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Quoddy Bay Urges FERC to Proceed with Pre-Filing Review of Maine LNG Project

A bid to suspend the pre-filing review process for Quoddy Bay LLC's proposed liquefied natural gas (LNG) terminal while the courts decide if the company has lawful access to a site at Split Rock, ME, should be rejected by FERC, Quoddy Bay's attorney said Tuesday.

The Save Passamaquoddy Bay 3-Nation Alliance in December urged FERC to stop the pre-filing review process, citing the filing of a lawsuit by certain Passamaquoddy Tribe members in U.S. District Court in Bangor challenging the Interior Department's Bureau of Indian Affairs (BIA) approval of the tribe's lease agreement with Quoddy Bay for the Split Rock site. Split Rock is located on the Pleasant Point Tribal Land of the Passamaquoddy Tribe in Washington County, ME.

The alliance, which is comprised of U.S., Canadian and Passamaquoddy tribal members, argued that the Federal Energy Regulatory Commission should halt the pre-filing process under the National Environmental Policy Act since the lease agreement between the tribe and Quoddy Bay LLC may be declared invalid by the court [PF06-11].

"The pre-filing process [simply] requires that Quoddy Bay inform the Commission of the 'availability of the proposed site.' It has done this," said the attorneys for Quoddy Bay, an Oklahoma-based independent energy company. "Quoddy Bay has a ground lease from the designated representative (the Pleasant Point Reservation) of the owner of the property (the Passamaquoddy Tribe), and such lease has been approved by the secretary of the Interior acting through the BIA...There does not appear to be any requirement in the pre-filing regulations that no legal action be pending challenging the interest of the applicant in the proposed site prior to the initiation of the process."

The lease would require Quoddy Bay to pay the Passamaquoddy Tribe $8 million a year for the use of the land, contingent on flowing gas.

As for the lawsuit, "neither Quoddy Bay nor the Pleasant Point Reservation (the tenant and landlord respectively under the lease for the Split Rock site) have either been named or joined in this suit," the company's Washington, DC attorneys said. "The suit is a collateral attack on a final and binding decision of the BIA. It cannot be an appeal of the [BIA] decision to approve the ground lease, since Quoddy Bay views that the time for filing an appeal [with BIA] expired prior to the suit being filed."

The lawsuit cited by the Save Passamaquoddy group "appears to be barred by a failure to exhaust administrative remedies" at Interior's BIA, Quoddy Bay's attorneys said. "Additionally, we think that the suit is premature since the nature of its challenge to the lease approval appears to be the BIA's failure to undertake independent investigations into the very issues which will be explored in the FERC pre-filing and license application processes. The BIA approval deferred consideration on environmental and other matters, since it knew that the FERC would be the 'lead' agency in any application for permission to construct an LNG import and storage facility."

The group's request is "unfounded, unsupported and premature at best," the attorneys argued, in asking FERC to proceed with the pre-filing process for Quoddy Bay's import terminal project. The concept of the pre-filing process is to involve individuals and groups, such as Save Passamaquoddy, in discussions regarding the proposed application, they said.

"If there is an alleged defect on the ground lease which might prevent the filing of an application, it can be brought out as part of the pre-filing sessions. However, Quoddy Bay does not believe any such defect exists."

The proposed Quoddy Bay terminal would be located at Split Rock on the Sipayik reservation of the Passamaquoddy Tribe. The 15-acre site near Point Pleasant, ME, abuts the Passamaquoddy and Cobscook Bays. A proposed pipeline would carry the LNG about one mile to a storage facility planned in the town of Perry, ME, where it would be regasified at a rate of up to 800 MMcf/d and then transported through another longer pipeline to the Maritimes & Northeast Pipeline. The company said it is seeking to begin construction in 2007 and to be in operation in 2010.

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