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Maine memo fuels more debate over
LNG plans

Mark Reynolds, Providence Journal Staff Writer, 9/15/2004

*The developer of the proposed Fall River natural gas facility calls accusations that he was planning to bypass Massachusetts regulators "flat-out untrue."

FALL RIVER -- A memo written last spring by a Maine state official suggests that the developer pursuing an unpopular liquefied natural gas shipping port in Fall River once planned to make an end run around state and local permits.
The developer, Gordon Shearer, denies such a plan and says federal guidelines basically force LNG developers to comply with local regulations. "The federal government does not have carte blanche authority to simply overturn local permitting," Shearer, of Weaver's Cove Energy and Hess LNG, said in an interview yesterday afternoon. "It's just not true," he said. "It's just flat-out untrue."

But opponents of the project are rallying around the memo, which characterizes an alleged conversation between Shearer and Citizens Energy president Joseph P. Kennedy II. They say the note speaks to the corruption of a federal permitting process that leaves Fall River vulnerable to a dangerous and unwanted energy project. The memo, obtained yesterday by The Journal, also documents the LNG interests of Massachusetts-based Citizens Energy, a nonprofit that supplies gas and oil to the poor.
Joseph Carvalho, chairman of the Coalition for the Responsible Siting of LNG Terminals, downloaded the note from a Web site last week. He recited the memo for officials with the Federal Energy Regulatory Commission who are reviewing the proposal to build a shipping port capable of receiving large quantities of LNG from tankers about 50 to 70 times a year.

Yesterday, The Journal confirmed the authenticity of the memo with officials in Maine. Dick Davies, an energy adviser to Maine Gov. John Baldacci, wrote the note in an internal communication to the governor on May 14, after a discussion with Kennedy. Most of what he reported had to do with the potential development of an LNG shipping facility in Maine, including the possibility that Citizens' Energy might pursue such a project in the state. But Davies also reported that Kennedy told him his friend, Shearer, is working on another project and "planning to bypass local and state approvals by going directly to [the regulatory commission] and seeking their preemption of local and state reviews and permits."
Davies also wrote that Kennedy was uncertain about the commission's "preemption authority" and that Maine should have a lawyer study the issue.
"It may prove true that [the regulatory commission] can just ram a project through despite community objections," Davies wrote.

Kennedy declined to comment on his alleged talks with Shearer and Davies.

(Citizens Energy officials confirmed that the nonprofit has an interest in LNG and might pursue a terminal project, but they also emphasized that Citizens Energy is not working on any specific LNG proposals right now.)

Shearer said he remembered a conversation with Kennedy, but he could not recall when it took place. Federal "preemption" doesn't happen unless state and local authorities take an action that's inconsistent with an action taken by the federal government, Shearer said.

The authority of local and state agencies over the LNG permitting process came into question several times in recent months as federal regulators performed a tentative evaluation of the development proposal, giving it a favorable review. In general, federal rules are supposed to hold projects to local laws and zoning ordinances. But federal requirements take precedent in any conflict between federal and local requirements, according to information posted on the Federal Energy Regulatory Commission Web site. The regulators' tentative review of the project reveals several such disagreements. For example, state fisheries officials have urged that developers sequence their dredging of the Taunton River to accommodate the needs of the local flounder population. Such timing is required by a Massachusetts state law that governs waterways, according to Carol Wasserman, a consultant to the city of Fall River. During their tentative review of the project, federal regulators rejected any such delays in dredging, determining that halting dredging could delay construction up to a year and cost Weaver's Cove more money.

Carvalho noted yesterday that the regulators' tentative determination on the issue lines up with the expectations that Shearer allegedly mentioned to Kennedy. "I think it's outrageous," he said. "Absolutely outrageous."

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