United States District Court, D. Maine
ORDER ON DEFENDANTS' CONSOLIDATED MOTION TO
DISMISS UNDER RULE 12(b)(1)
A. WOODCOCK, JR. JUDGE
Court finds that if it is legally permitted to do so,
Portland Pipe Line Corporation intends to and may be able to
reverse the flow of oil in its South Portland to Montreal
pipelines from north to south and therefore its claim
challenging the legality of the city of South Portland's
Clear Skies ordinance is justiciable.
order for a federal court to hear and decide a case, there
must be a real dispute. In this case, Portland Pipe Line
Corporation (PPLC) has brought suit to challenge the legality
of the city of South Portland's so-called Clear Skies
ordinance, which prohibits all bulk loading of crude oil at
South Portland harbor and the improvement of existing or the
installation of new facilities for the purpose of bulk
loading of crude oil into any marine tank vessel in South
owns two pipelines that run from South Portland, Maine to
Montreal, Quebec. Currently PPLC pumps oil south to north,
beginning in South Portland and ending in Montreal, where it
is brought to refineries. The premise of PPLC's lawsuit
is that PPLC has concrete plans to reverse the flow of oil in
its pipeline, and that the current South Portland Clear Skies
ordinance prohibits the loading of oil onto ships in South
Portland harbor, thereby effectively barring the pipeline
City moved to dismiss PPLC's lawsuit under Federal Rule
of Civil Procedure 12(b)(1). Defs.' Consolidated Mot.
to Dismiss Pursuant to Rule 12(b)(1) and Mot. for Summ.
J. (ECF No. 88) (Defs.' Mot.).
Specifically, the City challenged whether PPLC will actually
do what it claims it will do: whether-if given
permission-PPLC will, in fact, reverse the flow of the
pipeline, because in the City's view to do so would be
not just non-economical, but impossible. This is true, the
City said through its expert, Sarah Emerson, because the oil
from the oil-producing areas in the west of Canada and in the
northern mid-west of the United States has to run through the
so-called Enbridge Line 9, and the pipeline capacity in
Enbridge Line 9 is already spoken for. The City maintains
that the available capacity in the pipeline would be
insufficient to supply PPLC with enough oil to make shipping
out of South Portland harbor economically feasible.
disagrees. Pls.' Mem. in Opp'n to Defs.' Mot.
to Dismiss and for Summ. J. (ECF No. 127). It points out
that the City's ordinance prevents PPLC from seeking
potential shippers and while the ordinance stands, PPLC
“cannot arrange its future.” Id. at 3.
It also disputes the City's contention that the reversal
project is economically unsound. Id. at 2-53. In
reply, the City reiterates its position that PPLC's
claims are nonjusticiable because PPLC had no “concrete
plan to violate the Ordinance immediately or nearly
so.” Reply to Pls.' Opp'n to Defs.'
Consolidated Mot. to Dismiss and Mot. for Summ. J. at 2
(ECF No. 142).
11, 2017, the Court issued an interim order on the
Defendants' consolidated motion to dismiss under Rule
12(b)(1), which sets forth in detail the background to this
Order. Interim Order at 1-12 (ECF No. 156). In that
Order, the Court mandated further proceedings to resolve
whether it had subject matter jurisdiction in this case.
Id. at 1, 11-12.
Court's interim order was occasioned by the peculiar way
the parties had presented the issue. The City proffered
evidence in its motion through its expert Sarah Emerson that
PPLC would be highly unlikely to actually be able to pursue
reversal of the pipeline, even if it obtained permission to
do so. In response, PPLC decided not to present
countervailing evidence that it was indeed planning to
reverse the flow of the pipeline, regardless of what Ms.
Emerson said. Instead, PPLC raised evidentiary objections as
to whether the Court should consider Ms. Emerson's
opinion, since she was relying on the truth of reports
prepared by other individuals in forming her own conclusions.
This, PPLC maintained, violated the Rules of Evidence. The
Court was dissatisfied with the state of the record and was
extremely reluctant to issue a decisive order based on the
application of a relatively technical niche of the Rules of
Evidence. Instead, as the Interim Order stated, the Court
preferred to render a decision on the merits, having heard
from PPLC and the City's witnesses.
testimonial hearing on the justiciability motion was held on
August 9, 2017. PPLC presented the testimony of Thomas
Hardison, its President and Chief Executive Officer, and the
City presented the testimony of Sarah Emerson, its expert.
Mr. Hardison's entire career has been with PPLC. He
started with PPLC as a casual laborer forty-three years ago
and rose through the ranks until 2015, when he was named its
president. Mr. Hardison described the history of the
pipeline, emphasizing the impact that the infusion of tar
sands oil mostly from Alberta, Canada and of shale oil mostly
from North Dakota, has had on the PPLC South Portland to
Montreal pipeline. He testified, for example, that in 2010,
132 vessels unloaded 275, 000 barrels of oil per day in South
Portland for shipping to Montreal and in 2016, only 11
vessels unloaded only 23, 000 barrels per day for shipping
northward. Indeed, Mr. Hardison testified that PPLC had
infused nitrogen into the 18” pipeline to prevent
corrosion and was restricting its minimal shipping to the
24” pipeline. Mr. Hardison presented the reversal as a
matter of corporate life or death. He described PPLC as being
on life support for northbound oil and he said that PPLC
needed the reversal project for its very survival as a
business. On cross-examination, he stood by his testimony
that PPLC would commence the reversal project once it
obtained permission to do so.
City's witness, Sarah Emerson, is a true expert,
extremely knowledgeable and smart about oil markets. She is
the President and Managing Director of Energy Security
Analysis, Inc., a business that collects data on oil markets,
analyzes that data, and prepares forecasts about the oil
market. She has been working in this field for thirty years
and has worked all over the world for many of the big,
medium, and little players in the oil world. Like Mr.
Hardison's testimony, Ms. Emerson's testimony was
detailed and occasionally arcane, but she focused on two
major points: first, that there would not be enough available
oil for PPLC to ship to South Portland, and second, that the
price differential, the spread, between the per barrel cost
of PPLC oil and cheaper oil available elsewhere would not
justify the cost of shipment through the pipeline.
Enbridge Line 9 capacity, Ms. Emerson testified that Enbridge
Line 9 has the capacity to move 300, 000 barrels per day and
she stated that three Montreal refiners, Valero Energy,
Suncor Energy, and Imperial Oil Company, have the right to
about 275, 000 of those barrels. By order of the National
Energy Board of Canada, she explained the remaining 25, 000
is left to operators on the spot market and, even if PPLC
could somehow gain access to those barrels and transport 25,
000 barrels per day, the volume would be too low to be
economically justifiable. She also opined that customers in
the east coast of the United States and northern Europe could
get oil cheaper from the North Sea and Nigeria than the cost
of oil coming out of the PPLC pipeline in South Portland. It
is an understatement to say that neither PPLC nor the City
accepted the other's viewpoints.
issues this motion raises fall under the general rubric of
justiciability.Erwin Chemerinsky, Fed. Juris. at 42 (6th
ed. 2012) (“The justiciability doctrines determine
which matters federal courts can hear and decide and which
must be dismissed”). More specifically, the City claims
that the PPLC lawsuit must be dismissed for lack of standing
and lack of ripeness. Defs.' Mot. at 3. For a
party to have standing, it must show that a decision in its
favor “will relieve a discrete injury” to it.
Weaver's Cove Energy, LLC v. Rhode Island Coastal
Res. Mgmt. Council, 589 F.3d 458, 467 (1st Cir. 2009);
Penobscot Nation v. Mills, 861 F.3d 324, 336 (1st
Cir. 2017). For a claim to be ripe, the court's review of
the case must be neither “advisory” nor
“irrelevant to the ultimate approvability of the
project.” Weaver's Cove, 589 F.3d at
467. (quoting City of Fall River, Mass. v.
F.E.R.C., 507 F.3d 1, 8 (1st Cir. 2007)); Peno ...