The Quoddy Tides

Eastport, Maine

2009 June 12

Sipayik council votes to end project
with Quoddy Bay LNG

by Edward French

The Sipayik Tribal Council has voted to end its relationship with Quoddy Bay LNG for a liquefied natural gas (LNG) project at Pleasant Point. Whether the decision spells the end of the controversial LNG proposal is not clear, as Quoddy Bay's president maintains that the project is still proceeding, although slowly.

At a meeting on June 9, the five tribal councillors present voted unanimously to send a letter notifying Quoddy Bay LNG that the council considers the ground lease between the Pleasant Point Passamaquoddy reservation and Quoddy Bay to be expired. "It's the end of our relationship with Quoddy Bay. The agreement has expired," says tribal councillor Ed Bassett. The land-lease agreement, which had been signed in May 2005, expired within the past month. Passamaquoddy Chief Rick Phillips-Doyle could not be reached for comment.

On June 10, Quoddy Bay LNG President Donald Smith said he had not yet been informed about the tribal council's decision, so he could not comment on it. He says the project has been on hold pending further funding, but it is still proceeding, although slowly. "It's still viable from an economic, an engineering, a security and an environmental point of view," he says. In February, Smith had said the company was working on bringing in a new financial partner and that the outlook for the project "is still very positive." Smith says questions about whether Quoddy Bay would consider another possible location for an LNG terminal in the area are "speculative."

In October the Federal Energy Regulatory Commission (FERC) dismissed Quoddy Bay LNG's application to construct the LNG terminal because the company had failed to provide information the agency requested. In addition, Quoddy Bay's application to the Maine Board of Environmental Protection was placed on hold. Smith said in February that the company plans to resume its applications with FERC and the state "as soon as practical." He said the company was proceeding slowly because of the worldwide situation with LNG, as Quoddy Bay attempts to determine the type of LNG resource it would use.

Earlier this year a Massachusetts company hired by Quoddy Bay to perform engineering work on its proposed natural gas pipeline sued the company for failing to pay $159,831 in outstanding bills. The suit alleged that other creditors are owed in excess of $2 million. A decision on the suit has not yet been issued by the Washington County Superior Court, except that the request to seize the Quoddy Bay LNG office in Perry was denied. That office has not been open for some time, and Project Manager Brian Smith and Deputy Project Manager Adam Wilson are no longer with the company.

Last July, Quoddy Bay informed the Sipayik Tribal Council that it would be suspending its quarterly lease payments of $46,875 to the tribe. Quoddy Bay had paid the tribe nearly $800,000 in lease and other bonus payments associated with the lease contract. At the time, the company maintained that the permitting period commencement date had not begun and therefore lease payments were not required. The company argued that the Bureau of Indian Affairs had not yet given full approval of the lease agreement, although it had approved the lease for limited purposes. Nulankeyutmonen Nkihtaqmikon (We Take Care of Our Land) had brought a lawsuit alleging that BIA failed to comply with four federal laws in connection with its June 2005 approval of the ground lease. That lawsuit played a role in Quoddy Bay's decision to suspend the lease payments.

The payment of the lease fees had been in dispute previously, with Quoddy Bay not making the payments until the Passamaquoddy Joint Tribal Council signed a tax agreement. The tax agreement was approved by the joint council in March 2007, after a proposal was approved to have Pleasant Point split the lease payments with Indian Township.


© 2009 The Quoddy Tides
Eastport, Maine
Article republished on Save Passamaquoddy Bay website with permission.