2L Note Blog: The Portland Pipeline Corporation and Act 250: Can State Self-regulation of Pipelines Occur Outside of the Federal Pipeline Safety Act?

 In July 2010, a section of a pipeline located in Marshall, Michigan burst.[1]  Approximately one million gallons of diluted bitumen spilled into the Talmadge Creek, a tributary of the Kalamazoo River.[2]  Diluted bitumen, commonly referred to as “dilbit”, is a petroleum blend consisting of oil sands taken from Alberta, Canada and gas condensates.[3]  Responders and investigators found that the diluted bitumen did not behave as ordinary crude oil usually does in a spill, by floating to the surface of the water.[4]  Instead, the EPA noted that submerged diluted bitumen attached itself to particles and sank, coating the bottom of the river and that diluted bitumen that had been exposed to sunlight formed a sticky, impermeable coat.[5]  The Kalamazoo oil spill was arguably one of the costliest oil spills in United States history.[6]

UntitledAfter the proposal of the Keystone Pipeline Project, many state legislatures began to contemplate implementing land use planning laws in order to halt or at least have some say in the siting of diluted bitumen pipelines.[7]  Vermont’s Act 250 is a unique land-use planning statute, designed to reduce environmental impacts of development projects.[8]  Act 250 requires project developers to comply with environmental criteria through a quasi-judicial permitting process.[9]  Although Act 250 does allow projects finished before 1970 to be grandfathered in under the statute, if a project is substantially changed in a manner, which could affect the environment, Act 250 permitting is required.[10]

In January 2013, several citizen groups requested a Jurisdictional Opinion in order determine whether a pipeline built in the 1940’s and operated by the Portland Pipeline Corporation should be subject to Act 250 permitting in order to preemptively halt a flow-reversal project.[11]  The flow-reversal project would enable diluted bitumen to be shipped from Alberta, Canada through Vermont in order to reach Portland, Maine.[12]

Author Ligia Smith

Author: Ligia Smith, Staff Editor

More and more, Pipeline companies are contemplating flow reversal of older pipelines traditionally used to transport light or medium conventional crude oil rather than constructing new pipelines.[13] Reversing flow on existing pipelines presents an easier process for pipeline companies and is cheaper.[14] Existing pipelines crossing from Canada into the United States do not require pipeline companies to go through the time consuming process of procuring Presidential approval of the project or state approval for siting locations, such as Exxon Mobil has had to do in trying to begin work on the Keystone project.[15] Also, reversing flow of existing pipelines generates less public controversy than building new pipelines would.

This note will discuss whether Act 250 can be used to subject a preexisting pipeline to local permitting processes and in turn whether Vermont’s ability to regulate the pipeline due to siting and environmental concerns is preempted by the Federal Pipeline Safety Act.

 

Questions and inquiries regarding this Note may be forwarded to the author at LawReview@vermontlaw.edu.


[1] Crude Oil Pipeline Rupture and Spill, National Transportation Safety Board (Jul. 25, 2010), http://www.ntsb.gov/investigations/2010/marshall_mi.html.

[2] EPA Response to Enbridge Spill in Michigan, United States Environmental Protection Agency, http://www.epa.gov/enbridgespill/ (last updated Nov. 27, 2013).

[3] Diluted Bitumen, American Petroleum Institute (March 20, 2013), http://www.api.org/~/media/Files/Oil-and-Natural-Gas/Oil_Sands/Diluted-Bitumen.pdf.

[4] Kalamazoo River Spill Yields Record Fine, Living on Earth (Jul. 6, 2012), http://www.loe.org/shows/segments.html?programID=12-P13-00027&segmentID=1.

[5] Letter from Cynthia Giles, Assistant Adm’r for Enforcement & Compliance Assurance, EPA, to Jose Fernandez, Assistant Sec’y, U.S. Bureau of Econ., Energy & Bus. Affairs and Kerri-Ann Jones, Assistant Sec’y, U.S. Bureau of Oceans & Int’l Envtl. & Scientific Affairs at 2 (Apr. 22, 2013), available at http://epa.gov/compliance/nepa/keystone-xl-project-epa-comment-letter-20130056.pdf.

[7] Monica Davey, Nebraska Seeks a Say on the Route of a Pipeline, New York Times, Oct. 30, 2011, http://www.nytimes.com/2011/10/31/business/energy-environment/nebraska-legislature-to-debate-keystone-xl-oil-pipeline.html?_r=0.

[8] Joe Sherman, Fast Lane on a Dirt Road: Vermont Transformed: 1945–1990 105 (1991).

[9] Revised Jurisdictional Opinion (Revised JO) #7-274 at 12.

[10] Id.

[11] JO #7-274 at 1.

[12] Id.

[13] Line 9B Reversal (Phase II) and Line 9 Capacity Expansion Project Overview, Enbridge  http://www.enbridge.com/ECRAI/Line9BReversalProject.aspx (last visited Dec. 5, 2013). See also, Energy East Pipeline Project, TransCanada http://www.transcanada.com/energy-east-pipeline.html (last visited Dec. 5, 2013).

[14] John H. Cushman, Federal Rules Don’t Control Pipeline Reversals Like Exxon’s Burst Pegasus, Inside Climate News, Apr. 3, 2013, http://insideclimatenews.org/news/20130403/federal-rules-dont-control-pipeline-reversals-exxons-burst-pegasus.

[15] Id.