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Portland Pipe Line Corp. v. City of South Portland

United States District Court, D. Maine

December 12, 2017

CITY OF SOUTH PORTLAND, et al., Defendants.



         The city of South Portland filed another motion to dismiss this case following news that another pipeline company, TransCanada, announced that it will not pursue construction of its proposed Energy East pipeline. Despite the recent announcement, the Court still finds that if it is legally permitted to do so, Portland Pipe Line Corporation intends to and is sufficiently likely to be able to reverse the flow of oil in its South Portland to Montreal pipelines from northbound to southbound to make its claim challenging the legality of the City's Clear Skies ordinance justiciable.

         I. BACKGROUND

         In 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) brought suit to challenge the legality of the city of South Portland's (the City) so-called Clear Skies ordinance (the 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 onto any marine tank vessel in South Portland harbor.

         PPLC 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 it has concrete plans to reverse the flow of oil in its pipeline, and that the Ordinance prohibits the loading of oil onto ships in South Portland harbor, thereby effectively barring the pipeline reversal.

         On November 17, 2016, the 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). Specifically, the City challenged whether PPLC will actually do what it claims it will do: whether-if the Ordinance were not an obstacle-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 virtually all 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.

         PPLC disagrees. On December 20, 2016, PPLC filed a response to the City's motion. Pls.' Mem. in Opp'n to Defs.' Mot. to Dismiss and for Summ. J. (ECF No. 127). It pointed 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, given the bleak outlook PPLC faces if it continues to transport oil northbound. Id. at 2-53.

         On May 11, 2017, the Court issued an interim order on the Defendants' consolidated motion to dismiss under Rule 12(b)(1). 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. The Court held a hearing on the justiciability motion on August 9, 2017. Min Entry (ECF No. 179). PPLC presented the testimony of Thomas Hardison, its President and Chief Executive Officer, and the City presented the testimony of its expert, Sarah Emerson.

         On August 24, 2017, the Court issued an order denying the City's motion to dismiss. Order on Defs.' Consolidated Mot. to Dismiss Under Rule 12(b)(1) (ECF No. 185) (Order). The Court concluded that the case was justiciable. Id. at 1. The Court credited Mr. Hardison's testimony and found that PPLC intends to pursue the reversal if its challenge to the Ordinance is successful. Id. at 7. It also determined that PPLC may be able to accomplish the flow reversal despite Ms. Emerson's testimony about the current unfavorable market conditions. Id. at 7-9. The Court pointed to at least four reasons that PPLC's project is not so unlikely to succeed as to make the case unripe. Id. One reason was the volatility of the oil markets and PPLC's reasonable desire to place a bet that future events will break in its favor. Id. at 8-9. As one example of that volatility and potentially favorable future events, the Court mentioned the scheduled completion of TransCanada's Energy East pipeline. Id. at 9 (“For example, Mr. Hardison said that TransCanada is scheduled to complete its Energy East pipeline project by 2021 and, once completed, Mr. Hardison thought it would free up volumes of oil for transport down the PPLC pipeline to South Portland”). After concluding the case was ripe, the Court set about resolving the long-pending cross motions for summary judgment. Id. at 11.

         On October 5, 2017, the City made an emergency filing asking the Court to stay the pending summary judgment proceedings. Defs.' Emergency Mot. for Temporary Stay of Summ. J. Proceedings (ECF No. 186). The City presented new evidence that TransCanada had cancelled its plans for the Energy East pipeline. Id. Attach 1. At a telephone conference on October 6, 2017, the City indicated that it intended to file another motion to dismiss. Min. Entry (ECF No. 188). The Court stated that it would allow oral arguments on that new motion to dismiss, but it denied the motion for a stay of the summary judgment proceedings. Oral Order (ECF No. 189).

         On October 20, 2017, the City filed its renewed motion to dismiss. Defs.' Renewed Mot. to Dismiss Pursuant to Rule 12(b)(1) (ECF No. 194) (Defs.' Mot.). PPLC filed its response on November 2, 2017. Pls.' Obj. to Defs.' Third Mot. to Dismiss Pursuant to Rule 12(b)(1) (ECF No. 195) (Pls.' Opp'n). The City filed its reply on November 10, 2017. Reply Mem. in Supp. of Defs.' Renewed Mot. to Dismiss Pursuant to Rule 12(b)(1) (ECF No. 196) (Defs. Reply). The Court heard oral arguments on November 21, 2017. Min. Entry (ECF No. 198).


         A. Untimely Motion to Reconsider

          PPLC argues that the City's new motion to dismiss is, in truth, an untimely motion to reconsider the Court's August 24, 2017 Order on the City's old motion to dismiss. Pls.' Opp'n at 4. PPLC explains that the City only mentions the Energy East announcement in two paragraphs of its 20-page motion, and the balance of the document repeats the same justiciability arguments from prior motions and orders. Id. Citing the time-restricted provision for motions for reconsideration in the District's Local Rules, PPLC maintains that the City's new motion to dismiss is time-barred because the City filed the motion more than 14 days from the date of the contested order. Id. at 5 (citing D. Me. Local R. 7(g)).

         The City replies that parties can challenge subject matter jurisdiction at any point during the litigation and they cannot waive the issue. Defs. Reply at 5-6. The City also contends that, even if the motion to dismiss were actually a motion for reconsideration under Local Rule 7(g), the 14-day deadline contains an exception for newly available material evidence like the cancellation of the Energy East pipeline. Id. At oral argument, the City insisted that its motion is truly a new motion to dismiss, not a motion for reconsideration dressed as a motion to dismiss.

         B. Justiciability

         1. The City's Motion

         The City begins by restating the standards for ripeness and standing. Defs.' Mot. at 10-12. The City reiterates the obstacles to PPLC's accomplishing flow reversal, namely that it needs financing for the approximately $125-to-$185 million reversal project, that it needs to attract committed volumes from potential shippers to get that financing, and that there are no available uncommitted volumes from the only other pipeline in operation, Enbridge Line 9. Id. at 12-14. The City also argues that PPLC does not actually intend to imminently pursue the reversal project because it “resolved in June 2013 not to market any such project until the success of Enbridge Line 9 and Energy East were both ‘assured'” and Energy East is now canceled. Id. at 14-16.

         The City likens this case to McDonough v. City of Portland, 855 F.3d 452 (1st Cir. 2017). Defs.' Mot. at 16-17 (citing McDonough, 855 F.3d at 453-54). In McDonough, the First Circuit required the plaintiff to prove there was more than a “possibility” that the plaintiff would compete for the permit at issue in the case, but rather, there must be a “likelihood” that he ...

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