The owner of an Oklahoma company that hopes to construct a liquefied natural gas terminal on Passamaquoddy Bay expressed surprise this week that the Passamaquoddy Tribe has voted to terminate its land lease contract with his firm.
Donald Smith, president of Quoddy Bay LNG, said Tuesday that he received a letter Monday from Passamaquoddy Tribal Gov. Rick Phillips-Doyle informing him that the council voted last week to end its relationship with the company. Smith added that he does not think the tribe has legal grounds to terminate the contract.
"I am surprised to receive the letter," he said. "I don't feel the contract has expired."
Smith declined to provide a copy of the letter to the Bangor Daily News.
Tribal Councilor Ed Bassett confirmed Wednesday that on June 9, the council authorized Phillips-Doyle to send a letter to Smith notifying the company that their LNG partnership had ended.
Bassett said the ground lease that the Pleasant Point Passamaquoddy Reservation and Quoddy Bay signed years ago had expired.
"It is very simple," Bassett said in a telephone interview. "We determined that it is expired and we no longer have any legal relationship with respect to the lease."
Bassett said there was language in the lease that made it clear that either side could end the business relationship.
"There is a provision that has a timeline somewhere around four years. If it is not permanent within four years, either party can opt out of the agreement. So it is pretty cut and dry," he said.
Smith contends that the tribe has not upheld its legal obligations under the land lease contract. He said that as a result of a lawsuit brought in 2005 by Nulankeyutmonen Nkihtahkomikumon, a Passamaquoddy group that opposes LNG terminal development on the bay, a settlement was reached by all parties over the federal Bureau of Indian Affairs approval process for the project. The tribe agreed to this settlement in negotiations, Smith said, but never signed off on the formal settlement.
Smith said the tribe is legally required to formalize the agreed settlement.
"I am surprised and I am going to ask the reservation to fulfill its legal obligations," Smith said, referring to the tribal government at Pleasant Point.
Smith said that part of his surprise is based on meetings he had with Phillips-Doyle this past winter. He said the meetings, which were about his firm's continued interest in securing state and federal permits for an LNG terminal on Passamaquoddy Bay, were "productive."
Phillips-Doyle did not return phone messages left requesting comment.
Smith also cast doubt on the legality of the meeting at which the tribe supposedly voted to terminate its contract with Quoddy Bay. He said that there was no advance notice of the meeting and that not all members of the tribal council were there when the vote occurred.
Bassett said that five members of the seven-member council attended the meeting, and all five voted to terminate the contract.
Vera Francis, an organizer with Nulankeyutmonen Nkihtahkomikumon, wrote Tuesday in an e-mail to the Bangor Daily News that the group was "especially pleased" with the council vote. Quoddy Bay's proposal to build an LNG terminal on tribal land at Split Rock was "short-sighted," she indicated.
"The council's reversal essentially validates the significance Passamaquoddy ancestral waters [have] to our culture," Francis wrote. "The council's action should signal the other LNG developers that LNG has no place in Passamaquoddy ancestral waters."
According to Smith, he is still confident that the site is suitable for a terminal and that the market need in the Northeast for the facility will be there. He is still working on the project, he said, and earlier this week had conversations with a potential LNG supplier, whom he declined to identify.
Smith said he has spent $16 million on the project so far and is currently seeking a financial partner before he resumes the permitting process. The cost of building the facility is expected to be in the range of $500 million.
Quoddy Bay withdrew its applications for state and federal permits last year. Citing the canceled permitting process and the lack of final approval from BIA, the company later suspended the quarterly payments of nearly $47,000 that it had been making to the tribe.
In March, an engineering firm in Norwell, Mass., took Quoddy Bay LNG to court to compel the Oklahoma company to pay more than $210,000 in outstanding bills, interest and legal fees. Smith said at the time that he planned to pay the firm what it was owed but that the financial dispute would not affect the long-term prospects for constructing a terminal at Pleasant Point.
On Tuesday, Smith repeated his optimism for the future of the project.
"We think the Quoddy Bay LNG project is still economically viable," Smith said.
Asked if the reservation was talking with other LNG developers, Bassett said he was not aware of any such discussions.
"I think it is a good thing to do, economic development-wise," he said. "But we don't have anything lined up at this moment."
The tribal councilor said the tribe was looking at other economic development projects, but said it was too soon to discuss them.
The future for the tribe, he said, was in natural resource-based economic development projects, not in elaborate proposals like LNG. "We need to use the resources that we have," he said.
The Pleasant Point reservation sits next to Passamaquoddy Bay and right now the tribe's Environmental Department is looking into possibilities such as tidal power, among other projects.
BDN writer Diana Graettinger in Calais contributed to this report.
Copyright (C) 2009, Bangor Daily News, Maine
