Oil industry threatens lawsuit over South Portland tar sands moratorium

A national petroleum lobbying group is gearing up to sue the city of South Portland if it moves forward next week with a moratorium on the loading of Canadian oil-sands onto ships that dock on the city’s waterfront.

The five-page letter lays out a raft of legal positions against the proposed six-month moratorium and threatens legal action if it is enacted. The letter is dated Dec. 3 and was sent via email and hand delivered to the seven city councilors, City Manager Jim Gailey, City Planner Tex Haeuser and Corporation Council Sally Daggett.

Signed by Harry Ng, general counsel and corporate secretary for the American Petroleum Institute, the message is the latest volley in the protracted disagreement over the future of South Portland’s oil industry, and specifically whether the Portland Pipe Line Corp. should be permitted to reverse the flow of its 236-mile underground pipeline that connects tank farms in South Portland to a refinery in Montreal.

If reversed, the pipeline could bring so-called tar sands crude oil that lies in massive reserves under the Alberta wilderness. Before it can be pumped through piping, the sticky mixture of sand, water and raw petroleum is mixed with volatile chemicals.

“The proposed Moratorium could cause substantial harm to local, state, and national interests,” Ng wrote. “The facts do not support the proposed Moratorium’s claims that the transport and handling of oil sands products may pose greater environmental and safety risks than petroleum products from other sources.”

City councilors took up the moratorium in November, one day after voters turned down a controversial citizen-initiated ballot question to ban the same practice of offloading petroleum onto ships.

The six-month moratorium, which would end May 6, is intended to buy the council time to formulate its own ordinance to control waterfront activity and determine whether export of petroleum through the city’s port should be permissible. Discussion about how to craft such a permanent local law begins Wednesday at a 6:30 p.m. city council workshop to be held in the South Portland Community Center. A councilwide vote on the moratorium is scheduled for Dec. 16. The South Portland planning board, which examines issues regarding land use, recommended the moratorium be passed in a non-binding vote, 4-2, taken earlier this month.

Ng argues that the moratorium does not meet legal criteria for such measures; that federal and state laws regarding pipelines and pipeline safety will override a local ordinance; and that in general the moratorium violates the Commerce Clause of the U.S. Constitution.

The American Petroleum Institute declined further comment on the letter, and Gailey did not return a call seeking comment.

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