Here's to the crazy ones, the misfits, the rebels, the troublemakers, the
round pegs in the square holes... the ones who see things differently -- they're
not fond of rules... You can quote them, disagree with them, glorify or vilify
them, but the only thing you can't do is ignore them because they change
things... they push the human race forward, and while some may see them as the
crazy ones, we see genius, because the ones who are crazy enough to think that
they can change the world, are the ones who do.

Steve Jobs
US computer engineer & industrialist (1955 - 2011)

Monday, January 28, 2013

The Case Against Nalcor - You Decide

This is my case presented against the Lower Churchill development. I have not added all the attachments here. I publish this to give people a better understanding of the stakes involved, with the hope it gives a better understanding:
                                   
 
                                             2012 O1G 5862

IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR

                                  TRIAL DIVISION (GENERAL)

 

 

BETWEEN:

                                                Brad Cabana

                                                                                                APPLICANT

 

AND:

                              Her Majesty The Queen in Right of

                            The Government of Newfoundland and

                                                Labrador

                                                                                                FIRST RESPONDENT

AND:

                                              Nalcor Energy

                                                                                                SECOND RESPONDENT

AND:

                                    Innu Nation of Labrador

                                                                                                THIRD RESPONDENT

 

 

                                MEMORANDUM OF FACT AND LAW

                                   

 

SUMMARY OF CURRENT DOCUMENT
Court File Number(s):
2012 01G 5862
Date of Filing of Document:
January 25, 2013
Name of Filing Party or Person:
Brad Cabana
Application to which Document
being filed relates:
Interlocutory hearing seeking interim relief, dated  November 16, 2012
Statement of purpose in filing:
Applicant’s Memorandum of Fact and Law
Court Sub-File Number, if any:
n/a


 

                           MEMORANDUM OF FACT AND LAW

 

 

ISSUES

 

ISSUE 1 – DID THE PUBLIC UTILITIES BOARD HAVE THE RIGHT TO IMPOSE A WATER MANAGEMENT AGREEMENT ON CFLCO?

 

 

1.         The Lease Act 1961 exempts all hydro-electric power produced at the Upper Churchill Falls Plant, the Quebec Hydro Commission and/or the Newfoundland and Labrador Power Commission, from the Public Utilities Act, 1964:

 

The Public Utlities Act, 1964, the Act No.34 of 1964, as now or hereafter   amended shall not apply to

(b)        the supply of hydro-electric power developed under the Lease made pursuant to the Act No. 51 of 1961, as now or hereafter amended, at the Churchill Falls Power Plant in Labrdor to

                                    (i)         Quebec Hydro-Electric Commission

                                    (ii)        the Newfoundland and Labrador Power Commission,or…

But the said The Public Utilities Act, 1964, applies to the production, storage, transmission and supply of all other hydro-electric power developed under or in pursuance of the Lease executed and delivered pursuant to this Act.”

2.         The Lease Act 1961 acknowledges the Government’s surrender of all rights pertaining to the premises demised by the Lease to the Lessee:

“6A.    The Government acknowledges that, so long as this Lease or any of the leases or licenses refered to in Clause 7 of Part III of this Lease shall be in force, all right, title and interest in and to all fixtures, structures and other improvements located on the premises demised by this Lease or such other leases or licenses (but not personal property located thereon), and all proceeds and avails of such fixtures, structures and improvements shall be part of the lessee’s leasehold estate…”

3.         The Lease Act, 1961 grants CF(L)CO the exclusive right to utilize the Upper Hamilton :

“1.       In pursuance of the Principal Agreement and for and in consideration of the undertakings of the Lessee herein set forth and subject to the terms, conditions, reservations, exceptions and provisions herein contained, the Government hereby leases and demises unto the lessee full right and liberty to use exclusively all usable waters upstream of the point of intersection of the Hamilton River with the meridian of 63 degrees 40’ west of Greenwich and within

(a)        the catchment area of the Hamilton River upstream of that point; and

(b)        any other catchment areas that, by diversion, can be made tributary to the above-mentioned catchment area of the Hamilton Rver,…

TO HOLD the same unto the Lessee for all the term of ninety-nine years…

2.         Subject to the provisions, terms, conditions, exceptions and reservations of this Lease, the lease and demise of the Upper Hamilton created hereby includes the grant to the Lessee during the term created by this Lease of                                                                        

(a)        the exclusive right to harness and make use of the Upper Hamilton;

(b)        all hydro-electric and hydrualic power rights in, to and in respect of the Upper Hamilton;

c)         the exclusive right to utilize all of the Upper Hamilton in all dams, tunnels, canals,diversions, power houses and any and all other works, wheresoever located, necessary for the development of hydro-electric and hydraulic power;

(d)        the exclusive right to store so much of the Upper Hamilton as may be economic and/or beneficial for the purposes of the development by the lessee of the Upper Hamilton and to regulate the flow of the Upper Hamilton subject to the condition that in so doing the Lessee shall not interfere, to the detriment of downstream proprietors of water power rights without the consent of all such proprietors, with the minimum daily mean unregulated flow of such waters occuring prior to the establishment of a hydro-electric plant at a site on the Unknown River having an initial generating capacity of approximately 120,000 horsepower together with appropriate related facilities including high voltage transmission lines to and step down station near Wabush Lake (the said plant and facilities being herein called the “Twin Falls Project”).”

 

4.         The Lease Act 1961 agrees to grant the Lessee the right to Quiet Enjoyment of its Lease:

                        “PART III

GOVERNMENT’S COVENANTS

The Government hereby covenants with the Lessee as follows:

Quiet enjoyment

1.         The Lessee paying the royalty provided for in this Lease and observing, performing and fufilling the several provisions, covenants, terms and conditions herein contained and on the part of the Lessee to be paid, observed, performed and fufilled shall peaceably hold and enjoy the rights and liberties hereby leased and demised during the said term without any interruption or interference by the Government or any other person whomsoever rightfully claiming under or in trust for it.”

5.         The Lease Act 1961 has the effect of law notwithstanding any other Statutes of the Province:

                        “Lease to have effect of law

3.         The Lease authorized to be executed and delivered under Section 2 shall, upon its execution and delivery, be valid and binding upon the parties thereto, and all and singular provisions therefore shall have the force and effect of law for all purposes as if expressly enacted in this Act, and the Lessor and Lessee named in the Lease, as well as all others claiming directly or indirectly under the Lessor or the Lessee including without limiting the generality of the foregoing Twin Falls Power Corporation Limited if it is a sublessee, licensee or permitee of the Licensee and the trustee for the holders of any bonds issued by the Twin Falls Power Corporation Limited or the assignees of such trustee and any of them have, each of them according to their right, title or interest, full power and authority from time to time to do or perform or omit to do or perform all and singular the several acts, matters and things in and by the Lease provided to be done, as the case may be, in the manner and with the effect and under the conditions stipulated and provided in the Lease.

Sec.3 to have full effect

4.         Section 3 of this Act shall have full effect notwithstanding anything to the contrary contained in the Crown Lands Act, chapter 174 of The Revised Statutes of Newfoundland, 1952, or in any other statute of law”

6.         The Lease Act 1961 grants CF(L)CO the right to renew the Lease:

                        “Renewal

2.         Subject to all of the provisions of this Lease, the Government will on the written request of the Lessee made before the expiration of the term hereby created, if there shall not at the time of such request be any existing breach of the covenants, terms and conditions of this Lease on the part of the Lessee, grant to it a further lease of the rights and liberties leased and demised by this Lease for the further term of ninety-nine years from the expiration of the term created by this Lease subject to payment of the same royalty and containing the like covenants and conditions as are contained, except the covenant for renewal.”

7.         The Public Utilities Act, RSNL 1990 Chapter P-47, states that Lieutenant-Govenor may exempt a public utility from the application of all or a portion of the Act: 

Exemption     4.1 The Lieutenant-Governor in Council may exempt a public utility from the application of all or a portion of this Act where the public utility is engaged in activities that in the opinion of the Lieutenant-Governor in Council as a matter of public convenience or general policy are in the best interest of the province, to the extent of its engagement in those activities.” In fact, such an exemption was granted in the Lease Act, 1961 to the power produced at the Upper Churchill Falls Plant, the Quebec Hydro Electric Commission and the Newfoundland and Labrador Power Commission.

8.         The Public Utilities Act establishes the Public Utilities Board, and details their powers and responsibilities. As a creature of the Public Utilities Act, the Public Utilities Board derives its power from the Act, and therefore would have no jurisdiction or power to implement any policy or law that would affect the power produced at the Upper Churchill Falls Plant, the Quebec Hydro Electric Commission and/or the Newfoundland and Labrador Power Commission.

9.         Furthermore, the Lease Act 1961 states that all rights of the Lease are protected from “any other statue in law”, which by its normal meaning, would include the Electrical Power Control Act, 1994.

10.       Cabana, therefore, contends the Public Utilities Board did not have the legislative right to consider “establishing”, or better put “imposing” a Water Management Agreement on CF(L)CO, and by design on Hydro Quebec. Furthermore, that the Electrical Power Control Act, 1994, and specifically the 2007 amendments thereof, did not over ride the pre-existing exemption granted in 1961 by the Lease Act. In addition, previous Court rulings have found the Government of Newfoundland and Labrador cannot infringe on a contract that has its civil rights routed in a separate province.

 

ISSUE 2 – ARE THE 2007 AMMENDMENTS TO THE ELCTRICAL POWER CONTROL ACT, 1994, AND THE WATER MANAGEMENT AGREEMENT THEREBY ORDERED, CONSTITUTIONAL IN THEIR PITH AND SUBSTANCE?

 

A)        What rights does Hydro Quebec hold on the electrical power generated at the Upper Churchill Plant and/or the Plant’s operation?

 

11.       The amount of power that Hydro Quebec is entitled to from the Upper Churchill Plant is dictated by the Power Contract 1969 and the Guaranteed Winter Availability Contract 1998. “Plant” in the Power Contact 1969 is defined therein as:

“Plant” means the Hydro-Electric Plant (as referred to in the Engineering Report and in the Construction Cost Estimate, each prepared by Acres Canadian Bechtel of Churchill Falls,copies of each of which have been furnished to Hydro-Quebec by CFLCO) to be constructed by CFLCO pursuant to Section 4.1 hereof at a site near Churchill Falls on the Upper Churchill River, having, when completed, at least those technical characteristics set fourth in Schedule 1 hereto, or as may be varied pursuant to Section 4.1 hereof, and all facilities, properties and rights obtained by CFLCO for the constructionand operation thereof and the generation, transformation, transmission and delivery of power and energy therefrom including, without limiting the generality of the foregoing:

                        (a)        all access roads

                        (b)        airports and runways

                        (c)        all construction camps

                        (d)        permanent townsite and services therefor

                        (e)        all transport and communications

                        (f)        all water control and water storage works and facilities

                        (g)        all buildings and structures and their appurtenances

                        (h)        all machinery and equipment,whether moveable or immovea

                        (i)         all spare parts

                        (j)        all tools and maintenance material and

(k)        all transmission circuits of CFLCO, to and from said Plant, of any company which, under the present text of Section 121B of the Canada Corporations Act, would be a subsidiary of CFLCO, provided such circuits are required to be used eitherto supply energy to Hydro-Quebec pursuant hereto or to supply energy to Twin Falls Power Corporation Limited in satisfaction of CFLCO’s obligations referred to in Section 4.2.2 hereof. “

12.       Hydro Quebec and CF(L)CO agreed to the following object of the Power Contract:

            “Article II

            Section 2.1 Object

During the existence of the present Power Contract Hydro-Quebec agrees to purchase from CFLCO and CFLCO agrees to sell Hydro Quebec each month (i) prior to the Effective Date at least the amount of energy indicated in Column 7 of Schedule II hereof as available during the stage of construction applying to such month and Firm Capacity and (ii) from and after the Effective Date, the Energy Payable and the Firm Capacity; all at the prices , on the terms and conditions, and in accordance with the provisions, set forth herein.”

13.       CF(L)CO must deliver to Hydro Quebec, at the Delivery Point, in acordance with the Power Contract:

            “Article VI

            6.2       Sale and Purchase of Power and Energy

CFLCO shall deliver to Hydro-Quebec at the Delivery Point such power and energy as Hydro-Quebec may request, subject to the provisions of Section 4.2 and 4.3.”

Sections 4.2 and 4.3 detail operational disruptions, restrictions on runnung the Plant over capacity, and Twin Falls Power Corporation Limited/ Recall power to the Province. Therefore, without a bona fide reason to shut down the plant, Hydro Quebec is entitled to all the power available, which the Plant may produce, excluding 300 MW of recall power to the Province and 225 MW to Twin Falls Power Corporation. There are no other restrictions on Hydro Quebec’s access to the power generated at the Upper Churchill Plant.

14.       Furthermore, the Power Contract dictates more specifically what power shall be available to Hydro Quebec from the Upper Churchill Plant, and Hydro Quebec’s authority to dictate deliveries thereof:

            “6.4     Firm Capacity

The Firm Capacity shall be available at all times when Hydro-Quebec has requested it. In addition whenever additional capacity can, in the opinion of CFLCO, be made available, such capicty shall also be available to Hydro Quebec on request…

Each such seven day schedule shall constitute Hydro-Quebec’s request for availablity of such capacity over the period scheduled to the various extents and at the various times indicated by the schedule, but subject to Hydro-Quebec’s right to make further requests for changes in capacity during the period within the limits of Firm Capacity. Any such request shall be considered as revising the schedule to the required extent and for the required time.”

 

15.       CF(L)CO is also limited, by the Power Contract, in how it operates the Upper Churchill Plant. In particular, Hydro Quebec makes clear that the operational flexibility of the Plant, in its favour, is entrenched in the Power Contract:

            Article IV

            Section 4.2 Operation

            4.2.1.   Operational Flexibility

The parties hereto acknowledge that it is desirable for Hydro-Quebec to have the benefit of operational flexibility of CFLCO’s facilities in relation to the Hydro Quebec system. Accordingly:

(i)         Hydro-Quebec may request CFLCO to operate the Plant so as to supply Hydro-Quebec’s schedule of power requirements, provided that no such request shall be less than the Minimum Capacity or, except as provided in section 6.4 more than the Firm Capacity;

(ii)        Hydro-Quebec may require deliveries which have the effect of varying the amount of water to be carried in storage at any time, provided that, in so doing, sufficient water is left in storge so that Minimum Capacity can always be maintained”

 

16.       In reinforcing Hydro Quebec’s operational control of the Plant, Article IV continues:

            “Article IV

            4.2.9.  Control of Frequency and Power

For the purpose of the present Power Contract Hydro-Quebec shall be responsible for regulating frequency and CFLCO shall be responsible for power and reactive flows in the transmission circuits of the Plant, to meet the schedules to be provided by Hydro-Quebec pursuant hereto. Each party shall so operate its system to minimize voltage and power swings transmitted to the system of the other party.

            4.3 Interruptions

(i)         Either party may at any time, for the purpose of safeguarding human life or protecting from major damage the storage, generating or transmission facilities of CFLCO or the Hydro-Quebec system, discontinue or reduce, but only to the extent necessary, the supply or taking of power and energy hereunder.

(ii)        …All such discontinuances and reductions in the supply of power and energy, total or partial, shall be of minimum duration and, when possible, arranged for at a time least objectionable to Hydro-Quebec.

Section 4.3 clearly states that “taking of power and energy” shall only be in certain cases, and only as long as required to remedy those circumstances.

17.       In fact, other than the Twin Falls Power Corporation allotment of the Upper Churchill Plant’s production, the only power permitted to be exported by CF(L)CO is that allowed for recall to the Province. The Power Contract outlines the restrictions, and rights thereof:

“Recapture” means any withholding from the power and energy agreed to be sold hereunder which may be made by CFLCO in accordance with the provisions of, and within the limits stipulated by, Section 6.6 hereof…

6.6       Recapture

CFLCO may, on not less than three years prior written notice to Hydro-Quebec, elect to withhold from the power and energy agreed to be sold hereunder blocks at a specified load factor per month, to be stated in such notice, of not less than 60% nor more than 90%, which blocks in the aggregate shall not exceed during the term hereof 300,000 kilowatthours per year provided that:

(i)         energy so withheld is sold by CFLCO only for consumption outside the Province of Quebec;

(ii)        any part of the energy so withheld which, from time to time may become available for purchase by Hydro-Quebec, may be purchased by Hydro-Quebec…:

(iii)       any part of the power and energy so withheld before the seventh Delivery Date shall not relieve CFLCO from its commitment to deliver power and energy in accordance with Schedule II of the present Power Contract.

 

 

18.       It is clear from the letter and spirit of the Power Contract that Hydro Quebec has an integrated relationship with CF(L)CO, and the Upper Churchill Plant, that legally enshines its operational and capacity rights. It is also clear that those rights are central to the Power Contract.

19.       It is also clear from the Power Contract that Hydro Quebec has rights to a fixed amount of power, and rights to the remainder of the power generated by the Upper Churchill with the exception of 300 MW of Recall Power and 225 MW of power for Twin Falls Power Corporation.

20.       Cabana therefore asserts that Hydro-Quebec has the right to operationally manage the Upper Churchill Plant in accordance with the Power Contract 1969. That it has the first right to any access power generated by the Upper Churchill Plant, that is above and beyond its minimum right and the right of CF(L)Co to 300 MW of Recapture and 225 MW commited to TwinCo, in accordance with the Power Contract 1969, and the Guaranteed Winter Availabilty Contract 1998. For clarity, Cabana asserts Hydro-Quebec has the sole right to schedule the production at the Upper Churchill Plant in accordance with the Power Contract of 1969. That it’s right not to be deprived thereof is also enshrined in the Shareholder’s Agreement of 1998. Hydro-Quebec is also protected from Government interfernce in its conduct at the Upper Churchill Plant by the Lease Act 1961. CF(L)Co is bound to respect these rights, and has done so in the past.           

 

B)        Do the 2007 ammendments to the Electical Power Control Act 1994 and/or the Water Management Agreement effect the extra-provincial civil rights of Hydro Quebec?

 

21.       The Supreme Court of Canada in re Upper Churchill Water Rights Reversion Act, [1984] 1 SCR 297, (the Supreme Court Reference) faced a very similar issue. The first issue dealt with was whether or not the pith and substance of the Reversion Act was aimed at the rights of Hydro Quebec under the Power Contract.

22.       The Supreme Court Reference further defines the territorial limitation of provincial legislative competence:

 

“The territorial limitation on provincial legislative competence is contained in the Constitution Act, 1867. The opening words of s. 92 are: “In each Province…”. Subsection (13) ofs. 92 gives the Provinces exclusive legislative authority over “Property and Civil Rights in the Province” (emphasis added), and subs. (16), similarly, is confined to matters of a purely local or private nature in the Province. There is, however, some disagreement in the case authorities as to the test which should be applied in determining the constitutional validity of a provincial statute that has extraterritorial effects.”

23.       The Supreme Court Reference examined similar cases that had affected extra-provincial rights:

“In the Ottawa Valley Power case, on facts somewhat similar to those at bar, contracts were made between the Hydro-Electric Power Commission of Ontario and Ottawa Valley Power Company, a Quebec company distributing power in Quebec. An Ontario Act which declared the contracts “to be and always to have been illegal, void, and unenforceable as against The Hydro-Electric Power Commission of Ontario” was held to be ultra vires in the Court of Appeal of Ontario as being legislation in derogation of extra-provincial rights. In the Beauharnois case a similar result was reached on similar facts, and in the Credit-Foncier case the Appellate Division of the Supreme Court of Alberta held that an Act affecting interest payable on certain debts, owing by residents of Alberta to creditors outside of Alberta, was ultra vires as derogating from extra-provincial civil rights.”

24.       The Supreme Court Reference found that extrinsic evidence is admissible to show the background against which legislation was enacted, thereby assisting in the determination of the colourability of such legislation:

“It will therefor be open to the Court in a proper case to receive and consider extrinsic evidence on the operation and effect of legislation. In view of the positions of the parties, particularily the appellant’s contention the Reversion Act has extra-provincial effect, this is, in my opinion, such a case.

I agree with the Court of Appeal in the present case that extrinsic eidence is admissable to show the background against which the legislation was enacted. I also agree that such evidence is notreceivable as an aide to construction of the statute. However, I am also of the view that in constitutional cases, particularily where there are allegations of colourability, extrinsic evidence may be considered to ascertain not only the operation and effect of the impugned legislation, but its true object and purpose as well. This was also the view of Dickinson J. in the Reference re Residential Tenancies Act, 1979, supra, at p. 721, where he said:

‘In my view a court may, in a proper case, require to be informed as to what the effect of the legislation will be. The object or purpose of the Act in question may also call for consideration though, generally speaking, speeches made in the Legislature at the time of the enactment of the measure are inadmissable as having little eidential weight.’ “

25.       The Electrical Power Act, 1994 SNL 1994 CHAPTER E-5.1 contains the following sections that conflict with the Lease Act 1961, the Power Contract 1969, the Shareholders Agreement 1998, and the Guaranteed Winter Availability Contract 1998:

                        (a)      Power policy

                                    3.         It is declared to be the policy of the province that

(b)        all sources and facilities for the production, transmission and distribution of power in the province should be managed and operated in a manner

(i)         that would result in the most efficient production, transmission and distribution of power,

(ii)        that would result in consumers in the province having equitable access to an adequate supply of power,

(v)        where the objectives set out in subparagraphs (i) to (iv) can be achieved through alternative sources of power, with the least possible interference with existing contracts, and, where necessary, all power, sources and facilities of the province are to be assessed and allocated and re-allocated in the manner that is necessary to give effect to this policy;

(b)        Interpretation

5.3       In section 3, the phrase "all sources and facilities for the production, transmission and distribution of power in the province" shall be read as including sources of every kind, whether developed or undeveloped.


(c)        Agreement imposed

5.5       (1)        Where 2 or more persons to whom subsection 5.4(1) applies fail to enter into an agreement within a reasonable time, one or more of them may apply to the public utilities board to establish the terms of an agreement between them.

(2)        Where an application is made to the public utilities board under subsection (1), the board shall establish the terms of an agreement for the purpose of achieving the policy objective set out in subparagraph 3(b)(i).

(3)        An agreement established by the public utilities board under subsection (2) is binding on the persons named in the agreement.


Amendments to an agreement

5.6       (1)        An agreement approved by the public utilities board under subsection 5.4(3) or established under subsection 5.5(2) may not be amended by the persons to whom the agreement applies without the prior approval of the public utilities board.

(2)        The public utilities board may require reporting commitments, and impose monitoring requirements, as it considers appropriate, to ensure that the persons to an agreement approved by the public utilities board under subsection 5.4(3) or established under subsection 5.5(2) comply with the terms and conditions of the agreement.

(3)        Where the public utilities board believes that one or more of the persons to an agreement approved by the board under subsection 5.4(3) or established under subsection 5.5(2) have failed to comply with the terms and conditions of the agreement, the public utilities board may, independent of any of the rights or remedies available to the persons to the agreement,

(a)        order a defaulting person to comply with the terms and conditions of the agreement; and

(b)        exercise a contractual remedy that may be available to a person who is a party to the agreement as if it were a party to the agreement.


26.       The provisions in paragraph 23, as quoted from the Electrical Power Control Act 1994 have the effect of removing the operational flexibility, and de facto control of the Upper Churchill Plant granted to Hydro Quebec in the Power Contract 1969. In effect, the operational flexibility of the Upper Churchill Plant, as guaranteed by the Crown, is transferred from control of Hydro Quebec to an Agent of the Crown, for the benefit of an agent of the Crown, by an Act of the Crown.

27.       The provisions in paragraph 23 violate the quiet enjoyment and legislative exemptions granted in the Lease Act 1961 to CF(L)CO, for the benefit of an Agent of the Crown.

28.       The provisions in paragraph 23, and subsequent Water Management Agreement imposed by the Public Utilities Board, violate the Special Majority requirements of the Shareholder’s Agreement 1998 that require a CF(L)CO Board member, appointed by Hydro Quebec, to approve of contracts with related parties.

29.       The provisions in paragraph 23, and subsequent Water Management Agreement imposed by the Public Utilities Board, infringe on the rights granted to Hydro Quebec in the Guaranteed Winter Availability Contract. The Guaranteed Winter Availability Contract is governed by the Laws of the Province of Quebec, and therefore provisions in paragraph 23 infringe on extra-provincial civil rights of Hydro Quebec.

30.       Cabana therefore asserts that the amendments to the Electrical Power and Control Act 1994, and the water management agreement do interfere and derogate the rights of Hydro-Quebec under the Power Contract 1969 and the Guaranteed Winter Availability Contract 1998, and therefore do violate the extra-provincial civil rights of Hydro-Quebec.

 

C)        What is the pith and substance of the 2007 amendments to the Electrical Power Control Act 1994 and the Water Management Agreement, and are they coloured?

 

31.       The Supreme Court Reference found that virtually all the power produced at Churchill Falls is for the benefit of Hydro-Quebec in accordance with the Power Contract 1969:

“It is against this background that the Power Contract between CFLCo and Hydro-Quebec was signed on May 15, 1969. It is a lengthy and detailed document. Under the contract CFLCo agreed to supply and Hydro-Quebec agreed to purchase virtually all of the power produced at Churchill Falls for a term of forty years, which was renewable at the option of Hydro-Quebec for a further term of twenty-five years. The price to be paid for the electricity was to be based on the final capital cost of the project. Provision was made for CFLCo to retain a fixed amount of power for use within Labrador by its subsidiary Twin Falls Power Corporation. In addition CFLCo could recall on three years minimum notice up to 300 megawatts (MW) to meet the needs of the Province of Newfoundland.

The importance of the relationship between CFLCo and Hydro-Quebec to the success of the Churchill Falls development is made evident by a reading of the Power Contract.”

32.       In finding that “Under the contract CFLCo agreed to supply and Hydro-Quebec agreed to purchase virtually all of the power produced at Churchill Falls for a term of forty years, which was renewable at the option of Hydro-Quebec for a further term of twenty-five years.” the Supreme Court Reference confirmed that the power generated at Churchill Falls was the power that Hydro-Quebec was purchasing under the Power Contract 1969.

33.       In finding that “The importance of the relationship between CFLCo and Hydro-Quebec to the success of the Churchill Falls development is made evident by a reading of the Power Contract.” the Supreme Court Reference acknowledges the many operational and logistical, as well as financial responsibilities each company holds in the operation of the Churchill Falls Plant and the interconnected interests of each company in its function – which is evident upon reading the Power Contract.

34.       The Supreme Court Reference details evidence that it considered colouring of the Reversion Act:

“As early as 1974, however, problems had arisen. Newfoundland wanted more power for its own use. In January of 1976 the President of Newfoundland and Labrador Hydro requested from Hydro-Quebec the recall of 600 MW of power. This request was not met and in May of 1976 another request, this time to the Premier of Quebec, for 800 MW was made. No diversion of power to Newfoundland resulted from these requests. On August 6, 1976 the Government of Newfoundland adopted an Order in Council calling upon CFLCo to supply 800 MW to Newfoundland commencing on October 1, 1983. CFLCo declined to comply with the Order in Council because of its commitment to Hydro-Quebec under the Power Contract.

In September 1976, the Government of Newfoundland commenced an action in the Newfoundland Supreme Court for a declaration of entitlement to power under the Statutory Lease. This action is still pending in the courts of Newfoundland. In June of 1977 Hydro-Quebec brought an action in the Quebec courts seeking a declaration of its rights under the Power Contract. That action too is still pending. On December 17, 1980 the Reversion Act received Royal Assent after passage in the Legislature of Newfoundland and on February 10, 1981 the present Reference was presented to the Newfoundland Court of Appeal.”

The Supreme Court Reference concluded: “Much of the material tendered, concerning such matters as the Newfoundland demands for the recall of power, the background of the negotiations leading up to the development of the Power Contract, and the construction of the production facilities, I view as historical facts that were public knowledge in the Province of Newfoundland and may be considered.”

35.       The following historical events show a clear path of relations with Hydro-Quebec, as they pertain to the Upper Churchill Plant, by the Province of Newfoundland and Labrador, and the conflicts between Nalcor, Hydro-Quebec, the Newfoundland and Labrador government, and CFLCO (continued on from where the Supreme Court Reference left off):

                        (a)        1996 -  The Electrical Power Control Act (1994) is proclaimed;

(b)        1998 - The Guaranteed Winter Availability Contract is signed between Hydro-Quebec and CFLCO, November 1;

c)        1998 – The Shareholders Agreement is signed between Hydro-Quebec and CFLCO, June 18;

(d)        2003-2009 – Confidential negotiations between the Government of Newfoundland and Labrador and the Government of Quebec on constructing the Lower Churchill Falls project;

(e)        2004 – Government of Newfoundland and Labrador announces call for Expressions of Interest in developing the Lower Churchill project;

(f)         2005 – Government of Newfoundland and Labrador announces results of Expressions of Interest in development of the Lower Churchill project;

(g)        2007 – Newfoundland and Labrador government announce the Energy Corporation Act, May, 31;

(h)        2007 – Amendments to the Electrical Power Control Act, 1994. June, 14;

(i)         2007 – Premier Williams announces the new provincial Energy Plan, September 11;

(j)         2008 – The Newfoundland and Labrador government, Nalcor, and the Innu Nation of Labrador sign the New Dawn Agreement, September 26;

(k)        2009 – Lease granted to Nalcor for the Lower Churchill waters, March 17;

(l)         2009 – Gilbert Bennett, Vice President in charge of Muskrat Falls, Nalcor, invites CFLCO to negotiate a water management, March 19;

(m)       2009 – CFLCO and Nalcor negotiate a water management agreement, spring and summer;

(n)        2009 – CFLCO and Nalcor reach tentative agreement on a water management agreement, September;

(o)        2009 – Lease to Nalcor for water/power rights to the Lower Churchill revised and replaced, October 2;

(p)        2009 – CFLCO Board of Directors votes down the agreed to water management agreement, October 23;

(q)        2009 – Nalcor submits application for an imposed water management agreement to the Public Utilities Board, November 10;

r)         2010 – Public Utilities Board approves water management agreement as proposed by Nalcor, March.

The time table makes it clear that from 2003 to 2010 the focus of the Newfoundland and Labrador government was to construct the Lower Churchill project in accordance with a master Energy Plan, establish a provincially owned energy corporation to facilitate the project, negotiate with Hydro-Quebec to facilitate its power transmission, create legislation to compromise the Power Contract to aid in the Lower Churchill proceeding, and impose those legislative changes on Hydro-Quebec with the purpose of creating conditions allowing for the success of the Lower Churchill.

36.       The Government of Newfoundland and Labrador, since at least 2004, insisted on the development of the Lower Churchill project, when it new at such time that the development would not be possible without access to the Upper Churchill Plant power supply, and water on a basis that suited the Province.

37.       The Government of Newfoundland and Labrador, in 2007, published an energy plan entitled Focusing our Energy (Energy Plan). The plan makes frequent reference to the Power Contract 1969, and the intention of the government to use the “energy warehouse” for the benefit of the people of Newfoundland and Labrador.

38.       Then Premier Williams, as a forward to the Energy Plan, emphasized the pre-meditated nature of the government’s approach, and its dissatisfaction with the Power Contract 1969:

“The one and only way to ensure we are properly prepared to seize every opportunity for maximum economic benefit from these resources is to move forward on the basis of a comprehensive, long term strategic Energy Plan for our province. Until now, we have never had such a plan. Benefits we should have gained have been lost and deals that were destined for greatness were in fact inadequate.

The days of our resources primarily benefiting others are gone. A bold new attitude of confidence has taken hold of the province.

In a time when energy supply and demand are key international issues, we have taken an approach that will harness our resources in a responsible manner, while positioning our province as a key energy player – particularly in the North American market. With sound planning and strong leadership, Newfoundland and Labrador will reap a rich harvest of benefits from our Energy Warehouse for generations to come.”

39.       The Energy Plan, in the “Upper Churchill” section, refers to the Upper Churchill Plant making “a greater contribution to the province”:

“The Provincial Government will continue to explore opportunities for this facility to make a greater economic contribution.”

This statement speaks to previous exploration of opportunities and a future exploration of opportunities, with the under lining message being it wants the Upper Churchill plant to make a greater contribution to the financial benefit of Newfoundland and Labrador.

40.       The Energy Plan, in the “Other Hydro Developments” section, refers to the province controlling all future hydro-electric developments and water rights in the province:

“One of our goals is to maximize our benefits from resource developments. We believe this means the Energy Corporation should control the development of all small hydro developments for the benefit of all electricity users and determine whether to do this alone or with private sector partners. However, in the long term, the province, through the Energy Corporation, must maintain full control over any new hydro-electric generation assets. We will do this by adopting a policy that no new water rights for hydro-electric generation will be issued except to the Energy Corporation or another company acting in partnership with the Energy Corporation.”

This quotation is significant for several reasons. It speaks to the want of control over water rights and hydro-electric generation assets by the Energy Corporation, which is now Nalcor. It also begs the question if all hydro-electric resources and water rights are owned or controlled by Nalcor, why would the 2007 amendments to the Electrical Power Control Act 1994, from paragraph 23 herein, be necessary?

41.       Nalcor filed a document titled “Water Management Application – Pre-Filed Evidence” (Pre-filed Evidence) with the Public Utilities Board when it applied for an imposed water management agreement in 2009. The document refers to CFLCO as “having rights” to Upper Churchill waters while referring to its own entitlement to the Lower Churchill waters as having “the right”. The inference being that CFLCO does not have the exclusive rights granted it by the Lease Act 1961.

42.       The primary focus of the Pre-filed Evidence was to build a case to the Public Utilities Board that Nalcor required a water management agreement to make the Lower Churchill development feasible:

“Water management through coordination of flows mitigates the effects of  month, CF(L)Co deliveries could be requested in a manner that calls for Continuous Energy to be produced at an increased rate for part of the month with the remainder of the Continuous Energy to be produced at a reduced rate later in the month.

Irregular production at Churchill Falls will have different effects on the lower Churchill facilities depending upon the uncontrolled natural inflows at various times of the year. In many months, the lower Churchill facilities would have insufficient water for production requirements during periods of reduced production at Churchill Falls. However, during the spring runoff, there would be excess water, resulting in spillage, during periods of increased production at Churchill Falls. These problems would be compounded if full CF(L)Co delivery of Continuous Energy was scheduled early in one month followed by full production late in the following month.”

43.       The Pre-filed Evidence, Section 5.1 states in part:

“Section 5.7 of the EPCA requires that existing power contracts not to be adversely affected by the provisions of a water management agreement. The WMA recognizes the existing contractual obligations of CF(l)Co, and provides that the operation of the hydroelectric facilities on the Churchill River under the terms of the WMA will have no effect on CF(L)Co’s ability to meet its delivery requirements.

The WMA will, having regard to both parties’s power generation capacity and delivery requirements, result in production schedules for the delivery of power in the aggregate to meet contractual obligations of each of Nalcor and CF(L)Co. The requirements of both Nalcor’s and CF(L)Co’s customers will be met from the combined generation of both facilities. The outcome is simply the coordination of production to optimize the use of the water to produce energy.”

This section completely ignores the requirements of the Power Contract 1969, the Lease Act of 1961, The Shareholders Agreement 1998 and the Guaranteed Winter Availability Contract 1998. It ignores, in general, Hydro-Quebec’s right to operate the Upper Churchill Falls plant for its benefit in production and its right to quantity produced thereby. It imposes the generation from a separate plant at the lower Churchill that Hydro-Quebec has no ability to supervise quality of construction, standards or maintenance in. It has the effect of granting one admitted competitor the right to take control of the de facto asset of another without compensation, and in any case in violation of that competitors civil rights vested in the Province of Quebec.

 44.      The Pre-Filed Evidence, Section 5.5 Banking, states:

“Since the timing of volumes consumed by each producer under shared dispatch is different from that which they would have been under independent operations, it is essential that these amounts be tracked.”

In this statement Nalcor recognizes that the Water Management agreement has the effect of assimilating its proposed operations onto that of CF(L)Co, and by direct implication its competitor Hydro-Quebec, when it states: “under shared dispatch is different from that which would have been under independent operations.” This is another breach of the aforesaid agreements between Hydro-Quebec, and the Government of Newfoundland and Labrador and its agents.

45.       The Nalcor Application for Establishment of a Water Management Agreement, November 10, 2009, states the objective of the Agreement:

“The objective of this Agreement shall be the coordination of the Power generation and Energy production in the aggregate for all Production Facilities on the Churchill River to satisfy the Delivery Requirements for all suppliers, in a manner that provides for the maximization of the long term Energy-generating potential of the Churchill River, while ensuring the provisions of any Prior Power Contracts are not adversely affected.”

46.       The Electrical Power and Control Act 1994, Section 5.7, amendment dated 2007, similarly states:

“A provision of an agreement referred to in Section 5.4 or 5.5 shall not adversely affect a provision of a contract for the supply of power entered into by a person bound by the agreement and a third party that was entered into before the agreement under section 5.4 or 5.5 was entered into or established, or a renewal of that contract.”

47.       However, paragraphs 42 and 43 do not seem to consider the Supreme Court Revision finding that:       

Where, however, the pith and substance of the provincial enactment is the derogation from or elimination of extra-provincial rights then, even if it is cloaked in the proper constitutional form, it will be ultra vires. A colourable attempt to preserve the appearance of constitutionality in order to conceal an unconstitutional objective will not save the legislation. I refer to the words of Lord Atkin quoted above that “a colourable device will not avail”.

The Supreme Court Reference clearly states a “cloak” of constitutionality does not alter the ultra vires intent of the legislation. The Government of Newfoundland and Labrador, as owner of the majority shares of CF(L)CO’s shares clearly understood the Special Majority terms of the Shareholder’s Agreement which require Hydro-Quebec to approve of any agreement or contract between related parties. The Government of Newfoundland and Labrador clearly understood the terms or the Power Contact 1961 and the terms of the Guaranteed Winter Availability Contract 1998. It most certainly understood the terms of the Lease Act 1961, which it crafted and passed. Therefore, it is certain that the Government of Newfoundland understood that Section 5.7 of the Electrical Power Control Act 1994 was simply to give a cloak to coloured legislation. In fact, the cloak was successful to the point the Public Utilities Board implemented Section 5.5 despite being in contravention of Section 5.7.

48.       The Nalcor Application for Establishment of a Water Management Agreement (Nalcor Application), November 10, 2009, Section 4.2, states:

                        “Compliance with Production Schedules

4.2       CF(L)Co and Nalcor shall adhere to the Production Schedules set by the Independent Coordinator…”

49.       Section 4.2 of the Nalcor Application is in direct contravention of the Lease Act 1961, the Power Contract 1969, the Shareholders Agreement 1998, and the Guaranteed Winter Availability Contract 1998. In particular, the Power Contract 1969 states:

            Operation of the Plant

4.1       Operation

4.1.1.   Operational Flexibility the parties hereto acknowledge that it is desirable for Hydro-Quebec to have the benefit of operational flexibility of CFLCO’s facilities in relation to the Hydro-Quebec system. Accordingly:

(i)         Hydro-Quebec may request CFLCO to operate the Plant so as to supply Hydro-Quebec’s schedule of power requirements, …

(ii)        Hydro-Quebec may require deliveries which have the effect of varying the amount of water to be carried in storage at any time, providing that, in so doing, sufficient water is left in storage so that the Minimum Capacity can always be maintained.”

50.       Section 4.2 and 4.3 of the Nalcor Application are in direct contravention of the Lease Act 1961, the Power Contract 1969, the Shareholders Agreement 1998, and the Guaranteed Winter Availability Contract 1998. In particular, the Power Contract 1969 states:

                        “6.5     Firm Capacity Schedules

At least seven days in advance of the first Deliver Date and at weekly intervals thereafter Hydro-Quebec shall furnish to CF(L)Co:

(a)        an hourly schedule of its proposed capacity requirements over the week following; and

(b)        an estimate of what Hydro-Quebec is likely to schedule over the three weeks thereafter.

Each such seven day schedule shall constitute Hydro-Quebec’s request for availability of such capacity over the period scheduled to the various extents and at the various times indicated by the schedule, but subject to Hydro-Quebec’s right to make further requests for changes in capacity during the period within the limits of Firm Capacity and Minimum Capacity. Any such request shall be considered as revising the schedule to the required extent and for the required time.”

In effect, Nalcor is attempting to replace Hydro-Quebec’s position within the power contract as scheduler of power production with that of an “Independent Coordinator” who Hydro-Quebec does not control, and whose interests are statutorily separate and apart from those of Hydro-Quebec to the possible benefit of an admitted competitor of Hydro-Quebec.

51.       Further to paragraph 47, the Nalcor Application requires Hydro-Quebec to release commercially sensitive information to a competitor:

                        “4.4     Information sharing

Information and data shall be shared between the Suppliers and by the Suppliers with the Independent Coordinator as necessary for the Independent Coordinator to perform its functions under this Agreement, including records, data and models, and the Independent Coordinator shall have physical and computer access to those facilities as required to obtain and verify such information and data.”

This requirement is in contravention to the aforesaid contracts, and corporate rights in general.

52.       Section 5.1, 5.2 and 5.4 of the Nalcor Application , are in direct contravention of the Lease Act 1961, the Power Contract 1969, the Shareholders Agreement 1998, and the Guaranteed Winter Availability Contract 1998:

“5.1     Appointments and Replacements

(a)        The Suppliers shall establish, after the date of the approval of this Agreement by the Board pursuant to Subsection 5.4(3)(a) of the Act, and maintain the Water Management Committee consisting of four members, two appointed by CF(L)Co and two appointed by Nalcor.

5.2

(a)        Subject to this Agreement, the Water Management Committee shall be authorized to deal with all substantive matters, other than those expressly assigned to the Independent Coordinator, as necessary to administer this Agreement and any ancillary documents and agreements, including the validation of the tools and information sources to be used for the implementation and operation of this Agreement.

(b)        The Water Management Committee shall appoint the Independent Coordinator and may, and may, from time to time, establish operating procedures or guidelines for the Independent Coordinator, may give directions to the Independent Coordinator and may amend, modify or supplement Annex “A” to this Agreement, in accordance with and subject to Subsection 7.1(h).

c)         The Water Management Committee may provide for mechanisms and procedures to facilitate the administration of this Agreement and any ancillary documents and agreements during times of emergency, including, without limitation, to preserve stability and integrity of Production Facilities.

5.4       Decisions

All decisions of the Water Management Committee shall be unanimous. Any impasse shall be resolved in accordance with the Dispute resolution mechanism provided under Article 13.”

These sections of the Nalcor Application effectively remove Hydro-Quebec from the management and control of the Upper Churchill Plant contrary to the aforesaid Contracts. All directors of Nalcor and CF(L)CO, with the exception of a minority of two directors from Hydro-Quebec who sit on the Board of CF(L)Co, are appointed by the Government of Newfoundland and Labrador. As such, these directors can appoint whomever they choose to run the management committee, which in turn decides on everything essentially to do with the Upper Churchill Plant, including the appointing of an “Independent Coordinator”. Essentially, by legislative means, the Government of Newfoundland and Labrador is conducting a hostile take over of the Upper Churchill Plant and rewriting, in effect, historical wrongs as they perceive it.

53.       Section 7.1 of the Nalcor Application, is in direct contravention of the Lease Act 1961, the Power Contract 1969, the Shareholders Agreement 1998, and the Guaranteed Winter Availability Contract 1998:

                        “7.1     Energy Storage and Energy Losses Assignment

(a)        Each Supplier shall continue to have the same rights to store water in its reservoirs as it did prior to this Agreement, while at the same time recognizing the requirement to allow Energy banking by the other Supplier pursuant to the terms of this Agreement.

(b)        In no event shall the generating Capability, storage capacity, or transmission Capability available to a supplier from all Production Facilities on the Churchill River be less than the amounts of then available generating Capability, storage capacity, or transmission Capability of the Production Facilities owned by that Supplier on the Churchill River.”

Essentially 7.1(a) states that CF(L)Co can keep its water levels as they were under the aforesaid contracts, but then requires capabilities and capacities “in no event” to be less than the “Generating Capacity of the Production Facilities”. In other words, forcing CF(L)Co to operate at maximum production capacity which would necessarily require rights to be adjusted for water storage to meet that generation.

54.       Further to paragraph 50, the Water Management Agreement would require Hydro-Quebec to either use all the power generated by a requirement to operate at capacity, and thereby send water down the Churchill for full utilization of the Lower Churchill project, or not use the capacity of power generated in which case Nalcor can recall the power for its own subsystem. Gilbert Bennett, Vice-President in charge of Muskrat Falls at Nalcor, said as much in an interview on a Newfoundland political blog by John Samms November 3, 2012:

                        “JM:    This is where the WMA may not be effective.

                        Bennett: This is speculation. Our analysis indicates the WMA is effective.

JM: The Guaranteed Winter Availability Contract (GWAC) clearly identifies that HQ are entitled to excess capacity generated from the Upper Churchill Plant in the winter months.

Bennett:  I agree with this – the GWAC is effective during the winter months. However, section 2.1 of the Renewed Power Contract entitles HQ to take the Continuous Energy in each month, including during the winter. Referring to Volume 1 of our application to the PUB for the water management hearing, the average production at CF is about 34 TWh. If we deduct the 2.36 TWh and 1.97 Twh for recall and Twin Co respectively, we’re left with approximately 29.7 TWh for HQ, or approximately 2.5 TWh per month. Interestingly enough, this means the plant will deliver on average just over 3470 MW for HQ + 525 for NLH/Twinco (or 3995 MW out of 5428 MW) over the course of a month, meaning that HQ can have “additional capacity”, they cannot have it all of the time, as they will exceed their energy allowance. This point ensures there will be lots of opportunities to withdraw stored energy from CF, even in the winter. (The math above is 2,500,000 MWh/mo [30 days/mo]/[24 hr/day] = 3472 MW

JM:      What would limit HQ from requesting all the power from the UC during the peak winter day time period when we need it?

Bennett: Nothing prevents this, but we’re not worried. If HQ is requesting maximum CF production, we get water to produce downstream. In the short term, we can also be sure that our System Operations team will be holding the MF reservoir at full supply in anticipation of a peak day based on our short term operating forecast. If CF is not producing for HQ, then the water management agreement process will see us release energy from CF.

Bennett: The water management agreement and its operation have been subjected to internal legal, commercial, and engineering analysis at Nalcor, supported by external advisors, and subjected to independent review. No endorsement by Hydro Quebec is required.”

In effect, Bennett is also saying that Hydro Quebec cannot use more than 3472 MW of the Upper Churchill Falls Plant production due to restrictions imposed on it by its “energy allowance”, and by default Nalcor could recall up to the 2000 MW difference. The result, literally, is CF(L)Co being forced to produce more power than it requires to satisfy the Power Contract, full capacity in fact, and Nalcor being in a position to use the excess water thereby created. A recall of additional MWs it is not entitled to, and forbidden from exercising, under the Power Contract 1969, or the renewal thereof in 2016.

55.       In the same blog post from paragraph 51, Samms and Bennett state:

“With respect to the Water management issue, I have been arguing, almost ad nauseam, that the Hydro Quebec supposed “veto” is irrelevant as no one has brought forward how the Muskrat Falls or the Water Management Agreement adversely effects Hydro Quebec (My earlier posts on this are here and here). Without the adverse effects, there is no veto. As such, I do not see how both Nalcor and Hydro Quebec are not able to get the most out of both generation facilities.

I asked Nalcor VP Gilbert Bennett about my conclusions, and he seemed to agree. Bennett said,

‘To your point, the HQ veto is irrelevant. At the end of the day, the HQ veto applies to specific related-party contracts. The point is that CF(L)Co shareholders agreement approval of certain related-party contracts requires both a majority of board members and support from an HQ director. That being said, the terms of the water management agreement have been established by the PUB, and there’s nothing to veto. In accordance with the ECPA, they are in place.’

He continued, ‘HQ undoubtedly would yell if the terms of the Power Contract were violated, but of course, there’s no legal way to get there. The EPCA and the WMA both prohibit such an action.’”

Bennett seems confident that Hydro-Quebec has lost its contractual rights by virtue of the Water Management Agreement imposed by the Electrical Power Control Act 1994.

56.       In Nalcor publication “Outlet Winter 2012” the author refers to the under water cable designed to travel under the Strait of Belle Isle from Labrador to the island of Newfoundland. He states:

“The current 800 megawatt (MW) design has the capacity to be increased by a further 1000 MW, without changes to the operating voltage or overhead line transmission.”

This statement from Nalcor, at the very least, suggests Nalcor is planning to transmit up to 1800 MW through sub sea cables from Labrador to Newfoundland. That is 1000 MW more than Muskrat Falls can produce, and would infer that in the winter of 2012, at the latest, Nalcor was foreseeing the ability to capture this much additional capacity.

57.       The Preliminary Transmission System Analysis – Muskrat Falls to Churchill Falls Transmission Voltage, Newfoundland and Labrador Hydro, November, 2010, states:

                        “Conclusions

For project costing it is recommended that two 345 kv transmission lines with a two conductor bundle of 795 MCM?7 ACSR “DRAKE” per phase be assumed. In addition, to ensure acceptable voltage control on open end conditions four 345 kV, 45 MVAR shunt reactors (one per each transmission line ended) be included.”

58.       According to Idaho Power a: “345 kv line can carry 700 – 1000 MW” for a total capacity on the lines between Muskrat Falls and the Upper Churchill Plant of 1400 – 2000 MW of power. It is therefore, logical to assume that a transmission system capable of transmitting 1400-2000 MW, and a sub sea cable to the island capable of transmitting 900 – 1900 MW of power was designed beforehand to handle more power than simply Muskrat Falls. In fact, these specifications match almost exactly to the presumed recall Nalcor has stated it will be entitled to under the water management agreement.

59.       The Power Contract 1969, as outlined in paragraph 15 herein, strictly forbids CF(L)Co from recall power exceeding 300,000 kilowatt hours per year. The Water Management Agreement violates Section 6.6 of the Power Contract 1969. It is therefore clear that Nalcor, in design of the Lower Churchill project transmission facilities, and in particular its transmission capabilities, intended to breach the recall provisions of the Power Contract 1969. The Government of Newfoundland and Labrador has a history of attempting to recall power it is not entitled to under the Power Contract, and this is recall by water management agreement.

60.       Jerome Kennedy, then Minister of Natural Resources, on November 29, 2012, stated in the Newfoundland and Labrador House of Assembly:

“What we have, Mr. Speaker, is 92(a), the ability to recall power. I would love nothing better than to be able to bring in a piece of legislation in this House and allow us to recall 1,000 megawatts of Energy from Quebec. It’s not that simple.

The law of contract is governed by the law of Quebec, as the Supreme Court of Canada indicated on a number of occasions…we are now proceeding on the good faith action on the civil code of Quebec, Mr. Speaker, or the duty to bargain fairly as circumstances change. That will not result in the return of power and we have taken regulatory steps, Mr. Speaker…

Then we get issues raised, such as water rights management. Mr. Speaker, I said yesterday there is a law school student who can figure this out, a young man, I think his name is John Samms, who has written an excellent blog on water rights. He is a first year law student. He has outlined, again, the arguments and looked at it all, and concluded, quite carefully, that water rights are looked after.

Mr. Speaker, one of the things I always like about these arguments is that you get the Liberals on the other side saying: Well, our people looked at this and we have determined that there is an issue with water rights.In the next forty-nine seconds – because I know I will not get leave – if I can find my file on water rights, Mr. Speaker.

I am going to refer the Liberals to an interesting letter that was written by a former vice-president of their Party to Premier Danny Williams on February 15, 2007, a lawyer by the name of Jim Thistle. Jim outlined what he thought was the way to go about water rights management. Lo and behold,  Mr. Speaker, what Mr. Thistle suggested was the way that we proceeded in this House with legislation and went to the PUB… Mr. Speaker, a letter dated February 15, 2007.”

Mr. Kennedy’s comments to the House of Assembly clearly demonstrate that four months after receiving written advice on how to circumvent the Power Contract for the purpose of securing water rights, the Government of Newfoundland and Labrador passed Amendments to the Electrical Power and Control Act, which were in turn used by Nalcor, an agent of the Government, to undermine the Power Contract of 1969.

61.       Legal Options: S92A, Good Faith and Regulatory Proceedings in Quebec, Department of Natural Resources, Government of Newfoundland and Labrador, November, 2010 is a publication of the Newfoundland and Labrador Government posted for public consumption in the media, and on the internet. It details the difficulties the Government of Newfoundland and Labrador is facing in getting a “fair” price for power generated at the Upper Churchill Falls Plant, and issues with accessing power:

“The Province has engaged in extensive litigation over the years in relation to the Upper Churchill, none of which has been successful.

While Section 92A of the Constitution Act could allow for the recall of Upper Churchill power, this could result in a breach of the 1969 Power Contract between Churchill Falls (Labrador) Corporation Limited (“CFLCo”) and Hydro-Quebec (“Power Contract”) under Quebec civil law and potentially result in billions of dollars in damages.

The desired result of the good faith action is a change in the pricing terms of the Power Contract which will result in CFLCo receiving more revenue from the sale of Upper Churchill power, and the case will take years before it is resolved. The good faith action will not result in Upper Churchill power being returned.

The Province of Newfoundland and Labrador has taken numerous legal actions in relation to the unfairness and inequity of the Upper Churchill contract.

Recall of Upper Churchill Power

Since 1982, various suggestions have been made as to how Newfoundland and Labrador might use the powers provided under Section 92A to gain access to electricity from the Upper Churchill…Further, it has been suggested that the price that would have to be paid for such power, if any, would be so low that this option would be superior to the economics of the proposed Muskrat Falls development.

Challenges with Access to Power

Any use by the Government of Section 92A to access power from the Upper Churchill hydroelectric development would have to pass three tests in order to be feasible. First, the mechanism (whether it was legislation, regulation, etc) would have to be upheld by the courts as being constitutional. Second, the cost of electricity involved would have to be low enough to make it preferable to other options. Finally, the mechanism would have to provide now the required level of certainty to Government and Nalcor that the power would be delivered as and when required.

Since any use of Section 92A is expected to lead to prolonged litigation, the third test cannot be satisfied in the time frame necessary to meet the expected electricity of the province and to forego any other alternative, such as the proposed Muskrat Falls development. However, the use of Section 92A would also have difficulty in meeting the second of the first two tests in any event.

In order to be constitutional, the purpose and objective of legislation must be found by the courts to deal with issues within a province’s constitutional authority, which was expanded and confirmed by section 92A. Such issues would include meeting projected energy requirements of the province generally, or specifically of industrial development in Labrador. As a result, legislation requiring the delivery or redistribution of such power from sources such as the Upper Churchill for these purposes could be constitutionally valid, as long as it could be shown to be clearly based upon and supported by such a rationale, even if such actions indirectly interfered with the Upper Churchill power contract. What the province cannot do, as shown by the Water Rights Reversion Act case reviewed above, is to enact legislation and engage in conduct which is found by a court to be for the purpose of such interference and not for a valid provincial purpose. Assuming this would not be the case, constitutionality should not be an issue.

The second issue, the financial implications of valid access legislation, is more problematic. Any access request large enough to be a feasible alternative to the Muskrat Falls development will result in CFLCo not being able to meet its delivery obligations under the Power Contract. The issue therefore then becomes what CFLCo’s obligation to Hydro-Quebec would be in such a circumstance. In previous litigation in Quebec relating to the “Recall Case”, also described earlier in more detail, the Quebec Courts found that CFLCo would be in breach of the Power Contract if it failed to deliver, even if in response to a demand for power from the Province.

If a court followed this reasoning, CFLCo would be in breach of the Power Contract once it started diverting power to Newfoundland and Labrador from Hydro-Quebec. The amount of these damages cannot be accurately predicted, but would be significant. This is because the purpose of such damages will be to place Hydro-Quebec in a position they would have been in had CFLCo not breached the contract. There are a number of approaches to take in making such a calculation, as it would require identification of the losses suffered and profit lost to Hydro-Quebec as a result of the undelivered power. Attempts at this formulation can be made on a hypothetical basis. For instance, a recall requirement of 800 MW may result in approximately $180 million payable to Hydro-Quebec annually solely in respect of the lost profit from sales at Quebec’s internal electricity prices. If one included lost revenues from export sales that amount would increase significantly.

Any damages would then raise another issue – whether CFLCo would be able to pay damages. Any level of damages would be expected to drive CFLCo into insolvency and likely bankrupt, unless 1) CFLCo was paid sufficient amounts for its redirected power in the province to meet Hydro-Quebec’s damages demands or 2) Hydro-Quebec or the Province injected sufficient funds into CFLCo to keep it solvent. In other words, the power delivered would not be free in the province, but instead may be priced at rates entirely out of the control of the Province.

Summary

While Section 92A may provide a means to obtain access to part of the power of the Upper Churchill, there is no certainty that any attempt would be successful, or what the cost of such power would be.

Reliance on 92A would inevitably result in prolonged litigation. This litigation would take years to resolve (previous cases took as long as 12 years) and, even if ultimately successful, would do nothing to satisfy the province’s need for power in the near future. This delay in litigation makes any reliance on 92A an infeasible means to replace Muskrat Falls.

Also, even if 92A could be used to recall power, Newfoundland and Labrador could still be in breach of the power contract which is governed by the laws of Quebec. While the exact amount of compensation is unknown it can be reasonably expected to be in the billions of dollars…

The assumption behind such statements appears to be that the litigation is principally about accessing power or altering CFLCo’s electricity deliveries under the power contract.

These comments are incorrect. The litigation is about the price being paid by Hydro-Quebec to CFLCo under the Power Contract and CFLCO’s request that the price be changed. This litigation is independent of, and unrelated to, a decision to proceed with the Muskrat Falls development.

Summary

The Quebec litigation represents an opportunity for CFLCo to remediate the future pricing disparity of the Power Contract but it does not represent a means to solve the province’s future energy demand requirements. Its discussion in the context of being an alternative to the Muskrat Falls development is misplaced and the good faith action cannot be the basis of a decision to forego development of Muskrat Falls at this time.

Conclusion

The province of Newfoundland and Labrador has taken numerous legal actions to the unfairness and inequity of the Upper Churchill contract, none of which has been successful to date. Also, as outlined earlier, the province has explored the use of section 92A to recall Upper Churchill power but the risk inherent in the process would not allow for the use of section 92A to meet Newfoundland and Labrador’s present energy needs.

Also, contrary to the suggestions of some, the “good faith” action, even if ultimately successful, would not likely result in the ability to recall, or the return of, Upper Churchill power.

Finally, since 2006, Nalcor/NLH has attempted to gain access for the Lower Churchill power through Quebec’s regulatory process but has had no success.

It is clear that there has been no political will in Quebec to work with Newfoundland and Labrador and allow the province to break the geographic stranglehold that Quebec has on the province. Former Federal and Provincial Cabinet Minister John Crosbie stated in a speech in 2003 that Muskrat Falls and Gull Island had not been developed due to the lack of a national energy strategy “and the unshakeably self-centered position taken by Quebec where Newfoundland remains in a vise with little bargaining power.” The events of the last 40 years support the truth of Mr. Crosbie’s statements.”

62.       The details of paragraph 58 herein are significant for the following reasons:

                        (a)        They outline why section 92A is not an option for the Province;

(b)        They outline that losing a constitutional challenge on section 92A would create billions of dollars in damage awards to Hydro-Quebec, including the possible bankruptcy of CFLCo;

c)         They outline a desire by the Province to gain access to more recall power from the Upper Churchill Plant;

(d)        They infer that the Province could recall power from the Upper Churchill Plant at the same price Hydro-Quebec receives power at, and the inference is that would be preferable to the 92A option;

(e)        They describe legislation or regulation as a legitimate mechanism legitimate for attaining power from the Upper Churchill Plant;

(f)         They describe how 92A would be insufficient to provide the power the Province desires, at the timing the Province wants, and at the price the Province wants. In particular, the primary draw back described seems to infer that 92A would be tied up in the Courts for years, so another mechanism that would achieve the same on a more immediate and economical basis is preferred;

(g)        They describe the political ill will toward Quebec, and vice a versa, including comments regarding a “stranglehold” of the Province;

(h)        They refer to the necessity of not being found to be passing legislation for the purpose of interference; and

(i)         They admit that, in the previous “Recall Case”, Quebec Courts found that CFLCo would be in breach of the Power Contract if it failed to deliver power, even if in response to a demand for power from the Province.

The document gives evidence to the position and mentality of the Department of Natural Resources, and thereby the Government of Newfoundland and Labrador. The inference is clear. 92A is not the way to go for these reasons. Therefore, alternative strategy is necessary to accomplish the same or better result with a “cloak” of constitutionality.

63.       Upper Churchill: Can we wait until 2041?, Department of Natural Resources, Government of Newfoundland and Labrador, November, 2012 is a publication of the Newfoundland and Labrador Government posted for public consumption in the media, and on the internet. The document details certain facts pertinent to this action, in part:

“This, coupled with the refusal of successive federal governments to intervene, not only undermined CFLCo’s negotiations, but also left Newfoundland and Labrador’s great hydro resources at Muskrat Falls and Gull Island undeveloped.

Thus Brinco’s shares were captured by the Government of Quebec.

In 1972 a new Newfoundland and Labrador government under Premier Frank Moores was elected and threatened to expropriate Brinco if it did not sell its water rights to the Lower Churchill as well as its shares in CFLCo. This expropriation went ahead in 1972…

As highlighted in Newfoundland and Labrador’s 2007 Energy Plan, the Upper Churchill project has generated more than $20 billion dollars in net revenue, but the vast majority of this, over $19 billion, has gone to Quebec with Newfoundland and Labrador receiving approximately 1 billion.

The Power Contract with HQ provides for the sale to HQ of the vast majority of energy produced at the Upper Churchill plant at a price which has declined through the life of the contract thus far and which will be a firm price after 2016.

There is no additional power available to the expiry of these contracts in 2041.

The GWAC obligates CFLCo to provide any additional capacity in the winter months to Hydro-Quebec. In addition, the Shareholders Agreement limits certain aspects of the CFLCo’s operations and provides HQ with certain powers through requirements for its approval, both in its capacity as shareholder and through its nominees on the CFLCo Board.

The expiry of the HQ Power Contract on August 31, 2041 will represent a significant change in the structure of the electricity industry in the Province – as of that date, CFLCo will be in the position to negotiate new contracts for the sale of power from the Upper Churchill. However, on that date neither CFLCo, nor the Upper Churchill facility, nor the power generated by it will “revert” or “return” to the Province. Instead, the Upper Churchill will continue to be owned by CFLCo, a corporation owned 65.8% by NLH and 34.2% by HQ, until such time as the 1961 Water Lease expires. CFLCo will continue to be responsible for the terms and conditions of the sale of Upper Churchill power.

Instead HQ’s minority shareholder position (assuming they maintain this position at the time), and the legal rights that it confers, will have to be considered. This will have various consequences, one of which is that CFLCo may not be subject to being operated at the instruction of NLH. Instead, there will be legal, financial and corporate obligations upon CFLCo, including those directors of CFLCo that may be appointed by NLH, as a result of HQ continuing economic interests. These obligations may or may not align with the province’s public interest or policy goals at any given time.

In 2012 we require certainty that our short, medium and long term power obligations will be met.

NLH is not the sole shareholder of Upper Churchill and therefore may not be able to unilaterally decide how to distribute Upper Churchill power.

Conclusion

The power contract between Newfoundland and Labrador and HQ has been the source of great resentment for the people of our province for many decades. This contract has resulted in tremendous profits for HQ, while providing minimal profits to Newfoundland and Labrador.

However, Upper Churchill power is not exclusively owned by the province and Newfoundland and Labrador may consequently not have unfettered control over the resource.

Deferring the project also means deferring the province’s ability to fully capitalize on the value of its tremendous energy resources.

Waiting for available Upper Churchill power in 2041 is not a practical, economical, or sensible alternative to Muskrat Falls.

CFLCo is to make available to Hydro-Quebec Firm Capacity of approximately 4,100 MW in the winter and 3,860 MW in the summer, as well as whatever additional capacity can, in CFLCo’s opinion, be made available when requested by Hydro-Quebec. In addition, CFLCo shall make available such energy from the plant as Hydro-Quebec may request.

During the Renewal Period (post – 2016) the amount of power and energy that CFLCo will be required to sell to Hydro-Quebec under the Contract will be a set amount of energy per month (“Continous Energy”). Currently, Hydro-Quebec has a right to all of the energy produced at the plant other than the Twinco block and Recapture. The amount of the Continuous Energy is set at the end of the original term of the Power Contract and is based on the amount of energy delivered to Hydro-Quebec prior to the expiry of the original term.

The purpose of the GWAC is to provide for maximum availability of all eleven generating units at the Churchill Falls plant during the winter months, as this is the peak demand period for Hydro-Quebec.

64.       The details of paragraph 60 herein are significant for the following reasons:

(a)        There is no additional availability of power from the Upper Churchill Plant until 2041 in accordance with the Power Contract 1969, and the Guaranteed Winter Availability Contract;

(b)        NLH does not have the power to unilaterally decide how to distribute Upper Churchill power;

                         c)        Waiting for Upper Churchill power in 2041 is not an alternative;

(d)        CFLCo must make as much power available from the Plant as Hydro-Quebec may request;

(e)        Ignores Hydro-Quebec’s right to the Firm Capacity, and any other additional capacity must be offered and sold to Hydro-Quebec if they so desire it; and

(f)         Displays a consistently hostile attitude toward Hydro-Quebec in relation to the Upper Churchill Plant. For example: “Thus Brinco’s shares were captured by the Government of Quebec.”

65.       Despite assertions from Gilbert Bennett, Vice-President in charge of Muskrat Falls, Nalcor, and commentary made on the aforementioned public documents produced by Nalcor and the Department of Natural Resources, there are no limitations on the power available to Hydro-Quebec upon renewal of the Power Contract 1969 in 2016. The only difference between the two is the minimum base consumption of Hydro-Quebec. Hydro-Quebec is entitled to all excess capacity produced, with the exception of the 300 MW of Recapture and 225 MW from Twinco.  The Department of Natural Resources document in paragraph 60 herein states as much. Therefore, the only way excess MW could be allocated to Nalcor would be by breaking the Power Contract 1969, and using the Water Management Committee, the Independent Coordinator as appointed by the Water Management Committee, and the water management agreement to deprive Hydro-Quebec of its rights under the Power Contract 1969.

66.       In paragraph 51 herein, the aforesaid Gilbert Bennett refers to an Energy Allowance that serves to restrict Hydro-Quebec’s consumption of Upper Churchill Plant power, but no such allowance exists as it would violate the Power Contract 1969.

67.       The House of Assembly, Newfoundland and Labrador, June 13, 2007, Hansard states, in part:

“Ms. Dunderdale: Mr. Speaker, this is about moving forward with the legislative framework that is appropriate to provide hydroelectric operators sharing a river system, as will be the case on the Churchill River with the Lower Churchill Project, with certainty over the coordination of water flow.

The amendment will ensure the delivery commitments under existing contracts are honoured, including the 1969 power contracts for the Upper Churchill. This position is explicitly written into the amendment.

Through this amendment, the needs of both the Churchill Falls facility and the Lower Churchill project will be accommodated, as will the needs of any other hydroelectric developments in the Province.

This is about ensuring we have the appropriate tools to get the most out of our energy developments.

This type of legislation gives the financiers and potential customers of hydro-electric developments that share a river system, the certainty they need to finance projects and enter into power purchase agreements.

It will provide optimum production on our water courses and will result in the most efficient production, transmission and distribution of power. We need to get the most from our resources, Mr. Speaker, for the long term benefit of all sectors of our economy, for all the people of the province.

Ms. Jones: The amendments to the Electrical Power Control Act are, no doubt, coming about at this particular time as a result of the developments that are happening on the Lower Churchill file.

Ms Micheal: I think it is important that the government is asking us to agree to this act today. It shows foresight on their part, obviously. They recognize the gap in the current Act, and a gap that would be really pretty important once the time comes to look at the possibilities around the Lower Churchill. If we are to have the Lower Churchill developed in any way at all, co-operation between the Lower Churchill and the Upper Churchill will be absolutely necessary.

It was confirmed, of course, this morning by the officials and by the minister as well, I think, that this is sort of the driver for this act right now.

Another is that the officials this morning also indicated that this gap became identified as the government is working on the energy plan.”

Clearly, senior members of all three political parties in the House of Assembly, and provincial government staff, viewed the amendments as directed toward the Upper and Lower Churchill River facility and proposed facility.

68.       2011 Policy Blue Book, PC Party of Newfoundland and Labrador, New Energy, published by the governing party of Newfoundland and Labrador for its re-election bid of 2011. The policy book refers to the PC Party’s energy policies, in part:

“In 2007, we released our province’s first comprehensive energy plan, “Focusing our Energy”, a strategy to prepare Newfoundland and Labrador to capitalize fully on the extraordinary energy resources that stock our “energy warehouse”. Appreciating the importance of “getting this right”, we have adopted a perspective sufficiently broad to encompass all our energy resources and sufficiently far reaching to take us out to and beyond the return of the Upper Churchill control in 2041.

This project will produce more power than we can use.

For the very first time, Quebec will not have the power to block us from exporting our power to markets. There are protections for this province every step of the way to protect the best interests of the owners of this power, the people of Newfoundland and Labrador.

Development of the clean hydropower resources of the Lower Churchill is a vital component to our comprehensive Energy Plan and a giant leap forward for sustainability. Few factors can drive economic growth more effectively than a large supply of renewable energy at a relatively low cost…it is a key vehicle for our drive to self-reliance. In 2008, Quebec made 2.3 billion dollars from Upper Churchill power. Our province made 50 million, which is to say that for every dollar they made, we made 2 cents. CFLCo is currently before the courts seeking redress of this injustice.

The election policy book clearly refers to a strategic approach, based on the 2007 Energy plan, to get full advantage of all resources. It also refers negatively to Quebec’s hydro practises.

69.       News Release, Government to Create New Energy Corporation, Natural Resources, Government of Newfoundland and Labrador, May 31, 2007, states in part:

“The leadership team, at the direction of the Provincial Government, is already advancing business development opportunities, including possible investments in oil and gas, wind development and the Lower Churchill Project.

All activities engaged in by the energy corporation will be consistent with, and guided by, the province’s approach to energy development and the soon-to-be-realized provincial Energy Plan. Full control will remain with the Government of Newfoundland and Labrador, as the shareholder of the corporation.”

This statement emphasizes the actions taken on the Lower Churchill are planned well in advance, directed and controlled by the provincial government, and in total obedience of the Energy Plan, which had yet to be made public at this point in time.

70.       The CBC, on September 3, 2009, reported, in part:

Newfoundland and Labrador Premier Danny Williams is accusing Hydro Quebec of trying to block the Lower Churchill hydroelectric project to protect its own dominance in the marketplace.

In a speech Wednesday to energy executives in St. John’s Williams (former premier) said the time for parochialism and insular policies should be over, and criticized the Quebec utility for working against the national interest to protect its bottom line.

‘It is a vision about nation-building and not territorial and economic protectionism by some provinces such as our neighbour Quebec.’

Williams believes Quebec is trying to hinder the Lower Churchill project in any way it can and is working against the national interest by trying to protect its own.

‘It is disappointing and frustrating that Hydro-Quebec is not doing everything it can to enable this project given Hydro-Quebec’s exorbitant profitability from the Upper Churchill, which will go on for two-thirds of a century. A buy Hydro-Quebec policy is not good for the rest of us,’ he said.” 

71.       The Canadian Press, Williams goes after Quebec on hydro project, June 9, 2010, reported in part:

Newfoundland and Labrador Premier Danny Williams launched a blistering attack on Quebec on Wednesday, accusing the province of harming Canadians and the environment.

The cause of the Newfoundland premier’s complaint was not new – he accuses Quebec of blocking development of the Lower Churchill hydroelectric project as well as past sins – but the locale and the vehemence of his attack took the dispute to a new level.

‘The shock to me, as a provincial leader, is the sense of greed and arrogance and entitlement displayed by Quebec,’ Williams told about 500 people at a Canadian Club luncheon in Ottawa.

Now Williams says Quebec is unfairly blocking development of a Lower Churchill project by denying access to transmission lines only because it wants to diminish competition for Hydro-Quebec.

Williams did not restrict his criticism of Quebec to the energy dispute. He went on to complain that the province profits from the generosity of other Canadians while working to the detriment of other provinces.

Williams said Quebec gets “preferential treatment” because of its ‘stranglehold on the political process in Ottawa, in part because it has a separatist federal party – the Bloc Quebecois – that sees issues only through a provincial prism.”

72.       VOCM Open Line Radio show with Randy Simms, and Natural Resources Minister Kathy Dunderdale, September 4, 2009, excerpts of the broadcast in part:

“Simms – He’s actually saying that Quebec Hydro, to my surprise, is being the stumbling block every opportunity they can, and I’m shocked by that.

                        Dunderdale: Well that…unfortunately, that’s the case.

We need to have the ability to wheel our power through Quebec in context of the Lower Churchill, first of all, but also we always have our eye on 2041, and when we have, you know, the Upper Churchill comes back into the hands of the province, so, we, we have to look out that far ahead and we have to look now.

It’s a shocking development. Everybody in this province understands the, the unfairness of the Upper Churchill deal.

You know the Premier has gone to Quebec, and gone to Premier Charest, and, you know, Hydro Quebec. I’ve been, met with ministers and so on, and we say to them okay, we’ll set the Upper Churchill to one side. That, but, you know, let’s sit down and have a talk about the Lower Churchill piece, you know, we..we know we have to have a win-win situation here  because we’ve, as I said earlier this week, we know if you don’t have win-win you have win-poison pill, because that’s what we got with the Upper Churchill.

So we can have a win-win situation, and we know that you, if you come in here in any kind of, as an equity player, that you have to have a good return on your investment, but it also has to be a good deal for the people of Newfoundland and Labrador. Now we have been with that message for five years. No sir. No sir. There is no take-off on that proposal. You know, so we’re, so we’re going to use the processes available to us. It’s extremely frustrating though when they, you know, when they slow down those processes…But why particularly, in the particular circumstance that Newfoundland and Labrador find themself and the unfairness of the Upper Churchill deal in fact you wouldn’t be anxious to do that.

We have been. We’ve got a path beaten to their door, and they will not take up the, you know, the proposal as I said that we have put, we see enormous opportunity for ourselves first of all, for the maritime provinces, for Quebec and Ontario. I mean we have been promoting an east/west grid in the country for six years.

I mean the Premier lead the cause, energy plan development, it was talked about there, I mean people, we had the pen in our hand on the development of that strategy…It happened. It happened under the leadership of the, Premier, and this top energy plan has been most wanted, the most down loaded government document, uh in terms of costs of materials, in the county.

We’ve got substantial, you know, uh, entities in government trying to interfere with that process, but given the team the Premier has put together at Nalcor, given the strategy that we’ve developed, given the focus, methodical, strategic way that we’re doing this, which is why we’re going back into the House next week…not because there’s any big thing, but, you know, we’ve got a process laid out we’re going to follow, we’re not going to delay three months, let’s just go in and get it straightened up and let things proceed, but you will see the development of the Lower Churchill, uh, in our life time, and long before that for the benefit of the people of Newfoundland and Labrador.”

This interview provides a back drop to the frustration level Dunderdale was feeling at the time of the 2007 negotiations with Hydro-Quebec. It also refers to the strategic, methodical plan the Government had in place to achieve it’s goal of developing the Lower Churchill certainly as early as 2007, and in Dunderdale’s words, five years at that time.

73.       Dunderdale targets Quebec in defence of Muskrat Falls, CBC, October 3, 2012, states in part:

“ ‘This is a chance of a generation for Newfoundland and Labrador,’ Dunderdale said. But the premier targeted the grievances of past generations as she sold opportunities for future ones. She linked the hydro potential of Muskrat Falls as a way to settle old scores. ‘ It will make us energy self-sufficient and it will break Quebec’s stranglehold over Newfoundland and Labrador.’

‘They understand that if Muskrat Falls does not go ahead, what happens in Labrador from that point on lies squarely in the hands of Hydro-Quebec and the people of Quebec.’she noted.

Clearly, the tone and words of the current premier underline the tone of any interaction by the Government of Newfoundland and Labrador and Hydro-Quebec. The tone is hateful.

74.       The Supreme Court Reference found:

The appellants argued that the Reversion Act is colourable legislation aimed at the Power Contract. In support of this argument reference was made to the extrinsic evidence which has already been mentioned. That part of the evidence which I have held to be reliable and therefore admissible indicates the true purpose and intent of the Act. Newfoundland attempted to recall more power than was provided for in the Power Contract, first by a request to Hydro-Quebec and then to the Quebec Premier. These attempts failed. A demand to CFLCo by Order in Council was also refused. A whole section of the government pamphlet, “The Energy Priority of Newfoundland and Labrador”, deals with the price paid by Hydro‑Quebec for Churchill Falls power under the Power Contract and the benefits realized by Hydro-Quebec from its investment. The section concludes:

[Page 333]

The foregoing financial estimates have been included here to illustrate the harsh inequity created by the Power Contract since 1972. This inequity will clearly magnify to unconscionable proportions and amounts over the remaining 61 years of the Power Contract. It is this very Power Contract which Hydro-Quebec is using to deny Newfoundland’s right to access 800 MW of Churchill Falls power at this time. The increasing inequity of the Power Contract adds impetus to the Government’s determination to reach a resolution to its right of access. Such access would only begin to reduce the inequity and to move towards a fair and equitable utilization of the Churchill Falls resource.

Cabana asserts the Government of Newfoundland and Labrador aforementioned here do also reflect this same tone and argument.

75.          The Supreme Court Reference found:                                                                                                                                                                                                                   It was argued by the Attorney General of Newfoundland that control over                   the power generated at Churchill Falls is essential for the effective                                     management by Newfoundland of its water resources and to meet the                        energy needs of the Province. However, it is not for this Court to consider                         the desirability of legislation from a social or economic perspective where                      a constitutional issue is raised. As Laskin C.J. said in Central Canada                                     Potash Co. v. Government of Saskatchewan, 1978 CanLII 21 (SCC),                                    [1979] 1 S.C.R. 42 at p. 76:

Where governments in good faith, as in this case, invoke authority to realize desirable economic policies, they must know that they have no open-ended means of achieving their goals when there are constitutional limitations on the legislative power under which they purport to act. They are entitled to expect that the Courts, and especially this Court, will approach the task of

[Page 335]

appraisal of the constitutionality of social and economic programmes with sympathy and regard for the serious consequences of holding them ultra vires. Yet, if the appraisal results in a clash with the Constitution, it is the latter which must govern. That is the situation here.

It is also the situation in the present case, and it follows that the Reversion Act is ultra vires.

Cabana asserts that the current Newfoundland and Labrador government used almost identical justification in adopting the amendments to the Electrical Power and Control Act 1994, and the implementation of the the imposed water management agreement between CF(L)Co and Nalcor. Furthermore, it is evident in all the extrinsic evidence presented, and actual legislation, that this very reason of “… the effective management by Newfoundland of its water resources and to meet the energy needs of the Province.” is the stated government reasoning for its actions regarding the Upper Churchill Plant and proposed Lower Churchill project.

76.       The Supreme Court Reference stated:

One of the principal attacks made against the Reversion Act was that the Act interferes with civil rights existing outside the Province of Newfoundland. While no quarrel was made with the proposition that the Legislature of Newfoundland is fully competent to expropriate property within its boundaries, it was argued that when the exercise of expropriation powers derogates from civil rights outside the Province the enactment is ultra vires. On this point the appellants contended that the extrinsic evidence, which has already been discussed, is particularly relevant to show the purpose of the Reversion Act and to show how and where its operation would be effective. It was contended that, while all that would be taken under the Act is physically situated within the Province of Newfoundland, the effect of the Act would be to destroy lawfully acquired civil rights outside the Province.

The Attorney General of Newfoundland contended that the Reversion Act applies only to the Lease Act, the Statutory Lease, and the assets of CFLCo. All of the rights and property to which the Act applies are situated within the Province of Newfoundland. Any effect on rights outside the territorial limits of the Province are therefore

[Page 328]

irrelevant as being merely consequential. Newfoundland argued that the “pith and substance” test employed in division of powers cases has no application to the determination of the territoriality issue.

The appellants argued, firstly, that any provincial legislation that has extraterritorial effect is ultra vires. Alternatively, it was argued that the true purpose and intent of the legislation, its pith and substance, governs in the issue of territorial limitation just as it does in other constitutional cases involving division of powers. The appellants contended that the Revision Act is aimed at the destruction of the rights of Hydro-Quebec under the Power Contract, rights situate outside Newfoundland. Consequently, the Act is beyond the legislative competence of the Province.”

Cabana argues the same. That the 2007 ammendments to the Electrical Power Control Act 1994, and the water management agreement, interfers with the existing extra-provincial rights of Hydro-Quebec as they are situated in the Province of Quebec.

 

77.       The Supreme Court Reference found:

“As soon as the Reversion Act came into force, Hydro-Quebec’s right to receive power according to the terms of the Power Contract would be effectively destroyed. Even if the flow of electricity to Quebec continued at the same rate and for the same price after coming into enforce of the Act, it would be in the form of a privilege rather than an enforceable right. All of this, in my opinion, points to one conclusion: the Reversion Act is a colourable attempt to interfere with the Power Contract and thus to derogate from the rights of hydro-Quebec to receive an agreed amount of power at an agreed price.”

Cabana asserts the same. That the 2007 ammendments to the Electrical Power Control Act and the water management agreement alter the nature of the power contract to the point it is hardly recognizeable other than price.

78.       If in fact the statements of Gilbert Bennett, Vice-President of Muskrat Falls, Nalcor are proved to be accurate, and an Energy Allowance is in place, and aproximately 2000 MW per year will be available for Nalcor to effectively recall through the imposition of the water management agreement, then Nalcor will reap large profits from the process. Recall rates have been set as the same rates Hydro-Quebec pays for its power. In such a case, Nalcor avoids having to negotiate a power purchase with Hydro-Quebec and/or CFLCo for fair market value of that 2000 MW of power. Such a situation could only be possible with a management agreement in place. In such a scenario, Hydro-Quebec would be left suffering damages without recourse and in breach of the Power contract 1969. The effect of such a measure is the Government of Newfoundland and Labrador, through its agent the Public Utilities Board, for its agent Nalcor, has caused Hydro-Quebec to subsidize the operations of its competitor Nalcor.

79.       Cabana therefore asserts that the 2007 ammendments to the Electrical Power Control Act 1994 and the water management agreement, by their nature alone, were aimed solely to violate the extra-provincial civil rights of Hydro-Quebec for the purposes of the Government of Newfoundland and Labrador, and are therefore colourable and thereby unconstitutional in pith and substance.

 

ISSUE 3 – WAS THE REFERNEDUM ON THE NEW DAWN AGREEMENT CONSTITIONAL, AND HAVE ABORIGINALS AFFECTED BY THE LOWER CHURCHILL PROJECT BEEN CONSULTED AND ACCOMODATED?

 

D)        The Nunatukavut

80.       The Nunatukavut populate the southern area of Labrador and have used the area around the proposed Muskrat Falls development for hunting and gathering.

81.       Previously the Nunatukavut were refered to as the Labrador Metis Nation.

82.       On January 8, 2013, Daniels vs The Queen, the Federal Court found:

“[619] For all these reasons, the Plaintiff’s request for a declaration that Metis and non-status Indians are “Indians” within the meaning of the Constitution Act, 1867, s91(24) will be granted.”

83.       The Federal Court also refused a request for a declaration of negotiation and consultation rights of Metis and non-status Indians, believing that the clarrification of the constitutional status as “Indians” would lead to that within the constitutional decisions already enshrined, and decisions at Bar already in place:

“ [617] In all of the circumstances, the Court will not grant the declaration for negotiation and consultation. Hopefully, the resolution of the constitutional issue will facilitate resolution on other matters.”

84.       The Federal Court also found that the duty to negotiate and consult depends on the subject matter, strength of the claim, and other factors before the Court. The Court discussed the difficulty of, in a sense, issuing a decision without a specific claim:

“[614] Absent better particulars of what is at issue to consult on or negotiate, the Court can offer no guidance. The duty to consult and negotiate depends on the subject matter, the strength of the claim and other factors before the Court.”

85.       In Nunatukavut Community Council Inc. v. Newfoundland and Labrador Hydro-Electric Corporation (Nalcor Energy), 2011 the Court found:

In fact, Nunatukavut's complaint with the EA process for the Lower Churchill River Project derives from another source than the EA process itself: Nunatukavut does not have lands claim and impact benefits agreements

with Nalcor or the federal and provincial governments. It is developing its claims and "Unveiling Nunatukavut" is an important contribution to that process but the lands claim and impact benefits initiative is a separate stream to the EA process for the Lower Churchill River. It may be that Nunatukavut has not been consulted

as fully or accommodated as appropriately in its lands claim exercise as it has been for the EA process but the consultation and accommodation for the latter have been fulsome and generous.”

 

86.       The Supreme Court of Canada, Delamuukw, supra, at para. 186, quoting Van der Peet, supra, at para. 31, states:

 

“The government’s duty to consult with Aboriginal peoples and accommodate their interests is grounded in the honour of the Crown. The honour of the Crown is always at stake in its dealings with Aboriginal peoples: see for example R. v. Badger, [1996] 1 S.C.R. 771, at para, 41; R. v. Marshall, [1993] 3 S.C.R. 456. It is not a mere incarnation, but rather a core precept that finds its application in concrete practices.

 

The historical roots of the principle of the honour of the Crown suggests that it must be understood generously in order to reflect the underlying realities from which it stems. In all its dealings with Aboriginal peoples, from the assertion of sovereignty to the resolution of claims and the implementation of treaties, the Crown must act honourably. Nothing less is required if we are to achieve “the reconciliation of the pre-existence of aboriginal societies with the sovereignty of the Crown.”

           

It is, therefore, clear that Aboriginal people’s are to be treated with respect and consulted within an honourable relationship.

 

87.       The Supreme Court of Canada, Haida, S.C.C., para 47, stated:

 

“When the consultation process suggests amendment of Crown Policy, we arrive at the stage of accommodation. Thus the effect of good faith consultation may be to reveal a duty to accommodate. Where a strong prima facie case exists for the claim, and the consequences of the government’s proposed decision may adversely affect in a significant way, addressing the Aboriginal concerns may require taking steps to avoid irreparable harm or to minimize the effects of infringement, pending final resolution of the underlying claim.”

 

The Crown, therefore, has a duty to consult and accommodate when it becomes aware of a claim.

           

88.       The Nunatukavut have claimed the area involved with the proposed Muskrat Falls dam site, and the area where transmission lines are meant to traverse through to mines and the coastal area of Labrador.

 

89.       No Impact and Benefit agreements (IBA) have been finalized between proposed mining ventures in Labrador and the Nunatukavut.

 

90.       The Government of Newfoundland and Labrador have not negotiated, or reached an agreement for, an IBA with the Nunatukavut in reference to the Lower Churchill development. This despite the knowledge the Innu peoples were traditionally nomadic, and their claimed areas overlap. For example, while the Government did reach an IBA with the Innu of Labrador, they have not accorded the same right to the Nunatukavut, despite their competing claims over the same area of Muskrat Falls. In fact, Attorney General Tom Marshall for the Province of Newfoundland and Labrador publicly commented:

 

“The Federal Court decision has no bearing on whether or not non-status or Metis groups might hold treaty rights…This does not apply to rights assertions or land claims…The Nunatukavut Community Council does not have an accepted land claim with the federal government. Even in the absence of an accepted land claim, we will continue to consult with them as we have done on Muskrat Falls.”

 

 

91.       The Attorney General, with his comments in paragraph 90 herein, makes no reference of accommodation, which would normally result in an IBA, for the Nunatukavut as was given to the Innu of Labrador.

92.       Cabana, therefore, asserts that the Government of Newfoundland and Labrador is wrongly ignoring its duty to accomdate, and meaningfully consult, the Nunatukavut. The Nunatukavut have stated publicly this will result in further litigation. Given that the Nunatukavut claim overlaps with that of the Innu of Labrador at the Muskrat Falls site, and that their other claims for transmission lines are far most extensive than those of the Innu of Labrador, and given that they must be dealt with under the Indian Act in accordance with the decision by the Federal Court, Cabana concludes costs associated with such an accomodation will be atleast similar to the financial accomodation given the Innu of Labrador, thereby significantly raising costs associated with the proposed Lower Churchill development. Furthermore, IBAs now required by mining developments in the area claimed by the Nunatukavut could render these developments unprofitable, and thereby reduce potential electric power needs in Labrador.

 

E)        The Nunatsiavut

 

93.       The Nunatsiavut Government was established in 2005. The Nunatsiavut were formerly known as the Labrador Inuit. As a result of the Labrador Inuit Land Claims Agreement, the Nunatsiavut established self-government within the Province of Newfoundland and Labrador.          

94.       The water flowing from the Churchill River, including through the proposed Muskrat Falls site, flows through Lake Melville and to the ocean, thus flowing through Labrador Inuit Lands as designated in the Inuit Land Claims Agreement.

95.       The Inuit Land Claims Agreement was signed in 2005, four years earlier than Nalcor’s acquisition of water rights to the Lower Churchill.

96.       Press Release, Inuit concerns over downstream impacts of Muskrat Falls still being ignored, says President, Nunatsiavut Government, December 18, 2012, states in part:

“ ‘We have maintained, and will continue to maintain, that this project will have adverse affects on Inuit health, our rights and, indeed, our future,’ says President Leo. “We have tried to engage in meaningful discussions with the Government of Newfoundland and Labrador to try and find ways to mitigate the negative impacts this project will have on Labrador Inuit.’

‘The Premier left the impression the Nunatsiavut Government endorses   Muskrat Falls, and indicated that we have been consulted on the project,’ says President Leo. ‘That is simply not the case.’

‘The Government of Newfoundland and Labrador fails to accept our rights and titles, despite what the Premier may want people of the Province to believe,’ says President Leo. ‘We fought long and hard to negotiate the Labrador Inuit Land Claims Agreement. It is very unfortunate the Government of Newfoundland and Labrador is not prepared to honour the spirit of that Constitutionally protected document.’”

97.       Press Release, Concerns must be addressed if Muskrat Falls goes ahead, says President, Nunatsiavut Government, November 28, 2012, states in part:

“ ‘Labrador Inuit have well-established aboriginal rights and title downstream from Muskrat Falls that are Constitutionally protected in the Labrador Inuit Land Claims Agreement,’ the President says. ‘We believe this development, if it proceeds, will negatively impact communities in central Labrador, Rigolet as well as the entire Lake Melville ecosystem.’

‘Nalcor Energy has firmly entrenched in a position that fails to recognize effects of the proposed development on Labrador Inuit,’ she says. ‘ We have said all along that our health, rights and interests cannot be ignored.’

In an effort to get a better understanding of the downstream impacts of the proposed development, the Nunasiavut Government has partnered with ArcticNet to conduct an independent research and monitoring program.

‘We are conducting this work using credible, transparent and peer-reviewed research methods and processes,’ says Nunatsiavut’s First Minister and Ating Minister of Lands and Natural Resources, Darryl Shiwak. ‘We believe this work is necessary because the work done by Nalcor, in our opinion and in the opinion of many experts, is incomplete and inadequate,’

‘We need to find a way to ensure steps are taken to mitigate any adverse impacts this project will have on our health, our rights and our future,’ says President Leo. ‘We have opened the door to discussions. It is our hope that Nalcor and the province do the right thing, respect our Constitutionally-protected Land Claims Agreement, and work with us in the best interest of Labrador Inuit.’”

98.       Press Release, Muskrat Falls, Nunatsiavut Government, states in part:

“ Nunatsiavut Government has significant concerns with the proposed Muskrat Falls project, and we feel it is important that these concerns are on the public record.

The environmental assessment panel report noted that there could be significant adverse effects on the pursuit of traditional harvesting activities by Labrador Inuit – including the harvesting of country food – should this project go ahead.

What disturbs us, as a government, is that Nalcor failed to consider that Inuit would be affected by this project.”

99.       Inuit fear Muskrat Falls could poison food supply, CBC News, November 28, 2012 states in part:

“ ‘There’s a poison going into our water. It’s going into the fish. It’s going into the seals. And ultimately, it will go into us and our children. I don’t know how else to say it. We’re extremely concerned.’ he said.

‘We have to recognize, and the province and Nalcor have to recognize, that Inuit health will be affected by this,’ she said.

‘We simply cannot and will not be ignored any longer,’he said.”

100.     Nunatsiavut government challenges premier on  speech, The Telegram, December 31, 2012, states in part:

“The day after the on-air announcement of sanction of the Muskrat Falls hydroelectric mega project, while the provincial government was briefing its political opposition on new energy legislation, the Government of Nunatsiavut was issuing a reminder of its position on the project.”

101.     Nunatsiavut government challenges premier on speech, The Labradorian, December 31, 2012, states in part:

“ ‘Given the clear lack of work done by Nalcor and the Newfoundland and Labrador government, we have approached both Nalcor and the Newfoundland and Labrador government to provide funding and resources to help with our program,’ said First Minister Darryl Shiwak.

                        ‘To date, these requests have fallen on deaf ears,’

Nalcor Energy vice-president Gilbert Bennett responded at the time saying there was a difference of opinion between the company and the aboriginal government on both how far mercury release from the project might extend, and how monitoring should progress, specific to the project.

Bennett said Nalcor is still not expecting to see environmental effects far downstream of Muskrat Falls, reaching across Lake Melville and into Labrador Inuit Settlement Area.”

102.     Nalcor says it will track mercury levels, recognizes Inuit concerns about Muskrat Falls, The Canadian Press, November 29, 2012, states in part:

Newfoundland and Labrador’s public utility says it recognizes the importance of tracking mercury levels on the Lower Churchill River after the Nunatsiavut government raised concerns about the issue over Muskrat Falls.

Gilbert Bennett of Nalcor Energy says if the Muskrat Falls hydroelectric project is approved by the province later this year, baseline samples taken by the crown corporation will extend past Muskrat Falls east to Goose Bay and Lake Melville.

The provincial government and Nalcor say any mercury contamination will be diluted to where there’s no measurable effects.”

103.     Mercury concerns raised at Muskrat Falls meeting, CBC News, January 17, 2013 states in part:

“Nalcor estimates that mercury levels will keep rising in fish around Muskrat Falls for up to 15 years after the river is dammed to generate power.

Residents who attended the meeting were also told that contamination levels of methyl mercury are not expected to start dropping until about 30 years after a section of the Lower Churchill is flooded.

Biologist Jim McCarthy, Nalcor’s technical expert on the aquatic environment at the Muskrat Falls site, said this project will mean changes.

‘The biggest difference is [that] there’s going to be flooding, so a lot of the areas in the Muskrat Falls reservoir location that are fast-flowing habitat – it’s obviously going to be a slower moving habitat.’ he said.

‘So the fish species that are [in] those areas for certain life cycle stages, that habitat is not going to be available anymore.’

104.     Science Evaluation of the Environmental Impact Statement for the Lower Churchill Hydroelectric Generation Project to Identify Deficiencies with Respect to Fish and Fish Habitat, Fisheries and Oceans Canada, Science Advisory Report 2009/024, states in part:

“ The exclusion of the receiving environment below Muskrat Fall, including Lake Melville from the project description within the EIS was viewed as a major deficiency.

The magnitude of expected ‘Changes to fish habitat’ and fish populations needs to be considered relative to the ‘Loss of fish habitat’. The area of altered habitat is considerably larger than the area of lost habitat, and has the potential to have a more significant impact on the ecology of fishes of the Lower Churchill system.

Predictions that the new reservoirs will ‘advantage’ certain species and ‘disadvantage’ others are not well described in the current documentation.

Although specifically stated as ‘required mitigation measures’ within the EIS guidelines,  ‘fish habitat compensation strategy’ was presented in the EIS.

A number of component studies used to describe the aquatic environment had small sample sizes and were limited both in spatial and temporal coverage. These limitations and an increased level of risk and uncertainty of any predictions or analysis based on these data.

Potential cumulative effects within the aquatic environment were not well addressed in the EIS. In addition, potential interactions with climate change, based on regional models that have been developed for Labrador (i.e. extreme events in spring/fall) were not presented.

The impact of direct fish mortality from turbine operations was not addressed in a population context.

Deficiencies

Lake Melville

The exclusion of the area below Muskrat Falls including Lake Melville was highlighted as a deficiency by the EIS by all participants of the meeting. The impoundment of the Churchill River at Gull Island and Muskrat Falls would reasonably be expected to affect the area within the estuary. Potential changes noted by the reviewers were wide ranging but included changes to sediment delivery and transport within this area, which could lead to change in physical habitat affecting fish resources. Flow patterns, nutrient concentrations and temperature changes could also be a possible in the estuary and Lake Melville. It was also noted that mercury levels could be increased in this receiving environment by downstream passage of food items (both fish and invertebrates) from the reservoirs. The oceanographic and hydrological models provided in the component studies are not adequate to assess responses of the estuary to interruption of freshwater input from the Churchill River or the longer term consequences of changes to water, sediment and dissolved nutrient delivery. Finally, project related socio-economic factors will likely have wide ranging biological consequences by changing the pattern and the level of fisheries and marine mammal resource use in the whole region. Since this area was not covered by the current EIS, it was suggested that a through study of traditional and local knowledge pertaining to fish habitat be conducted for this entire area. This survey should be conducted within both aboriginal and non-aboriginal communities.”
This scientific report clearly states the Lake Meville region was almost completely ignored for environmental impact studies, that there is likely be impacts in this area, and that aboriginal knowledge pertaining to fish habitat be studied thoroughly. By nature of the comment, the logical deduction is that the aboriginal communities had not been involved in the
study of impacts to Lake Meville and area regarding fish habitat, which would certainly be a failure in consultation and certainly accommodation.

105.     Duration and Extent of Elevated Mercury Levels in Downstream Fish Following Reservoir creation , Environmental Sciences Division, Science Branch, Fisheries and Oceans Canada , states in part:

“ In summary, downstream affects of reservoir creation are seen in elevated mercury levels of riverine and estuarine fish. The extent and duration appear to depend on the trophic position and habitat preferences of individual species. Return times are similar to those fish from boreal reservoirs, <20 years for lower trophic levels and 20-30 years for piscivores. Elevated mercury levels are seen farther down stream for littoral species. Estuarine fish over 300 km down stream of the reservoir also had elevated mercury levels however, further work is required to elucidate the spatial and temporal extent of estuarine effects.”

It is therefore a certainty that mercury contamination of fish species, if not the water itself, will reach the Innu Lands.

106.     Review of Potential Downstream Effects of Lower Churchill Hydroelectric Project, Elsie M. Sutherland, PhD, Department of Environmental Health, Harvard School  of Public Health, Boston, MA, April 7, 2011, states in part:

                        “5.0 Conclusion

            The Lower Churchill accounts for ~75% of freshwater inputs into Lake Melville. Hydroelectric development will result in increased riverine inputs of MeHg to Lake Melville in the dissolved and solid phases, even if flow levels remain the same due to the enhanced concentrations in the river that are presently acknowledged by all parties. Migration of fish and seals represents another vector for exchange of enhanced MeHg concentrations in the Lower Churchill to Lake Melville that has not been acknowledged by the proponent. Traditional knowledge reports migration and feeding behaviour of seals (a country food) throughout the region and commonly consumed fish such as sea brook trout spend a portion of their lifecycle in the river and in Lake Melville. Modelling performed by the proponent has some major conceptual flaws in its treatment of stochastic environmental quantities and predictive power and is severely limited by data constraints. Overall risks to Inuit health of even a small increase in MeHg in country food are likely large due to their subsistence lifestyle and high levels in fish from the initial development of the Upper Churchill. In my expert opinion, there will likely be some increases in biological MeHg concentrations throughout Lake Melville, although the magnitude of these changes is highly uncertain.”

This scientist from Harvard University is conducting a detailed study of the subject matter with the cooperation of the Nunatsiavut. Her conclusions are that MeHg will reach and effect the Inuit Lands both by water and food source.

107.     Parental Methylmercury, Parental Lead Exposure, and Evidence of Attention Deficit/Hyperactivity Disorder among Inuit Children in Arctic Quebec, Centre de Recherche du Centre hospitalier universitaire de Quebec, Department of Psychiatry and Behavioral Neurosciences, Wayne State University School of Medicine, Detroit, MI, Universite de Sherbrooke, Sherbrooke, Quebec, Volume 120, Number 10, October 2010, states in part:

“Conclusions

To our knowledge, this study is the first to report an association between prenatal MeHg exposure and ADHD symptomatology at school age. The associations with teacher-reported ADHD symptoms observed in the current study suggest that adverse effects of prenatal MeHg on attention previously reported based on neuropsychological assessments may be clinically significant, and may interfere with learning and performance in the classroom. This study also suggests that prenatal MeHg exposure may be a risk factor for attention problems in diverse ethnic groups from Southern Canada and the United States who may be exposed to similar levels of MeHg through their diet. Although the main source of Pb exposure in our study population – lead shot (as revealed by blood Pb isotope ratios; Levesque et al. 2003) – is unique in the Pb exposure literature, this study replicates previous findings linking low-level childhood Pb exposure to ADHD. Our results support the need for local intervention intended to reduce prenatal exposure to MeHg and childhood exposure to Pb. Additionally, because MeHg exposure in the Arctic is attributable primarily to long range transport of Hg from developing countries, international actions and conventions aimed at limiting Hg emissions are urgently needed.

The study’s conclusions, aside from the very real medical implications, find “the need for local intervention”.

108.     Association between methylmercury and cardiovascular risk factors in a native population of Quebec (Canada): a retrospective evaluation, Centre de recherch√© du CHUQ, Quebec, Department of Social and Preventative Medicine, Laval University, Quebec, Quebec Heart and Lung Institute, Quebec, Faculty of Pharmacy, Laval University, Quebec, states in part:

“In conclusion, Mege was associated with increasing resting HR after considering the traditional risk factors as well as other contaminants (lead and total PCBs) and n-3 fatty acids. Since increased HR is a risk for sudden death in the general population (Jouven et al. 2001), the results of the present study suggest that MeHg exposure could increase the risk of CVD among the Inuit of Nunavik. However, cohort studies are imperative in order to examine the long-term impact of high MeHg levels in the development of CVD.”

109.     Methylmercury Poisoning: Another Gift from Hydro-Quebec? FurmanCarrie, April 2, 2010, states in part:

“ In 1977, a study of mercury levels in the Innu population of Sheshatshiu revealed elevated mercury levels in 37 percent of the individuals surveyed. The government responded by issuing a press release telling people to limit their consumption of fish to ½ lb. per week to deal with “this complex problem, which is world wide.” (see 1992 posting on the Innu Nation website, www.innu.ca/dam.html.) Steps were also taken to close access to the fishery and post signs warning of the health risks of eating too much fish from reservoirs and downstream areas. Yet the cultural ramifications of this environmental disaster have never been considered.”

110.     Bioaccumulation of Mercury by Aquatic Biota in Hydroelectric Reservoirs: A Review and Consideration of Mechanisms, Institute of Environmental Studies, University of Toronto, 1987, Ontario, states in part:

“ The recognition of mercury as a risk to human health from environmental rather than from occupational exposure dates from the late 1950s and includes a number of examples relating to mercury from specifics sources (D’itri and D’Itri, 1977). Mercury readily accumulates in tissue and is also biomagnified through the aquatic food chain. Methylation of mercury is accepted to be a major process contolling its biological activity in aquatic ecosystems, and a number of recent articles and reviews have addressed this (e.g. Nriagu, 1979).

More recently, occurrences of elevated mercury levels in tissues in fish from regions considered to be remote from point or local sources of mercury have been documented. Thee appear to be related to: (1) acidification of surface waters (Linqvist et al., 1984) and, (2) recent impoundments, usually in connection with hydroelectric dam construction (e.g. Bodaly et al., 1984).”

111.     Mercury Poisoning in First Nation Groups in Ontario, Canada, Masazumi Harada, Masanori Hanada, Masami Tajiri, Yukari Inoue, Nobuyuki Hotta., Tadashi Fujino, Shigeru Takaoka, and Keishi Ueda, Journal of Minamata Studies 3:3-30, states in part:

“Organic mercury poisoning can be traced back to the 19th century. However, those cases were all direct poisoning through occupational exposure or accidents. Minimata Disease is a form of organic mercury poisoning which originated from the environmental pollution mediated by the food chain, an unprecedented experience in the history of mankind. The peculiarity of its origin will be obscured if it is termed simply as organic mercury poisoning. Therefore, it must be named Canadian Minamata Disease.”

112.     Hydropower Dams Hamper Migrating Fish Despite Passage Features, University Communications, January 16, 2013, states in part:

“Major hydropower dams in the northeastern United States, constructed with state-of-the-art features designed to allow migratory fish to pass through them on their way to spawn upstream, have failed in that regard, raising questions that should be addressed as more dams are planned worldwide.

‘It may be time to admit failure of fish passage and hatchery-based restoration and acknowledge that ecologically and economically significant diadromous species restoration is not possible without dam removals.’

‘Not only are these losses felt locally, possibly with major ramifications to fishery and biodiversity resources, but in fact they translate into lost marine production and weakened marine food  webs.’”

This very report indicates major failings in mitigation measures with serious consequences for local populations.     

113.     Clarifying the Role and Responsibilities for Aboriginal Consultation and Accommodation Within DND/CF, LCdr Ken Osborne, The Office of the Canadian Forces Legal Advisory Services (DND/CFLA LAS), states in part:

“In Hiada Nation, the Court said ‘that the scope of the duty is proportionate to a preliminary assessment of the strength of the case supporting the existence of the right or title, and to the seriousness of the potentially adverse effect upon the right and title claimed.’ If the claim is weak or the potential for infringement is minor, the only duty on the Crown may be to give notice, disclose information and discuss any issues raised in response to the notice. If the claim is strong, the potential infringement significant and the risk of non-compensable loss is high, deep consultation and possibly accommodation will be required.

In all cases of consultation, the Court held that government responsiveness is paramount. The honour of the Crown requires that the Crown act with good faith to provide meaningful consultation appropriate for the circumstances. The Crown must be proactive and embark upon consultation after a full assessment of the strength of the aboriginal claim. In discharging its duty to consult, the Court noted that regard might be had to procedural safeguards of natural justice mandated by the principles of administrative law. Therefore, genuine consultation may mean a process that involves any of the following activities:

                                    a.         notice to affected aboriginal groups;

                                    b.         gathering information to test policy proposals;

                                    c.         disclosure of information;

                                    d.         seeking aboriginal opinion on the proposal;

e.         informing aboriginal groups of all the relevant information upon which the proposal is based;

                                    f.          providing feedback during the consultation process;

                                    g.         offering reasons for a decision if necessary.

It is important to note that consultation is not automatically coupled with accommodation. Accommodation is separate outcome connected to the obligation of the Crown to act honourably.

The need for accommodation will be most apparent when a strong prima facie case exists for the aboriginal claim, the consequences of the government’s proposed decision will adversely effect the claim in a significant way, and the steps are needed to avoid or minimize the irreparable harm.

Conclusion

The Supreme Court of Canada’s decision in Haida and Taku River are an affirmation that the Crown owes Canada’s Aboriginal peoples a duty to treat their interests fairly, seriously and in the spirit of reconciliation. The doctrine of consultation and accommodation is not a modern innovation crafted for the purpose of fettering the Crown’s ability to govern absolutely. The government’s duty to consult with Aboriginal people’s and to accommodate their interests, if necessary, is firmly rooted in a traditional principle of the Crown’s honour, a concept crystallized when European sovereignty was asserted over Aboriginal peoples. In short, both decisions explicitly recognize the pre-existence of aboriginal societies and the Crown’s obligation to govern with considered regard as to how land use decisions will affect aboriginal interests.

Clearly, the honour of the Crown is central to the relationship between Aboriginals and the Crown. The more serious the impact to Aboriginals, the more extensive the consultation and accommodation required by the Crown, toward the Aboriginal people.

114.     Consultation with First Nations and Accommodation Obligations, John J.L. Hunter, Q.C., Hunter Voith Litigation Counsel, states in part:

“ When the consultation process suggests amendment of crown policy, we arrive at the stage of accommodation. Thus the effect of good faith consultation may be to reveal a duty to accommodate (Haida).

“The accommodation that may result from pre-proof consultation is just this – seeking compromise in an attempt to harmonize conflicting interests and move down the path of reconciliation. A commitment to the process does not require a duty to agree. But it does require good faith efforts to understand each other’s concerns and move to address them. (Haida)”

Cabana asserts no such good faith has been afforded the Nunatsiavut Government in the circumstances surrounding mercury contamination by the proposed Lower Churchill project.

115.     Labrador Inuit Health and the Lower Churchill Hydroelectric Generation Project, Nunasiavut Government, Press Release, states in part:

“ Field activities for the biophysical component of program were initiated this summer in Lake Melville, while the community-based component will begin this winter through community-based research teams.

It is most important that we understand the baseline conditions in Lake Melville prior to the development in order to confirm impacts after development, if the project proceeds. Given the clear lack of work done by Nalcor on down stream effects, we have approached both Nalcor and the Province to provide funding and resources for our program. To date these request have fallen on deaf ears.

The research and monitoring program is very new, but we have learned useful information already. The preliminary data on total mercury indicate transport from the Churchill River extending along the surface of Lake Melville into the Labrador Inuit Settlement Area. This provides even more information that strongly supports the weight of evidence that effects of the proposed Muskrat Falls development will extend into the Labrador Inuit Settlement Area and impact Inuit Health.”

The Nunatsiavut Government is proceeding with a research project, in association with a Harvard professor, to do environmental studies on impacts from the dam downstream. The Government of Newfoundland and Labrador is not financially assisting them in this study. There is no accommodation.

116.     Innu fear Muskrat Falls could poison food supply, CBC news, November 28, 2012, states in part:

Natural Resources Minister Jerome Kennedy said he's willing to discuss this issue with the Nunatsiavut government, but he's not making any promises about what action the government might take.

Kennedy said they have heard extensively from the Inuit about their concerns. He rejected any notion that government has ignored the issue.

"I don't fully understand the comment that they feel like they have been ignored," he said.

"I think that we don't agree with them on everything. But being consulted and being respected and being ignored are different things. I don't think 'being ignored' is a good description."”

This response from Minister Kennedy appears to be the extent of the Government Newfoundland and Labrador’s response to the Nunasiavut concerns.

117.     In DELGAMUUKW v. BRITISH COLUMBIA the Supreme Court of Canada found:

as a result of the "inescapably economic aspect" of Aboriginal title, fair compensation will ordinarily be required to fulfil the Crown’s fiduciary duty when Aboriginal title is infringed. The amount of compensation will vary according to the nature of the Aboriginal title in question, the severity of the infringement, and the extent to which Aboriginal interests are accommodated.”          

118.     Cabana asserts that the Nunatsiavut has not been meaningfully consulted and has not been accommodated whatsoever over the downstream impacts on their community, that are scientifically certain to occur if the Lower Churchill project proceeds. There is scientific evidence that proves existing mercury poisoning downstream from the Upper Churchill Plant. The Nunasiavut people rely on fish, and animals that eat fish, such as seal, for a majority of their diet. This has been a practise of theirs for all time. The fact the Government of Newfoundland and Labrador has refused to provide them with funding to assist in the new, and ongoing study of Lake Melville, speaks to a certain arrogance that is meant to have been laid to rest decades ago, as it pertains at the least to Aboriginal peoples.

 

F)         The Quebec Innu

119.     The Innu communities of Quebec, collectively referred to as the Quebec Innu, have a possibly competing and ongoing claim to lands in Labrador currently known as Innu of Labrador lands.

120.     The inability to reach any compromise and/or understanding between the Government of Newfoundland and Labrador and the Quebec Innu has resulted in years of confrontational behaviour on the parts of both parties.

121.     Williams defends Quebec Innu cabin evictions, CBC news, June 5, 2008, states in part:

Newfoundland and Labrador Premier Danny Williams on Thursday defended a decision to send eviction notices to Quebec Innu who have cabins in Western Labrador.

The cabin owners said they don’t need permits to build in western Labrador because of the Innu’s traditional ties to the area.

Williams said there’s been a recent surge of cabin-building that may be a bid to bolster the Quebec Innu’s claims on Labrador resources.

‘Anytime anybody squats on land to reserve rights, we as a government have to deal with that,’ the Premier said… ‘If in fact, it’s a positioning or posturing to establish claims, well then the proof of that will come out in the eating.’

122.     Federal Court dismisses Quebec Innu land claim, CBC news, June 10, 2008, states in part:

“ A Federal Court judge in Montreal dismissed the claim, suggesting the Innu would be better off trying to prove their case in Newfoundland and Labrador’s Supreme Court.

‘This is a direct challenge by Newfoundland. Newfoundland is treating the Innu who have been there for centuries as strangers in their own land,’ he said.

Newfoundland’s actions can only be described as very provocative. It seems to be a frontal assault by Newfoundland to kick the Innu out of Labrador, which I find very hard to digest, and I think it’s an international outrage.’”

123.     Quebec Innu caribou hunt protests N.L. deal, CBC news, February 21, 2010, states in part:

“ five Quebec-based Innu groups began the hunt Saturday to make a political statement against the New Dawn Agreement, a contentious deal that has split the Innu people.

‘It draws a line between the Quebec Innu and the Innu of Labrador,’ said Armand MacKenzie, an advisor with the La Romaine Innu on Quebec’s Lower North Shore. ‘And it draws a map of where the Innu in Labrador will always be considered first in Labrador, leaving the Quebec Innu out of the loop.’

‘The border was not even an issue a few years ago,’ he said. ‘ We were a nomadic people going from one place to another without taking into account the provincial border. For many, many years we were one people.’

‘Our ancestral land, which ignores all boundaries imposed by non-aboriginal governments, is largely located in Labrador where we have always hunted caribou and we will continue to do so.’”

124.     Quebec Innu inciting violence, N.L. premier says, CBC news, March 3, 2010, states in part:

“ ‘Statements made this week by elected officials within the Quebec Innu, coupled with their recent illegal hunt of the Red Wine Caribou herd, are completely unacceptable to our government and must be exposed as rhetoric and activity with a goal of inciting violence,’ said Williams in a news release Wednesday.

‘Real MacKenzie, chief of the Matimekush-Lac-John Quebec Innu community, stated that ‘This is a war that begins as of now,’ said Williams. ‘ Those words, which conjure up images of violent behaviour, are completely unacceptable to me personally and to our government. Furthermore, threats to economic development activity, such as the Lower Churchill and mining projects, will not be taken lightly by our government.’

‘This provincial government will use any legal resources required to ensure that violent and illegal activities are addressed head on while ensuring the protection of law enforcement officers and safety of the public at large,’ said the release.”      

125.     Quebec caribou hunters arrested in Labrador, CBC news, March 18, 2010, states in part:

“Two hunters have been charged with killing endangered caribou in Labrador.”

126.     Letter from the Ekuanitshit Innu Council, Nitassinan, QC to Todd Burlingame, Lower Churchill Hydroelectric Generation Project, Nalcor, April 14, 2010, states in part:

“ We do not share your appreciation for the position we have taken during previous discussions between your company and our community and during the submissions to the Joint Review Panel of the Lower Churchill Hydroelectric Generation Project. In particular, we are not of the opinion that your consultation efforts are progressing or that we are nearing an agreement.

We would be prepared to accept your offer of providing us more information, in writing or as a presentation, on the project, although by no means are these actions to be considered a consultation by Nalcor with the Ekuanishit Innu.

In fact, the very least you could do is visit our community to explain your project. The guidelines require that you take into account our interests, values, concerns, contemporary and historic activities, and traditional knowledge, and our important questions regarding the planning and implementation of the project.”

This letter is revealing to the extent that some after the conclusion of the environmental assessment hearings the Ekuanitshit people had not even had a consultation team, or any team, come to their community to consult and explain the project – in stark contradiction of the process involving the two Labrador Innu communities compromising the Innu of Labrador.

127.     Penashue not worried about Quebec Innu court bid, CBC news, April 29, 2012, states in part: 

“ ‘That’s been settled and dealt with. And, of course there’s always people who complain.’

‘The legal standing of aboriginal issues in Labrador have been addressed,’ he said.

‘There’s an agreement with the Innu Nation of Labrador, and that’s the only outstanding comprehensive land claims process that is present,’ said Penashue.

‘As a government we have dealt with the issues that need to be dealt with.’”

128.     As of the time this document is being drafted, the Innu of Quebec, specifically the Counseil des Innus de Ekuanitshit, are in Federal Court in Montreal arguing that the Crown failed to consult and accommodate Ekuanitshit in regard to the proposed Muskrat Falls project.

129.     In DELGAMUUKW v. BRITISH COLUMBIA, the Supreme Court of Canada found in part:

In recognition of the potential scarcity of conclusive evidence of pre-sovereignty occupation, the Chief Justice stipulated that a group claiming Aboriginal title may prove such occupation through evidence of present occupation, supplemented by evidence of continuity. The claiming group need not establish "an unbroken chain of continuity," but rather "substantial maintenance of (their) connection" with the land (par. 153). Provided this substantial connection has been maintained, a claim to Aboriginal title need not be precluded by alterations in the nature of the occupation between sovereignty and the present.

Lamer C.J. noted that this requirement, like occupation, is proved with reference to both common law and Aboriginal perspectives. Thus, notwithstanding the common law principle of exclusivity linked to fee simple ownership, the test for exclusive occupation in Aboriginal title claims must consider the context of the Aboriginal society in question at sovereignty. In this light, exclusive occupation can be demonstrated, depending on the circumstances, even if other Aboriginal groups were present on or frequented the lands claimed. In addition, the exclusivity requirement need not preclude the possibility of joint title shared between two or more Aboriginal nations, for instance where more than one group shared a particular piece of land, recognizing each other’s entitlement to the exclusion of others. Moreover, evidence of non-exclusive occupation may still establish shared, site-specific Aboriginal rights short of title, for example on lands adjacent to those subject to a title claim and shared for hunting by a number of groups.”

The Supreme Court of Canada found in this position a group like the Collective Innu of Quebec were nomadic in nature through out history, and that a shared claim is possible, and justifiable.

130.     Cabana asserts that the relationship between the Crown, as represented by the Government of Newfoundland and Labrador, and the Innu of Quebec has been anything, but respectful and conciliatory in nature. The Crown has not led by example. The Crown has not been honourable in its approach. In fact, the Crown has been territorial, narrow minded, confrontational, dismissive, and quasi-nationalistic toward the Innu of Quebec and their claims toward Labrador. This is counter to every Supreme Court reference that contemplates the rights of aboriginal peoples in recent time. There has been very little, if any meaningful consultation, and certainly no accommodation, up to and including evicting aboriginals from Cabins as “squatters”. There is no recognition whatsoever that the Innu of Quebec travelled, hunted, and gathered in the territory now known as Labrador since population in the territory began. There is no recognition that the border was an artificial line imposed by provincial and federal governments that did not exist a few hundred years earlier. There is only an approach by the Crown of apparent territorial self-interest, which breaches the fiduciary nature of the relationship based on the honour of the Crown.

G)        The Innu of Labrador

131.     The Labrador Innu Land Claims Agreement-In-Principle, states in part:

Part 31.3 Innu Approval Process

“31.3.1 The Innu Nation board of directors shall submit the Agreement-in-Principle (AIP) to a vote pursuant to 31.3.3 within three (3) months of the initialing of the Agreement-in-Principle by negotiators of the Innu Nation, Canada and the Province.

31.3.2 The members of the Innu Nation will have approved the Agreement-in-Principle if:

a.         a majority of the Eligible Voters for Sheshatshiu vote, and at least sixty percent (60%) of these Eligible Voters that actually vote, vote in favour of approving the Agreement-in-Principle; and

b.         a majority of the Eligible Voters for Natuashish vote, and at least sixty percent (60%) of these Eligible Voters that actually vote, vote in favour of approving the Agreement-in-Principle.

31.3.3 The vote of the members of the Innu Nation on the Agreement-in-Principle shall be by secret ballot.

31.3.4 Polling stations shall be located in Sheshatshiu, Natuashish, and other locations as may be determined by the Innu Nation.

31.3.5 The Innu Nation board of directors shall forthwith declare that the Agreement-in-Principle has been approved and shall forthwith direct the duly authorized officers of the Innu Nation to sign the Agreement-in-Principle if it is approved by the members of the Innu Nation in a vote conducted in accordance with this Part.

31.3.6 The Innu Nation will have approved the Agreement-in-Principle when the Agreement-in-Principle is signed by the duly authorized officers of the Innu Nation.

The agreement to make the New Dawn Ratification process a binding referendum was all parties signatory to the AIP, which includes the Provincial Government and the Federal Government as representatives of the Crown.

132.     The Innu of Labrador are “Indians” under the Indian Act in accordance with the AIP:

                 Part 2.4 Identity as Aboriginal People

2.4.1 Nothing in the Agreement shall be construed so as to deny that:

a.         Innu are an Aboriginal people of Canada within the meaning of the Constitution Act, 1982; or

b.         Innu are "Indians" within the meaning of section 91(24) of the Constitution Act, 1867.

133.     As “Indians” under the Indian Act, the Innu cannot hold a referendum without the permission of the Federal Minister, and in accordance with the provisions of the  Indian Referendum Regulations, C.R.C., c. 957:

Indian Referendum Regulations

C.R.C., c. 957


Regulations Governing the Holding of Referendums on Indian Reserves

 

HOLDING OF REFERENDUM

3. (1) The Minister may, at the request of the council of a band or whenever the Minister considers it advisable, order that a referendum be held to determine if the majority of the electors of a band are in favour of a proposed absolute surrender or designation.”

 

134.     In accordance with the Supreme Court of Canada Reference on Quebec Seperation, as filed in the original application in this proceeding, a referendum, to be constitutional, must ask an unambigous question, and receive an unambigous approval. The Innu of Labrador refuse to supply a copy of the referendum question despite a number of requests to do so for the purpose of this application. Central to the proposition that the refernedum was unconstitutional is the contention, based on Government of Newfoundland and Labrador press releases, and media coverage, that the New Dawn Agreement was that document which was voted on by the Innu of Labrador, and not three separate agreements.

 

135.     Further to paragraph 133 herein, the assertion that eighty percent of the people from the two Innu communities could sufficiently understand a document , such as the AIP which in itself is nearly 500 pages of “legalize”, to form an unambigous opinion is doubtful at best.

 

136.     Innu Oral Dominance Meets Schooling: New Data on Outcomes, Brabara Burnaby and David Pilpott, states in part:

 

“ Under these circumstances, it is not surprising that, as shown in table 1, the Innu in Labrador have a much higher percentage of people over the age of 25 with less than high school education compared with other groups (Statistics Canada, 2001).

Although census figures are not reliable for fine-tuned comparisons, the contrasts indicated here show that the Innu have fared much worse in education even after other Aboriginal peoples, and certainly than the rest of the population. These indicators by Statistics Canada reinforce the findings of Philpott et al. about the failure of schooling for Innu children and put them on a broader perspective.

Percentage of adults with less than high school education by various groups: Focus on the Innu of Labrador

                        Aboriginals in Sheshatshu    aged 25+             65.4%
                        Aboriginal in Davis Inlet      aged 25+             70%
Aboriginals in Newfoundland and Labrador    40%

                        Newfoundland and Labrador, ages 20-64        31.7%

                        All Aboriginals in Canada                                42%

                        All Canada, ages 20-64                                     21.4%

                        Based on Statistics Canada 2001 Census”

 

As terrible as these numbers are, the clear indication is that very few members of the Labrador Innu would possibly be able to understand the full New Dawn Agreement, and the three accompanying agreements. By way of comparison, almost as many people voted in favour of the referendum question as the number who have not received a full high scholl education.

 

137.     Further to paragraph 135 herein, Cabana asserts it would be almost impossible to draft an unambiguous question in these circumstances. For clarity, people could not possibly understand all the ramifications, clauses, definitions, and the like. Therefore, in accordance with the Supreme Court of Canada, the referendum question could not possibly be constitutional.

 

 

138..    Central to the argument of constitutionality of the referendum is whether or not the question referred to the New Dawn Agreement, which is a nine page document covering all three separate agreements, and the use of the words “ The parties agree that ratification and execution of the IBA by the Innu Nation and First Nations constitutes full and final consent of the Innu of Labrador to the project proceeding.” As stated in paragraph 133 herein, the Innu of Labrador refuse to release the question.

 

 

139.     Cabana relies on prefiled evidence and statements made in his Statement of Claim, and Interlocutory Application on this Action for th remainder of the analysis of this issue.

 

140.     Cabana therefore asserts that the First Respondent did by action, and word endorse the New Dawn Agreement as a de facto referendum on the Lower Churchill Project. That the question put to the Innu of Labrador has not been made availble by the Third Respondent, and that such a disclosure may have negated the need to be a Party to this action. That the First Respondent assisted in funding and organizing of the referendum, and the Second Respondent, at a minimum, assisted in organizing the referendum. That all the Respondents were responsible for crafting the ballot question. That there is a serious question costitutional law in regard to the capacity to comprehend such a detailed agreement, let alone three, by a population plagued with scant educational experience.That such a condition seriously questions how the referendum question could possibly be unambiguous, and thereby the result as well. Furthermore, the “ratification vote” is in fact, and law, a referendum, and can be nothing else, and that all Respondents did endorse such a referendum.

 

 

 

ISSUE 4 – DOES THE BALANCE OF CONVENIENCE FAVOUR THE  APPLICANT?

 

141.     An injunction aginst the spending of any more public money on the Lower Churchill hydroelectric development until the legal uncertainty surrounding the project is constitutionally resloved is a necessary measure to protect Cabana, and the public, from the financial consequences of moving ahead with the project without financial certainty.

 

142.     If the construction of the Muskrat Falls development continues as scheduled, without including the Gull Island development, the dam, resevoir and associated transmission lines are currently estimated to cost $6,300,000,000.00 (Nalcor’s share).

 

143.     It is estimated that the Government of Newfoundland and Labrador and Nalcor have spent in the range of $1,000,000,000.00 on pre-project construction costs and interest.

 

144.     Over a 35 – 50 year term of financing, the interest on the project debt would be atleast $9,000,000,000.00, once project over runs are factored in. Interest rates are currently at historic lows. Terms can only be set on 5 – 10 year bonds at the maximum, and likely less at these rates. Interest rates will eventually rise. There is uncertainty how high they may rise.

 

145.     The Government has a contingency allowance of 15% for the Muskrat Falls construction, however the World Report on dams states the average cost over run on Hydroelectric dam construction is 25%, and the difference would add an additional $1,600,000,000.00 to the cost of the Muskrat Falls development. In addition, Nalcor is liable for 50% of the cost over runs on the maritime link, which would make its share, based on a 25% cost over run, aproximately $300,000,000.00.

 

146.     D/C transmission lines across land must be converted to A/C power at the point of water, and back to D/C again after exiting the water. This entire process must occur twice before the power reaches mainland Nova Scotia. The average loss of power at each conversion process is aproximately 5%, which means 20% of the power will be lost in transmission to Nova Scotia. Considering Muskrat Falls is expected to produce aproximately 5,000,000,000.00 kwh of power per year at a break even, blended rate at Soldier’s Pond of  aproximately 21 cents per kwh, the annual loss based on today’s prices would be $210,000,000.00 per year or $7,350,000,000.00 over the 35 year term currently envisioned with Emera, not including rising interest rates.

 

147.     Funds borrowed to finance the project must be borrowed, including the “down payment” as the annual budgetary deficit of 2012, $750,000,000.00 combined with the Government projected budget for 2013, $1,000,000,000.00  leaves an accumulated defict of $1,750,000,000.00 for 2014. In 2012 the Government used banked funds rather than borrowing to fund the budget deficit. If the Government does the same in 2013, or borrows the money to pay the deficit and invests the cash funds in the project, the result will be the same – a very low pool of cash left to fund any further projects of about $300,000,000.00.

 

148.     In conjunction with project spending, and normal operations, the unfunded pension liabilities and Retirement Benefits liability are projected to be $5,369,829,000.00 in 2012 and $5,641,525,000.00 in 2013. In fact, the Government has announced it must cut down on pension benefits to slow the growth of the liability, which forms part of the gross debt of the Province.

 

149.     The Government has announced it will build a hospital in Corner Brook for approximately $700,000,000.00, an investment in the Hebron project at an estimated cost of $750,000,000.00, a ferry replacement program of undisclosed cost, small hydro projects in Labrador of undisclosed cost, and so it goes.

 

 

150.     If the government proceeds with the Muskrat Falls project by 2017 it will have invested a minimum of  $9,200,000,000.00 in the project. Currently it has invested $1,000,000,000.00 or less.

 

151.     Given that the Government’s legislation imposing a water management agreement on CFLCo, and thereby Hydro Quebec, is unconstitutional, the $9,200,000,000.00 investment becomes immediately at risk. Nalcor has stated in its pre-filed evidence to the PUB that Gull Island, which is expected to produce 2,300 MW of power at capacity, could only rely on average firm energy of 400 MW. That is a massive underutilization of capacity, sending the cost per kwh as high as 600%. Roughly the same translation can be done for Muskrat Falls. Without the water management agreement, to either share the water or take the recall or both, neither dam is economically viable. In fact, if Hydro-Quebec were to wait until the dam and transmission was complete, and then file court action once a water management agreement started to affect their rights as defined in the Power Contract, CFLCO would become bankrupt, as could Nalcor and the Government would be unable to financially intervene with its funds already expended.

 

152.     The Government’s own expert opinion from paragraph 61 herein stated: “ Also, even if 92A could be used to recall power, Newfoundland and Labrador could still be in breach of the power contract which is governed by the laws of Quebec. While the exact amount of compensation is unknown it can be reasonably expected to be in the billions of dollars.” Essentially, the Government’s water management agreement imposed on CFLCO/Hydro-Quebec operates in an even more questionable way than a 92A challenge, it’s just a much quicker route to get to the desired position. If it took Quebec 5-10 years to litigate the matter, and should they win, immediate damages at 6 cents per kwh for 2000 MW thus appropriated per year, would be approximately $1,500,000,000.00 to $3,000,000,000.00.

 

153.     If the cost of Muskrat Falls at $9,200,000,000.00 is added to the damages over 10 years of litigation, the cost would escalate to over $12,000,000,000.00 at least. In the final result, the operation of Muskrat Falls would then be uneconomical and CFLCO and possibly Nalcor would be bankrupt. In the case CFLCO should go bankrupt, the Power Contract 1969 grants Hydro-Quebec the right to run the Plant, and the Shareholder’s Agreement grants Hydro-Quebec the right of first refusal on purchasing any new or existing shares. Therefore, and on the balance of probabilities, the province would lose ownership of the Upper Churchill Falls Plant.

 

154.     In addition, the Federal Loan Guarantee provided by the federal government includes provisions for default on the Muskrat Falls financing that include loss of the Muskrat Falls Plant. Furthermore, should default occur on any other of the assets, except the Maritime Link, it would cause the default of all assets, including the Labrador Island Link. The loan guarantee covers a maximum of $5,000,000,000.00 of debt for the Muskrat Falls Plant and Labrador Island link combined, leaving at least $3,200,000,000.00 uncovered. The uncovered debt can only be registered against the assets behind those of the Federal Government, which may concern most lenders and could involve securing of additional assets, like equity positions in offshore developments, by those lenders as collateral. In the case of default those assets would also be lost.

 

155.     The skilled labour market in Newfoundland and Labrador is stretched thin and incapable of responding to any large mega project. Building the Muskrat Falls project will either lead to higher wage cost, and therefore project costs and inflation, or result in the importing of temporary workers which would result in money leaving the province and localized (Labrador) growth for five years or so. An example of the critical shortages of skilled labour was the loss of the Hebron Module to an out of province manufacturer, and the significant investment it would have brought the economy.

 

156.     If  Muskrat Falls proceeds, and if the water management agreement and the 2007 amendments to the Electrical Power Control Act are found to be constitutional, then Nalcor and the Government have an excellent opportunity to gain 2000 MW a year at the same price Hydro-Quebec would have paid for it, and stand to essentially have the same production a Gull Island would have produced, but without the expense. The debt added to the gross debt of the province would be approximately $9,200,000,000.00, not including interest, and the revenue would be approximately $2,000,000,000.00 per year. It would be a coup of creative regulation. However, if  the aforesaid legislation and order are found to be unconstitutional and the Muskrat Falls project is built before that is determined, the 5 year-range cost will range from $10,000,000,000.00 -$13,000,000,000.00 to the gross debt, of which the federal government will cover less than half of, a bankrupt utility, the loss of the Upper Churchill Plant and its annual production capacity of approximately 5800 MW.

 

157.     By contrast, if the 2007 amendments and the water control act are found to be unconstitutional now, then the cost will be the $1,000,000,000.00 reportedly already invested. $200,000,000.00 a year, which is already a part of Nalcor’s operational budget to run Holyrood and therefore not a new loss. There will be costs to individual contractors, but Nalcor has provided no evidence as terms for cancellations, etc. Nalcor may have to lay off some portion of its staff that is solely involved in the development of this project. There may be localized layoffs in Labrador that could easily be absorbed in an Island economy that has a high demand for skilled workers. Furthermore, it may cool the Labrador housing market and inflation making life more enjoyable for people who live there on a full-time basis.

 

158.     Even if the costs associated with the costs of contracts and demobilizing some contractors, combined with funds already invested was $2,000,000,000.00, it would be far better for the financial position of the Province than a loss to Hydro-Quebec and the resulting economic chaos.

 

159.     Additionally, and interestingly, Nalcor has failed to state that not building Muskrat Falls would cause a lack of power for the province. As a measure of the public good, and the balance of convenience, surely the evidence would be put forth that in fact the additional power is needed at all. Instead, Nalcor’s position seems to centre around inconvenience to contractors, loss of corporate face increasing business costs, and some speaking points. If the need for power was the reason for building Muskrat Falls, and for all the cost to the provincial treasury in any case, then surely the nature of any long term injunction would require the invoking “we need the power”?

 

160.     Cabana asserts that the balance of convenience is strictly on the side of granting the injunction. That without a reference or judgement in their favour, the Government and Nalcor are clearly putting the Province, and the people in it, in a grave financial position that is unnecessary. Cabana asserts, that strictly speaking for himself and family, that the financial implications of a default based on a decision against the Government and Nalcor once the Plant is built would be financially devastating. His property value would likely fall by half, situated as it is in rural Newfoundland, and his taxes and power rates would have to rise dramatically to service that kind of sudden massive debt. Cabana further submits such a financial result for the Province would have a super-chilling effect on the economy, and the cost of such an effect would be significant and long term.

 

 

RESPONSES TO AFFIDAVITS

 

 

NALCOR ENERGY:

 

161.)    Response to section 9 - The New Dawn Agreement may be a frame work agreement, but on March 29th, 1996 an agreement called the “Framework Agreement” was signed by the Government of Canada, the Government of Newfoundland and the Innu Nation. There is no clause in the New Dawn Agreement stating that it superceeds any previous “framework agreement” or any agreement. The “Framework Agreement” states in part:

 

                        “1.       The Purpose of the Framework Agreement

           

1.1       The purpose of this framework agreement is to enhance the effectiveness of the negotiation process.

 

                                    1.2       This agreement:

 

(a)        sets out an approach to and process for negotiations;

 

                                                (b)        identifies the scope of negotiations; and

 

c)        establishes an agenda and timetable for negotiations.

 

1.3       It is intended that the process set out herein will lead to an agreement-in-principle and a final agreement based on an agreement-in-principle.

 

2.)        Parties

 

2.1       The parties to the agreement-in-principle and the final agreement will be the Innu Nation, Canada and Newfoundland.”

 

Cabana therefore asserts the New Dawn Agreement  dated September 26, 2008, is in fact an agreement-in-principle as envisioned by the original “Framework Agreement”. Therefore, it cannot be a framework agreement.

 

162.     Response to Section 10 – Cabana asserts the same as paragraph 156 herein.

 

163.     Response to Section 11. – Cabana asserts that if the AIP and UCRA and IBA were voted on in the same question, and that question refered to The New Dawn agreement, then they would have been voted on as an agreement-in-principle as the original “framework agreement” envisioned the process. That it would have been ambigous to combine two binding agreements with one non-binding agreement in one vote. Particularily as a framework agreement already existed prior to the New Dawn Agreement, and no mention of it being renounced or incorperated by the New Dawn Agreement.

 

164.     Further to paragraph 158 herein, Framework agreement signed with the Innu Nation of Labrador, Press Release March 29, 1996, states in part:

 

“ Newfoundland and Labrador Pemier Brian Tobin, federal Minister of Indian Affairs and Northern Development Ronald A. Irwin, and Innu Nation President Peter Penashuue today signed a framework agreement, signalling an important step in the process towards reaching a treaty with the Innu in Labrador.

 

This framework agreement was initialled by negotiatots in October 1995 and the signing ceremony marks the formal ratification of the agreement.”

 

165.     The Framework Agreement 1996 contradicts the New Dawn Agreement 2008:

           

(a)        The Government of Canada is not a Party to the New Dawn Agreement;

 

(b)        Energy Corporation of Newfoundland and Labrador (Nalcor) is not a Party to the Framework Agreement 1996;

           

c)        Section 2.1 of the Framework Agreement states: “ The parties to the agreement-in-principle and the final agreement will be the Innu Nation, Canada, and Newfoundland;

 

(d)        Section 13.1 of the Framework Agreement states: “Other than the Innu government provisions negotiated between the parties, the final agreement shall be a land claims agreement within the meaning of section 35(3) of the Constitution Act, 1982; and

 

(e)        The Innu of Labrador state in their Affidavit evidence that: “The Province is not a Party to the IBA” , yet it initialed pages 4,5,6,7 and 8 of the IBA portion, New Dawn Agreement.

 

The New Dawn Agreement is not a “framework agreement”. It is an agrrement-in-principle, which has a federal document (Labrador Innu Land Claims Agreement-in-Principle) without the Government of Canada being a Party to the document/agreement. The Land Claim Agreement-in-Principle Section, page 1,2,3,and 4 of the New Dawn Agreement is initialled by a Nalcor representative while Nalcor is not a Party to the Land Claim agreement-in-principle.

 

166.     Further to paragraph 160 herein, the New Dawn Agreement states in part:

 

                                    “WHEREAS:

 

B.         The parties now wish to conclude these negotiations and provide a framework for the conclusion of definitive agreements.

           

NOW THEREFORE the parties agree as follows:

 

1.         Land Claim Agreement in Principle

 

The Energy Corporation of Newfoundland and Labrador (Nalcor) is not a Party to the Land Claims Agreement-in-Principle and therefore cannot agree to provide a frame work for definitive agreements on the Land Claims Agreement-in-Principle. The Government of Canada is not a Party to the New Dawn Agreement, yet must agree to a framework for conclusion of definitive agreements as a Party to the Land Claims Agreement-in-Principle, including the sections outlined in the New Dawn Agreement’s sections included under the heading Land Claim Agreement-in-Principle. For clarity, Nalcor has no authority to initial an agrrement to include a national park in the AIP, but the federal govvernment must. Yet, the reverse is in place in the New Dawn Agreement. Cabana asserts therefore that the New Dawn Agreement 2008 is simply a document designed to wrap three agreements in one for epediency rather than representing the honour of the Crown.

 

167.     Response to Section 12 – see paragraphs 156-161 herein.

 

168.     Response to Section 13 – Cabana asserts he does not have access to Chapter 6 of the IBA.

 

169.     Response to Section 14 – Cabana asserts he has been denied access to the ballot question by the Innu of Labrador.

 

170.     Response to Section 15 – see paragraphs 134-136 herein.

 

171.     Response to Section 16 – see paragraphs 156-161 herein.

 

172.     Response to Section 17 -  from the Guaranteed Winter Availability Contract:

                        THIS CONTRACT MADE AS OF THE 1st DAY OF NOVEMBER 1998

WHEREAS the Power Contract also provides that whenever additional capacity can, in the opinion of CF(L)CO, be made available from the Plant, such capacity shall be made available to HQ on request

AND WHEREAS CF(L)CO acknowledges that HQ’s capacity requirements for Additional Availability during the Key Period of each Availibility Period is expected to be 682 MW, without limiting the right of HQ otherwise to schedule for Additional Availability at any time during any Availibility Period (whether within or outside of the Key Period of Availibility Period) on the terms and conditions set forth herein

2.1       During the Contract Period, CF(L)CO agrees to guarantee to HQ the Additional Availability at the Delivery Point during each Availability Period and in consideration thereof HQ agrees to pay to CF(L)CO the monetary consideration provided for in Article 5.”      

173.     Response to Section 18 – The Special Veto in the Shareholder’s Agreement protects against CFLCo entering into agreements that would compromise the civil rights under the Power Contract.

174.     Response to Section 19 – The PUB issued an “Order”. From the Nalcor Appication to the PUB, page 5:

“18.      Nalcor Energy requests the Board make an order…such other alternate orders or directions which may upon the hearing of this Application appear just and reasonable in the circumstances.”

An “order” typically is issued to “enforce” something. The Nalcor application for a water management agreement, and the actual order drafted by an Agent of the Crown, were word-for-word identical.

175.     Response to Sections 20-27 – see paragraphs 94-113 herein.

176.     Response to Sections 28-31 – agreed.

177.     Response to Sections 32-49 – see paragraphs 138-155 herein.                        

 

 

GOVERNMENT OF NEWFOUNDLAND AND LABRADOR:

 

 

178.     Response to Sections 1-4 – agreed.

 

179.     Response to Section 5 – The New Dawn Agreement is not just an agreement between the First and Third Respondents, but also the Second Respondent. The Second Respondent is not a Party to the Lands Agreement-in-Principle.

 

180.     Response to Section 6-8 – see paragraph 164 herein.

 

181.     Response to Section 9 – from the Labrador Innu Land Claim Agreement-in-Principle:

4.4.4 Decisions of the Ratification Committee during the ratification period shall be made by consensus wherever possible. In the event consensus cannot be reached, which shall be determined by the chairperson, the decision shall be put to a majority vote of all seven (7) members of the Ratification Committee.

4.4.5 The Ratification Committee shall:

be responsible for all aspects of the conduct of the Innu ratification vote outlined in this Chapter, as well as other aspects as the Parties may agree

a.         establish the mechanism to conduct the Innu ratification vote, including the form and content of the ballot, advance polls, mail-in ballots, and voting venues;

b.         conduct the Innu ratification vote on a day or days determined by the Ratification Committee, and ensure the vote is held on the same date or dates in all of the polling stations;

Therefore, Cabana asserts that the Third Respondent did not determine on his own anything to do with the ratification process or the referendum.

182.     Response to Section 10 –  Innu say land claims, Upper Churchill compensation must come before deal, The Aurora, May 26, 2008 states in part:

 

“If the province can’t reach an agreement with the Innu of Labrador then the development of a hydroelectric project on the Lower Churchill will not go ahead Premier Danny Williams said last Tuesday.

 

But the Innu won’t sign on to the project unless the province signs a land-claims agreement with them and compensates their people for the Upper Churchill project first, replied an Innu leader later.

 

‘If we don’t reach a deal with the Innu…the Lower Churchill is not going to happen,’ Williams told reporters outside the House.

 

Peter Penashue, deputy grand chief of the Innu Nation, said the government shouldn’t be nervous about negotiating with the Innu and said it’s in the province’s best interest to address the long standing issues.”

 

Therefore, Caabana disagrees with the statements in Section 10.

 

183 .    Response to Sections 11-12- disagree.

 

184.     Response to Sections 13-14 – agreed.

 

185.     Response to Section 15 – disagree.

 

186.     Response to Sections  16 19 – see paragraphs 133-137 herein.           

 

187.     Response to Section 20 – see paragraph 177 herein.

 

188.     Response to Section 21 – disagree.

 

189.     Response to Sections 22-23 – agreed.

 

 

THE INNU OF LABRADOR:

 

190.     Response to Sections 1-12 – agreed.

 

191.     Response to Sections 13-14 – Cabana has no knowledge if this is true or not.

 

192.      Response to Section 15 – agreed.

 

193.     Response to Section 16 – Cabana has not seen the IBA or UCRA in complete form.

 

194.     Response to Sections 17 – 20 – agreed.

 

195.     Response to Section 21,22 – Cabana has not viewed the final IBA.

 

196.     Response to Section 23 – disagree.

 

197.     Response to Section 24 – Cabana has not viewed the final IBA.

 

198.     Response to Section 25 – Cabana is unable to agree or disagree.

 

199.     Response to Section 26 – If that were true it would violate the Indian Act.

 

200.     Response to Sections 27-28 – Cabana is unable to agree or disagree.

           

 

 

ADDITIONAL RESPONSES TO AFFIDVAITS (GENERAL):

 

 

201.     Despite the assertion of all respondents, a ratification vote is conducted by means of a referendum in accordance with the Indian Referendum Regualtions, which is the only legal avenue for a “band” under the Indian Act to conduct a vote on a surrender.

 

202.     In Affidavit evidence, dated January 9, 2013, the Third Respondent states “ The ratification vote was conducted entirely by Innu Nation, not by the Province or Nalcor.” The Third Respondent’s Statement of Defence states:

 

“a)       18.       Innu Nation determined all aspects of the process of the Ratification Vote.

 b)        19.       Neither the Province nor Nalcor played any part and had no role in the Ratification Vote.”

 

203.     Further to paragraph 137 herein, the Second Respondent, stated in its Affavit evidence:

 

“14.     …The requirement for the ratification vote was negotiated by Nalcor and Innu Nation in order to confirm community support for the two definitive and binding agreements.”

 

Clearly, the Respondents answers in Paragraphs 137, and 138 herein do not agree with eachother.

 

and in his Statement of Defence:

 

            “ 27. iii) states the ratification did not arise as a result of government action, alternatively, if it did, which is denied, no benefit was conferred by the Province.”

 

However, the Second Respondent is an Agent of the Crown, and has admitted taking action that facscilitated the referendum, and thereby the Crown did have a role to play in the facsilitating of the referendum.

 

 

            204.     The Indian Act states in part:

 

 

*                               39. (1) An absolute surrender or a designation is void unless

(a) it is made to Her Majesty;

§         (b) it is assented to by a majority of the electors of the band

(i) at a general meeting of the band called by the council of the band,

(ii) at a special meeting of the band called by the Minister for the purpose of considering a proposed absolute surrender or designation, or

§         (iii) by a referendum as provided in the regulations

Assent of band
(3) Where a meeting is called pursuant to subsection (2) and the proposed absolute surrender or designation is assented to at the meeting or referendum by a majority of the electors voting, the surrender or designation shall be deemed, for the purposes of this
section, to have been assented to by a majority of the electors of the band.

*                                                                                           Marginal note:Secret ballot

(4) The Minister may, at the request of the council of the band or whenever he considers it advisable, order that a vote at any meeting under this section shall be by secret ballot.”

 

The Respondents all state the Ratification Vote is not a referendum, however, the Indian Act requires it to be so for a surrender to be valid.

           

205.     The Labrador Innu Land Claims Agreement-in-Principle states:

                        Part 31. 2 General

31.2.1 Once the Agreement-in-Principle has been initialed by the negotiators of the Innu Nation, Canada and the Province it shall be submitted to the Parties and the Parties shall consider it for approval.

31.2.2 The Agreement-in-Principle shall be signed by the Parties when they have approved it in accordance with this Chapter.

31.2.3 The Parties acknowledge that:

a.         the Upper Churchill Redress Agreement among the Province, Nalcor Energy, Innu Nation, Mushuau Innu First Nation and Sheshatshiu Innu First Nation;

b.         the Lower Churchill Innu Impacts and Benefits Agreement; and

c.         this Agreement-in-Principle are being voted on by the members of the Innu Nation in the same vote. If the three agreements referred to in a) to c) are not approved by the members of the Innu Nation in this vote, none of these agreements shall have been approved by the members of the Innu Nation.

SUMMARY:

206.          Cabana contends the Public Utilities Board did not have the legislative right to consider “establishing”, or better put “imposing” a Water Management Agreement on CF(L)CO, and by design on Hydro Quebec. Furthermore, that the Electrical Power Control Act, 1994, and specifically the 2007 amendments thereof, did not over ride the pre-existing exemption granted in 1961 by the Lease Act. In addition, previous Court rulings have found the Government of Newfoundland and Labrador cannot infringe on a contract that has its civil rights routed in a separate province.

207.     Cabana asserts that Hydro-Quebec has the right to operationally manage the Upper Churchill Plant in accordance with the Power Contract 1969. That it has the first right to any access power generated by the Upper Churchill Plant, that is above and beyond its minimum right and the right of CF(L)Co to 300 MW of Recapture and 225 MW commited to TwinCo, in accordance with the Power Contract 1969, and the Guaranteed Winter Availabilty Contract 1998. For clarity, Cabana asserts Hydro-Quebec has the sole right to schedule the production at the Upper Churchill Plant in accordance with the Power Contract of 1969. That it’s right not to be deprived thereof is also enshrined in the Shareholder’s Agreement of 1998. Hydro-Quebec is also protected from Government interfernce in its conduct at the Upper Churchill Plant by the Lease Act 1961. CF(L)Co is bound to respect these rights, and has done so in the past.

208.     Cabana asserts that the amendments to the Electrical Power and Control Act 1994, and the water management agreement do interfere and derogate the rights of Hydro-Quebec under the Power Contract 1969 and the Guaranteed Winter Availability Contract 1998, and therefore do violate the extra-provincial civil rights of Hydro-Quebec.

209.     Cabana asserts that the 2007 ammendments to the Electrical Power Control Act 1994 and the water management agreement, by their nature alone, were aimed solely to violate the extra-provincial civil rights of Hydro-Quebec for the financial purposes of the Government of Newfoundland and Labrador, and are therefore colourable and thereby unconstitutional in pith and substance.

210.     Cabana asserts that the Government of Newfoundland and Labrador is wrongly ignoring its duty to accomdate, and meaningfully consult, the Nunatukavut. The Nunatukavut have stated publicly this will result in further litigation. Given that the Nunatukavut claim overlaps with that of the Innu of Labrador at the Muskrat Falls site, and that their other claims for transmission lines are far most extensive than those of the Innu of Labrador, and given that they must be dealt with under the Indian Act in accordance with the decision by the Federal Court, Cabana concludes costs associated with such an accomodation will be atleast similar to the financial accomodation given the Innu of Labrador, thereby significantly raising costs associated with the proposed Lower Churchill development. Furthermore, IBAs now required by mining developments in the area claimed by the Nunatukavut could render these developments unprofitable, and thereby reduce potential electric power needs in Labrador.

211.     Cabana asserts that the Nunatsiavut has not been meaningfully consulted and has not been accommodated whatsoever over the downstream impacts on their community that are scientifically certain to occur if the Lower Churchill project proceeds. There is scientific evidence that proves existing mercury poisoning downstream from the Upper Churchill Plant. The Nunasiavut people rely on fish, and animals that eat fish, such as seal, for a majority of their diet. This has been a practise of theirs for all time. The fact the Government of Newfoundland and Labrador has refused to provide them with funding to assist in the new, and ongoing study of Lake Melville, speaks to a certain arrogance that is meant to have been laid to rest decades ago, as it pertains at the least to Aboriginal peoples.

212.     Cabana asserts that the relationship between the Crown, as represented by the Government of Newfoundland and Labrador, and the Innu of Quebec has been anything, but respectful and conciliatory in nature. The Crown has not led by example. The Crown has not been honourable in its approach. In fact, the Crown has been territorial, narrow minded, confrontational, dismissive, and quasi-nationalistic toward the Innu of Quebec and their claims toward Labrador. This is counter to every Supreme Court reference that contemplates the rights of aboriginal peoples in recent time. There has been very little, if any meaningful consultation, and certainly no accommodation, up to and including evicting aboriginals from Cabins as “squatters”. There is no recognition whatsoever that the Innu of Quebec travelled, hunted, and gathered in the territory now known as Labrador since population in the territory began. There is no recognition that the border was an artificial line imposed by provincial and federal governments that did not exist a few hundred years earlier. There is only an approach by the Crown of apparent territorial self-interest, which breaches the fiduciary nature of the relationship based on the honour of the Crown.

213.     Cabana therefore asserts that the First Respondent did by action, and word, endorse the New Dawn Agreement as a de facto referendum on the Lower Churchill Project. That the question put to the Innu of Labrador has not been made availble by the Third Respondent, and that such a disclosure may have negated the need to be a Party to this action. That the First Respondent assisted in funding and organizing of the referendum, and the Second Respondent, at a minimum, assisted in organizing the referendum. That all the Respondents were responsible for crafting the ballot question. That there is a serious question costitutional law in regard to the capacity to comprehend such a detailed agreement, let alone three, by a population plagued with scant educational experience.That such a condition seriously questions how the referendum question could possibly be unambiguous, and thereby the result as well. Furthermore, the “ratification vote” is in fact, and law, a referendum, and can be nothing else, and that all Respondents did endorse such a referendum.

 

214.     Cabana asserts that the balance of convenience is strictly on the side of granting the injunction. That without a reference or judgement in their favour, the Government and Nalcor are clearly putting the Province, and the people in it, in a grave financial position that is unnecessary and unlawful. Cabana asserts, that strictly speaking for himself and family, the financial implications of a default based on a decision against the Government and Nalcor once the Plant is built would be financially devastating. His property value would likely fall by half, situated as it is in rural Newfoundland, and his taxes and power rates would have to rise dramatically to service that kind of sudden massive debt. Cabana further submits such a financial result for the Province would have a super-chilling effect on the economy, and the cost of such an effect would be significant and long term.

215.     Cabana asserts that the legal uncertanties surrounding the delopment of Muskrat Falls, and the Lower Churchill development in general, are many and serious. Cabana considers the Government of Newfoundland and Labrador and Nalcor Energy’s actions arbitrary, and in the case of the Government unlawful. The Constitution being the highest law in the Land, such an arbitrary, covert action by the Government in a deliberate and methodical way is an afront to democracy in our Country and dangerously perilous for those of us on low to medium incomes in particular. Cabana asserts that as a person that falls within the low to medium income bracket, that he will suffer irreparable harm to the secuirty of his person by the unconstitutional actions taken by his Government.

STANDING:

216.     Cabana requests to be granted Section 52(1) standing during the injunction application as the 2007 ammendments to the Electrical Power Control Act 1994, and the water management agreement imposed by Order NO. P.U. 8(2010), the Public Utilities Board, are coloured in pith and substance and therefore unconstitutional. For clarity, the aforesaid ammendments and order derogate the extra-provincial civil rights of Hydro-Quebec as registered in the Province of Quebec, and thereby place himself, and all other residents of Newfoundland and Labrador in financial peril to such an extent that their security of the person will be violated, not in accordance with the principles of fundamental justice, contrary to Section 7 of the Canadian Charter of Rights and Freedoms.

217.     In the alternative, Cabana seeks standing under Section 24(1) of the Canadian Charter of Rights and Freedoms.