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Feds dismiss proposed liquefied natural gas terminal on sacred land

SIPAYIK, Maine – The Federal Energy Regulatory Commission has dismissed an application from Quoddy Bay LLC to build a controversial liquefied national gas terminal and pipeline on a three-quarter acre portion of shoreline land owned by the Passamaquoddy Tribe, because the company failed to provide necessary technical information for the agency to review.

A group of Passamaquoddy members, Nulankeyutomonen Nkihtahkomikumon (We Protect the Homeland), which considers the land sacred, has opposed the project for almost three years. NN is part of Save Passamaquoddy Bay, a three-nation grassroots group with citizens from Maine and Canada. While the opponents welcomed the news of the project’s dismissal, they said they remain wary of Quoddy Bay’s future plans.

The FERC informed Oklahoma-based Quoddy Bay LNG President Donald M. Smith and project manager Brian Smith on Oct. 17 through his Washington attorney that the company had failed to provide information requested last February about the proposed project.

The commission suspended review of the Quoddy Bay LNG project in April pending receipt of materials the company had promised to supply the previous fall. The agency’s staff could not go forward with its engineering review of a required draft Environmental Impact Statement without them, the commission said. Quoddy Bay did not provide the material following the April suspension.

Passamaquoddy group’s BIA lawsuit continues
Although the Federal Energy Regulatory Commission has dismissed Quoddy Bay LLC’s applications to build a liquefied natural gas terminal on shoreline land owned by the Passamaquoddy Tribe, a related lawsuit against the BIA over the proposed project’s land lease continues. Here’s the background:
In late may 2005, the tribe and Quoddy Bay LLC, an Oklahoma-based company signed a 50-year lease allowing Quoddy to develop the LNG terminal on three-quarters of an acre of tribal land called Split Rock on the shore of Passamaquoddy Bay. The BIA approved the lease about a week later. A Passamaquoddy group called Nulankeyutmonen Nkihtaqmikon (NN), which means “We Protect the Homeland,” opposes the project, which they say would permanently change a natural beach area with historical, cultural, religious and recreational significance to an industrial zone that would not be accessible to them. The land is used for traditional tribal ceremonies, community events and recreation. NN filed a lawsuit in federal district court in November 2005 alleging the BIA’s lease approval was invalid because it approved a massive industrial development on tribal land without conducting the necessary environmental reviews, interagency consultation, or fair market appraisal. The BIA filed a motion to dismiss NN’s lawsuit on the grounds that the group lacked standing and the case was not ripe for review. The district court relied on the BIA’s claim that the lease was only preliminary and dismissed the case. NN appealed to the 1st Circuit Court and during the course of the appeal, the BIA conceded that it had in fact approved the entire LNG project and not just the initial exploratory phase as it had previously claimed. At this point, the BIA introduced a new argument based on the issue of “exhaustion,” claiming that the Passamaquoddy group should have exhausted all avenues of administrative appeal by taking their complaint to the Interior Board of Indian Appeals before lodging it in court. The BIA had not notified NN of its decision to approve the lease in June 2005 and the group’s right to appeal that decision to the IBIA. The 1st Circuit Court remanded the case back to the district court where NN argued that it had not pursed an administrative appeal because it wasn’t required under the law in Endangered Species Act, National Environmental Protection Act, or National Historic Preservation Act cases, all of which it had invoked in its lawsuit. NN further argued that it had the right to pursue its claim in court since the lease the BIA had signed was a “final agency action.” The district court judge agreed that the BIA had “simply ignored its own regulation” when it did not notify NN of their right to appeal the agency’s approval of the ground lease in June 2005 and “compounded its error” by making its approval effective immediately. But he dismissed NN’s case based on his conclusion that NN had not exhausted the administrative appeal process before filing a complaint in court. Teresa Clemmer of the Environmental and Natural Resources Law Clinic at the Vermont Law School, who represents NN, said her clients will continue its case against the BIA as long as the 50-year lease is in place. Clemmer initiated an appeal of the district court’s dismissal to the 1st Circuit on Aug. 28. “In this appeal, we will basically be arguing that we’re not required to go through an IBIA appeal process, as we’ve always maintained,” Clemmer said. In addition, in case the 1st Circuit upholds the district court decision, Clemmer has filed Notice of Appeal with the IBIA, but asked the board to stay the case until the 1st Circuit rules on the exhaustion issue. On Sept. 18, the BIA sent a belated “notice of decision” to NN. “This is the notice that they should have given us back in June 2005 at the time they made their decision approving the lease. By giving us the notice now, they’re trying to support their argument that our IBIA appeal is timely (and that we would not be prejudiced by having to go this route) because the notice is what triggers the 30-day appeal period.” The IBIA has agreed to postpone its review until the 1st Circuit Court has ruled.

“Therefore, I am dismissing your application for the construction and operation of an LNG import terminal. … In addition, I am dismissing Quoddy Bay Pipeline LLC’s applications for the construction and operation of the Quoddy Bay pipeline, a blanket certificate to perform certain routine activities and operations, and a blanket certificate to provide open access firm transportation services in (three separate dockets) as they are dependent on the (terminal) application,” wrote J. Mark Robinson, FERC’s director of the Office of Energy Projects.

The dismissal is “without prejudice,” Robinson wrote. That means Quoddy Bay may file a new application if the company “is able to finalize its design and provide a complete application. However, in accordance with the Commission’s regulations, it will be examined as a new proceeding,” Robinson wrote.

Smith could not be reached for comment; however, on Oct. 18 he told the Bangor Daily News that the dismissal “operationally doesn’t change anything for me. When we reapply we’re not going to change the project. It’s going to be the same project, the same engineering, the same everything.”

Smith repeated his intention to re-file the application even as he withdrew the project’s state applications from the Maine Board of Environmental Protection on Oct. 26.

“We expect to re-file them in the near future, but are uncertain of the dates due to the world LNG supply and demand situation,’ Smith wrote.

The three-quarters of an acre of land is located at a place called Split Rock on Passamaquoddy Bay that is used for traditional ceremonies, community events and recreation. Three years ago the Passamaquoddy tribal council signed a 50-year land lease with Quoddy Bay to allow the company to develop the terminal.

Hilda Lewis, a member of NN who was elected to the tribal council a year after the lease was signed, said she wasn’t completely surprised by FERC’s dismissal because the company “has been so lacking in commitment to this.”

The fact that the application has been dismissed without prejudice is the sticking point, Lewis said.

“That kind of worries me, especially when they say, well, we’re just going to regroup and we’ll be back. It’s a reprieve and I’m excited, but I’m a little wary. I think it’s wonderful and this is probably going to be it, but I just want to be on guard,” Lewis said.

Vera Francis, an organizer for NN, said FERC’s dismissal of the project was “a crushing blow” to Quoddy Bay LLC owners Donald and Brian Smith.

“The record now supports the Smith’s own shortsightedness and failures. Nulankeyutomonen Nkihtahkomikumon has known from day one how inappropriate an LNG terminal is for our ancestral bay. We remain dedicated to protecting our bay, our heartland,” Francis said.
Robert Godfrey, Save Passamaquoddy Bay’s webmaster ( and researcher said the project’s cancellation was the “logical – if not late – end to a poorly-sited and ill-conceived project, clearly one that the developers themselves – along with a host of consultants – could not technically accomplish. Quoddy Bay LNG has been dishonest with the Passamaquoddy Tribal Government, the tribal community, and with the greater area public, thinking they could simply sweep in, fool the public, and then ram their project through the regulatory process. Today, they’ve found out otherwise, on all counts.”

Godfrey, who has researched and compiled on the Web site a vast archive on LNG projects worldwide, said the Split Rock location “ignored world LNG industry siting standards, the hazardous conditions of the waterway, and hazards to the public in numerous communities in both Maine and New Brunswick.”

Quoddy Bay owners also planned to defy Canada’s refusal to allow LNG-ship transits into Passamaquoddy Bay, which has sovereign rights over part of the channel through which the huge LNG gas tankers would pass.

Quoddy Bay was one of three proposed LNG projects in the area. Godfrey said he hoped the other two – Downeast Pipeline LNG and Calais LNG – would “see the futility of their own projects, especially since the natural gas marketplace has reversed, making their projects futile.”
Economically, Godfrey said, high-priced LNG can’t compete with the 120-year supply of low cost North American natural gas.

On Oct. 24, a few days after Godfrey’s comments, FERC’s Robinson wrote to Downeast warning that it must schedule a required “open season” for the project – or why it doesn’t need to conduct one – within 20 days or risk having the project dismissed. An open season is similar to bid process in which the company can access market interest in the project, as well as capacity and design requirements, and pipeline route and delivery options.

“Considering the uncertainty of the outcome of the environmental analysis, the fact that you have not attempted to garner the critical project information that you would obtain through holding an open season, and the passage of nearly two years since the filing of the application, we must reassess whether Commission staff’s continued efforts and analysis are appropriate under these circumstances,” Robinson wrote.

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