PORTLAND PIPE LINE CORPORATION et al v. CITY OF SOUTH PORTLAND et al

Filing 156

INTERIM ORDER holding in abeyance 87 Motion for Summary Judgment; 88 Motion to Dismiss; 88 Motion for Summary Judgment By JUDGE JOHN A. WOODCOCK, JR. (sfw) Modified on 5/11/2017 to indicate this is an Interim Order(sfw).

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
PORTLAND PIPE LINE
CORPORATION, et al.,
Plaintiffs,
v.
CITY OF SOUTH PORTLAND,
et al.,
Defendants.

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2:15-cv-00054-JAW

INTERIM ORDER
The Court orders further proceedings under Federal Rule of Civil Procedure
12(b)(1) to resolve whether the Court has subject matter jurisdiction.
I.

BACKGROUND
On February 6, 2015, Portland Pipe Line Corporation (PPLC) and the

American Waterways Operators (AWO) (collectively, Plaintiffs) filed a nine-count
complaint in this Court, challenging the constitutionality of a municipal ordinance
that prohibits the “bulk loading” of crude oil onto marine vessels in the harbor of
South Portland, Maine. Compl. for Declaratory and Injunctive Relief (ECF No. 1)
(Compl.). PPLC owns and operates the United States portion of a transportation
system that includes 12-inch diameter, 18-inch diameter, and 24-inch diameter
pipelines and associated facilities extending from South Portland, Maine to Montreal,
Quebec. Id. ¶ 11. At the time of the filing of the Complaint in February 2015,
approximately forty-eight ships offloaded at South Portland annually, and PPL

transported crude oil to Quebec via pipeline at a rate of approximately 2.4 million
barrels of oil per month. Id. The practical effect of the Ordinance is to prevent PPLC
from reversing the flow of its existing pipeline infrastructure to transport oil south
from Montreal, Quebec, to vessels in the South Portland harbor.
On March 31, 2015, the city of South Portland and its code enforcement officer
(collectively, Defendants) filed a motion to dismiss for lack of subject matter
jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), arguing, inter alia,
that the Plaintiffs’ claims are unripe and that the Plaintiffs lack standing. Defs.’ Mot.
to Dismiss the Compl. Pursuant to Rule 12(b)(1) (ECF No. 16); Mem. of Law in Supp.
of Defs.’ Mot. to Dismiss Pursuant to Rule 12(b)(1) (ECF No. 17). Specifically, the
Defendants argued that the Plaintiffs have no concrete plan to reverse the flow of oil
and thereby violate the Ordinance, that the present effect of the Ordinance on the
Plaintiffs consists of a “threadbare claim of economic uncertainty,” and that the
Plaintiffs’ claims rest on a “chain of contingencies, including whether PPLC ever
decides to bulk load crude oil in the City and whether it initiates a process for federal,
state and local approvals that may conflict with the Ordinance.” Id. at 11–18.
On February 11, 2016, the Court issued an order denying the Defendants’
Motion to Dismiss. Order on Defs.’ Mot. to Dismiss (ECF No. 29). Viewing the facts
in the light most favorable to the Plaintiffs, the Court concluded that “but for the
Ordinance, PPLC would commence plans to reverse the flow of crude oil and would
begin marketing that oil.” Id. at 38–38. However, the Court cautioned that “it

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remains to be seen whether PPLC will amass a set of facts sufficient for the Court to
make its legal determinations [regarding justiciability] . . . .” Id. at 40.
Subsequent to the Court’s Order, the parties engaged in discovery, and on
November 17, 2016, the parties filed cross motions for summary judgment with
supporting statements of material facts. Pls.’ Mot. for Summ. J. (ECF No. 87); Pls.’
Statement of Material Facts (ECF No. 89); Defs.’ Consolidated Mot. to Dismiss
Pursuant to Rule 12(b)(1) and Mot. for Summ J. (ECF No. 88) (Defs.’ Mot.); Defs.’ Rule
12(b)(1) and Loc. R. 56(b) Statement of Undisputed Material Facts [Redacted Verion]
(ECF No. 95). As part of their motion for summary judgment, the Defendants also
renewed their motion to dismiss for lack of subject matter jurisdiction pursuant to
Rule 12(b)(1). Defs.’ Mot. at 2–3. In their motion, the Defendants contend:
Now that discovery is complete, it is plain that the [Defendants’] initial
arguments were correct and that, in denying the [Defendants’] initial
motion, the Court was misled by statements and arguments by the
Plaintiffs that are demonstrably untrue. Specifically, contrary to
Plaintiffs’ representations, PPLC has no current plans to reverse the
flow of oil in its pipeline . . . , did not receive all of the permits necessary
to reverse the flow . . . and, in fact, has full knowledge that there is not
sufficient volume of crude oil available in the existing west-to-east
pipeline network [which would supply PPLC] to make its project viable.
. . . Thus, the [Defendants] renew[] [their] motion to dismiss based upon
ripeness and standing.
Id.
II.

FACIAL VERSUS FACTUAL RULE 12(b)(1) CHALLENGES
Under Rule 12(b)(1), a court must dismiss a case over which it lacks subject

matter jurisdiction. FED. R. CIV. P. 12(b)(1), (h)(2). Rule 12(b)(1) is a “large umbrella,
overspreading a variety of different types of challenges to subject-matter

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jurisdiction,” including ripeness and standing. Valentin v. Hosp. Bella Vista, 254 F.3d
358, 362–63 (ripeness); see Blum v. Holder, 744 F.3d 790, 795–96 (1st Cir. 2014)
(standing). The plaintiff, as the party asserting subject matter jurisdiction, has the
burden of demonstrating its existence. Aversa v. United States, 99 F.3d 1200, 1209
(1st Cir. 1996).
The First Circuit has established two ways to challenge a court’s subject matter
jurisdiction under Rule 12(b)(1): facial challenges and factual challenges. In a facial
challenge, the defendant “accepts the plaintiff’s version of the jurisdictionallysignificant facts as true and addresses their sufficiency, thus requiring the court to
assess whether the plaintiff has propounded an adequate basis for subject matter
jurisdiction.” Id. at 363. In performing this task, the court must proceed as it would
under Rule 12(b)(6), accepting the well-pleaded facts contained in the complaint as
true and drawing all reasonable inferences in favor of the plaintiff. Id.
When mounting a factual challenge, by contrast, the defendant controverts
“the accuracy (rather than the sufficiency) of the jurisdictional facts asserted by the
plaintiff and proffer[s] materials of evidentiary quality in support of that position.”
Id. Faced with a factual challenge, the court must first “determine whether the
relevant facts, which would determine the court’s jurisdiction, also implicate the
elements of the plaintiff’s cause of action.” Torres-Negron v. J&N Records, LLC, 504
F.3d 151, 163 (1st Cir. 2007). If the court determines that the disputed jurisdictional
facts are intertwined with the merits of the case, then “the district court should

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employ the standard applicable to a motion for summary judgment.” Id. (quoting
Autery v. United States, 424 F.3d 944, 956 (9th Cir. 2005)).
If, however, the court determines that the contested jurisdictional facts are not
intertwined with the elements of the plaintiff’s cause of action, then the court “must
address the merits of the jurisdictional claim by resolving the factual disputes
between the parties.” Valentin, 254 F.3d at 363. This is because “at issue in a factual
12(b)(1) motion is the trial court’s jurisdiction—its very power to hear the case . . . .”
Torres-Negron, 504 F.3d at 163 (quoting Lawrence v. Dunbar, 919 F.2d 1525, 1529
(11th Cir. 1990)); see also Valentin, 254 F.3d at 364 (“A court’s authority to hear a
particular case is a necessary precondition to the proper performance of the judicial
function”). When resolving the factual disputes, the court “may proceed as it never
could under [Rule 12(b)(6) or Rule 56].” Torres-Negron, 504 F.3d at 163 (alteration
added). The plaintiff’s factual allegations are entitled to no presumptive weight;
rather, the court is free to weigh the evidence and “enjoys broad authority to order
discovery, consider extrinsic evidence, and hold evidentiary hearings in order to
determine its own jurisdiction.” Valentin, 254 F.3d at 363; see also HernandezSantiago v. Ecolab, Inc., 397 F.3d 30, 33 (1st Cir. 2005); Nulankeyutmonen
Nkihtaqmikon, 462 F. Supp. 2d. 86, 90 (D. Me. 2006) (internal quotations marks and
citation omitted), rev’d on other grounds 503 F.3d 18 (1st Cir. 2007); 2 JAMES WM.
MOORE, MOORE’S FEDERAL PRACTICE § 12.30[4] (3d ed. 2016) (“Because a factual Rule
12(b)(1) motion involves the court’s very power to hear the case, the Court may weigh
the evidence to confirm its jurisdiction. No presumptive truthfulness attaches to

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plaintiff’s allegations, and the existence of disputed material facts does not preclude
the trial court from evaluating for itself the merits of the jurisdictional claim”).
III.

THE DEFENDANTS’ FACTUAL RULE 12(b)(1) CHALLENGE
In this case, the Defendants label their present Rule 12(b)(1) motion as a

“factual challenge.”1 Defs.’ Mot. at 10 (citing Valentin, 254 F.3d at 362–65).

The

Plaintiffs do not appear to disagree with this designation; rather, they argue that the
Defendants should not be entitled to a second bite at the Rule 12(b)(1) apple,
especially because the Defendants could have requested the evidentiary record two
years ago when it filed its first motion. Pls.’ Mem. in Opp’n to Defs.’ Mot. to Dismiss
and for Summ. J. at 2 (ECF No. 127) (Pls.’ Opp’n). The Court agrees with the

In Valentin v. Hospital Bella Vista, 254 F.3d 358 (1st Cir. 2001), the First Circuit discussed in
great detail the distinction between facial and factual Rule 12(b)(1) challenges. In Valentin, the
defendant challenged the plaintiff’s factual allegations relating to the existence of diversity
jurisdiction. Notably, the First Circuit stated that because challenges to ripeness present a “pure (or
nearly pure) question[] of law,” it was beyond the scope of the Court’s opinion. Id. at 363. Hence, it is
possible to read Valentin as suggesting that a defendant may not bring a factual Rule 12(b)(1)
challenge to contest ripeness.
However, this Court does not read Valentin in such limited terms. In this case, there is a
significant dispute regarding the facts underlying the Court’s ripeness determination. The Court must
resolve that dispute in order to establish its authority to hear the case. Thus, as the First Circuit
reasoned in Valentin, “when a factbound jurisdictional question looms, a court must be allowed
considerable leeway in weighing the proof, drawing reasonable inferences, and satisfying itself that
subject-matter jurisdiction has attached.” Id. at 364. This is especially the case here, where the
Plaintiff’s cause of action involves important constitutional questions. See Ernst & Young v. Depositors
Economic Protection Corp., 45 F.3d 530, 538 (1st Cir. 1995) (“Courts should strive to avoid gratuitous
journeys through forbidding constitutional terrain”). The Court therefore concludes that, at least in
the context of this case, the Defendant may raise a factual Rule 12(b)(1) challenge to contest the
ripeness of the Plaintiffs’ claims. See also Al-Owhali v. Ashcroft, 279 F. Supp. 2d 13, 20 (D.D.C. 2003)
(challenges regarding ripeness or failure to exhaust administrative remedies can be either facial or
factual challenges); Hearns Concrete Const. Co. v. City of Ypsilanti, 241 F. Supp. 2d 803, 810 (E.D.
Mich. 2003).
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Plaintiffs that it would have been better practice for the Defendants to request
preliminary jurisdictional discovery earlier in the case.2
However, the Defendants cannot waive subject matter jurisdiction—as the
Plaintiffs seem to suggest. The First Circuit has written that “lack of subject matter
jurisdiction can be noticed at any time and cannot be waived.” Plumbers' Union Local
No. 12 Pension Fund v. Nomura Asset Acceptance Corp., 632 F.3d 762, 767 (1st Cir.
2011); see also Mach. Project, Inc. v. Pan Am. World Airways, Inc., 199 F. Supp. 3d
382, 386 (D. Mass. 2016) (citing Aversa v. United States, 99. F.3d 1200, 1209 (1st Cir.
1996)) (holding that a challenge to the existence of federal subject matter jurisdiction
“may be raised at any point during the litigation pursuant to Fed. R. Civ. P. 12(b)(1)”).
This is because, as noted earlier, “[a] court’s authority to hear a particular case is a
necessary precondition of the proper performance of the judicial function.” Valentin,
254 F.3d at 363; see also FED. R. CIV. P. 12(h)(3) (“If the court determines at any time
that it lacks subject matter jurisdiction, the court must dismiss the action”). Indeed,
on April 27, 2017, the Court of Appeals for the First Circuit affirmed the dismissal of
a case based on a lack of subject matter jurisdiction, even though the case had gone
all the way to verdict and was on appeal before the jurisdictional flaw was recognized.
Hearts with Haiti, Inc. v. Kendrick, Nos. 15-2401, 16-1839, 2017 U.S. App. LEXIS
7622 (1st Cir. Apr. 27, 2017).

Consequently, the Court must address the

As a practical matter, the Court cannot know—nor does it matter—how much of a difference
isolating and resolving the jurisdictional issue first would have made, because the parties would have
had to engage in extensive discovery in any event. No doubt there would have been some efficiency
gained from trimming the issues subject to discovery and briefing. But exactly how much is conjecture,
and the Court must deal with the case presented, not as it might have been.
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jurisdictional issues that the Defendants raise in their factual Rule 12(b)(1) challenge
before proceeding to the merits of the case.
In addressing the Defendants’ factual Rule 12(b)(1) challenge, the Court first
notes that the contested jurisdictional facts are not intertwined with the merits of the
Plaintiff’s case. In the Court’s view, whether PPLC has both the capacity and a
sufficiently immediate plan to violate the Ordinance is not intertwined with the
ultimate constitutionality of the challenged law. To this point, each of the other
substantive legal issues assumes that PPLC will proceed with its proposal to reverse
the flow of oil; otherwise, the Court would be issuing a constitutionally-prohibited
advisory opinion on the legality of a project that might never happen. See Abbott
Labs. v. Gardner, 387 U.S. 136, 148 (1967) (the prohibition against advisory opinions
prevents “the courts, through avoidance of premature adjudication, from entangling
themselves in abstract disagreements”); Mangual v. Rotger-Sabat, 317 F.3d 45, 59
(1st Cir. 2003). Accordingly, it is the Court’s obligation to weigh the competing
jurisdictional facts—affording neither party a presumption of truthfulness—to
determine whether the Plaintiffs have met their burden of proving that they have
standing and that their claims are ripe.
The Court has scrutinized the copious filings in this case and has identified
some examples of facts in contention that the Court is uncomfortable resolving based
on the current state of the record.3 For instance, after comparing the parties’ cross

The analytic contrast is with the pending motions for summary judgment, where the Court
must view contested facts in the light most favorable to the non-movant. See Gillen v. Fallon
Ambulance Serv., Inc., 283 F.3d 11, 17 (1st Cir. 2002).
Furthermore, in highlighting some disputed facts, the Court is not proposing an exclusive list.
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statements of facts, the Court is unclear on the extent to which PPLC’s marketing
efforts depend on crude oil flowing from west to east on the reversed Enbridge Line 9
system; whether the oil flowing west to east on the Enbridge Line 9 system is already
committed to other refineries; the ramifications of the take-or-pay contracts between
Enbridge Pipelines, Inc., and Suncor and Valero Jean Gaulin Refineries near
Montreal, Quebec; the precise reasons for PPLC’s inability to move forward with a
reversal project in 2011, 2012, or 2013; the extent to which a current plan to reverse
the flow of the pipelines would differ from the 2008 proposal; and what steps PPLC
has taken to analyze the demand for a flow reversal since publishing an open letter
to the citizens of South Portland in 2013, in which it wrote:
Let us be clear—there is no such project [to reverse the flow of the
pipelines to South Portland] proposed, pending, or imminent. In fact,
recently, as a good faith measure, we took the rare step of voluntarily
surrendering our final permit relating to that prior proposal, as further
reassurance to the community we care so deeply about that there is no
tar sands project.
Third Decl. of Jesse Harlan Alderman, Esq., in Supp. of Defs.’ Opp’n to Pls.’ Mot. for
Summ. J., Attach. 2, An Open Letter to the Residents of South Portland (ECF No.
125).
Moreover, the Court is uncomfortable with the underpinnings for opinion
evidence of Sarah Emerson in its present state. Decl. of Sarah Emerson (ECF No.
91); Defs.’ Loc. R. 56(d) Resp. to Pls.’ Additional Statement of Facts, Attach. 3, Second
Decl. of Sarah Emerson (ECF No. 143) (Second Emerson Decl.). Sarah Emerson, an
oil industry expert, questioned whether there currently is sufficient pipeline capacity
carrying crude oil to allow PPLC to reverse the flow of its pipelines and load crude oil
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onto ships in South Portland. Second Emerson Decl. ¶ 12. Relying on Ms. Emerson’s
expert opinions, the Defendants contend that “PPLC cannot show that there is
sufficient crude oil available to make the project viable.” Defs.’ Mot. at 3.
The Plaintiffs argue that the Defendants cannot rely on the expert testimony
of Ms. Emerson to introduce facts of which Ms. Emerson lacks personal knowledge.4
Pls.’ Loc. R. 56(c) Opposing Statement of Material Facts and Additional Statement of
Facts ¶ 10 (ECF No. 128). Ms. Emerson herself acknowledged that she is basing her
opinions not only on her own personal knowledge but also on “facts and data that I
have been made aware of, personally observed, that are publicly available, and that
professionals in my field routinely rely on to reach opinions.” Second Emerson Decl.
¶ 4. The First Circuit has explained that Federal Rule of Evidence 703 contemplates
that “the trial judge act as an independent ‘gatekeeper’ to ensure that there is
sufficient, credible evidence that experts do rely on the specified types of sources in
formulating their opinions.” United States v. Corey, 207 F.3d 84, 89 (1st Cir. 2000).
That said, Ms. Emerson’s testimony raises substantial questions about the
practical ability of the Plaintiffs to move forward with a plan to reverse the flow of
their pipelines.5 Disputes regarding expert testimony and personal knowledge are

The Plaintiffs’ resort to Rule 56(c) is appropriate for a motion for summary judgment, not a
jurisdictional hearing. But their overall point—namely, that the Court should perform a gatekeeping
function to make sure Ms. Emerson is basing her expert opinions on reliable facts—is equally
applicable to a jurisdictional hearing.
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It is important to note that the Court is not charged with determining whether it makes
“business sense” for PPLC to proceed with its reversal project. Rather, the Court must satisfy itself
that there is a case or controversy in this matter, which requires the Court to find that “the facts
alleged, under all the circumstances, show that there is a substantial controversy, between parties
having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of the
judicial relief sought.” Labor Relations Division of Construction Industries of Massachusetts, Inc. v.
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often difficult to resolve on a truncated record. See Cortes-Irizarry v. Corporacion
Insular De Seguros, 111 F.3d 184, 188 (1st Cir. 1997). Consequently, the Court is
hesitant to rule definitively on the admissibility of Ms. Emerson’s testimony,
especially when her testimony raises significant questions relating to the Court’s
jurisdiction.
Given the weighty constitutional issues looming in this case, it is imperative
for the Court to make certain that it has jurisdiction and to weigh and resolve the
factual disputes regarding the Court’s jurisdiction. As the Court’s examples suggest,
the parties’ cross statements of facts leave the Court with substantial uncertainty
and preclude it from undertaking the careful factual weighing that this case deserves.
Consequently, the Court seeks additional assistance from the parties to clarify the
factual jurisdictional disputes and to provide materials of evidentiary quality to assist
the Court’s determination.
Therefore, the Court ORDERS that the Plaintiffs’ Motion for Summary
Judgment (ECF No. 87), and the Defendants’ Consolidated Motion to Dismiss
Pursuant to Rule 12(b)(1) and Motion for Summary Judgment (ECF No. 88) be held

Healey, 844 F.3d 318, 326 (1st Cir. 2016). Here, it could be that even if Ms. Emerson is correct, PPLC
has an alternative explanation for why it is going forward with the reversal project.
Even so, based on what the Court now knows, if the Defendants prove, for instance, that there
is simply no oil to supply the reversal project, or that PPLC itself acknowledged that it would not move
forward with the project due to market forces, then the Court would have serious reservations about
the Plaintiffs’ assertion that the Ordinance subjects them to immediate harm. Compl. ¶ 63. At the
same time, it seems unfair to reach this conclusion based on evidence that PPLC contests, without
giving PPLC a better opportunity to challenge the facts underlying the expert opinion that could defeat
its case, and to give the Defendants an equal opportunity to prove their point. The Court is reluctant
to rule either way based on the contents of a contested sworn declaration.

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in abeyance. The Court will schedule a telephone conference to be held at the mutual
convenience of the Court and counsel to determine the next steps.
SO ORDERED.
/s/ John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR.
UNITED STATES DISTRICT JUDGE
Dated this 11th day of May, 2017

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