Woodfibre LNG Loses FISC Appeal [UPDATED]
Canada’s Woodfibre LNG has lost its appeal to the Canada Border Services Agency (CBSA) to have fabricated industrial steel components (Fisc) used in its project modules removed from the scope of a 45.8% anti-dumping duty imposed in 2017 by the Canadian International Trade Tribunal (CITT).
In a scope ruling handed down November 23, the CBSA denied Woodfibre’s contention that foreign steel used to make the frames for its processing modules and pipe racks should not be assessed the penalty because they do not form the main components of the modules and are just parts of the completed module. Taxing the steel parts used to make the frame, Woodfibre said, would be akin to taxing the sugar in an imported soft drink.
“While there is a fabricated steel structure that forms the framework for the processing units, this framework is irrevocably interconnected with the complex machinery that provides the modules with their essential characteristics and end use,” Woodfibre LNG said in its application for a scope review. “The complexity of the fabrication and finished product, which is defined by its use and not by the FISC forming part of its structure, is such that the resulting modules should not be considered Fisc.”
The CBSA, however, disagreed with Woodfibre’s contention that the modules, once put together using Fisk and non-Fisc, are essentially stand-alone components, each with a unique function, much like an industrial machine.
“The characterization of modules as stand-alone, finished goods distinct from its parts is not consistent with the reality of the different standards and codes that apply to different parts of a module and the industrial facility after construction,” the CBSA said. “Canadian regulatory requirements treat various parts of a module as distinct and separate.”
The FISC tariff applies to steel imported from China, South Korea and Spain. Woodfibre LNG has said that Fisc constitutes about 40%, by weight, of its finished modules, and application of the tariff could threaten the financial viability of the C$1.6bn (US$1.2bn) project at Squamish, north of Vancouver.
A Woodfibre LNG spokeswoman said the company is reviewing the ruling and evaluating its options.
The company has the right to appeal the CBSA’s ruling back to the CITT within 90 days, or it may prefer to await a ruling on the Fisc tariff in a proceeding currently before the Federal Court of Appeal. A decision in that proceeding, brought to the court by Anglo-Dutch Shell-led LNG Canada, is expected later this year.
The CBSA ruling came on the same day that Woodfibre LNG announced that Squamish Nation, on whose traditional territory Woodfibre LNG’s 2.1mn metric tons/year liquefaction terminal will be developed, had approved three agreements related to the project. The three agreements are with Woodfibre LNG, FortisBC, which will build a pipeline extension to deliver natural gas to the terminal, and the province of BC, and constitute Squamish Nation's final approval of the project and its environmental impacts.
The impact benefit agreement with Woodfibre is worth about $C1.1bn (US$827mn), in the form of annual cash payments to the Squamish First Nation and business and employment opportunities that will be made available to the First Nation’s members.
“The Squamish Nation sought to ensure that the Nation’s environmental standards are being met,” Squamish Nation Council said in a statement released November 21. “The project proponents are doing this by satisfying the Nation’s 25 environmental conditions issued under the Squamish Nation’s environmental assessment process.”
The Woodfibre LNG project is the first industrial project to undergo Squamish Nation’s environmental assessment process, and the first industrial project in Canada to be awarded an environmental certificate by an indigenous government.