The Saint Croix Courier

St. Stephen, NB

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2007 Jun 8

FERC says no to NB

By BARB RAYNER

ST. ANDREWS - The U.S. Federal Energy Regulatory Commission (FERC) has denied a motion from New Brunswick to suspend processing the applications filed by Downeast LNG and Downeast Pipeline for authorization to construct and operate LNG facilities in Maine.

It was in February that the province filed its motion requesting that the commission suspend its administrative review of the proposed terminal and pipeline projects. The motion was also supported by the Save Passamaquoddy Bay Three Nation Alliance.

New Brunswick formally sought and was granted intervenor status in the FERC process in Maine. As such, the province can ensure that safety and security concerns — and the environmental and economic impacts of such terminals on Passamaquoddy Bay — are taken into account and forcefully defended.

Downeast LNG have filed an application for an LNG terminal at Mill Cove while Downeast Pipeline have applied to operate pipeline facilities to transport regasified LNG from the terminal to an interconnection with Maritimes and Northeast Pipeline.

The proposed transit route for LNG tankers would straddle the U.S./Canada boundary and pass through Canadian waters in Head Harbour Passage and Passamaquoddy Bay.

In the motion, New Brunswick referred to a letter from Canadian Ambassador to the US, Michael Wilson, to commission chair Joseph T. Kelliher.

The letter stated that, based on a study commissioned by the federal government, the Canadian government has decided it will not permit LNG tankers to pass through Head Harbour Passage to the proposed terminal because such tanker traffic would present unacceptable environmental and navigational risk to southwest New Brunswick and its inhabitants.

New Brunswick asserts that the commission should suspend its review of the terminal project because it is no longer viable in view of the federal government's decision.

The motion referred to a similar case in Long Beach, Cal., in which a terminal developer was requested to show cause why FERC should continue to review a terminal application when a factor — essential for the project to go forward — was declined.

In a letter to Ambassador Wilson, Kelliher explained that the commission acts primarily as a safety agency and requested a copy of the Canadian study so it could be incorporated into the commission's record and safety review of the proposed facilities.

He also stated that because the applications for the proposed Downeast LNG terminal and pipeline project have not been withdrawn, commission staff are continuing to prepare an environmental impact statement to address the environmental impacts and the maritime safety and security of the project as currently proposed.

FERC documents note that New Brunswick states that it is a smaller Canadian province with limited means and is concerned about the likely costs of required studies and analyses to assess the potential impacts of the proposed LNG project.

They assert that there is no need for the province and other parties to expend resources on this matter when the Canadian government has already decided not to permit LNG tankers to pass through Canadian waters to reach the proposed terminal.

While Downeast acknowledges that the inability of LNG tankers to transit Canadian waters would affect the viability of the project, they argue that it is premature to conclude that the tankers will not be allowed to use Canadian waters to access the proposed terminal. The Maine State Planning Office also stated that suspension of the commission's proceedings at this time is unnecessary and unreasonable.

While Downeast and Save Passamaquoddy Bay Three Nation Alliance disagree on whether the Canadian government can deny LNG tankers passage through Head Harbour Passage and Passamaquoddy Bay to reach the proposed terminal, they agreed that this issue can be resolved only by mutual accord or by an international tribunal with appropriate jurisdiction.

The commission recognizes that such issues of international law are beyond its purview. They do not agree with New Brunswick and Save Passamaquoddy Bay that they should suspend proceedings on the Downeast LNG applications because the issues relating to LNG tanker passage through Canadian waters have not yet been resolved.

"There is a vital need for additional imported LNG supplies to meet increased demands for natural gas from all consuming sectors. Therefore, the commission will continue its review of the proposed Downeast LNG project and preparation of an environmental impact statement so that the project can proceed in a timely manner if issues relating to LNG tanker passage through Canadian waters are favourably resolved and the commission finds, after thoroughly reviewing all environmental and safety matters, that approval of the project is in the public interest. "

In response to New Brunswick's concerns regarding its costs to perform studies and participate in these proceedings, the commission emphasized that it welcomes the involvement of the province and any Canadian agency regarding environmental, navigational or safety concerns and will continue to seek their input.

The commission say they will thoroughly consider any information received and will conduct any additional studies or analyses needed in view of such information.

They say the U.S. Coast Guard will address all relevant marine safety concerns in its Waterway Suitability Report to determine the suitability of the proposed vessel route for accommodating the type and frequency of LNG traffic that would be associated with Downeast's proposed terminal project.

The commission will also continue working with the U.S. Department of State, which is assisting the commission's staff and the U.S. Coast Guard, to address Canadian concerns regarding the project.

For the above reasons, the commission is denying New Brunswick's motion to suspend processing of the application and the commission staff will continue to evaluate the environmental, security, safety, and navigational effects of the project.

"The commission continues to encourage Canadian agencies with relevant responsibilities to assist the commission staff and the US Coast Guard as they continue their analyses. "

Art MacKay, a member of Save Passamaquoddy Bay and executive director of the St. Croix Estuary Project, said the news that FERC had denied the motion did not come as a surprise.

"What the province did was use the system to take a run at the problem and FERC has made it clear from the beginning that they intend to see this process through. It was a nice try but no one is really surprised. "

However he said the province should keep their heads up because a similar opportunity may well arise as a result of things happening in the Board of Environmental Protection hearings. Also, said MacKay, the US Coast Guard submissions and those from Fish and Wildlife have taken a negative stance on this proposal.

"Timing is everything. The province should stay alert because there may be another opportunity. They should be stating concerns over the impact on the bottom which they have jurisdiction over. They have jurisdiction over the bottom of our portion of Passamaquoddy Bay. They should be greatly concerned about the dredging, pile driving, etc., because the impacts will be on provincial property.

"There are some unique invertebrate animals located in that area and there is a well known and important overwintering area for ground fish and herring right off where Quoddy Bay LNG (the other company proposing an LNG terminal in Passamaquoddy Bay) plan to build their terminal.

"That particular population is really the foundation of the spring fishery for groundfish and herring — so the province should be protecting the bottom on behalf of the residents of New Brunswick."