PORTLAND, Maine — South Portland will have to pay to defend its environmental ordinance that effectively stops oil from being piped into Maine from Canada, the state’s highest court ruled Tuesday — a decision that will leave local taxpayers to foot a legal bill that has already topped $1 million.
The Maine Supreme Judicial Court ruled that the city’s legal insurance does not need to cover the expense of fighting a lawsuit by the Portland Pipe Line Corp., which sued South Portland over a 2014 ordinance that blocked the company from pumping Canadian tar sands oil into tankers in city waters.
South Portland City Manager Scott Morelli said the city is disappointed by the decision but remains committed to defending its so-called Clear Skies ordinance. He wouldn’t comment directly on whether the city has the funds to sustain its legal fight against the privately held pipeline company.
“I’m not going to stray to far into commenting on that case or the funding other than to say the council is committed to defending the city’s rights in the matter,” he said.
Since 2015, South Portland has spent $1.07 million defending its ordinance, though it has not yet paid its outside lawyers for February or March, Morelli said. The city has has $423,667 on hand to continue the legal fight, according to the manager.
The case has not yet gone to trial, and any decision by the U.S. District Court in Portland could be appealed to 1st U.S. Circuit Court of Appeals in Boston, a process that could take years.
The Portland-Montreal pipeline has long carried oil across New England to refineries in Montreal. But as global oil markets have shifted in recent years the pipeline has gone mostly dry, giving the company incentive to try to carry oil south. The company did not respond to requests for comment.
South Portland’s Clear Skies ordinance was born out of a push by environmentalists who are opposed to importing oil drawn from the Canadian tar sands, which they say gives off higher carbon emissions than oil derived from other extraction methods.
Tuesday’s state court ruling was not in the federal case over the Clear Skies ordinance but rather in a spin-off state case between South Portland and the Maine Municipal Association, which operates a fund that members use to defend against lawsuits.
Although South Portland is a member, the association refused to cover the city’s cost defending the ordinance, prompting the city to sue to try and force the matter.
The Supreme Judicial Court upheld a lower court’s ruling that the association is not on the hook for South Portland’s bill, finding that any damages the city may incur in the federal case are beyond the scope of its coverage agreement. Lawyer Jim Bowie said the organization was pleased with the decision, which cannot be appealed.
South Portland’s agreement with the Maine Municipal Association excludes coverage for suits over lost land or property rights “resulting from governmental action,” according to the court opinion.
The pipeline company’s suit claims that the city ordinance robs it of some of the pipeline’s value, as well as arguing that the ordinance is unconstitutional because it interferes with interstate trade, discriminates against Canadian interest and undermines the regulatory power of the federal government.
South Portland Mayor Patricia Smith said the city council will evaluate how the decision impacts the financing of its legal defense. The council will meet in executive session Monday to discuss the case with its lawyers.