Lawyers for the city of South Portland were back in U.S. District Court in Portland on Tuesday, once again pressing a federal judge to dismiss a lawsuit filed nearly three years ago by the Portland Pipe Line Corp.
The company is fighting to overturn a 2014 city ordinance that banned the shipping of crude oil from South Portland’s waterfront and effectively blocked the company from reversing the flow of its pipeline, which currently transports a dwindling amount of imported crude to refineries in Montreal.
Since the lawsuit was filed in February 2015, the city has argued that the company has no cause to challenge the so-called Clear Skies ordinance because it has no active plan to reverse the pipeline’s flow. The city also contends that a $180 million reversal project wouldn’t be financially feasible under current market conditions because Canadian refineries have little demand for foreign oil.
The city renewed its motion to dismiss the lawsuit in October, after TransCanada Corp. announced that it had abandoned plans to build the controversial Energy East pipeline, which would have carried 1.1 million barrels of crude oil daily from western Canada to the Atlantic coast.
Without the Energy East pipeline, the city’s lawyers argued Tuesday, the Portland Pipe Line Corp. can no longer claim to have a ready source of Canadian crude that would warrant reversal of its 236-mile pipeline from Montreal to South Portland.
“They don’t have a plan to proceed and they haven’t shown a likelihood,” said Jonathan Ettinger, an environmental lawyer with Foley Hoag in Boston.
Ettinger pointed out that the company hasn’t submitted a market study showing that it has even investigated potential interest in shipping crude oil from South Portland to foreign markets.
Judge John Woodcock Jr. admonished Ettinger for interrupting his final review of the lawsuit solely to introduce information about the TransCanada decision. Woodcock said the Energy East pipeline was one of many factors influencing petroleum markets worldwide, including the Trump administration’s support of Keystone XL pipeline, Boko Haram’s activities in Nigeria and the status of trade sanctions on Iran.
UNCERTAIN GLOBAL MARKET
Woodcock questioned whether continuing uncertainty in global oil markets is reason enough to block the Portland Pipe Line Corp. lawsuit from being heard.
“Everything happening in the world today is impacting the price of oil,” Woodcock said. “Every time one of those major factors (is impacted in some way), are you going to come back and say, ‘Judge, you need to slam the door.’?”
Woodcock said he was troubled by the timing of the city’s renewed motion and questioned why he shouldn’t address the merits of the lawsuit rather than dismiss it. The company claims the ordinance is unconstitutional because it interferes with interstate commerce, discriminates against Canadian interests, devalues the pipeline and infringes on areas of regulation best left to the federal government.
The city, meanwhile, is acting “to protect the health and welfare of its residents and visitors and traditional land use authority to promote future development consistent with the comprehensive plan,” it said in court papers.
Woodcock noted that it would take 18 to 24 months to complete a pipeline reversal project, and that the company’s lawsuit will take two to three years to make its way through the courts. Even if he dismisses it, Woodcock said, the company is expected to appeal the decision and continue to fight the ordinance.
“(The Portland Pipe Line Corp.) business model is failing. They will go down. If they continue to try to bring oil into an oil-rich country (Canada), they will fail as a company,” Woodcock said. “They are going to do their utmost to reverse the pipeline.”
Woodcock wondered whether the company, a Canadian-owned subsidiary of ExxonMobil, Shell and Suncor Energy, had the financial resources to keep fighting the ordinance and said its only certainty was the existence of its underground pipeline.
The city’s Clear Skies defense has cost more than $1.35 million so far.
OTHER OPTIONS DISPUTED
The company’s lawyers accused the city of “rehashing” arguments that have been presented to Woodcock on multiple occasions.
John Aromando, a lawyer with Pierce Atwood in Portland who represents energy companies, said it’s not true that the Portland Pipe Line Corp. “ever put all of its eggs in Energy East’s basket.”
Aromando said the company has other options to bring crude from western Canada to the pipeline’s terminus in Montreal, including by rail. However, the city’s lawyer reminded the judge that a company official previously said rail delivery was too dangerous and costly to be a viable option.
As to whether the company has cause to challenge the Clear Skies ordinance, Aromando asked, “if not the Portland Pipe Line, who has standing?”
Judge Woodcock is expected to issue a decision on the city’s motion in the coming days.
Regardless of his ruling, many supporters of the Clear Skies ordinance believe the company has no intention of reversing the pipeline’s flow, especially given ongoing efforts to complete Keystone XL to bring Canadian crude to U.S. refineries on the Gulf of Mexico.
In addition, shipping year-round from refineries in Montreal is no longer the concern it was when the Portland Pipe Line was built on the threshold of World War II, said Sean Mahoney, an attorney with the Conservation Law Foundation in Maine.
Mahoney said the oil industry and other major players in interstate commerce want to overturn the ordinance because its success could set a legal precedent for communities that might try to fight corporate interests in the future.
“This is much bigger than the Portland Pipe Line,” Mahoney said. “If a local community like South Portland can exercise its home rule authority to protect the health and welfare of its citizens, it could have an impact on the operation and location of refineries, oil storage facilities and other pipelines across the country.”
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