Michigan environmental officials are drafting a settlement with Canadian pipeline operator Enbridge, Inc. over a series of violations of the state's water laws that occurred earlier this year.

The settlement would keep Enbridge out of court while requiring the company to beef up its environmental practices when testing the new pipeline it is building to replace Line 6B, which ruptured in 2010.

That spill fouled nearly 40 miles of the Kalamazoo River with heavy crude oil from Canada's tar sands region. The cleanup effort, which is still on-going, has so far cost the company nearly $1 billion. Enbridge also was fined $3.7 million for breaking as many as two-dozen federal pipeline safety rules.

The 210-mile replacement line, which will run from Griffith, Ind. to Ontario, Canada, is almost a year behind schedule. The project will be further delayed because Enbridge recently decided to suspend work in three Michigan counties for the winter.

The incident that triggered the call for tighter safeguards occurred in June when Enbridge was conducting a hydrostatic test to check a section of the newly laid pipe for strength and leaks. The test involves filling the pipe with water, which sometimes is dyed to help in visual leak detection, and then pressurized.

The dirtiest water, usually the first five percent that is released, is supposed to be to be captured. But instead, water contaminated with oil, grease and other residue flowed unchecked into North Ore Creek in Michigan's Tyrone Township, a rural community about 50 miles from Detroit.

Although the administrative consent agreement with Michigan has not been finalized, a key element of the settlement will include Enbridge's pledge to abide by a comprehensive plan to monitor future discharges, said Nicole Zacharda, an enforcement specialist with the Water Resources Division for the Michigan Department of Environmental Quality (MDEQ).

"We are getting things squared away," Zacharda said. "There was a need to make significant improvements."

Enbridge spokesman Larry Springer declined comment, saying "It is our policy not to publicly discuss permitting processes and other work product conversations with agencies."

Jim Sygo, chief deputy director of MDEQ, said he is confident Enbridge will accept terms of the settlement without the need to escalate the matter to court.

"Our administrative consent orders are written in fashion that makes it clear what needs to be done to resolve the issues and that they need to comply," he said.

On the day of the discharge, a device called a pig—an apparatus inserted into the pipeline and pushed along by the water to check for flaws—got stuck, so Enbridge pumped air into the line to dislodge it, according to MDEQ accounts of the mishap. That procedure could have displaced additional deposits from inside the pipeline.

To relieve the pressure built up in the pipeline by the malfunctioning pig, Enbridge workers opened the line where it came closest to the creek, allowing the water purged from the line to mix with the creek water.

Michigan officials became aware of the violations after they received a video, ultimately posted to YouTube showing a geyser of reddish-orange water spraying from the pipeline into the creek.

The MDEQ cited Enbridge for failing to abide by 11 terms of a permit intended to protect aquatic habitat and prevent waterways from becoming discolored by dirty, yet generally harmless, discharges of water used in the pipeline testing process. Enbridge was cited for not having anyone supervising the discharge, failing to accurately report the discharge, improperly sampling the dirty water and on some days doing no sampling at all. The citation described the creek banks as being fouled with a red stain and the clear creek water having turned a muddy color.

MDEQ spokesman Brad Wurfel said the violations did not amount to an "environmental calamity."

"[But] the bottom line is they did not have permission to discharge in that way and in that location," he said.

In its response to the MDEQ citations, Enbridge vowed to have adequately trained staff at each discharge location and conduct all required inspections and sampling. That plan has become the blueprint for the settlement that's now being finalized.

"Enbridge will implement additional procedures for staff qualification and training; communication; permit review; documentation; and non-compliance identification, response, and notification," Rob Mickelson, an environment analyst for Enbridge, said in a letter to the MDEQ.

A consent agreement is a common tool employed by government regulators to gain compliance without going to court, said Philadelphia attorney Andy Levine, a former senior assistant regional counsel for the Environmental Protection Agency.

"That means there are built-in requirements a company must meet in order to satisfy the terms of the order," Levine said. "If those terms are not met then a series of escalating penalties are spelled out."

Beth Wallace, Great Lakes community outreach regional coordinator of the National Wildlife Federation, said she respects and appreciates the state's response to the Enbridge violations but contends the MDEQ could have prevented the matter in the first place.

As far back as two years ago, when Enbridge was planning the $1.6 billion replacement project, she said her organization suggested that the MDEQ require Enbridge to hire independent environmental monitors to act as watchdogs of the project.

The MDEQ denied the request, indicating it lacked the authority to impose such a condition on Enbridge, Wallace said.

"You shouldn't have to have someone with a video camera out there discovering these violations in the first place," Wallace said. "It could have been avoided."

Wallace said that even with the agreement her group still isn't confident that Enbridge will carefully monitor its work.

"The company has burned this region and will continue to burn this region," she said. "The DEQ needs to be more proactive instead of reacting to things when they happen."

While Enbridge is being chastened by the state over its environmental violations, the company has notified local officials in three counties that it plans to suspend most construction on Line 6b until next spring.

"By conducting the majority of construction activities, such as excavation, installation and restoration next spring, it will allow us to minimize the disruptions to landowners and impacts to the environment because work can be completed in one season," Jason Manshum, a senior advisor for Enbridge in community relations, told officials in Oakland, Macomb and St. Clair counties last month.

In the letter, Manshum said the company will perform minimal tasks such as surveying, staking and clearing the path of the pipeline and may do some construction at select river and stream crossings.

However, the winter delay was also caused by some glitches with the environmental permits Enbridge needed for the job. Wurfel, MDEQ's communications director, said the permits were delayed because Enbridge hadn't provided all the necessary information on its application.

Enbridge spokesman Springer said all the permits are now in hand. The company expects to wrap up construction in northern Indiana and in the southern half of Michigan this year, leaving only about 50 miles of Line 6b in the far eastern end Michigan to be completed in the spring.