A lobbyist, legal concerns and a warning letter
The decision to send the bill to Judiciary followed a letter from Downs Rachlin Martin lobbyist Joseph Choquette, who represents the American Petroleum Institute. He sent senators a letter on behalf of the Portland Pipe Line Corp., raising legal questions about S.58.
The Portland Pipe Line Corp. owns the Portland-Montreal pipeline, which connects Montreal oil refineries to Portland, Maine. The pipeline, which cuts through a northern slice of Vermont, is the only current entity that would be subject to S.58, and Portland Pipe Line CEO Larry Wilson told legislators in February that he opposes any added regulations on the line.
Choquette's letter defended the current Act 250 process. He argued that there's no need to go down a road that could lead to legal issues with potential federal pre-emption. He said Act 250 already applies.
"We understand that any cognizable physical change to this pipeline would require a permit under existing law if such change may have a significant adverse impact on the environment," Choquette wrote. "To that end, there is a process already under way with full participation by environmental advocacy groups."
Choquette called on the Senate to send the bill to the Judiciary Committee for review, and he cautioned that the bill might violate the Vermont and U.S. constitutions.
"Treating this pipeline facility and company differently than all other regulated projects and entities that operate in Vermont would arguably run afoul of federal pre-emption principles that explicitly bar states from regulating oil pipeline safety; potentially constitute an impermissible attempt to nullify the President's exercise of his foreign affairs power under the U.S. Constitution as reflected in the Presidential Permits issued to Portland Pipe Line and potentially impose an unconstitutional burden on foreign or interstate commerce," he wrote.
Before the Senate took up the bill on Thursday, Choquette sent the letter to Sens. Dick Sears, D-Bennington, and Kevin Mullin, R-Rutland.
Sears, who chairs the Judiciary Committee, told VTDigger that Choquette's suggestion to bring the bill into his committee wasn't motivated by the letter so much as by the recognition that the bill affected one company.
"I don't think we should not do something because there's a threat of a lawsuit, but I think we should make ourselves fully aware of what we're up against," he said. "If the committee of jurisdiction thinks it's good public policy to pass a bill, I don't want to be in a position of killing it. But I do want to be in a position of making it the least risk-adverse as we can."
The committee that moved the bill to the floor is the Senate Natural Resources and Energy Committee.
Attorneys, competing views and a change of language
Friday morning, Sears and his committee met with legislative counsel and attorneys from Downs Rachlin Martin (DRM).
Peter Van Oot, a veteran environmental attorney with DRM, previously chaired the very Act 250 commission that would be charged with overseeing changes to the pipeline. He has also represented Portland Pipe Line for more than a decade.
He told the committee that the Choquette letter was not a threat of litigation from his client.
"They are trying to protect their business interests ... but I want to make it very clear that they have not asked us to threaten litigation, and we have not threatened litigation," he told the committee -- a comment which was greeted with gesticulated signs of incredulity from the panel's members.
Van Oot did, however, raise concerns about potential targeting of Portland Pipe Line, if the bill were passed.
"This would dramatically change the rules and it would dramatically change the rules for one and only one facility and for one and only one entity, at least currently," he said. "When you look at that context, that suggests to me that this entity is being singled out and discriminated in that anyone else would play by very different rules under Act 250."
Robert Luce, another DRM attorney who testified, won a major case in the U.S. court of appeals that found railroads in Vermont were federally exempt from Act 250.
The bill, he said, "would create a very different standard for a particular industry, which distinguishes it from all other industries. ... The question that comes up from a constitutional perspective ... is why are you singling this particular industry out for this treatment."
Luce said that the bill would conflict with the White House and could violate the dormant commerce clause under the U.S. Constitution.
"Requiring that (regulation) would delay, restrict or prohibit the use of the pipeline for certain business purposes, and doing that directly interferes with presidential powers," he said. "This pipeline is operating under a presidential permit issued by the president or the State Department."
Legislative counsel, on the other hand, advised the committee that the presidential permits only apply to portions of the pipeline by the borders, not the entire pipeline.
There is also language in the bill that stipulates regulation of safety issues falls under the strict purview of the federal government. It is a provision meant to avoid a federal lawsuit, like the one the state currently finds itself embroiled in with Entergy Corp. over regulating the Vermont Yankee nuclear plant.
The Legislature's legal team told the committee that changing the bill's language from requiring Act 250 review for "a change to the pipeline" to "a cognizable physical change to the pipeline" was more in line with existing case law and thus "more defensible."
The language also echoes the wording used in Choquette's letter.
The committee supported the language and so did the Senate in its second reading, but there was no discussion about whether the new language would trigger Act 250 review if Portland Pipe Line Corp. pumped tar sands oil through Vermont -- which is the very notion that prompted the bill's creation.
Portland Pipe Line's Larry Wilson previously told legislators that he's "aggressively" seeking new opportunities for his company's line. Such opportunities include contracts with oil companies that want to distribute petroleum products from Alberta's tar sands region.
The Senate's decision comes two weeks after the Canadian government voiced concern that Vermont towns were approving resolutions opposing the movement of tar sands oil through the state.
The bill is "basically unnecessary"
Jim Murphy, senior counsel for the National Wildlife Federation, and Sandra Levine, senior attorney for the Conservation Law Foundation, say that while they appreciate legislators' efforts, the state already has Act 250 jurisdiction over any such changes to the pipeline.
Joined by a coalition of environmental groups and Northeast Kingdom residents, the two attorneys asked the Northeastern Act 250 commission in January to verify that the state's governing land-use law has authority over potential changes to the Portland-Montreal Pipeline. The request is still pending.
"We've testified in the Senate about this, that it's basically unnecessary," Levine said. "If you're buying yourself a lawsuit, which clearly the pipeline company seems to be threatening, I think one should be thinking about whether it makes sense or not."
At the same time, she said, the Legislature can't back down from large corporations.
"Clearly the Legislature needs to be more careful, considering the litigation that came out of the Vermont Yankee vote," she added. "But the Legislature has a lot of authority, and it shouldn't let threats from corporations necessarily guide its actions."
Murphy said he has concerns about the new language in the bill, and he said that the previous language would not pre-empt federal authority.
"If you actually look at ... a presidential permit ... there is no basis, I believe, for determining that it would pre-empt the clear ability of states to regulate siting, routing and land-use issues, which is what Act 250 does," Murphy said.