United States Court of Appeals For the First Circuit

No. 18-2118

PORTLAND PIPE LINE CORPORATION; THE AMERICAN WATERWAYS OPERATORS,

Plaintiffs, Appellants,

v.

CITY OF SOUTH PORTLAND; MATTHEW LECONTE, in his official capacity as Code Enforcement Director of South Portland,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE

[Hon. John A. Woodcock, Jr., U.S. District Judge]

Before

Torruella, Thompson, and Barron, Circuit Judges.

Catherine R. Connors, with whom John J. Aromando, Matthew D. Manahan, Nolan L. Reichl, and Pierce Atwood LLP were on brief, for appellants. Jonathan M. Ettinger, with whom Euripides Dalmanieras, Jesse H. Alderman, Foley Hoag LLP, Sally J. Daggett, and Jensen Baird Gardner & Henry were on brief, for appellees. David H. Coburn, Joshua H. Runyan, and Steptoe & Johnson LLP were on brief, for American Fuel & Petrochemical Manufacturers, American Petroleum Institute, Association of Oil Pipe Lines, International Liquid Terminals Association, National Association of Manufacturers, and National Mining Association, amici curiae. Twain Braden and Thompson Bowie & Hatch, LLC were on brief, for Portland Pilots, Inc., Maine Energy Marketers Association, and Associated General Contractors of Maine, amici curiae. Samuel D. Adkisson, Patrick Strawbridge, Consovoy McCarthy Park PLLC, Steven P. Lehotsky, Michael B. Schon, and U.S. Chamber Litigation Center were on brief, for U.S. Chamber of Commerce, amicus curiae. Maura Healey, Attorney General for the Commonwealth of Massachusetts, Seth Schofield, Senior Appellate Counsel, Turner Smith, Assistant Attorney General, and Office of the Attorney General of Massachusetts were on brief, for Massachusetts, California, Connecticut, Delaware, Maine, Maryland, Minnesota, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and the District of Columbia, amici curiae. Sarah J. Fox, Northern Illinois University College of Law, Lisa C. Goodheart, William L. Boesch, C. Dylan Sanders, and Sugarman Rogers Barshak & Cohen, P.C. were on brief, for International Municipal Lawyers Association and Legal Scholars, amicus curiae. Sean Mahoney, Conservation Law Foundation, Jan E. Hasselman, Earth Justice, Kenneth J. Rumelt, and Vermont Law School were on brief, for Conservation Law Foundation, Natural Resources Council of Maine, and Protect South Portland, amici curiae.

January 10, 2020 Per Curiam. This case involves a clash between Portland

Pipe Line Corporation ("PPLC"), a Maine corporation engaged in the

international transportation of oil, and the City of South Portland

(the "City"), which enacted a municipal zoning ordinance

prohibiting the bulk loading of crude oil onto vessels in the

City's harbor. The practical effect of the ordinance at issue,

known as the Clear Skies Ordinance (the "Ordinance"), is to prevent

PPLC from using its infrastructure to transport oil from Montréal,

Québec, Canada to South Portland, Maine via a system of underground

pipelines. On appeal, PPLC and the American Waterways Operators,

a national trade organization whose industry members employ

thousands of seamen (and women) who would be negatively impacted

by the loss of port traffic associated with PPLC's pipeline system,

argue, in part, that the Ordinance is preempted by Maine's Coastal

Conveyance Act ("CCA") and runs afoul of federal constitutional

law.

In accordance with well-settled constitutional avoidance

doctrine, see Vaquería Tres Monjitas, Inc. v. Pagan,

(1st Cir. 2014), we sidestep the federal quagmire for the

moment. This dispute raises important questions of state law

preemption doctrine and statutory interpretation that (in our

view) are unresolved and may prove dispositive. We therefore

certify three questions to the Maine Law Court. See Fortin v.

Titcomb,

(1st Cir. 2012) (certifying questions to

- 3 - the Law Court where there were "no clear controlling [state law]

precedents" (quoting Me. Rev. Stat. tit. 4, § 57)). Some context

for those questions, along with the questions themselves, follow.

I. Background

We begin by reciting the undisputed facts and procedural

background germane to the issues of state law presented herein.

PPLC and its parent company, Montreal Pipe Line Limited, operate

the Portland-Montreal Pipe Line, a mostly underground pipeline

system that primarily transports oil from South Portland, Maine,

through three states, across the Canadian border, to the system's

northern terminus in Montréal, Québec. In connection with this

work, PPLC has for years obtained the state and federal regulatory

approvals necessary to unload crude oil from tanker vessels in the

City's harbor to be held in above-ground storage facilities pending

transport to Canada via the pipeline system.

Beginning in or around 2007, to accommodate purported

changes in demand, PPLC made efforts to reverse the flow of oil

along the pipeline system such that oil would flow southbound from

Montréal to South Portland, where it would then be loaded onto

tankers in the City's harbor for distribution in the United States.

Over the next few years, PPLC requested and received permission to

proceed with the reversal project from federal, state, and

municipal agencies. On July 18, 2008, for example, the U.S.

Department of State approved the reversal project after concluding

- 4 - it did not represent a substantial deviation from the work

previously approved by the federal government pursuant to a

Presidential Permit issued to PPLC in 1999.1 Less than a year

later, on August 25, 2009, PPLC obtained an air emissions license

from Maine's Department of Environmental Protection ("MDEP"), the

agency charged with enforcing the state's environmental laws.

Additionally, as is relevant to the certification questions

presented here, on December 20, 2010, MDEP renewed PPLC's existing

oil terminal facility license under the authority granted to MDEP

by the CCA.2 The license application summary, criteria for

renewal, findings of fact, and formal approval of the renewal

license are memorialized in an MDEP document titled "Department

Order," which acknowledges and approves PPLC's plans to "reverse

one of its underground pipe lines" and "store[] [oil] in . . .

above ground tanks prior to being loaded onto vessels at the South

Portland pier for transport to refineries and terminals outside

the state of Maine."3 At the local level, PPLC sought and received

1The State Department followed up with PPLC on August 13, 2013, instructing PPLC to provide more information about the changes in advance of implementing the flow reversal.

2As explained in more detail later, the CCA imbues MDEP with authority to issue licenses to oil terminal facilities and to adopt rules and regulations concerning their operations. See Me. Rev. Stat. tit. 38, §§ 544, 546. 3MDEP renewed PPLC's license pursuant to a second document titled "Department Order," dated September 11, 2015.

- 5 - zoning approval from the City's Planning Board. Despite receiving

these and other necessary regulatory approvals, PPLC halted its

plans prior to implementation, choosing instead to wait out the

economic decline precipitated by the Great Recession.

As economic conditions improved in 2012 and 2013, PPLC

revived the pipeline reversal project. Around the same time,

however, environmental interest groups began lobbying for a

municipal referendum that would (among other things) bar a key

component of the project: the transportation of Canadian oil sands

(or, as environmentalists call it, "tar sands") via pipeline to

South Portland, where PPLC planned to load the same onto vessels

in the City's harbor. City residents voted against this citizen-

initiated referendum on November 5, 2013. But South Portland's

City Council subsequently created a draft ordinance committee to

consider changes to City code that, according to the City, would

"protect the public health and welfare from adverse or incompatible

land uses, or adverse impacts to local air, water, aesthetic,

recreational, natural, or marine resources" caused by the loading

of unrefined petroleum products, like Canadian oil sands, onto

marine tank vessels docking in South Portland's harbor. After a

months-long drafting and review process conducted by the draft

ordinance committee, the City Council passed Ordinance No. 1-

14/15, the Clear Skies Ordinance, on July 21, 2014. The Ordinance

prohibits the "bulk loading of crude oil onto any marine tank

- 6 - vessel," South Portland, ME, Ordinance #1-14/15, nipping PPLC's

reversal project in the bud.

According to PPLC (and as disputed by the City), if it

cannot move forward with the reversal project, it likely cannot

survive as a business.4 As PPLC tells it, one of the system's two

pipelines has been completely idle as a result of insufficient

demand for northbound shipping and the Ordinance's impediment to

southbound shipping. The other pipeline, while still active,

transports what amounts to a "trickle" of oil.

Deprived of the means and method by which it intended to

transport oil from Canada into the United States as part of the

reversal project, PPLC filed suit against the City and the City's

code enforcer in U.S. District Court for the District of Maine on

February 6, 2015. Count IX of PPLC's nine-count complaint alleges

the Ordinance is preempted by the CCA and, in particular, a

provision of the statute that prohibits municipal activity which

directly conflicts with a MDEP rule or order, including (as PPLC

views it) the 2010 MDEP renewal license authorizing PPLC's reversal

project in a document titled "Department Order." The complaint's

4 PPLC contends that the flow reversal project is a necessary response to the recent increase in the production of Canadian oil sands, which has reduced demand for northward flow on PPLC's pipelines.

- 7 - remaining claims primarily concern the Ordinance's alleged

violation of various federal laws and federal preemption doctrine.5

The City filed a motion to dismiss, which was denied on

February 11, 2016. The parties subsequently filed cross-motions

for summary judgment, which culminated with the district court

dismissing all but one of PPLC's claims on December 29, 2017. In

dispensing with PPLC's state law preemption claim, in particular,

the district court concluded the 2010 MDEP renewal license document

titled "Department Order" is not an "order" with preemptive effect

under the CCA and, even if it is, the Ordinance does not directly

conflict with the CCA to the extent the statute leaves room for

local zoning restrictions like the Ordinance. PPLC's remaining

5 PPLC's federal claims are as follows: (Count I: Preemption - Pipeline Safety Act,

et seq.); (Count II: Preemption - Foreign Affairs Doctrine, U.S. Const., art. 2, §§ 2, 3); (Count III: Preemption - The Ports and Waterways Safety Act,

(a)(1), 1225(a)(2)(A)); (Count IV: Preemption - Maritime Law, U.S. Const., art. 3, § 2); (Count V: Commerce Clause Violation, U.S. Const., art. 1, § 18); (Count VI: Due Process and Equal Protection Clause Violations, U.S. Const., amend. XIV, § 1); and (Count VII: Civil Rights Act Violation,

).

We should also note the complaint alleges as Count VIII that the Ordinance is inconsistent with the City's Comprehensive Plan enacted and amended under the authority granted municipalities pursuant to Me. Rev. Stat. tit. 30-A, § 4352. Because PPLC does not press this claim in earnest on appeal, we do not seek analysis of the same from the Law Court.

- 8 - claim after summary judgment was dismissed on August 27, 2018,

following a four-day bench trial.6

PPLC timely appealed to this Court on November 7, 2018.

The Court heard oral argument on July 23, 2019. We then invited

the parties and the State of Maine, which (along with other amici)

had filed an amicus brief on behalf of the City, to file

supplemental briefs on the following questions that (if answered

in the affirmative) would resolve the state law preemption claim

and this matter as a whole: (1) whether the 2010 MDEP renewal

license is an order with preemptive effect under the CCA; and (2),

if the renewal license is an order, whether the Ordinance directly

conflicts with the same. Even after careful review of the parties'

proffers, we believe the case lacks controlling precedent and

presents "close and difficult legal issue[s]" that warrant

certification to the Law Court. In re Engage, Inc.,

(1st Cir. 2008). We have recognized that certification may be

an appropriate option even where, as here, the parties have not

requested it. See Me. Drilling & Blasting, Inc. v. Ins. Co. of N.

Am.,

(1st Cir. 1994) (noting that the Court on occasion

certifies "questions to a state's highest court upon our own

motion").

6On October 10, 2018, the district court entered an amended judgment clarifying that Count VII of the complaint was dismissed without prejudice.

- 9 - II. The Issues

With the relevant facts and procedural background

covered, we turn to the state law questions for which we seek

certification. We begin our discussion with a review of the

relevant provisions of the CCA.

A. The Coastal Conveyance Act

In enacting the CCA, the Maine legislature declared that

the "highest and best" uses of the state's seacoast include public

and private recreation, fishing, lobstering, and "gathering other

marine life used and useful in food production and other commercial

activities." Me. Rev. Stat. tit. 38, § 541. To preserve the

integrity of Maine's coastline for such uses, state lawmakers,

through the enactment of the CCA, conferred upon MDEP "the power

to deal with the hazards and threats of danger and damage" posed

by transfers of oil, petroleum products, and their by-products

between vessels and onshore oil facilities in state waters. Id.

The CCA imposes a licensure requirement on anyone who wishes to

perform oil transfers in or around state waters, see id. § 545

(prohibiting the "operat[ion]" of any "oil terminal

facility . . . without a license"), and vests MDEP with the

authority to issue such licenses, id. § 544(2). The CCA also

grants MDEP the "power to adopt rules and regulations" for

"[o]perating and inspection requirements for facilities, vessels,

personnel and other matters relating to licensee operations." Id.

- 10 - § 546(4). MDEP, in turn, has developed regulations governing

marine oil terminals and oil transfers.

Although the CCA acknowledges the potential for

municipal activity within the sphere of the CCA's (and, by

extension, MDEP's) authority, it includes the following limitation

in the case of conflict between the two:

Nothing in this subchapter may be construed to deny any municipality, by ordinance or by law, from exercising police powers under any general or special Act; provided that ordinances and bylaws in furtherance of the intent of this subchapter and promoting the general welfare, public health and public safety are valid unless in direct conflict with this subchapter or any rule or order of the board or commissioner adopted under authority of this subchapter.

Id. § 556 (emphasis added).

With this regulatory framework in mind, we turn to the

state law questions, covering whether MDEP's December 2010 renewal

license constitutes an "order" with preemptive effect and then

discussing whether the Ordinance is preempted by the text of § 556

and whether, independent of any express preemption powers set forth

in § 556, preemption may be otherwise implied by the CCA.

1. Whether the MDEP License Is an Order.

PPLC's license renewal application sought authorization

to reverse the flow of one of PPLC's underground pipelines and to

store oil in above-ground tanks prior to being loaded onto vessels

in the City's harbor. After concluding that PPLC's operations

satisfied statutory and regulatory criteria, MDEP's Acting

- 11 - Commissioner approved the application and issued PPLC a license in

a document titled "Department Order." Notwithstanding MDEP's

review and approval of PPLC's reversal operations, the City enacted

the Ordinance, which serves as a blanket prohibition on all

unrefined oil-loading activity in the harbor.

PPLC has argued that MDEP licenses issued pursuant to

the CCA are considered orders with preemptive effect. According

to PPLC, to decide otherwise would render meaningless certain MDEP

enforcement powers outlined in the CCA. PPLC argues, for example,

that distinguishing orders from licenses could subject MDEP's

licensure decisions to procedural delays that would impede the

department's ability to quickly respond to potentially dangerous

activity. See Me. Rev. Stat. tit. 38, § 557 (explaining that MDEP

"orders" cannot be stayed pending appeal, which PPLC cites for the

proposition that MDEP's licensure decisions would not be entitled

to procedural safeguards against delay if the Court determines

such licenses are distinct from orders). The City and the State

of Maine, on the other hand, argue that nothing in the text of the

MDEP renewal license at issue suggests that it is an order with

preemptive effect, and the use of the letterhead "Department

Order," without more, does not bestow upon a license the power of

preemption. Neither appeal to plain language wins the day in our

view. The parties' attempts to define the term "order" by cherry-

picking relevant provisions of the CCA are similarly unavailing.

- 12 - We therefore seek clarification from the Law Court. In

so doing, we respectfully ask the Law Court to consider, as the

district court did, whether interpreting "order" to include MDEP

licenses infringes upon "home rule" authority reserved for the

state's municipalities. See Portland Pipe Line Corp. v. City of

S. Portland,

(D. Me. 2017) (explaining

that "[t]here is no indication in the [CCA] that the State intended

to remove local home rule authority over facility siting and use

prohibitions through these [M]DEP licenses");

(observing that "[i]f the licenses had the preemptive effect PPLC

claims, there is virtually no room for local regulation in this

realm at all, since every single transfer facility must have a

license"); see also Me. Rev. Stat. tit. 30-A, § 3001 (implementing

home rule authority, which reserves for municipalities power that

is "not denied either expressly or by clear implication").

2. Whether the Ordinance Is Expressly or Impliedly Preempted.

Next up, we welcome analysis from the Law Court on

whether the CCA expressly or by implication preempts the Ordinance.

First, assuming the 2010 MDEP renewal license is an "order" under

§ 556, we seek guidance regarding whether § 556 of the CCA

expressly preempts the Ordinance. As mentioned, the parties

disagree as to whether the license is an order such that § 556

applies here. The parties also disagree about whether, even if

the license is an order, the terms of § 556 are such that the

- 13 - Ordinance is expressly preempted. In support of their arguments,

the parties offer competing interpretations of "in furtherance of

the intent of this subchapter" and "direct conflict," as those

terms appear in the text of § 556.

Second, even if the text of § 556 does not require express

preemption here, the question remains whether the CCA, independent

of any express preemption that it effects in consequence of § 556,

impliedly preempts the Ordinance. Under Maine law, ordinances are

preempted by implication only where "state law is interpreted to

create a comprehensive and exclusive regulatory scheme

inconsistent with the local action" or where "the municipal

ordinance prevents the efficient accomplishment of a defined state

purpose." Dubois Livestock, Inc., 103 A.3d at 561 (citations

omitted) (first quoting Sawyer Envtl. Recovery Facilities, Inc. v.

Town of Hampden,

(Me. 2000) and then quoting E.

Perry Iron & Metal Co. v. City of Portland,

(Me.

2008)). According to the City and the State of Maine, the

Ordinance is not inconsistent with a "comprehensive and exclusive

regulatory scheme," because the CCA -- in § 556 -- expressly

contemplates local regulation. The City and the State also argue

the Ordinance does not "prevent[] the efficient accomplishment of

a defined state purpose," but they diverge as to why. PPLC, by

contrast, argues both that the Ordinance intrudes into the CCA's

comprehensive and exclusive regulatory scheme and that, because

- 14 - the Ordinance's blanket prohibition on loading crude oil restricts

the transfer of the same, the Ordinance prevents the efficient

accomplishment of the CCA.

The district court and the parties rely primarily on the

Law Court's implied preemption analysis in Sawyer,

(Me. 2000) and Smith v. Town of Pittston,

(Me. 2003).

In Sawyer, a municipal zoning ordinance prohibited the expansion

of a solid waste facility after the expansion was approved by MDEP

pursuant to state waste management laws. Sawyer, 760 A.2d at 265–

66. Specifically, the ordinance was found to be preempted because

its "absolute prohibition of the expansion prevent[ed] the

'efficient accomplishment' of the 'defined state purpose'" of

Maine's Hazardous Waste, Septage and Solid Waste Management Act

("WMA"), Me. Rev. Stat. tit. 38, §§ 1301-1319. Id. at 265. In

Smith, the Law Court considered whether a municipal septage

ordinance was preempted by an MDEP-issued septage spreading permit

that the plaintiff received shortly after the ordinance at issue

was enacted. See Smith,

. In concluding there

was no preemption, the Law Court found that the ordinance did not

frustrate the purpose of the WMA since it prohibited only one

method of septage disposal while leaving other methods authorized

by the WMA intact.

. Indeed, the Law Court explicitly

recognized that "[i]f the Town's ordinance prohibited all methods

of septage disposal, [the plaintiff] would have a stronger argument

- 15 - that the purposes of [the WMA] are frustrated."

The district

court nevertheless let Smith, rather than Sawyer, guide its

application of the Law Court's state law preemption analysis. See

Portland Pipe Line Corp.,

("As in Smith,

this statute contemplates local zoning prohibitions and neither

the statute nor [M]DEP review process involves the kind of local

land use and impact considerations typically left to

localities.").

We need not necessarily opine on the soundness of the

district court's reasoning right now because the assertedly

preemptive state statute at issue in Smith and Sawyer was the WMA,

not the CCA, and thus those cases are not on all fours with the

matter currently before us. In addition to serving a purpose

distinct from that set forth in the CCA, the WMA includes an

express ceiling on local regulation that would interfere with an

activity authorized under the statute. See Me. Rev. Stat. tit.

38, § 1310-U (prohibiting municipalities "from enacting stricter

standards than those [in the WMA] governing the hydrogeological

criteria for siting or designing solid waste disposal facilities"

and giving municipalities a limited role in the state licensing

process). The CCA is not similarly expressive in outlining the

contours of permissible municipal action. See Me. Rev. Stat. tit.

38, § 556 (providing that "ordinances and bylaws in furtherance of

the intent of this subchapter . . . are valid unless in direct

- 16 - conflict with this subchapter or any rule or order of the [MDEP]").

Thus, the Law Court's preemption analysis in Smith and Sawyer is

not controlling here, where we must consider the scope of the CCA's

regulatory regime to determine whether and to what extent it leaves

room for municipal conduct. We are not aware of any decision of

the Law Court that resolves whether the CCA preempts (either

expressly or by implication) the Ordinance at issue here. Because

there are no clear controlling precedents, the state law preemption

questions (as set forth below) require certification.

The uniquely local policy interests at stake here also

support certification. This is "not a case in which the 'policy

arguments line up solely behind one solution.'" In re Engage,

(quoting Boston Gas Co. v. Century Indem.,

(1st Cir. 2008)). This case will impact the day-to-day

licensure procedures of a state agency, the future of a local

business that has been operating in the area for the better part

of seventy-five years, and the City's authority to protect against

perceived environmental threats to its coastline. The Law Court

is better suited for the challenge of balancing these interests to

the extent allowed by applicable state law preemption doctrine.

- 17 - III. Certification

For the reasons set forth herein, we certify the

following three questions to the Maine Law Court:

(1) Is PPLC's license an "order," as that term is used in Me. Rev. Stat. tit. 38, § 556?

(2) If PPLC's license is an order, is the City of South Portland's Clear Skies Ordinance preempted by Me. Rev. Stat. tit. 38, § 556 of Maine's Coastal Conveyance Act?

(3) Independent of Me. Rev. Stat. tit. 38, § 556, is there any basis for finding that Maine's Coastal Conveyance Act impliedly preempts the City of South Portland's Clear Skies Ordinance?

We would welcome further guidance from the Law Court on

any other relevant aspect of Maine law that it believes would aid

in the proper resolution of the issues before us.

The Clerk of this Court is directed to forward to the

Maine Supreme Judicial Court, under the official seal of this

Court, a copy of the certified questions, along with the merits

briefs and appendices filed by the parties and the State of Maine

as amici, as well as the supplemental briefs filed by the parties

and the State of Maine pursuant to this Court's order dated

September 23, 2019.

- 18 -