PORTLAND, Maine — National oil and business groups are worried a South Portland ban on loading crude oil onto ships will prompt other local governments to make rules that effectively block importation of oil harvested from abundant shale deposits in Canada.
The controversial ordinance has caught the ire of the U.S. Chamber of Commerce and various oil industry groups that this month filed briefs in support of a federal lawsuit seeking to strike down the city’s Clear Skies Ordinance as a violation of the U.S. Constitution and other federal laws.
Those groups wrote they are concerned about the precedent set if a federal court allows the local law to stand.
“Ordinances like the one the City enacted here … set a dangerous precedent that, if adopted elsewhere, would seriously disrupt interstate and international markets and create a patchwork of regulation that the Constitution and numerous statutes were designed to prevent,” the U.S. Chamber of Commerce wrote in its brief.
The city argues that Maine law gives it and other municipalities wide rulemaking authority, under a system called “home rule,” including the ability to craft rules regarding air quality. Not all states give municipalities that level of authority.
Still, the national chamber, the American Fuel and Petrochemical Manufacturers, the American Petroleum Institute, the Association of Oil Pipe Lines and the International Terminals Association want a federal judge to find the city overstepped its bounds.
To make that point, Portland Pipe Line and the friendly parties also argued that the city’s ordinance was not primarily about air quality but about limiting the export of tar sands oil from western Canada.
Tar sands come from western Canada, primarily Alberta, and consist of bitumen, which is a solid or semisolid petroleum deposit, mixed with sand, water and clay. It does not contain tar.
“The Ordinance is, put simply, an outright ban on the importation of crude oil into the United States from Canada by shutting down the only feasible option that [Portland Pipe Line Corp.] has available to it to import crude oil across the U.S.-Canada border,” the oil industry groups wrote in a brief.
The city, similarly, argued that striking down the law would create ” new oil transportation sanctuaries,” preventing state or municipal law from regulating land use on property used to load crude oil onto ships.
The legal battle comes as President Donald Trump on Tuesday breathed new life into key pipeline proposals that would import oil from Canada and deliver it to the Gulf Coast. Demand for those pipelines is driven by the same shifts in global markets that are driving demand to export Canadian oil through South Portland.
The national Conservation Law Foundation has argued in the city’s favor, writing in a “friend of the court” brief that the city has the authority and obligation “to protect the health and safety of its residents, to enhance the quality of life in the municipality, and to plan and control the municipality’s growth and development.”
The Portland Pipe Line Corp., which has a pipeline running from Quebec to South Portland filed the federal lawsuit against the city and its code enforcement director in February 2015. The city’s voters in 2013 rejected a ballot question altering zoning to prohibit loading crude oil from tar sands onto ships.
While the national groups fight over the broader implications of a federal court ruling in the case, state business groups including the Associated General Contractors of Maine and Maine Energy Marketers Association also have sought to influence the case.
Portland Pilots Inc., which operates tugboats that guide large ships into the harbor, reported that its traffic has declined dramatically, forcing it to make cuts and move out of an office on Union Wharf.
The company said as of October it piloted just 11 crude oil tankers into the harbor in 2016, which was down from 226 in 2004. The number has steadily declined since that year.
If the pipeline is reversed, the company argued, it expects 48 to 72 crude oil tankers would enter the harbor, giving it more regular business and keeping skilled pilots employed. That, it said, would make the harbor safer by ensuring that skilled pilots are available to guide ships into harbor.
The ability and intention of the Portland Pipe Line Corp. to reverse the flow of its pipeline is a practical matter for the local firms, but a point the city argues has legal significance to its case.
The city has asked the court to dismiss the suit by arguing that the company doesn’t have real plans to reverse the flow of its pipeline. Therefore, it hasn’t prevented Portland Pipe Line Corp. from doing anything.
In legal terms, the city argues that makes the company’s claims “unripe” for hearing in federal court and that it does not have standing to make the complaint at all.
The company, in turn, has argued that striking down the ordinance is a first step to saving the business that has struggled as Canadian demand for oil imports has plummeted.
“[Portland Pipe Line] must strike down the ordinance to advance the only economic strategy it has to stay in business,” the company wrote in November.
The city has disputed that claim, saying its representatives found during discovery in the case that the company has no specific plan for reversing the flow of its pipeline, despite having spent $5 million to craft such a plan in 2008 and 2009.
The city wrote on Monday that the friend of the court briefs filed by national groups such as the U.S. Chamber all assume that such a plan is in place, which it called one of many “fatal flaws” in their argument.
“Logically,” the city argued in its reply filed Monday, “an ordinance cannot discriminate against commerce when there is no evidence of foreseeable commercial activity, the quantity of such commerce, or what form it would take.”