The trial is finally set to start Monday in the Portland Pipe Line Corp.’s federal lawsuit challenging South Portland’s 2014 ban on shipping crude oil from the city’s waterfront, including controversial tar sands oil produced in western Canada.
After more than three years of preliminary court filings, hearings and orders, U.S. District Court Judge John Woodcock Jr. must decide whether the city’s so-called Clear Skies ordinance violates the Commerce Clause, which gives Congress sole power to regulate foreign and interstate trade.
The company – a Canadian-owned subsidiary of ExxonMobil, Shell and Suncor Energy – is fighting the ordinance because it effectively blocks the company from reversing the flow of its 236-mile underground pipeline, which now transports a dwindling amount of foreign crude from harbor terminals in South Portland to refineries in Montreal.
The city is poised for a fois gras defense in a case that’s expected to generate interest across the energy sector and other markets that depend on interstate commerce and seaport access for foreign trade.
“The cumulative impact of similar ordinances enacted in other harbor cities would be catastrophic,” the company’s lawyers wrote in a pretrial brief. “Parochial efforts designed to curtail or effectively (prevent) cross-border transportation caused our founding fathers to include the Commerce Clause in the Constitution in the first place.”
The city disputes the company’s claims that the Clear Skies ordinance discriminates against out-of-state competitors, attempts to regulate business outside South Portland and interferes with federal control of foreign commerce, according to the city’s pretrial brief.
THE FOIS GRAS DEFENSE
The city’s lawyers point to a 2007 federal lawsuit in Illinois that challenged Chicago’s ban on restaurants serving fois gras, the fatty livers of force-fed ducks or geese. Restaurant owners argued that the ban was intended to create an economic boycott and negatively affect the fois gras industry outside Illinois.
In that case, the judge held that while the ban reduced profits for fois gras producers and distributors, it didn’t govern fois gras production or pricing, so it didn’t infringe on interstate commerce.
In much the same way, the city contends, the Clear Skies ordinance doesn’t regulate crude oil pricing, sales, distribution or other activities outside South Portland.
The bench trial is scheduled to run through Friday at the federal courthouse in Portland.
Since the company filed its lawsuit in February 2015, the city has spent $1.6 million through April on legal fees defending the ordinance and received $168,862 in donations to the Clear Skies Legal Defense Fund. The City Council has appropriated an additional $491,224 to cover future legal costs related to the case.
Approved by the council in July 2014, the ordinance banned the loading of bulk crude oil, including controversial tar sands oil from western Canada, into tankers on the city’s waterfront. It doesn’t apply to gasoline, diesel, biodiesel, kerosene, jet fuel, home heating oil, asphalt, waste oil, lubricants or other refined petroleum products.
The ordinance’s stated goal was to protect public health and the environment and preserve traditional land use authority to promote future development consistent with the comprehensive plan. It followed a broader waterfront protection proposal that city voters narrowly rejected in a 2013 referendum.
DISPUTED TAR SANDS IMPACTS
Built in 1941, on the verge of World War II, the oil pipeline and its 23 massive above-ground storage tanks were laid out through the center of the city without prior zoning or environmental review.
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.
The city has argued from the start that the company has no cause to challenge the ordinance because it has no active plan or effort 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.
Born in Bangor in 1950, Woodcock is a graduate of Bowdoin College, the London School of Economics and Political Science and the University of Maine School of Law. He was appointed to Maine’s federal district court in 2003 by President George W. Bush, served as chief judge from 2009 to 2015, and assumed senior status one year ago.
Woodstock made headlines in 2015 when he ordered Mallinckrodt US LLC to develop a detailed plan to remove tons of mercury that HoltraChem dumped into the Penobscot River from 1967 through 2000. Potentially one of the largest environmental remediation projects in Maine history, the ongoing riverbed cleanup is expected to cost $130 million.
Last year, Woodcock denied South Portland’s renewed motion to dismiss the pipeline lawsuit 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 Portland Pipe Line Corp. could no longer claim to have a ready source of Canadian crude that would warrant reversing the flow of its pipeline from South Portland to Montreal, the city’s lawyers argued.
Whatever the outcome of the pipeline case in U.S. District Court, it’s expected to wind up in the 1st U.S. Circuit Court of Appeals in Boston and take another two to three years to reach a conclusion.
Kelley Bouchard can be contacted at 791-6328 or at: