The City of South Portland, Maine, won a major legal victory at the end of August when a federal judge ruled that the city’s effective ban on tar sands oil did not violate the Commerce Clause of the U.S. Constitution. The decision, like a similar one in Portland, Oregon, has potentially widespread implications for other communities fighting fossil fuel infrastructure projects within their borders.
In 2014 South Portland passed the Clear Skies Ordinance, which prohibited loading crude oil onto tankers in the city’s harbor. The ordinance was a response to efforts to reverse the direction of the Portland Montreal pipeline, which would allow its owner, Portland Pipe Line Corporation, to import tar sands oil from Canada and export it from the city of about 25,000 via ship.
The Commerce Clause gives Congress the sole power to regulate interstate and foreign trade, and the pipeline company argued that the Clear Skies Ordinance would impact interstate and international trade and thus was unconstitutional.
Among the reasons South Portland passed the ordinance were the two 70-foot high smokestacks that would have been required to burn off volatile compounds from the tar sands oil during its loading onto tankers. The city argued that these smokestacks, located close to residential neighborhoods, would be a health risk.
Ken Rumelt, a law professor at Vermont Law School's Environment and Natural Resources Law Clinic, worked with the City of South Portland on this case. He explained to DeSmog the importance of this decision lies in giving communities faced with potential impacts from fossil fuel projects the ability to regulate the activities bringing about those impacts.
“There is a high probability based on this decision moving forward [that similar cases] can survive Constitutional muster,” said Rumelt.
South Portland's victory is bad news for the fossil fuel industry, as evidenced by the American Petroleum Institute and U.S. Chamber of Commerce joining the fight against the city ordinance. As the industry anticipated, when communities have the power to decide whether or not to welcome new fossil fuel infrastructure — such as a pipeline or an oil-by-rail terminal — they often say “no thanks.”
This decision deals another major blow to the oil industry strategy of using the Commerce Clause to preempt local laws and push through its projects.
Another Portland Ruling, Cumulative Impact, and Legal Precedent
This latest ruling in South Portland follows on the heels of a similar decision in Portland, Oregon, this year. In that case the Oregon Court of Appeals issued a ruling that the city had not violated the U.S. Constitution's Commerce Clause by voting to ban new fossil fuel terminals within its borders, and the Oregon Supreme Court upheld this decision at the start of August.
That ruling was hailed by activists as a message to communities around the country that they now have a legal pathway to ban new fossil fuel infrastructure in their own communities.
“This decision sends an important message at a time, when our federal government is dropping the ball on climate change, that cities can and will lead,” said Bob Sallinger, Conservation Director at Portland Audubon Society.
And the oil industry acknowledged as much in its legal documents in the South Portland case. As reported by the Portland Press Herald, in a pre-trial brief filed by the Portland Pipe Line Corp. (PPLC), the industry noted that if South Portland and other “harbor cities” were allowed to ban fossil fuel projects, the “cumulative impact” of such bans would be “catastrophic.”
“The cumulative impact of similar ordinances enacted in other harbor cities would be catastrophic,” wrote PPLC's lawyers. “Parochial efforts designed to curtail or effectively (prevent) cross-border transportation caused our Founding Fathers to include the Commerce Clause in the Constitution in the first place.”
With two legal decisions shooting down the Commerce Clause argument in quick succession, the oil industry’s fear is being realized. Harbor cities have begun winning these legal challenges and succeeding in blocking the industry’s plans to use those harbors to export oil.
A similar ban on new oil infrastructure was signed into law in Baltimore, Maryland, in March, adding further support to the industry’s fear that this approach would spread. Baltimore's ban was in response to industry plans to build new infrastructure to increase oil-by-rail traffic into the Port of Baltimore.
“This proves that local governments can take real steps to fight climate change and can act to protect residents from risky transport of potentially explosive materials,” said Leah Kelly, an attorney for the Environmental Integrity Project who was involved in the ban. “Now communities living near rail lines in Baltimore will not have to fight off proposals for these terminals one by one.”
While communities now have the option of banning whole-sale any new fossil fuel infrastructure, several West Coast harbor cities have fought off major oil-by-rail projects in this one-by-one approach, including a proposed terminal in Vancouver, Washington. That oil-by-rail facility would have been the largest in the country but was blocked by local opposition — despite oil industry efforts which included funneling hundreds of thousands of dollars to a local port authority candidate who favored the project.
Blocking the Ports
The two recent rulings in Maine and Oregon do not bode well for oil industry efforts to overrule local government authority over fossil fuel projects.
They follow another industry loss back in 2016. At the time, the oil industry was arguing that federal law preempted local laws regarding new oil-by-rail facilities. Generally speaking, the rail industry is able to preempt most local laws on rail-owned property, and the oil industry was arguing that oil-by-rail facilities also should be allowed to preempt local laws in this same manner.
However, in 2016 the U.S. Surface Transportation Board, an independent federal agency presiding over railroad disputes, ruled that because the facilities were owned by oil and not rail companies, the preemption did not extend to such facilities.
As DeSmog reported, this ruling was a major setback for oil industry plans to expand shipments to the West Coast, a point industry lawyer Kevin Sheys spelled out at the 2016 Energy by Rail Conference.
Sheys is a partner at the Washington, D.C., law firm Nossaman, LLP, and at the conference, his presentation focused on the Surface Transportation Board decision. One slide in his presentation asked, “What Is The Energy By Rail Tsunami For the Next Four Years?” The following slide answered the question, stating, “Local Regulation of Crude Oil/Ethanol Unit Train Unloading Projects.”
In other words: Local governments regulating oil-by-rail infrastructure pose a major threat to the industry's plans.
The oil industry acknowledges that ”local regulation” is one of its biggest hurdles to building new infrastructure for oil exports from American port cities. These projects typically offer few economic benefits to the cities, as pointed out in the cases of Albany and Vancouver, Washington, compared to the health and environmental risks from local air pollution, oil spills, and climate change (just for starters), increasing the odds of local opposition.
Which is why the oil industry tried to preempt local laws in places like Benicia, California, by using the argument that rail-related projects are not subject to local laws and by arguing local bans such as those in South Portland and Portland violate the Commerce Clause.
Since the crude oil export ban was overturned in late 2015, exports of U.S. crude oil have exceeded all expectations as companies look abroad to fetch higher prices, a move which has in turn helped drive efforts to build new oil infrastructure in harbor cities.
With these recent rulings, the oil industry is facing tough lessons from local communities uninterested in hosting its projects — and now it appears the industry has lost one of its main legal arguments — the Commerce Clause — against local regulation of crude oil projects.
Main image: Tanker at the proposed location of pollution control towers in South Portland, Maine. Credit: Tom Mikulka, used with permission