Maine pipeline co drops lawsuit over city law that blocked oil export

A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops, British Columbia, Canada June 7, 2021. REUTERS/Jennifer Gauthier
  • Decision to abandon appeal follows Biden admin brief in support of town

(Reuters) - A pipeline operator has abandoned a long-running lawsuit that sought to end a South Portland law that bans the loading of crude oil into tankers along its waterfront to minimize pollution, effectively preventing the company from proceeding with plans to reverse the flow of its operation to bring crude oil from Canada to the Maine coastal town.

Portland Pipe Line Corporation (PPLC) and tugboats industry group the American Waterways Operators on Thursday voluntarily dropped their 1st U.S. Circuit Court of Appeals bid to reverse a lower court ruling that upheld the ordinance, a decision that comes two weeks after the United States filed a brief in support of South Portland.

The local law effectively blocked the operator, a subsidiary of Suncor Energy Inc, from reversing the flow of its 236-mile Maine-to-Quebec line for maritime export from South Portland, in southern Maine. The line currently transports oil from the town's unloading facility to Suncor's Montreal refinery.

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PPLC's executive Chris Gillies told Reuters that the South Portland-based company was dismissing its appeal because it does "not currently have any plans to reverse the flow of crude oil in the Portland-Montreal Pipe Line system."

Under previous ownership "there had been some thought to reverse the direction of flow of crude oil of the" line, he said.

The company is represented by lawyers at Pierce Atwood.

South Portland Mayor Misha Pride said in a statement: "I applaud the decision by Portland Pipe Line, which will allow both them and our community to move forward." The city's lawyers include Jonathan Ettinger of Foley Hoag.

The July 2014 ordinance by the city of 25,000 known for its scenic lighthouses and sweeping views set up a showdown with the oil industry, which called the process illegal.

City legislators said the Clear Skies Ordinance would protect their waterfront and prevent air pollution associated with the storage of bulk crude oil.

In 2015, PPLC and American Waterways Operators kicked off a legal battle with a complaint that accused South Portland of violating the U.S. Constitution's so-called Dormant Commerce Clause, which generally bars states from regulating interstate commerce.

The complaint argued the ordinance violated the clause because its effect was to "control conduct beyond the boundaries of South Portland."

U.S. District Judge John Woodcock in Portland federal court disagreed in a 2018 ruling, finding the "fatal flaw in PPLC’s discrimination argument is that there can be no disparate burden on interstate or foreign competitors when there are no such competitors."

Kristen van de Biezenbos, an assistant professor of energy law at the University of Calgary, said that the case illustrates the ability of cities to adopt bylaws and ordinances that effectively challenge energy infrastructure projects where there is no conflicting state or federal law.

James Coleman, an energy law professor at the Southern Methodist University Dedman School of Law, said the case was "another example of the variety of legal tools that can be used to stop new linear infrastructure projects like pipelines."

The case is Portland Pipe Line Corp., et al v. City of So. Portland, et al, 1st U.S. Circuit Court of Appeals, No. 18-2118.

For Portland Pipe Line Corp., et al: John Aromando of Pierce Atwood.

For City of So. Portland, et al: Jonathan Ettinger of Foley Hoag.

For interested party United States: Lewis Yelin with the U.S. Department of Justice.

Read more:

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Maine port city bans oil loading as Canada seeks export options

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New York-based correspondent covering environmental, climate and energy litigation.