Few respond to $200,000 LNG offer

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PLEASANT POINT – The Oklahoma developer who wants to build a $500 million liquefied natural gas facility on Passamaquoddy tribal land put forward a $200,000 “good faith” offer last week to the Tribal Council at the Pleasant Point reservation, the developer confirmed Tuesday.

The offer, which apparently was not accepted or acted upon, may have unnerved some tribal members and left others not wanting to talk about it at all. A spokeswoman for a group opposing the facility denounced the offer made so close to elections.

Marilyn Francis, the tribe’s lieutenant governor, said she had no comment Tuesday on developments at the meeting last Thursday.

Three of the council members, Francis and other tribal members listened as Donald Smith, president of Quoddy Bay LNG, outlined a plan that could move the LNG project ahead in spite of the Passamaquoddy Joint Tribal Council having withheld its full approval on tax conditions within the parties’ lease agreement, according to participants.

Although Smith argues that the tribe so far has failed to complete tax agreements as stipulated in the paperwork that gives Smith access to Split Rock, where Quoddy Bay wants to build the LNG terminal, Quoddy Bay was willing to extend $200,000 “in good faith.”

Smith flew in from Oklahoma City on Thursday to offer the tribe an amount that, he suggested, could be divided among every Pleasant Point household.

Council members did not accept what he was offering, but agreed to continue considering the tax agreement issue that keeps that part of the LNG project at a standstill, according to people who were present.

Smith told the council that the $200,000 could cover a “per capita” arrangement of $400 per household of four, as a reasonable distribution of his company’s money.

Smith specified that he wanted the money distributed by Sept. 1, less than one week before the tribe’s elections on Sept. 5 for governor, lieutenant governor and tribal council.

The tribe and the developer remain at odds over the lease agreement, with each side having its own interpretation about when Quoddy Bay will begin making payments to the tribe.

The parties have agreed that, in lieu of taxes, the tribe would be paid as much as $12 million annually, depending on the LNG that flows through the project.

Craig Francis, the tribe’s attorney in Portland, told the Bangor Daily News in May that the tribe believes that it was to be paid upfront money on the Split Rock lease, beginning Dec. 1, 2005.

The attorney could not be reached for comment Friday or again on Tuesday.

No lease fees have been paid to date, partly because the Joint Tribal Council did not give its approval earlier this year for a three-page “Project Coordination and Tax Agreement.”

Had it gained approval, the agreement would exempt the developer from real estate and personal property taxes. It also would allow the Pleasant Point reservation to reduce the Tribal Employment Rights Ordinance tax it can impose on a construction project from 3 percent to 1 percent.

Not unusual on Indian reservations, the TERO tax also would allow the tribe to collect on the bricks-and-mortar part of the project.

Brian Smith, the project manager and Donald Smith’s son, on Friday described the $200,000 offer as a way Quoddy Bay could “pre-pay some of the lease fees in advance.”

The money was offered last week, he said, “in order to share in some of the successes that we are realizing, as we pass milestones.”

The Smiths say they are within one month of beginning the formal application process for permitting with the Federal Energy Regulatory Commission.

Brian Smith added Friday that if the tax agreement were signed and the Smiths file their formal application with FERC, they would pay the council $375,000.

“That’s what’s been accruing all this time,” Brian Smith said. “After that, we would make our $45,000 payments quarterly” during the construction period in 2008 and 2009.

No LNG project in the country can go forward without FERC’s approval.

Quoddy Bay is basing its project timeline of starting construction of the terminal in the winter of 2008, if FERC delivers a permit in the fall of 2007.

The project has been colored with controversy since the tribe and Quoddy Bay LNG announced an agreement to pursue the LNG development in June 2004.

Opposition has been vocal from surrounding communities and from Canadians who do not want LNG tankers traveling through the Harbour Head Passage within Canadian waters to reach Split Rock.

Smith’s offer comes at a time when both reservations face internal elections for new leadership.

Caucuses to identify candidates for a general election in September were held a week ago. Primary elections will take place today at Indian Township and Thursday at Pleasant Point.

Winners of the primary elections for governor this week at Indian Township will face off against Robert Newell, the incumbent governor, on Sept. 5.

At Pleasant Point, Gov. Mark Altvater is not standing for re-election. The top two candidates out of Thursday’s primary will face off for the governor’s position.

Some tribal members were uncomfortable discussing the impact of Smith’s offer on the reservations, given the nearness of elections.

Vera Francis, who gave her comments by e-mail, was not one of them.

“The reality is, Donald Smith failed” last week, said Francis, a spokeswoman for the opposition group Ntulankeyutmonen Nkihtaqmikon, or “We Take Care of Our Homeland” in the Passamaquoddy language.

“His attempt to gain a tax agreement on the eve of our tribal election and then attempt to impose upon the Tribal Council how to spend its money, months overdue, should tell you something about Oklahoma’s business practice.

“Attempting to buy favor by those most vulnerable to unscrupulous tactics is an affront to all of Maine’s people. Promising to dole out any amount of money on the eve of any election is simply wrong.”