PLEASANT POINT – The Passamaquoddy Joint Tribal Council says it’s not interested in giving an Oklahoma-based liquefied natural gas developer tax exempt status as he pursues building a $500 million liquefied natural gas facility at Split Rock.

And the Joint Tribal Council made its feelings known last Thursday when it voted 7-3 against the “Project Coordination and Tax Agreement.”

Had it been approved, the three-page agreement would have exempted developer Quoddy Bay LLC from all real and personal property taxes. It also would have allowed the Pleasant Point reservation to reduce the Tribal Employment Rights Offices Tax it can impose on a construction project from 3 percent to 1 percent.

A TERO tax is not unusual on Indian reservations.

The Federal Highway Administration deals with TERO Tax issues during construction projects on Indian Reservations. “Many tribes have established a [TERO] tax, which is applied to contracts for projects performed on the reservation,” the administration said on its Web site.

Last year the Passamaquoddy Tribe at Pleasant Point and Quoddy Bay LLC entered into a land-lease agreement which said that the company, in lieu of taxes, would pay the tribe upwards of $12 million annually in lease payments depending on the average annual throughput of LNG. The Bureau of Indian Affairs approved the lease agreement in June 2005.

But not everyone was satisfied with the agreement. It has drawn fire from a number of people both on and off the reservation, including tribal members at Indian Township.

The Passamaquoddy Tribe is divided into two reservations – the one at Pleasant Point near Eastport and the Indian Township Reservation near Princeton. The Joint Tribal Council is made up of tribal governors and councilors from both reservations. Last week, the majority members of the Indian Township Tribal Council said that although they might not have a say over the actual construction on their sister reservation, they did have a say over the taxable part of the agreement.

In 1996, the Joint Tribal Council approved a resolution that allowed each reservation to pursue economic development. However, the resolution did not address the issue of assessment of taxes.

Tribal officials who balked at the original lease agreement have said that the tribe as a sovereign government had the right to impose taxes and it was not in the tribe’s interest to relinquish that right.

Tribal attorney Craig Francis said Wednesday it would be inappropriate for him to comment on the meeting since he represented both reservations.

Indian Township Gov. Bobby Newell did not return a telephone call.

But Quoddy Bay project manager Brian Smith said Wednesday although the joint tribal council rejected the agreement he did not view it as a setback for his company. He said the project was moving forward.

“While we are disappointed that the Joint Tribal Council could not yet come to agreement on this issue we are confident that the two Passamaquoddy reservations will continue to work together to come to a solution that both reservations will embrace,” Smith said in the prepared release issued to the Bangor Daily News on Wednesday. “We stand ready to honor our lease commitments as soon as the Pleasant Point band secures the tax agreement from the Joint Tribal Council. This is the only impediment now standing in the way of the commencement of lease payments.”

Smith conceded that the Joint Tribal Council had a say over the issue. “While the lease is already approved and binding on Quoddy Bay LNG and the Pleasant Point Reservation, the lease provides for the Joint Tribal Council, which is the body which represents the tribe as a whole, to confirm the tax exemption provisions,” the release said.

The developer rejected rumors that Quoddy Bay was against Indian Township’s efforts to build a competing LNG facility in the Red Beach area of Calais. Last week tribal officials at Indian Township, along with their business partner Cianbro Corp., unveiled plans for a $500 million facility in Red Beach between Devil’s Head Park and St. Croix Island. Smith said his company was not interested in “meddling in the affairs of Indian Township.”

Smith said that the company looked forward to starting lease payments to Pleasant Point. “The sooner that tax agreement is signed the better it is for everybody,” Smith said.