    So my question is, Why was there a need to have two 
different ROVs to be ordered, one ordered by the Coast Guard to 
assess the cable damage which came in, and another one ordered 
by Enbridge to separately align? Why wouldn't we just get an 
ROV down there as quickly as possible and do both? What 
prevented that from happening? Either--maybe Admiral Nunan? 
Because am I understanding that there needed to be two 
different ROVs? Is that accurate?
    Admiral Nunan. Chairman Peters, the--the ROVs were ordered 
as needed by either--the responsible party, in this case, was 
American Transmission. Enbridge could separately order an ROV 
to inspect their lines, or perhaps PHMSA.
    When we look at our response plans and the training and how 
we respond, typically ROVs are not necessarily a required piece 
of that right up front. And so we use all the tools that we 
have readily available that I mentioned, in this case, the 
diagnostic testing.
    For the utility line, they knew fairly quickly that the 
utility was severed, so that was part of what was used. And 
like I said, the Coast Guard used many of the tools that we 
have, including overflights and shore and on-water patrols 
every day.
    So the ROV is not necessarily part of most immediate 
responses. ROVs are not located everywhere in the country. So 
that just becomes part of the follow up review and further 
investigation.
    Senator Peters. Do you think two and a half weeks is quick 
enough?
    Admiral Nunan. I think ultimately the--the work that was 
done leading up to the ROVs, I think the ROV would not have 
changed our--our response. I think we had very good information 
to do our initial response. And like I said, all the players 
that you would want to be participating in a response of any 
kind in the straits were right there on-scene.
    So I don't think that was a critical need. It was nice to 
have, and it did ultimately show what we--what we knew to begin 
with, and it was definitely helpful in some of the follow-on 
actions to do final repairs and things like that.
    Senator Peters. Administrator Elliott, do you think two and 
a half weeks is sufficient? Is that quick enough?
    Mr. Elliott. Well, certainly, we would like to have seen 
something more swift, but, again, Enbridge had indicated that 
they had ordered up a ROV to the sites. It ultimately was 
onsite, and they did their inspection on the seventeenth.
    Perhaps going back to the admiral's comments, part of it's 
the availability of the equipment and the operators to be able 
to provide the necessary high-resolution inspection that we 
need at the kind of depths that we were dealing with here. But 
certainly sooner is better in this case.
    Senator Peters. So do we need to be rethinking about how 
quickly we require getting eyes on, particularly in an incident 
like we saw in April?
    Mr. Elliott. Well, my assessment would be is that 
specifically in instances where we know that the construction 
of the pipeline, in this case, you know, over 240 feet at the 
bottom of a waterway, creates some very normal problems with 
our ability to respond promptly. So it's probably something 
that we could look at; yes, sir.
    Senator Peters. That would be great.
    [Applause.]
    Senator Peters. So, Admiral Nunan, you mentioned in your 
testimony the equipment that the Coast Guard has ready, but let 
me first, I would say we know the primary responsibility for 
cleanup is the company that is operating the pipeline or the 
spill incident. The Coast Guard steps in when that operator is 
not able to do it to make sure that it gets cleaned up because 
of the catastrophic damage that could be done, whether in the 
straits or any other spill anywhere in the country.
    So could you be more specific? What kind of equipment does 
the Coast Guard have standing up and ready to respond within 24 
hours? If we had an accident in the Straits of Mackinac, how 
much equipment could you have there within 24 hours?
    Admiral Nunan. Chairman, if you look around the Great 
Lakes, there are OSROs and industry materials, booming, 
absorbent pads, vacuum trucks, all throughout the Great Lakes. 
The Coast Guard also, kind of on its own volition to be able to 
supplement that, especially in areas where our plans show that 
we might need additional equipment, those are strategically 
placed, and they would be things like booming equipment, 
absorbent equipment, things that you would need immediately to 
protect sensitive areas or to contain a spill as needed. But 
really the primary materials being brought to the scene are 
going to be those OSROs that we certify from a Coast Guard 
perspective.
    Senator Peters. And how quickly would they--could you get 
them to the straits?
    Admiral Nunan. In each scenario, it could be a little bit 
different. Some OSROs are able to respond as quickly as an 
hour, some 6 to 8. I would say typically you would see things 
on-scene within 12 hours, I would say at the--usually at the 
longest.
    Senator Peters. So as I remember in April, there wasn't 
significant ice at the time, although the straits ice up pretty 
dramatically during the winter, but there wasn't significant 
icing except along the coastline. Is that accurate, Admiral?
    Admiral Nunan. Yes, sir; that's correct.
    Senator Peters. Are there--it's my understanding that the 
Coast Guard has the capability for a response to ice 
conditions, but it remains somewhat limited. And there is 
certainly a lot more we need to know about cleaning up a spill 
during ice conditions as well. How concerned are you about 
potential ice in the straits? And how concerned are you in the 
future should there be complete ice cover, as to how difficult 
that will be for a unified command to bring in appropriate 
response?
    Admiral Nunan. The icing conditions, the cold conditions, 
definitely add another layer of complexity and challenge to any 
type of response. And as I mentioned in my oral statement, this 
is something over the last several years in particular, the 
Research and Development Center that the Coast Guard runs along 
with many partners that we have in academia, even international 
partners, have begun looking very closely at, How do you 
respond in icing conditions, not only, you know, collecting--
identifying and collecting the oil, but also protecting our 
responders?
    So that research and development is ongoing, not only 
developing new technologies, but just refining some of our 
procedures that we would use our current materials to operate 
in ice.
    Senator Peters. So both Administrator Elliott and Admiral 
Nunan, so give me--just give me your realistic assessment, 
let's say that worst-case scenario happened and Line 5 was 
indeed ruptured by the anchor at that time, do you think we 
have enough equipment onsite, could we have done an effective 
response?
    Administrator Elliott.
    Mr. Elliott. Well, Senator, I think based on the 
information we have with our role to review oil spill plans 
working in conjunction with our colleagues in the Coast Guard 
to help understand the dynamics, I think, depending on the 
circumstances, that the plan in place would provide adequate 
coverage in responding to the spill. Now, there are a lot of 
dynamics with, you know, what could possibly happen, but I 
think at least the requirements of the spill plan are to 
provide response to a worst-case scenario.
    Senator Peters. Admiral, do you agree with that?
    Admiral Nunan. Chairman, I would agree. A spill that you're 
describing is the exact worst-case scenario that we have been 
trying to prevent, we've been working to prepare in case it 
happens, and so it would not catch us unprepared because that 
is what we have been very much working on both from full-scale 
exercises, you know, before that, tabletop exercises, making 
sure that we have the right equipment in place, the right 
partnerships in place. So--and it's not to say that we're not 
going to continue to learn, we're not--we are--we are going to 
continue to evolve in technologies and procedures and 
partnerships, but our, you know, 50-member Area Committee, that 
is our primary worst-case scenario. So I feel that that's what 
we've been preparing for, in case that happens, and I think the 
preventative measures will hopefully be--be able to prevent 
such a spill.
    Senator Peters. So you have this assessment, but it's 
always--and I gave you a hypothetical, so I realize the 
limitations of that, but we also assume that you--and according 
to your response, that we had good conditions to actually clean 
up the site, as you have in the straits. We all know that the 
weather conditions in the straits can be very challenging for 
navigation, it can be very challenging if you had to do a 
cleanup of a spill of some sort.
    In fact, Mr. Lundgren, within that time, we had a pretty 
severe storm that you were monitoring from NOAA that I know, in 
fact, I have some of the wave responses here. I've been looking 
at this chart here. There's a lot of red on that chart. I think 
that's bad usually----
    [Laughter.]
    Senator Peters.--and other colors that happen. So we had 
very high waves, you know, in excess of 8 feet. In some areas 
when you get on the lakes, it's way in excess of that. But 
would you say we had--we had some pretty bad weather that you 
were forecasting that was coming into the area. So Enbridge and 
others knew bad weather was coming in. Is that accurate?
    Mr. Lundgren. Yes. I know the Weather Service has provided 
what was being released for the wind observations and forecasts 
as well as the wave forecasts for that--that period of time 
that you're talking about. And when you look at the Straits of 
Mackinac and the material that was provided to you and your 
staff, sir, there were wave peaks in the order of 5 to 6 feet 
for significant wave height during that timeframe. It was 5 
p.m. on April the 15th was the maximum in the straits.
    Significant wave height is the mean, the average of the 
highest one-third of waves, so that doesn't mean that was the 
maximum, but there were waves that were in that highest one-
third that were 5 to 6 feet on----
    Senator Peters. Right. And so the maximum, though, was in 
excess of that. We knew it was in excess.
    Mr. Lundgren. Right.
    Senator Peters. That's a mean average. So we've got waves, 
it's reasonable to say, over 8 feet were coming in?
    Mr. Lundgren. Yes. That's the----
    Senator Peters. This is a--this is a bad weather condition 
coming in. And I knew this was happening at the time after the 
strike. We were very concerned about whether or not there has 
been a response coming.
    In fact, Admiral Nunan, this is where I thank you for 
bringing your folks together to talk about what would happen 
now that we've got bad weather coming in. We haven't--we don't 
have visual inspection of this pipeline. We have Enbridge 
saying that their testing is looking good. We have PHMSA 
reviewing that, but still relying on what Enbridge has to say. 
But we don't have eyes on what that may be. And I asked you a 
question, or your team a question, at that time, Do you have 
skimmers onsite because you're cleaning up the cable break? At 
what size--or how effective are they in rough seas and wave 
heights? And I was told at the time anything beyond 2 to 3 
feet, they would be ineffective. Is that accurate?
    [Applause.]
    [Audience disruption.]
    Admiral Nunan. Chairman, I--I do recall that we provided 
that information to you. I think typically in a unified 
command, we would use 2 meters, which is about 6-1/2 feet, as a 
standard, but really any significant wave height, it does make 
it more challenging to contain a spill. It does make it more 
difficult, and you have to look at all of your options.
    Senator Peters. Yes. And I know--and I know you, Admiral, 
you care so deeply about the Great Lakes and response. When you 
say it's more challenging----
    Admiral Nunan. Yes.
    Senator Peters.--I mean, you can't get out there to clean 
in rough seas, and when you have those kinds of winds, the 
kinds of projections as to what would happen to oil, the worst-
case projections come to bear as well, that will blow that 
stuff, and the currents will be strong to move it around, and 
we can't simply get equipment out there. So it is a--it is a 
very frightening situation. It's going to put our responders 
in, as you say, an incredibly challenging position. But I would 
argue at that point that we're looking at catastrophic damage 
now that will have irreparable harm, especially during that 
kind of storm environment.
    Administrator Elliott, I spoke to you during that, and as--
and I will talk to our representative from Enbridge later--but 
there's an agreement with the State of Michigan that they would 
shut down the pipeline if there are 8 feet of swells because of 
the issue related to cleanup. We've heard from NOAA that 
weather forecasts were basically telling us that, and that 
actually came to pass, that we had that kind of weather. It was 
on front page papers about the big storm that came across here. 
So the state requirement was 8 feet, but we had to--we had to 
really put some pressure on Enbridge. And I appreciate you 
taking my call and spending time over a weekend that you were 
engaged. But Enbridge, it was not without some effort to get 
them to shut that down, is that correct?
    Mr. Elliott. Well, Senator, yes. And first of all, weekends 
don't matter when we're talking about issues such as----
    [Applause.]
    Mr. Elliott. You're correct. I mean, the agreement that 
Enbridge has talks about 8-foot-high waves, and in this case, 
we knew we were dealing with some concerns about the lines that 
ran on the Straits of Mackinac. It was our hopes that Enbridge 
would have ceased operations when I think it was two weeks 
after--about two weeks after the anchor strike that we were 
talking.
    Senator Peters. Right.
    Mr. Elliott. And in this case, you and I talked, and I also 
had conversation with some of the leadership at Enbridge. So it 
took a discussion to get them to shut down the line until the 
storm had passed, yes.
    Senator Peters. The question I have for Admiral Nunan, that 
I understand that the Coast Guard now is proposing dealing with 
the navigation area and specifically about anchors. Do you want 
to tell me more about your efforts to have regulations to 
prevent anchoring in that area?
    Admiral Nunan. Yes, Chairman. After this incident, the 
State of Michigan actually put in place a temporary regulated 
navigational area, and the Coast Guard has proposed such. It is 
out for public comment until September 4. And then subsequent 
to that, we will initiate a regulated navigation area. If you 
look on the chart right now, it does warn of undersea cables, 
and it doesn't say, ``Don't anchor here,'' but we think that 
this additional RNA, is what we call it, will definitely sort 
of raise the awareness of the concerns in that area and also 
provide some consequences if someone intentionally or 
unintentionally anchors in that area.
    Senator Peters. So you're significantly increasing both 
civil penalties and potentially criminal penalties for doing 
that?
    Admiral Nunan. Yes, sir.
    Senator Peters. Well, that's good. I appreciate that. We 
definitely need to continue to move forward on that.
    Mr. Elliott, PHMSA recently authorized Enbridge to return 
to maximum operating pressure after a composite sleeve was 
utilized to reinforce the areas of the pipe that have been 
affected by this anchor strike. At a top level, can you explain 
why the lower pressure had been mandated following that strike?
    Mr. Elliott. Yes, Senator. And if I can take just a second 
to explain. So the maximum allowable pressure for the section 
of pipeline that traverses the Straits of Mackinac is 600 psi. 
Enbridge historically has operated at a pressure much lower 
than that, between 150 and 200 psi.
    When the dents occurred, we worked with Enbridge to 
understand their corrective action plan to resolve the dents. 
They followed through on that commitment. Our engineering staff 
went through all of the repair criteria. And then after the 
repairs were made and the sleeves were put on the outside of 
the dent area, and at that point, we felt that it was 
appropriate to go ahead and reestablish the original maximum 
allowable operating pressure.
    But please let me stress that in 2017, that line was also 
pressure-tested hydrostatically to 1,200 psi. So the maximum 
allowable pressure is one point, but again we know that 
Enbridge in this case typically operates that pipeline at a 
much lower rate, between 150 and 200 psi.
    So given the repairs that were made, given the in-line 
inspection technology that had been applied both before and 
then after the repairs were made, and we're still going to be 
reviewing some of the additional in-line inspection that's been 
done after the repair, we felt it was adequate to go ahead and 
allow the operating pressure to return.
    Senator Peters. But I want to get back to the damage that 
was done. My understanding is once we got a visual inspection 
both from the ROVs plus putting divers into the water, that 
there was not just denting, we keep talking about denting, but 
there was also gouging is how that occurred on the pipes. Can 
you describe the difference between denting and gouging, and 
specifically why gouging is more of a concern for PHMSA than 
denting, and we've got to be clear these pipes were gouged?
    Mr. Elliott. Right. Well, and certainly, and actually I 
think the best way to really explain it is there are three 
terms I like to use. So a dent is what we would normally see if 
someone were to take a ball-peen hammer and hit a piece of soft 
metal; there's an indentation. There's a second term that we 
use called ``scoring,'' and that's actually where if you think 
about maybe a worn knife through a pat of butter where actually 
there is deformation of the material, but there is no--no 
removal of the base metal in this case. And then the third 
point, that you bring about, is gouging. That's where you would 
apply--the example I use would be like a wood chisel that 
actually has constant downward force and the metal is removed.
    In this case, there was indications, not only was there a 
dent, but some gouging. Now, to your very good point, where we 
get concerned about gouging is because that's where we have a 
more likelihood of a crack, and a crack that's allowed to 
propagate. So that was one thing that we were looking at 
closely, but I might also add with some of the in-line 
inspection work data that we reviewed, that can--that's one of 
the items that the in-line inspection data can help us 
identify.
    But you're correct, I mean, gouging does create more of a 
concern for us.
    Senator Peters. So are you--is PHMSA confident that the 
coating is fully intact on the straits segment of Line 5, all 
of the coating?
    Mr. Elliott. Well, we know--we know for sure that there 
are--and the term that we use in the business are ``coating 
holidays.'' There are actually some areas where coating has 
been removed from the pipe. We know that--and it goes along 
with some of the spacing gaps that occur. The spacing 
requirements are actually part of Enbridge's permit to operate 
with the state. We know, too, in working with Enbridge that 
they have a plan not only to put in more anchors than they have 
done already to help stabilize the pipeline, but they also have 
a plan to go and catalog and then do work on recoating those 
coating holidays as well.
    Senator Peters. And how long will that take?
    Mr. Elliott. I'm not sure of the exact date, but I can get 
that and make sure that----
    Senator Peters. We need to do that because obviously it has 
to be done quickly.
    Mr. Elliott. Yes, sir.
    Senator Peters. Given Enbridge has failed to report damage 
to Line 5 in the past, and then many folks in the audience will 
know many times where that hasn't happened or we learn about it 
months later, or in some cases years later, how can PHMSA, or 
the State of Michigan for that matter, be confident that 
damages are actually being properly monitored and corrected 
given the track record that we have seen from Enbridge?
    [Applause.]
    Senator Peters. Mr. Elliott.
    Mr. Elliott. Well, Senator, we are dependent upon not only 
Enbridge, but every operator in a 2.7-million-pipeline network 
that we have in this country with hundreds of operators. We are 
dependent upon the operators to promptly report incidents that 
occur to their pipeline. We have a number of enforcement tools 
at our capability to help encourage those that do not report as 
they are required to do.
    Senator Peters. So is there any way, I mean operationally, 
that the state or PHMSA can actually maintain, given the 
resource constraints that you have, are there any way that you 
can maintain independent eyes on an operation, or is that just 
an unrealistic expectation that we may have?
    Mr. Elliott. Well, Senator, I think it's fair to say, 
again, it's an expansive pipeline network in this country, but 
the men and women of PHMSA do the very best they can. We're 
dependent on integrity management systems that the pipeline 
operators are required to put in place. We require--we also 
monitor their safety management systems. So there are a number 
of procedures and processes that we monitor.
    Is it fair to say that we can look at every mile of 
pipeline, every bit of data? No, that's--that's not something 
we can do. We tend, though, to focus a lot of our time on those 
operators that we have the most concerns about.
    Senator Peters. Well, obviously, some areas are more 
sensitive than others. You can't watch everything all of the 
time, but I think it's fair to say that you will not find a 
more sensitive area anywhere in the United States of America 
than the Straits of Mackinac.
    [Cheering and applause.]
    Senator Peters. So the question is, How can we 
operationally keep independent eyes in one place, or a few, 
that are absolutely critical in so many ways?
    Mr. Elliott. Well, Senator, you have my commitment that we 
will work hard every day to ensure the integrity of the entire 
Lakehead System and Line 5. You know, the men and women of 
PHMSA do a great job each and every day with the resources we 
have to make sure that every operator works in a safe manner. 
We have responsibilities through all of the United States. And 
I agree with you, this is a wonderfully pristine area and 
someplace that we have to make sure that we work very hard to 
ensure the safety operations and the integrity of the operator.
    Senator Peters. Well, I appreciate that commitment, but we 
need to work on a variety of areas to make sure that commitment 
becomes--becomes real. As you know, I was able to get language 
recently passed that takes a look at the entire Great Lakes 
region and now classifies the entire Great Lakes region as a 
high-consequence area. As catastrophic as it would be in the 
Straits of Mackinac, anywhere in the Great Lakes region is a 
risk to the Great Lakes all across the Upper Peninsula, very 
sensitive areas. We've got to treat all of that as a special 
place with unique challenges. That's in the law. Where are we 
in actually implementing that?
    Mr. Elliott. So we've had our first meeting here in 
Michigan to help understand the complexities of identifying 
some of the terms that came into play. There are some 
definitions that had heretofore been part of definitions of 
high-consequence areas. The team has come back from that first 
session. We have started to work on some language for Advanced 
Notice of Proposed Rulemaking. And I think, too, in talking to 
my staff, we're looking to come back here in the near future to 
kind of run that information by folks here in the state, and 
then we'll move more--move more quickly forward with the 
rulemaking.
    Senator Peters. Can I get your commitment you will make 
that a priority within your agency?
    Mr. Elliott. Yes, sir.
    Senator Peters. OK. Thank you.
    Mr. Lundgren, part of why the Great Lakes region is so 
sensitive is the fact that it's freshwater as opposed to 
saltwater. I mentioned in my opening comments my concern is 
that we know a whole lot more about cleaning up oil in 
saltwater, and primarily as a result of the fact that there are 
microorganisms that exist in saltwater that simply don't exist 
in freshwater that make it more complicated. Could you inform 
the Committee on the science of cleanup of freshwater versus 
saltwater and why freshwater is so much more difficult to 
clean?
    Mr. Lundgren. Certainly, Senator. You're correct that 
historically most research has been focused on marine 
environments over time, partly reflecting historic transport 
patterns as well as the substantial spills that have driven 
major research booms in the oil spill world: Exxon Valdez in 
1989, Deepwater Horizon in 2010. So much of the knowledge 
that--that is there relates to that. There was a recent survey 
of over 11,000 spill research publications spanning 30 years, 
and it did find that about 5 percent were focused on 
freshwater, less than 5 percent.
    So there is interest in expanding freshwater research 
driven by the shift in inland oil production and transport, as 
well as the Kalamazoo River spill, but it does remain a small 
fraction. Some of the types of biological degradation that 
you're talking about that ultimately does consume a lot of oil, 
there's additional knowledge that could be warranted, could be 
developed through further research.
    While many response tactics and much of the response 
knowledge on injury has been developed from saltwater spills, 
and a lot of that may be directly transferable or adaptable to 
fresh, research is certainly prudent to ensure a lot of the 
under--deeper understanding that you mentioned of the changes 
resulting from the water density, salinity, the major ecosystem 
differences, including the microorganisms that are major 
degraders. So that, plus the additional concern for drinking 
water resources, warrants greater understanding, and it's 
certainly an area of interest for our--for us.
    Senator Peters. Well, we certainly need to have much 
greater understanding across the country because these 
pipelines are crossing rivers and other lakes. It is important 
for us to have a sense of how to deal with that, which is a big 
reason why in the Coast Guard reauthorization bill, I've 
included language to create a Center of Excellence to be able 
to research freshwater spills to the extent that they need to 
be because we've fallen behind in how we clean up these spills, 
coordinate with the Coast Guard.
    Admiral Nunan, that will be within the Coast Guard 
reauthorization when passed, and we are hoping to bring 
partners with the universities here in Michigan, the Coast 
Guard, other entities, to be able to increase that research 
effort. I know you do some of that research currently and do it 
in other facilities along the East Coast, but we're hoping to 
work closely with you and find the appropriate funding and 
other mechanisms to make that a reality. How would you see that 
playing out?
    Admiral Nunan. In an unrestrained budget, we would always 
want more research, more development. And it was great to have 
some of your staff come on board the Coast Guard Cutter 
HOLLYHOCK when we are continuing to do some of the research 
that's happening within the Coast Guard's R&D Center and with 
our partners. So--but I think, you know, the point that you 
bring up about resources is something that we can't ignore and 
really has to do with, you know, how do we prioritize our 
resources?
    So right now I'm committed to continuing to do everything 
that we can do to further that advancements in technology and 
using what we have.
    Senator Peters. Well, in wrapping up this panel, I mean, 
one thing that to me is very clear, we've been talking about 
oil response for an unthinkable act, but bottom line, we don't 
ever want to get to the point where we have to clean up. It's--
you know, we want----
    [Cheering and applause.]
    Senator Peters. And we know accidents occur, and just by 
the presence of whenever that a pipeline exists, there's always 
the possibility. We see it in places all across the country at 
various times. Accidents do happen.
    So my question for you, Administrator Elliott, has PHMSA 
ever ordered the decommissioning and removal of an oil pipeline 
in the United States of America?
    [Cheering and applause.]
    [Audience disruption.]
    Mr. Elliott. We have not.
    [Audience disruption.]
    Senator Peters. You have not done that in the past? Is 
there a procedure or a process that could lead to the 
decommissioning of an oil pipeline?
    Mr. Elliott. As I had mentioned earlier, Senator, we have 
emergency authority powers. We have not executed those. They 
have been recently given to PHMSA within the last few years. We 
typically find that working through corrective action orders or 
other processes we have that we can work to get pipeline 
operators to quickly comply in resolving any safety issues. I 
do think it's fair to say, though, that if we do find a 
situation that is severe and critical enough, that we would not 
hesitate to use that ability to force a pipeline operator to 
cease operations.
    I might say, on the opposite end, there is a fair amount of 
new pipeline construction, as you know, going on in this 
country. And we have a pretty good record of not allowing 
pipelines to startup operation until we've been absolutely sure 
that they could attest to the full integrity of their 
operations.
    Senator Peters. So those are today's regulations. Of 
course, the pipe across the straits, that was 60 years ago. The 
world was a lot different then.
    [Cheering and applause.]
    Senator Peters. So I appreciate the testimony from all 
three of you. As I mentioned in the opening, we're going to 
keep the record open. I'm sorry I couldn't ask all the 
questions I would like to ask in the time that we have, but we 
will submit additional questions for the record to get your 
response. I open that up to anybody who would like to have 
questions or comments put into the official Senate record 
regarding the testimony that you have heard from these three 
witnesses.
    We're going to now end this panel, and we're going to bring 
up a second panel to further discuss this issue. But again 
thank you for your testimony. Thank you for taking the effort 
to be here. I look forward to working closely with all three of 
you. Thank you so much.
    [Applause.]
    [Pause.]
    Senator Peters. Well, we now have our second panel 
situated. And I want to thank each of our panelists for being 
here today to provide your testimony. Our panel today consists 
of Mr. David Bryson, who is the Senior Vice President for 
Operations, Liquid Pipelines, for Enbridge, out of Calgary, 
Alberta.
    Mr. Bryson, certainly I'm pleased that you are here today. 
I think you've already heard from some of the reaction from the 
folks in the audience today, this is an issue of great concern 
to Michiganders, as well as it should be a great concern for 
everybody in the country, given the importance of the Great 
Lakes, not just for the region, but for the entire Nation.
    And my goal for this hearing is to give Enbridge an 
opportunity to articulate your vision of safety and 
environmental protection for folks to hear. I have not always 
agreed with the company's approach, and believe that as a 
result of the disaster in Kalamazoo, there is a significant 
deficit of trust when it comes to Enbridge and dealing with the 
people of Michigan.
    [Applause.]
    Senator Peters. But having said that, I'm grateful for your 
willingness to be here, and we all look forward to hearing your 
testimony.
    We have also Dr. Shriberg, who is the Executive Director of 
the National Wildlife Federation's Great Lakes Regional Center 
in Ann Arbor.
    Dr. Shriberg, thank you for your leadership within the 
National Wildlife Federation as well as your service to the 
state on the Pipeline Safety Advisory Board. You have been a 
tremendous advocate for the Great Lakes, and having you here to 
testify is most appreciated.
    Mr. Hennessy, Mr. Chris Hennessy, is another witness who is 
the Business Development Representative from the Michigan 
Laborers-Employers Cooperation and Education Trust.
    Mr. Hennessy, as you know, for nearly a century Michigan 
Laborers have been building the infrastructure that 
Michiganders rely on every day, and your workers, quite 
frankly, have built most of Michigan. So we appreciate that and 
we appreciate your testimony on workforce related to pipelines.
    We also have with us Mr. Larry Bell, who is the founder and 
owner of Bell's Brewery in Kalamazoo, Michigan.
    [Cheering and applause.]
    Senator Peters. As is obvious, Mr. Bell has been a 
tremendous advocate for the Great Lakes. In fact, I certainly 
enjoyed being present when you were honored by the League of 
Conservation Voters for your very forceful advocacy on behalf 
of the environment, in particular, clean water. There's no 
question, we can't enjoy your great product without having 
clean water.
    [Laughter.]
    Senator Peters. And I say that's something that I really 
fully appreciate and love to have you here.
    [Laughter.]
    Senator Peters. We also have Mr. David Murk, who is the 
Manager of Pipelines, Midstream and Industry Operations at the 
American Petroleum Institute.
    Mr. Murk, thank you for being here today and sharing the 
American Petroleum Institute's expertise as well as for your 
past service to the United States Coast Guard. As you heard 
when I introduced Admiral Nunan, the people in Michigan 
appreciate the men and women who serve in the Coast Guard, and 
your service in the Coast Guard was certainly exemplary, and we 
look forward to learning more from you.
    I know I had a lot of questions for the previous panel, so 
we're going to--we have--we're going to try and move this one a 
little quicker, although you still obviously will all have, 
hopefully, your less than five-minute opening comments, and 
then we'll get to some questions for this panel.
    So with that, Mr. Bryson, if you would lead off this panel. 
I'm sorry, the table looks a little short for the five of you 
here, but we appreciate you being here, Mr. Bryson.

 STATEMENT OF DAVID BRYSON, SENIOR VICE PRESIDENT, OPERATIONS, 
                   LIQUID PIPELINES, ENBRIDGE

    Mr. Bryson. Thank you. Well, thank you, Senator Peters.
    My name is David Bryson. I oversee liquid pipeline 
operations for Enbridge throughout North America. I appreciate 
the opportunity to discuss pipeline safety and emergency 
response as it relates to the Great Lakes, an important focus 
for this Committee, for the people and businesses of Michigan 
and Great Lakes region, and a critical priority for Enbridge.
    Enbridge brings to this morning's discussion our experience 
as an operator of critical energy infrastructure in Michigan 
and the Great Lakes region for more than 60 years. Today our 
company is one of the largest suppliers of energy across the 
State.
    Line 5 is one of several pipelines we operate in Michigan. 
The pipeline carries light and synthetic crude and natural gas 
liquids. Line 5 carries to market Michigan-produced light crude 
oil, helps supply refineries in the greater Detroit area, and 
helps meet approximately 55 percent of Michigan's statewide 
propane demand.
    Line 5 has also been receiving a lot of attention lately, 
not for the products and benefits it provides to Michigan and 
the surrounding region, but for the unique environment in which 
it operates, specifically the Straits of Mackinac.
    At Enbridge, we understand how important the Great Lakes 
and the straits are to the Michigan residents and businesses. 
The health and protection of these waterways are essential to 
the vitality, sustainability, and economic prosperity of the 
region and the State of Michigan overall.
    We also recognize that our unique responsibility to 
Michigan is borne out of a shared experience, a failure 8 years 
ago on an Enbridge pipeline in Marshall, Michigan, that 
fundamentally reshaped our company's approach to managing risk 
and pipeline integrity, and that it's defined a safety culture 
at Enbridge fixated on 100 percent safe operations and zero 
incidents.
    Prevention is a key component of safety. Enbridge's 
integrity management and monitoring programs for Line 5 at the 
straits crossing are as unique as the surrounding areas and 
rely on Federal and State regulations as a baseline for actions 
as we strive for continuous improvement. Our proactive 
inspection program allows us to monitor the fitness of our 
pipelines using advanced technologies from both inside the 
pipeline and outside the pipeline.
    While prevention is a critical component of our pipeline 
safety and our first priority in the unlikely event of an 
incident, Enbridge is committed to providing a comprehensive 
incident response at any point along our pipeline network.
    Enbridge maintains strong emergency preparedness and 
response systems, and we regularly test and continually improve 
through simulated exercises and drills alongside Federal, 
State, and local first responders and emergency management 
officials. This includes the training of people and resources 
to respond to incidents in any conditions, including winter.
    Enbridge has significant supplies of equipment and 
resources stationed near the straits. These resources, 
including support from oil spill removal organizations, can be 
moved and concentrated at any point along Line 5 to enable a 
safe, efficient, and effective response. We recently 
strengthened our emergency response capability at the straits 
by purchasing $7 million in additional equipment, which 
enhances our capabilities and further reduces the response time 
in the unlikely event of an incident.
    In addition, as you heard from Rear Admiral Nunan, the U.S. 
Coast Guard, which has Federal jurisdiction in this area, would 
augment any response.
    In summary, Enbridge has been operating liquids and natural 
gas pipelines in Michigan for more than 60 years, and today our 
company is one of the largest suppliers of energy across the 
state and the Great Lakes region. Within this system, Line 5 
has been, and will continue to be, a critical link in the 
straits, connecting Michigan's two peninsulas, safely and 
reliably deliver the energy Michigan families and businesses 
rely on each day.
    While we are committed to helping further secure Michigan's 
energy future, and we see Line 5 as an integral part of that 
future, Enbridge also recognizes that the Straits of Mackinac 
is a special place, vital to the Michigan residents and to the 
State's economy. Our multilayered pipeline safety management 
system continues to protect Line 5 and the straits, and our use 
of advanced technologies continues to drive the risks lower and 
lower.
    We are committed to harnessing and developing new 
technologies to further protect and enhance the integrity of 
our assets and to ensuring a timely and coordinated robust 
response to protect the Great Lakes.
    Thank you for the opportunity to be part of today's 
discussion. And I look forward to your questions.
    [The prepared statement of Mr. Bryson follows:]

Prepared Statement of David Bryson, Senior Vice President, Operations, 
                       Liquid Pipelines, Enbridge
    Enbridge appreciates the opportunity to appear before the Senate 
Committee on Commerce, Science and Transportation to discuss pipeline 
safety and emergency response as it relates to the Great Lakes--an 
important focus for this Committee, for the people and businesses of 
Michigan and the Great Lakes Region, and a critical priority for 
Enbridge.
    Enbridge operates energy infrastructure across 41 U.S. states and 
seven Canadian provinces. Through our system of more than 50,000 miles 
of pipelines, terminals and storage facilities, Enbridge helps to fuel 
quality of life and to stimulate economic growth in communities across 
our system--safely and reliably transporting approximately 28 percent 
of the crude oil produced in North America and approximately 20 percent 
of all natural gas consumed in the United States.
    Enbridge also serves approximately 3.7 million customers directly 
through our natural gas utility businesses, and we have invested nearly 
$10 billion in renewable energy and power transmission projects across 
the U.S., Canada and in Europe. As a company developing and operating 
liquids and natural gas pipelines and renewable energy production, 
Enbridge is delivering energy security and driving transformation 
toward a lower-carbon economy.
Enbridge in Michigan
    Enbridge brings to this morning's discussion our experience as an 
operator of critical energy infrastructure in Michigan and the Great 
Lakes Region for more than 60 years. Today, more than 100 Enbridge 
employees and contractors live and work in communities across Michigan, 
and our company is one of the largest suppliers of energy across the 
State with a number of pipelines, terminals and storage operations 
supporting the safe and reliable delivery of crude oil, natural gas, 
natural gas liquids and refined products to homes and businesses 
throughout Michigan.
    Our assets in operation include the Line 5 pipeline which moves 
light crude, synthetic crude and natural gas liquids (NGL) from 
Superior, Wisc. to destinations in northern Michigan and the Detroit 
area before ending in Sarnia, ON, Canada. On an annual basis, Line 5:

   supplies approx. 55 percent of Michigan's statewide propane 
        demand;

   carries up to 14,000 barrels per day of Michigan-produced 
        light crude; and

   delivers nearly 30 percent of its light crude to refineries 
        in the greater Detroit area.

    Enbridge's operations in the State help fuel quality of life 
through ongoing tax revenue as well. In 2017, Enbridge paid nearly $61 
million across Michigan in property tax for our pipelines and related 
facilities. Enbridge also paid $837,000 in sales and use taxes, and 
$150,000 in other taxes (including payroll tax, fuel tax and excise 
tax) across the state of Michigan. This revenue can be used by local 
communities for schools, infrastructure (roads and bridges), health and 
wellness, recreation, transportation and other services that help 
strengthen the fabric of the community.
    Enbridge's ongoing operations, and planned projects, stimulate 
local and regional economies in other ways, too. Through procurement 
spending, we're helping to create indirect employment, support local 
businesses, and establish economic spinoffs. In 2017, Enbridge's 
capital expenditures in Michigan, on such items as pipe steel, 
equipment purchases and replacement, system integrity-related 
investments, and capital leases, exceeded $16.1 million. Enbridge's 
operating and administrative expenditures in Michigan, such as 
maintenance costs, equipment leases, power consumption, and field 
personnel salaries and wages, exceeded $59.2 million.
    Last year, Enbridge also invested more than $400,000 in community-
strengthening initiatives across Michigan--and supported numerous not-
for-profit agencies in the state--aligned to our three focus areas of 
health and safety, environment, and community.
    Enbridge continues to support the various emergency response 
organizations that keep Michigan safe. Our Safe Community program helps 
first response emergency services purchase the safety equipment, obtain 
the professional training, and deliver the educational programs that 
ultimately save lives. Enbridge's Emergency Responder Education Program 
equips first responders and 9-1-1 dispatchers with the essential 
information they need to respond in the unlikely event of a pipeline 
incident, through free, unlimited, online training. Finally, through 
our public awareness programs, we engage in an open dialogue with our 
neighbors in the communities near our projects and operations, 
providing pipeline safety information to the people who live and work 
along our pipeline routes.
Pipeline Safety
    Our unique responsibility to Michigan is borne out of a shared 
experience, a failure eight years ago on an Enbridge pipeline in 
Marshall that fundamentally reshaped our company's approach to managing 
risk and pipeline integrity, and that has defined a safety culture at 
Enbridge, fixated on 100 percent safe operations and zero incidents.
    While this is true throughout Michigan and across our entire North 
American system, we take special precautions to ensure the continued 
safe and reliable operation of Line 5 as it crosses under the Straits 
of Mackinac in the Great Lakes.
    We understand how important the Great Lakes and the Straits of 
Mackinac are to Michigan residents and businesses. The health and the 
protection of these waterways are essential to the vitality, 
sustainability, and the economic prosperity of the region--and the 
state of Michigan.
    Prevention is a key component of safety at Enbridge. Enbridge's 
integrity management and monitoring programs for Line 5 at the Straits 
crossing are as unique as the surrounding areas, and rely on Federal 
and state regulations as a baseline for our actions as we strive for 
continuous improvement. Our proactive inspection program allows us to 
monitor the fitness of our pipelines, using advanced technologies, from 
both the inside and the outside. The extra precautions Enbridge takes 
on the Line 5 Straits of Mackinac crossing, make this crossing the most 
inspected segment of pipe in our entire North American network.
    Current safety and inspection measures/programs include:

   Operating the dual pipelines at low pressures with a maximum 
        pressure limit of 600 psi, to minimize stress on the pipeline 
        steel and enhance safety;

   Regular inspections performed even more frequently than what 
        is required in the PIPES Act--this includes using leading 
        technologies on inline inspection tools, expert divers, and 
        remotely operated vehicles (ROVs);

   Span management and support modernization;

   Pursuing and advancing commercially available technology, 
        including collaborations with Michigan Tech's Great Lakes 
        Research Center; and

   Supporting the Line 5 crossing's extraordinary design and 
        construction standards with proactive maintenance and 
        modernization opportunities.

    With all monitoring, maintenance and modernization measures, 
Enbridge works closely with our Federal and state regulators and 
interested government entities including (but not limited to): U.S 
Department of Transportation/PHMSA, U.S. Environmental Protection 
Agency, U.S. Coast Guard, U.S. Army Corps of Engineers, U.S. Fish and 
Wildlife Agency, Michigan Department of Natural Resource, Michigan 
Department of Environmental Quality, and the Michigan Agency for 
Energy.
Emergency Response
    While prevention is a critical component of pipeline safety and our 
first priority, in the unlikely event of an incident, Enbridge is 
committed to providing a comprehensive incident response at any point 
along our pipeline system. Enbridge maintains throughout its pipeline 
system strong emergency preparedness and response systems that we 
regularly test and continuously improve alongside federal, state and 
local first responders and emergency management officials.
    Our company-wide Enbridge Enterprise Emergency Response Team (E3RT) 
was created in 2012 and trained to respond to large-scale incidents 
across North America that would require more resources than a single 
Enbridge operating region or business segment could provide.
    Enbridge's emergency response teams are trained to use the NIMS 
(National Incident Management System) utilizing standardized ICS 
(Incident Command System), an emergency response system used across 
North America by military, first-response agencies, and local, state/
provincial, and Federal governments. ICS enables Enbridge employees and 
contractors to react quickly and efficiently to the emerging issues and 
challenges that are inevitable in a real-life emergency response. That 
common, across-the-board understanding of ICS, and implementation with 
other response partners, helps to make our emergency response safer, 
more efficient, and more effective.
    To keep our employees and contractors prepared, we stage regular 
simulation exercises and drills in all of our operating regions, such 
as:

   Tabletop exercises, including E3RT events;

   Equipment demonstration events; and

   Full-scale simulation and resource deployment events.

    Since 2012, Enbridge has conducted on average annually more than 
400 drills, exercises, and emergency equipment deployments enterprise-
wide including at least 165 on its liquids pipelines systems alone in 
each of the last four years.
    During many of these exercises, employees and contractors train 
along-side federal, state, regional and local first-response agencies. 
This not only tests Enbridge's emergency response tactics and 
strategies, but also strengthens the bonds of preparedness between 
agencies that can help promote a safe, rapid and effective response 
when necessary.
    Enbridge has tailored and detailed emergency response plans, region 
by region, that govern our response for all types of situations. 
Regional emergency plans consider all the factors that influence the 
behavior and potential impact of a release--including drinking water, 
flow of running water, air emissions, wildlife and animal livestock, 
and shoreline impacts. These plans are reviewed and updated on a 
regular basis.
    In the event of an emergency near the Straits of Mackinac, we can 
draw upon considerable combined resources. Enbridge has significant 
supplies of equipment and resources near the Straits, and these 
resources can be moved and concentrated at any point along Line 5 to 
support a response. In addition, Enbridge would immediately leverage 
the resources of oil spill removal organizations (OSROs)--such as T&T 
Marine and Marine Pollution Control in the Straits region--whose 
resources can help enable a safe, speedy, and effective response. In 
addition, the U.S. Coast Guard, which has Federal jurisdiction in this 
area, would augment any response.
    The tactical response plan for the Straits area has been tested via 
full-scale emergency response exercises--including one in September 
2014 at Indian River, and another in September 2015 at the Straits of 
Mackinac--involving key agencies such as the U.S. Coast Guard, PHMSA, 
the U.S. EPA, and numerous state, local, and Tribal agencies and 
representatives.
Winter Response
    Enbridge has the training, the people, and the resources to respond 
to a winter incident in the Straits of Mackinac. Enbridge has equipment 
positioned near the Straits to enable access, containment, and removal 
of oil--including equipment tailored to a response in harsh winter 
conditions.
    Ice cover changes the movement and composition of oil, with any 
potential spread of oil reduced in icy conditions. Ice floes also act 
as natural boom, with their presence limiting the oil's movement. The 
changing properties of oil, and the access obstacles created by ice, 
are all taken into consideration in Enbridge's emergency response plan 
developed for the Straits of Mackinac.
    Enbridge again would leverage the resources of its OSROs and the 
U.S. Coast Guard in any response.
    Enbridge practices and refines its winter response on an annual 
basis. Enbridge held a full-scale simulation exercise at St. Ignace, 
Michigan, in January 2012, involving the U.S. Coast Guard and other 
response partners. Enbridge also observed and supported another winter 
response exercise on Lake Huron in February 2016, as the U.S. Coast 
Guard tested winter spill response equipment.
Additional Measures Specifically for the Great Lakes/Straits Crossing
    As mentioned, Enbridge recognizes the significance of the Great 
Lakes and has taken additional steps to protect our pipelines and the 
surrounding environment.
    Enbridge recently strengthened our emergency response capabilities 
at the Straits by purchasing $7 million in additional equipment which 
is stored mostly at the Mackinaw City pump station and further reducing 
the response time in the unlikely event of a release. The new equipment 
includes:

   several high-speed open water oil containment and recovery 
        systems;

   additional skimmers;

   ice response skimming systems; and

   additional containment, protection and absorbent boom.

    Enbridge has also recently:

   performed (in June 2017) a hydrostatic test of the dual 
        pipelines at the Straits to confirm and ensure the significant 
        factor of safety build into the original design is still 
        present today;

   entered an agreement with the State of Michigan (signed in 
        September 2015) which prevents the flow of heavy oil through 
        Line 5 and the dual pipelines at the Straits;

   agreed (as part of the November 2017 agreement with the 
        State of Michigan) to voluntarily shut down the dual pipelines 
        during periods of ``sustained adverse weather conditions'' 
        where wave heights exceed 8 feet at the Straits crossing; and

   established an operations/maintenance crew at the Straits in 
        2015.
Summary
    Enbridge has operated liquids and natural gas pipelines in Michigan 
for more than sixty years, and today our company is one of the largest 
suppliers of energy across the State and the Great Lakes region.
    Within this system, Line 5 has been, and will continue to be, a 
critical link in the Straits of Mackinac--connecting Michigan's two 
peninsulas to safely and reliably deliver the energy Michigan families 
and businesses rely on each day.
    While we are committed to helping further secure Michigan's energy 
future--and we see Line 5 as an integral part of that future--Enbridge 
also recognizes that the Straits of Mackinac is a special place, vital 
to Michigan residents and the State's economy--and we recognize our 
responsibility for protecting the Great Lakes while safely meeting 
Michigan's energy needs.
    Our multi-layered pipeline safety management system continues to 
protect Line 5 at the Straits and our use of advanced technologies and 
aggressive maintenance and modernization programs continue to drive 
risks closer to zero.
    We are committed to harnessing and developing new technologies to 
further protect and enhance the integrity of our assets; and to 
ensuring a timely, coordinated and robust response to protect the Great 
Lakes.

    Senator Peters. Thank you, Mr. Bryson.
    Dr. Shriberg.

               STATEMENT OF MIKE SHRIBERG, Ph.D.,

            GREAT LAKES REGIONAL EXECUTIVE DIRECTOR,

                  NATIONAL WILDLIFE FEDERATION

    Mr. Shriberg. Yes. Thank you, Senator Peters, for your 
leadership and for inviting me to this critical hearing.
    My name is Mike Shriberg, and I'm the Great Lakes Regional 
Executive Director of the National Wildlife Federation. I'm 
also a member of the Michigan Pipeline Safety Advisory Board--
sorry, a little closer? Better?
    Senator Peters. Yes.
    Mr. Shriberg. Although I'm not speaking in that capacity 
today.
    My focus today, and summarized in my full submitted 
testimony, is to outline how Enbridge Energy's Line 5 in the 
straits has exposed serious flaws in both our state and Federal 
regulatory regimes. Fortunately, there are solutions for both 
our Great Lakes and our oversight of pipelines across the 
country.
    For Line 5, the most important context is that Michigan and 
the Great Lakes serve mainly as a shortcut for mostly Canadian 
oil and natural gas liquids to go--to go to mostly Canadian 
export markets. In fact----
    [Cheering and applause.]
    Mr. Shriberg.--in fact, new independent research, which has 
been submitted for the record, reveals that the small value 
provided by Line 5 to the State of Michigan could be replaced 
without noticeable impact to consumers. Of course, there is no 
substitute for the Great Lakes and our way of life.
    [Cheering and applause.]
    Mr. Shriberg. For this oral testimony, my focus will not be 
on the strong case for the state to take immediate action to 
begin decommissioning Line 5, but, rather, on this Committee's 
interest in improvements to our Federal regulatory regime, as 
revealed through the lessons learned about Line 5.
    Lesson 1: The need for increased transparency. The current 
system fails to appreciate that transparency is vital to safety 
and national security. For example, Enbridge revealed just two 
weeks ago at the Michigan Pipeline Safety Advisory Board that 
it placed a sleeve on the damaged section of the pipelines from 
an April 1 boat anchor strike, and that the maximum operating 
pressure restriction from the incident has been lifted, as we 
heard. However, when asked for the underwater video and images, 
as well as for the official documentation, the answer at that 
board meeting was that the approval was done orally and that 
the videos and images were never turned over to the state or 
PHMSA and that Enbridge would not release them.
    [Audience disruption.]
    Mr. Shriberg. How can Congress, the states, and citizens 
trust that decisionmaking will truly protect the Great Lakes 
when it cannot read the agency's decision or view the records 
of inspection? The solution is to greatly strengthen disclosure 
provisions.
    [Applause.]
    Mr. Shriberg. Lesson 2: We need to close the loophole that 
leaves certain freshwater ecosystems with less protection. Our 
state learned this lesson all too painfully in the wake of 
Enbridge Energy's oil spill disaster near the Kalamazoo River. 
There can and should be specific emergency spill response plans 
in place that protect our freshwater ecosystems. Where these 
plans are not feasible, pipelines should not be allowed to 
operate.
    [Cheering and applause.]
    Mr. Shriberg. The Straits of Mackinac are the extreme 
example of this case.
    Moreover, PHMSA has not yet, to my knowledge, and as we 
heard earlier, used its statutory authority to declare the 
Great Lakes an unusually sensitive area under the PIPES Act. 
Beyond the--of course, beyond the Great Lakes and the straits, 
protections need to be in place for all waterways, which means 
PHMSA would need to implement its statutory authority for 
freshwater fully.
    Third lesson: We need clear leadership and authority. The 
violation of the state easement, in part due to the excessive 
length of unsupported spans and structural deficiencies, and 
the implementation of the agreement between Governor Snyder and 
Enbridge Energy, all exposed unclear lines of authority and 
leadership. Moreover, in the wake of the anchor strike, PHMSA 
reportedly said that it lacked the authority to issue a 
temporary shutdown. I appreciate you asking questions about 
that earlier. And the state never implemented its own authority 
under the easement or under the Snyder-Enbridge deal. Clearly, 
we need to clarify authority and leadership.
    Fourth and final lesson: We need to require end-of-life and 
public benefit assessments. The straits section of Line 5 was 
built for a 50-year life, yet is now in its 65th year with no 
assessment of end-of-life. In recent months and years, we have 
learned about major problems, each of which have been 
discovered not by PHMSA, but essentially by accident. As you 
heard earlier, this is because the agency lacks the authority 
and jurisdiction to make assessments about when a pipeline is 
beyond its useful life and poses a great risk to the public. 
That's the situation we're in with Line 5 and the straits.
    The National Wildlife Federation stands ready to work with 
Congress and the agencies to carefully address this problem on 
Line 5 and across the country.
    In conclusion, thank you for allowing me to summarize my 
testimony and for taking the time to hold this field hearing. 
We have the ability and responsibility to not only protect the 
Great Lakes and our way of life from the threat that Line 5 
poses, but to also utilize Michigan's experiences with Line 5 
to better protect our natural, cultural, and economic resources 
throughout this country.
    Thank you.
    [Cheering and applause.]
    [The prepared statement of Mr. Shriberg follows:]

   Prepared Statement of Mike Shriberg, Ph.D., Great Lakes Regional 
            Executive Director, National Wildlife Federation
    Thank you, Senator Peters and Chairman Thune, for inviting me to 
speak today and for holding this critical hearing on pipeline safety in 
the Great Lakes with an emphasis on the threats posed by Enbridge 
Energy's Line 5 in the Straits of Mackinac. Thank you also, Senator 
Peters, for your leadership on this issue--your clear and level-headed 
approach has driven positive action at the Federal and state level.
    My name is Mike Shriberg and I am the Great Lakes Regional 
Executive Director of the National Wildlife Federation (NWF). I am also 
a member of the Michigan Pipeline Safety Advisory Board, although I am 
not speaking in that capacity today. My goal is to outline how we can 
better protect the Great Lakes and the people, economies, communities, 
and wildlife which depend on them by utilizing our experience with Line 
5 to improve our regulatory system for hazardous liquids pipelines.
    Enbridge Energy's Line 5 has exposed serious flaws in both our 
state and Federal regulatory regimes. The scrutiny of Line 5 began with 
an NWF report--Sunken Hazard--in the wake of the 2010 Kalamazoo River 
oil spill, when a different Enbridge pipeline ruptured approximately a 
million gallons of oil into a wetland and river system. Since then, we 
have learned that the Straits section of Line 5 has been and continues 
to be out of compliance with the state easement signed in 1953 and that 
Federal and state regulatory oversight has left our state's most 
valuable asset, the Great Lakes, extremely vulnerable. Fortunately, 
there are solutions both to the future of Line 5 and to fix our 
oversight of pipelines across the country.
    For Line 5 specifically, the important context is that Michigan and 
the Great Lakes serve mainly as a shortcut for mostly Canadian oil and 
natural gas liquids to go to mostly Canadian and export markets. In 
fact, new independent research--which will be submitted for the 
record--reveals that the small value provided by Line 5 to the state of 
Michigan (in the form of raw materials for propane, transport of 
Michigan-produced oil and delivery of crude oil to regional refineries) 
could be replaced with little or no economic impact. Specifically, 
natural gas liquids for propane could be supplied to Rapid River via 
truck or rail and Michigan-produced oil in the northern Lower Peninsula 
could be sent to key transfer points via trucking without significant 
economic impacts. Moreover, there is enough excess capacity in 
pipelines servicing Michigan and Toledo refineries to allow Line 5 to 
be decommissioned. In other words, Line 5 is not critical energy 
infrastructure for Michigan--there are viable alternatives. In 
contrast, there are no substitutes for the Great Lakes. For this 
hearing, I will not delve further into the strong case for the state to 
take immediate action to begin decommissioning Line 5 but rather will 
turn to what lies under the jurisdiction of this committee--
specifically, the necessary improvements to our Federal regulatory 
regime revealed by close analysis of Line 5.
    First, increase transparency. While we all understand the need for 
safety and national security, the current system fails to appreciate 
that transparency is vital to safety and national security. While there 
is an obvious need for certain specific kinds of information to be 
narrowly accessible, the current approach keeps far too much 
information from the public and in doing so actually undermines our 
ability to achieve safety and security. A prime example came just two 
weeks ago at the Michigan Pipeline Safety Advisory Board. Enbridge 
revealed, I believe for the first time publicly, that it placed a 
sleeve on the damaged section of the pipelines from an April 1 boat-
anchor strike--the kind of strike that was identified by the state of 
Michigan as holding the highest risk for causing a major oil spill. 
When asked for the underwater video and images, as well as for the 
official documentation approving a return to full operating pressure 
(maximum operating pressure was reduced in the wake of the anchor 
strike), the answer was that the videos/images were never provided to 
the state and thus were not publicly accessible, and that the approval 
by the Pipeline & Hazardous Materials Safety Administration (PHMSA) was 
done orally with no documentation. How can Congress, the states and the 
public provide oversight when the agency's orders are oral and when 
documentation of critical inspections are never turned over to the 
agency? How can citizens trust that Federal decision-making will truly 
protect the Great Lakes when it cannot read the agency's decision or 
view the records of inspection on which that decision was based? The 
lack of transparency at the Federal level is one reason why the state 
of Michigan is considering increasing its authority and oversight over 
pipelines. The solution is to strengthen disclosure provisions and err 
on the side of public scrutiny in a manner that promotes safety and 
security while preserving the need to keep private specific kinds of 
sensitive information. There are multiple pathways to achieve this goal 
and NWF would welcome further evaluation and discussion on this matter.
    Second, close the loophole that leaves certain freshwater 
ecosystems with less protection. There are unique circumstances that 
make cleanup of hazardous liquids spills in freshwater particularly 
difficult. Our state learned this all too painfully in the wake of 
Enbridge Energy's oil spill disaster near the Kalamazoo River. 
Unfortunately, PHMSA's interpretation of their regulatory authority 
under the Clean Water Act, as amended by the Oil Pollution Act, allows 
pipeline operators to skirt writing clear emergency response plans for 
certain freshwater systems. NWF took the unusual step for our 
organization of suing the agency for this oversight. The bottom line is 
that there can and should be emergency spill response plans in place 
that protect our freshwater ecosystems. Where these plans are not 
feasible, pipeline operators should not be allowed to operate. The 
Straits of Mackinac are the extreme example of the latter case. I do 
not believe it is possible to have a plan in place that is fully 
compliant with the law in this extraordinarily challenging environment, 
where 60,000 acres of unique wildlife habitat and 47 species of special 
conservation status are at risk, according to a recent risk analysis 
commissioned by the state. The Straits' unique climate as well as 
currents and flow regimes, which have been documented thoroughly by the 
University of Michigan, simply do not allow for recovery of a worst 
case oil spill. Beyond the Straits, protections need to be in place for 
all waterways of Michigan and across the country, which means PHMSA 
would need to implement its statutory authority fully.
    One obvious step forward in the Great Lakes is the PIPES Act. The 
PIPES Act, which was signed into law more than two years ago, directs 
PHMSA to revise the regulations in Title 49 to declares the Great Lakes 
an Unusually Sensitive Area, and thus a high consequence area, to 
ensure standards that apply in high consequence areas apply to 
pipelines operating in the Great Lakes. The statute represents good 
progress, but my understanding is that PHMSA has not yet implemented it 
through revised regulations. The statutory direction to PHMSA is both 
simple and clear. If PHMSA has in fact not yet revised the regulations 
to comply with the statute, then Congress deserves an explanation.
    Third, clarify leadership with overlapping authorities. The boat-
anchor strike to Line 5 on April 1, the violation of the state easement 
in part due to excessive length of unsupported spans and structural 
deficiencies, and the implementation of the agreement between Governor 
Snyder and Enbridge Energy all exposed unclear lines of authority and 
lack of leadership. For example, although your actions--Senator 
Peters--are greatly appreciated, it should not have taken a call from a 
sitting Senator to have Line 5 shut down temporarily in the wake of a 
storm where wave heights clearly exceeded the agreed upon threshold. 
The inability of the Federal and state agencies to have any effective 
and immediate influence over response to the strike further exposed 
this weakness. And PHMSA reportedly said it lacked the authority to 
order a temporary shutdown while an assessment was made. The state 
either lacked authority or did not utilize its authority to obtain 
video, images and clear documentation of repairs in the wake of the 
anchor strike. This again exposes the lack of clarity and leadership--
and the fix is to provide clear authority in the wake of potential 
incidents.
    Fourth, require end-of-life and public benefit assessments. 
Enbridge Energy's Line 5's primary purpose is to take mostly Canadian 
product through the U.S. and back to Canada. The benefits to our state 
and country, as I outlined previously, are marginal while the potential 
costs are extreme--with estimates ranging from $2 billion to $6 
billion, or above. The Straits section of Line 5 was built for a 50-
year life yet is now in its 65th year with no assessment of end-of-
life. In fact, Enbridge has often claimed that Line 5 could remain 
``indefinitely''. All infrastructure has a useful life in practice; 
however, under the law, there are no provisions to even assess 
lifespan. In just the time that I have been on the Pipeline Safety 
Advisory Board, we have learned about violations of the state easement 
and the peeling away of significant areas of coating. These have each 
been discovered not by PHSMA but, essentially, by accident through 
other activities. During this time, Enbridge has done its best to keep 
these issues from public scrutiny. For example, Enbridge's Vice 
President of Pipeline Integrity stated inaccurately to the Board last 
March that Line 5's pipeline coating in the Straits was fully intact. 
It was later revealed that the company knew about this problem prior to 
the testimony. I mention all this not to provide a full rundown of the 
Line 5's problems with structural integrity, operational issues and 
lack of transparency--all of which are significant--but to show that 
the Federal agencies have failed in their duty to provide the necessary 
oversight to protect the people, natural resources, and economy of 
Michigan in part because they have no ability to assess end-of-life for 
pipelines and to truly evaluate public benefits. An end-of-life and 
public benefits assessment needs to become part of the Federal 
regulatory structure. NWF stands ready to work with Congress and the 
agencies to address this problem. Again, Line 5 is exhibit A but this 
is a national problem and stems from the statutory limitations.
    Thank you again for taking the time to hold this field hearing and 
for your transparent approach to this issue. We have the ability and 
responsibility to not only protect the Great Lakes and our way of life 
from the threat that Line 5 poses but to also utilize Michigan's 
experiences with Line 5 to protect our natural, cultural and economic 
resources throughout the country.
                                 ______
                                 

 Assessment of alternative methods of supplying propane to Michigan in 
                         the absence of Line 5

             Prepared by London Economics International LLC

                             July 23, 2018

    London Economics International LLC (``LEI'') was funded by the 
Charles Stewart Mott Foundation (``CS Mott'') in cooperation with the 
National Wildlife Federation (''NWF''), to examine alternatives to 
Enbridge Energy, Limited Partnership (``Enbridge'') Line 5 for supply 
of propane to consumers in the State of Michigan. Enbridge Line 5 
provides natural gas liquids (``NGLs'') from which propane is 
extracted, directly to a facility in Michigan's Upper Peninsula, and to 
facilities in Ontario that then supply propane to Michigan's Lower 
Peninsula. LEI's assessment assumes that Line 5 would not be in use for 
the transport of oil and NGLs across the Straits of Mackinac.
    LEI finds that, with strong recent and projected growth in supply 
of NGLs from the United States, and with flat to declining demand for 
propane in Michigan, the prospect of persistent propane supply 
shortages in Michigan is unlikely, even if Enbridge Line 5 ceased to 
operate. Event-driven supply interruptions or weather-driven shortages 
such as experienced in 2014 during the Polar Vortex winter, will likely 
occur on occasion, as they have in the past. But with the prospect of 
plentiful supplies relative to demand, the main concern with the 
potential absence of Enbridge Line 5 is the delivered cost of 
alternative sources of propane.
    With this focus on the cost of alternatives, LEI's key findings are 
that the lowest-cost alternative options to Enbridge Line 5 would be 
truck or rail from Superior, Wisconsin (``WI''). LEI estimates the 
price increase to consumers in the Upper Peninsula would likely be 
about $0.05 per gallon. This small price increase would be lost in the 
noise of typical propane price volatility.

Table of Contents
1 INTRODUCTION AND EXECUTIVE SUMMARY
        1.1 Enbridge Line 5

        1.2 LEI's Approach 

        1.3 Key Findings and Conclusions

        1.4 Roadmap to this Report
2 UNDERSTANDING THE MICHIGAN PROPANE MARKET
        2.1 What is Propane?

        2.2 Propane Demand in Michigan

                2.2.1 Propane demand in Michigan has been falling

                2.2.2 The residential sector consumes much of the 
                propane used in Michigan

                2.2.3 Upper Peninsula propane consumption

                2.2.4 Propane demand in the United States is flat to 
                declining

                2.2.5 U.S. propane demand is seasonal

                2.2.6 Michigan propane demand is also seasonal

                2.2.7 Number of Upper Peninsula households using 
                propane is unlikely to increase

        2.3 Sources of propane supply

                2.3.1 United States propane production is rising

                2.3.2 Propane supply from states near Michigan is set 
                to increase

        2.4 Propane transportation

                2.4.1 Pipelines are the option traditionally favored 
                for transporting large volumes

                2.4.2 Cochin pipeline taken out of propane service

                2.4.3 Utopia pipeline could supply additional propane 
                to Michigan

                2.4.4 Propane by rail to U.S. Gulf Coast for export has 
                increased

                2.4.5 U.S. exports of propane surged beginning in 2013

        2.5 Propane seasonal storage

                2.5.1 Michigan propane storage capacity

        2.6 Propane transportation into Michigan

                2.6.1 Enbridge Line 5 propane deliveries

                2.6.2 Propane deliveries from Sarnia nearly match Lower 
                Peninsula demand

        2.7 Drivers of wholesale and retail propane prices in Michigan

                2.7.1 U.S. propane prices are connected to North 
                American natural gas prices and global oil prices

                2.7.2 Wholesale prices in Michigan usually track PADD 2 
                prices closely

                2.7.3 Recent residential propane prices in Michigan 
                were about $2 per gallon
3 COST OF PROPANE SUPPLY WITH AND WITHOUT ENBRIDGE LINE 5
        3.1 Step One: LEI examined data from publicly-available sources

                3.1.1 Propane prices at supply hubs

                3.1.2 Transportation cost data

        3.2 STEP two: LEI replicated Dynamic Risk's propane supply cost 
        results

                3.2.1 Replicating Dynamic Risk's methodology and 
                assumptions

        3.3 Step three: LEI calculated propane transportation costs 
        using public data

                3.3.1 Trucking costs

                3.3.2 The cost of rail from Superior to Rapid River

                3.3.3 Upper Peninsula propane costs could increase 
                $0.11 per gallon on an annual average basis

                3.3.4 Other alternatives cost more

                3.3.5 Lower Peninsula may have negligible cost impact
4 IMPACT OF A COST INCREASE ON CONSUMER PRICES
        4.1 Cost increase is shared by suppliers and consumers
5 CONCLUSIONS AND IMPLICATIONS
        5.1 Consumers would pay for part of the cost increase, but not 
        all of it

        5.2 The price increase would be lost in the noise of typical 
        price volatility

        5.3 New supplies, but no surprises
6 APPENDIX A: DETAILS OF ECONOMETRIC ANALYSIS OF PROPANE SUPPLY AND 
        DEMAND
        6.1 Econometric model specification

                6.1.1 Demand model

                6.1.2 Supply model

        6.2 Data used in the econometric analysis

        6.3 Econometric analysis

                6.3.1 Econometric results, demand

                6.3.2 Econometric results, supply

                6.3.3 Impact of cost increase
7 APPENDIX B: CONSULTANT CV
                                 ______
                                 
Table of Figures
Figure 1. Enbridge Line 5

Figure 2. Estimated weighted average annual cost of propane supply to 
Rapid River (all costs in $ per gallon)

Figure 3. Top five states for residential sector propane consumption, 
2015

Figure 4. Annual propane consumption in Michigan

Figure 5. Total LPG consumption by sector in Michigan

Figure 6. EIA'S U.S. propane consumption, and consumption as share of 
production

Figure 7. United States seasonal propane demand as share of U.S. 
production

Figure 8. Michigan seasonal propane demand

Figure 9. Number of Upper Peninsula homes heated with propane and other 
fuels

Figure 10. Outlook for U.S. propane production from natural gas 
processing

Figure 11. United States Petroleum Administration for Defense Districts 
(PADD)

Figure 12. Projections for PADD I and PADD II NGL production from 
natural gas

Figure 13. NEB outlook for Canadian NGL production

Figure 14. Cochin pipeline and related propane transportation 
infrastructure in 2014

Figure 15. The Utopia pipeline project

Figure 16. U.S. and Canadian propane shipments by rail

Figure 17. U.S. propane exports

Figure 18. Stocks of propane and propylene in the US, PADD 2, and 
Michigan

Figure 19. Liquids pipelines in Michigan

Figure 20. Propane deliveries to Rapid River, Enbridge Line 5, 2015 and 
2016

Figure 21. Prices of Brent crude oil, Henry Hub Gas, and Mont Belvieu 
propane

Figure 22. Wholesale winter propane prices

Figure 23. Wholesale propane prices, PADD 2 and selected PADD 2 states

Figure 24. Wholesale and residential winter 2017/18 propane prices

Figure 25. North American wholesale propane prices by market hub

Figure 26. LPG railcar lease rates, 2016 and 2017

Figure 27. Hourly wage for propane delivery truck driver, not including 
benefits, bonuses, or commissions

Figure 28. PADD 2 retail price of No. 2 diesel, ultra-low sulfur (0-15 
ppm), including taxes

Figure 29. Dynamic Risk's alternatives to Enbridge Line 5 for Upper 
Peninsula propane supplies

Figure 30. Dynamic Risk assumptions for alternative supply of propane--
rail cost analysis

Figure 31. Dynamic Risk assumptions for alternative supply of propane--
trucking cost analysis

Figure 32. Dynamic Risk's Edmonton to Kincheloe rail cost estimates

Figure 33. LEI's replication of Dynamic Risk's costs for rail shipping 
from Edmonton to Kincheloe (numerical data)

Figure 34. LEI's replication of Dynamic Risk's cost for rail shipping 
from Edmonton to Kincheloe

Figure 35. Edmonton to Kincheloe rail cost per gallon, comparison of 
impact of lease and storage cost assumptions

Figure 36. Conway to Owen rail cost per gallon, comparison of impact of 
lease and storage cost assumptions

Figure 37. Comparison of trucking cost estimates

Figure 38. Estimated weighted average annual cost of propane supply to 
Rapid River (all costs in $ per gallon)

Figure 39. Supply and demand for propane in Michigan, 2008-2018

Figure 40. Weekly maximum and minimum prices, and monthly average 
prices for residential propane in Michigan (2008-JAN 2018)

Figure 41. Demand and supply models estimated

Figure 42. Data sources for econometric analysis

Figure 43. Data used in econometric analysis

Figure 44. Econometric results, demand

Figure 45. Econometric results, supply
                                 ______
                                 
1 Introduction and executive summary
1.1 Enbridge Line 5
    The State of Michigan is considering options for ongoing operations 
of the Enbridge Line 5 liquids pipeline, which traverses Michigan's 
Upper Peninsula and Lower Peninsula. Line 5 begins in Superior, WI and 
terminates in Sarnia, Ontario (``ON''). The pipeline's capacity is 
540,000 barrels per day.\1\ It transports light crude oil, light 
synthetic crude, and NGLs, which include propane.
---------------------------------------------------------------------------
    \1\ Enbridge. ``The Straits of Mackinac crossing and Line 5.'' 
September 2015. 
---------------------------------------------------------------------------
    Enbridge Line 5 was built in 1953. The pipeline runs for 645 miles 
from Wisconsin, under the Straits of Mackinac, through Michigan to 
Sarnia. The 30-inch diameter pipeline splits into two 20-inch diameter 
lines where it crosses the Straits of Mackinac for 4.5 miles (see 
Figure 1).

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    LEI was engaged to assist in understanding the current and 
potential future role of Enbridge Line 5 from the perspective of 
Michigan propane consumers. More specifically, the CS Mott Foundation 
and NWF wished to understand the degree of reliance on Enbridge Line 5 
by Upper Peninsula consumers for the supply of propane and if there are 
alternative viable options; and understand the potential impact on 
Lower Peninsula consumers.
---------------------------------------------------------------------------
    \2\ Enbridge. ``About Line 5.'' Accessed on April 2018. 
---------------------------------------------------------------------------
    In this report, LEI provides an independent view of whether and to 
what extent Enbridge Line 5 is needed for Michigan propane consumers; 
and what would be the cost impact on consumers if Enbridge Line 5 into 
Michigan did not exist.
    A report by Dynamic Risk Assessments, Inc (``Dynamic Risk'')--
funded by Enbridge Energy and overseen by the State of Michigan--also 
estimated the potential impact on Michigan propane consumers.\3\ LEI 
did not perform a comprehensive critique of the Dynamic Risk report, 
which covers a wide variety of issues in addition to the impact on 
propane consumers. However, Dynamic Risk provided specific assumptions 
about the elements of pipeline, rail, and trucking costs for propane, 
which LEI compared to publicly-available data and then used to evaluate 
the impact on the cost per gallon of propane. Dynamic Risk's 
assumptions and their resulting estimates for the cost of alternatives 
to Enbridge Line 5 provide useful comparisons to LEI's, and we refer to 
Dynamic Risk's assumptions and results in this report.
---------------------------------------------------------------------------
    \3\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' October 26, 2017. Prepared for the State of 
Michigan. October 26, 2017.
---------------------------------------------------------------------------
1.2 LEI's approach
    To provide a foundation for understanding the cost of alternatives 
to Enbridge Line 5, LEI began by laying out the facts that describe the 
Michigan propane market (supply, demand, storage, transportation, and 
prices) in the context of the relevant broader U.S. propane market (see 
Section 2). This provides a deeper understanding of the most important 
issues for propane supply in the Upper Peninsula and the rest of 
Michigan.
    Then LEI analyzed the cost of propane supply, particularly to the 
Upper Peninsula, with and without Enbridge Line 5 (see Section 3). LEI 
took a three-step approach to this. First, LEI examined publicly-
available data sources for reported prices at propane trading hubs, 
published pipeline tariffs, and public reports of rail and truck 
shipment costs. Second, LEI re-produced the cost calculations provided 
by Dynamic Risk\4\ to understand to what degree Dynamic Risk's cost 
results (in dollars per gallon of propane) depended on their 
assumptions about key elements of cost. Third, LEI substituted 
publicly-available data for key cost elements, and applied the Dynamic 
Risk methodology, to arrive at new estimates of the additional cost per 
gallon to propane consumers if Enbridge Line 5 did not exist. LEI also 
examined several alternatives not considered by Dynamic Risk.
---------------------------------------------------------------------------
    \4\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' October 26, 2017. Prepared for the State of 
Michigan. October 26, 2017. Appendix J.
---------------------------------------------------------------------------
1.3 Key findings and conclusions
    LEI's key findings were:

  1.  There is no shortage of propane in the United States; supply is 
        growing faster than demand;

  2.  The least expensive alternative supply options are pipeline 
        transportation to Superior, WI combined with either trucking 
        from Superior to Rapid River or rail from Superior to Rapid 
        River. The cost of these two options could be nearly identical. 
        They could add an estimated $0.11 per gallon to the cost of 
        propane supply in the Upper Peninsula (see Figure 2). An 
        econometric analysis of propane demand in Michigan shows that 
        this cost increase would translate into a $0.05 per gallon 
        increase in consumer propane prices in the Upper Peninsula;

  3.  Although more expensive options are available, as shown in Figure 
        2, it would not make sense to assume that these would be chosen 
        instead of the least expensive option, except under emergency 
        conditions. Even if rail or trucking from Kincheloe to Rapid 
        River was free, the total cost of using the Kincheloe route 
        would be higher than the route from Edmonton through Superior;

  4.  In the Lower Peninsula, the impact on the cost of propane may be 
        negligible.

  5.  A price increases of $0.05 per gallon is small compared with the 
        usual volatility of weekly propane prices. Michigan prices 
        swung from $0.86 per gallon to $3.50 per gallon over the past 
        few years. The small price increase from using alternatives to 
        Enbridge Line 5 would be lost in the noise of typical price 
        volatility.

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1.4 Roadmap to this report
    This report begins by describing the propane market in Michigan, 
neighboring states, and the United States, trends in propane 
consumption, sources of supply, use of storage, transportation modes, 
and wholesale and retail prices; these are presented in Section 2 of 
this report. In Section 3, LEI examines the cost of propane supply and 
delivery to the Upper Peninsula, and Lower Peninsula, of different 
supply sources and transportation routes. In Section 4, LEI uses 
econometric analysis to estimate the impact of higher supply costs on 
residential consumer prices. LEI's conclusions and implications are in 
Section 5. Details of LEI's econometric analysis can be found in 
Appendix A (Section 6).
2 Understanding the Michigan propane market
2.1 What is propane?
    Propane is a hydrocarbon classified as a liquefied petroleum gas 
(``LPG''); LPGs in turn are a subset of natural gas liquids (``NGLs''). 
Propane is one of the NGLs that come to the surface during field 
production of natural gas. The produced natural gas (methane and NGLs) 
is sent to a gas processing plant near the point of field production, 
which separates the NGLs from the methane to produce pipeline-quality 
natural gas (mostly methane, sometimes with a small amount of ethane) 
in a gaseous state. The leftover NGLs can then be transported or stored 
in their liquid state. For propane, a second stage of processing, 
called fractionation, separates the propane from the other NGLs. Unlike 
natural gas processing, which occurs near the point of field 
production, fractionation often occurs closer to markets, after the NGL 
stream has been shipped to market hubs.
    Propane produced from natural gas drilling therefore requires two 
stages of processing: (1) natural gas plant processing, to separate 
NGLs from methane, and (2) fractionation, to separate the propane from 
the other NGLs. Companies involved in this process often combine 
fractionation and transportation into a single service for wholesale 
buyers of propane. Such companies also usually also operate natural gas 
processing plants in the field. Propane can also be extracted from 
refinery gas streams during the crude oil refining process.
    Propane is used for space and water heating, cooking, crop drying, 
as fuel for vehicle engines, and for refinery operations.
2.2 Propane demand in Michigan
    The Michigan residential sector has the highest consumption of 
propane of any residential sector in the United States, according to 
the Energy Information Administration (``EIA'') (see Figure 3).\5\ EIA 
reports that Michigan residential propane demand ranged from 0.83 
million gallons per day to 1.02 million gallons per day (303 million 
gallons per year to 372 million gallons per year) for 2013-2017.\6\
---------------------------------------------------------------------------
    \5\ US-wide, five percent of households use propane for heating, 
while in Michigan it is estimated to be around eight percent. Sources: 
Michigan Agency for Energy. ``Michigan Energy Appraisal. Winter Outlook 
2017/18.'' November 2017. ; EIA. Michigan State Energy Profile. May 18, 
2017. 
    \6\ EIA. ``Prime Supplier Sales Volumes of Propane (Consumer 
Grade).'' April 2, 2018.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The State of Michigan estimates propane is used as a primary 
heating fuel in about 320,000 households in the state.\8\ This 
translates into annual average consumption per household of 1,037 
gallons per year if residential consumption of 0.91 million gallons per 
day (the 2013-2017 state-wide average, per EIA) is divided by the 
320,000 households. Other sources of information are consistent with 
this; one source notes that a typical Michigan household using propane 
consumes 500-1,200 gallons per year.\9\
---------------------------------------------------------------------------
    \7\ EIA. ``Top five residential sector propane consuming states.'' 
2015. 
    \8\ Michigan Agency for Energy. ``Propane in MI.'' Accessed on 
April 9, 2018. 
    \9\ Crumm, Charles. ``Lower utility prices and a milder winter in 
the forecast.'' Macomb Daily. November 27, 2015. 
---------------------------------------------------------------------------
2.2.1 Propane demand in Michigan has been falling
    Consumption of propane in Michigan has generally been falling since 
the 1980s (see Figure 4). Propane use for heating in Michigan is being 
displaced by electricity, which is estimated to have increased by 
almost 30 percent from 2009 to 2016.\10\ Gas used for heating remained 
stable during this time.
---------------------------------------------------------------------------
    \10\ U.S. Census Bureau. ``2011-2015 American Community Survey 5-
Year Estimates.'' Accessed on April 18, 2018.
    \11\ EIA. ``Michigan Propane All Sales/Deliveries by Prime 
Supplier.'' Accessed on April 2018. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.2.2 The residential sector consumes much of the propane used in 
        Michigan
    The EIA reports that in Michigan, the residential sector consumes 
about 80 percent of all the LPGs (propane, ethane, and olefins) used in 
the state (see Figure 5). EIA does not provide a sectoral breakout for 
propane specifically; but, as mentioned above, EIA reports state-wide 
average 2013-2017 propane consumption to be 0.91 million gallons per 
day. Comparing to the 1.2 million gallons per day for LPGs in 2015 in 
Figure 5 implies that propane makes up about 75 percent of LPGs used in 
Michigan. The residential sector does not have much direct use for 
ethane or olefins, so it is safe to assume that the residential 
consumption shown in Figure 5 is all propane.\12\
---------------------------------------------------------------------------
    \12\ EIA. ``Hydrocarbon gas liquids explained.'' 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.2.3 Upper Peninsula propane consumption
    Unlike Michigan state-level consumption data which is provided by 
the EIA, there are no official figures for annual consumption of 
propane in the Upper Peninsula versus Lower Peninsula.

   The Michigan Propane Gas Association reported that 460 
        million gallons of propane was consumed in Michigan in 2015, of 
        which 430 million gallons was in the Lower Peninsula.\13\ This 
        leaves 30 million gallons (about 6.5 percent of the Michigan 
        total) consumed in the Upper Peninsula.\14\ These estimates 
        include all sectors, not just the residential sector.
---------------------------------------------------------------------------
    \13\ Note that the Michigan Propane Gas Association's estimate of 
propane consumption in Michigan in 2015 is higher than EIA's estimate.
    \14\ MPGA. ``Comments on the Alternatives Analysis for the Straits 
Pipeline.'' August 4, 2017.

   The U.S. Census Bureau estimates that in the 15 counties in 
        the Upper Peninsula, 22,050 households used bottled, tank, or 
        LP gas (``LPG'') as the primary source of heating fuel in 
        2016.\15\ If the typical Michigan household consumes 500-1,200 
        gallons per year, as noted above\16\ then the 22,050-household 
        residential sector consumes 11 million to 26.5 million gallons 
        per year.
---------------------------------------------------------------------------
    \15\ https://www.census.gov/hhes/www/housing/census/historic/
fuels.html
    \16\ Crumm, Charles. ``Lower utility prices and a milder winter in 
the forecast.'' Macomb Daily. November 27, 2015. 
    \17\ EIA. ``EIA's propane market indicators and measures of supply 
adequacy.'' January 10, 2018.  Note: EIA uses ``product supplied'' as a 
proxy for propane consumption. Product supplied = production + imports 
- stock change - exports.

    The estimates all indicate that Upper Peninsula propane consumption 
is small compared with Michigan over all.
2.2.4 Propane demand in the United States is flat to declining
    Falling propane consumption is not unique to Michigan. Consumption 
of propane in the United States was lower in 2017 than in 2010 (see 
Figure 6). At the same time, U.S. production (to be discussed in more 
detail in Section 2.3) has been on the rise, resulting in U.S. domestic 
demand accounting for a smaller share of U.S. production.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.2.5 U.S. propane demand is seasonal
    Propane is consumed seasonally, because much of it is used for home 
heating. Propane is produced year-round as that is the most efficient 
way to produce it, therefore seasonal storage has played an important 
role in meeting wintertime demand. U.S. wintertime demand of 61 million 
gallons per day (the weekly average during the months of December 2016, 
and January and February 2017) was somewhat lower than total U.S. 
production of 75 million gallons per day on average in 2017.\18\
---------------------------------------------------------------------------
    \18\ EIA. ``Weekly U.S. Refiner Blender and Gas Plant Net 
Production of Propane and Propylene.'' Accessed on April 2018. ; and EIA. ``Weekly U.S. Product Supplied of 
Propane and Propylene.'' Accessed on April 2018. 
    \19\ EIA. ``EIA's propane market indicators and measures of supply 
adequacy.'' January 10, 2018.  Note: EIA uses ``product supplied'' as a 
proxy for propane consumption. Product supplied = production + imports 
- stock change - exports.
    \20\ EIA. ``Michigan Propane All Sales/Deliveries by Prime 
Supplier.'' Accessed on April 2018. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.2.6 Michigan propane demand is also seasonal
    In Michigan as in the United States more broadly, propane demand is 
much higher in the winter than in the summer (see Figure 8). The 
colder-than-normal winters of 2013/14 and 2014/15 are evident in the 
spikes in demand during those winters, compared winter 2015/16 and 
2016/17.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.2.7 Number of Upper Peninsula households using propane is unlikely to 
        increase
    The number of Upper Peninsula households using LP gas (including 
propane) has not changed in many years (see Figure 9). The total number 
of households in the Upper Peninsula (whether or not they are users of 
propane) decreased by one percent from 2010 to 2016, according to the 
U.S. Census Bureau.\21\ LEI believes the number of households in the 
Upper Peninsula which use propane is unlikely to rise in the future.
---------------------------------------------------------------------------
    \21\ U.S. Census Bureau. U.S. Census Bureau. ``2012-2016 American 
Community Survey 5-Year Estimates--House Heating Fuel.''

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.3 Sources of propane supply
    The United States and Canada have both seen substantial growth in 
oil and gas production, driven by prolific and cost-effective shale oil 
and gas plays (and, in Canada, the oil sands). This is boosting 
production of NGLs, including propane.
2.3.1 United States propane production is rising
    Annual propane production in the United States is increasing and 
reached a record 1.2 million barrels per day in 2017 (see Figure 10). 
EIA forecasts a 9 percent increase in propane production in 2018, and 
projects long-term growth at a slower pace, with production rising to 
1.6 million barrels per day in 2030.\22\
---------------------------------------------------------------------------
    \22\ EIA. ``Natural Gas Weekly Update for week ending February 28, 
2018.'' March 1, 2018. 
    \23\ Ibid.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
2.3.2 Propane supply from states near Michigan is set to increase
    Michigan is part of the U.S. refined product Petroleum 
Administration for Defense District (``PADD'') 2 (see Figure 11). PADDs 
are an administrative concept, developed by the Federal government 
during World War II to help manage fuel rationing. Thus, PADDs do not 
represent physical boundaries between markets. However, PADDs are 
useful to help keep track of supply, demand and transportation issues 
and trends for refined products and other petroleum liquids, including 
propane.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    NGL production in PADD 1 and PADD 2 has been increasing strongly 
and EIA expects it to keep rising (see Figure 12).\24\ PADD 1 includes 
Pennsylvania, with huge growth in NGLs associated with shale gas 
production. PADD 2 includes Ohio, also with strong growth in shale gas; 
Kansas, which is the location of an important storage and trading hub 
for propane; and North Dakota, which has seen strong growth in tight 
oil production.
---------------------------------------------------------------------------
    \24\ IHS Markit. ``Prospects to Enhance Pennsylvania's 
Opportunities in Petrochemical Manufacturing.'' March 2017. 
    \25\ Ibid.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Canada's National Energy Board's (``NEB'') expects NGL production 
to increase, though not at the fast rate of supplies expected from the 
United States. Propane production in Alberta increased in 2017 by 11 
percent.\26\ The NEB 2017 outlook projects Canadian propane production 
to increase somewhat in the long term (see Figure 13).
---------------------------------------------------------------------------
    \26\ AER. ``Propane Supply/Demand.'' Accessed on April 2018. 


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.4 Propane transportation
    Propane can be transported by various means including pipelines, 
rail, and trucking. In pipelines, propane sometimes travels with other 
NGLs, and is separated at a fractionation plant near final end-users. 
Sometimes it is shipped in dedicated propane pipelines. Propane can 
also be transported in water-borne vessels, which facilitate exports 
from the United States to markets overseas.
2.4.1 Pipelines are the option traditionally favored for transporting 
        large volumes
    Pipelines are usually the lowest-cost form of transportation for 
propane and NGLs.\27\ For this reason, pipelines are the most widely-
used transportation for propane between PADDs within the United 
States.\28\
---------------------------------------------------------------------------
    \27\ EIA. ``Hydrocarbon Gas Liquids (HGL): Recent Market Trends and 
Issues.'' November 2014. 
    \28\ EIA Propane Movements by Pipeline, Tanker, Barge and Rail 
between PAD Districts, and Propane Movements by Pipeline between PAD 
Districts.
---------------------------------------------------------------------------
2.4.2 Cochin pipeline taken out of propane service
    In April 2014, the 95,000 barrels per day Cochin pipeline, which 
shipped propane from Alberta to the U.S. Midwest was taken out of 
service for southbound propane shipments (see Figure 14).\29\ That 
stretch of the pipeline was re-configured to ship light condensate 
petroleum liquids northbound from Milford, Illinois to Alberta. After 
the conversion, rail imports of propane from Canada to the Midwest 
increased from 5,700 barrels per day in 2013 to 28,400 barrels per day 
in 2017.\30\
---------------------------------------------------------------------------
    \29\ Kinder Morgan. ``Cochin Pipeline System.'' Accessed on April 
12, 2018. 
    \30\ EIA. ``Winter 2014-15: Propane Supply & Infrastructure for 
State Heating Oil and Propane Program (SHOPP) Workshop.'' October 8, 
2014, Washington, DC. 
    \33\ EIA. ``4-Week Avg U.S. Exports of Propane and Propylene 
(Thousand Barrels per Day).'' 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.4.4 Propane by rail to U.S. Gulf Coast for export has increased
    Shipments of propane by rail have increased dramatically from the 
Marcellus area (Pennsylvania and Ohio) and the Bakken region (North 
Dakota) (see Figure 16). Oil and gas production from these regions has 
run ahead of the pipeline capacity needed to ship NGLs to market hubs 
such as Mont Belvieu, Texas and Conway, Kansas. As can be seen in 
Figure 16, these two hubs are important destinations for propane from 
the Marcellus and Bakken regions.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.4.5 U.S. exports of propane surged beginning in 2013
    With strong growth in supplies and flat-to-declining demand, 
exports of propane from the United States began growing rapidly in 2013 
(see Figure 17). Most of these exports originated from the U.S. Gulf 
Coast.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.5 Propane seasonal storage
    As noted previously in Section 2.2.5, propane demand in the United 
States varies greatly by season. Propane storage facilities are used to 
match seasonal demand with year-round production.
2.5.1 Michigan propane storage capacity
    Michigan has above-ground propane and propylene storage capacity of 
about 9 million barrels (378 million gallons).\34\ Michigan also has 
large volumes of propane storage capacity in underground rock 
formations and caverns.\35\
---------------------------------------------------------------------------
    \34\ EIA Stocks of Propane/Propylene dataset (maximum recorded 
stock volume)
    \35\ Michigan Agency for Energy. ``Propane in MI.'' Accessed on 
April 11, 2018. 
    \36\ EIA. ``Stocks of Propane/Propylene by PAD District, June 2016 
to Present.'' 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Michigan's capacity accounts for about one-quarter of PADD 2's 32 
million barrels (1,344 million gallons) of propane and propylene 
capacity, which in turn is about 20 percent of total propane and 
propylene working and net available shell storage capacity in the 
United States (see Figure 18). Storage capacity at Rapid River is 
reported by Dynamic Risk to be 1.26 million gallons of NGLs; Michigan 
Public Service Commission data reports one million gallons.\37\
---------------------------------------------------------------------------
    \37\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' Prepared for the State of Michigan. October 26, 
2017. P. 4-7; and Michigan Public Service Commission ``Michigan SHOPP: 
Energy Data and Security Section.'' 10-2-2014. LEI converted to gallons 
at 42 gallons per barrel. https://www.eia.gov/petroleum/
heatingoilpropane/workshop/2014/pdf/michigan.pdf
    \38\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' Appendix C, P. C-3. Prepared for the State of 
Michigan. October 26, 2017. Dynamic Risk notes on page PR-7 of its 
Final Report that ``Enbridge obtained permission from shippers to 
release publicly the historical and gross throughput of Line 5 on a 
monthly an annual basis showing deliveries and withdrawals of oil and 
NGLs at various points on Line 5. . . . Portions of the volume data 
were cleared for release in June 2017 and are provided in Table C-1 of 
Appendix C.''
---------------------------------------------------------------------------
2.6 Propane transportation into Michigan
    Propane is imported into Michigan from outside the state through 
two pipeline systems: Enbridge Line 5, and the Sarnia Downstream System 
(``SDS'') operated by Plains Midstream Canada (see Figure 19). SDS 
carries propane from Sarnia, Ontario to the Michigan border near 
Detroit.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.6.1 Enbridge Line 5 propane deliveries
    Enbridge Line 5 transports about 3.4 million gallons per day of 
NGLs out of Superior, WI and into Michigan. At Rapid River, MI, about 
0.081 million gallons per day (about 29 million gallons per year) are 
extracted. Much more propane is delivered in the winter than in the 
summer (see Figure 20).

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

2.6.2 Propane deliveries from Sarnia nearly match Lower Peninsula 
        demand
    After Rapid River, there are no further propane or other NGL 
withdrawals from Line 5 in Michigan. All the remaining NGLs are 
transported across the Lower Peninsula and delivered to Sarnia, Ontario 
for fractionation.\39\ According to Enbridge, these deliveries amounted 
to an average of 3.321 million gallons per day of NGLs in 2015/16.\40\ 
Sarnia also has rail links with western Canada which supply NGLs;\41\ 
and the Sarnia region is connected by rail to the U.S. Marcellus 
natural gas region.
---------------------------------------------------------------------------
    \39\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' P. PR-7. Prepared for the State of Michigan. 
October 26, 2017.
    \40\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' Appendix C. Prepared for the State of Michigan. 
October 26, 2017. Pp. C-3, C-3.
    \41\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' Appendix G. Prepared for the State of Michigan. 
October 26, 2017. P G-10.
---------------------------------------------------------------------------
    Sarnia's fractionation capacity is reportedly 4.79 million gallons 
per day with an 84 percent capacity utilization rate, which amounts to 
throughput of 4.02 million gallons per day.\42\ Based on this, the NGL 
shipments on Enbridge Line 5 in 2015/16 accounted for about 83 percent 
of the throughput of the fractionation plant at Sarnia.
---------------------------------------------------------------------------
    \42\ Canadian Energy Research Institute. ``Natural Gas Liquids 
(NGLs) in North America: An Update Part II--Midstream and Downstream 
Infrastructure.'' May 2014. P. 12.
---------------------------------------------------------------------------
    An average of 1.08 million gallons per day of propane from Sarnia 
was shipped to the U.S. border at Detroit through the SDS system from 
2015-2017.\43\ The 1.08 million gallons per day is about 90 percent of 
the 1.2 million gallons per day average annual consumption of the Lower 
Peninsula (based on Michigan Propane Gas Association consumption 
estimates for 2015). If consumption is lower than 1 million gallons per 
day, as EIA data shows, then SDS provides more than the equivalent of 
all the propane used in the Lower Peninsula.
---------------------------------------------------------------------------
    \43\ Plains Midstream Canada. ``Filing of Plains Midstream Canada 
ULC--Sarnia Downstream System (SDS) Tariff Filing NEB No. 112--
International Join Rate Tariff Land Matters Consultation Initiative 
(LMCI) Collection Mechanism. May 12, 2017. https://docs2.neb-one.gc.ca/
ll-eng/llisapi.dll/fetch/2000/90465/92837/813094/813186/3266454/A83570-
1_PMC-_SDS_NEB
_No._112_%E2%80%93_Tariff_Submission_Letter_-
_A5L7G0.pdf?nodeid=3268764&vernum=1
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2.7 Drivers of wholesale and retail propane prices in Michigan
2.7.1 U.S. propane prices are connected to North American natural gas 
        prices and global oil prices
    Propane prices in the Unites States reflect the global price of 
crude oil, as represented by the price of Brent crude, a widely-used 
global benchmark price (see Figure 21). As one source explains 
``depending on market conditions, produced propane may be sold, 
consumed as fuel (in the refinery) or transformed to other refined 
products within the refinery.'' \44\ This is one reason that propane's 
price can rise and fall with the price of crude oil. The price of crude 
oil in turn is determined by continental as well as global supply and 
demand events.
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    \44\ Gas Processing Management Inc. ``Canadian Propane Supply and 
Demand through 2055.'' January 2018. P. 14.
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    Another reason for the connection to Brent crude oil prices is 
that, with propane supplies growing faster than demand, the United 
States is exporting increasing volumes of propane. Most exported 
propane originates from the U.S. Gulf Coast, but the U.S. Northeast has 
begun exporting NGLs, to provide an outlet for growing Marcellus-area 
supplies. This expanding connection to the global market means that 
propane prices in North America can be influenced by global propane 
prices, which in turn are influenced by global oil prices.
    The cost and supply of natural gas plays an important role in 
propane prices. The price of natural gas in the United States is 
determined mostly by supply and demand in the North American continent, 
rather than global gas supply and demand. With strong growth in natural 
gas supplies in the United States, continental gas prices declined 
dramatically after 2008, and the availability of NGLs increased. This 
reduced the price of NGLs such as propane. Before 2010, propane prices 
were nearly identical to crude oil prices; but starting in about 2011, 
a gap has appeared between Brent crude oil prices and United States 
propane prices, with U.S. propane usually selling at a discount to 
Brent crude.

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2.7.2 Wholesale prices in Michigan usually track PADD 2 prices closely
    The average wholesale price of propane in Michigan usually tracks 
the PADD 2 price closely (see Figure 22). The average wholesale price 
of propane in Michigan was about $0.76 per gallon for winter (November-
March) 2016/17, and $1.04 per gallon for winter 2017/18.

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    Michigan wholesale prices averaged one percent higher than in 
Wisconsin in 2017. However, in 2018 Michigan prices were seven percent 
higher than the PADD 2 average. This may have been related to an 
unusual January and February 2018 price increase at Sarnia, 
Ontario.\45\
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    \45\ Based on the higher spot FOB propane prices from Bloomberg at 
Sarnia, Ontario, observed in early 2018.
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    EIA data, which begins in 2016 for Michigan wholesale prices, shows 
the wholesale price of propane in Michigan was an average of $0.06 per 
gallon higher than the PADD 2 average in 2016/18 (see Figure 23). Other 
PADD 2 locations include Kansas, the location of the Conway propane 
supply hub; Ohio, home of the prolific Marcellus supply region; and 
North Dakota, home of the Bakken supply region. These low-wholesale 
cost areas contribute to slightly lower PADD 2 average wholesale prices 
compared with Michigan.

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2.7.3 Recent residential propane prices in Michigan were about $2 per 
        gallon
    Propane prices to residential consumers in Michigan were about $2 
per gallon for the winter of 2017/18, about $1 more than wholesale 
price (see Figure 24). Part of the total residential price of propane 
in Michigan is a four-percent sales tax on propane (classified by the 
State as an ``unregulated fuel'') used in the residential sector.\46\ 
Propane sales for any other use are charged a six-percent sales tax, 
with some exemptions.
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    \46\ Michigan Department of Treasury. https://www.michigan.gov/
treasury/0,4679,7-121-44402_44415_44416-7217--,00.html

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3 Cost of propane supply with and without Enbridge Line 5
    With strong growth in supply of NGLs in the United States, and with 
flat to declining demand for propane in Michigan, indeed, in the United 
States overall, the prospect of persistent propane supply shortages in 
Michigan is unlikely. Weather-driven or event-driven supply 
interruptions, such as experienced in 2014 during the Polar Vortex 
winter, will likely occur on occasion, as they have in the past. But 
with the prospect of plentiful supplies relative to demand, the main 
concern with the potential absence of Enbridge Line 5 is the delivered 
cost of alternative sources of propane.
    LEI took a three-step approach to examining the cost of alternative 
supply sources and transportation routes to the Upper Peninsula.

  1.  LEI examined public supply and transportation cost data. To the 
        extent public data were available, LEI compared them to the 
        cost assumptions that underpinned the analysis conducted by 
        Dynamic Risk. Section 3.1 provides a review of those costs. LEI 
        found that some of Dynamic Risk's assumptions were consistent 
        with publicly-available data, and others were not.

  2.  LEI replicated Dynamic Risk's computations. Using Dynamic Risk's 
        own assumptions and their cost model, LEI replicated Dynamic 
        Risk's calculations of the cost of alternatives to Line 5. This 
        step ensured that we understood Dynamic Risk's methodology and 
        used their model correctly (but does not imply we agree with 
        their assumptions). This is presented in Section 3.2.

  3.  LEI tested the reasonableness of Dynamic Risk's results. LEI used 
        the publicly-available data from Step 1 in the Dynamic Risk 
        model (see Section 3.3) and calculated the results. LEI 
        concluded that Dynamic Risk's pipeline and trucking cost 
        estimates were consistent with public sources of data, but the 
        rail cost estimates were higher than supported by public 
        sources. LEI calculated alternative rail transport costs.

    LEI did not perform precisely the same analysis for the impact on 
Lower Peninsula costs, as the region is less reliant on Enbridge Line 
5. However, we provided a qualitative view on the impacts on propane 
costs in the Lower Peninsula, in Section 3.3.5.
3.1 Step One: LEI examined data from publicly-available sources
    LEI examined a broad array of public data sources to collect 
information on the key determinants of the cost of propane supply in 
Michigan.
3.1.1 Propane prices at supply hubs
    Propane prices are published for hubs where large volumes are 
traded: at Mont Belvieu in Texas, Conway in Kansas, Sarnia in Ontario, 
and Edmonton in Alberta. Prices tend to be higher during winter and 
lower during summer (see Figure 25). Prices at Edmonton are lower than 
at the other hubs because supplies in Alberta are abundant, demand is 
much less than supply, the distance to markets is long, and transport 
capacity to the rest of North American is tight.

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3.1.2 Transportation cost data
    Pipeline tariffs for transportation of propane or NGLs are publicly 
available. Rail and truck costs have many elements which are not 
publicly available and are not simple to estimate, but some cost 
information is available in the public domain. This section covers key 
elements of pipeline, rail, and trucking costs for propane.
3.1.2.1 Costs by pipeline
    Propane contracted for delivery via a pipeline usually pays for 
transportation costs at a published tariff for a specific route, with a 
receipt point near where the propane or NGLs are produced, to a 
delivery point where they are fractionated if needed and stored for 
distribution.
    For transportation to Michigan, the transportation tariff for NGLs 
(including propane) on Enbridge's system from Edmonton, Alberta to 
Rapid River, MI, is $20.5562 per cubic meter, or $0.078 per gallon.\47\ 
This is based on Enbridge's 2011 Competitive Tolling Settlement 
(``CTS'') that came into effect in 2011 and expires in June 2021.\48\
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    \47\ International joint rate tariff. ``NEB No. 402 FERC No. 
45.12.0.'' Issued July 22, 2016.
    \48\ NEB. ``Canada's Pipeline Transportation System 2016--Enbridge 
Pipelines Inc.'s Enbridge Mainline.'' Accessed on April 12, 2018. 

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    From Sarnia to the U.S. border in Michigan (the end of the SDS 
line) the propane transportation pipeline tariff effective in 2016 was 
$0.008 per gallon.\49\
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    \49\ NEB. ``Plains Midstream Canada ULC Tariff (via the Sarnia 
Downstream Pipeline System).'' Issued March 01, 2016.
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3.1.2.2 Elements of rail costs
    Railroads offer tariffs in the form of ``walk-up'' rates which 
apply to the equivalent of a last-minute transaction. Most shippers do 
not pay walk-up rates. Instead, they pay discounted rates by providing 
their own equipment such as tanker cars, and/or committing to shipping 
large or fixed volumes.
    Pressurized tanker cars are an important piece of the kit required 
to transport propane or other NGLs. The cost to lease such tankers is 
reported to range from about $100 per car per month to about $500 per 
car per month in 2017, down from a range of $100-$750 per car per month 
in 2016 (see Figure 26).
    Rail cars may also be used to store propane. A distributor may find 
it cost-effective to buy propane in the summer when it is cheap and 
store it in a railcar until the winter. The cost to store a loaded rail 
car is reported to range from $10-$15 per rail car per day (about $300-
$450 per month), while the cost to store an empty car is reported at 
about $3 per car per day (about $90 per month).\50\
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    \50\ Energy Transport Insider. ``Longer-Term LPG Tank Car Lease 
Rates Up as Urge to Avoid Storage Continues.'' June 23, 2017. Vol. 2, 
Issue 25. 
    \51\ Energy Transport Insider. ``LPG Rail Car Lease Rates Fall as 
Demand Softens; Firms Try to Keep Cars Out of Storage.'' November 11, 
2016. ; and Energy Transport Insider, June 23, 2017. Vol. 2, Issue 
25. 
    \53\ PayScale. ``Propane Delivery Driver Salary.'' Accessed on 
April 2018. 
    \54\ EIA. ``Midwest No 2 Diesel Ultra Low Sulfur (0-15 ppm) Retail 
Prices Dollars per Gallon.'' Accessed on April 2018. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Public data for the retail price of diesel fuel in PADD 2 including 
taxes was $2.00 to just under $3.00 per gallon in 2016/17 (see Figure 
28). This compares to the $3.00 per gallon assumed by Dynamic Risk.

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    As discussed in more detail in Section 3.3, LEI used this public 
information to test the reasonableness of Dynamic Risk's cost 
estimates.
3.2 Step two: LEI replicated Dynamic Risk's propane supply cost results
    Dynamic Risk calculated the impact on the cost of propane of 
several alternatives to Enbridge Line 5. Dynamic Risk concluded that 
the Upper Peninsula could face cost increases in the range of $0.10-
$0.35 per gallon (based on winter months only).\55\ LEI replicated this 
analysis and arrived at a similar low end of the range. However, as LEI 
discusses in Section 3.3, high-cost options would not be adopted if 
low-cost options are available, and therefore should not be used to 
assess impacts on consumers.
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    \55\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines'' Prepared for the State of Michigan. October 26, 
2017. P 4-13.
    \56\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' Appendix J, P. J-1. Prepared for the State of 
Michigan. October 26, 2017.
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    To perform their analysis, Dynamic Risk examined several 
transportation and supply alternatives from three different hubs (see 
Figure 29).

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    Dynamic Risk relied on extensive and detailed cost assumptions and 
analysis, which they supplied in Appendix J of their Final Report.\57\ 
LEI will be referring to these assumptions, so we reproduced them for 
the reader's convenience (see Figure 30 for rail cost assumptions and 
Figure 31 for trucking cost assumptions).
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    \57\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' Appendix J. Prepared for the State of Michigan. 
October 26, 2017.
    \58\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' Appendix J, P. J-2. Prepared for the State of 
Michigan. October 26, 2017.
    \59\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' Appendix J, P. J-4. Prepared for the State of 
Michigan. October 26, 2017.
    \60\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' Appendix J, P. J-2. Prepared for the State of 
Michigan. October 26, 2017

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3.2.1 Replicating Dynamic Risk's methodology and assumptions
    As mentioned above, the purpose of Step 2 was to ensure LEI 
performed the cost calculations in the same way that Dynamic Risk did. 
Once that was established, LEI could then change key assumptions and 
examine the impact on the bottom line.
3.2.1.1 Replicating pipeline shipping costs
    LEI compared the pipeline costs used by Dynamic Risk to the 
published tariffs for Enbridge Line 5 and SDS. Dynamic Risk's 
assumptions were consistent with the published tariffs ($0.078 per 
gallon for Enbridge Line 5 and $0.008 per gallon for SDS). There was 
therefore no need for LEI to perform further calculations to replicate 
pipeline shipping costs.
3.2.1.2 Replicating rail shipping costs
    For the cost to ship by rail, LEI first examined Dynamic Risk's 
results for the cost to ship by rail from Edmonton to Kincheloe; these 
costs include monthly railcar lease and storage costs, monthly freight 
costs, monthly transloading costs, and other costs. Dynamic Risk did 
not provide the numerical data for these results, but they did provide 
a visual representation in the Final Report, as Figure 4-4, page 4-10 
and in Appendix J, as Figure J.2.1 (reproduced as Figure 32 below, for 
the reader's convenience).
    Dynamic Risk noted that their estimated transport costs by rail 
from Edmonton to Kincheloe were in the range of $0.12 to $0.50 per 
gallon (Final report, Section 4: Alternative 6, page 4-10). However, it 
is clear from the figure that accompanied the discussion that the range 
is more like $0.28 to $0.50 per gallon. If their Figure (reproduced as 
Figure 32 below) is correct, the Dynamic Risk text appears to contain 
an error.

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    LEI used this visual representation (and the $0.28 to $0.50 range) 
as a ``target'' for our replication of the Dynamic Risk analysis.
    LEI replicated these costs by using monthly propane deliveries to 
Rapid River (from Appendix C, pages C-2 and C-3). LEI cannot confirm 
the exact level of monthly propane deliveries Dynamic Risk used in its 
analysis, but we think it is reasonable to assume that their monthly 
estimate would be close to actual deliveries reported by Enbridge. 
Dynamic Risk said it reduced these deliveries by five percent to derive 
propane production volumes from the NGL flow data provided by Enbridge. 
To match Dynamic Risk's methodology, LEI did the same. LEI then 
calculated the monthly freight charge by using the $10 per barrel 
charge used by Dynamic Risk (see Figure 30 above), converting it to 
dollars per gallon, and multiplying it by the number of gallons of 
propane delivered.
    LEI replicated the railcar lease cost by multiplying Dynamic Risk's 
monthly costs per car ($3,000, see Figure 30 above) by the number of 
railcars assumed by Dynamic Risk (39 cars, see Figure 30 above).
    To replicate monthly storage costs, LEI first estimated the number 
of cars that would be in storage each month (Dynamic Risk did not 
provide this number). In December, January, and February we assumed no 
cars would be in storage, i.e., we assumed all 39 railcars would be 
needed for deliveries. For the other months, we scaled down the 39 cars 
based on the quantity of propane delivered in the month relative to the 
quantity delivered in December, January, and February. For example, if 
propane deliveries in April were only half the level of monthly 
deliveries in December, we assumed that half the railcars would be in 
storage in April. We then multiplied the number of cars in storage by 
the $1,000 per car storage cost assumed by Dynamic Risk (see Figure 
30).
    To replicate monthly transloading costs,\61\ LEI multiplied the 
monthly transloading fee of $700 per car by the number of cars in the 
fleet which were assumed to be operating in a given month (i.e., 39 
less the number of cars assumed to be in storage) and by the number of 
trips the cars needed to make.
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    \61\ Transloading refers to transferring cargo from one mode of 
transportation to another (such as railcar to truck) or transferring 
cargo from one vehicle to another. Source: UPDS. ``How Transloading 
Works.'' 
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    To replicate ``Other operating costs,'' LEI calculated monthly 
overhead and incremental overhead costs; for incremental overhead costs 
we assumed a 2,000-hour work year and a labor cost of $30 per hour.
    To replicate ``Other capital costs,'' LEI assumed a 20-year asset 
life for storage tanks and transloading equipment (the same as Dynamic 
Risk); used the same capital costs as Dynamic Risk; assumed two units 
of transloading equipment (one for each end of the journey) would be 
needed, and three storage tanks (to accommodate the assumed 270,000 
gallons of storage), and the same 15 percent discount rate that it 
appears Dynamic Risk used, to arrive at net present value of the 
capital. LEI assumed deliveries of 30 million gallons per year for 20 
years, to arrive at an average annual fixed cost recovery charge of 
$0.0055 per gallon.
    LEI added all the monthly costs and divided by the monthly 
deliveries to Rapid River. We arrived at an average of $0.32 per gallon 
to ship by rail from Kincheloe to Rapid River for the time period 
covered by the Dynamic Risk analysis (see Figure 33 and Figure 34, 
which is a visual representation of the data in Figure 33). This is 
very close to Dynamic Risk's $0.31 per gallon estimate of the 
incremental rail cost for the same route.\62\
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    \62\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' Prepared for the State of Michigan. October 26, 
2017. P. 4-13.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    As can be seen in Figure 34 in comparison to Figure 32, LEI's total 
monthly freight charges were nearly identical to Dynamic Risk's, which 
indicates LEI replicated Dynamic Risk's approach for that cost 
component almost perfectly. LEI's estimates of monthly storage and 
transloading costs appear to be slightly different from Dynamic Risk's, 
which probably reflects slightly different assumptions for the number 
of cars in service versus in storage in a given month.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    LEI's replication of Dynamic Risk's results does not imply that LEI 
agrees with Dynamic Risk's assumptions. It simply confirmed that LEI 
understood Dynamic Risk's approach and used Dynamic Risk's assumptions 
correctly.
3.3 Step three: LEI calculated propane transportation costs using 
        public data
    For the final step, LEI substituted public data into the Dynamic 
Risk models, and calculated the results.
    For the rail analysis, LEI's research of public sources discussed 
in Section 3.1 above indicated that LPG tanker car lease costs were 
considerably less than $3,000 per car per month assumed by Dynamic 
Risk. Costs for 2016-2017 ranged from $100-$750 per car per month, 
depending on supply and demand conditions and length of lease (see 
Figure 26 previously). Railcar storage costs (for empty cars) was 
reported at $90 per car per month; storage of loaded cars was reported 
at $300-$450 per car per month.
    LEI performed the same analysis as described above but substituted 
$750 per car per month for the railcar lease cost (Dynamic Risk assumed 
$3,000) and $450 per car per month storage cost--assuming cars are 
stored loaded (Dynamic Risk assumed $1,000 per car per month). This 
resulted in an average cost of $0.27 per gallon (see Figure 35), which 
was $0.05 per gallon lower than the $0.32 per gallon estimated by LEI 
using Dynamic Risk's assumptions. The lower lease cost per rail car 
shifted the cost per month downward, while the lower storage cost 
flattened the summer peak in cost per gallon.

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    LEI performed the same calculations for the rail cost from Conway, 
KS to Owen, WI. We calculated the cost per gallon assuming lease costs 
were $750 per car per month and storage costs were $450 per car per 
month. LEI's assumptions based on the public data resulted in costs of 
$0.15 per gallon, a reduction of $0.03 per gallon compared to LEI's 
replication of Dynamic Risk's results.

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3.3.1 Trucking costs
    For the cost of trucking propane to Rapid River, Dynamic Risk 
reported a winter average cost of $0.06 per gallon (Kincheloe to Rapid 
River), $0.09 per gallon (Owen to Rapid River), and $0.11 per gallon 
(Superior to Rapid River) (see Figure 37).\63\ LEI replicated Dynamic 
Risk's trucking analysis in the same manner as we did for their rail 
analysis. On an annual average basis, LEI calculated that trucking 
costs were $0.09 per gallon from Kincheloe to Rapid River, $0.12 per 
gallon from Owen to Rapid River, and $0.14 per gallon for Superior to 
Rapid River. LEI's annual averages are somewhat higher than Dynamic 
Risk's wintertime averages, because fixed costs are spread over fewer 
volumes in the non-winter months.
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    \63\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' P. 4-13. Prepared for the State of Michigan. 
October 26, 2017.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    LEI's replication of Dynamic Risk's results does not imply that LEI 
agrees with Dynamic Risk's assumptions. It simply confirmed that LEI 
understood Dynamic Risk's approach and used Dynamic Risk's assumptions 
correctly.
    LEI's analysis of publicly available data showed different values 
to those used by Dynamic Risk: 11,000-gallon truck volume (Dynamic Risk 
assumed 10,400 gallons); and recent (winter 2017/18) diesel fuel prices 
somewhat below Dynamic Risk's $3.00 per gallon). Public data for driver 
wages was lower than the $35 per hour used by Dynamic Risk, but did not 
include benefits, bonuses, or commissions. LEI assumed an average pay 
of $17 per hour (from Figure 27), a 2,000-hour working year, $18,000 
per driver per year for health insurance,\64\ and $8,000 for bonuses 
and commissions,\65\ for a total cost of $30 per hour. Substituting 
public data (11,000-gallon truck, $2.90 per gallon diesel price, and a 
wage cost of $30 per hour) into the Dynamic Risk model reduced the cost 
per gallon for each of the routes by about $0.01 per gallon (see Figure 
37 above).
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    \64\ National Conference of State Legislatures. 2016 Employer 
Health Benefits Survey. http://www.ncsl.org/research/health/health-
insurance-premiums.aspx.
    \65\ https://www.indeed.com/q-Propane-Delivery-Driver-Class-B-CDL-
Tanker-Hazmat-jobs.html
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3.3.2 The cost of rail from Superior to Rapid River
    LEI also estimated the cost of transportation on a hypothetical new 
rail connection and transloading facilities at Rapid River. We used the 
same analytical framework and cost assumptions we used for the analysis 
of the other rail options and adjusted for the distance between 
Superior and Rapid River (which impacts transit time and therefore the 
number of railcars needed). We included the cost of storage and 
offloading equipment using the same assumptions as Dynamic Risk. The 
one important element of cost which is not publicly available is the 
freight rail charge. Canadian National Railway Company (``CN'') 
currently serves this route but does not have a published tariff for 
LPGs. LEI calculated that, assuming a freight rate of up to $4.00 per 
barrel ($0.095 per gallon), rail from Superior to Rapid River would be 
within a fraction of a cent of trucking. This $4.00 per barrel would 
likely be the highest price a railroad could charge--it if were any 
higher, it would lose the propane business to truckers.
3.3.3 Upper Peninsula propane costs could increase $0.11 per gallon on 
        an annual average basis
    LEI combined the transport costs we estimated based on public data 
with cost of supply at alternative sources, to arrive at the total cost 
of propane at Rapid River.\66\ On a weighted average annual basis, the 
cost of propane at Rapid River was lowest, at $0.61 per gallon, if 
delivered by Enbridge Line 5 from Edmonton (see Figure 38). The next 
lowest-cost options are the combination of pipeline to Superior, and 
thence by rail or truck to Rapid River, with an incremental cost of 
$0.11 per gallon (including variable costs, overhead, and capital 
costs). A rail carrier may choose to charge a freight rate lower than 
$4.00 per barrel, in which case the incremental cost could be lower 
than $0.11 per gallon.\67\
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    \66\ By using the propane price at Edmonton rather than a value for 
NGLs at Edmonton, LEI implicitly assumed fractionation costs are 
included in the supply hub price, though the fractionation does not 
occur until the NGLs arrive at Rapid River.
    \67\ LEI also analyzed the cost of trucking from Sarnia to Rapid 
River, using the same assumptions used for the other trucking options. 
This route requires crossing the Straits, which is not favored by NWF. 
In any case, the cost of that option was $1.00 per gallon ($0.82 per 
gallon supply cost plus a $0.18 per gallon trucking cost) which made it 
clearly out-of-the money.

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3.3.4 Other alternatives cost more
    In theory, there are a wide variety of options for supply sources 
and routes to the Upper Peninsula. In practice, any viable alternative 
would have to be cheaper than the Edmonton-Superior alternatives, 
otherwise suppliers would not invest in it--they would not be able to 
beat the cost of the Edmonton-Superior route. For example:

   Expanding storage at Kincheloe: Dynamic Risk noted that 
        propane storage exists at Kincheloe, which receives propane by 
        rail from Alberta.\68\ LEI's analysis summarized in Figure 38 
        shows that that even if rail or trucking from Kincheloe to 
        Rapid River was free, the total cost of using the Kincheloe 
        route would be $0.80 per gallon, which is more expensive than 
        the Edmonton-Superior route. Therefore, LEI did not examine the 
        option of expanding storage at Kincheloe--it cannot compete 
        economically with the Edmonton-Superior route.
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    \68\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' P. 4-9. Prepared for the State of Michigan. 
October 26, 2017.

   A new 4-inch diameter pipeline from Superior: LEI was asked 
        to examine whether a new, smaller pipeline dedicated to 
        transport of propane to the Upper Peninsula would be 
        economically viable. LEI modeled a 4-inch (internal diameter) 
        pipeline running 290 miles from Superior Wisconsin, to Rapid 
        River. Even if the cost of abandoning Line 5 in the Upper 
        Peninsula is excluded, and even if operating and maintenance 
        costs are excluded, the cost of this option was very expensive. 
        At an assumed capital cost of about $2 million per mile,\69\ a 
        length of 290 miles from Superior to Rapid River, a 40-year 
        period to cover return of capital, and a four percent discount 
        rate, the cost would be $0.86 per gallon. This is expensive 
        because the volume of propane needed in the Upper Peninsula is 
        too small to support the capital cost of dedicated pipeline.
---------------------------------------------------------------------------
    \69\ ICF. ``North America Midstream Infrastructure through 2035: 
Capitalizing on Our Energy Abundance.'' INGAA Foundation Final Report 
No. 2014.01. March 18, 2014. Pp. 14, 17.

   Using existing Line 5 far below capacity: Apart from any 
        engineering and operational problems, this would involve a 
        large increase in transportation costs per gallon. Pipeline 
        tariffs are designed to recoup investment and are agreed under 
        a regulatory process. Propane demand in Rapid River is less 
        than 4,000 barrels per day even in high-demand months, less 
        than one percent of the 540,000 barrels which is the basis of 
        the current tariff. Continued operations would require a very 
        large increase in the tariff, given the small volume of propane 
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        and large pipeline capacity.

    LEI concluded that the Edmonton-Superior route which relies on 
pipeline service to Superior and trucking or rail transport to Rapid 
River, is the lowest-cost alternative and therefore the most likely 
market response if Enbridge Line 5 did not exist.
3.3.5 Lower Peninsula may have negligible cost impact
    For the Lower Peninsula, the loss of the delivery of NGLs to Sarnia 
may have a negligible cost impact. Enbridge Line 5 is the main source 
of NGLs to Sarnia as noted in Section 2.6, but it is not the only 
source. Sarnia is located close to cheap sources of NGLs from the 
Marcellus shale. Dynamic Risk noted that ``(w)ith the potential 
availability of low cost ethane and additional propane from Marcellus 
and Utica, the Sarnia area petrochemical industry is able to source 
alternate feedstock supplies for their respective plants given the 
well-developed infrastructure and logistics available in the region as 
well as proposed new pipelines.'' \70\
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    \70\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines (Appendices).'' October 26, 2017. Prepared for the 
State of Michigan. October 26, 2017. Appendix G, P. G-9.
---------------------------------------------------------------------------
    Dynamic Risk estimated the cost impact at $0.06 per gallon (on 
Sarnia supply costs), and also noted that the producers would probably 
absorb some of this cost increase.\71\ LEI examined Dynamic Risk's 
assumptions and calculations and found that, assuming Dynamic Risk's 
assumption of a stand-alone rail rate of $6.49 per barrel from Superior 
to Sarnia (which we could not verify) and the other assumptions (which 
we could verify), that the $0.06 per gallon could be accurate, assuming 
the NGLs had to come from Edmonton through Superior.
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    \71\ Dynamic Risk. ``Final Report: Alternatives Analysis for the 
Straits Pipelines.'' October 26, 2017. Prepared for the State of 
Michigan. October 26, 2017. Appendix J. P. J-12.
---------------------------------------------------------------------------
    However, there is no obvious reason why the 4 million gallons per 
day of NGLs processed at the Sarnia fractionation plant would have to 
be sourced from Edmonton via Superior. Sarnia is closer to the 
Marcellus supply region than it is to Superior. If Sarnia needed 
additional supplies of NGLs, rail transport from Ohio through Michigan 
might be cheaper because the distance is shorter, and pipeline 
transport costs might be lower still. So, if Line 5 were not in 
service, Sarnia could still receive NGLs, and still provide propane via 
SDS to Michigan.
    Also, in terms of propane rather than NGLs, the potential future 
expansion of the Utopia pipeline could increase the quantity of propane 
shipped into the Lower Peninsula. This could potentially add 25,000 
barrels per day, which coincidentally is the equivalent of the 25,000 
barrels per day currently shipped from Sarnia on SDS. The tariff for 
this has not been established (as the expansion is not under way, it is 
only proposed) so costs are not known. LEI examined several recent 
tariff filings and found a range of $0.064 per gallon to $0.089 per 
gallon for propane transportation by pipeline, which gives a general 
indication of the potential cost.\72\ The supply cost of propane in the 
Marcellus region is not widely available or publicly reported, so LEI 
could not estimate the total cost of propane supply plus 
transportation, to compare it to the $0.828 per gallon total from 
Sarnia.\73\
---------------------------------------------------------------------------
    \72\ Blue Racer NGL Pipelines, Inc. ``Local pipeline tariff. FERC 
oil tariff.'' December 2015; Tri-Sates NGL Pipeline, LLC. ``FERC oil 
tariff.'' January 2016; and Mid-America Pipeline Company.
    \73\ Adding the $0.008 per gallon rate on SDS to the average 
propane cost at Sarnia of $0.82 (from January 2016-December 2017) 
totals $0.828 from Sarnia to Detroit.
---------------------------------------------------------------------------
4 Impact of a cost increase on consumer prices
    The cost increases will not be borne entirely by consumers in the 
Upper Peninsula of Michigan. LEI found that $0.05 per gallon of the 
$0.11 per gallon cost increase would be borne by consumers in the form 
of a price increase. The remaining $0.06 per gallon would be borne by 
producers and suppliers in the form of lower margins.
4.1 Cost increase is shared by suppliers and consumers
    To estimate the shares of the cost borne by suppliers versus 
consumers, LEI used econometric analysis of propane supply and demand 
in Michigan. LEI focused on the impact of prices on supply and demand; 
there are drivers other than price that can affect supply and demand, 
and econometric analysis isolates these, so that we can examine the 
impact of prices alone. Detailed information about the econometric 
methodology, the drivers tested, data LEI used, and the results are 
available in Section 6 (Appendix A).
    LEI used the econometric analysis to create supply and demand 
curves for propane in Michigan (see Figure 39). The orange dots 
represent Michigan propane supply as it relates to the price of 
propane; as prices rise suppliers are willing and able to supply more 
propane, so the orange trend has an upward slope. The blue dots are 
Michigan demand for propane as it relates to price. It has a downward 
slope in relation to propane prices, because as prices rise consumers 
are less able or willing to buy propane. The market-clearing 
residential price, where (orange) supply and (blue) demand meet, is 
$2.284 per gallon (see Appendix A for calculations).
    The grey line shows the supply of propane if the cost goes up $0.11 
per gallon. This added cost shifts the supply curve upward: at any 
given quantity, the cost is $0.11 per gallon more. However, the new 
market-clearing price is not $2.394 (i.e., $2.284 + $0.11) per gallon. 
It is lower than that. This is because the demand curve is not 
perfectly vertical--it has a downward slope, because, as mentioned 
above, people want less propane when it costs more. The new market-
clearing price, where supply and demand meet, is $2.337 per gallon, 
which is $0.053 per gallon higher (see Appendix A for calculations).

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

5 Conclusions and implications
    Without access to propane from Enbridge Line 5, consumers would 
seek the next-least-expensive alternative; and suppliers would not 
attempt to serve the market using a supply route that costs more than 
the cheapest option. The cheapest option is rail or trucking from 
Superior, WI. LEI estimates this would add about $0.11 per gallon to 
the weighted average annual cost of propane.
    It would not make sense for consumers to choose the other 
alternatives unless there were some interruption in pipeline service to 
Superior, or road or rail access from Superior to Rapid River was 
closed off. Thus, it does not make sense to assume that the impact of 
the loss of Line 5 would be a $0.35 per gallon ``upper bound,'' as 
Dynamic Risk argued.\74\ The upper bound would only be relevant if the 
lower-cost alternatives did not exist. The upper bound cost impact 
under normal operating conditions would be $0.11 per gallon, the cost 
at which the two lowest-cost alternatives would compete to supply the 
market.
---------------------------------------------------------------------------
    \74\ Dynamic Risk. Analysis of Alternatives Dynamic Risk. ``Final 
Report: Alternatives Analysis for the Straits Pipelines.'' October 26, 
2017. Prepared for the State of Michigan. October 26, 2017. P. 4-13.
---------------------------------------------------------------------------
5.1 Consumers would pay for part of the cost increase, but not all of 
        it
    The demand for propane in Michigan, like demand for most goods and 
services in most places, is ``downward-sloping.'' This means that 
consumers will buy less of something when its price goes up. LEI's 
econometric analysis shows that, of an $0.11 per gallon cost increase, 
the residential price of propane would increase $0.05 per gallon.
5.2 The price increase would be lost in the noise of typical price 
        volatility
    Each week, the price of propane varies widely compared with its 
monthly average. For Michigan, weekly prices of propane have been as 
low as $0.86 per gallon even in the winter, and as high as over $3.50 
per gallon (see Figure 40). This wide variation is often referred to as 
price volatility and is typically measured as the standard deviation of 
prices. For Michigan residential propane prices, the standard deviation 
of weekly prices for 2008-2018 was about $0.58 per gallon. This is much 
larger than the $0.05 per gallon price increase estimated for the Upper 
Peninsula from using an alternative to Enbridge Line 5.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

5.3 New supplies, but no surprises
    LEI's economic analysis of supply options assumes that the need to 
transition to a new supply option, and the timing of this need, would 
be known in advance. This gives the industry time to plan. The Polar 
Vortex and surprises such as pipeline outages drive up prices precisely 
because they are unexpected. But if Enbridge Line 5 were not operating, 
ideally regulators and stakeholders would establish a timeline so that 
the industry can create new supply and transportation routes.
    If Enbridge Line 5 did not exist, consumers should not expect 
shortages of supply under normal conditions (i.e., assuming the 
railroads are running, and highways are open). Consumers should 
continue to expect the price of propane to reflect supply and demand, 
weather conditions, and volatility, as it has for many years.
6 Appendix A: Details of econometric analysis of propane supply and 
        demand
    Econometric estimation is a technique based on statistical analysis 
of historical data. If enough data is available, econometric analysis 
allows isolation of the individual impacts of prices and of other 
drivers (known as regressors, or explanatory variables) on demand for a 
good; or similarly, on supply of a good.
6.1 Econometric model specification
    LEI used a standard formulation of a system of demand and supply 
equations, which includes the price of the good as an explanatory 
variable for both demand and supply.
6.1.1 Demand model
    The price of a good is a driver of demand, in that a higher price 
would probably reduce demand and a lower price would increase demand, 
so economists include price an explanatory variable in any demand 
model. Propane is used for heating, so the weather (measured as number 
of heating degree days (``HDD'')) is likely to be an important 
driver.\75\ Propane is also used for drying crops, a seasonal activity 
which typically happens in October. Finally, demand for propane could 
increase over time, or it could fall over time, depending on other 
factors such as adoption of other heating fuels, or a rising 
population. We do not necessarily know what these time-dependent 
factors might be, but we can include an explanatory variable which 
tracks an underlying trend over time and discover whether it tends to 
increase or decrease demand. If there is no impact over time, the 
econometric results would indicate that, too. This model is shown in 
Figure 41.
---------------------------------------------------------------------------
    \75\ A heating degree day is defined as the difference in the 
average temperature on a given day from 65 degrees Fahrenheit. For 
example, a day in which the temperature averaged 30 degrees would 
account for 35 heating degree days.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

6.1.2 Supply model
    The price of propane is an incentive to supply it. A rising price 
would, all else equal, encourage more supply, while a lower price would 
induce less supply. Availability of propane could increase over time, 
or it could fall over time, depending on a variety of factors such as 
NGL production and demand from refineries. Just as for propane demand, 
we do not necessarily know what these time-dependent factors might be, 
but we can track the trend over time and discover whether it tends to 
increase supply, decrease supply, or has no impact on supply. The 
supply model is also shown in Figure 41.
6.2 Data used in the econometric analysis
    LEI used data from the EIA and the U.S. National Oceanographic and 
Atmospheric Administration (``NOAA'') (see Figure 42). The EIA price 
and consumption data are available for Michigan as a whole, but not for 
the Upper Peninsula separately; LEI used Michigan-wide data for the 
econometric analysis.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    LEI created the variable for October by using a ``1'' if the 
observation was in October, and ``0'' if not. This standard formulation 
is known as a ``dummy variable.'' The time trend regressor equals ``1'' 
in 2008, and subsequent years are ``2'', ``3'', ``4'', etc. All the 
data values are shown in Figure 43. All data was for 2008-2018, for the 
months of January-March and October-December (except for 2018, for 
which only January data was available). This provided a sample size of 
61 observations, which is enough observations to support statistically 
significant results.\76\
---------------------------------------------------------------------------
    \76\ The more observations in a sample of data, the more likely it 
is that the sample represents reality. Statistical significance refers 
to whether the results of the econometric analysis are likely to 
closely match reality.
---------------------------------------------------------------------------
    LEI computed the logarithms of consumption, price, and HDD and used 
those values in the econometric model. This widely-used formulation 
provides a straightforward way of interpreting the estimated 
coefficients: they are the elasticities of demand, as in ``a one-
percent change in the price of propane is associated with an x-percent 
change in demand.''

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

6.3 Econometric analysis
    LEI estimated the demand and supply equations separately. We then 
used the results of the econometric analysis to calculate the impact of 
a $0.11 per gallon cost increase on the market-clearing price.
6.3.1 Econometric results, demand
    LEI's econometric results showed that, for the demand model, the 
impact of a one-percent increase in price was to reduce quantity 
demanded by 0.29 percent (see Figure 44). This relationship defines the 
downward slope of the demand curve. For every one percent increase in 
HDD in a given month, demand increased by 0.88 percent. The impact of 
the time trend was negative: each year, Michigan demand declined by 
0.01 percent. The impact of October was positive: 0.26 percent more 
propane would be used in October than in the other months, 
independently of price, time, or HDD.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    The results are statistically significant. The measures of 
statistical significance LEI used in this analysis are the well-known 
t-statistic and P value. The t-statistic is the difference between the 
estimated coefficient and zero (i.e., its value under the null 
hypothesis ``H0''),\77\ divided by its standard error (see 
Figure 44). A t-statistic with an absolute value which is 2 or greater 
(given our 61 observations) indicates that we can be 95 percent 
confident that the estimated coefficient is accurate.
---------------------------------------------------------------------------
    \77\ For our study, zero is the hypothesized value--i.e., we test 
the estimated coefficient against zero, which would be its value if the 
driver (for example, price) had no impact on demand. This is referred 
to as the ``null hypothesis'' or ``H0.''
---------------------------------------------------------------------------
    The P value is the probability of erroneously rejecting 
H0 when it is true. For example, the P value of 0.03 in 
Figure 44 for the estimated coefficient on price indicates that there 
would be only a 3 percent chance of making that mistake. This means 
that we can be 97 percent sure that the estimated coefficient for price 
is accurate.
6.3.2 Econometric results, supply
    LEI's econometric results showed that, for the supply model, a one 
percent increase in price increased quantity supplied by 0.54 percent 
(see Figure 45). This relationship defines the positive slope of the 
supply curve. The P value indicates that the estimated coefficient for 
price is significant at 98 percent.
    The impact of the time trend was not statistically significant in a 
model that LEI tested which included the time trend, so we left time 
out of the final supply model.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

6.3.3 Impact of cost increase
    When supply is equal to demand, the market is said to ``clear.'' 
LEI solved for the market-clearing price (where the supply and demand 
curves intersect):

        ln(quantity demanded) = 8.27 - (0.29 x (ln(price)) + (0.88 x 
        ln(HDD average value)) - (0.01 x time average value) + (0.26 x 
        October average value)

        ln(quantity supplied) = 13.54 + (0.54 x ln(price))

    Setting supply equal to demand and solving for the market-clearing 
price results in a price of $2.284 dollars per gallon.
    If the cost to supply propane goes up $0.11 per gallon, the supply 
curve shifts upward by $0.11 per gallon, resulting in a new intercept 
of 13.52. The set of equations now has a new intercept for the supply 
curve:

        ln(quantity demanded) = 8.27 - (0.29 x (ln(price)) + (0.88 x 
        ln(HDD average value)) - (0.01 x time average value) + (0.26 x 
        October average value)

        ln(quantity supplied) = 13.52 + (0.54 x ln(price))

    Again, we set supply equal to demand and solve for the market-
clearing price. The new price is $2.337 per gallon, $0.053 per gallon 
more than the old price.
                       Appendix B: Consultant CV

                          Marie N. Fagan, PhD

Managing Consultant and Lead Economist, London Economics International, 
        LLC
KEY QUALIFICATIONS:
    Marie Fagan is Managing Consultant and Lead Economist at London 
Economics International, LLC, based in Boston, Massachusetts. With over 
25 years of experience in research and consulting for the energy 
sector, Marie's career has spanned international upstream and 
downstream oil and gas, global coal, North American gas markets, and 
North American power markets. She has advised C-suite industry clients, 
buy-side and sell-side financial clients, as well as legislators and 
regulators; she has served as an expert witness. At LEI, Marie's 
expertise across electricity markets and fuels provides integrated 
perspectives and supports sound strategic advice for clients.
    Marie leads LEI's engagements related to oil and natural gas market 
analysis. She directs gas pipeline modeling efforts based on a 
sophisticated network model, supporting outlooks for natural gas prices 
and basis, and analysis of flows on North American interstate 
pipelines. She provides in-depth expert testimony on issues such as 
basis differentials, pipeline capacity and utilization in key regions, 
and LNG import and export supply and demand. Recent projects for LEI 
have included serving as independent market expert for the Maine Public 
Utilities Commission, in the evaluation of the costs and benefits of 
new natural gas pipelines into New England, and as independent market 
expert assisting the Minnesota Department of Commerce in evaluating the 
application of an oil pipeline expansion project.
    Marie directs LEI's research of the Electric Reliability Council of 
Texas (``ERCOT'') electric power market. Recent projects have included 
examination of the political, legislative, and economic drivers the led 
to creation of ERCOT's Competitive Renewable Energy Zones (``CREZ''), 
and assessment of the potential for state-level support for further 
expansion of CREZ transmission lines.
    Marie draws on her long-time experience across fuels and regions to 
ensure clients benefit from an integrated understanding of market rules 
and practices. Recent projects have included providing expertise 
related to the design of capacity markets in the electric power sector. 
Marie is experienced in the use of scenario analysis, an approach which 
helps clients identify potential turning points and arrive at decisions 
that are robust given the uncertainties inherent in any future set of 
market conditions.
    From 1996-2014, she was with Cambridge Energy Research Associates 
(``CERA,'' now part of IHS, Inc.). She served as an Associate, then 
Associate Director for CERA's Global Oil research practice, as Director 
for the North American Gas research practice; she founded the CERAView 
Institutional Investor Service and co-founded CERA's Global Steam Coal 
service; she served as Senior Director for CERA's North American 
Electric Power service and of IHS CERA's Upstream Strategy service. 
Before joining CERA, Marie served as an economist with the United 
States Energy Information Administration (``EIA''), conducting analysis 
and modeling supporting the Annual Energy Outlook (``AEO''), and 
conducting analysis of energy company financial performance.
    Marie is the author of original research with publications in 
academic and industry journals. She holds a PhD in Economics from the 
American University in Washington, DC.
EDUCATION:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Institution              American University, Washington DC
Date:                    1995
Degree(s) or Diploma(s)  PhD in Economics. Dissertation: ``Measuring
 obtained:                Cost and Efficiency in U.S. Crude Oil Resource
                          Development, 1977-1990: A Frontier Translog
                          Cost Function Approach''
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Institution              University of Connecticut
Date:                    1984
Degree(s) or Diploma(s)  Bachelor of Science, Business Administration
 obtained:                (Finance)
------------------------------------------------------------------------

EMPLOYMENT RECORD:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 2014-present
Location:             Boston, MA
Company:              London Economics International LLC (``LEI'')
Position:             Managing Consultant and Lead Economist
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 2003-2014
Location:             Cambridge, MA
Company:              IHS (formerly Cambridge Energy Research Associates
                       (``CERA''))
 
Position:             Senior director, Upstream Strategy Advisory
                       service (2012-2014).
                       Responsible for the re-vamp of research
                       services and development of new research services
                       focused on the needs of oil and gas exploration
                       and production companies. Defined product
                       architecture, defined deliverables, and generated
                       research, as well as managed the delivery of
                       research. Responsible for marketing plans and
                       focus, conducting presentations to Board of
                       Directors meetings and other C-suite client
                       groups. Keynote speaker at IHS CERA events such
                       as CERAWeek and other industry events and
                       conferences
                      Senior director, North American Gas, Power, and
                       Renewables group (2007-2011).
                       Responsible for thought leadership,
                       development, and delivery of research for IHS
                       CERA's North American Electric Power Advisory
                       Service and North American Gas and Power
                       Scenarios Service. Led client engagements, as
                       well as wrote and published research. Provided
                       oversight and direction of the launch of a new
                       research service, the IHS CERA Global Steam Coal
                       Advisory Service
                      Director/Senior director, CERAView Institutional
                       Investor Service (2004-2007)
                       Created, launched and directed IHS CERA's
                       first research service encompassing the oil, gas,
                       and power sectors to serve a targeted client
                       community. Developed a new IHS CERA research
                       publication, Investors' Energy Monthly, and
                       served as publication's executive editor. In this
                       role, won the IHS Circle of Excellence Award in
                       2005
                      Director, North American Gas Advisory service
                       (2003-2004)
                       Responsible for rapid re-construction and
                       turnaround of one of CERA's largest research
                       advisory services. Contributed to and helped
                       define the research agenda and was responsible
                       for the editorial content and publication of
                       major research and analytical reports related to
                       gas infrastructure and markets in North America.
                       Advised senior executive clients, including
                       leading discussions of sensitive client-related
                       issues.
------------------------------------------------------------------------


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Date:                 2001-2002
Location:             Boston, MA
Company:              International Human Resources Development
                       Corporation (``IHRDC'')
Position:             Director, International Gas Program
                       Developed and implemented management
                       training programs for middle and senior energy
                       company managers, designed interactive
                       presentations and teaching materials, and served
                       as instructor. Taught principles of project
                       development and financial analysis of energy
                       company operations.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 1996-2001
Location:             Cambridge, MA
Company:              CERA
Position:             Associate director, Global Oil advisory service
                       (1999-2001)
                       Authored original research reports,
                       responsible for client presentations and the
                       management, execution, and delivery of consulting
                       projects.
                      Associate, Global Oil advisory service (1996-1998)
                       Developed and maintained IHS CERA's
                       expertise in exploration and production costs,
                       technology, and financial factors affecting the
                       upstream oil and gas industry.
------------------------------------------------------------------------


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Date:                 1994-1996
Location:             Washington, DC
Company:              US Department of Energy, Energy Information
                       Administration
Position:             Economist
                       Conducted financial analysis of upstream
                       and integrated oil and gas companies; evaluated
                       and implemented conceptual approaches to analysis
                       of energy markets and market incentives and wrote
                       and published original research reports.
------------------------------------------------------------------------


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Date:                 1989-1994
Location:             Vienna, Virginia
Company:              Decision Analysis Corporation of Virginia (DAC)
Position:             Research associate/Associate
                       Performed economic and econometric
                       analysis, modeling, and forecasting to support
                       the Energy Information Administration energy end-
                       use models. Designed the National Energy Modeling
                       System's Commercial Energy Demand Model;
                       conducted financial analysis of energy companies.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 1988
Location:             Washington DC
Company:              US Department of Energy, Office of Policy,
                       Planning and Analysis
Position:             Intern
                       Researched waste-to-energy potential in
                       the United States; constructed a database,
                       developed econometric models, analyzed results
                       and produced written reports.
------------------------------------------------------------------------

RECENT PROJECT EXPERIENCE:

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Date:                 July-June 2018
Location:             United States, MISO
Company:              Minnesota Department of Commerce (as subcontractor
                       to Ecology & Environment)
Description:          Marie served as independent market expert
                       assisting the Minnesota Department of Commerce in
                       evaluating the application of Enbridge Energy for
                       a Certificate of Need for its Line 3 oil pipeline
                       expansion project (Docket No. PL-9/CN-14-916, OAH
                       Docket No. 65-2500-32764). Marie's analysis
                       covered global and local trends in refined
                       product demand and crude oil supply, refinery
                       utilization rates and utilization of high-
                       conversion refinery capacity in Petroleum
                       Administration for Defense District (``PADD'') 2
                       and in the local Minnesota region. It involved
                       examination of issues around electric vehicle
                       adoption. Her analysis also required detailed
                       examination of the assumptions and methodology of
                       an oil pipeline linear programming-based model,
                       in order to assess another witness's testimony
                       which relied on the model. Marie provided written
                       testimony; responded to interrogatory requests,
                       provided written surrebuttal, and oral testimony.
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Date:                 June-December 2017
Location:             United States, MISO
Company:              Mississippi Public Service Commission
Description:          Marie led a management audit of the fuel (gas,
                       coal, and nuclear) and energy procurement
                       activities of a major vertically-integrated
                       utility in MISO. Marie's team assessed fuel and
                       energy contract terms and reviewed the prudency
                       of coal and nuclear fuel procurement and
                       inventory practices. Marie's team also assessed
                       management, organization, controls, strategies,
                       and outcomes for the company's hourly MISO
                       offers. The team investigated the operations of a
                       nuclear power plant, and the financial
                       implications of the utility's power purchase
                       agreement for nuclear power.
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Date:                 April 2017
Location:             United States and Canada
Company:              Private client
Description:          For a private equity client, Marie led an
                       extensive project reviewing all investable energy
                       sectors in the United States and Canada (except
                       oil and gas exploration and production). The
                       sectors included: electricity generation (natural
                       gas, wind, solar, hydro), AMI, distributed
                       resources, demand response, retail energy, gas
                       LDCs, gas storage, gas pipeline transportation,
                       LNG-related infrastructure, vertically-integrated
                       utilities, electric distribution utilities, and
                       water utilities. LEI assessed the investment
                       potential of each sector for the next five years
                       and proposed a methodology to screen and identify
                       investment opportunities and execute on these
                       opportunities.
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Date:                 March 2017
Location:             Alberta, Canada
Company:              Private client
Description:          LEI was engaged to provide global perspectives on
                       the detailed mechanisms that make up capacity
                       markets, so that eventual capacity market design
                       in Alberta will be workable and efficient, with
                       minimal unintended consequences. Marie led
                       research and delivered a detailed report on
                       market power mitigation mechanisms and their
                       potential impacts on capacity market performance.
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Date:                 February 2017
Location:             North America
Company:              Provider of services to vehicle fleet industry
Description:          Developed scenario outlook for electric vehicle
                       (``EV'') market penetration in the United States;
                       examined the role of electric utilities (and
                       their emerging EV-related business models) as
                       potential partners versus competitors to the
                       downstream transportation industry; identified
                       activities and strategic positioning of upstream
                       and downstream industry participants; led
                       discussion of implications of ``electrification
                       of transportation'' for fleet service companies,
                       convenience stores, and other downstream industry
                       participants. Presented material to company's
                       partner advisory board.
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Date:                 December 2016
Location:             Alberta, Canada
Company:              Private client
Description:          To support Board-level understanding of the
                       implications of potential capacity market designs
                       in Alberta, Marie prepared a detailed review and
                       comparison of capacity markets across
                       international and North American jurisdictions.
                       Report concluded ``the devil is in the details''
                       of capacity market design. Market design details
                       with potentially large impacts on the client were
                       resource eligibility definitions, price setting
                       mechanism, demand curve design, performance
                       requirements, and market power mitigation rules.
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Date:                 September 2016
Location:             Northeast United States
Company:              Private client
Description:          For a client performing due diligence related to a
                       potential investment in business-to-business
                       behind-the-meter solar in the Northeast United
                       States, Marie led a project examining U.S.
                       Federal and state incentives for solar adoption,
                       and assessing business models used for targeting
                       commercial, institutional, and industrial
                       sectors. For each business model, LEI assessed
                       the competitive environment--who is operating in
                       the sector, what is their go-to-market strategy,
                       and in general how these models have been
                       performing. Marie's team also provided a 10-year
                       outlook for solar renewable energy credits
                       (``SRECs'') for certain jurisdictions. Finally,
                       LEI developed key questions the client should ask
                       as part of its evaluation of potential
                       transactions in the behind-the-meter solar
                       sector.
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Date:                 October/November 2016
Location:             California, Kansas
Company:              Law firm
Description:          Marie prepared an expert report in support of
                       litigation in Case 15CV-04225 in the District
                       Court of Johnson County, Kansas. LEI was retained
                       by counsel to examine the value of the green
                       attributes of landfill gas (``LFG'') produced by
                       a project in Kansas City and sold under long-term
                       contract to the Sacramento Municipal Utility
                       District (``SMUD''). Marie's report demonstrated
                       several flaws in the opposing counsel's expert's
                       methodology. Marie proposed an alternative, more
                       appropriate methodology for valuing the green
                       attributes of LFG, based on market fundamentals
                       driven by the California RPS requirements.
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Date:                 August-October 2016
Location:             Maine
Company:              Maine Public Utilities Commission
Description:          Marie led an engagement to estimate the
                       macroeconomic impact of biomass generation within
                       the state of Maine (Maine PUC Docket No. 2016-
                       00084). This included direct, indirect, and
                       induced impacts on: permanent direct jobs,
                       payments to municipalities, payments for fuel
                       harvested in the State, payments for in-state
                       resource access, in-state purchases of goods and
                       services, and construction-related jobs and
                       purchases. Marie used the macroeconomic model
                       known as IMPLAN to capture the economic impacts
                       on industries including logging, sawmills, and
                       other forestry-related industries and well as on
                       state and local taxes.
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Date:                 May 2016
Location:             ERCOT, Texas
Company:              Private client
Description:          Marie conducted a case study assessing the current
                       ancillary services (``CAS'') market in ERCOT,
                       outlining the structure of ERCOT's proposed
                       Future Ancillary Services Nodal Protocol Revision
                       Request (``FAS-NPRR''), and examining the
                       implications of ERCOT's experience so far for the
                       Alberta electricity market. This involved
                       examining the drivers of ancillary services
                       supply and demand in ERCOT, the price-setting
                       mechanisms and procurement processes, and the
                       technical requirements of the various ancillary
                       services in ERCOT. Findings included the
                       following: While it was widely expected that the
                       addition of large amounts of wind (and other non-
                       synchronous generation) on the ERCOT system would
                       significantly increase the need for ancillary
                       services, by 2015, ERCOT's procurement of CAS
                       products had not increased compared with 2011.
                       However, the need for synchronous inertial
                       response (``SIR'') which is not part of CAS did
                       increase somewhat over the time period, though
                       ERCOT did not include SIR in its FAS-NPRR.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 April/May 2016
Location:             ERCOT/Texas
Company:              Renewable power investor
Description:          LEI was hired to perform due diligence for an
                       investor interested in wind assets in ERCOT.
                       Marie examined the political, legislative, and
                       economic drivers of ERCOT's Competitive Renewable
                       Energy Zones (``CREZ'') and provided an
                       assessment of state-level support for further
                       expansion of CREZ transmission lines. She also
                       provided assessment of and outlook for ERCOT's
                       and the Public Utility Commission of Texas's
                       views of the ``system cost'' of wind (the
                       potential increased need for ancillary services
                       and firm capacity on the system).
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 June 2014-April 2016
Location:             Maine
Company:              Maine Public Utilities Commission
Description:          Marie served as project manager, independent
                       market expert, and expert witness for the Maine
                       Public Utilities Commission, in the evaluation of
                       the costs and benefits of alternatives for
                       expansion of natural gas supply into Maine
                       pursuant to the Maine Energy Cost Reduction Act
                       (MPUC Docket #2015-00071). Marie reviewed and
                       evaluated proposals for firm natural gas
                       transportation service by pipeline developers.
                       These evaluations included LEI's review of
                       commercial terms include in the pipeline
                       Precedent Agreements that underpin capacity
                       expansion projects; review of contract provisions
                       for Firm Transportation Agreements and Negotiated
                       Rate Agreements; and evaluation of the status of
                       the FERC and state-level permitting process for
                       each pipeline proposal. Marie provided expertise
                       in upstream natural gas (exploration and
                       production), midstream natural gas (interstate
                       pipelines) and global energy markets including
                       oil and LNG markets, to provide a solid grounding
                       for LEI's long-term outlook for New England
                       natural gas prices. Marie directed the natural
                       gas network modeling (using GPCM, an industry-
                       standard network model of the North American
                       natural gas system) and power simulation modeling
                       (using LEI's proprietary POOLMod model) to arrive
                       at a quantitative cost-benefit analysis of
                       proposals. She authored reports provided to the
                       Commission; responded to discovery from other
                       parties; prepared discovery questions and cross-
                       examined witnesses; reviewed testimony by other
                       parties and provided assessments of the issues
                       presented; and she served as an expert witness in
                       the proceedings.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 November-December 2015
Location:             US Northeast
Company:              Renewable power developer
Description:          LEI was hired by a wind developer to provide a
                       quantitative assessment, based on an economic
                       dispatch model, of congestion/curtailment risk
                       for a wind asset in Maine. LEI used its
                       proprietary dispatch model, PoolMod, to provide
                       an outlook from 2016 through 2020 of hourly LMPs,
                       as well as the components of LMP (energy, losses,
                       and congestion). We incorporated information from
                       the interconnection impact study to examine
                       system limits for the plants in question. LEI
                       also provided an assessment of risk of outages
                       based on NERC outage data for NPCC. Marie led the
                       project
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 October-November 2015
Location:             ERCOT, Texas
Company:              Private equity company
Description:          LEI was hired to forecast the potential energy
                       revenues of two wind farms in Texas, using its
                       proprietary dispatch model, PoolMod. Marie led
                       the project, and also examined the implications
                       of the PPA related to the two wind farms.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 July 2015
Location:             North America/United Kingdom
Company:              UK Department of Energy and Climate Change
Description:          Marie participated in a review of auction design
                       for the UK DECC. The UK market regulator was
                       interested in whether U.S. power markets evaluate
                       generation bids based on criteria other than the
                       price bid, specifically, if the length of
                       contract had a role in the auctions. LEI reviewed
                       capacity market rules for PJM, ISO-New England
                       and the New York ISO. Marie examined whether and
                       for how long a ``lock-in'' option for the first
                       year capacity price is offered to new generation
                       assets bidding into the auctions. She also
                       reviewed international spectrum auctions, North
                       American gas transmission open season rules, and
                       international auctions for toll roads to examine
                       whether and how duration or length of contract is
                       incorporated into bidding.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 May 2015
Location:             Connecticut; Virginia
Company:              Private equity company
Description:          Marie evaluated contracts for firm gas
                       transportation capacity for gas-fired plants in
                       Virginia and Connecticut.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 April 2015
Location:             Connecticut; New Jersey
Company:              Private equity company
Description:          LEI was retained to forecast delivered gas prices
                       in New England (Connecticut) and PJM (New Jersey)
                       and locational marginal prices as well as retail
                       electricity prices in Connecticut. Marie led the
                       gas market analysis.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 August 2014-January 2015
Location:             North America
Company:              Private client
Description:          LEI was engaged to support an energy company's
                       Regulatory Group in its administering of the
                       company's compliance program. The purpose of the
                       engagement was to ensure that client's
                       transactional and business groups were made aware
                       of market rules and regulatory risks. This
                       involved creating and delivering a monthly report
                       covering developments by regional market and
                       traded products which included: energy, capacity,
                       long-term transmission service, FTR auctions,
                       ancillary services, diesel oil, PRB coal, natural
                       gas commodity, transmission, and storage, RECS,
                       and CO2. Marie served as project manager and
                       executive editor of the monthly report and
                       monthly conference call, and provided the
                       research and insight on U.S. gas, oil, and coal
                       markets, and FERC activities.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 October 2014
Location:             New England
Company:              Private equity company
Description:          To support potential acquisition of hydropower
                       assets, Marie provided analysis of ISO-New
                       England's Locational Forward Reserves Market
                       (``LFRM'').
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 April-June 2014
Location:             US Midwest
Company:              Private equity company
Description:          LEI was engaged by an investment firm in
                       association with due diligence related to a
                       district cooling system in the Midwest. Marie
                       reviewed contracts and developed a model for
                       projecting revenues and gross margins for the
                       asset. Marie provided insight by identifying the
                       potential for lower customer contract prices at
                       renewal (in contrast to the seller's assumptions)
                       and other areas of revenue risk.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 June 2014
Location:             North America
Company:              Law firm
Description:          LEI was engaged by a law firm on behalf of a
                       Canadian energy company to provide market
                       advisory for an investigation related to the
                       timing of outage scheduling under PPAs. Marie
                       provided research and expertise covering FERC
                       practices related to monitoring, enforcement, and
                       definition and prosecution of alleged market
                       manipulation.
------------------------------------------------------------------------


------------------------------------------------------------------------
 
------------------------------------------------------------------------
Date:                 April-May 2014
Location:             Nova Scotia
Company:              Government of Nova Scotia
Description:          LEI was retained by the Nova Scotia Department of
                       Energy to perform analysis of the organization
                       and governance of electricity systems both cross-
                       jurisdictionally and within the province of Nova
                       Scotia. Marie provided a detailed overview of the
                       Nova Scotia gas and power sectors, including
                       governing institutions, the legal and regulatory
                       framework, recent developments and challenges,
                       and SWOT analysis.
------------------------------------------------------------------------

PUBLICATIONS:
Technical/Academic
``New England Oil, Gas, and Power Markets'' guest lecture, University 
of Massachusetts, Boston, MA, October 2005, with Lawrence Makovich.

``The Disappearing Middle Class: Economies of Scale in Exploration and 
Development,'' presented at the International Association for Energy 
Economics, 26th annual conference, Aberdeen, June 2002.

``The Key Role of Technology in Reducing Offshore Finding and 
Development Costs,'' Fundamentals of the Global Offshore Industry, The 
Petroleum Economist Ltd., London, September 2001.

``The U.S. Oil and Gas Supply Situation: How Did We Get Here?'' guest 
lecture, Clark University, Worcester, MA, October 2000.

``The Technology Revolution and Upstream Costs,'' The Leading Edge 
(Journal of the Society of Exploration Geophysicists), June 2000.

Review of Exploration, Development, and Production--Texas Oil and Gas 
1970-1995, for the Journal of Economic Literature, 1999.

``Resource Depletion and Technical Change: Effects on U.S. Crude Oil 
Finding Costs from 1977 to 1994,'' The Energy Journal, 1997.

``Inter-jurisdictional Competition, Resource Rents, Tax Exporting, and 
Oil and Gas Severance Taxes,'' The Journal of Energy Finance and 
Development, 1997, with Kevin Forbes.

``Fiscal Illusion and Fiscal Sclerosis: The Case of Oil and Gas 
Severance Taxes,'' presented at the U.S. Association for Energy 
Economics/International Association for Energy Economics conference, 
Boston, MA October 1996.

``Prices, Depletion, and Technical Change 1977-1990: The Declining Cost 
of Crude Oil,'' presented at the Allied Social Science Association 
Annual Meeting, American Economic Association/International Association 
for Energy Economics session, San Francisco, CA, January 1996.

``Technical Change and Scale Economies in U.S. Onshore Oil and Gas 
Exploration 1977-1990,'' presented at the Southern Economic Association 
meeting, New Orleans, LA, November 1993.
US Department of Energy
State Energy Severance Taxes, DOE/EIA-TR/0599, Washington, DC, 1995.

Oil and Gas Development in the United States in the Early 1990s: An 
Expanded Role for Independent Producers, DOE/EIA-0600, Washington, DC, 
1995, with Jon Rasmussen.

``Trash to Energy: A Burning Issue,'' 1988 Selected Papers and 
Presentations by DOE's Policy Integration Staff, US Department of 
Energy, Office of Policy, Planning and Analysis, Office of Policy 
Integration, Washington, DC, December 1988, with Peggy Podolak.
IHS/CERA Publications
Global Prospects for Shale Gas: Assessing Above-ground Risks and 
Enablers IHS CERA Private Report 2013
The Impact of Technology on U.S. Offshore Finding and Development Costs 
IHS CERA Private Report 2013
The Next E&P Hotspots: What are the Leading Indicators? IHS CERA 
Decision Brief 2012
Taking the Shale Gale International: Lessons from North America IHS 
CERA Decision Brief 2012
Prospects for Shale Gas in Europe: Insights from CERAWeek IHS CERA 
Insight 2012
Envisioning a Long-term Future for Coal IHS CERA Insight 2011
North American Power Industry Landscape 2011 IHS CERA Decision Brief 
2011
Common Ground? CERAWeek Perspectives on U.S. Electric Power 
Transmission IHS CERA Insight 2010
North American Power Industry Landscape 2010 IHS CERA Decision Brief 
2010
Mexico's Road to Renewable Power: The Cost of a Range of Targets and 
Options IHS CERA Decision Brief 2009
Competitive Bidding: A Key Tool for Capital Formation in the U.S. Power 
Sector IHS CERA Decision Brief 2009
Financing the Global Power Business: Insights from CERAWeek IHS CERA 
Insight 2009
Concentrating Solar Power: U.S. Demand Heats Up IHS CERA Decision Brief 
2008
US CO2 Policy Quandary: Near-term Reductions Imply a High 
Carbon Price IHS CERA Private Report 2008
The U.S. Energy Act of 2007: Addressing the Demand Side of Electric 
Power IHS CERA Insight 2008
Investors' Energy Monthly December 2004-November 2007
Some Sail, Some Fail: Utility M&A after PUHCA IHS CERA Decision Brief 
2006
Another Decade of Rising Upstream Costs? IHS CERA Decision Brief 2006
Merchant Power's Recovery: Four Dimensions of Value IHS CERA Private 
Report 2006
PUHCA Repeal and Utility M&A: One Big Obstacle Down, Many Remain IHS 
CERA Decision Brief 2005
North American Gas Monthly Briefing January 2003-June 2004
Costs are Up for North American Natural Gas IHS CERA Decision Brief 
2004
Bottom Line: A New Long-term Floor for North American Gas Prices IHS 
CERA Private Report 2004
Upstream Gas Costs and North American E&P Strategy: Avoiding the Edge 
IHS CERA Decision Brief 2004
Can We Drill Our Way Out of the (Natural Gas) Supply Shortage? IHS CERA 
Decision Brief 2003
Cost-effective Deepwater Development: Seeing the Forest from the 
``Trees'' IHS CERA Private Report 2001
Optimization and the Role of R&D IHS CERA Decision Brief 2001
Upstream Spending Plans: Inflation in the Pipeline IHS CERA Alert 2001
Upstream Technology on the Horizon IHS CERA Decision Brief 2000
Upstream Costs--Why the Gap will widen IHS CERA Decision Brief 1999
The Impact of Falling Oil Prices on Upstream Operations IHS CERA 
Decision Brief 1998
The Technology Revolution and Upstream Costs IHS CERA Private Report 
1998
Managing the Rig Shortage IHS CERA Decision Brief 1997
SPEAKING ENGAGEMENTS:
News Media
``Upstream oil costs on the rise'' (excerpts from Another Decade of 
Rising Upstream Costs? IHS CERA Decision Brief 2006), The Wall Street 
Journal Morning Brief, June 28, 2006.

``Unnatural Gas Prices,'' live television interview for CNN-FN, 
December 23, 2003.
IHS/CERA CERAWeek Roles
Chairman, Coal Plenary Envisioning a Long-term Role for Coal, March 10, 
2011
Chairman, Strategy Session Financing the Power Future, March 10, 2011
Chairman, Expert Dialog North American Gas and Power Scenarios 
Wildcards, March 9, 2011
Chairman, Strategy Session Financing a North American Power Sector in 
Transition, March 12, 2010
Panelist, CERA Insights Global Power Outlook, March 12, 2010
Chairman, Strategy Session US Electric Power Transmission: The Battle 
of the Jurisdictions, March 11, 2010
Chairman, Critical Issue Forum, Financing the Power Sector in a 
Turbulent Economy, February 12, 2009
Chairman, Critical Issue Forum Power Sector Investment: Global Capital, 
Local Strategies February 15, 2008
Panelist, Leadership Circle Global Power Outlook February 14, 2008
Chairman, Critical Issue Forum Rising Costs and the Outlook for North 
American Gas, February 14, 2007
Host and Commentator, Reception for Institutional Investors February 
13, 2007
Panelist, Critical Issue Forum Oil Sector Finance: The Cliff behind the 
Clouds? February 13, 2007
Host and Commentator, Reception for Institutional Investors February 7, 
2006
Chairman, Critical Issue Forum Financing the Oil Future: A Three-
Trillion Dollar Dilemma February 7, 2006
Host and Commentator, Reception for Institutional Investors February 
15, 2005
Chairman, Critical Issue Forum North American Natural Gas: E&P in a 
Mature Region February 11, 2004
Chairman, Expert Briefing North American Gas E&P Strategy: Getting off 
the Treadmill? February 12, 2003
Panelist, Expert Briefing Bracing for a Wild Ride: North American Gas 
Market Outlook February 11, 2003

    Senator Peters. Thank you, Dr. Shriberg.
    Mr. Hennessy.

        STATEMENT OF CHRIS HENNESSY, CONSTRUCTION MARKET

          REPRESENTATIVE, MICHIGAN LABORERS-EMPLOYERS

                 COOPERATION & EDUCATION TRUST

    Mr. Hennessy. Thank you. And thank you for the opportunity 
to participate in today's hearing, specifically regarding the 
role of the members of the Laborers' International Union of 
North America, our training program plays in the construction 
and maintenance of pipelines here in Michigan, and the economic 
significance it has to the workers that we represent.
    As the Senator mentioned, we have a long history of 
building the State, from downtowns to schools to our water, 
sewer, and energy infrastructure systems.
    The Michigan Laborers' Training and Apprenticeship 
Institute was founded in 1972, and is the training arm of LIUNA 
and our signatory contractors. We have four locations in 
Michigan: Wayne, Perry, St. Joseph, and Iron Mountain. Our 
training center has built a reputation as one of the safest and 
most productive facilities in the Nation, with more American 
National Standards Institute Certified instructors than any 
similar facility. We have certified nearly 700 members in 
pipeline construction safety and technology since the U.S. 
Department of Transportation's Operator Qualification Rule went 
into effect.
    LIUNA members are involved in both the production and 
transmission of our Nation's energy resources. We repair and 
build sites, and we strengthen and repair service roads to 
those sites. We build both transmission and mainline pipelines 
and distribution lines to get them to homes and businesses. We 
also build processing and compression stations. But most 
important, as LIUNA members, we maintain this energy 
infrastructure under the highest standards designed to protect 
both workers and surrounding communities.
    Before members begin working on a pipeline such as Line 5, 
they are required to take the ``Pipeline Technology'' class at 
the training center. This class is comprehensive 80 hours of 
instruction over 2 weeks where students learn methods to 
prepare the pipe's surface with proper coatings to ensure no 
imperfections and to prevent--prevent incidents, such as leaks.
    Students learn these skills through instructor-led 
interactive discussions, demonstrations, as well as hands-on 
practice that simulates the type of work encountered during the 
construction or repair of a pipeline. At the end of this 
course, workers are put through performance evaluations for 
every task performed in the field. This is a requirement of the 
DOT's Operator Qualification program.
    It's important to note that the graduates and our 
contractors gain a clear understanding of the environmental 
responsibilities of the pipeline worker. They learn erosion 
control, species stewardship, water protection, and it's fair 
to say that this type of environmental training, along with 
worker and public safety, are the most important aspects of our 
training program.
    In the last 10 years, LIUNA members in Michigan have logged 
more than 8.1 million work hours on pipeline construction and 
maintenance, continuing to make them safe, so many of the 
people could come to this hearing today. These work hours 
equate to more than $202 million in wages paid to Michigan 
residents, from Iron Mountain in the Upper Peninsula to Monroe 
on Lake Erie. Not only has this work helped local communities 
across the state, it's ensured families receive excellent, 
privately funded health care. These work hours represent more 
than $43 million in health care for children, mothers, fathers, 
and grandparents. Simply put, we look at the construction and 
maintenance of pipelines as a lifeline to good family 
supporting jobs.
    LIUNA members were involved in the original construction of 
Line 5, and we take, and took, this responsibility seriously. 
Our members and signatory contractors feel strongly about 
Michigan and its health. They work every day to make sure 
pipeline operations are safe for their friends, family, and 
neighbors.
    We ask this Committee to do its due diligence with respect 
to oversight of this important piece of the Nation's energy 
infrastructure work. Specifically, we want the Committee to 
ensure that the people of Michigan continue to receive reliable 
supply of energy to heat their homes, cook dinners for their 
families, and provide transportation needed to get them to 
places of necessity. We also ask that the Committee require the 
continued inspection of Line 5 and other pipelines in Michigan 
using evidence-based research when making decisions about 
changes to existing methods of transporting energy.
    Again, thank you for the opportunity to participate in 
today's hearing and provide this Committee with information 
about our role in construction and continuing to provide 
reliable sources of energy to people in Michigan.
    I'm happy to answer any questions the Committee may have at 
this time. Thank you.
    [The prepared statement of Mr. Hennessy follows:]

       Prepared Statement of Chris Hennessy, Construction Market
        Representative, Michigan Laborers-Employers Cooperation
                           & Education Trust
    Thank you for the opportunity to submit testimony regarding the 
role members of the Laborers' International Union of North America 
(LIUNA) and our signatory contractors play in the construction, 
maintenance, and incident response on pipelines.
    My name is Chris Hennessy and I am the Construction Market 
Representative for the Michigan Laborers-Employers Cooperation & 
Education Trust, a partnership between LIUNA and its signatory 
contractors. Michigan LECET partners with its signatory contractors on 
issues that impact Michigan's construction industry, particularly those 
affecting labor and management's delivery of safe, high quality, on-
time and on-budget projects. The intent of today's testimony is to 
provide information to the committee about the quality of construction 
and maintenance on pipelines, and the economic significance of 
pipelines to the state's workers.
    With over 13,000 active and retired members of LIUNA here in 
Michigan, and thousands of signatory contractors, we have a long 
history of building the state; from its downtowns, schools, roads and 
bridges, to its water, sewer, and energy infrastructure systems. For 
nearly a century, Michigan Laborers have been building the things that 
Michigan residents rely on everyday.
    The Michigan Laborers' Training & Apprentice Institute (MLTAI), 
founded in 1972, is the training arm of LIUNA and our signatory 
contractors. With four locations in Michigan--Wayne, Perry, St. Joseph, 
and Iron Mountain--MLTAI creates the highest quality, most 
comprehensive, and up-to-date construction training curricula in the 
industry. This training center helps construction workers improve and 
add to their skills, and gain a competitive advantage in a very tight 
marketplace. Most importantly, MLTAI provides contractors and owners 
with an invaluable resource, workers who are properly trained, safe, 
and productive.
    MLTAI has built a reputation as one of the safest and most 
productive facilities in the nation, with more American National 
Standards Institute (ANSI) Certified Instructors than any similar 
facility. We have certified over 650 Members in pipeline construction 
safety & technology since the U.S. Department of Transportation's 
Operator Qualification (OQ) Rule went into effect. We pride ourselves 
on having the most educated, prepared, safe and highly skilled 
workforce in the industry.
    LIUNA members and our signatory contractors are involved in both 
the production and transmission of our Nation's energy resources. We 
repair and build sites; we strengthen and repair service roads; we 
build transmission and mainline pipelines, and the distribution lines 
to get them to homes and businesses; we also build processing and 
compression stations. Most important, we maintain this energy 
infrastructure under the highest standards designed to protect workers 
and the people living in the surrounding communities.
    Before LIUNA members begin working on the construction, 
maintenance, or repair of pipelines such as LINE 5, they are required 
to take the ``Pipeline Technology'' class at the MLTAI. This class is a 
comprehensive 80-hours of instruction over two weeks where students 
learn methods to prepare the pipe's surface with proper coatings to 
ensure no imperfections and to prevent incidents such as leaks.
    Students learn these skills through instructor led interactive 
discussions, demonstrations, and hands-on practice that simulates the 
type of work encountered during the construction or repair of a 
pipeline. At the end of the course, workers are put through performance 
evaluations for every task likely to be performed in the field, a 
requirement of the Department of Transportation's Operator 
Qualification program. It's important to note that our graduates gain a 
clear understanding of the environmental responsibilities of the 
pipeline worker--from erosion control to species stewardship to 
waterway protection. It's fair to say that environmental training, 
along with worker and public safety, rank as the most important aspects 
of our pipeline training program.
    In the last ten years, LIUNA members in Michigan have logged more 
than 8.1 million work hours on pipeline construction, maintenance, and 
repair. This work has contributed a significant amount to the Michigan 
economy. These work hours equate to more than $202 million in wages 
paid to residents all over Michigan, from Iron Mountain in the Upper 
Peninsula to Monroe on Lake Erie. Not only has this work helped local 
communities across the state, it has ensured families receive 
excellent, privately funded healthcare. These work hours represent more 
than $43 million in healthcare for children, mothers, fathers, aunts, 
uncles, and grandparents. Simply put, pipelines are a lifeline to good, 
family supporting jobs.
    LIUNA members and our signatory contractors are involved in the 
maintenance of pipelines all over Michigan, including Line 5. This 
pipeline is inspected more frequently than Federal regulations require 
and LIUNA members are responsible for some of that regular inspection 
work, especially around integrity digs. These inspections show that 
Line 5 continues to work the way it was designed, thanks to the well-
trained members of LIUNA and other skilled trades who were involved in 
its original construction. We take this responsibility seriously. Our 
members and signatory contractors feel strongly about Michigan and its 
continued health--and they work every day to make sure pipeline 
operations are safe for their family, friends, and neighbors.
    We ask the Committee to do its due diligence with respect to 
oversight of this important piece of the Nation's energy infrastructure 
network, and accomplish these specific goals:

   Ensure the people of Michigan continue to receive a reliable 
        supply of energy necessary to heat their homes, cook dinners 
        for their families, and provide the transportation needed to 
        get them to and from work, school, or other places of necessity 
        without drastic changes to the existing energy infrastructure 
        network

   Require the continued inspection of Line 5 and other 
        pipelines in Michigan using evidence-based research when making 
        determinations about changes to existing methods of 
        transporting energy

    Thank you for the opportunity to participate in today's hearing and 
provide this committee with information about LIUNA's role in providing 
citizens with reliable sources of energy. I am happy to answer any 
questions the committee may have at this time.

    Senator Peters. Thank you, Mr. Hennessy.
    Mr. Bell.

            STATEMENT OF LARRY J. BELL, PRESIDENT, 
                      BELL'S BREWERY, INC.

    Mr. Bell. Thank you, Senator. A great honor to be here 
today representing Bell's Brewery. And also I'm here as a 
founding member of the Great Lakes Business Network, which 
represents over 70 businesses, a network that was formed for 
the express purpose of shutting down Line 5 because the 
business owners feel that it's an undue liability risk to their 
businesses.
    [Cheering and applause.]
    Mr. Bell. Senator, as a brewer of high-quality beers, the 
integrity of ingredients to us is of utmost importance at 
Bell's, and we strive to purchase the best grains and hops for 
our products, and we've heavily invested in our laboratory to 
culture pure yeast for our fermentations. But our number one 
ingredient, water and its purity, is not a thing that we can 
always control the quality of. Hence, maintaining pure water in 
the State of Michigan has become of paramount importance to our 
company and to most of the breweries of the state.
    Our brewery in Escanaba, Michigan, the Upper Hand Brewery, 
uses----
    [Laughter.]
    Mr. Bell.--uses water from the municipal system of the 
city, which is sourced from Lake Michigan. And while Escanaba 
is a considerable distance from the straits and from Enbridge's 
Line 5 in the straits, a pipeline failure, given certain 
conditions, could make it to Escanaba, but it would also be 
highly publicized that the perception of us making beer with 
contaminated water would be a harm to our sales. We believe 
this right now because we are currently dealing with this issue 
due to PFAS contamination issues in the vicinity of our main 
brewery in Comstock, Michigan.
    [Cheering and applause.]
    Mr. Bell. While water from the Kalamazoo municipal system 
remains clean, our customers both in-state and out-of-state 
have been concerned because of the contamination of water in 
Parchment, Michigan, which abuts Kalamazoo. Due to the state of 
PFAS issues around the state, as well as the issue with lead in 
the water in Flint, Michigan, our state has been gaining a 
reputation for having bad water. This is not the kind of thing 
that makes us comfortable in the brewing business.
    A rupture of Line 5 and the resulting contamination of 
Lakes Michigan and Huron would be top news around the world. 
The debate about Line 5 has quickly become one of the hottest 
topics in this year's statewide races for political office. The 
media coverage of a rupture of Line 5 and the resulting 
devastation to wildlife and municipal water systems in the 
vicinity of the rupture would be leading stories for most news 
outlets. A rupture of Line 5 would cement Michigan's reputation 
of having the worst water in the United States. This reputation 
would have horrible effects upon our business as brewers.
    Recently, at the annual meeting of the Michigan Brewers 
Guild, the Guild voted overwhelmingly, 83 to 2, to call for the 
shutdown of Line 5.
    [Cheering and applause.]
    Mr. Bell. A rupture of Line 5 would also hurt our business 
because of the great loss in tourism that the straits area 
currently enjoys. The straits area, Mackinac Island, and 
Northern Michigan have long been recognized for their beauty, 
and attract a plethora of visitors and seasonal residents every 
year. This cohort of people are an important customer base for 
our business.
    A rupture of Line 5 has the possibility of corrupting the 
water supplies for many communities in Northern Michigan. 
Should this happen, it is highly likely that property values 
would plummet and great amounts of tourism would be lost in the 
area, and that would result in a loss of business, not just for 
Bell's, but for thousands of businesses in our state.
    It has been well documented that Line 5 has experienced 
stress and damage that it was never intended to endure. A 
recent strike by a boat anchor put dents in the pipeline. 
Underwater video evidence shows bends in the pipeline, as well 
as the deterioration of the pipeline's protective coating. Also 
documented is the fact that the pipeline has not been properly 
anchored to the lake floor, further stressing the pipeline.
    We should also question the ability of Enbridge to shut the 
pipeline down timely in the event of an emergency. It is well 
known that when a spill was occurring in Marshall, Michigan, 
that operators at Enbridge ignored multiple warnings for 17 
hours, and, in turn, upped the pressure in the line twice, 
resulting in the biggest inland oil spill in the history of the 
United States. This type of laissez-faire attitude cannot be 
tolerated.
    [Cheering and applause.]
    Mr. Bell. Line 5 was originally intended to be in service 
for 50 years. It is now 65 years old. Nothing lasts forever, 
and every day that goes by increases the chance of a 
devastating rupture and spill of oil into the straits. The 
possibility of a rupture in Line 5 and the oil spill that would 
result from such a rupture in the Straits of Mackinac is a risk 
that is simply too much to ask for those that count on clean 
water in the Great Lakes for drinking, for business, and for 
recreation. It is not in the interest of the residents of 
Michigan to continue to allow this pipeline to operate, and it 
would be best if this pipeline were shut down.
    [Cheering and applause.]
    [The prepared statement of Mr. Bell follows:]

  Prepared Statement of Larry J. Bell, President, Bell's Brewery, Inc.
    As a brewer of high quality beers, the integrity of ingredients is 
of utmost importance to us at Bell's Brewery, Inc. We strive to 
purchase the best grains and hops for our products and have invested 
heavily in our laboratory to culture pure yeast for our fermentations. 
But our number one ingredient, water, and its purity, is not a thing 
that we can always control the quality of. Hence, maintaining pure 
water in the State of Michigan has become of paramount importance to 
our company.
    Our brewery in Escanaba, Michigan, The Upper Hand Brewery, uses 
water from the municipal system of the City which is sourced from Lake 
Michigan. And while Escanaba is a considerable distance from the 
Straits of Mackinac and Enbridge's Line 5 in the Straits, a pipeline 
failure and/or spill of oil in the Straits would be so highly 
publicized that the perception of us making beer with contaminated 
water would be a harm to our sales. We believe this because we are 
currently dealing with this issue due to PFAs contamination issues in 
the vicinity of our main brewery in Comstock, Michigan. While our water 
from the Kalamazoo municipal system remains clean, our customers, both 
in state and out of state, have been concerned because of the 
contamination of water in Parchment, Michigan, which abuts Kalamazoo. 
Due to the spate of PFAs issues around the State as well as the issue 
with lead in the water in Flint, Michigan, our state has been gaining a 
reputation for having bad water. This is not the kind of thing that 
makes us comfortable in the brewing business.
    A rupture of Line 5, and the resulting contamination of Lakes 
Michigan and Huron, would be top news around the world. The debate 
about Line 5 has quickly become one of the hottest topics in this 
year's statewide races for political office. The media coverage of a 
rupture of Line 5, and the resulting devastation to wildlife and 
municipal water systems in the vicinity of the rupture, would be 
leading stories for most news outlets. A rupture of Line 5 would cement 
Michigan's reputation of having the worst water in the U.S. This type 
of reputation would have deleterious effects upon our business as 
brewers.
    A rupture of Line 5 would also hurt our business because of the 
great loss in tourism that the Straits area currently enjoys. The 
Straits area, Mackinac Island, and Northern Michigan have long been 
recognized for their beauty and attract a plethora of visitors and 
seasonal residents every year. This cohort of people are an important 
customer base for our business.
    For the past 8 years Bell's Brewery has been the title sponsor for 
the Bayview Mackinac Race, one of the premier sailboat races of the 
world. This race alone is known to be responsible for tens of millions 
of dollars in tourism spending. It is the number one sponsorship that 
our brewery has. A rupture of Line 5 could bring an end to this race. A 
rupture of Line 5 could have a significant negative impact to tourism 
for the whole area, an area that Bell's counts on for a significant 
part of our summer sales, part of which is supplying the Grand Hotel 
with a private label beer.
    A rupture of Line 5 has the possibility of corrupting the water 
supplies for many communities in Northern Michigan. Should this happen, 
it is highly likely that property values would plummet and great 
amounts of tourism would be lost in the area and that would result in a 
loss of business for not just Bell's, but for thousands of businesses 
in our State.
    Simply put, Line 5 presents a business risk to many businesses, and 
the great number of employees that they have, that can no longer be 
tolerated.
    It has been well documented that Line 5 has experienced stress and 
damage that it was never intended to endure. A react strike by a boat 
anchor has put dents in the pipeline. Underwater video evidence shows 
bends in the pipeline as well as the deterioration of the pipeline's 
protective coating. Also documented is the fact that pipeline has not 
been properly anchored to the lake floor, further stressing the 
pipeline.
    We should also question the ability of Enbridge to shut the 
pipeline down in the event of an emergency. It is well known that when 
a spill was occurring in Marshall, Michigan, that operators at Enbridge 
ignored multiple warnings for 17 hours, and in turn, upped the pressure 
in the line twice, resulting in the biggest inland oil spill in the 
history of the United States. This type of laissez-faire attitude 
cannot be tolerated.
    Additionally, we should question the ability of all involved to be 
able to clean up a spill from Line 5. Weather and wave conditions in 
the Straits can be unpredictable and severe at times, making a cleanup 
operation most likely impossible at times. A spill in the winter time 
would be devastating as the Straits tend to be ice covered at that 
time.
    The majority of oil that passes through Line 5 comes from Canada 
and is sent back to Canada via Michigan and the Great Lakes. The small 
amount of oil that is used in our State could be obtained via other 
pipeline systems. Michigan has a huge exposure to risk from a pipeline 
failure while receiving virtually no compensation for allowing this 
infrastructure to exist.
    Line 5 provides propane for many residents and home owners in 
Michigan's Upper Peninsula and we must insure that those users of 
propane continue to have a supply of the gas. A recent study showed 
that the closure of Line 5 would have a negligible impact on the supply 
and price of propane in the UP.
    Line 5 was originally intended to be in service for 50 years. It is 
now 65 years old. Nothing lasts forever and every day that goes by 
increases the chance of a devastating rupture and spill of oil into the 
Straits.
    The possibility of a rupture in Line 5, and the oil spill that 
would result from such a rupture in the Straits of Mackinac, is a risk 
that is simply too much to ask of those that count on the water of the 
Great Lakes for drinking, business and recreation. It is not in the 
interest of the residents of Michigan to continue to allow this 
pipeline to operate and it would be best if this pipeline was shut 
down.

    Senator Peters. Thank you, Mr. Bell.
    Mr. Murk.

           STATEMENT OF DAVID MURK, PIPELINE MANAGER,

               MIDSTREAM AND INDUSTRY OPERATIONS,

                  AMERICAN PETROLEUM INSTITUTE

    Mr. Murk. Good morning, Senator Peters. I'm David Murk. I'm 
the Pipeline Manager for the American Petroleum Institute. And 
I want to thank you as well for the opportunity to appear 
before you today.
    Safety for our industry is a core value. Our proactive 
prevention, preparedness, and response efforts help protect the 
public and the environment, including the Great Lakes, and help 
ensure the safe transportation of energy that American families 
and businesses need and demand every day.
    At API, I'm responsible for oil and natural gas pipeline 
safety policy. Previously, as you pointed out, I served 26 
years overseeing safety in the public sector, including 24 
years with the U.S. Coast Guard and 2 years at the Pipeline and 
Hazardous Materials Safety Administration as the Director of 
Field Operations for Pipeline Safety. I have committed my 
entire life to public safety and environmental protection, and 
continue to do so working with pipeline operators to promote 
safety in all operations.
    Pipelines play a critical role in delivering energy to 
Michigan families and businesses. There are nearly 9,000 miles 
of natural gas transmission lines and close to 3,500 miles of 
petroleum pipelines in the state. Energy infrastructure 
contributes to local communities across the Great Lakes states, 
supporting over 14,000 jobs and providing nearly $1 billion in 
labor income in 2015.
    Michigan also leads the Nation in propane consumption for 
home heating in the residential sector, where 1 in 10 residents 
use propane, kerosene, or fuel oil to warm their homes. 
Michigan was also in the top 15 as a national consumer of 
distillate fuel oil, natural gas liquids, and motor gasoline in 
2016 to support recreation, transportation, and agriculture.
    As we move these critical energy resources in Michigan and 
throughout the United States by pipeline, the protection of the 
public and the environment is a top priority, and we 
continually strive to reach a goal of zero incidents. This 
requires the right combination of prevention, mitigation, and 
response strategies that are most appropriate for a company's 
unique assets and the environment they operate.
    Our liquids Pipeline Safety Excellence Initiative with the 
Association of Oil Pipe Lines and our three-year strategic plan 
seeks to enhance organizational safety culture and 
technological innovation, which includes the implementation of 
pipeline safety management systems, and efforts to examine, 
share, and learn from ongoing operations and past incidents. 
This embodies the work of nearly a dozen industrywide pipeline 
groups to improve pipeline operations and safety.
    As a high-tech industry, we continue to focus on research 
and development. Improvements to leak detection and pipeline 
integrity inspection are strategic objectives that drive our 
industry to invest in furthering in-line inspection technology, 
or ``smart pigs,'' to identify defects, like corrosion, dents, 
or cracks, and provide operators information for preventative 
maintenance and decisions on priority repairs.
    Also, API partners with the best and brightest technical 
experts from government, academia, and industry to create 
industry standards and recommended practices that go beyond 
regulations to ensure the highest level of safety. Our 
standards program is accredited by the American National 
Standards Institute, the same organization that accredits 
similar programs at several national laboratories. In fact, we 
have over 30 standards specific to pipeline safety, including 
recommended practices related to safety management systems, 
pipeline integrity, pipeline leak detection management, 
emergency response, and managing hydrotechnical hazards for 
pipeline water crossings.
    Our primary goal is preventing incidents before they occur. 
However, pipelines are also ready to respond in partnership 
with first responders and government authorities. As a former 
Federal On-Scene Coordinator for the Coast Guard for spill 
response, I know firsthand the importance of a community being 
prepared to respond to an incident in pristine waterways such 
as the Great Lakes. That said, with area contingency plans and 
pipeline response plans as a foundation, we proactively conduct 
drills and exercises and review how the operator effectively 
collaborates and executes a response in specific environments, 
including ice.
    Pipeline operators are also working with first responders 
and government agencies on the implementation of Recommended 
Practice 1174, which provides a pipeline-specific framework for 
continued improvement of emergency planning and response. API 
recently hosted two webinars to educate first responders, 
industry, and government agencies on the importance of 
implementation of the RP.
    API also helped create a free online pipeline emergency 
response training program with the National Association of 
State Fire Marshals. To date, nearly 8,100 first responders 
have completed training, including 152 from Michigan.
    We are committed to promoting safety in all operations and 
helping to ensure American families and businesses in Michigan 
and across the country can safely and efficiently access 
affordable and reliable energy.
    I want to thank you again, Senator, for the opportunity to 
appear before you today. And I'm happy to answer any questions.
    [The prepared statement of Mr. Murk follows:]

   Prepared Statement of David Murk, Pipeline Manager, Midstream and 
           Industry Operations, American Petroleum Institute
    Good morning Senator Peters. I am David Murk, Pipeline Manager for 
Midstream Industry and Operations with the American Petroleum Institute 
(API). Thank you for the opportunity to appear before you today. Safety 
is our industry's core value. The oil and natural gas pipeline 
industry's proactive prevention, preparedness, and response efforts 
help ensure the safe transportation of our products, protecting the 
public and environment and providing American consumers with access to 
affordable energy.
    API is the only national trade association representing all facets 
of the oil and natural gas industry, which supports 10.3 million jobs 
and eight percent of the U.S. economy. API's more than 625 members 
include large integrated companies, as well as exploration and 
production, refining, marketing, pipeline, and marine businesses and 
service and supply firms. As API Pipeline Manager, I am responsible for 
the oversight of infrastructure policy and technical issues to support 
and advocate for the safe and reliable storage and transportation of 
petroleum liquid and natural gas by pipeline. Prior to API, I served 
twenty-six years overseeing safety in the public sector, including 
twenty-four years with the U.S. Coast Guard and two years at the U.S. 
Department of Transportation's Pipeline and Hazardous Materials Safety 
Administration (PHMSA). In my role at PHMSA, I served as the Director 
of Field Operations in the Office of Pipeline Safety where I helped 
lead over 140 pipeline inspectors in the oversight of Federal safety 
regulations for interstate natural gas and petroleum liquid pipelines 
and liquefied natural gas facilities.
Energy Security
    Our energy infrastructure is a critical component of the oil and 
natural gas supply chain, consisting of terminals, underground storage 
facilities, pipelines, railcars, trucks, ships, and barges. Ensuring we 
have a robust energy infrastructure system that keeps pace with growing 
production and demand is essential to helping American families and 
businesses have reliable access to affordable energy. Investment in 
energy development and infrastructure, along with our proactive safety 
initiatives, have helped the United States lead the world both in the 
production and refining of oil and natural gas. A recent study found 
that the U.S. will need up to $1.3 trillion in energy infrastructure 
investment through 2035. This investment, on average, will support up 
to 1 million jobs and add up to $100 billion to GDP annually.\1\
---------------------------------------------------------------------------
    \1\ ICF, ``U.S. Oil and Gas Infrastructure Investment Through 
2035'' (2017)
---------------------------------------------------------------------------
    In the past decade, we have transitioned from an era of energy 
scarcity and dependence in the U.S. to one of energy abundance and 
security. In 2008, the U.S. was producing only 5 million barrels per 
day of oil. In August 2018, the U.S. is producing a record 10.9 million 
barrels per day, a doubling of production.\2\ A similar transformation 
has occurred in natural gas production, which has grown by almost 33 
percent since 2008.\3\ This energy renaissance has helped U.S. families 
save on their energy bills, created greater job opportunities for 
American workers, bolstered U.S. manufacturing, strengthened our 
economy, and helped to enhance our national security interests abroad. 
Whether it is powering our Nation's electricity grid, delivering 
natural gas to heat homes during harsh winters, or providing emergency 
fuel for first responders during natural disasters, this investment 
will ensure that these critical fuels are delivered when and where they 
are needed most. In addition to the benefits derived from the delivery 
of oil and natural gas, pipeline companies support the economy during 
construction of the pipeline by hiring skilled construction and 
building trades' workers and during operation of the pipeline through 
local tax revenue that supports communities through which the pipelines 
pass. At the same time, the energy renaissance has helped to reduce 
carbon dioxide emissions, which are at their lowest levels in 25 
years.\4\ Carbon dioxide emissions from electricity generation have 
declined 28 percent since 2005 and are at their lowest level in 30 
years; more than 60 percent of the decrease in power generation-related 
CO2 emissions since 2005 was due to fuel switching to 
natural gas.\5\
---------------------------------------------------------------------------
    \2\ U.S. DOE, Energy Information Administration, Weekly U.S. Field 
Production of Crude Oil
    \3\ U.S. DOE, Energy Information Administration, Monthly U.S. Dry 
Natural Gas Production.
    \4\ U.S. DOE, Energy Information Administration, Monthly Energy 
Review May 2018. Lowest since 1992
    \5\ http://energytomorrow.org/blog/2017/03/31/energy-and-declining-
emissions
---------------------------------------------------------------------------
Importance of Michigan Infrastructure
    A robust infrastructure system is essential to ensuring reliable 
delivery of natural gas, oil, and other derived products to consumers 
where and when they are needed. Altogether, more than 500,000 miles of 
liquids and natural gas transmission pipeline make up the energy super-
highway system that spans across the United States, enough to circle 
the Earth 20 times.\6\ Our pipeline and infrastructure system is the 
critical connection between supply basins and demand centers.
---------------------------------------------------------------------------
    \6\ PHMSA Annual Report Mileage Summary Statistics, https://
cms.phmsa.dot.gov/data-and-statistics/pipeline/annual-report-mileage-
summary-statistics
---------------------------------------------------------------------------
    Pipelines play a critical role in delivering energy to the citizens 
of Michigan and families throughout the country. There are nearly 9,000 
miles of natural gas transmission lines and close to 3,500 miles of 
petroleum and refined products pipeline in the state.\7\ Energy 
infrastructure contributes to local communities across the Great Lakes 
states, supporting over 14,000 jobs and providing nearly $1 billion in 
labor income in 2015.\8\
---------------------------------------------------------------------------
    \7\ PHMSA, https://hip.phmsa.dot.gov/analyticsSOAP/
saw.dll?Portalpages
    \8\ http://www.api.org//media/Files/Policy/Natural-Gas-Solutions/
API-Natural-Gas-Industry-Impact-Report.pdf
---------------------------------------------------------------------------
    The state leads the Nation in propane consumption for home heating 
in the residential sector, where one in ten residents use propane, 
kerosene, or fuel oil to warm their homes.\9\ Michigan was also in the 
top 15 national consumers of distillate fuel oil, natural gas liquids 
and motor gasoline in 2016.\10\ Enbridge's Line 5 is an example of a 
pipeline that provides a vital link to propane and other petroleum 
products in northern Wisconsin and the Upper Peninsula. Line 5 
transports up to 540,000 barrels per day (bpd) of light crude oil, 
light synthetic crude oil, and natural gas liquids (NGLs), which are 
refined into propane. These products heat homes and businesses, fuel 
vehicles, and power industry.
---------------------------------------------------------------------------
    \9\ https://www.eia.gov/state/analysis.php?sid=MI#46
    \10\ https://www.eia.gov/state/seds/sep_use/notes/use_print.pdf
---------------------------------------------------------------------------
    Pipelines also safely and reliably transport natural gas to the 
residents of Michigan for home heating and electricity generation. The 
state routinely ranks among the top five nationally in residential use 
of natural gas and in the top 10 in total consumption.\11\ More than 
three-fourths of Michigan households use natural gas as their primary 
source for home heating.\12\ In addition, Michigan's use of natural gas 
in the electric power sector has nearly doubled since 2010.
---------------------------------------------------------------------------
    \11\ https://www.eia.gov/state/analysis.php?sid=MI
    \12\ Ibid
---------------------------------------------------------------------------
Commitment to Pipeline Safety
    Industry's commitment to safe operations is evident by the strong 
safety record of the oil, petroleum products, and natural gas delivered 
safely via pipeline. Protecting the public and the environment is a top 
priority for pipeline operators and a central component to pipeline 
design, construction, and maintenance. For instance, during 
development, pipeline operators design routes to avoid environmentally 
sensitive areas. Pipelines are constructed from certified steel pipe 
that meets or exceeds Federal quality regulations. Every project 
undergoes rigorous environmental review and must comply with existing 
environmental laws such as the Clean Air and Clean Water Acts before it 
can be built and placed into operation. PHMSA also routinely inspects 
these projects during their construction and throughout their operation 
to ensure that the pipelines are being maintained safely and 
responsibly.
    API, our allied oil and gas trades, and members are fully committed 
to maintaining the highest standards and establishing a strong 
foundation with the public by holding ourselves accountable and 
continually striving for improvement. Not satisfied with this near-
perfect record, however, pipeline companies are striving to address the 
remaining 0.001 percent of incidents and reaching the industry-wide 
goal of zero incidents. This requires the right combination of 
prevention, mitigation, and response strategies based on several 
factors that are most appropriate for a company's unique assets and 
operations, as well as effective use of state-of-the-art technology. 
The Association of Oil Pipe Lines (AOPL) and API Pipeline Safety 
Excellence Initiative is a critical component in that effort and 
embodies the work of nearly a dozen industry-wide pipeline groups to 
improve pipeline operations and safety. Under the Pipeline Safety 
Excellence Initiative, and 2017-2019 pipeline safety strategic plan, we 
are also enhancing our prevention efforts by improving our threat 
detection and response competencies, expanding safety culture and 
management systems, and boosting our emergency response capabilities.
    Our industry has and continues to place a great deal of emphasis 
and resources on research and development. Improvements to pipeline 
integrity inspection capabilities are a strategic objective that has 
driven our industry to invest in furthering in-line inspection (ILI) 
detection, or ``smart pigs,'' used to scan the pipeline wall to 
identify defects like corrosion, dents, or cracks, and provide 
operators the information necessary for preventative maintenance and 
decisions on priority repairs. ILI technology and other mitigation 
initiatives have helped reduce integrity management incidents impacting 
people and the environment by nearly 40 percent since 2015.\13\ This 
effective application of technology to improve pipeline safety 
performance is a shared goal of PHMSA and the industry. As such, 
industry continues to explore opportunities to further strengthen 
collaboration with PHMSA on research and development, collectively 
shaping a longer-term strategy that drives innovation, informs 
regulations, and ultimately improves pipeline safety performance.
---------------------------------------------------------------------------
    \13\ 2018 API-AOPL Pipeline Safety Excellence Performance Report
---------------------------------------------------------------------------
The Role of API Standards
    Our operators are committed to enhancing the safety of our workers 
and protecting the community and environment. To ensure that American 
consumers and workers continue to benefit from the U.S. energy 
renaissance and infrastructure operates safety and efficiently, we need 
rational and science-based energy policies which recognize that the oil 
and natural gas industry is part of the solution to advancing U.S. 
economic and national security goals. At API, we establish industry 
standards and disseminate best practices across the industry to ensure 
the highest level of safety and achieve our collective goal of 
operating with zero incidents. In fact, since 1924, API has been the 
leader in developing voluntary, consensus, internationally-recognized 
industry standards that promote safety and reliability. Our standards 
program is accredited by the American National Standards Institute 
(ANSI), the same organization that accredits similar programs at 
several national laboratories. To create these industry consensus 
standards and recommended practices (RPs), API partners with the best 
and brightest technical experts from government, academia, and 
industry. This work supports the fulfillment of the National Technology 
Transfer and Advancement Act (NTTAA), which mandates that Federal 
agencies use technical standards developed and adopted by voluntary 
consensus standards bodies, as opposed to using government-unique 
standards.
    Currently, API has more than 600 standards that are used globally 
by oil and natural gas operators. Here in the United States, these 
standards are referenced more than 430 times in Federal regulations, 
covering multiple government agencies, including PHMSA. Additionally, 
API's standards are the most widely-cited petroleum industry standards 
by state regulators, with 240 API standards cited over 4,130 times in 
state-based regulations. Finally, API's standards are also the most 
widely cited standards by international regulators in the 14 major 
producing regions.\14\
---------------------------------------------------------------------------
    \14\ OGP Report No. 426, Regulators' Use of Standards, March 2010
---------------------------------------------------------------------------
Importance of Performance Based Standards
    API continues to develop and revise critical standards and 
recommended practices for prevention, mitigation, and response 
activities to address pipeline safety in close coordination with 
subject matter experts from government, academia and industry. API RP 
1173, Pipeline Safety Management Systems, provides the framework for 
managing complex operations with safety as the top priority. It 
provides operators with established guidelines to manage risk, promote 
best practices, continuously improve safety performance, and build a 
strong organizational safety culture. As U.S. production continues and 
pipeline capacity keeps apace, operators are motivated to develop a 
management system that ensures new pipelines are built to the 
appropriate specifications, keeping safety a priority. API RP 1177, 
Steel Pipeline Construction Quality Management Systems, outlines the 
steps needed for constructing safe steel pipelines, from purchasing the 
correct material to completing the right inspections prior to 
initiating operation.
    While pipeline operators are taking significant steps to meet the 
goal of zero incidents, they must have a comprehensive mitigation 
strategy to reduce the impact should a release occur. Developed with 
industry and regulator input, API RP 1175, Pipeline Leak Detection--
Program Management, outlines how to use multiple leak detection tools 
to create a robust and holistic program. Available tools include aerial 
overflights, ground patrols, and computational pipeline monitoring. In 
addition, the RP encourages senior leaders within companies to enforce 
a leak detection culture that promotes safety. Properly trained 
employees will also aid in mitigating incidents. Pipeline operator 
qualifications ensure companies properly prepare their personnel to 
perform high-risk duties. Continuous testing to verify the skills of 
qualified employees is a critical effort of operators. API has 
developed RP 1161, Pipeline Operator Qualification, to give operators 
direction on ensuring those individuals performing high-risk tasks are 
appropriately trained and competent. API RP 1133, Managing 
Hydrotechnical Hazards for Pipelines Located Onshore or within Coastal 
Zone Areas, was developed to provide guidance on the construction and 
maintenance of pipelines crossing water to minimize the potential of a 
pipeline incident. This RP was recently expanded to address risk-based 
analysis and management of water crossings to prevent and mitigate loss 
of cover.
    The aforementioned RPs are just a few of the available documents 
developed in collaboration with Federal and state regulators, academics 
and interested stakeholders, which through effective implementation and 
training will help improve safety across the industry.
Preparedness and Response
    While the primary goal is preventing incidents before they occur, 
pipeline operators are ready to respond in partnership with first 
responders and government authorities to protect local communities and 
the environment. Through coordinated emergency response programs with 
federal, state, and local first responders and response agencies, 
operators ensure timely, seamless and effective responses.
    Oil spill planning, preparedness, and response are critical 
components of both onshore and offshore pipeline operations. Operators 
follow Federal and state regulations when developing response plans for 
a potential spill to ensure a well-organized and efficient response 
should an incident occur. The Oil Pollution Act of 1990 requires 
interstate liquid pipeline and storage operators to draft plans to 
address a `worst-case discharge' of oil or other hazardous liquids 
which are reviewed and approved by PHMSA. If a plan does not meet the 
agency's requirements, PHMSA will require amendments to be submitted 
and will review the plan again for compliance.
    To evaluate the effectiveness and adequacy of spill response plans, 
operators, together with private and public first responder 
organizations and government agencies proactively conduct drills and 
table-top exercises. Performing drills and tabletop exercises together 
is critical not only to the building of relationships, but to the 
strengthening of our community preparedness in the event of an 
incident. Pipeline operators stage events and review how their company, 
along with response agencies at all levels, effectively collaborate, 
execute and respond. These exercises help identify not only what is 
working well, but also where gaps may exist and the actions that are 
needed to eliminate them. For example, earlier this month an API member 
company participated in a government-led exercise in Monroe, Michigan. 
In addition to this type of collaborative engagement, industry 
participates in one-on-one liaison meetings, industry meetings and 
forums, Regional Response Team meetings, and cross-company exercise 
participation which provide pipeline operators and first responders 
opportunities to meet and learn together to exchange insights, best 
practices, and areas for improvement.
    The Midwest is no exception to this and the Regional Response Team 
for the area, RRT V, has published much of the guidance that operators 
should use when establishing their own response plans. This regional 
published guidance is used proactively in response situations to ensure 
appropriate response techniques are utilized and sensitive resources 
are protected. The industry is committed to working with this group to 
ensure the region is prepared and will continue to work with them to 
ensure any gaps in response capabilities are addressed. Throughout the 
country, Regional Response Teams have used guidance produced by API to 
inform and augment the regional and area contingency plans. These 
documents are available free of charge on oilspillprevention.org and we 
encourage anyone working on spill response plans to look through this 
library to see how our guidance can help with planning efforts. This 
guidance includes subjects such as sunken oil, shoreline cleanup, and 
spill impact mitigation assessment, among others. API works directly 
with these teams and anyone who wants to incorporate any of our 
guidance to ensure this happens efficiently, when requested.
    Pipeline operators are also working with first responders and 
government agencies on several initiatives going beyond regulation to 
properly and effectively improve emergency response efforts. For 
example, API RP 1174, Pipeline Emergency Response, provides a framework 
for continued improvement of emergency planning and response processes 
and prepares operators for safe, timely, and effective pipeline 
emergency efforts. The RP also emphasizes an increased focus on 
training, exercise planning, and continual evaluations of the speed and 
effectiveness of response tools. Additionally, API RP 1174 outlines a 
comprehensive management system for setting planning and response 
goals, documenting procedures, and communicating roles and 
responsibilities. This important guidance goes beyond regulatory 
requirements with additional planning for areas sensitive to releases 
below the required worst-case discharge planning scenario (i.e., 
population centers, water crossings, areas of environmental, historic 
or cultural significance). API recently hosted two webinars to educate 
first responders, industry, and government agencies on the importance 
and implementation of RP 1174. In addition, to further improve response 
efforts API and AOPL host a Pipeline Emergency Response Advisory Board 
(ERAB) providing operators, emergency responders and regulators a venue 
to share lessons learned from past responses and discuss ways to 
enhance preparedness and cooperation. To further improve response 
efforts operators also incorporate lessons learned from past releases. 
The ERAB serves as a platform for open dialogue between response 
advocacy organizations, first responders, and regulatory agencies to 
help steer preparedness and response activities within the pipeline 
community. These forums provide opportunities for operators and first 
responders to participate in joint exercises, exchange best practices, 
and build partnerships.
    Training is another important response tool, and API recognizes the 
need to educate the first responder community for pipeline incidents. 
API helped create an online pipeline emergency response training 
program. Produced with the National Association of State Fire Marshals, 
the online portal delivers pipeline-specific training free to first 
responders. To date, nearly 8,100 first responders have completed 
training, including over 152 from Michigan.
    Let me reemphasize that the oil and natural gas industry is 
committed to promoting safety in all its operations and helping to 
ensure that American families and businesses can safely and efficiently 
access affordable and reliable energy. Again, thank you the opportunity 
to appear before you today, and I am happy to answer any questions that 
you may have.

    Senator Peters. Thank you, Mr. Murk.
    And again thank you to all of our witnesses for all of your 
perspective on this issue.
    I want to start the questioning the same place I started 
the questioning with our Federal officials, and that was the 
April blizzard that we had after the anchor strike on the 
pipes, which we have learned didn't just dent them, actually 
gouged them as well, which creates another set of concerns in 
operating a pipe.
    And, Mr. Bryson, in your written testimony, you talk about 
some of the recent changes to the agreement with the State of 
Michigan, and you quote here, you agreed as part of the 
November 17 agreement that the State of Michigan--with the 
State of Michigan to voluntary shut down the dual pipelines 
during periods of sustained adverse weather conditions where 
wave heights exceed 8 feet at the straits crossing. And that's 
why I want to start with this, because, as I mentioned in some 
of my opening comments and through some of the questions, we 
have a situation with your company that there is just a lack of 
trust with a lot of folks in Michigan.
    It starts, obviously, with the Kalamazoo disaster, which 
was a horrible catastrophic event, has continued with things, 
as Dr. Shriberg has mentioned, in terms of transparency. So 
there just is not trust that Enbridge will truly step up to 
what you claim in your testimony as looking out for the best 
interests of not just the waters around Michigan, but to 
safeguard your pipelines across the country.
    So you have this agreement for 8 feet. You heard earlier 
from the gentleman from NOAA, which is our national weather 
forecasting agency, who was forecasting and indeed happened 
that we had waves in excess of 8 feet. It took quite a bit of 
effort on working--on my part working with Administrator 
Elliott on it.
    So my question to you, Does Enbridge have independent 
weather forecasting service or would you look at the forecasts 
of the NOAA national weather forecasts? And how do you look at 
those weather reports both as forecasts as well as when they 
actually are occurring when you look out the window and you can 
actually see it?
    Mr. Bryson. OK. Well, I think it's important that I just 
want to start----
    Senator Peters. Get your mic closer, mic closer.
    Mr. Bryson.--start off by saying prior--prior to the storm, 
we never hesitate to shut our systems down. As a matter of 
fact, we're involved in shutting our systems down on a regular 
basis for a variety of reasons.
    As soon as we became aware of the anchor strike from ATC, 
the shut--the pipeline was shut down. The pipeline was shut 
down. We performed leak detection analysis. We performed a 
pressure test, not a hydrostatic test, but a pressure hold 
test. We ran a gauge plate tool through both lines to determine 
that there wasn't any deformation in the pipelines. We then ran 
tools through--high--high-caliber tools to determine if there 
was a dent, what it looked like, and it did show us the dents. 
And it also showed us that the pipes had not moved because we 
use GEOPIG data to show us whether the pipes have moved or not.
    All those steps were taken prior to the storm coming that 
you're speaking about, which I'll get to in a second. So--and 
the pipe had been shut down for a day after the anchor strike 
to ensure that--that we were comfortable with that. A finite 
element analysis was done by our engineers to examine the burst 
pressure of the pipeline. A pressure reduction was taken of the 
pipeline. And that's why we had confidence that the structural 
integrity of the system was intact, as we're focused on safe 
operations.
    So leading into the weekend, our people, as you heard 
earlier, were part of the unified command. So we were aware of 
the weather. NOAA was there. We were there. The Coast Guard was 
there. And we were very aware of the fact that there was a 
pending storm. Of course, it's regional, so it doesn't have the 
same impact everywhere. And we had people in incident command, 
and we had people on the ground witnessing the weather. And the 
storm was building, of course, but even into Saturday night, 
the waves forecasted in the straits and actuals were 2 to 3 
feet.
    Sunday morning, we did have an unrelated power event in 
Superior, and the lines were shut down. And it was at that time 
I was having a conversation on Sunday morning with Mr. Elliott, 
and the decision was made just to leave the lines down. I think 
the NOAA experts said that the waves had peaked on Sunday at 5 
or 6 feet. The pipeline was shut down during that period. We 
started up sometime later on--on Monday, Senator.
    Senator Peters. So, now, you know that wasn't his 
testimony, that they peaked at 5 or 6, that's a mean average 
based on waves, and that there were clearly waves in excess of 
8 feet or so. And I just go back to this chart. Red I think is 
bad. Red is bad, and they were there, that we know that there 
was going to be very severe weather coming in.
    And I guess my--you know, and my question is--and this is 
what's so frustrating for me as I went through that experience 
and getting Enbridge to recognize that, to shut it down, and 
then to say you had an unrelated event related to it, again 
with this deficit of trust, is that we've got weather forecasts 
saying that these are going to be large waves, peaks will be in 
excess of 8 feet. The mean is going to be less, but the peaks 
will be greater than that. You have actual agreement with the 
State of Michigan you'd shut down over 8 feet. And--but this 
agreement is with a perfectly functioning nondamaged pipe, if 
such a thing can exist.
    What you had in this situation was an anchor strike, and 
not only dents, as we also learned later, we got gouging, which 
is a whole lot worse than just strikes, according to the 
testimony, that we heard happening. And although your internal 
tests showed that things--the integrity was there, we did not 
have any kind of visual inspection. In fact, it was the visual 
inspection that then showed it was gouging, not just dents, 
which is something of greater concern to everybody. We were 
going to have to wait two and a half weeks--I'll get to that 
later--two and a half weeks for an actual visual inspection of 
an underwater vehicle.
    So we have weather forecasts coming in and the reality that 
you're going to have spikes of waves in excess of 8 feet, which 
is--which means you should have, under State rules, shut it 
down. But here you are talking to the public saying you go the 
extra measure to make sure that you protect the Great Lakes. 
And yet you have a damaged pipe that we know is damaged on the 
bottom of the straits, we don't know the full extent of it 
because we haven't put eyes on either with a submersible or 
divers. And later we find out there was the gouging, as I 
mentioned, and yet you push back on saying we will--in the 
spirit of making sure that we are really cautious when it comes 
to having an accident in the absolute worst place in the entire 
Great Lakes, we're still going to push back and say, ``No, you 
know, the waves are only--maybe they're 6 feet or something. 
We're not going to shut it down until we actually see it 
verified.''
    I mean, I--can you see why that is something that people 
look at and say Enbridge is not really focused on going the 
extra measure of safety when they had a damaged pipe in the 
straits and severe weather, and they pushed back on shutting 
down to make sure that nothing happens?
    [Cheering and applause.]
    Senator Peters. So tell me why?
    Mr. Bryson. Well, Senator Peters, I--I wouldn't say we 
pushed back on shutting down. Like I said, we--we focus on the 
safety of our operation on a daily basis. We shut down our 
systems routinely for a variety of reasons.
    [Audience disruption.]
    Mr. Bryson. We had shut down this pipeline because of this. 
Multiple engineers were involved. Tool runs were performed. As 
we were heading into the weekend, we had people on the ground. 
We were involved in the incident command center in consultation 
with the Coast Guard at NOAA around the wave height 
predictions. So the worst of the storm was--we were speaking--I 
was physically speaking with our people through Friday night, 
through Saturday morning, through Sunday night. The worst of 
the storm did come on Sunday. We were shut down there. I would 
not characterize it as us pushing back about shutting down. 
When we need to shut our system down, we--we shut it down.
    Senator Peters. But initially when you shut it down, you 
said it was because of an operational problem somewhere else, 
it wasn't because of the storm. And, you know, as you heard, I 
asked Admiral Nunan, the skimmers that were on the site there 
dealing with the break from the cables, they were ineffective 
in seas greater than 2 to 3 feet. So the equipment that's 
onsite ready to operate would be ineffective at 2 to 3 feet. So 
forget the 8 feet, whether or not you were violating the 
Michigan rule----
    [Applause.]
    Senator Peters.--forget the Michigan rule, you've got 
skimmers that we know, and so you say, ``Well, the median was 
only 6 feet.'' That's still in excess of what these skimmers 
would actually be effective in. So without eyes on, without 
having visual inspection, without knowing for certain, with a 
damaged pipe, if anything happened to that pipe, it would have 
been impossible for that equipment to get out, according to the 
testimony of the Coast Guard with even those waves.
    So why would not the company say, ``We are going to show 
what stewards we are of the environment. We've got a damaged 
pipeline. We haven't had eyes on it. We know the waves are in 
excess of the skimmers that are on the site. We are going to 
shut this down to prove to the people of Michigan that we are 
responsible''? That did not happen. Those are the facts of what 
happened. Right?
    [Audience disruption.]
    [Applause.]
    Mr. Bryson. Well, we--we did--we did shut down on Sunday, 
Senator, in the--in the worst of the storm, and--and the peak 
came through Sunday night later, and we started up on Sunday. 
The important part, I think, is we had confidence that our--
that the system integrity was intact based on a lot of 
information.
    Senator Peters. So you had confidence based on the 
internal, and you had your engineers?
    Mr. Bryson. Right.
    Senator Peters. You still had not put eyes on. And as we 
heard from previous testimony, you never know for sure until 
you've actually taken a look at it. And we also found out there 
was gouging, which is a different kind of injury to it.
    So the question, as I asked the other panelists, why did it 
take over two weeks to actually get a submersible to take a 
look at that? That seems absolutely unacceptable that it takes 
two weeks to bring visual inspection. What happened? Why?
    [Applause.]
    Mr. Bryson. Well, we were--we were, again, involved with 
the unified command. So part of that--part of the coordination 
effort of bringing the ROV to bear on the pipe was the 
coordination between the activity of the barge work over the 
electric lines and our facilities. So we were working to get an 
ROV over the pipe as quickly as we could within the unified 
command structure.
    Senator Peters. I understand that it didn't even arrive on-
scene for a couple weeks.
    Mr. Bryson. I--I could confirm the actual date, but we--we 
called for it soon. I think the important part to understand 
about our system, and as David said, the millions of pipeline 
miles across the country, you can't see the outside of the pipe 
because they're buried. So in today's technology, and part of 
the reason why our incident rates are decreasing, it's because 
of internally looking at the pipe. And that is the kind of work 
we do, by sending these highly sophisticated tools on the 
inside of the pipe. The external analysis of the pipe from the 
ROV essentially just--just validated what we knew from the 
inside of the pipe.
    Senator Peters. So my--you know, I'm not an engineer, but I 
would think it's really hard for an anchor to hit a buried 
pipeline on land, is that correct?
    [Laughter.]
    Mr. Bryson. It is, but----
    Senator Peters. So this is a completely different incident. 
You have a pipe here going along the bottom of the straits----
    [Applause.]
    Senator Peters.--that was hit by a anchor, which is the 
worst-case scenario, that is where the outside damage occurs. 
You're not going to have that in a land-buried pipeline going 
through. So this is a circumstance where you have to get eyes 
on, particularly given the sensitive nature of where you are 
operating----
    Mr. Bryson. Yes, no, it's important.
    Senator Peters.--and that needed to be. And to say that the 
unified command slowed it down, it was part of my questions 
with Admiral Nunan, is that if that unified command is just 
focused on the cable, then we've got to change unified command 
and we've got to change Enbridge protocols, that your priority 
is always Line 5, always, always Line 5.
    [Cheering and applause.]
    Senator Peters. So now the question is, now that you've put 
the repairs forward and you've put in a coating, how confident 
are you that the coating on the straits is fully intact without 
any additional missing segments?
    Mr. Bryson. There's--there's some coating work going on 
right now. So we had a variety of work we were doing this year. 
We've installed anchors. We're doing a cathodic protection 
survey. And we're repairing the coating areas. So that is--that 
is ongoing as we speak, Senator.
    Senator Peters. So the question that Dr. Shriberg answered, 
will you provide full documentation of the damage sustained to 
Line 5 by the anchor strike, including all video and images? 
Will you commit to doing that to the public?
    Mr. Bryson. Yes, I will. Yes.
    Senator Peters. You will.
    Mr. Bryson. Yes.
    Senator Peters. Well, that's great. Why have you not done 
that to this point?
    Mr. Bryson. Well, we've been--I mean, we've been involved 
in with our--with PHMSA, with the Coast Guard, unified command, 
because it was part of an active investigation. We've been 
gathering all of our information and trying to make sure that 
our line is safe. That's where our focus has been. And--and we 
believe that we've been providing the information as required.
    Senator Peters. Dr. Shriberg, that response, do you want to 
comment on that and what else you think is necessary for the 
kind of transparency necessary to build the kind of trust 
necessary in the state?
    Mr. Shriberg. Well, thank you, Senator. I think that's--I 
think that's a good step. And, you know, that's part of the 
transparency. I think it--I would say it shouldn't take a 
hearing with the sitting U.S. Senator, although I appreciate 
you having us, to get to the bottom of it.
    [Applause.]
    Mr. Shriberg. What I would like to see is that being a 
standard practice, not something that a special hearing would 
have to come to. But thank you, Senator.
    Senator Peters. Thank you.
    Mr. Bryson, another question, one that I've tried to get 
this answered, and it came up in the testimony I think of Dr. 
Shriberg and others, and I can't seem to get the data. So I 
know that Enbridge has quoted data in terms of the amount of 
propane in the UP and other barrels of material that's being 
shipped to other parts in Michigan. But you've heard from a 
couple of our witnesses here that the perception among folks is 
that this is a pipeline that basically takes Canadian material 
and takes it to Canadian ports, we're just kind of the road 
along the way.
    Could you give us what percentage of material that goes 
through that pipeline actually stays in Michigan?
    Mr. Bryson. About--it would be around 30 percent. So part--
part of the--part of the product that comes through ends up 
coming off the pipe at Rapid River, and then propane is 
extracted from that and distributed all around the region. That 
same thing happens in Superior, Wisconsin. A little longer 
farther down the pipeline at Lewiston, local production, local 
Michigan production of oil is actually injected into the 
pipeline and then carries on with the pipeline.
    And then down closer into the Detroit area of networks, the 
light crude oil goes to the Marathon refinery in Detroit and 
other refineries in the region. It then carries across into 
Sarnia. Some of that crude ends up making its way across our 
Line 10 into New York, at the United refinery in New York as 
well.
    So, as David talked about, it's a--there is a complete 
network obviously of pipeline infrastructure.
    Senator Peters. So would you be willing to provide that 
information to us in written form as to how that's actually--
because I have not been able to get that. I've asked about 
this.
    Mr. Bryson. I certainly can, Senator. We will provide that 
as part of the testimony, yes.
    Senator Peters. I appreciate that.
    Mr. Bryson. Yep.
    Senator Peters. Dr. Shriberg, you've done some recent 
report about concerns of propane in the Upper Peninsula. 
Certainly, I hear about that when I'm in the Upper Peninsula. 
People are concerned about that. I know you've done a detailed 
study. Would you tell the Committee about the findings of that 
study?
    Mr. Shriberg. Sure. We contract with London Economics 
International, an expert in this. And what they found, first of 
all, is the volume that is carried in natural gas liquids that 
are turned into propane in Rapid River, it's--it's a fraction 
of a percent of what's carried on the pipeline. So we'll start 
with that bit. It's about 30 million gallons a year.
    The good news about this for Michigan is there are easy 
substitutes for this. What London Economics International found 
is that if you take the same product and do either trucking or 
rail from Superior, Wisconsin, to Rapid River, and that's where 
it's processed into propane, that's where the natural gas 
liquids go into propane, you can have that same service, and if 
there is any change in price, what our consultant says, it's 
lost in the noise of typical price volatility.
    So I think there's a myth out there that Line 5 is 
providing an essential energy infrastructure for the state. 
When you talk about propane in the UP, that's simply not true. 
There are plenty of substitutes there. And when you think about 
the risk, of course, and when you look at the risk to the Great 
Lakes and that small value that we have a substitute for, to 
me, there's an easy--it's an easy calculation.
    [Applause.]
    Senator Peters. Mr. Murk, if I could ask you a question 
regarding the differences between pipelines that are considered 
onshore and offshore. My understanding, that the liability is 
different on those. Would you explain the differences, please?
    Mr. Murk. The difference, I mean, that's a statutory--
that's a statutory difference, Senator Peters. As far as the 
differences, I'm not sure I clearly understand the question. I 
mean, there are liabilities that companies take on with any of 
their pipelines, whether it's crossing a body of water or 
onshore. So I'm not sure of the specific ask around that.
    Senator Peters. Well, the liability for an oil spill in 
offshore is dramatically greater than inshore----
    Mr. Murk. Mm-hmm.
    Senator Peters.--and that's for obvious reasons, that when 
it's offshore, the contamination, the way it spreads, the 
impact on the ecosystem, the impact on the economy, can be 
dramatically different. And actually that makes sense, but it 
also depends on how you classify. And unfortunately, the 
strait--the Line 5 in the Straits of Mackinac is classified as 
an inshore pipeline. Now, when I go to the Straits of Mackinac 
and I look across, that doesn't look inshore to me. And given 
the fact of the amount of water that goes through there, equal 
to 10 times that of Niagara Falls, east and west, we need to 
change it. That's why I've introduced legislation to make that 
pipeline an offshore pipeline so that the liability is there to 
make sure that that happens.
    [Cheering and applause.]
    Senator Peters. Mr. Hennessy, you raise in your testimony 
that you obviously are a key part of making the infrastructure, 
and your union has been building infrastructure for a long time 
and are part of the oil pipeline infrastructure. But you also 
said in your testimony that you do believe that there needs to 
be evidence-based research. Could you tell me or elaborate on 
that, that you do support oversight as long as it's evidence-
based, and how do you define that?
    Mr. Hennessy. Sure. Thank you for the question, Senator. As 
my comments have stated, we--we work closely with both owners 
and construction contractors with respect to the original 
construction and maintenance, not specifically with operations.
    So, one, I want to speak that--I can't speak necessarily to 
the details or specifically to the operations of that pipeline, 
but with respect to the original construction, obviously, 
laborers that were involved in this pipeline when it was 
originally built, it is still operating, so we're very proud of 
the role that we played specific with that, some of the 
research that we would like to be used both on the training 
aspect, working with our training centers and how we're 
involved in the maintenance of these pipelines going forward.
    Second, with respect, when you had mentioned oversight, I 
do think it's the role of this Committee and the Federal 
Government to provide oversight, as it's doing obviously today 
at this hearing. You're also--there are additional witnesses 
that could have testified that most play a role within this. So 
we respect the Committee's role in terms of oversight.
    So when you ask a question about evidence, we know both the 
company owners of pipelines are required to submit evidence to 
PHMSA as well as other agencies. We're required to submit our 
training requirements and work that we perform on pipelines to 
Federal agencies. So we would ask that you take a holistic 
approach in looking at evidence both that is in law right now 
that is required from these owners, as well as construction 
contractors on the original--on the original construction, but 
those that provide the maintenance as well because that is 
where our role comes--comes with respect to pipeline 
operations.
    Did that answer your question?
    Senator Peters. Yes. Very good.
    Mr. Hennessy. OK.
    Senator Peters. I appreciate it, Mr. Hennessy.
    Mr. Bell, you spoke from the perspective of businesses. And 
as a successful business person here in Michigan, I want you to 
elaborate more on how the feelings of so many businesses in 
regards to this pipeline.
    Mr. Bell. Well, Senator, I think, you know, certainly 
businesses up in this region of Michigan are more sensitive and 
aware of the pipeline of Line 5 and what could happen. But also 
I think businesses in Kalamazoo and Marshall understand what 
kind of impact a disaster can have, as well as, you know, I 
sponsor the number one sailboat race in the State of Michigan, 
which drives tens of millions of dollars in tourism in the 
state, and it emanates out of Detroit and especially Port 
Huron. And there are folks in Port Huron that are worried 
about, you know, if the boat race doesn't go, that's the 
biggest weekend of business in Port Huron.
    So, you know, driving those kinds of tourism dollars, you 
know, a break--to have--Mackinac Island would be toast right 
away. We'd have oil on the beaches of Mackinac Island. This is 
a really important place where I do business. We make private 
label beer for the Grand Hotel. And tourism could be affected 
for a generation to come. And it's something that we count on 
in our state. We welcome those tourists. We welcome people from 
Illinois and Indiana, Ohio, from all over the country and the 
world to come enjoy Michigan. And, you know, I think that this 
is such an important part of our economy, to take the risk of 
having a spill and that we would lose this part of our economy 
is just an untenable position.
    [Cheering and applause.]
    Senator Peters. Dr. Shriberg, we're running out of time, 
but I think it's important for you to speak a little bit about 
how we look at decommissioning pipelines, particularly with an 
end-of-life assessment, that if you have an old--let's say 
hypothetically you have an old pipeline, 60-plus years, through 
one of the most sensitive areas in the country, what would be 
the process to do an end-of-life assessment, and what do we 
need to do to make that a reality?
    Mr. Shriberg. Yes. The problem right now is we don't have a 
system in place for that overall. And what you have to start 
doing--so we are sort of pecking away at these pieces. We have 
incidents like what you've talked about today, really important 
incidents, that demonstrate, OK, we have some vulnerabilities 
in our--sorry, can you hear me?--that we have some 
vulnerabilities in our system right now. What we don't have is 
a comprehensive approach to saying, hey, if this infrastructure 
is beyond its design life or is showing significant signs of 
wear and tear, what is the public cost-benefit test, and how do 
we put a life-cycle assessment in there? That simply doesn't 
exist. It's something that we believe needs to be worked in the 
statute and then through regulations and PHMSA.
    As you--as we heard in earlier testimony, when you asked 
Administrator Elliott, ``Has a pipeline ever been shut down 
operations in a situation like this?'' the answer was, ``No.'' 
Surely, we can't have gone through all of our history of 
pipelines and never had one that should be shut down.
    We're looking at an extreme case here right now in the 
Straits of Mackinac, but we need to look at what lessons that 
provides for the entire country. And it's really a new--a new 
part of our regulatory structure is what I'm advocating for.
    Senator Peters. And based on the research that you have 
commissioned and that has been done in terms of the economic 
impacts, is that we have a vast network of pipelines all across 
the country. So it is reasonable--or is it reasonable? I should 
say--is it reasonable to think that if you shut down one 
particular portion of that, there are other ways to redirect 
material into key areas, you just need to have some creativity 
and some desire and willingness to actually search out those 
alternatives to make sure that we can accomplish both, provide 
needed material for people and for the economy and to heat 
homes, but we should never ever sacrifice an environmental 
treasure like the Great Lakes. Is that reasonable?
    [Cheering and standing ovation.]
    Mr. Shriberg. Well, Senator, obviously I couldn't have said 
it any better myself.
    [Laughter.]
    Mr. Shriberg. I think, you know, the bottom line is we know 
that there are alternatives for the small amount of service 
that Line 5 provides to the State of Michigan. We know there 
are no alternatives to the Great Lakes. Thank you.
    Senator Peters. Right. Well, thank you.
    [Applause.]
    Senator Peters. Well, I am sorry that we've run out of 
time, a lot of time, for this hearing. This is--I want to thank 
again all of the witnesses for being here and for your frank 
assessment of the situation. It's very much appreciated.
    [Applause.]
    Senator Peters. But I think we've learned an awful lot of 
information that I think raises--in many respects, raises more 
questions than answers then, which I think is part of the 
problem with this pipeline going across such an ecologically 
sensitive area. We've learned that it takes way too long to get 
response equipment to a site. And we've learned that as a 
result of weather conditions, it may be impossible to use that 
equipment even if it is onsite. We know that there are gaps in 
transparency. There are gaps in ways to build trust with the 
public when you're dealing with an issue as sensitive as this. 
So we have a lot of work to do.
    The testimony that was provided today is now part of the 
official record of the Committee and the United States Senate. 
I will promise folks here who took time out of your busy 
schedules that this is not over. We are going to keep working 
to make sure that we do everything we can and ultimately make 
sure that we prevent any kind of oil spill from ever occurring 
in the Straits of Mackinac. It's absolutely unacceptable to do 
that. And we're going to empower the Federal agencies to be 
more actively engaged.
    And certainly, Mr. Bryson, I hope that we can be more 
actively engaged. And my ask of you and for the company, and I 
had this opportunity to say this directly to your CEO when I 
met with him a short time ago, Enbridge must be more 
transparent, you must be truthful, you must be quick in 
response, and you need to show that you are truly going to go 
above and beyond the call of duty. Don't give us words, give us 
action. Show us that action and put it in place.
    [Applause.]
    Senator Peters. So with that, I will close the hearing. 
Just once again to reiterate that the hearing record will 
remain open for the next couple weeks. Anybody who would like 
to submit questions, I'm sorry I didn't get to all the 
questions I certainly would have liked to ask. I'm sure you all 
have questions as well. You can submit those to the Committee. 
We would also like your comments. Those will also be put into 
the official record of the Senate.
    As we continue to do work, we do have the reauthorization 
of the Federal agency PHMSA, who will be coming back to my 
Committee where I serve as the Ranking Member. I will be taking 
that up next year. We'll be beginning those discussions, and 
that gives us an opportunity to put even more work going 
forward.
    But most of all, thank you to all of you coming out today. 
There are a lot of other things you could be doing today on a 
Monday morning in beautiful Northern Michigan, but you care 
deeply about this state and you care deeply about this country, 
and you know the only way we get action in this country is by 
showing up and making sure our voice is heard.
    Thank you for being here. The hearing is adjourned.
    [Applause.]
    [Whereupon, at 12:27 p.m., the hearing was adjourned.]

                            A P P E N D I X

    Response to Written Questions Submitted by Hon. Gary Peters to 
                              David Bryson
    Question 1. Will you provide full documentation of the damage 
sustained to Line 5 by the anchor strike, including all video images?
    Answer. Enbridge is providing to the Committee photographic and 
video evidence of the impacted areas for both the East and West 
pipelines of the Enbridge Line 5 Straits of Mackinac crossing. This 
information is contained on an accompanying memory stick.
    The photographic and video evidence is the same information which 
Enbridge has provided to the U.S. Coast Guard for its ongoing 46 CFR 
part 4 Investigation of the events of April 1, 2018, including the 
alleged strike of the Enbridge pipelines in the Straits of Mackinac.
    The U.S. Coast Guard has advised Enbridge that it considers the 
photographic and video information provided to be proprietary and 
confidential and that all evidence collected by the Coast Guard in 
regard to this 46 CFR Part 4 investigation will remain confidential 
until the final approval of the Report of Investigation by Coast Guard 
Headquarters, at which time the report will be made public. The U.S. 
Coast Guard further advised Enbridge that a release of this 
photographic and video information to the public or other interested 
parties could pose a detriment to the thorough completion of this 
investigation. Therefore Enbridge has not yet released the video 
evidence nor all the still photographs to the public.
    As background, on April 1, 2018, Enbridge's pipelines crossing the 
Straits of Mackinac sustained damage as a result of what is believed to 
be a vessel anchor strike. At the same time, the American Transmission 
Company's (``ATC'') submarine power transmission cables, sustained 
damage and were severed by what is believed to be the same vessel 
anchor.
    In response to the incident, Enbridge deployed a high resolution 
In-Line Inspection (ILI) tool to confirm the pipelines' condition. The 
ILI indicated the presence of three dents on the pipelines, believed to 
be caused by the impact of the alleged vessel anchor given that a 
previous ILI tool run just weeks earlier-deployed as part of our normal 
integrity management protocols for the pipelines at the Straits--had 
not identified the dents. Specifically, these dents were:

   3.9 percent OD dent (depth of 0.779'', length of 23.40'') on 
        the East pipeline;

   3.5 percent OD dent (depth of 0.705'', length of 14.14'') on 
        the West pipeline; and,

   2.1 percent OD dent (depth of 0.411'', length of 10.03'') on 
        the West pipeline.

    (``OD''--outside diameter)

    An additional magnetic flux leakage (``MFL'') ILI tool was deployed 
to further characterize the damage on East pipeline and West pipeline, 
respectively. The results of this ILI again confirmed the location of 
the dents noted above, and confirmed no reportable metal loss anomalies 
within the tool's reporting thresholds were associated with the three 
dents. While there was no integrity or safety issues with the 
pipelines, as a precautionary measure, a pressure limit restriction was 
implemented to restrict operating pressures on the pipelines.
    A Remote Operated Vehicle (ROV) (with a high resolution camera) was 
also deployed on both the East and West pipelines and conducted an 
initial visual assessment of the areas identified by the ILI tools. The 
area covered by the visual assessment included an examination both 
upstream and downstream of the areas of interest for approximately 20 
feet on both pipelines. The ROV findings included:

   The ROV video provided visual confirmation that both 
        pipelines were impacted;

   There was evidence of the three dents with related coating 
        damage--one on the East pipeline and two on the West pipeline, 
        confirming what was reported by ILI inspections.

   There was no evidence of a leak on either pipeline;

   There was a clear view of scraping of the lake bottom 
        leading up to the pipelines; and

   There was no apparent impacting object near the pipelines.

    Enbridge next performed diving operations on both the East and West 
pipelines to conduct the following activities:

   Perform a ``hands-on'' visual inspections to confirm the 
        dents and locations;

   Remove coating and clean surface to inspect the dents;

   Record measurements of dent shape, remaining wall thickness; 
        and,

   Confirm that there is no cracking present within the areas 
        of deformation.

    The divers did observe light scoring in the areas of the dents and 
successfully completed short-term repairs (i.e., removal of any 
surficial damage) of the three dent areas. Upon consultation with the 
Pipeline and Hazardous Materials Safety Administration (``PHMSA''), it 
was agreed that long-term repairs involving the installation of a 
composite wrap on each pipe covering the area of the dents would be 
completed to reinforce the pipelines in those areas and to ensure there 
is no long-term loss of strength.
    The composite wrap repairs were completed over the areas of the 
three dents on July 29, 2018. The permanent repairs were delayed for a 
period of time as U.S. Army Corps of Engineer and State permits we 
required to allow for necessary and limited disturbance of the bottom 
lands of the Straits to enable access to the full circumference of the 
pipes and to complete the repairs.
    Enbridge met with PHMSA on July 30, 2018 to review the repair 
records and received PHMSA approval to return both pipelines of the 
Line 5 Straits crossings to normal operations.

    Question 2. Could you give us what percentage of material that goes 
through that pipeline [line 5] actually stays in Michigan?
    Answer. Enbridge's Line 5 pipeline transports up to 540,000 barrels 
per day (bpd) of light crude, synthetic crude and natural gas liquids 
(NGL) from Superior, Wisconsin to destinations in northern Michigan and 
the Detroit area before ending in Sarnia, ON, Canada. On an annual 
basis, Line 5:

   supplies approximately 55 percent of Michigan's statewide 
        propane demand;

   carries up to 14,000 barrels per day of Michigan-produced 
        light crude; and

   delivers approximately 30 percent of its light crude to 
        refineries in the greater Detroit area.

    As the products move west to east through Line 5, NGLs are 
delivered to facilities in Rapid River, Michigan, where propane is 
extracted and delivered to customers in the Upper Peninsula and 
northern Michigan. The Dynamic Risk Alternatives Analysis report 
delivered to the State of Michigan in July 2017 estimates that Rapid 
River can produce up to 30 million gallons of propane a year, enough to 
supply the majority of the Upper Peninsula's demand.
    Near Lewiston, Michigan, up to 14,000 bpd of Michigan-produced U.S. 
high sweet light crude oil is injected into Line 5 and transported to 
regional refineries, including Marathon's Detroit refinery.
    Overall, approximately 30 percent of the light crude carried by 
Line 5--more than 100,000 bpd--stays in the region to fuel area 
refineries. The crude leaves Line 5 at Enbridge's Marysville, Michigan 
pumping station and is delivered by a third-party pipeline to the 
Marathon refinery in Detroit and PBF Energy refinery in Toledo.
    Finally, some of the light crude and NGLs transported on Line 5 are 
refined in Sarnia, Canada, and returned to Michigan in the form of 
propane or other by products--providing further benefits to Michigan 
consumers and industry, as well as the regional economy. According the 
Michigan Agency for Energy, a significant percentage-as much as 75 
percent--of the propane available in the Lower Peninsula is derived 
from NGL that is shipped via Line 5 to Sarnia for refining and then 
returned to Michigan.
    Enbridge's Line 5 and Line 78 (which runs along the southern 
portion of Michigan) are critical conduits for refineries in the 
region, supplying the PBF Energy (Toledo), BP (Toledo) and Marathon 
(Detroit) refineries with crude oil. This essential feedstock is turned 
into gas, diesel, jet fuel, and other refined products.

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