A federal judge on Friday largely rejected arguments from Portland Pipe Line Corp. challenging the legality of South Portland’s municipal ban on crude oil exports.

But U.S. District Judge John A. Woodcock Jr. did not reach a conclusion about whether South Portland’s ordinance violated federal commerce laws, thereby keeping alive a central part of Portland Pipe Line’s lawsuit.

In February 2015, Portland Pipe Line sued in federal court to overturn a 2014 city ordinance banning shipments of crude oil from South Portland’s waterfront. The so-called Clear Skies ordinance effectively prohibits the company from reversing the flow of its pipeline between South Portland and Montreal in order to potentially ship crude from the oil fields of western Canada.

The company had argued the ban was 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.

In Woodcock’s nearly 230-page decision on the complex case, the judge rejected the company’s claims that several federal laws pre-empted South Portland actions and therefore created a conflict with the ordinance. Woodcock also disagreed with Portland Pipe Line’s arguments that the ordinance could interfere with federal maritime law and the U.S. government’s “foreign affairs powers.”

But Woodcock took no stance on the critical question of the ordinance’s impact on interstate and foreign commerce. Instead, Woodcock wrote that a future “fact finder” – potentially the court – would have to resolve those federal commerce issues given that “the parties disagree both mildly and vigorously about facts critical to the resolution of the Commerce Clause issue.”

“The city claims the ultimate effect of the ordinance is not to block pipeline reversal because crude can be exported by other means, including by rail,” Woodcock wrote. “(The company) maintains the practical and intended effect is to block its plan for pipeline reversal and therefore block the flow of Canadian oil to other markets. Both parties present evidence … to support their factual claims. There are genuine disputes of material fact as to primary effect and primary purpose of the ordinance. The Council’s primary purpose and intent in enacting the ordinance, as well as its primary practical effect, will have to be resolved by a fact finder.”

South Portland City Manager Scott Morelli said in a statement that the city was pleased Woodcock ruled in its favor on eight of the nine counts.

“In a 229-page opinion, the court agreed with the city that its Clear Skies initiative was not preempted by the federal Pipeline Safety Act, the federal Ports and Waterways Safety Act, or the Maine Oil Discharge Prevention Law; was not preempted by federal powers over foreign affairs or maritime commerce; did not violate Portland Pipe Line’s due process or equal protection rights; and was not inconsistent with the City’s Comprehensive Plan,” Morelli said. “The city looks forward to the opportunity to resolve the remaining issues in its favor.”

The pipeline company issued the following statement:

“While we are disappointed with aspects of the judge’s decision today, our claim under the commerce clause remains to be decided. (The company) will vigorously continue its challenge of the ordinance.”

Earlier this month, Woodcock rejected South Portland’s request to dismiss the lawsuit altogether, after the energy giant TransCanada announced it was dropping plans to build a pipeline from western Canada to the Atlantic coast. In that ruling, Woodcock sided with Portland Pipe Line that the company could find alternate sources of crude without the TransCanada pipeline.

South Portland passed the Clear Skies ordinance in 2014 at a time of heated international debate over the economic benefits but potential environmental consequences of so-called “tar sands” oil and the fracking process.

Regular foreign crude is currently offloaded from ships in Portland Harbor and sent via the 76-year-old pipeline to refineries outside of Montreal. But with the flow of crude from South Portland to Montreal dwindling in recent years, there has been discussion of reversing the direction of oil flow to allow shipments of heavier crude from the oil sands region of western Canada to South Portland.

Environmentalists argue that oil sands or tar sands oil is dirtier than other crude, requires more environmental damage to extract and is harder to clean up after a spill. Supporters of South Portland’s Clear Skies ordinance said reversing the pipeline could increase the risk of spills and would require the construction of smokestacks next to Bug Light Park to burn off gases associated with loading the crude onto tankers. Opponents of the ban, meanwhile, called those concerns unfounded and predicted the ordinance could result in lost jobs and tax revenues at the company.

South Portland’s legal fight with Portland Pipe Line has drawn national attention fromboth environmental groups, the oil industry and business groups. The city has spent $1.4 million so far defending the Clear Skies ordinance and has received $168,000 in donations to the Clear Skies Legal Defense Fund.

Kevin Miller can be contacted at 791-6312 or at:

[email protected]

Twitter: KevinMillerPPH

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