A federal judge put the Portland Pipe Line Corp. lawsuit against the city of South Portland on hold Thursday while he determines whether the U.S. District Court in Portland has jurisdiction to hear the case.

The order by Judge John Woodcock Jr. comes more than two years after the company first challenged the city’s so-called Clear Skies ordinance in U.S. District Court in Portland. Approved by the City Council in July 2014, the ordinance banned the loading of crude oil into tankers on the city’s waterfront, effectively blocking the company from reversing the pipeline’s flow to bring oil from Canada to South Portland.

Filed in February 2015, the lawsuit claims that the ban is unconstitutional because it interferes with interstate trade, discriminates against Canadian interests, devalues the pipeline and infringes on areas of regulation best left to the federal government.

Woodcock’s order follows months of court filings, including briefs, motions and written testimony, wherein the company’s lawyers set out to demonstrate the loss of business opportunity and the city’s lawyers argued that there’s no economic opportunity to be lost.

“Given the weighty constitutional issues looming in this case, it is imperative for the court to make certain that it has jurisdiction,” Woodcock wrote. “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.”

The order stipulates that Woodcock plans to schedule telephone conferences with attorneys in the case to help him clarify and reach a decision on the jurisdiction question. Neither city nor company representatives would answer questions about the judge’s order.

The company operates an underground pipeline that transports foreign crude oil from its harbor terminal on South Portland’s waterfront to refineries in Montreal. The 75-year-old pipeline has been largely shut down in the last year or so for lack of demand because the refineries have been drawing crude from western Canada and North Dakota.

The city claims the company’s lawsuit is groundless because it had no plan to reverse the flow of the pipeline when the council approved the ordinance “to protect the health and welfare of (city) residents and visitors and traditional land use authority to promote future development consistent with the comprehensive plan,” according to court documents.

A key issue for Woodcock is the city’s claim – backed by testimony from an oil industry expert – that the company cannot show there is a sufficient supply of crude oil in Canada to make it viable to reverse the pipeline’s flow, according to the judge’s order.

Woodcock noted a lack of clarity on what steps the company has taken in the past and recently to assess the economic feasibility of reversing the pipeline’s flow and how such a project today might differ from a 2008 proposal that was dropped. He quoted the company’s open letter to South Portland citizens in 2013 that said “there is no such project proposed, pending or imminent.”

The city has asked Woodcock to dismiss the case. Whatever the outcome in U.S. District Court in Portland, the case will likely wind up in the 1st U.S. Circuit Court of Appeals in Boston.

So far, the lawsuit has cost the city more than $1 million in legal fees. The company is also seeking a 42 percent reduction in the $44.7 million assessed value of its real estate and personal property across the city that would reduce its annual property tax bill by more than $330,000.

Kelley Bouchard can be contacted at:

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