2012 O1G 5862
IN THE SUPREME COURT
OF NEWFOUNDLAND AND LABRADOR
TRIAL
DIVISION (GENERAL)
BETWEEN:
Brad
Cabana
APPLICANT
Her Majesty The Queen in Right of
The Government of Newfoundland
FIRST RESPONDENT
Nalcor Energy
SECOND RESPONDENT
Innu
Nation of Labrador
THIRD RESPONDENT
MEMORANDUM
OF FACT AND LAW
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SUMMARY OF
CURRENT DOCUMENT
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Court
File Number(s):
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2012 01G 5862
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Date
of Filing of Document:
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Name
of Filing Party or Person:
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Brad Cabana
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Application
to which Document
being filed relates: |
Interlocutory
hearing seeking interim relief, dated
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Statement
of purpose in filing:
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Applicant’s
Memorandum of Fact and Law
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Court
Sub-File Number, if any:
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n/a
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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
“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 Newfoundland 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
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 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
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
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 Newfoundland 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 Newfoundland Newfoundland Newfoundland
In
September 1976, the Government of Newfoundland Newfoundland Newfoundland Quebec December
17, 1980 the Reversion
Act received Royal Assent after passage in the Legislature of Newfoundland February 10, 1981 the present Reference was presented to the Newfoundland
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 Labrador announces call for Expressions of Interest
in developing the Lower Churchill project;
(f) 2005 – Government of Newfoundland Labrador announces results of Expressions of
Interest in development of the Lower Churchill project;
(g) 2007 – Newfoundland 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 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 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 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 Newfoundland 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
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
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
“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 Muskrat Falls
57. The
Preliminary Transmission System Analysis – Muskrat Falls Newfoundland
“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
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
“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
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 Labrador , November, 2010 is a publication of the Newfoundland 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 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
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 Quebec Quebec
If a court followed this reasoning, CFLCo
would be in breach of the Power Contract once it started diverting power to Newfoundland 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
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 Labrador
could still be in breach of the power contract which is governed by the laws of
Quebec
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
Summary
The Quebec Muskrat
Falls Muskrat
Falls
Conclusion
The province
of Newfoundland 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 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
It is clear that there has been no
political will in Quebec Newfoundland Labrador
and allow the province to break the geographic stranglehold that Quebec
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
(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 Labrador ’s
great hydro resources at Muskrat
Falls Gull
Island
Thus
Brinco’s shares were captured by the Government of Quebec
In 1972 a new Newfoundland 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 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 Newfoundland 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 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 Labrador .
However, Upper Churchill power is not
exclusively owned by the province and Newfoundland 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
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 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 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 Newfoundland 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
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
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 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 Labrador
Premier Danny Williams is accusing Hydro Quebec
In a speech Wednesday to energy
executives in St. John’s Quebec
‘It is a vision about nation-building and
not territorial and economic protectionism by some provinces such as our
neighbour Quebec
Williams believes Quebec
‘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 June
9, 2010 ,
reported in part:
“Newfoundland Labrador
Premier Danny Williams launched a blistering attack on Quebec
The cause of the Newfoundland Quebec
‘The shock to me, as a provincial leader,
is the sense of greed and arrogance and entitlement displayed by Quebec Ottawa
Now Williams says Quebec
Williams did not restrict his criticism
of Quebec
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 Quebec
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 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 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 Muskrat Falls CBC , October 3, 2012 , states in part:
“ ‘This is a chance of a generation for Newfoundland 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 Quebec Newfoundland 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 Churchill
Falls is
essential for the effective management
by Newfoundland
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
“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
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
“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 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 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 Province of Newfoundland 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 Labrador .
94. The
water flowing from the Churchill
River ,
including through the proposed Muskrat Falls Lake Melville
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 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 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
‘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 Newfoundland Labrador
is not prepared to honour the spirit of that Constitutionally protected
document.’”
97. Press
Release, Concerns must be addressed if Muskrat Falls 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
‘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 Labrador
Inuit.’”
98. Press Release, Muskrat Falls
“ 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 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
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 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 Goose
Bay 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 CBC News, January 17, 2013 states in part:
“Nalcor
estimates that mercury levels will keep rising in fish around Muskrat Falls
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
‘The
biggest difference is [that] there’s going to be flooding, so a lot of the
areas in the Muskrat Falls
‘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
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
The exclusion of the area below Muskrat
Falls Lake
Melville Churchill River
at Gull
Island Muskrat
Falls Lake
Melville 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
study
of impacts to Lake Meville
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 Lake
Melville Lake
Melville Lake
Melville
This
scientist from Harvard University
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
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 Quebec Laval
University , Quebec Quebec Laval University , Quebec
“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 Ontario
“ 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
“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 Taku
River Canada
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
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 Labrador
Inuit Settlement Area. This provides even more information that strongly
supports the weight of evidence that effects of the proposed Muskrat
Falls 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 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
“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
119. The
Innu communities of Quebec 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 CBC news, June 5, 2008 , states in part:
“Newfoundland Labrador
Premier Danny Williams on Thursday defended a decision to send eviction notices
to Quebec 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 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 CBC news, June 10, 2008 , states in part:
“ A Federal Court judge in Montreal Newfoundland Labrador ’s
Supreme Court.
‘This is a direct challenge by Newfoundland
‘Newfoundland Newfoundland Labrador ,
which I find very hard to digest, and I think it’s an international outrage.’”
123. Quebec 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 Labrador ,’
said Armand MacKenzie, an advisor with the La Romaine Innu on Quebec Lower
North
Shore Labrador
will always be considered first in Labrador ,
leaving the Quebec
‘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 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 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 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 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 Muskrat Falls
129. In
DELGAMUUKW v. BRITISH COLUMBIA
“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 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
153. If the cost of Muskrat
Falls Muskrat
Falls
154. In addition, the Federal Loan Guarantee
provided by the federal government includes provisions for default on the Muskrat
Falls Labrador
Island
155. The skilled labour market in Newfoundland Labrador is stretched thin and incapable of
responding to any large mega project. Building the Muskrat
Falls 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 Muskrat
Falls
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.
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
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:
(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.
(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 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
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.
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