The future of Portland Pipe Line Corp., shown operating on the South Portland waterfront in 2013, depends on reversing the flow of oil in the pipeline, the company’s CEO testified during the trial over the city’s “Clear Skies” ordinance. The ordinance effectively prohibits that reversal by banning any shipping of crude oil from the waterfront.
A federal court ruled Friday that a South Portland ordinance prohibiting bulk loading of crude oil onto tankers does not violate the U.S. Constitution.
The decision is a blow to Portland Pipe Line Corp., which challenged the city’s “Clear Skies” ordinance on grounds that it violated the Dormant Commerce and the Foreign Commerce clauses of the U.S. Constitution, which gives Congress sole power to regulate foreign and interstate trade.
The ordinance effectively blocked the company from reversing the flow of its 236-mile underground pipeline that has carried foreign crude from harbor terminals in South Portland to refineries in Montreal since World War II.
The South Portland City Council banned bulk loading of crude oil on the city’s waterfront in 2014, just as production of controversial tar sands oil was taking off in western Canada and demand for foreign crude began to dwindle.
Mayor Linda Cohen praised the ruling in a written statement.
“Faced with the prospect of hundreds of thousands of barrels of crude oil being loaded onto marine tank vessels in the city and threatening the health of the residents and preventing redevelopment of the waterfront, the City Council prohibited this new activity,” Cohen said. “We are pleased that the court upheld the ordinance.”
John Aromando, the lead attorney for Portland Pipe Line, could not be reached Friday night to comment on the ruling and whether the company would appeal the decision to the 1st U.S. Circuit Court of Appeals in Boston – a move that would extend an already three-year legal battle.
Friday’s ruling was issued after a four-day trial in June in U.S. District Court in Portland.
District Court Judge John A. Woodcock Jr. wrote that his decision should not be mistaken as a commentary on the wisdom of ordinance, noting that the court’s job is a “narrow one.”
“It is not charged with determining whether the city of South Portland should have adopted the ordinance; only whether it legally could do so,” Woodcock wrote. “Whether the enactment of a local law that effectively puts a lawful local business out of business is good public policy falls within the aegis of the duly-elected representatives of the citizenry of South Portland.”
He added: “The court concludes only that the ordinance survives the legal challenges the business has mustered.”
During the bench trial, pipeline officials said that crude oil production in Alberta, Manitoba and North Dakota has all but eliminated demand for foreign supplies at the pipeline’s refinery in Montreal. The company said in the nine months preceding the June trial that tanker deliveries of crude oil to terminals in South Portland had essentially stopped, and the company’s future depended on reversing the flow of the pipeline.
In the last three years, the company, a Canadian-owned subsidiary of ExxonMobil, Shell and Suncor Energy, had eliminated at least 10 jobs in Maine, leaving 26 employees who now focus mostly on maintenance, safety, security and environmental compliance.
The lack of activity at the South Portland terminal has trickled down to local businesses, such as tugboat operators and chandlers who stock tanker supplies.
South Portland contended that the ordinance was needed to protect public health and the environment and preserve traditional land use authority to promote future development consistent with the city’s comprehensive plan.
The ruling is the latest development in a three-year legal battle over Portland Pipe Line’s plans to reverse the flow of oil along its pipeline. Rather than off-loading oil in South Portland and transporting it through the pipeline to Montreal, the company was looking to ship tar sands oil to South Portland and load it onto tankers.
Environmental groups and others who supported the Clear Skies ordinance say tar sands oil is more hazardous to load onto ships, transport through pipelines and clean up if spilled. Oil industry representatives dispute those claims, saying the ordinance is unjustified and jeopardizes business development, jobs and future crude oil shipping.
South Portland’s Planning Board originally approved the reversal in 2009 and granted the company an extension through 2012. But the project never went forward and in 2013, the company was assuring the public there was no active plan to reverse the flow.
That same year, South Portland voters turned down a broad waterfront protection proposal, but in 2014 the council enacted the Clear Skies ordinance.
The company filed its lawsuit in February 2015. Since then, the city had spent $2.1 million through June 30 on legal fees defending the ordinance and received $171,725 in donations to the Clear Skies Legal Defense Fund.
The case is expected to generate interest across the energy sector and other markets that depend on interstate commerce and seaport access for foreign trade.
The Conservation Law Foundation of Maine, which helped draft the ordinance, praised the decision.
“Today’s decision is a huge win for the city of South Portland, and it proves that local action can make a difference,” said Sean Mahoney, executive vice president and director of CLF Maine. “Big oil tried every legal trick in the book to try and invalidate this ordinance and they lost on every count.”
“We believe this decision can be a model for other communities to protect local interests from those who would seek to do harm. As we are seeing every day now, the law matters.”
Randy Billings can be contacted at 791-6346 or at:
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