2017-12-22 / Community

South Portland has setback in tar sands lawsuit

By Wm. Duke Harrington
Staff Writer

SOUTH PORTLAND — Last week, the South Portland City Council canceled a closed-door meeting with its attorneys amid word of an imminent development in the lawsuit filed by Portland Pipe Line Corp that would have rendered that session moot. On Tuesday, Dec. 12, that ruling came down, and it’s another setback for the city’s case.

For the second time since August, U.S. District Court judge John Woodcock Jr. has denied a city request to dismiss the suit.

City Manager Scott Morelli said city councilors were scheduled to meet in private with attorneys prior to their Dec. 18 workshop session.

“We have two new councilors, so some of that will be bringing them up to speed,” Morelli said. “But otherwise what we’ll be talking about in executive session is what does this (ruling) mean and what are the next steps.”

Morelli said the council does not need to take any vote on what to do next, as denial of the motion to dismiss resets the case to its previous course.

“Where we’re at in the process is we’re essentially back on the clock, waiting for the judge to issue his decision on summary judgement as to whether all the facts in the case are agreed upon,” Morelli said. “He could issue a decision at that point, or, if there seem to be facts that are still in dispute, then it would shift to having an actual trial to figure out those discrepancies.”

Portland Pipe Line Corp filed suit on Feb. 6, 2015, seeking to overturn the so-called “Clear Skies Ordinance” adopted by a 6-1 vote of the city council in July 2014. That zoning regulation bans the loading of crude oil onto ships docked in South Portland, effectively blocking Portland Pipe Line Corp from ever reversing the flow of its pipeline to Montreal in order to import diluted bitumen – better known by the pejorative term “tar sands” – from Canada. Only Maxine Beecher and Mayor Linda Cohen remain on the council from the seven who voted on the Clear Skies Ordinance.

In March 2015, the council voted to hire Boston law firm Foley Hoag to defend the Clear Skies zoning amendment. According to City Finance Director Greg L’Heureux, that defense has cost $1.39 million through Oct. 31. Against that bill, the city has taken in $162,587 in private donations to a special defense fund, some as small as $20, from supporters of the tar sands ban.

The fight over tar sands in South Portland dates to November 2012 and an energy filing in Canada. That’s when pipeline giant Enbridge submitted an application to Canada’s National Energy Board to reverse the flow of one of its major lines to carry “heavy crude” oil out of western Canada. That sent environmental activists to Maine as they expanded protests that began gestating the previous summer, staging demonstrations and rallying residents against the possibility of tar sands entering Maine via the 236-mile-long Portland Pipe Line Corp artery, which runs from Canadian refineries, through Vermont and New Hampshire and past Sebago Lake, to South Portland.

First built in 1941 in the run-up to World War II, the pipeline was made to pump crude oil offloaded from tankers in South Portland to Montreal for refining. The current infrastructure includes two lines – an 18-inch pipe dating to 1950 and a 24-inch line built in 1965.

Portland Pipe Line Corp got a city application approved in 2008 to expand its facilities preparatory to reversing the flow of oil, so that it could take in refined oil from Canada. However, those plans stalled with the start of the Great Recession and the local permits expired.

However, as concern over tar sands began to grow, the city held a public hearing at the behest of then Mayor Tom Blake. More than 400 people packed the Nelson Street community center to hear pipeline officials say that they “continue to seek all opportunities to maximize the use of our assets,” they had “as of yet received no request to reverse flow in the line.”

That did not satisfy members of newly formed activist group Protect South Portland, however, and its members soon petitioned the council to call a vote on a draft ordinance it submitted to keep tar sands from flowing through the city.

In the run-up to that vote, Protect South Portland activists discovered that while Portland Pipe Line Corp 2008 expansion permits with the city had expired, the environmental green light given by the Maine Department of Environmental Protection for the “volatile combustion chamber” smokestacks – needed to burn off additives put in tar sands to make it viscous enough to pump though the pipeline – remained active and on file. In what it described as a show of good faith meant to prove it had no current intent to act on those permits, Portland Pipe Line Corp voluntarily surrendered them back to the state.

Following what was by all accounts a bitter and divisive campaign, the tar sands ban narrowly failed at the polls, 4,261 to 4,453. But the council quickly regrouped and by December had adopted a moratorium on diluted bitumen – even as Portland Pipe Line Corp officials continued to say, “We have no project” – while also establishing a three-member study committee. However, the council charge to that ad hoc committee was, from the start, to draft an ordinance that would answer objections to the one that had just been voted down, while still achieving the same objectives, to keep tar sands from flowing through Portland Pipe Line Corp’s South Portland terminals.

At the time, Portland Pipe Line Corp Spokesman Chris Gillis continued to say the company had “no proposed, pending or imminent oil sands project.

“This has been a one-sided process from the start,” Gillis complained. “The council’s focus has been on arriving at a predetermined conclusion, rather than on an impartial, collaborative effort for the good of South Portland. It is unfortunate that the council feels the need to act so rashly, without the benefit of trying to first understand the subject matter that it seeks to regulate.”

Portland Pipe Line Corp refused to participate in any meetings of the ad hoc study committee, which eventually created the Clear Skies ordinances, which chose not to attack tar sands directly, instead approaching the issue as a zoning amendment designed to ban the bulk loading of crude oil anywhere along the South Portland waterfront.

In its legal challenge to that new rule, Portland Pipe Line Corp has claimed any such ban is unconstitutional because it interferes on both interstate and international commerce, properly regulated by the U.S. Congress, while also devaluing the only such pipeline to the Atlantic seaboard.

South Portland first tried to get the case thrown out not under the pretext that Portland Pipe Line Corp officials had said repeatedly that the city was trying to ban something it had “no plans” to do anyway, but because it couldn’t run tar sands through South Portland if it wanted to.

The argument went that oil from western Canada and the northern mid-west of the United States has to run through Enbridge’s “Line 9,” and virtually all the pipeline capacity for that route is already spoken for.

According to Justice Woodcock, “The city maintains that the available capacity in the pipeline would be insufficient to supply PPL with enough oil to make shipping out of South Portland harbor economically feasible.”

On Aug. 24, Woodcock ruled against the motion to dismiss, taking pipeline CEO Thomas Hardison at his word that, “PPL intends to pursue the reversal if its challenge to the ordinance is successful,” and pointing to “at least four reasons that PPL’s project is not so unlikely to succeed as to make the case unripe.”

One of those points was based on Hardison’s assertion that TransCanada Corp. was scheduled to complete its Energy East pipeline project by 2021 and, once completed, “Mr. Hardison thought it would free up volumes of oil for transport down the PPL pipeline to South Portland.”

The 2,796-mile long Energy East line would have carried up to 1.1 million barrels of crude oil and diluted bitumen per day from Western Canada to a marine terminal in Saint John, New Brunswick, between Maine and Nova Scotia. That reportedly would have cleared the Enbridge No. 9 bottleneck and allowed Portland Pipe Line Corp to begin taking some product – as much as 100,000 barrels per day, Portland Pipe Line Corp claims – but for the South Portland ordinance which disallows it.

However, on Oct. 5 TransCanada announced it had abandoned the Energy East project. That day, city attorneys made an emergency filing asking the court to delay Woodcock’s summary judgement. On Oct. 20, the city submitted a new motion to dismiss, based on market conditions.

With Portland Pipe Line Corp shipments to Canada having flowed to a trickle, and the spigot apparently closed on new flows from Canada, the company does not have access to “committed volumes from potential shippers” to finance the $125 to $185 million it would cost to undertake a reversal project.

The city claimed that 275,000 of the 300,000 barrels of oil flowing through Enbridge No. 9 are “spoken for” and that Portland Pipe Line Corp can’t make the numbers work on just 25,000 barrels per day.

For it’s part, Portland Pipe Line Corp countered that the Energy East announcement was actually good news, because “it ensures that PPL will continue to be the sole operator of a crude oil pipeline running to the Atlantic coast.”

Meanwhile, Portland Pipe Line Corp argued that city attorneys only mentioned the Energy East development in two paragraphs of its 20-page motion to dismiss. The rest of the document, it noted was filled with “the same justifiability arguments” from prior motions and orders on which Woodcock has already ruled.

For his part, Woodcock decided he “does not need to resolve the complicated question,” of who is correct over current market conditions and Portland Pipe Line Corp’s ability to secure enough business to justify flipping its historic business model, and taking in oil from Canada, rather than shipping crude to it.

“This is because whatever the state of the oil market today, it can be said with some confidence that it will not be the same four or so years from today,” Woodcock wrote.

“If the time that it will take to resolve this case, including an inevitable appeal, is added to the time that it will take to complete the reversal, in its best case, PPL will not complete the reversal project for at least another three or four years,” Woodcock wrote. “Three or four years is a lifetime in the oil business.”

Staff Writer Wm. Duke Harrington can be reached at news@inthesentry.com

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