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A federal judge on Thursday heard arguments in a lawsuit filed by Catholic Charities Maine against the city of Portland over an ordinance that restricts federal funding to agencies that deny benefits to employees' domestic partners. The suit, filed in U.S. district court, claims the city's ordinance violates equal-protection laws of the 14th Amendment and the federal Employee Retirement Income Security Act. "We think the city knows entirely what it's doing," said Gene Libby, the charity's attorney. "Instead of applying it to all contractors in the city because of a concern for both their own pocketbook and the impact, they have applied it to a narrow cross section." The ordinance requires social service agencies that receive federal Housing and Urban Development funds through the city to offer domestic partners the same benefits available to employees' spouses. "The central argument to everything about this case is that Catholic Charities had a choice," said Pat Peard, attorney for the city. "It made its own choice that it was not going to apply for HCD funds because it didn't want to provide domestic-partner benefits." Catholic Charities further claims the ordinance is unfair because it applies only to organizations that receive federal Housing and Urban Development funds from the city, not the hundreds of companies and organizations that do business with the city. Officials for Catholic Charities have said that compliance with the ordinance would constitute a violation of Roman Catholic doctrine opposing homosexuality, cohabitation by unmarried couples, and premarital sex. The charity has an annual budget of $25 million and is one of the largest social services providers in Maine. It would have received $88,310 for two child care programs, elderly homemakers services, and mental health programs. These programs employ about 125 people. This summer the Salvation Army opted to forgo a $609,000 grant under the ordinance for a meals-on-wheels program rather than violate religious principles by providing benefits to employees' domestic partners. Still, Libby said the question is not one of principle, stating that losing the money has contributed to a loss in the quality of what social services the charity can provide to the poor and elderly. "When you have less money, you're able to provide less services," he said. During the hearing Libby said one legal precedent is a case in which the Air Transport Association of America successfully challenged San Francisco's domestic-partner ordinance. The case turned on the federal Employment Retirement Income Security Act, which prohibits state and local regulation of employee benefits. Although the city lost the case, the airlines and others doing business with the city of San Francisco agreed to provide the benefits. Judge D. Brock Hornby said he expects to have a ruling next week.