The Quoddy Tides

Eastport, Maine

2005 December 9

University's economic impact study of
LNG facility criticized

by Marie Jones Holmes

Researchers from the University of Maine's Department of Resource Economics and Policy and the Margaret Chase Smith Center for Public Policy have released their findings regarding the projected fiscal and economic impacts of a proposed $400 million liquefied natural gas (LNG) facility in Robbinston. Downeast LNG, based in Washington, D.C., hopes to build the LNG import terminal at Mill Cove.

UMaine researchers Todd Gabe, Jonathan Rubin, Charles Morris and Lisa Bragg were contracted by Downeast LNG to conduct the study, which focuses on both the long- and short-term effects of the proposed facility, considering such factors as employment, wages, and tax impacts at both the state and local levels. The study was conducted during the late summer and fall of this year.

The study found that the proposed project would substantially increase the local tax base, lowering current tax rates for the town of Robbinston by approximately 69 percent. According to Gabe, an associate professor of resource economics and policy, the projected decrease in taxes takes into account not only the proposed facility's contribution to the town's tax base, but the increases in county taxes and reductions in state education contributions that would affect the town as well.

"During the three year construction phase, the project would create 1,053 jobs per year statewide according to our model. These jobs would provide $42.9 million annually in wages and benefits," says Gabe. "Of that, there would be approximately 375 jobs in Washington County, which would result in $15.3 million per year in income."

After the construction phase is completed, the study determined that operations of the facility would create 253 jobs statewide, amounting to $10.7 million per year in wages and benefits. A projected 187 of those jobs would be in Washington County.

University asked to provide full story

Save Passamaquoddy Bay, in a press release issued December 5, asks Robert Kennedy, UMaine president; George Criner, head of the Department of Resource Economics and Policy; and Charles Morris, acting director of the Margaret Chase Center for Public Policy, to provide the public with more information than that contained in the December 2 news release provided by the university officials.

"The UMaine news release provided only a tidbit of truth, yet it will become headlines and sound bytes that the public will take for more than it is," states Suzanne Crawford, a Robbinston resident and retired higher education administrator. "I was surprised that a study paid for by a private client — in this case the LNG developers seeking to locate a terminal operation at Mill Cove in Robbinston — would be released by the university, and I was even more stunned to see a UMaine website listed as the place where the full study paid for by the developer could be seen."

"'What a disappointment,' was what I thought after reading the results of the LNG project done by the Margaret Chase Smith Center and the Department of Resource Economics and Policy at the University of Maine. The cover page of the full report states that the research project was funded by a grant from one of the LNG developers. It states that it used data supplied by the developer, and also that it used an analysis model which the federal government acknowledges to be flawed. The results of this research project affects many people's lives and livelihoods and the work done by the university is much too superficial and narrowly focused. I, as well as other academics, would expect more substantial and inclusive research results from the center bearing the name of one of Maine's great heroines," Crawford comments.

Robert Godfrey of Save Passamaquoddy Bay notes that the study, paid for by Downeast LNG, used the IMPLAN economic model, which Dr. Daraius Irani, a presenter at the Washington County Economic Summit 2005 on his economic study of the Cove Point LNG terminal in Maryland, admitted "is flawed." Godfrey says that Irani stated that IMPLAN is used by those who don't want a more thorough and expensive method of economic investigation.

Godfrey comments, "The UMaine study indicates that it is not a comprehensive impact study, but that statement did not make the news release, it merely studied the positive impacts of spending money in the area; it didn't cover environmental, social, or cultural impacts. It didn't study the negative impacts that such a facility would have on the area, and therefore is merely an unscholarly, unscientific propaganda tool for Downeast LNG developers Girdis and Wyatt."

Richard Barry, coordinator of Save Passamaquoddy Bay - Robbinston, asks, "Did any of these University of Maine staffers actually leave their desks in Orono and come to Robbinston, visit the proposed area, talk with local people, look across the narrow expanse to Canada, or seek to understand the whole picture? A true impact study would have covered all economic issues, plus the many other areas — from traffic and tourism implications to fisheries, homeland security, safety, property values and a full range of possible health issues. This minimal study the university did in partnership with the developer has given the public a very unrealistic and incomplete view."

Speaking as Save Passamaquoddy Bay - Canada coordinator, Arthur MacKay, marine biologist and executive director of St. Croix Estuary Project, said, "As a life-long citizen of the Quoddy region and a university graduate who thought that professional standards went with my degree, I was astounded to learn that the University of Maine's Margaret Chase Smith Public Policy Center and the Department of Economics and Policy recently issued an 'Economic and Fiscal Impact Assessment' for the LNG facility proposed for Robbinston, Maine. The study was paid for by the proponents Downeast LNG. I have a hard time reconciling this as a grant, frankly, and I'm astounded that a superficial study like this is being published by a well recognized university. It truly looks like the University of Maine is now shilling for industry."

"Had the study restricted itself to an analysis of the impacts on Robbinston only, the outcomes would hardly be surprising and it would not take the University of Maine to determine that new money will benefit the community. Still, the costs and negative concerns should have been considered also. But the study spoke to regional and state impacts as well and failed miserably in weighing the so-called economic gains against the contemporary and long-term losses that will occur in the international Quoddy region, 75% or more of which is in Canada. Apparently, impacts on the Canadian side of the border are of no consideration and international impacts were not mentioned in the statement of 'limitations.' It's my backyard, too, and there are many of us from Canada, the U.S., and the Passamaquoddy Nation who plan to see that our homeland is protected, in spite of pseudo-economic analyses such as this."

Response from the center

Charles Morris, acting director of the Margaret Chase Smith Center for Public Policy, a part of the University of Maine, says, "This study has a very fiscal and economic basis. We never suggested this work was going to cover anything but that."

Morris says, "One of the reasons why we did the study was that we knew this was an issue that was important to Washington County. We try to use our resources to promote a dialogue on important issues as part of the land grant tradition of the University of Maine."

Dean Girdis, president of Downeast LNG, who contracted for the study, says, "I thought it was important to do the study, and the University of Maine was the most qualified group in Maine to look at the impact of the project. It is truly an independent study."

© 2005 The Quoddy Tides
Eastport, Maine
Article republished on Save Passamaquoddy Bay website with permission.