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Portland Pipe Line Corp. v. City of South Portland

United States District Court, D. Maine

August 8, 2017

PORTLAND PIPE LINE CORPORATION, et al., Plaintiffs,
v.
CITY OF SOUTH PORTLAND, et al., Defendants.

          ORDER ON DEFENDANTS' MOTION IN LIMINE

          JOHN A. WOODCOCK, JR., UNITED STATES DISTRICT JUDGE.

         The Court denies the Defendants' motion in limine to exclude from evidence any testimony or documents concerning the volume of crude oil delivered to Montreal East from Enbridge Line 9B, but defers ruling on whether the failure to disclose was harmless and, if not harmless, whether a remedy short of exclusion is in order.

         I. BACKGROUND

         On February 6, 2015, Portland Pipe Line Corporation (PPLC) and the American Waterways Operators (AWO) (collectively, Plaintiffs) filed a nine-count complaint in this Court against the city of South Portland and its code enforcement officer (collectively, Defendants). The Complaint challenges the validity of a municipal ordinance that prohibits the “bulk loading” of crude oil onto marine vessels in the harbor of South Portland, Maine. Compl. for Declaratory and Injunctive Relief (ECF No. 1) (Compl.). PPLC owns and operates the United States portion of a pipeline system that stretches from South Portland, Maine, to Montreal East, Quebec. Id. ¶ 11. PPLC's parent company, Montreal Pipe Line Limited (MPLL), operates the portion of the pipeline system that lies within Quebec. Pls.' Statement of Material Fact ¶ 6 (ECF No. 89) (PSMF). At the time the Plaintiffs filed the Complaint in February 2015, PPLC and MPLL transported crude oil northward from South Portland to Montreal East at a rate of approximately 2.4 million barrels of oil per month. Compl. ¶ 11. The practical effect of the Ordinance is to prevent PPLC and MPLL from reversing the flow of its existing pipeline infrastructure to transport oil south from Montreal to vessels in the South Portland harbor.

         On March 31, 2015, the Defendants filed a motion to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), arguing, among other things, that the Plaintiffs' claims are unripe and that the Plaintiffs lack standing. Defs.' Mot. to Dismiss the Compl. Pursuant to Rule 12(b)(1) (ECF No. 16); Mem. of Law in Supp. of Defs.' Mot. to Dismiss Pursuant to Rule 12(b)(1) (ECF No. 17). Specifically, the Defendants argued that the Plaintiffs have no concrete plan to reverse the flow of oil and thereby violate the Ordinance, that the present effect of the Ordinance on the Plaintiffs consists of a “threadbare claim of economic uncertainty, ” and that the Plaintiffs' claims rest on a “chain of contingencies, including whether PPLC ever decides to bulk load crude oil in the City and whether it initiates a process for federal, state and local approvals that may conflict with the Ordinance.” Id. at 11-18.

         On February 11, 2016, the Court issued an order denying the Defendants' Motion to Dismiss. Order on Defs.' Mot. to Dismiss (ECF No. 29). Viewing the facts in the light most favorable to the Plaintiffs, the Court concluded that “but for the Ordinance, PPLC would commence plans to reverse the flow of crude oil and would begin marketing that oil.” Id. at 38-38. However, the Court cautioned that “it remains to be seen whether PPLC will amass a set of facts sufficient for the Court to make its legal determinations [regarding justiciability] . . . .” Id. at 40.

         Subsequent to the Court's Order, the parties engaged in discovery, and on November 17, 2016, the parties filed cross motions for summary judgment with supporting statements of material facts. Pls.' Mot. for Summ. J. (ECF No. 87); PSMF (ECF No. 89); Defs.' Consolidated Mot. to Dismiss Pursuant to Rule 12(b)(1) and Mot. for Summ J. (ECF No. 88) (Defs.' Mot. for Summ. J. and to Dismiss); Defs.' Rule 12(b)(1) and Loc. R. 56(b) Statement of Undisputed Material Facts [Redacted Verion] (ECF No. 95). As part of their motion for summary judgment, the Defendants also renewed their motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). Defs.' Mot. for Summ. J. and to Dismiss at 2-3.

         To support their claim that the matter is not ripe, the Defendants argue that there is not a sufficient supply of oil flowing into MPLL's facilities in Montreal East to make PPLC's flow reversal project economically feasible. Id. at 15-16. Here, the Defendants rely on their expert, Sarah Emerson. See Decl. of Sarah Emerson, Ex. 1, Mem. for City of South Portland at 7-9 (ECF No. 91) (Emerson Decl.). Ms. Emerson explains that there are two sources of crude oil currently available to supply PPLC's reversal project: railway infrastructure transporting crude oil from western Canada to Quebec, and the Enbridge Line 9 pipeline running from Sarnia, Ontario, and terminating at MPLL's facilities in Montreal East. Id. Ms. Emerson estimates that 60, 000 barrels per day would be available by railway but that the high cost of transporting crude oil by rail would make the reversal plan uneconomical given the current market conditions. Id. at 9.

         Focusing on the Enbridge pipeline, Ms. Emerson states that the amount of crude oil from Line 9B that would be available for PPLC to ship south from Montreal East to South Portland “is currently and should remain close to zero.” Id. According to Ms. Emerson, this is because two other refineries in Quebec-Suncor and Valero- have already entered into “take or pay” commitments for ninety percent of the capacity of Line 9. Id. Ms. Emerson concludes that “as a result of the commitments by Suncor and Valero to receive crude oil from Line 9, there is little to no ‘spare' crude oil from Line 9” to feed PPLC's reversal project.” Id. at 6. Because there is no “spare” crude to supply the PPLC reversal project, the Defendants contend that the matter is not ripe. Defs.' Mot. for Summ. J. and to Dismiss at 15-16.

         In response, the Plaintiffs argue that Ms. Emerson lacks personal knowledge of the facts asserted in her declaration, and thus, the facts are inadmissible. Pls.' Resp. to Defs.' Statement of Material Fact ¶ 10 (ECF No. 128). The Plaintiffs further highlight that the Defendants “cannot point to any of the actual shipping agreements between Suncor or Valero and Enbridge [and] can only speculate as to what those agreements provide . . . .” Pls.' Mem. in Opp'n to Defs.' Mot. to Dismiss and for Summ. J. at 8-9 (ECF No. 127). Additionally, the Plaintiffs point out that even if Suncor and Valero receive “significant shipments” of oil from Enbridge Line 9, Enbridge can make oil available for PPLC by expanding the throughput of Line 9 without significant investment. Id. at 9.

         On May 11, 2017, the Court issued an interim order holding in abeyance the parties' motions for summary judgment and ordering further proceedings under Federal Rule of Civil Procedure 12(b)(1) to resolve whether the Court has subject matter jurisdiction. Interim Order at 11-12 (ECF No. 156). The Court expressed discomfort with the factual underpinnings of Ms. Emerson's opinions, but it noted that her testimony “raises substantial questions about the practical ability of the Plaintiffs to move forward with a plan to reverse the flow of their pipelines.” Id. at 10. Rather than rule on a truncated record, the Court requested “additional assistance from the parties to clarify the factual jurisdictional disputes and to provide materials of evidentiary quality to assist the Court's determination.” Id. at 11.

         On June 8, 2017, the Court held a telephone conference in which the parties agreed to schedule a hearing to present evidence on the Court's subject matter jurisdiction. Min. Entry (ECF No. 159). The parties set the hearing date for August 9, 2017. Notice of Re-Sched. Hr'g (ECF No. 165). In anticipation of the hearing, and in accordance with the Court's request, both parties submitted witness lists and summaries of their witnesses' expected testimony. Pls.' Witness List (ECF No. 169); Defs.' Witness List (ECF No. 170); Direct Testimony of Thomas A. Hardison (ECF No. 171) (Hardison Decl.); Defs.' Summ. of Direct Exam. Test. (ECF No. 173).

         The Plaintiffs listed Thomas A. Hardison, the president of PPLC, as their only witness and submitted an affidavit of Mr. Hardison summarizing his expected testimony. Pls.' Witness List at 1; Hardison Decl. ¶¶ 1-70. In his affidavit, Mr. Hardison responded to Ms. Emerson's assertion that the amount of crude oil available for PPLC's reversal project from Enbridge Line 9B “is currently and should remain close to zero”. Hardison Decl. at ¶¶ 47-55. Mr. Hardison referenced “available data” that demonstrate that “[Enbridge] Line 9B can be a sufficient source of volume for PPLC to support flow reversal under current conditions.” Id. at ¶ 54. Mr. Hardison explains that MPLL's Montreal East facilities and Enbridge Line 9B are “physically interconnected” and that all crude oil that arrives in Montreal East through Line 9B passes into and through MPLL's facilities. Id. From there, MPLL can then store the oil in its tanks or direct the oil onward to the Suncor or Valero refineries. Id. Mr. Hardison stated that, as a result of this arrangement, Enbridge provides electronic data reflecting the volume delivered from Line 9B to the main computer that monitors and runs PPLC's pipeline infrastructure. Id.

         According to Mr. Hardison, Line 9B has a stated “nameplate” capacity of 300, 000 barrels per day. Id. at ¶ 55. He claimed that the data indicate that since December 2015, Line 9B has delivered a monthly average of 215, 000 barrels per day to Suncor and Valero through MPLL's facilities in Montreal East, thus leaving 85, 000 barrels per day available under Line 9B's nameplate capacity. Id. Furthermore, Mr. Hardison stated that “there have been days where Line 9B's volume has reached as high as 320, 000 barrels per day”-20, 000 barrels over its nameplate capacity. Accordingly, Mr. Hardison contended that “Line 9B can make available over 100, 000 barrels per day in volume in addition to what Suncor and Valero currently transport on the line.” Id. Mr. Hardison therefore concluded that there is sufficient volume available on Line 9B to support a successful flow reversal project. Id.

         On July 10, 2017, counsel for the Defendants sent an email to counsel for the Plaintiffs, complaining that the Plaintiffs failed to produce the data underlying Mr. Hardison's testimony. Defs.' Mot. in Limine, Attach. 6, July 10, 2017 Email at 2 (ECF No. 172). Accordingly, counsel for the Defendants demanded that the Plaintiffs produce all data that Mr. Hardison used in formulating his testimony. Id. at 2-3. Counsel for the Plaintiffs responded the following day. Defs' Mot. in Limine, Attach. 7, July 11, 2017 Email (ECF No. 172) (July 11, 2017 Email). They denied that the Defendants were entitled to the data. Id. at 2-3. Nevertheless, counsel for the Plaintiffs provided the Defendants with a spreadsheet showing the monthly average of barrels of crude oil per day flowing from the Enbridge Line 9 through MPLL's facilities in Montreal East. Id. at 5. According to counsel for the Plaintiffs, the spreadsheet “represents all of the data available to PPLC that supports Mr. Hardison's testimony about how much additional capacity on Enbridge Line 9 could be available to ship south on PPLC's pipeline.” Id. at 4.

         On July 14, 2017, the Defendants moved in limine to exclude from evidence any data or testimony concerning the volume of crude oil delivered to MPLL from Line 9B. Defs.' Mot. in Limine (ECF No. 172) (Defs.' Mot.). The Plaintiffs responded on August 2, 2017. Pls.' Opp'n to Defs. Mot. in Limine (ECF No. 175) (Pls.' Opp'n). The Defendants replied on August 4, 2017. Reply Mem. in Supp. of Defs.' Mot. in Limine (ECF No. 176) (Defs.' Reply).

         II. PARTIES' POSITIONS

         A. The Defendants' Motion in Limine

         The Defendants move in limine under Federal Rule of Civil Procedure 37(c) and Federal Rules of Evidence 701 and 1006 to exclude from evidence any data or testimony concerning the volume of crude oil passing through MPLL's facilities in Montreal East from the Enbridge 9B pipeline. Defs.' Mot. at 1.

         1. Federal Rule of ...


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