The Protocols of the Elders of Laurentia

In Hisself’s own words, in the House of Assembly, dutifully and accurately recorded by Hansard, the Old Man describes the nefarious forces that circle around him.

In response to this question about the Abitibi expropriation  - “Are you planning to seek leave to appeal this court loss to the Supreme Court of Canada at this time?” – he begins:

Mr. Speaker, let’s do a little history lesson first of all, and what this is all about. This goes back to the late 1960s when we had the best project in the world that we wanted to develop but we could not do it on our own because we were a poor Province - because of what happened as a result of Confederation and everything else. We were the poor and the weak sisters of Canada. So, we basically entered into a partnership with Quebec in order to develop that particular project. For that, they acquired at least one-third of the company which developed that particular project.

Then, when it got down to the short strokes and we were months away from concluding it and we were out of money, the company was basically out of money, they squeezed us. That is when they squeezed us for another twenty-five years on a contract that already was a complete giveaway of a very valuable hydro resource. They squeezed us for another twenty-five years at a lower price -

So based on that history, Newfoundlanders and Labradorians, particularly this Newfoundlander and Labradorian, and all these Newfoundlanders and Labradorians here and all the people in this Province, feel very, very strongly about the way Quebec has treated us. So if we have to fight them in the courts or fight them at the Régie, or if I personally got to get down and go toe to toe or roll around on the ground with them to fight them, we will do it.

…

And then after discussing Churchill Falls for all that time he answered the Abitibi question:

…we are now reviewing it.

But he couldn’t just state that simple answer to a simple question without further embellishment:

We are looking at asking for leave to appeal to the Supreme Court of Canada. I think that, as a Province, we have to keep fighting Quebec because if we don’t they will take away everything we have.

In response to the second, simple question - What is the recourse for the Province to now be added to the list of unsecured creditors? – came a further rant:

Of course, what we are dealing with is obviously a very biased court.

When you look at the Quebec courts, you look at the decision that was given here. The opinion, of course, that we have from our solicitors on this is that the court dodged a central legal and policy issue. So we had constitutional and factual arguments and the Court of Appeal completely and totally avoided that. In addition, they completely ignored the same rationale which has been used by the Ontario Court of Appeal, B.C. Court of Appeal, the Alberta Court of Appeal, and the Supreme Court of Canada. So, basically, these courts are doing whatever they can to try and stop us.

The same thing with Judge Gascon, we just saw the Régie ruling which came out of Quebec, which is one of the most horrendous, absurd rulings that I have ever seen. They ignored facts. They said that what Hydro-Quebec was doing was discretionary. They ignored the evidence - a complete abuse of process. So, throughout this process we will just keep hammering away.

Yes, folks, there was a duplicate key to the wardroom icebox where they kept the  strawberry ice cream.  The only thing missing was the ball bearings in his hand.

At that point, opposition leader Yvonne Jones asked exactly the same question over again (The Old Man didn’t come close to answering it the first time, after all).  There followed another diatribe in which the Premier noted the holding company set up to deal with the two properties the provincial government didn’t expropriate:

Instead, Mr. Speaker - if I may have a moment -of what they have done in Botwood and Stephenville, put those assets in a shell company so that they could go bankrupt so that we get nothing.

Not exactly what happened, nor does the Premier explain why his lawyers consented to the arrangement, but that’s another issue.

At that point, the question of costs deflected off to justice minister Felix Collins.

A question about an English translation of the decision by the Quebec energy regulator brought Hisself to his feet once more to fulminate about Quebec:

Mr. Speaker, I said it last week, and I can say it again in all honesty today, I have not seen an English copy of the Régie decision. We are waiting on the Régie to provide us with an English copy.

It is really interesting, too, when you go on their Web site, pretty well everything that they have is always in English and French, but on this particular one we have not been provided an English copy. That tells me a lot about the Régie, the attitude of Quebec against Newfoundland and Labrador.

Basically, while the Premier’s parliamentary assistant is on a hunt for Commies, the Premier himself is fighting against the evil machinations of the seething nest of anti-Newfoundland conspiracy that is Quebec.

To conclude, some simple observations:

• The chart was not an exaggeration, as anyone can plainly see. The World the Old Man Lives In is populated by enemies everywhere, linked together by secret ties.
• This is not the way Danny Williams felt for the five years he tried  - entirely out of the public eye, one might add - to interest Hydro Quebec in taking an ownership stake in the Lower Churchill, without any redress for the 1969 contract.

You could not make this stuff up if you tried.

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Williams admits taxpayers stuck with bill for his expropriation mess

While his embattled environment minister blustered and stuck to the old line during Question Period, outside the legislature Premier Danny Williams admitted to reporters today that the taxpayers of the province will be stuck paying for the environmental cleanup from his expropriation mess.

CBC.ca/nl has a version of the story that’s worth checking out.

The cost of the clean-up, legal fees, any NAFTA penalties for the expropriation and the cost of compensation for seized assets belonging to three companies could reach $500 million or more based on the provincial government’s own estimates.

More to follow.

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Buchans saga deepens: Johnson claims credit for Abitibi work

CBC may have retracted its story about the provincial government and possible lead pollution at a former mine in Buchans but that isn’t the end of the Buchans saga.

As CBC quoted it:

"We held a town meeting. The public meeting was in fact reported on. That site was, in fact, remediated that very summer," Environment Minister Charlene Johnson told the legislature on Monday.

Johnson told the legislature that:

Mr. Speaker, quickly we hired a consultant to go out and do a Human Health Risk Assessment. That piece of work was done in literally less than months. The report came to our office in December 2007, at which time my officials went out to the Town of Buchans, gave the report to the Town of Buchans in less than days. The Town of Buchans at that time, Mr. Speaker, asked to have a public meeting. That public meeting was held and my officials were there. In fact, Mr. Speaker, CBC carried the reports of that within days after the public meeting.

But the full story is very different.

According to the Grand Falls-Windsor Advertiser, the environmental review was done by AMEC, a consultant retained by Abitibi. And the timeline for when the town council first learned of the problem was the spring of 2007, not late 2007 or early 2008 as Johnson suggested in the House of Assembly:

With ASARCO declaring bankruptcy a number of years ago, AbitibiBowater is left bearing the brunt of the responsibility for the site.

It wasn't until a representative with AMEC, a consultant for AbitibiBowater, met with the Buchans council last spring to update its members on environmental improvements that the town's municipal leaders became aware of the situation.

It wasn’t until six months later, in the fall of 2007 – when current MHA Susan Sullivan was fighting for her seat in a by-election - that the provincial government got involved as Johnson described.  According to the Advertiser:

The council contacted Susan Sullivan in November, who was campaigning for her seat as MHA for Grand Falls-Windsor-Buchans at the time, for an immediate meeting.

She visited the town to hear their concerns and brought the council's demand for a complete human health risk study to the minister of environment.

The Buchans story demolishes the provincial government’s efforts to portray Abitibi as abandoning its responsibilities in the province.

Again, as the Advertiser reported well before the botched expropriation:

Remedial action and/or additional studies in the area were recommended.

And that is exactly what AbibitiBowater and AMEC intend to do, although it will be a costly venture. Already the paper company has anywhere from $1.6-2.5 million budgeted for the clean-up.

If that's not enough, they are prepared to spend more to ensure the job is finished.

"The day we ask for a certificate of approval from the government to carry out the work, we have to carry it out to the end and if it costs more, we're stuck with it; we have to do it," said Nicole Lee, environment manager with AbitibiBowater.

The Advertiser reported that the best containment option at that point seemed to be collecting the contaminated materials and burying them in a glory hole or in an abandoned mine.  The Advertiser also reported in March 2008 that both a mining company and the provincial natural resources department opposed this option.

Interestingly enough, when the provincial government finally announced the clean-up option for the land it expropriated, a new remediation proposal cropped up:  cover it over.  Again as the Advertiser reported in late 2009:

He said that of all the option open to his department the "cap in place" option was the best because it would among other things minimize the amount of dust created during construction and wouldn't affect future mining operations. SNC Lavalin has been contracted for $114,000 to prepare and tended documents that are hoped to be ready by late spring with construction to be carried out from June to September. As well as the tailings spill area, the identified arsenic problem by the old ore shed will be taken care of with a layer of berm. [Emphasis added]

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Polluter pay?

At the Telegram, James McLeod hits on a huge problem with the provincial government’s efforts to foist enviro liabilities on Abitibi:  who owns the facilities and related to that who actually caused the pollution?

The provincial government has already coloured its own actions so badly they’d probably have trouble getting a court order in this province to enforce the politically motivated clean-up orders Charlene signed last fall.

When they try to stick Abitibi with liabilities on the land the provincial government owned before Abitibi? 

Hey, that just screams “moron” to a judge no matter what province he or she lives in.

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Libs accuse Tory minister of keeping enviro risks under wraps

In a news release issued Thursday, Opposition leader Yvonne Jones accused the provincial government, including environmentalist minister Charlene Johnson of being “negligent in not revealing they had reports which exposed the full extent of pollution on former Abitibi properties, particularly the scope of contamination at the mill site in Grand Falls-Windsor.”

Jones said evaluation by the government’s enviro consultant – Conestoga-Rovers Associates  - revealed that reports on Grand Falls “identify heavy metals and other toxins polluting 16 areas exceeding human safety guidelines.”

In the House of Assembly, Johnson said that:

Mr. Speaker, this information is public. I have offered it to the member, to come over to my office, and she has sent her staff over. I have offered it to the mayor of Grand Falls –

Of course, the information wasn’t public until Johnson let the opposition take a peek.  And the documents aren’t publicly available if the public has to troop into Charlene’s office, find the papers among the mound of major issues that have been stacked up unattended on her desk for years and then only take notes on them.
Johnson also was doing a bit of a nosepuller with respect to Grand Falls-Windsor.  Apparently, the mayor didn’t have any information until Jones’ office sent him an e-mail wondering if the town council had seen anything on the enviro review of the mill site.

We know he didn’t have the information, since, as Johnson admitted in the legislature:

Mr. Speaker, I had to pick up the phone and call the mayor of Grand Falls-Windsor yesterday to reassure the people of that community that there is not an immediate health and safety concern there.

Johnson defended her actions by saying that the reports showed a potential life safety issue in Buchans  - tailings supposedly blowing around town - but not in Grand Falls where, according to Johnson, all the enviro issues are confined to the site.

Of course, the whole matter could be cleared up if the documents in question were actually in the public domain.

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AbitibiBowater moves Stephenville and Botwood properties to subsidiary

As part of its re-organization plan, AbitibiBowater sold its two properties in Newfoundland and Labrador (Stephenville and Botwood) to a subsidiary company on April 27, 2010.

The company is in receivership with Ernst & Young acting as receivers.

The Government of Newfoundland and Labrador did not object to the arrangements.  The provincial government was represented by Weirfoulds LLP. The arrangements do not alter the environmental orders or the appeal of Judge Clement Gascon’s March 31 decision.

However, the move appears to limit the number of orders affecting AbitibiBowater from ones affecting five sites in the province to only the two that the expropriation act left with the company. 

The cost of clean-up  at Botwood and Stephenville is listed in a report for the court by Ernst & Young as being potentially in the “tens of millions of dollars.” 

The provincial government did not release the cost estimate prepared by its consultants for all five sites, including the Grand Falls mill.  A document filed with the court by Ernst & Young dated February 19 did not establish a clear estimate of the costs involved.  It put the base case estimate as being in the mid to high eight figures and the worst case as being several times that.

The receivers have the power to sell the properties or to make an arrangement to deal with the environmental issues.

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Abitibi “intended to go bankrupt”': Williams

Newfoundland and Labrador Premier Danny Williams today said that the expropriation of assets belonging to three companies was a “very deliberate move” and that as a result of the expropriation of assets belonging to three separate companies, the provincial government can now “use the value of these assets to deal with the environmental liability which we would have been responsible for because they [AbitibiBowater] intended to go bankrupt in the first place.”

Williams made the comments in Question Period during an afternoon sitting of the House of Assembly.

He said that AbitibiBowater “would have walked away from their responsibilities”.  Williams said the paper company would have gone bankrupt, sought creditor protection or “done what they were in the process of doing and that was trying to sell off those assets to somebody else.”

That’s the first time Williams has linked the expropriation to a failed bid by the provincial government to buy one of those assets, a hydro project at Star Lake which was not supplying power to the mill at Grand Falls.

In another answer to questions from opposition leader Yvonne Jones, Williams described the mill at Grand Falls and the two houses associated with it as “the most valuable piece of real estate in Grand Falls”.  He did not explain why the provincial government intended to expropriate all the other assets and leave  AbitibiBowater with the most valuable piece of real estate in Grand Falls when he had earlier described the expropriation as seizing the valuable assets to forestall their being sold off.

Those assets would have been lost to an irresponsible company that did not give a darn about the people of Newfoundland and Labrador, the people of Central Newfoundland and Labrador. They would not - they would have walked away from their responsibilities. They either would have gone into consumer protection, they would have gone bankrupt or they would have done what they were in the process of doing, and that was trying to sell off those assets to somebody else.

While Williams has been careful in previous statements and made no comments during debate on the expropriation bill, his most recent remarks could weigh heavily against the province’s efforts to fight off a NAFTA challenge and to push the environmental liabilities onto AbitibiBowater.

Williams comments raise the prospect that the expropriation was not done  - as he originally suggested  - because AbitibiBowater breached a 1905 lease.  In a statement to the legislature before his natural resources minister introduced the expropriation bill, Williams said:

Abitibi has reneged on the bargain struck between it and the Province over the industrial development of the Province’s timber and water resources for the benefit of the residents of the Province.

Mr. Speaker, having said that, we cannot as a government allow a company that no longer operates in this Province to maintain ownership of our resources.

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NALCOR takes on Fortis loan payments

NALCOR, the provincial government’s energy corporation, is paying a loan on behalf of the Exploits Partnership, one of the entities affected by the expropriation fiasco in December 2008.

In its 2010 first quarter financial statements (2010 Q1) released on Friday, Fortis, one of the partners in Exploits River Hydro Partnership, said that NALCOR  is making the “scheduled repayments” under the terms of the loan. 

As of March 31, 2010, $59 million remained outstanding on the loan. The statement reads in part:

As the hydroelectric assets and water rights of the Exploits Partnership had been provided as security for the Exploits Partnership term loan, the expropriation of such assets and rights by the Government of
Newfoundland and Labrador constituted an event of default under the loan. The term loan is without recourse to Fortis and was approximately $59 million as at March 31, 2010 (December 31, 2009 - $59 million). The lenders of the term loan have not demanded accelerated repayment. The scheduled repayments
under the term loan are being made by Nalcor, a Crown corporation, acting as agent for the Government of Newfoundland and Labrador with respect to the expropriation matters. [Emphasis added]

Newfoundland and Labrador-based Fortis noted in 2009 first quarter financial statements that the unidentified lender had not sought “accelerated repayment” following government’s expropriation.  The Exploits Partnership (51% Fortis/49% Abitibi) made the scheduled term loan payment in 2009.

The expropriation bill passed by the House of Assembly in December 2008 seized all the generating assets and transmission assets of the partnership and cancelled all leases and contracts related to it.  The assets were used to secure the loan. 

Under a contract with Newfoundland and Labrador Hydro, the Exploits partnership sold surplus power not needed for the Grand Falls mill to Hydro for sale to its other commercial and residential clients.  The 30 year power purchase agreement would have expired in 2033.

There is no indication in the 2010 Q1 statement that NALCOR and Exploits Partnership reached an agreement on all issues related to the expropriation.

The loss of income from the the Exploits Partnership as well as the expiration of a water rights contract in Ontario on another project combined to reduce gross revenue for Fortis Generation 73% from $19 million in 2008 Q1 to $5.0 million in 2010 Q1.  Fortis Generation is the subsidiary through which Fortis partnered in the Exploits project with Abitibi.

Contacted by Bond Papers in early 2009 to clear up confusion created by comments by the Premier and the text of the expropriation bill on the Fortis aspects of the expropriation, a spokesperson for the province’s natural resources department refused any comment on the process as there was a process in place to discuss the expropriation and any compensation.

In answer to questions in the House of Assembly last month about negotiations with Fortis and ENEL - another company affected by the expropriation - natural resources minister Kathy Dunderdale said only that talks were continuing and that “a number of arrangements had been made” in the meantime.

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How our system doesn’t work

Supposedly the Western Star – the province’s west coast daily – has never liked or supported Danny Williams.

Now before anyone starts clacking a comment just remember that is the official crackberry statement from the Premier’s publicity machine in response to a recent editorial in the Star that suggested the Old Man is getting a bit cranky and might want to consider retiring.

It’s a load of dung but that’s another story.

The Star editors this week could have decided to write an editorial on the revelation that the provincial government had royally screwed themselves and taxpayers with a botched expropriation of assets that used to belong to Fortis, Enel and Abitibi.

Sounds like a logical topic especially for a paper the crowd with crackberries would like you to think keeps a voodoo doll of Hisself that they stick pins into every day during the morning story meeting.  After all, what better story is there for the bunch of Danny-haters at the Star than this.

So what did the Star do with it?

Try this assessment on for size:

The ruling PCs stood in the House of Assembly this week and said the botched the expropriation of the AbitibiBowater properties in this province when they included properties that will likely require millions of dollars in environmental cleanup.

That aside, at least the Tories, to their credit, were up front about the blunder, and said so straight out without trying to couch it in some political song and dance.

Then they turn their attention to what the Star editorialists see as the real villain in this piece,  the five people on the opposition benches:

It’s time they admitted their shortcomings in the process.

It’s the duty of the opposition to challenge the government on legislation it brings before the house, and make sure these kinds of potentially expensive hiccups don’t make it into law.

They were asleep at the switch in this matter — there’s now way around it.
They dozed in their seats, didn’t ask enough questions ... and let the bad legislation become the law of the land.

It should be a lesson for all concerned.

Our system works best when the tough questions are asked ... not when  government gets a free pass.

That last sentence is absolutely true.

We also know our system is not working in this case because the crowd at the Western Star can’t even get a simple fact right.  When they say that the provincial government was “upfront” about the blunder and didn’t couch their news in political rhetoric, well, nothing could be further from the truth.

A good 10 months elapsed between the time the crowd on the Hill discovered the shag-up and the first time they mentioned it publicly in this province.

That’s right 10 months.

But that’s just for this province. 

In Quebec, people there knew of the monumental blunder back in October.  That’s when a Quebec court handling the Abitibi bankruptcy protection listened to arguments in a case involving the provincial government and its ongoing war with Abitibi.

And when the provincial government finally did publicly mention they owned the mill, the news release made it sound like Abitibi had simply abandoned its property and that as a result, the provincial government was doing the noble thing and taking custody to protect the public interest.

None of the government narrative on this issue since May 2009 has been even vaguely close to the credit-worthy actions the Star editorialists invented.  In fact, so great a work of fiction is the premise of this editorial that its writers would be better off handing their resumes to the show driver on Doyle than wasting their time out there in the second city.

As if that hum were not enough for the Humber crew, though, the Star then decided to blame the Liberals and New Democrats. Apparently the whole thing while a government measure could have been avoided if only they had done their jobs.

Well, here’s a simple test:  look around and try to find anyone - any one person – in December 2008 who publicly doubted the wisdom of the expropriation and/or the haste with which it was done.

Go on and look.  We’ll wait until you are done.

No luck?

That’s hardly surprising.  The Western Star,  for example, thought that the expropriation was the right thing to do and praised the legislature – the full legislature, no less – for acting.  Not a peep about the possibility of mistakes or the need to slow down and let the opposition do its job. Not a word about how our system requires a bit of sober second thought, a bit of careful scrutiny lest someone make a colossal mistake of any kind.

If there were two people in the entire province publicly criticising the haste of it, let alone the expropriation itself, then that’s all there was.  We were summarily dismissed by all those, the opposition included, who shared the view that Abitibi, the friggers,  ought to lose all its stuff in the province.  We were discounted by those who trusted the provincial government to be careful and to make sure everything was done properly.  After all, they have never been wrong before.

Your humble e-scribbler singled out the NDP leader in December 2008 to illustrate how little thought had gone into the expropriation bill, but, in fairness Lorraine Michael is nothing more than an example of the views and attitudes of almost everyone in the province at the time.

And in the end, that post concluded, somewhat prophetically, that:

In the future  - perhaps a few months or even a few years - someone will look back on this time and wonder how such steps could be taken.  They wonder how the Churchill Falls deal could have be done, with the concurrence of all members of the legislature.

In the energy bill and now the expropriation bill – as exemplified by Lorraine Michael’s comments - they have a very simple answer. No one bothered to think.

And there it is, dear friends, the simple truth of the matter.  No one bothered, no one took the time to think. no one felt thinking might be even needed.  Let Hisself and the crew look after that.

No government ought to get such a free pass.

But in this case, the government got its free pass, handed to them gleefully by the legislature and everyone else.

The expropriation debacle is the result.

And if the Star editorialists want someone to blame for this fiasco they can look in the mirror.  They needn’t waste much time doing that, though.  There’s enough guilt to go around when it comes to people who let the government have a free pass on this issue.

Then again, for the past seven years that’s what this government has had:  a free pass. They are popular because they are right and right because they are popular as the sock puppets, Fan Clubbers and pitcher plants will tell you. Things worked out when it appeared the provincial government won.  After all, our system can’t be broken if everything turns out right.  Trust in the saviour of the moment and all will be well.  Anyone saying otherwise just hates Danny.

Such ideas seem so foolish now.

The reality is that just as it was in 1969, so it was 40-odd years later.  Back then the three opposition members – Gerry Ottenheimer, Tom Hickey and Ank Murphy – sided with the government.  So too did the province’s editorialists. Fast forward to 2008 and see the same thing playing out all over again.

Our system of government works when tough questions are asked and  when thorough, prompt and complete answers are demanded.  There must be consequences  - even if only in the form of criticism - when the answers aren’t received. 

All the members of the legislature have a responsibility to ask those questions but so too do editorialists and ordinary citizens have an obligation to pose questions and demand answers.

It is the government’s duty to answer them.

Our system of government in this province is not working;  it has not been working since 2003.  The Abitibi expropriation mess serves only to highlight just exactly how great is the risk that people in this province are taking as a result.

And until people  - ordinary citizens and Western Star editorialists alike - start to acknowledge that, the risk that more Abitibi fiascos will take place – or have already - will only increase.

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The Abitibi Expropriation Fiasco: TARFU

The Government of Newfoundland and Labrador not only expropriated a paper mill it didn’t intend to seize, but two major houses and land rights over half the town of Grand Falls.

The size of the expropriation fiasco grew in leaps and bounds Tuesday as the House of Assembly started to dissect the budget estimates.  The morning’s revelations during committee meetings livened up Question Period in the afternoon.

Natural resources minister Kathy Dunderdale tried to bluster her way through the questions while her boss – the guy behind the mess – jetted off to Ottawa for what his office described as high level meetings. 

D’uh!.  Premiers don’t have other kinds of meetings.

Dunderdale denied accusations she and her colleagues had tried to hide the expropriation cock-up, claiming it had been revealed in a February 2010 news release.  But, that release tried to make it sound as if Abitibi had vacated the property.

What’s worse, the full scope of the mess wasn’t revealed until this past week in the House of Assembly.

What’s more, the provincial government knew of the expropriation blunder in May, 2009, five months after the expropriation. Not a single minister said a peep about the situation. The major league legal foul-up was discovered, incidentally, by a company retained to conduct title searches on the lands after the bill was rammed through the legislature.

According to Dunderdale in the House of Assembly Tuesday,  the provincial government originally intended to fix the problem by  - wait for it - bringing in a second piece of legislation which gave back the accidentally expropriated bits of land to Abitibi. 

You could not make this up if you tried.

Unfortunately for the hapless Williams administration, Abitibi’s bankruptcy made any amendment to expropriate the mill legally impossible.  That’s no small irony given that the expropriation was predicated in part on the potential that Abitibi would declare bankruptcy and sell off all it assets.  As Premier Danny Williams put it last week in the House of Assembly:

They would have sold them off to some other interest, and we would have been left high and dry and our workers and the environmental issues, none of those would have been resolved; or otherwise they would have gone bankrupt and they would have lost everything and we would not have had anything.

Interestingly, Dunderdale told reporters outside the legislature that the provincial government was “well into the fall” before they realised they wouldn’t be able to introduce the do-over legislation.  While Dunderdale didn’t say exactly when she and her colleagues figured out their legislative option was closed, her admission it might have been in November suggests there is some overlap between the realisation their legislative options were closed and a series of events in a Quebec courthouse.

The provincial government launched a legal application in October 2009 just days after a surprise announcement in Buchans about possible contamination of the community from a long abandoned mine. The legal action was an effort to gain access to Abitibi’s private financial information through a data sharing arrangement between Abitibi and its creditors.

The court dismissed the application and with it the Williams administration’s claim to creditor status, finding, in part, that “…[t]he Motion has merely referred to several press articles in support of an alleged claim against Abitibi for the contamination arising from a closed mine in the town of Buchans. [59] These vague and unsubstantiated allegations are, at this point in time, barely supported.” 

The court also dismissed the province’s claim to creditor standing through an arrangement with unions to pay severance and other payments to former Abitibi employees:

[54] On one hand, the Province alleges, without supporting evidence, that it has made payments to certain former employees of the Abitibi's Grand Falls mill.  Yet, no evidence to establish the nature of the payments made or any lawful assignment of the related claims has been put forward.

[55] Indeed, when one reads paragraphs 7, 8 and 9 of the Motion, it appears obvious that if Abitibi's former employees in the Province claims have been assigned to anyone, it is to an organisation created by the various unions involved, not to the Province.  Its role is simply to fund this organisation.

[56] In that regard, the Motion itself refers to claims that will ultimately be made in the restructuring by an "Assignee".  According to the Motion, this "Assignee" is certainly not the Province.

Within three days of the failure of that application, the provincial government issued a series of nine environmental orders to Abitibi.  They required, among other things, that Abitibi file environmental remediation plans with two months and complete all work within one year.  

Aside from the apparently coincidental timing of these actions, it is interesting to see in a decision on whether the environmental claims were barred by a previous decision of the court overseeing the Abitibi creditor arrangements, the court noted:

[60]  Although the Province publicly announced that the Abitibi Act did not include the Grand Falls mill then still in operation, a review of the Abitibi Act revealed that, whether deliberately or as a result of the haste in which the Act was drafted, the Grand Falls mill site was, in fact, included in the confiscated assets.

Of course that’s all just extra in a situation in which the provincial government’s strategy in seizing the assets went poof with that legal cock-up.  From the briefings given before the bill was unveiled in December 2008 to the Premier’s own public comments as recently as December 2009, Danny Williams intended to leave the company with the environmental liabilities while seizing all the choice assets.

In the end, any compensation for the seized assets would be balanced by the environmental liabilities.  The deal the provincial government hoped to strike would see no money change hands.  The provincial government might wind up paying for the clean-ups, but it would escape any NAFTA penalties and other payments.

As Williams put it on the day the seizure bill raced through the legislature:

If that [the cost of environmental clean-up] is quantified, then that would be offset against any responsibility for compensation. If there is an excess of value over liability, then that would be the amount that would be paid.

That isn’t the way things turned out.

The provincial government now owns the mill outright and will wind up covering the costs of any clean-up on its own. In addition, it will still have to pay compensation for the seized assets.  Even the Williams administration’s own expropriation legislation calls for it to pay compensation.  If the provincial government reneged on its statutory obligation, presumably Abitibi could and would sue.

Then there is the NAFTA claim. Abitibi is pursuing a lawsuit that seeks a minimum of $500 million for what it says was an illegal seizure of assets.

And if Kathy Dunderdale wonders where people are getting the numbers involved, she can just look around.  Her own colleagues have been putting costs on the environmental cost for the past year that come to around $200 to $300 million.

For the numerically challenged, or for those living in denial, that would wind up being $800 million:  $500 million for NAFTA and another $300 million for the environmental work.

At least.

That’s a pretty hefty cost taxpayer’s will have to bear to clean-up someone else’s mess.

TARFU.

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Is the Abitibi Fiasco on the agenda?

The Premier’s trip to Ottawa announced late Tuesday morning is only a surprise if you didn’t know about it in advance.

Regular readers of these scribblers had it yesterday:

When Danny heads off to Ottawa later this week for a round of meetings on a bunch of subjects, …

One item not mentioned on the agenda  - but surely to come up  - will be how the provincial government will repay the feds for the Abitibi expropriation fiasco the Premier will be leaving behind for his ministers to defend. Ministers are discovering the idea of collective responsibility, likely for the first time since the Tories took office in 2003. 

If the provincial government expropriated half the town of Grand Falls by mistake – you could not make up this kind of blunder - you can safely bet they don’t stand a snowball’s chance in hell of winning the claim for $500 million or more that Abitibi levelled against Canada under NAFTA.   The federal government may pay up front but, at some point they will likely come looking for reimbursement from the one who caused the mess in the first place.

What better time to discuss that than when Hisself is in town for meetings?

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The Abitibi Fiasco: a house divided

Premier Danny Williams  - House of Assembly, April 21, 2010 - on the costs associated with his disastrous expropriation bill:

What we are trying to do, and we have throughout this negotiation, is protect the interests of the people of Newfoundland and Labrador because Abitibi owes us anywhere from $200 million to $300 million in environmental liabilities for the mess that they left us, in addition to the severance for the workers that have paid, in addition to what we as a government have put into Grand Falls-Windsor and the Central Newfoundland region.

Provincial environment minister Charlene Johnson  - House of Assembly, April 22, 2010 - on the costs of Abitibi’s environmental liabilities:

Mr. Speaker, under the act the way that we - under the orders that we issued [November 2009]  we require Abitibi to submit to us a remediation plan. There were five orders: Botwood, Stephenville, Grand Falls-Windsor, Buchans and some logging camps. So, until they submit a remediation plan to us - and they had one year to submit this plan and they have done some work on it in the past. Until they submit that plan and until we are satisfied with the plan to ensure that the environmental liabilities will be dealt with, I cannot give you a firm, actual cost until that comes to us and we are satisfied with it.

 

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Dunderdale on Abitibi/Fortis/ENEL expropriation: Oops!

An obviously stressed natural resources minister Kathy Dunderdale admitted to the House of Assembly yesterday that there were problems with the provincial government’s hasty seizure of  assets belong to AbitibiBowater, Fortis and ENEL.

The paper mill itself – originally supposed to be left out of the deal – wound up being left in.  As a result, taxpayers are stuck with a potentially major environmental liability.

CBC puts the Premier’s reaction to the shag-up this way:

Outside the legislature, Premier Danny Williams told reporters he's embarrassed by the turn of events, but he can live with them.

"It was something I wasn't happy with when it happened, but it was an innocent mistake that was made by an official in the department," Williams said. "As simple as that."

That’s bad enough, except adding the mill when you explicitly wanted to leave it out isn’t the only shag up in the whole confiscation.

According to a court decision in Quebec where Abitibi is working through a bankruptcy protection proceeding with its creditors, the Williams administration also forgot to pick up a few of the Abitibi assets in the province that should have been seized as well in the Chavez-esque sweep.

The Legal Genius(es) behind the whole fiasco left out the port facilities at Botwood and the former mill site in Stephenville.

Abitibi closed the mill at Stephenville closed in 2005 after a prolonged battle with the provincial government that included threats by the Premier to expropriate Abitibi’s assets:

"If there's an interested party that can have that mill up and running, we'd be interested in talking to them," Williams said Monday.

"If that requires expropriation, then that's something we'd certainly consider."

In the end no other buyers emerged and the mill closed despite the Premier’s 2003 election commitment that the mill would not shut down on his watch.

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Epic Fail of The Week: prov gov loses to Abitibi… again

First, the provincial government’s Legal Genius(es) drafted the expropriation bill which seized - all, as it turned out -  AbitibiBowater assets in Newfoundland and Labrador.

They told the good burghers of Danny-ville that this meant only that the power plants and everything else belong to the people of Newfoundland and Labrador.

Everything, except that is for the mill itself, they said which would be used as leverage in negotiations over any compensation for the expropriation.

It would all be a wash, in the end.

Or so people were told publicly and in briefings before the expropriation bill turned up in public.

Then, people discovered that the same Legal Genius(es) didn’t actually exclude the mill as they’d originally claimed.

Nope.

They seized it all.

Big screw up.

Now, the people of Newfoundland and Labrador discover that trying to get some sort of court action forcing the former mill owners to foot the bill for environmental clean-up – as the legal genius(es) assured everyone – won’t work either.

Hands up anyone who is surprised at the latest failure by the provincial government?

Okay, well just stop and think for a minute: 

The Legal Genius(es) behind this latest string of expropriation epic fails would be exactly the same Legal Genius(es) who brought you the Ruelokke legal mess.

And they’d be the same Legal Genius(es) who are now betting massive chunks of the public purse on a law suit against Hydro-Quebec to try and settle a dispute over the 1969 contract.

Any bets on how good that one will turn out for taxpayers in the end?

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Medvale School for the Gifted Update:  Seems the Legal Genius(es) indeed have caught themselves in another bit of jurisprudential bother.  As Russell Wangersky astutely points out, the lovely Abitibi expropriation bill clearly gives no value to water rights and timber rights.  Yet, the scheme to funnel money to Corner Brook Pulp and Paper is based on timber rights having value.

The two things cannot live in the same space.

So either no cash will go to CBPP or, as your humble e-scribbler expects, the real legal geniuses who work for AbitibiBowater (they are 2-0 so far) will use the CBPP cash hand-over to put a much higher price on the expropriation now that they can legitimately claim cash for timber and water rights.

Not only that but AbitibiBowater can also claim – quite rightly – that the expropriation was unusual and punitive aimed specifically at one company and remains without any merit. Coupled with all the nasty words flicked by ministers toward Abitibi, they can likely show that the whole thing was prejudiced and that will only add to the poor beleaguered Newfoundland and Labrador Taxpayer’s legal misery in other places (NAFTA challenge anyone?)

Momentous Update:

Hypothetical Answer by Hard-done-by Citizen:  “Golly Gee Mr. Finance Minister, what will happen if they get more money?”

Not-so-hypothetical Answer by Finance Minister:  “The debt will go up.  We cannot stop the momentum.”

Epic Fail on seizure looms

Back when the provincial government managed to ram an unprecedented bill through the legislature seizing private assets and crushing active legislation without compensation, one argument used to justify the seizure was novel.

Apparently the environmental clean-up costs and the potential penalty under the free trade deal for the seizure would be so close that the whole thing would wind up being a wash after a negotiated settlement.  No money would wind up changing hands but ultimately the mill – carefully excluded from the initial seizure – would come to the provincial government and Abitibi would just walk away.

Officially, the Premier described the idea this way:

So, if, in fact, there is contamination which is located with operations in Botwood or around the mill in Grand Falls or the logging operations or any other rivers or whatever happens to be where they have constructed bridges or have had a presence in Newfoundland and Labrador, then there may be environmental fallout from that and that has to be quantified. If that is quantified, then that would be offset against any responsibility for compensation. If there is an excess of value over liability, then that would be the amount that would be paid.

And if there was any discrepancy, then they’d add in the amount the provincial government paid out voluntarily to settle issues with some of Abitibi’s former employees.

Nice, tidy and wonderfully convenient.

Things haven’t quite worked out that way.

First the provincial government wound up getting the mill unceremoniously dumped in their laps.

Then Ernst and Young valued the environmental remediation at around $50 million and maybe as much as $100 million.

Now Abitibi has filed its NAFTA claim seeking damages of at least $500 million, reputedly a record amount if it is awarded.

It’s also not far off another old record, the cost of the Come by Chance bankruptcy back in the 1970s which was up to that time the largest bankruptcy in Canadian history.

So now having paid out the workers cash and assumed full liability for the environmental clean-up, the provincial government is now facing a history-making lawsuit for damages.

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Dunderdate;  Some choice words from natural resources minister Kathy Dunderdale that reinforce the notion of the whole thing being a wash, at the end of the day on a go forward basis.  From the Telly, 25 Mar 09:

The company has publicly put the price tag for those assets at $300

million.

 

Dunderdale says the government's figure is lower than that, but would

not say just how far apart the two sides are.

 

She said the province has a clear idea of how much it thinks the

assets are worth and has determined a range of value it would be

willing to pay Abitibi.

But Dunderdale said the province wouldn't go beyond that range just to settle up with the company.

Taxpayers shafted

On February 2, Abitibi notified the provincial government that the company vacated the only properties the provincial government didn’t expropriate in December 2008.

As a result, the taxpayers of Newfoundland and Labrador are entirely responsible for cleaning up whatever environmental mess may be attached to the century old facility.

There is no word on how big the problems at the old paper mill are or how much it will cost taxpayers to clean it up.

The official government release on the development is a masterpiece of uncommunication from a department – natural resources – that has become legendary for its practice of the dark art of misinformation. 

There is even a complete contradiction in the claim at the front – namely that the provincial government is now responsible for the sit in every respect and a statement at the back that Abitibi is still liable.

This is the third financial shaft to be felt by taxpayers resulting from the 2008 expropriation.  The first is the yet-unresolved bill for the expropriation itself.  The second is the voluntary payment by the provincial government of money owed by the company.

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Economic Recovery: Not exactly as illustrated

By definition, anyone connected to “economic development” in any provincial government or quasi-government organization must be so positive and upbeat as to make a Pollyanna look like someone about to climb into a warm bath and open a major artery or six.

That pretty much sums up the view in central Newfoundland where the regions major private sector employer is gone and there is nothing on the go even remotely as big:

"(If it was contrary to what businesses are reporting) you would see it in job losses, you would see it in lack of inventory," [Amy Coady-Davis, chair of the Grand Falls-Windsor town economic development committee] said.

"The turnover is there - it is right in front of your face. You can't fudge those numbers. Sales are up, they have said they're up, you can see that they are up."

Well, not exactly, at least if you judge by some numbers included the same Telegram article and which came from no less an authority than the town’s own economic development agency:

According to the economic development office in Grand Falls-Windsor, housing starts are down 50 per cent from 2008 - there were 118 units built then as compared to 53 units in 2009.

There you have it.

And if that wasn’t enough, consider the view from the local chamber of commerce:

Gerald Thompson, president of the Chamber of Commerce - which represents 209 businesses in Grand Falls-Windsor - tends to agree with the town's positive outlook.

He said they are getting far more positive feedback from members than negative.

"... Although there's been a number of small businesses that have closed in the last year, we still know that the people that have done business here in this valley, their percentages over last year are up.”

Of course, they are up. 

Some of the people who used to patronize those businesses that have closed up have moved their custom to the ones remaining.

And those companies that went out of business? 

Well, they aren’t members of the chamber of commerce any more – most likely – so their voices wouldn’t heard when the chamber does a survey of members.

Just to add to the whole surreal atmosphere of the article, don’t forget that the president of the chamber of commerce cited as proof of the great things the positive view from the people who build new homes.

Oh yeah.

Things are so great in that business people are building only half as many homes as they did in that artificial bubble the year after the mill closed.  That would be the year of severance cheques and all that extra, short-term cash.

What happens from this point onward will be entirely the result of whatever economic activity there is left now that the Abitibi mill’s corpse has stopped twitching.  Those who are tempted to look at places like Stephenville need to think again.  All those paper mill workers found other jobs, mostly in Alberta.  Those sorts of options don’t exist for the crew from Grand Falls-Windsor.

Nor is there a chance that the province’s remaining paper mill – there were three in 2003, incidentally – will take up any slack.  It is struggling to survive.  The company that runs the mill is reportedly looking for a 10% wage roll back from workers.

The professional pollyannas can be as bright-eyed and optimistic as the want.

The reality may well prove to be not exactly as illustrated.

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How bad is it?

You just know things are pretty tense in Corner Brook.

You can tell because the provincial government has been pouring on the happy-talk while over at the city’s major employer, the company operating the paper mill is looking for a 10% wage roll-back from employees.

The latest happy-talk is a hope-drenched a study on the oil and gas potential for the west coast.

According to the official news release, the study was commissioned based on an election commitment from 2003. 

That’s okay. 

We can wait while you go and check your calendars again.

Yes, it was indeed seven years ago.

The work on this particular report, though, was only done in 2008.  Check the dates on some of the consultation sessions;  that’s the only way to figure out the timelines for sure since most of the document has been scrubbed of dates. You can hunt around and eventually find the news release that kicked it off, from December 2007. 

That would make it a bit more than two years for this study to see the light of day.

After all that time and all that work, the recommendations are stunning: 

Ensure a regulatory and administrative environment to maximize investment in onshore and offshore exploration and attract industry operators and businesses to the region;

Ensure the protection of key natural resource areas, including Gros Morne National Park, the Humber Valley and the Bay of Islands;

Establish a clear environmental regime between the provincial and federal governments;

Continue to improve infrastructure in the region through investments in education, health-care facilities, transportation and commercial land availability;

Encourage the planning, regeneration and use of existing infrastructure, including that in Port aux Basques, Stephenville, Corner Brook, Deer Lake, Port Saunders and St. Anthony, to ensure it continues to support existing economic sectors;

Maintain and upgrade infrastructure specific to the needs of potential hydrocarbon projects, including wharves and air facilities at Corner Brook and Stephenville;

Facilitate the training of local residents to help them meet the demand for skills in this emerging sector;

Continue to invest in public education, health care, cultural and recreational opportunities to serves the needs of the region; and,

Continue to promote the western region as a place of opportunity for business investment and families.

In a nutshell:  fix the roads, spend money on things like education and health care, protect the ecologically sensitive and important bits (like Gros Morne)  and “promote” the potential in the area.

They are about as surprising as the recommendations made by the task force that spent 18 months trying to figure out how to keep more young people from leaving the province.  Its major conclusion:  create work for them so they can find jobs and stay here.

All standard. 

All patently obvious.

Nothing concrete and measurable.

Like explaining what is meant by “[e]nsure a regulatory and administrative environment to maximize investment in onshore and offshore exploration and attract industry operators and businesses to the region.” 

Maybe there is a tax issue here or problems with issuing permits. You won’t find anything in the report to explain what this means.

And the stuff that appears to be specific  - like the suggestion to “twin” selected portions of the Trans-Canada between Port aux Basques and St. John’s as needed – is actually just a confirmation of what has been government policy since 1988.  Under the roads for rails agreement, the provincial government used federal cash to do exactly that.  And yes, for those who need reminding that would be from the last time the Conservatives formed the provincial government.

So what are these study guys talking about 20 years later?

Not a heckuva lot, apparently, given that any administration at any time can claim:

• to have either already done that or,
• to be doing exactly what was recommended as it carries out the existing maintenance of the existing road.

Look in vain and you will not find a single thing in this 71 pages of pure bumpf is tied to  drilling more holes, finding oil and getting it into production.

Things seem to be pretty tense in Corner Brook these days.  That’s just as they have been in other towns in this province since 2003 when the major employer found itself in hard financial straits.

What’s most interesting since 2003, though, has not been the problems themselves but how the provincial government has reacted to each development.

The oil and gas study released on Monday seems to be very much par for the course, very much a sign of the times.

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Fortis/ENEL Expropriation, one year later

Outside the legislature on Wednesday, Premier Danny Williams had this to say about the legal and financial problems that are still hanging around after last December’s seizure of assets by the government under a hastily compiled expropriation bill.

The expropriation will come with a purchase price, but Williams said he now plans to deduct the cost of severance and environmental cleanup from the final amount.

"So, if the possible environmental exposure and, or, the severance were X amount, and the amount that the assets were valued at were substantially less, well, then obviously there would be no payments of cash from the government," Williams said.

One of the great unreported facts of this expropriation – unreported by the conventional media, that is – is that the expropriation didn’t just affect AbitibiBowater.

Nope.

Included in the seizure were assets of Newfoundland and Labrador-based Fortis Inc and an Italian company called ENEL. 

The former was involved in a hydro project that supplied power to the former Abitibi mill at Grand Falls-Windsor and sold the rest to the provincial energy corporation.

The latter was involved in a hydro project at Star Lake that had absolutely nothing to do with supplying anything to the mill.  The Star Lake generating plant was built in response to a call for proposals by the province’s energy corporation about a decade ago. The plant supplied power to the grid to reduce emissions from the diesel plant at Holyrood.

Now if you take the Premier’s comments at face value you get a truly amazing thing and one that is unlikely to be swallowed that easily by the companies involved.

If there are any environmental liabilities related to the Abitibi mill, it would be quite a stretch to suggest that ENEL and Fortis somehow have any responsibility for them given that their operations were not for running the mill.  ENEL has got a real case in this respect, one would suppose.

By the Premier’s construction a company like ENEL could undertake legitimate business activities based on a government contract entered into in good faith by all parties only to find itself, in less than a decade, not only without the assets it paid for but without any compensation whatsoever for the government seizure.

And the excuse for stiffing them is that they somehow gained a liability for something they had no responsibility for in the first place.

This is one of those moments where you’d wonder if the Premier would be quite so calm about it all if someone were trying to pull the same stunt on him.

Meanwhile, one wonders if the rapprochement between the provincial Conservatives and their federal cousins might possibly have something to do with trying to get Ottawa to protect the Newfoundland and Labrador treasury from the fall-out of last year’s seizure.  The federal government has to deal with the international repercussions – like the NAFTA challenge Abitibi filed – but there doesn’t seem to be anything stopping the feds from recovering their costs once the international bits are settled.

Of course, all of this really makes a mockery of recent efforts by the provincial government to win sympathy for its case against Hydro-Quebec.

If the Americans really started to care about it all anyway, might those same New York financiers who supposedly listened sympathetically to the luncheon speech a couple of weeks ago feel quite so favourably disposed to the Premier’s cause if they got the full story on how Fortis and ENEL got screwed over by the Premier’s seizure?

This expropriation business is a long way from settled and the bills are a long way from being paid.  Something says some of the bills won’t be settled in cash, either. 

Payback will be a mother.

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The story that won’t go away, banner version

Some smart bunny or bunnies is buying advertising in the Grand Falls-Windsor weekly to remind locals how much money is being made from hydro assets the provincial government seized last December.

Run bi-weekly in the local Grand Falls-Windsor Advertiser under a banner that reads "Expropriation by the Numbers," the sparsely worded ads suggest the province has so far earned $28 million from the hydro facilities.

The ads say that's $1,100 for every citizen in the Exploits Valley, and question why more of that money isn't being spent in the region.

There’s a move afoot in central Newfoundland to get the money from the hydro assets to offset the loss of the Abitibi paper mill.

Thus far, the requests have fallen on deaf ears.

But the expropriation story just won’t stop bleeding all over the political landscape.  Not only are the crowd in central looking for cash but there’s a good chance the provincial government will wind up paying big time for the expropriation itself. 

This central story has got to be causing some hard political damage to the careers of people like Susan Sullivan, one of the local members of the provincial legislature.  Even a quickie elevation to cabinet hasn’t silenced the cries for government cash.

Then again, it’s not like the provincial government doesn’t have bags and bags of cash it doesn’t want to talk about, either. 

Odd then that they are resisting any kind of substantive move in central Newfoundland to deal with the ongoing political damage done by the hasty and evidently ill considered seizure back in December. The way this whole mess is unfolding, you’d almost think the whole expropriation was done at the spur of the moment without even a hint of a plan, let alone a second thought for any of the consequences.

N’ah.  Couldn’t be.

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