Ferry service between Portland and Nova Scotia could return next year if the city and the ferry operator can come up with roughly $2 million to pay for new equipment and other improvements at the ferry terminal that federal customs officials say is necessary.

U.S. Customs and Border Protection has said it will stop screening vehicles at the Ocean Gateway terminal next year unless the city pays for upgrades promised when the Canadian ferry service resumed in 2014. Upgrades included a license-plate reader, radiation scanning devices, closed-circuit video, new inspection booths and offices, at a cost of $7 million, the city estimated last month. Portland officials have said they are unable to pay the bill, effectively scuttling the Cat high-speed ferry to Yarmouth, Nova Scotia, operated by Bay Ferries.

But new negotiations between Portland and Customs could open the door to continuing the service. In a Dec. 14 meeting attended by city staff, customs officials and Bay Ferries, the federal agency proposed a temporary improvement plan that would cost between $1.5 million to $2 million, Portland Economic Development Director Greg Mitchell said. The proposal would not cover all of the improvements requested by the federal agency, but it would pay for license-plate readers, cameras and other equipment. If Portland and Bay Ferries pays for improvements, Customs and Border Protection will resume screening passengers in time for the 2018 sailing season, which starts in late May.

“We have been exploring non-municipal sources of funding to support that kind of investment,” Mitchell said. “We have open lines of communication between Bay Ferries, the city and Customs and Border Protection folks.”

The city and Bay Ferries would like to resolve the issue within 60 days, so the Prince Edward Island-based ferry company can begin marketing its 2018 season and extend its lease with the city, Mitchell said. When Bay Ferries took over the Portland-Yarmouth route in 2016, it secured a two-year lease with Portland that included a one-year extension, which has yet to be approved.

“Clearly the decision that customs made not to provide service has made us hit the pause button,” Mitchell said. “We need to resolve the security requirements to process passengers and vehicles. It is a necessary requirement in order to operate the ferry service.”

Customs spokesman Sean Smith said the agency is willing to provide inspection services through 2020, as long as Portland comes up with a plan by next October to provide a fully compliant customs facility at Ocean Gateway that could be completed by 2021.

“These changes are critical for passenger and officer safety, and national security,” Smith said in a prepared statement.

Ocean Gateway complied with federal border safety standards when it opened in 2009, but those standards became tougher by 2014, when ferry service resumed after a five-year hiatus, Smith said.

Bay Ferries CEO Mark MacDonald declined to speak in detail about the proposal, but said his company regularly deals with regulatory issues.

“We are working with the city and Customs and Border Protection, both of whom we have enjoyed very positive, long-term relationships with,” MacDonald said.

“It does touch on a matter of border security which we don’t normally engage in public discussion about,” he added. “I can say that the interests of all parties are aligned.”

Bay Ferries took over the Portland-Nova Scotia route after the Nova Scotia provincial government dropped underperforming Nova Star Cruises.

The Cat carried 41,463 passengers in the 2017 season, a 17 percent increase from 2016, but fewer than expected. One of the ship’s engines blew out in July, forcing it to run much slower and cancel almost 25 percent of its sailing days.

Peter McGuire can be contacted at 791-6325 or at:

pmcguire@pressherald.com

Twitter: @PeteL_McGuire

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