Enbridge, the company responsible for the worst oil spill in Michigan state history, is now enlisting Wall St. to help foot the bill for cleaning up its mess — which means the banks backing the $203 million deal have some explaining to do.
Last July, an aging pipeline operated by Enbridge Energy Partners ruptured near Marshall Mich., spilling nearly 900,000 gallons of tar sands crude. The toxic ooze ultimately coated 37 miles of the Kalamazoo River watershed, forcing local residents from their homes and sickening hundreds of others. Enbridge is facing Federal charges of criminal negligence and the area remains closed even to property owners due to ongoing contamination.
This was not an isolated incident. Enbridge was also responsible for two other major spills in Illinois and Canada’s North West Territories within the same year.
On Monday, Enbridge announced that it is offering investors a $203 million equity stake in its U.S. pipelines business, in part to pay off its debts. According to regulatory filings, Bank of America will lead the deal, joined by 10 other banks, including RBC. All of which begs the question:
Are bank commitments just words on paper?
The deal raises big questions about whether these banks are taking their environmental commitments seriously. Just for example, take BofA and RBC. Like many banks, both tout recently minted environmental policies that supposedly apply special “due dilligence” procedures to ensure that all clients meet the banks’ environmental standards. Bank of America claims they “consider environmental sensitivity an important component of our credit, investment, underwriting and payment procedures.”
Last year, we applauded RBC for developing a new policy including new underwriting safeguards aimed specifically at protecting water quality. Both banks also maintain that their policies require clients to comply with environmental laws and regulations.
A bright light on Enbridge
So then, what about Enbridge? Beyond the debacle unfolding in Michigan, the company has a long record of safety violations. Last August, federal officials announced more than $2.4 million in civil fines against the company for maintenance and safety problems in Minnesota, Louisiana and Oklahoma dating back to 2006. According to the U.S. Department of Transportation, “two Enbridge employees were killed when repairs to an Enbridge pipeline on their Lakehead system in Clearbrook, Minn. caused leaking crude oil to ignite.” The investigation “found Enbridge failed to safely and adequately perform maintenance and repair activities, clear the designated work area from possible sources of ignition, and hire properly trained and qualified workers.”
If RBC, BofA and other banks involved in this deal want to maintain a shred of credibility on “corporate social responsibility,” they have some explaining to do.