The future of the Portland Pipe Line Corp. will be in jeopardy if it’s not allowed to reverse the flow of its pipeline to bring tar sands oil from Canada to its marine terminal in South Portland, lawyers for the company argued Thursday in U.S. District Court in Portland.

The company is challenging South Portland’s controversial Clear Skies ordinance, passed by the City Council in July 2014, which banned the loading of crude oil into tankers on the city’s waterfront and effectively blocked the company from reversing the flow of its South Portland-to-Montreal pipeline.

In the lawsuit, filed in February 2015, the company claims that the ban is unconstitutional because it interferes with interstate trade, discriminates against Canadian interests, devalues the pipeline and infringes on areas of regulation best left to the federal government.

Catherine Connors, an attorney with Pierce Atwood in Portland, said overturning the ordinance has grown more crucial as U.S. and Canadian petroleum production has boomed and driven down demand for imports to the one remaining refinery in Montreal.

In 2004, 160 million barrels of oil flowed north through the pipeline. Now, with so much cheap oil flowing west to east, she said, the company’s last shipment of foreign oil, delivered on Dec. 8, is still “sitting” in South Portland.

“The situation has gotten worse for the Portland Pipe Line,” Connors said. “It’s even more critical for the survival of the pipeline that it reverse the flow. (The company) has to move forward with this project.”

While the company’s lawyers stressed an urgent need to reverse the pipeline’s flow, attorneys for South Portland questioned why the company still hasn’t submitted any plans or sought any of the permits needed to reverse the pipeline’s flow.

“They haven’t taken any steps to actually do what they claim they want to do,” said Jonathan Ettinger, a lawyer with Foley Hoag in Boston. “If they’re not taking steps, (the claim of urgency) is hollow.”

Ettinger said global market conditions – not the city’s ordinance – are the source of the company’s hardships.

Connors responded that the company cannot submit plans or pursue permits for what would be an illegal operation under the city’s ban. If the ban were overturned, she said, the company would use plans developed nearly a decade ago but never used.

The city is seeking a summary judgment from Justice John Woodcock Jr. to dismiss the lawsuit, saying that it believes the company cannot claim damages from the ordinance because it had “no current plans” to reverse the flow of the pipeline.

“The jig is up for the Portland Pipe Line and the ordinance stops them in their tracks,” Woodcock said, explaining his understanding of the company’s position.

Woodcock is expected to decide within four to six weeks whether to dismiss the lawsuit or allow it to go forward. Whatever he decides, it’s possible the case could wind up before the U.S. Court of Appeals for the First Circuit, where it could languish for as long as three years before being heard, Woodcock said. The First Circuit includes the districts of Maine, Massachusetts, New Hampshire, Puerto Rico and Rhode Island.

Connors pointed out that the flow of one of the company’s two pipelines was reversed from 1987 to 1999 to transport natural gas to South Portland. In 2008 and 2009, the company secured local, state and federal permits and approvals that would have allowed the same pipeline to transport crude oil to South Portland.

The $2.3 million project never happened and the permits have since expired or been revoked or surrendered, according to court testimony and documents.

The city is acting “to protect the health and welfare of its residents and visitors and traditional land use authority to promote future development consistent with the comprehensive plan,” according to the motion to dismiss.

The Clear Skies ordinance was rooted in concerns about air pollution associated with the bulk loading of crude oil into tankers. The company’s previous plan to reverse the pipeline’s flow called for significant modifications to the marine terminal, including the installation of a vapor recovery system with two combustion stacks, each one measuring 70 feet tall and 12 feet in diameter.

The city has set aside $450,000 to defend the ordinance and set up a Clear Skies Legal Defense Fund to solicit tax-deductible donations. So far, it has collected nearly $6,000, said City Manager Jim Gailey.

This court battle has thrust the city into an international struggle over the development of Canada’s abundant tar sands. Environmentalists argue that exporting the oil would accelerate global climate change, while petroleum industry representatives have said the oil is no more damaging than other crude oil.

In court Thursday, the city’s lawyers emphasized the far-reaching impact of Woodcock’s decision and the potential that it could set a precedent for other East Coast communities with waterfront interests. The American Waterways Operators, a trade association representing tugboat, towboat and barge operators across the United States, has joined the company in fighting the city’s ban.

“Other cities and towns are affected by this decision,” Ettinger said.

 


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