Passamaquoddys, LNG firm at impasse

PLEASANT POINT – The chief of the Passamaquoddy Indians on this reservation in Washington County says that an Oklahoma-based liquefied natural gas facility developer owes the tribe $500,000.

Chief Rick Doyle wants Quoddy Bay LNG to pay up.

Doyle said that Quoddy Bay was continuing to operate under the terms of an agreement the two sides signed two years ago, yet had “stifled” the tribe’s ability to operate under the same agreement. Some tribal officials have said they believe the quarterly payments the company owes them should have started Dec. 1, 2005.

“For example, they owe us right now … a half a million dollars, but they won’t give it to us because we didn’t meet some of the thresholds in the contract. Well if that’s true then the contract needs to stop until those thresholds are met, but for both sides, not just one,” the chief said.

Quoddy Bay hopes to build a multimillion-dollar liquefied natural gas terminal at Pleasant Point. Company officials say payments will start once the tribe fulfills its parts of the agreement.

Pleasant Point and Quoddy Bay’s agreement, signed two years ago, said the company would pay the tribe about $12 million annually depending on the average annual throughput of liquefied natural gas. The Bureau of Indian Affairs approved the lease agreement in June 2005.

Doyle said he was concerned about the agreement. “From my reading it is biased toward the company’s benefit and not of benefit to the Passamaquoddy people,” he said.

On Tuesday, Doyle elaborated. “Here is an analogy. It’s like in the past when we were under the state’s care we had these things called Indian agents and when the tribe needed something or a tribal member needed something he had to go beg the Indian agent for whatever it was he needed. And that was a form of oppression [that] we wanted to overcome by entering into this business agreement. We don’t want to have to continue to beg them for the money they owe us,” he said.

The project continues to move through the licensing process even though Pleasant Point’s sister community at Indian Township last year refused to sign off on the project coordination and tax agreement the company needs.

The Passamaquoddy Tribe is divided into two reservations – the one at Pleasant Point near Eastport and the Indian Township reservation near Princeton.

The tax agreement was part of the land-lease agreement Pleasant Point signed with the company. Tribal leaders at Indian Township believe that although they don’t have a say over construction, they do have a say over the tax agreement because of its potential impact on both reservations.

After Indian Township officials objected, the tribe’s Joint Tribal Council made its feelings known last February when it voted 7-3 against the tax agreement. The Joint Tribal Council is made up of tribal governors and councilors from both reservations.

Officials at Pleasant Point disagreed with its sister reservation and for months the issue simmered. For a time it looked as if the agreement was going nowhere until September 2006 when elections were held on both reservations and new leaders were chosen.

Eventually, tribal leaders met and Pleasant Point agreed it would split its payment from the company with Indian Township, 60-40, but first Indian Township had to approve the tax agreement.

The matter is expected to go before voters at Indian Township at the end of this month.

Once approved, the three-page agreement will exempt Quoddy Bay from all real and personal property taxes. It also would allow the Pleasant Point reservation to reduce the Tribal Employment Rights Office tax it can impose on a construction project from 3 percent to 1 percent.

Doyle questioned what would happen if Indian Township voted to reject the agreement.

“The company keeps saying it can operate without a tax agreement, but I don’t think that it’s as attractive to any partners that Don Smith [Quoddy Bay president and Brian Smith’s father] wants to bring on if there is taxing on it because it then is just a marginal project,” the chief said.

Smith agreed that if Indian Township turns the agreement down, it would be “less attractive” for the company to move forward. “Which is why the tax agreement was originally conceived of both by our lawyers and the lawyers of the tribe, that this would improve the project as a whole. In return for the Pleasant Point reservation working to get this tax agreement signed through the Joint Tribal Council we agreed to certain high lease payments. The project can go forward, but it makes it riskier and certainly our money now is at greater risk than it would be had the tax agreement been signed when it was intended to be signed,” Smith said.

Company officials agreed Tuesday they owe the tribe money, but denied they’ve reneged on the contract.

“As the tribe recognizes … we will owe the tribe $500,000 as soon as the project coordination and tax agreement is signed,” Quoddy Bay LNG Project Manager Brian Smith said Tuesday. “It’s our feeling that it’s true the Pleasant Point reservation has not yet lived up to its obligation under the lease, [but] they are working in good faith to do that … and we are required in the lease to act in good faith to assist them.”

The project manager rejected Doyle’s claim that the agreement wasn’t in the tribe’s best interest. “The lease agreement calls for us to pay millions and millions of dollars a year and I think that’s a big advantage to the tribe.”

Smith said the project was moving forward in everyone’s best interest and said it wouldn’t be right to stop and “hold the whole project hostage” because the tribe has yet to fulfill its obligations.