SOUTH PORTLAND — The city’s attempt to derail a lawsuit filed last year by Portland Pipe Line Corp. was denied last week by a U.S. District Court judge.

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 by passing the Clear Skies Ordinance in July 2014.

Mayor Tom Blake said Wednesday that he was “disappointed” by the court’s decision. “We were hoping that the judge would deny their claim, because it wasn’t right, but he didn’t,” Blake said.

The mayor said South Portland’s Clear Skies Ordinance is one “that we need to protect.”

The ordinance prohibits bulk loading of crude oil onto vessels in the harbor, which effectively would prevent PPL from reversing the flow of its Montreal-South Portland pipeline to transport Canadian tar sands.

The city sought summary judgment and asked the court to dismiss the lawsuit on grounds that PPL has submitted “no current or specific plans” to actually move tar sands to South Portland, therefore putting to rest the argument that the ordinance prohibits the company from conducting its business.

PPL argued it would “very much like to serve this market right now, and would be taking steps right now to respond to existing market demand were the service (it) seeks to market not illegal under the ordinance,” according to the Feb. 11 decision by Judge John Woodcock Jr.

Woodcock concluded PPL has “the better argument” and that the ordinance places the company in a classic “Catch-22.”

As a result, the lawsuit will continue. If it is not settled, it could take up to three years to resolve, pending appeals.

Determining whether the city and Portland Pipe Line can strike a deal is worth exploring, but Blake said he doesn’t “necessarily see a compromise.” Another possibility would be reaching some sort of settlement, City Manager Jim Gailey said Wednesday afternoon.

The city set aside $450,000 in June to fund its defense of the lawsuit. Members of the public have donated an additional $6,000 since the lawsuit was filed in February, Gailey said.

The city is being “extremely cautious” as it moves forward, Blake said, and city councilors were expected to discuss the lawsuit in an executive session Wednesday night, Feb. 17.

“We’re going to evaluate all factors before we decide which road to turn down next,” he said.

Mary-Jane Ferrier, a member of Protect South Portland, the citizens group that pushed for passage of the Clear Skies Ordinance, said in a statement last week that the group “applauds” the city’s continued defense of the policy.

“Thousands of South Portland residents stood together in support of the Clear Skies Ordinance, and now we stand united behind the City Council as it defends the will of the people,” Ferrier said. “We have absolute confidence in the city’s legal defense team and that the right of the people of South Portland to protect their community and the health of its citizens will be upheld.”

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

Updated Feb. 18, 2016.