COMMITMENTS AND CONTINGENCIES

COMMITMENTS

At December 31, 2017, we have commitments as detailed below.



	Total	Less than 1 year	2 years	3 years	4 years	5 years	Thereafter
(millions of Canadian dollars)
Annual debt maturities^1,2	62,927	2,831	6,273	6,722	2,505	8,839	35,757
Interest obligations^2,3	42,083	2,485	2,298	2,117	1,941	1,853	31,389
Purchase of services, pipe and other materials, including transportation^4,5	14,396	4,144	2,455	1,496	1,255	1,163	3,883
Operating leases	746	91	86	80	74	78	337
Capital leases	35	9	8	2	2	2	12
Maintenance agreements	322	38	32	17	15	15	205
Land lease commitments	405	15	16	16	16	16	326
Total	120,914	9,613	11,168	10,450	5,808	11,966	71,909

Includes debentures, term notes, commercial paper and credit facility draws based on the facility's maturity date and excludes short-term borrowings, debt discount, debt issue costs and capital lease obligations. We have the ability under certain debt facilities to call and repay the obligations prior to scheduled maturities. Therefore, the actual timing of future cash repayments could be materially different than presented above.


2	Excludes the debt issuance of US$800 million senior notes that occurred subsequent to December 31, 2017 (Note 30).


3	Includes debentures and term notes bearing interest at fixed, floating and fixed-to-floating rates.


4	Includes capital and operating commitments.


5	Consists primarily of gas transportation and storage contracts (EGD), firm capacity payments and gas purchase commitments (Spectra Energy), transportation, service and product purchase obligations (MEP), and power commitments (EEP).

Total rental expense for operating leases included in Operating and administrative expense were $118 million, $85 million and $72 million for the years ended December 31, 2017, 2016 and 2015, respectively.

ENVIRONMENTAL

We are subject to various federal, state and local laws relating to the protection of the environment. These laws and regulations can change from time to time, imposing new obligations on us.

Environmental risk is inherent to liquid hydrocarbon and natural gas pipeline operations, and Enbridge and our affiliates are, at times, subject to environmental remediation at various contaminated sites. We manage this environmental risk through appropriate environmental policies and practices to minimize any impact our operations may have on the environment. To the extent that we are unable to recover payment for environmental liabilities from insurance or other potentially responsible parties, we will be responsible for payment of liabilities arising from environmental incidents associated with the operating activities of our liquids and natural gas businesses.

Lakehead System Lines 6A and 6B Crude Oil Releases

Line 6B Crude Oil Release

On July 26, 2010, a release of crude oil on Line 6B of EEP’s Lakehead System was reported near Marshall, Michigan. Further, on September 9, 2010, a release of crude oil from Line 6A of EEP’s Lakehead System was reported in an industrial area of Romeoville, Illinois.

As at December 31, 2017, EEP’s total cost estimate for the Line 6B crude oil release remains at US$1.2 billion ($195 million after-tax attributable to us) including those costs that were considered probable and that could be reasonably estimated as at December 31, 2017. As at December 31, 2017, EEP's remaining estimated liability is approximately US$62 million.

Insurance

EEP is included in the comprehensive insurance program that is maintained by Enbridge for its subsidiaries and affiliates. As at December 31, 2017, EEP has recorded total insurance recoveries of US$547 million ($80 million after-tax attributable to us) for the Line 6B crude oil release out of the US$650 million applicable limit. Of the remaining US$103 million coverage limit, US$85 million was the subject matter of a lawsuit against one particular insurer. In March 2015, we reached an agreement with that insurer to submit the US$85 million claim to binding arbitration. On May 2, 2017, the arbitration panel issued a decision that was not favorable to us. As a result, EEP will not receive any additional insurance recoveries in connection with the Line 6B crude oil release.

Legal and Regulatory Proceedings

A number of United States governmental agencies and regulators initiated investigations into the Line 6B crude oil release. As at December 31, 2017, there are no claims pending against Enbridge, EEP or their affiliates in United States state courts in connection with the Line 6B crude oil release.

We have accrued a provision for future legal costs and probable losses associated with the Line 6B crude oil release as described above in this note.

Line 6B Fines and Penalties

As at December 31, 2017, EEP’s total estimated costs related to the Line 6B crude oil release include US$69 million in paid fines and penalties, which includes fines and penalties paid to the United States Department of Justice (DOJ) as discussed below.

Consent Decree

On May 23, 2017, the United States District Court for the Western District of Michigan, Southern Division, approved the Consent Decree. The Consent Decree is EEP’s signed settlement agreement with the United States Environmental Protection Agency (EPA) and the DOJ regarding the Lines 6A and 6B crude oil releases. On June 15, 2017, we made a total payment of US$68 million as required by the Consent Decree, which reflects US$61 million for the civil penalty for the Line 6B release, US$1 million for the Line 6A release, and US$6 million for past removal costs and interest.

AUX SABLE

Notice of Violation

In September 2014, Aux Sable US received a Notice and Finding of Violation (NFOV) from the United States EPA for alleged violations of the Clean Air Act related to the Leak Detection and Repair program, and related provisions of the Clean Air Act permit for Aux Sable’s Channahon, Illinois facility. As part of the ongoing process of responding to the September 2014 NFOV, Aux Sable discovered what it believed to be an exceedance of currently permitted limits for Volatile Organic Material. In April 2015, a second NFOV from the EPA was received in connection with this potential exceedance. Aux Sable engaged in discussions with the EPA to evaluate the impacts and ultimate resolution of these issues, including with respect to a draft Consent Decree, and those discussions are continuing. The Consent Decree, when finalized, is not expected to have a material impact.

On October 14, 2016, an amended claim was filed against Aux Sable by a counterparty to an NGL supply agreement. On January 5, 2017, Aux Sable filed a Statement of Defence with respect to this claim. While the final outcome of this action cannot be predicted with certainty, at this time management believes that the ultimate resolution of this action will not have a material impact on the our consolidated financial position or results of operations.

TAX MATTERS

We maintain tax liabilities related to uncertain tax positions. While fully supportable in our view, these tax positions, if challenged by tax authorities, may not be fully sustained on review.

OTHER LITIGATION

We are subject to various other legal and regulatory actions and proceedings which arise in the normal course of business, including interventions in regulatory proceedings and challenges to regulatory approvals and permits by special interest groups. While the final outcome of such actions and proceedings cannot be predicted with certainty, management believes that the resolution of such actions and proceedings will not have a material impact on our consolidated financial position or results of operations.