Hans Eysenbach 

The United States’ energy sector is experiencing a profound clash: accelerated departure from fossil energy sources versus commercial pressure to exploit now economically recoverable unconventional oil and gas reserves. Perhaps the most notable example of this clash is the Keystone XL oil sands pipeline proposal that was recently rejected by executive order after a highly publicized six-year environmental and inter-agency review.[1] Since the early 2000s, the advent of horizontal drilling technology and hydraulic fracturing of rock structures containing oil and gas have led to unprecedented increases in access to unconventional reserves of oil (e.g., tight formation, or oil sands, and shale oil) and gas (i.e., shale gas).[2] This hydraulic fracturing technological revolution has rapidly changed the structure of the U.S. oil and gas sector in under a decade.[3] Current projections hold that, given continuity of current trends, the United States is poised to become a net energy exporter by 2035.[4] These systemic shifts have increased the strain and strategic importance of the bottlenecks for oil and gas transportation: pipelines.

This country has limited pipeline resources. At the national level, pipeline capacity under current directions of flow is insufficient to satisfy the transport needs of new oil and gas sources.[5]  The capacity shortfall is most evident upon considering the number of recently proposed pipeline construction, or flow reversal projects, around the county. The New England area, for example, has six major proposed natural gas pipeline expansion projects, which will more than double the region’s capacity if approved.[6]

One such project, a pipeline flow reversal proposal, has sparked considerable controversy in northern New England and is now the subject of an ongoing lawsuit. On February 6th, 2015, the Portland Pipeline Corporation, Montreal Pipeline Limited, and American Waterways Operators (referred to jointly as PPLC) filed suit challenging the validity of a zoning ordinance, known as the Clear Skies Ordinance (CSO), passed by the planning council of South Portland, Maine.[7] South Portland enacted the CSO to prevent the PPLC from reversing the flow of its pipeline to export Canadian oil sands from the existing oil terminal in South Portland Harbor.[8]

This note argues that although PPLC’s pipeline is an interstate oil pipeline subject to federal control, South Portland has authority to regulate against changes in land use represented by a reversal in its flow. Such control is within the city’s zoning power because the project poses significant effects to residents’ health, general economic and social welfare.[9]

Part I discusses the long-standing legal vesting of authority for state police power over land use decisions with “substantial relations to the public health, safety, morals or general welfare.”[10] Maine, like other home rule states, gives municipalities the authority over land use planning and zoning as consistent with the state Constitution and general laws.[11] Meanwhile PPLC argues that it has already secured state, federal, and executive approval, and that it represents a broad base of private interests in unimpeded interstate energy infrastructure.[12] Part II investigates how zoning ordinances can avoid preemption by the Natural Gas Pipeline Safety Act and conflicts with state law. [13] Additionally, it compares the CSO with cases wherein courts invalidate local zoning that regulates beyond a municipality’s jurisdiction.[14] Part III explores ways in which land use zoning such as the CSO can continue to play an important role in both promoting, and deterring, energy infrastructure development consistent with localities’ long-term health, economic welfare, and public policy priorities.[15] Finally, the Conclusion argues for increased use of local authority to shape energy use choices. Such ordinances and statutes will force future oil and gas infrastructure proponents to mindfully engage local stakeholders in ways that respect evolving local energy priorities.

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

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[1] U.S. State Dep’t, Record of Decision and National Interest Determination (Nov. 5, 2015), http://keystonepipeline-xl.state.gov/documents/organization/249450.pdf (“[A]pproval would undermine the United States’ successful foreign policy engagement to combat climate change on a global scale.”).

[2] Marianne Levelle, Forcing Gas Out of Rock with Water, Nat’l Geographic Daily News (Oct. 17, 2010) (explaining that use of horizontal drilling technologies for shale gas extraction date to early 2000).

[3] Energy Info. Admin., Annual Energy Outlook ES-5, 20, (2015) (explaining that from 2005 through 2013 total U.S. natural gas production increased 35%; 2008–2013 crude oil production increased from 5.0 million barrels per day (bbl/d) to 7.4 million bbl/d).

[4] Id. at 17.

[5] INGAA Found., Inc., North American Natural Gas Midstream Infrastructure Through 2035: A Secure Energy Future 8 (2011), http://www.ingaa.org/File.aspx?id=14911 (estimating $205 billion in new pipeline infrastructure will be needed by 2035).

[6] Conservation Law Foundation, Comment on Approaches to Ameliorate Adverse Wholesale Electricity Market Conditions in New Hampshire (May 14, 2015) (arguing that existing pipeline and storage capacity are adequate in the region, and transmission capacity is not source of electricity price volatility).

[7] Complaint at 1, Portland Pipe Line Corp. v. City of S. Portland, No. 2:15cv54 (D. Me. Feb. 6, 2015).

[8] Portland, Me., Clear Skies Ordinance (July 1, 2014), http://www.southportland.org/files/8114/0580/7459/08_-_ORDINANCE__1-14-15.pdf (‘Clear Skies Ordinance’).

[9] Id., at Annex 1, 3.

[10] Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 395 (1926) (holding that a municipal zoning ordinance restricting development was valid due to the restriction’s “substantial relation to the public health, safety, morals, or general welfare.” (emphasis added)).

[11] Me. Const. art. VIII, Pt. 2, § 1. (“The inhabitants of any municipality shall have the power to alter and amend their charters on all matters, not prohibited by Constitution or general law, which are local and municipal in character.”); But cf. Jesse J. Richardson Jr., et al., Is Home Rule the Answer? Clarifying the Influence of Dillon’s Rule on Growth Management 8, 25–29 (2000) (Explaining that most states grant local autonomy over land use planning, courts also rely upon ‘Dillon’s Rule’ – a strict rule of construction for plain language of constitutional or legislative grants – to limit the extent of home rule authority.)

[12] Complaint at 6–8, Portland Pipe Line Corp. v. City of S. Portland, No. 2:15cv54 (D. Me. filed Feb. 6, 2015).

[13] Compare Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n., 461 U.S. 190, 198 (1983). (holding that the Pipeline Safety Act (PSA) expressly preempts state regulation of oil pipeline safety), with Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 517 (1992) (“Congress’ enactment of a provision defining the pre-emptive reach of a statute implies that matters beyond that reach are not pre-empted.”) See also Wash. Gas Light Co. v. Prince George’s Cnty. Council, 711 F.3d 412, 421–22 (4th Cir. 2013) (holding zoning with incidental effects on pipeline safety does not regulate in a field preempted by the PSA).

[14] ANR Pipeline Co. v. Iowa State Commerce Comm’n, 828 F.2d 465, 471 (8th Cir. 1987).

[15] Clear Skies Ordinance, supra note 9; Me. Rev. Stat. Ann. tit. 30-A, § 5283 (permitting a municipality to incentivize certain forms of private sector industrial or infrastructure improvements within 10% of the acreage within its jurisdiction).