Opinion ID: 202936
Heading Depth: 2
Heading Rank: 1

Heading: Quoddy Bay Lease

Text: The complicated nature of this case requires a slightly extended introduction. Part of the complexity stems from the fact that neither of the litigants are parties to the lease agreement that precipitated this dispute. The lease at issue is between the Pleasant Point Passamaquoddy Reservation [2] and Quoddy Bay, LLC (Quoddy Bay), a developer seeking to construct an LNG terminal on tribal lands. In May 2005, these parties formalized a ground lease agreement (Quoddy Bay Lease), which would allow Quoddy Bay to develop a LNG terminal on a 3/4-acre portion of tribally owned land known as Split Rock, pending federal approval of the project. The fifty-year lease is a complex and multistage contract, contemplating four distinct phases: Permitting, Construction, Operations, and Removal and Remediation. The latter periods call for heavily invasive construction and operation of the LNG terminal. The permitting period, however, allows only less-invasive testing and surveying, necessary for obtaining Federal Energy Regulatory Commission (FERC) approval. [3] During this initial period, Quoddy Bay is limited to a non-exclusive right and license to enter upon and restrict access to the Premises, at any time and from time to time, to inspect, to examine, to survey, and to conduct, soil tests, borings, installation of water monitoring wells, and other engineering, geotechnical, archaeological, and architectural tests and studies on the Premises, and otherwise to do that which, in Tenant's reasonable discretion, is necessary to conduct due diligence, to secure Permits and to determine the suitability of the Premises for the LNG Project. [4] The Tribal Council approved the lease on May 19, 2005, and pursuant to the Indian Long-Term Leasing Act of 1955 (Leasing Act), 25 U.S.C. § 415, sent the lease to the BIA for review. On June 1, 2005, the BIA approved the lease. [5] At the same time, the BIA issued a Categorical Exclusion Checklist, indicating that lease approval is solely for the site investigation required for the [FERC] permitting process in the development of an [Environmental Impact Statement (EIS)]. . . . [C]omplete environmental analysis and EIS development [will] be conducted through the FERC permitting process. Continuing the lease beyond the investigation period is contingent upon FERC permit approval, acceptability of the EIS analysis and insignificant impact on the leased property. The BIA will be a Cooperating Agency for the EIS development through FERC. The BIA determined that the site investigation fell within the definition of a Categorical Exclusion, such that an EIS was not required prior to approval of the lease. [6]