Maine's Supreme Court Upholds the Constitutionality of the Site Location Act and the Coastal Conveyance Act

The Maine Supreme Judicial Court recently upheld the validity of two Maine laws, both of which promise to have a far-reaching impact upon state environmental legislation in the 1970's. The Site Location Act of 1970¹ establishes a strict land use control system by requiring state approval of the landsites of all major industrial, commercial and residential developments. The constitutionality of this statute was affirmed by the state's highest court In the Matter of Spring Valley Development by Lakesites, Inc.;² the court rejected the plaintiffs' contention that the application of the Site Location Act would result in taking without compensation. Also enacted in 1970, the Coastal Conveyance Act,³ which imposes absolute and vicarious liability for oil spills upon oil terminal operators, survived a major constitutional challenge charging violations of the Admiralty, Commerce and Import-Export Clauses in a Maine supreme court decision in two related cases, Portland Pipe Line Corporationv. Environmental Improvement Commission and American Oil Company v. Environmental Improvement Commission.⁴

Both laws were prompted by a threatened invasion of oil-import operations and related refining industries anxious to exploit Maine's deepwater ports, unique along the Eastern seaboard. Before enactment of these two laws Maine was vulnerable to all the ills accompanying an oil industrial boom. Before the Site Location Act was passed, Maine, like most other states, relied primarily upon municipalities to legislate land use regulations. Yet in 1970 only one-third of Maine's townships were organized into municipal corporations, and of this fraction only 15 percent were zoned. Consequently, 60 percent of the land area of the state was not subject to control by incorporated local governments. During that same year a number of companies were considering the possibility of building major oil terminals and refineries in areas of the state where only a few local governments had passed any land use restrictions at all.⁵

Furthermore, state liability provisions for oil pollution were woefully inadequate. As a result, before enactment of the Coastal Conveyance Act, losses caused by oil spills were borne for the most part by the state and by costal landowners. Between 1967 and 1969 only 24 of the 70 oil spills reported along the Maine coast resulted in litigation, and of these 24 litigations only 18 were settled by placing liability upon the party responsible for the oil spill. Expectedly, oil industries gravitated to Maine's coastal waters. In Portland Harbor alone, which is the second largest oil port on the East coast, 26 million tons of oil are transferred yearly.

Faced with these alarming facts, Maine legislators pushed through a number of tough environmental measures during the 1970 legislative session.⁶ The Site Location Act requires state approval of landsites for all large industrial, commercial and residential developments. The landsites of all major developments throughout the entire state "which may substantially affect the environment" are subject to state regulation as well as local zoning and licensing requirements. Major developments are defined as all industrial, commercial and residential developments (1) encompassing a land or water area in excess of 20 acres, (2) involving drilling or excavation, or (3) consisting of a structure which occupies, on a single parcel of land, an area in excess of 60,000 square feet.

Developers must prove that proposed projects falling within any of these categories will inflict minimal damage on the environment. Anyone planning to construct or operate such a development must submit a Record of Intent to the Environmental Improvement Commission, a state agency consisting of ten members representing manufacturing interests, conservationists, municipalities, air pollution experts and the public. The Record of Intent describes the nature and location of the development, the financial status of the developer, an estimate of the environmental damage that the project will cause, and a description of proposed sewage and water supply systems.

Approval of a development by the Commission depends upon four criteria: (1) sufficient funds held by the developer to attain pollution control and solid waste disposal standards; (2) provisions for satisfactory traffic movement in and out of the developed area; (3) proof that the project will have a minimal adverse effect upon the local environment; and (4) the suitability of soil types on which the project will be constructed. Besides meeting these requirements, power plants generating more than 1,000 kilowatts and transmission lines carrying more than [3 ELR 10146] 125 kilovolts must also be approved by the Public Utilities Commission. The burden is on the developer to prove that the proposed project meets these required standards.

According to the terms of the law, the Commission may deny requests or issue permits subject to certain conditions, usually at the recommendation of other interested state agencies. In the event that inadequate information is disclosed in the Record of Intent, the Commission may refuse to issue a permit, regardless of the nature of the development or its effect on the environment.⁷ The decisions of the Commission are enforced by the state attorney general, who at the request of the Commission may also enjoin the construction of a project undertaken by a developer who has failed to notify the Commission first. Finally, the Act directs that decisions of the Environmental Improvement Commission may be appealed to the state Supreme Judicial Court.

The Maine law closely resembles the Vermont Land Use and Development Act, which was approved in 1970.⁸ Like the Maine law, the Vermont statute is designed to attain a controlled balance between conservation and development. However, several important differences exist between the two laws. First, the Vermont statute is administered by the statewide Environmental Board and seven District Environmental Commissions. Second, requests for permits to sell any interest in a subdivision or to begin construction on a development occupying more than ten acres must first be made at the district level. Decisions of District Environmental Commissions may be appealed to the Environmental Board. Third, the Environmental Board must develop a comprehensive statewide land use plan. Lastly, the Vermont statute charges the Environmental Board with the responsibility of initiating injunction proceedings.

When compared with the Vermont law, the Maine Site Location Act appears to have three serious weaknesses. To begin with, the statute makes no provision for the promulgation of a comprehensive land use plan similar to the one required by the Vermont law. Without statewide planning, the Maine law is at best a stopgap measure. Second, the Environmental Improvement Commission, although strengthened in the past several years, is hampered by its inability to enforce its decisions. The Commission must rely upon the state attorney general to enforce its orders. Finally, the administration of the Maine Act is somewhat cumbersome because unlike Vermont's Environmental Board the Environmental Improvement Commission is not assisted by district-level commissions.⁹

Nevertheless, the Site Location Act does present a welcome innovation by introducing state participation in land use regulation, particularly since such regulations have heretofore been absent in Maine.

Although the law was designed to regulate the growth of oil industries, the number of such proposals considered by the Environmental Improvement Commission has been relatively small, perhaps because the Maine Department of Economic Development has successfully encouraged the introduction of light industry in the state. Approximately 83 percent of the applications brought before the Commission request permits for residential subdivisions, and of this percentage, about one-half involve seasonal housing, a reflection of the current wave of developers and second-home buyers pouring into the state.¹⁰

It is not surprising, then, that the Maine Supreme Judicial Court case upholding the constitutionality of the Act involved the construction of a residential subdivision. On February 9, 1973, the court declared In the Matter of Spring Valley Development by Lakesites, Inc., that the Site Location Act represented a valid exercise of state police power and that the law quite clearly authorized the Environmental Improvement Commission to rule on the suitability of residential subdivision landsites.

Lakesites, Inc. was in the process of preparing a 92-acre plot of land in Raymond, Maine for sale in subdivided lots when the Environmental Improvement Commission ordered a halt on all preparation until Lakesites had applied for and received a permit from the Commission. During a hearing held by the Commission, it was found that the soil in the area was unsuitable for septic tank disposal of domestic sewage and that installation of 90 septic tanks would very likely result in the degradation of groundwater supplying the area's drinking water. As a result, the Commission refused to issue a permit to the subdividers.

Lakesites appealed to the Supreme Judicial Court, specifically challenging the authority of the Commission to issue or deny permits for the subdivision. The appellants also charged that the Act constituted taking without compensation and violated equal protection and due process.

In tracing the legislative history of the Act, the court found that residential subdivisions were indeed subject to the provisions of the Act inasmuch as subdivisions fell into the category of commercial ventures. Residential subdivisions, the court went on, met the two criteria proposed by the legislature in defining developments which significantly affected the environment. The subdivision of lots, like all industrial and commercial developments, resulted in the consumption of natural resources and the discharge of potentially harmful wastes. Furthermore, such developments may harm local environments merely because of their size. Also important to the decision was a1972 Amendment to the Act¹¹ which inserted the words "including subdivisions" after "commercial or industrial developments" in § 482(2).

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The appellants argued that the provisions of the Act, intended to prevent environmental damage, were strictly limited to the builder and did not apply to the person who subdivides the lots for development. In answer the Court replied that "the Legislature intended the Commission to scrutinize the proposals before the harmful act could be done."

Focusing on the issue of unconstitutionality, the court found that the Site Location Act did not step outside permissible bounds. Three main judicial doctrines were cited in affirming the law's constitutionality. First, the court briefly mentioned the presumption of constitutionality of all legislative acts. Second, it found that the Act represented a valid exercise of the state's police power. In the opinion of the court, the state was justified in its attempt to prevent ecological damage before it occurred by limiting the use of property. Cited as particularly relevant were a 1835 Maine Supreme Judicial Court decision¹² upholding a Bangor municipal ordinance prohibiting the construction of wooden buildings in certain parts of the city and a 1928 Maine court decision¹³ affirming the constitutionality of a statute authorizing village corporations to enact zoning ordinances. In the latter decision the court declared: "We consider it indisputable that the limitation of use of property for the purpose of preserving from unreasonable destruction the quality of air, soil and water for the protection of the public health and welfare is within the police power."

Consequently, the court rejected the appellants' contention that the Act here resulted in a taking would compensation. The Act, the court stressed, forbade only the sale of the Spring Valley development for residential purposes in its present state.

One provision of the statute, however, was struck down by the court. The Maine Legislature had inserted into the Act a section stating that property values must not be unreasonably affected by commercial or industrial developments. This provision, the court ruled, was at best "a dubious criterion," which lay "outside the scope and purposes of the Act," but nevertheless, did not affect the Environmental Improvement Commission's refusal to issue Lakesites a permit. As a result of these conclusions, the court declared that the statute violated neither the federal nor the Maine constitution, and that the Environmental Improvement Commission had acted within its authorized capacity in refusing to approve the Spring Valley development.

During the same year that the Site Location Act was passed, Maine once again set the pace for state environmental legislation by enacting the Coastal Conveyance Act. Recognizing the danger posed by the multiplication of oil terminal facilities along the coast, the law bluntly declares that the state interest in preserving the natural condition of the coastline "outweighs any economic burdens imposed by the Legislature upon those engaged in transferring oil, petroleum products and their by-products and related activities." The Act requires speedy clean-up of oil spills, provides a system of reimbursement for persons damaged by oil spills, and establishes a fund not only for the administration of these activities but also to guarantee immediate payment of damage claims. The law imposes a number of strict regulations upon the activities of oil terminals, defined as facilities on land or water designed for transferring, processing, refining and storing oil. First, an annual license from the Environmental Improvement Commission is required for the operation of an oil terminal. In order to renew a license an oil terminal operator must produce proof that his facility is complying with federal and state plans for controlling oil pollution. Second, oil terminals and tankers which have inadvertently discharged oil within twelve miles of Maine's coastline must take responsibility for cleaning up the oil spills. Third, the Act charges each oil terminal operator with absolute liability not only for the acts of terminal employees but also for those of oil tankers and other vessels destined for the terminal as long as these vessels are within 12 miles of the Maine coastline. In any suit filed by the state to enforce the liability provisions of this law, the state has only to prove that the oil spill was caused either by an oil terminal or by one of the vessels under the terminal's responsibility. No proof of negligence is necessary.

The Environmental Improvement Commission is responsible for the administration of the Act. An independent body that has been strengthened enormously in recent years, the Commission is empowered to adopt rules and regulations regarding operation and inspection requirements for oil terminals and related vessels, procedures for reporting and dealing with oil spills, establishment of temporary control districts with requirements designed specifically for those districts, and regulations for vessels and oil terminals. The law also directs the Commission to take responsibility for the clean-up of "mystery spills."

Finances for the administration of the law are provided by the Maine Coastal Protection Fund, a "nonlapsing, revolving fund" limited to four million dollars. Principal funding is derived from an annual license fee of one-half cent per barrel of oil or petroleum transferred annually. This fee is reduced to cover only administrative and research expenses of the Commission whenever the balance of the Fund reaches the four million dollar limit.

Besides paying for administrative expenses and for "mystery spill" clean-ups, the Fund is also used to pay for third party damage claims under a procedure which by the terms of the law provides exclusive remedies for such claims. Anyone whose property has been damaged by an oil spill may apply to the Commission for a claim settlement within six months of the incident. If the claimant, the Commission and the polluter agree to the validity and the amount of the damage claim, the claimant must be reimbursed for the damage to his property by the Coastal Protection Fund. In case of disagreement between the [3 ELR 10148] claimant, the Commission and the polluter, the claim must be settled by a board of arbitration whose determination regarding the claim is final. Only cases regarding abuse of discretion by the board may be appealed to a Justice of the Superior Court.

Finally, the Act directs oil polluters to reimburse the Fund for all costs involved in cleaning up oil spills, including the full amount of third party claims if the offender failed to report the oil spill. If the discharge was reported promptly, the offender is required to pay only those claims which are in excess of $15,000.

Despite a major attack by a combined force of oil-related industries, the Maine Supreme Judicial Court upheld the constitutionality of the Coastal Conveyance Act in a decision in two related case, Portland Pipe Line Corporation v. Environmental Improvement Commission, and American Oil Company v. Environmental Improvement Commission. Portland Pipe Line, the plaintiff in the first action, is a Maine corporation which transports oil from South Portland to the Canadian border. The Corporation does not have any ownership interest in the oil that it carries.However, the plaintiffs in the second action, ten major oil companies, not only own oil terminals in Portland Harbor and elsewhere along the coast of Maine, but also own property interests in most of the oil and petroleum transferred at their terminals.

Claiming a large number of constitutional infringements, the plaintiffs in both suits sought a declaratory judgment against the Act. Their most formidable arguments charged violations of the Import-Export Clause (Article I, Section 10, Clause 2), the Commerce Clause and the Admiralty Clause (Article III, Section 2, Clause 3) of the United States Constitution.

In the decision handed down by the state's highest court, the intent of the Coastal Conveyance Act was first of all defined as an attempt to regulate the potentially destructive transfer of oil over water; administration of the Act did not touch on the value of the oil itself.

From this standpoint, then, the court upheld the validity of the Act against the plaintiffs' strongest and most detailed attacks. Chief among these charges was the contention that the license fee of one-half cent per barrel of oil transferred violated the Import-Export Clause of the U.S. Constitution, which forbids state governments to levy duties or imposts on imports or exports without the consent of Congress. Exempted from this prohibition are those duties which are necessary for the implementation of state inspection laws. In response to this attack, the court reached two conclusions. First, despite the fact that the great majority of petroleum products affected by the law were imported from foreign countries, the license fee itself was not imposed upon the import of oil, but rather upon "the offloading of oil." Consequently, although the fee was levied according to the volume of oil transferred, in the long run it had no relation to the value of the oil. Second, the license fee could not be considered a duty or impost because its primary purpose was the establishment of a regulatory system designed to to control oil pollution, a purpose very much in the interest of the public welfare.

The plaintiffs also argued that the license fee violated the Commerce Clause by placing an impermissible burden upon interstate and foreign commerce. Nevertheless, the court rejected this argument, citing the three-pronged test of constitutionality set out in a 1972 Supreme Court decision, Evansville-Vanderburgh Airport Authority District v. Delta Airlines,¹⁴ in which a fee levied on interstate commerce for the use of airport facilities was upheld. In Delta the Court ruled that such a state tax or fee levied on interstate commerce is valid if the tax does not discriminate against interstate and foreign commerce, if the fee bears a direct relationship to the danger which the act seeks to avert, and if those involved in foreign and interstate commerce cannot prove that the contested fees are "excessive" in proportion to administrative costs of the act. The license fee of one-half cent per barrel of oil transferred, the Maine court ruled, met all of these criteria.

In their strongest argument the plaintiffs charged that the Act violated the Admiralty Clause, which in effect does not permit Congress or the states to deprive federal courts of admiralty jurisdiction. The plaintiffs contended that § 551(2)D of the Act, which defines proceedings of the board of arbitration as the exclusive remedy for damage claims, directly infringed upon this field of federal jurisdiction. However, the Maine court declined to accept this reasoning, pointing out that board of arbitration proceedings as designed by the law represented merely the exclusive state remedy for damage claims. Accordingly, as a means to provide prompt settlement of such claims, board of arbitration proceedings did not encroach upon the jurisdiction of federal courts.

Finally, the court also denied the plaintiffs' claim that by creating substantive admiralty law, the Coastal Conveyance Act conflicted with existing admiralty law. Rejecting the contention that a state may not legislate "new" maritime law, the court cited a recent Supreme Court decision involving a similar state oil pollution statute. In Askew v. American Waterways¹⁵ the Court upheld a Florida law imposing strict liability upon both oil terminal and vessel operators, declaring that "a State, in the exercise of its police power, may establish rules applicable on land and water within its limits" as long as such rules do not interfere with the implementation of existing federal maritime law. Affirming the legality of the Act, the Maine court ordered the case to be remanded to the superior court.

The highest court of the state, then, has been most emphatic in upholding the constitutionality of these two laws, although the Site Location Act and the Coastal Conveyance Act represent wide departures from traditional Maine law. Since Maine is presently being eyed with great interest both by oil-related industries and subdividers, these two decisions of the state supreme court may have come none too soon.

1. M.R.S.A. tit. 38 §§ 481 et seq. (Supp. 1970). The full text of the Act can be found at 3 ELR 43027.

2. In Re Spring Valley Development by Lakesites, Inc. 3 ELR 20589 (Me. Sup. Jud. Ct. Feb. 9, 1973).

3. M.R.S. tit. 38, §§ 541 et seq. (Supp. 1972). The full text of the Act can be found at 3 ELR 43019.

4. Portland Pipe Line Corporation v. Environmental Improvement Commission, 3 ELR 20616 (Me. Sup. Jud. Ct. June 4, 1973).

5. Bosselman and Callies, The Quiet Revolution in Land Use Control 198 (Council on Environmental Quality. 1972)

6. For a discussion of the situation in Maine leading to the enactment of the Site Location Act in particular, see id.

7. See In Re Black Horses Acres, App. No. 81-0005-06210 (EIC, Aug. 6, 1970).

8. Vt. Stat. Ann. tit. 10, §§ 6001 et seq. (Supp. 1971)

9. See Walter, The Law of the Land, 23 Maine L. Rev. 2 (1971).

10. Bosselman, 98, supra note 5.

11. P.L. 1971, Special Session 1972, ch. 613, § 2.

12. Wadleigh v. Gillman, 12 Me. 430, 405 (1835).

13. New York Harbor Village Corporation v. Libby, 126 Me. 537, 140A. 382 (1928).

14. 405 U.S. 707 (1972).

15. Askew v. American Waterways Operators, Inc., 3 ELR 20362, __ U.S. __ (1973).