PORTLAND — Portland Pipe Line Corp. will be out of business by 2017 if the Clear Skies Ordinance isn’t lifted, lawyers representing the company in a lawsuit against the city of South Portland said Wednesday in U.S. District Court.

The zoning ordinance amendments, enacted in July 2014, prohibit PPL from reversing the flow of unrefined crude oil that is piped from South Portland to Montreal, and the bulk loading of crude oil onto marine tank vessels. 

The lawsuit, filed in February 2015 by PPL and American Waterways Operators, a national advocate for the tugboat, barge and towboat industry, claims the city overstepped its municipal regulatory power and interfered with state and federal trade and commerce laws. 

In the year since the lawsuit was filed, the city has set aside $450,000 from the 2016 budget for its defense, in addition to collecting nearly $6,000 in donations, according to City Manager Jim Gailey. 

The hearing Jan. 21 was on a motion for summary judgement filed by the city, which argued that the lawsuit be dismissed on grounds that PPL has no concrete plans to actually move Canadian tar sands crude oil from Montreal to South Portland. 

Catherine Connors, a Pierce Atwood attorney arguing for Portland Pipe Line, told Judge John Woodcock Jr. that since the lawsuit was filed in February 2015, the company’s situation “has gotten worse,” and that it is “even more critical that you reverse the law.”

The company cannot reap the benefits of low oil prices, or an embargo that was lifted against the U.S. exportation of oil in December, she said. Because there is a diminished need for oil to be piped to Canada and, instead, a high demand for oil piped through the Montreal-Portland Pipe Line to be exported internationally through South Portland, the ordinance is running the corporation out of business, she said. 

The flow was successfully reversed from 1987 to 1999 for the transport of natural gas, Connors said. In order to reverse the flow of crude oil, PPL has to obtain the necessary permits, which it did in 2008. But those permits have since expired.

Because they have not begun to reapply for the permits or built infrastructure needed for a reversal, Jonathan Ettinger of Boston-based Foley Hoag argued for the city, PPL cannot legally claim that the ordinance is interfering with its business. 

After PPL voluntarily surrendered its permits in 2013, “They have not (taken) one step in getting a single permit,” Ettinger said. “If they’re not taking steps, (their claim) is hollow.”

Moreover, he said, “It’s not the ordinance that’s imposing the hardship on the Portland Pipe Line,” but rather, “the current market.”

Connors disagreed, and said the permitting process doesn’t work like that.

“They’re putting us in a ‘Catch-22,'” she said. The government will not grant the necessary permits if the activity the company is attempting to get permits for is illegal, she said.

“We cannot go forward when there is a blanket, ‘You cannot do it at all,'” Connors said. 

Woodcock is expected to decide whether the lawsuit should be dismissed in the next month or so. 

“This is like a preliminary skirmish,” he told Ettinger and Connors. If the lawsuit moves forward, he said, “It seems to me both parties are going to have to deal with some very legal and complicated issues.”

Whatever Woodcock decides, an appeal to the U.S. First Circuit Court of Appeals is expected, and likely wouldn’t be resolved for three years, he said. 

Alex Acquisto can be reached at 781-3661 ext. 106 or aacquisto@theforecaster.net. Follow Alex on Twitter: @AcquistoA. 

South Portland residents line up at the Community Center to address the City Council on July 10, 2014, before councilors voted in favor of a ban on tar sands in the city. The ordinance is being challenged in a lawsuit filed by Portland Pipe Line Corp.