The city of South Portland is blocking the Trump administration’s push to promote cross-border transmission of crude oil from Canada to the coast of Maine, a lawyer for the Portland Pipe Line Corp. argued Tuesday in federal appeals court in Boston.

The city’s attorney argued that if the court backs the company’s appeal, it would effectively create a nationwide exemption from zoning restrictions for any new oil pipelines installed anywhere, including in residential areas.

The 1st U.S. Circuit Court of Appeals heard oral arguments Tuesday in the pipeline company’s effort to overturn a 2018 federal district court ruling that upheld South Portland’s 5-year-old Clear Skies ordinance. A ruling is expected in the coming weeks or months.

The ordinance, approved by the South Portland City Council on July 21, 2014, effectively blocked the company from potentially reversing the flow of its pipeline to bring crude oil from western Canada to its shipping terminals on Portland Harbor.

Since the company filed its lawsuit in February 2015, the city has spent $2.4 million defending the ordinance and received $173,603 in donations to its Clear Skies Legal Defense Fund.

The company contends that the ordinance is preempted by state and federal law, violates the Commerce Clause of the Constitution and adversely impacts national and international oil trade. The clause gives Congress the power to regulate interstate and foreign trade.

The company’s lawyer argued Tuesday that the city should not be allowed to block the Canadian-owned subsidiary of ExxonMobil, Shell and Suncor Energy from bringing crude into the United States from the pipeline’s northern terminus in Montreal.

“The question before this court on appeal is narrow,” said Catherine Connors of Pierce Atwood in Portland. “May a city enact an embargo on the transportation of crude oil through a harbor and 200 miles of a cross-border, presidentially permitted pipeline because it believes that the transportation of oil from Canada is dangerous?”

Connors said the court must decide “whether any town, any harbor city can shut down all maritime transportation in crude oil.”

The panel of judges interrupted Connors several times, clarifying that the ordinance applies only within South Portland and doesn’t specifically name the pipeline company.

When Judge O. Rogeriee Thompson said the company “is perfectly free to convince some (other) city in Maine to allow this facility to be set up there,” Connors noted that the pipeline cost millions to build in 1941 and can’t be moved because it needs a deep harbor to handle oil tankers.

While clarifying the ordinance’s impact on foreign policy, Connors said that “it’s for the president to decide whether the oil should flow across the border” and that the Trump administration “wants to encourage the cross-border transmission of oil.”

“Well,” Thompson responded, “the president’s not here.”

The city’s lawyer argued that a municipality can exercise its traditional police powers to amend zoning ordinances to prevent a new use that would harm the health and welfare of its citizens.

“Despite Portland Pipe Line’s protestations, the ordinance does not shut down this pipeline,” said Jonathan Ettinger of Foley Hoag, a Boston law firm. “That is simply not true. What it does is prohibit the bulk loading of crude oil onto ships and prohibit the construction of structures associated with that land use.”

In August 2018, a judge for the U.S. District Court in Portland ruled that South Portland has the right to enact zoning ordinance amendments prohibiting an activity that has never occurred in the city – the bulk loading of Canadian crude onto oil tankers.

The company actually has two underground pipelines but has employed one since World War II to transport foreign crude from waterfront terminals in South Portland, through New Hampshire and Vermont, to refineries in Montreal. Demand for foreign oil has dried up in recent years as production of crude from controversial oil or tar sands increased in western Canada and North Dakota.

As a result, “faced with the shutdown of its business,” the pipeline company and the American Waterways Operators challenged the city’s ordinance, claiming that “tens of thousands of workers … would be devastated by the loss of port traffic,” according to the company’s appeals brief.

“The ordinance in fact succeeded in stopping the flow of oil from Canada and has shuttered the pipelines,” the company’s brief states. “If enacted elsewhere, U.S. ports would close to interstate and international trade in crude oil.”

Ettinger argued that Congress intended the city to have the power to control local zoning and that the company can still bring in oil from the Middle East and elsewhere for shipment via the pipeline to Montreal.

“I understand there’s little demand for that, but that’s not the city’s fault and it’s not the result of the ordinance,” Ettinger said.

Ettinger said the city had “sincere concerns” about the impact of a bulk oil loading project that the pipeline company proposed several years ago, including air emissions-related public health risks, aesthetic and noise issues and interference with redevelopment opportunities.

Unlike unloading oil from tankers into the pipeline, loading oil from the pipeline into tankers would “cause adverse respiratory outcomes, including bronchoconstriction, airway hyperresponsiveness, lung function decrements, asthma severity or attacks, and hospital admissions and emergency department visits for asthma for city residents,” the city’s appeals brief states.

The South Portland Planning Board approved a proposal to reverse the pipeline’s flow in 2009, when the city planner indicated in an email to a company representative that he had “no concerns” with the plan. The board extended the approval through 2012, but the company never started the project and by 2013 it was assuring the public there was no active plan to reverse the pipeline’s flow.

Tom Hardison, CEO of the pipeline company, issued the following statement Tuesday: “We are grateful for the opportunity to have our case heard today. Given that this matter remains in litigation, we will have no further comment.”

The city issued no formal statement Tuesday.

The stated goals of the Clear Skies ordinance include protecting public health and the environment, preserving traditional land use authority and promoting future development consistent with the city’s comprehensive plan. It followed a broader waterfront protection proposal that city voters narrowly rejected in a 2013 referendum.

Environmental groups and others who supported the Clear Skies ordinance say tar sands oil is more hazardous to load onto ships, transport through pipelines and clean up if spilled. Oil industry representatives dispute those claims, saying the ordinance is unjustified and jeopardizes business development, jobs and future crude oil shipping.

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