The News (New Glasgow)

Can N.S. bail on Northern Pulp?

Deals, deal-breaking and who owes what to whom

- BY AARON BESWICK

The only thing more confusing than the possibilit­y the taxpayer will have handed over 475,000 acres of woodlands to a subsidiary of an Indonesian paper conglomera­te, is the contractua­l obligation­s by which it happened.

Three documents — an indemnity agreement, a lease for Boat Harbour and a memorandum of understand­ing — signed by provincial government­s going back to 1995 guaranteed that Nova Scotians would provide an effluent treatment facility to the company until 2030 and potentiall­y cover its lost profits if we don’t.

In 2002, John Hamm’s Progressiv­e Conservati­ve government renewed a lease for Boat Harbour that runs until 2030. Hamm is now chair of Northern Resources Nova Scotia Corporatio­n and a director of Northern Pulp Nova Scotia Corporatio­n.

And then there’s the Memorandum of Understand­ing also signed by Liberals in 1995 that states among other things: “Nova Scotia agrees to use its best efforts to (help) ... obtain all necessary permits, consents and approvals to permit the constructi­on and operation of a replacemen­t effluent treatment facility to replace the Facility at the expiration of the term of the Lease.”

Nova Scotia, as defined in the Memorandum of Understand­ing, includes the province’s Department of Environmen­t that will be conducting the environmen­tal assessment whenever one is filed by the mill.

But unlike you or I, provinces have a “get out of jail free” card for the contracts that they sign. It’s called legislatio­n.

“The Legislatur­e within its jurisdicti­on can do everything that is not naturally impossible, and is restrained by no rule human or divine,” ruled Justice William Riddell of the Ontario High Court in the precedent setting 1909 case Florence Mining Co. v. Cobalt Lake Mining Co. “The prohibitio­n, ‘Thou shalt not steal,’ has no legal force upon the sovereign body.”

Though over a century old, the precedent stands that provincial and federal government­s can legislate their way out of contracts. While American citizens and private companies are at least granted a constituti­onal right to compensati­on, no such thing exists in Canada in the face of legislativ­e authority.

“The Federal Parliament and Provincial Legislatur­es may pass laws of any kind, including laws that change or cancel legally binding agreements,” recently wrote Queens University law professor Bruce Pardy in a legal brief for the Fraser Institute. “This power exists even if the enactment has the effect of expropriat­ing property or causing hardship to innocent parties who negotiated with government in good faith in entering into the contract in the first place.”

The Boat Harbour Act, passed by McNeil’s government in 2015, wiped the slate of the province’s contractua­l liability to Northern Pulp partially clean by stating: “No action lies against Her Majesty in right of the Province or a member of the Executive Council in respect of the cessation of the use of the Facility for the reception and treatment of effluent from the Mill as a result of this Act.”

However, a final clause in the legislatio­n leaves us on the hook for cancelling the lease early.

“The enactment of this Act is deemed not to be a repudiatio­n or anticipato­ry repudiatio­n by Her Majesty in right of the Province of the lease agreement dated December 31, 1995 ...” reads the clause.

According to the premier our liability is for ending the lease early.

“There is a belief we are negotiatin­g to build the effluent treatment facility but that is not what we’re doing,” said McNeil. “We’re looking at what compensati­on do we have for closing Boat Harbor nine years earlier.”

However, according to documents obtained by The Chronicle Herald through a Freedom of Informatio­n request, the amount of compensati­on to be paid by the province for ending the lease early is being negotiated based on the cost of building the proposed new activated sludge effluent treatment facility.

Though the province has a cost estimate for the new facility, it won’t say what it is or what portion we are likely on the hook to pay. A 2015 letter by Northern Pulp technical manager Terri Fraser to then environmen­t minister Randy Delorey estimated the cost of such a facility to be “in excess of $100 million.”

McNeil said a number won’t be released until negotiatio­ns conclude.

But if Northern Pulp doesn’t get to build that new effluent treatment plant because it is blocked through civil disobedien­ce, that raises other questions.

“I know the tensions are high and this is a very divisive issue in the community but my hope is that they will allow the process to happen while respecting each other’s position,” said McNeil. “The rule of law will apply and we will let a decision be made based on science. That’s what my hope is.”

Fishermen haven’t appeared to be overly concerned with the premier’s hopes.

“We are great hunters in Pictou Harbour,” reads a quote attributed to Edwin Donald Shaw in a court affidavit filed by members of a survey boat contracted by Northern Pulp who claim to have been threatened and intimidate­d by local fishermen. “If you come back to Pictou Harbour you are going to be gone. We are real good shots.”

Northern Pulp sought and received a court injunction against seven community members from further hampering its survey work.

Mill spokeswoma­n Kathy Cloutier said in December that the mill is working on the logistics of completing its survey work.

Fishermen have told The Chronicle Herald they also don’t plan to back down.

For his part, McNeil’s government is also planning for the possibilit­y of a future without Northern Pulp.

“How do we protect jobs?” said McNeil. “The impact of this mill will be felt far beyond Pictou County to every mill in the province.”

The other question — what we owe Paper Excellence — could end up in court.

In the meantime, faced with a convoluted and uncertain mess of liability and contracts to Northern Pulp, McNeil is standing by his deal with the Pictou Landing First Nation.

“It might have been seen as OK in the 60s to put (the effluent treatment plant) next to an aboriginal community, but it’s not in 2020,” said McNeil.

As for what happens next, whether for Northern Pulp, the economy, the environmen­t or the taxpayer, no path appears certain.

 ?? FILE PHOTO ?? The Abercrombi­e Point Mill began making northern bleached softwood kraft pulp in 1967.
FILE PHOTO The Abercrombi­e Point Mill began making northern bleached softwood kraft pulp in 1967.

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