07 October 2020

Innu Nation suing provincial government not HQ over Churchill Falls #nlpoli


Laws suits get filed in court.

Political claims for cash launch with a news conference, a website, and a deceptive news release that misidentifies the target of the action.

The Innu Nation statement of claim  filed in Newfoundland and Labrador  Tuesday is against the Churchill Falls (Labrador) Corporation as the first defendant in its claim for $4 billion in damages.  The provincial government owns 65% of CF(L)Co and Hydro-Quebec owns a minority interest (35%).

There’s no reason to sue HQ since it is a minor partner in the company that runs Churchill Falls and manages the reservoir built in the 1960s on land claim by Innu in Quebec and Labrador.  Whatever liability HQ might have would be through CF(L)Co.

Otherwise, Hydro-Quebec is just a customer for the power.  And if Innu Nation wanted to include the customers of the power, then it would have sued every single customer of CF(L)Co since 1971, which would include companies and towns in Labrador, Ontario, and the United States. 

There are lots of little clues in the claim that this is a political move, not a legal one.

That lie-by-omission at the start is a ploy to get local public opinion on side by exploiting historic animosity against HQ.  Innu Nation got lots of easy coverage from their newser since no one read the statement of claim before they filed the story.  But Innu Nation wouldn’t have had such luck of they had started out by saying they were coming for the locals, which is really what this is all about.

The amount of damages – roughly $4 billion – is about CF(L)Co’s gross revenue if you judge the project as being 50 years old.  It’s a lot less than HQ reportedly made off the power purchase agreement.  If they were hunting HQ, the Innu wouldn’t be low-balling the cash award.  And they might be launching this in concert with the Quebec Innu who also have a claim.

The claim runs in part on the assertion that CF(L)Co and HQ were involved in a common enterprise at Churchill Falls.  The Supreme Court of Canada settled that last year in the fairness lawsuit when it determined that – contrary to the Newfoundland and Labrador claim in the lawsuit - HQ was a customer not a co-venturer.

The clue to what this is really all about starts with the New Dawn Agreement for the development of Muskrat Falls.  It included a financial settlement that was supposed to settle claims about Churchill Falls. Part of the financial settlement in New Dawn is a piece of Churchill Falls profits after 2041.

But since The Geniuses behind Muskrat Falls indemnified Nalcor but not CF(L)Co, they left the door open for this suit.  Muskrat Falls just got a lot more expensive and we have uncovered the real objective of the Innu action.

Expect HQ to want out of the suit for some pretty simple and obvious reasons.  They’ll get their wish if not on Duckworth Street then in Ottawa.  Malcolm Rowe will file a political – not a legal – dissent from the majority.

That will leave local taxpayers facing the lawsuit alone.

Well, sort of alone.

This is a pretty savvy play by Innu Nation.

It isn't about Churchill Falls.  It is about Muskrat Falls and Gull Island and the talks about some sort of bailout for Muskrat Falls that also involves - in some versions - using cash from Churchill Falls after-2041 to cover off Muskrat Falls today.  That's the only way Churchill Falls might come into things. 

The more important issue is the security of cash payments under the New Dawn agreement from the Lower Churchill and potential development of Gull Island, which, so far, hasn't involved the Innu Nation. While the lawsuit goes at things in a seemingly roundabout way, the lawsuit will cost the province dearly if they don't settle.  Expect the final resolution - out of court - to be a revised agreement to develop the Lower Churchill,  and protect the Innu Nation's financial interests, and deliver them more cash. With Ottawa involved, the settlement will be more lucrative than the New Dawn.