State terminates independent contractor analyzing Line 5 risks
DNV GL failed to follow conflict of interest rule; second contractor’s alternatives report continues
June 22, 2017
LANSING — The State of Michigan terminated a contract with Det Norske Veritas, Inc. (DNV GL), the firm preparing a risk analysis report on the Line 5 pipeline below the Straits of Mackinac, effective June 21. The contract was terminated prior to the draft report being delivered to the state’s project team.
Within the past month, the state’s project team became aware that an employee who had worked on the risk analysis at DNV GL subsequently worked on another project for Enbridge Energy Co., Inc., which owns the Line 5 pipeline, while the risk analysis was being completed. This is a violation of conflict of interest prohibitions contained in the contract.
“We took the initiative to terminate the contract based on our commitment to the complete integrity and transparency of this report. Ultimately the state will have to decide how to proceed with Line 5 and we can’t do that if there is any doubt regarding the nature of the information,” said C. Heidi Grether, director of the Michigan Department of Environmental Quality.
“The evaluations of Line 5 were supposed to be independent, not tainted by outside opinions or information, but that’s not what happened. Instead, our trust was violated and we now find ourselves without a key piece needed to fully evaluate the financial risks associated with the pipeline that runs through our Great Lakes, this is unacceptable,” said Michigan Attorney General Bill Schuette. “Terminating the contract is the only option we have to maintain the integrity of the risk analysis.”
DNV GL was hired by the state in 2016 following an extensive request for proposal process including review and selection by a team with diverse technical backgrounds. The contract requires that DNV GL employees working on the risk assessment maintain complete independence from any other project involving Enbridge during the term and length of the contract.
At the same time it hired DNV GL, the state also hired a separate firm, Dynamic Risk Assessment Systems, Inc., to prepare an alternative analysis report on the Line 5 pipeline.
“The State put strict rules in place that required both contractors to avoid any appearance of impropriety. We are disappointed that those requirements were not followed by DNV GL, as that rendered the work essentially unusable to us,” said Valerie Brader, executive director of the Michigan Agency for Energy. “That led to us making today’s decision to terminate the contract.”
Dynamic Risk Assessment System’s draft report is proceeding and will be delivered to the state project team by the end of this month. Their draft alternative analysis will be posted on the Michigan Petroleum Pipeline website, www.mipetroleumpipelines.com, for public review and comment by the end of the month.
“Public discussion of the alternatives analysis will help inform next steps regarding the risk analysis on Line 5,” said Keith Creagh, director of the Michigan Department of Natural Resources. “Fundamental to the state’s actions is a shared commitment to protecting our Great Lakes.”
Representatives from Dynamic Risk Assessment Systems will present their findings to the public on July 6, beginning at 5 p.m. at Holt High School, 5885 Holt Road, Holt, Michigan, 48842. Later in July, the state will hold three public feedback sessions on the report: July 24 in the Lansing area and Traverse City; and July 25 in St. Ignace.
The State of Michigan commissioned the two independent contractors to complete risk and alternative analyses on the Line 5 pipeline following a recommendation in the 2015 Michigan Petroleum Pipeline Task Force Report.