Nova Scotia seeks to legislate Northern Pulp liability

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Facing a $450 million lawsuit, the province introduced amendments to the Boat Harbor Act to retroactively remove liability for forcing Northern Pulp to close.

“The amendment was simply intended to add crystal clear language to the bill to protect the taxpayers of this province,” Premier Tim Houston told reporters Thursday.

The Boat Harbor Act, passed by the Liberal government of Stephen McNeil in 2015, ordered the closure of the provincially built and owned effluent treatment plant by January 31, 2020.

He effectively canceled Northern Pulp’s lease at the facility a decade earlier, forcing the closure of the Abercrombie Point kraft mill.

$450 million lawsuit

The plant filed a $450 million lawsuit against the province in November for loss of profits and damages, alleging a conspiracy by senior government officials to force the plant to close by setting unachievable goals in the process of industrial approval, then within the time frame associated with the boat. Harbor Act. The company has offered to use funds obtained through the lawsuit for a proposed $350 million replacement effluent treatment facility and plant overhaul that has just begun a two-year environmental assessment process.

Last week, the Supreme Court of British Columbia ordered Nova Scotia to enter into mediation with Northern Pulp over its alleged liability to the company, overturning arguments by the province’s lawyers that it does not there is no responsibility to negotiate.

The amendment tabled by the government on Thursday adds the line ‘No action, including action for damages or other compensation’ may be sought by Northern Pulp as a result of the Boat Harbor Act. The amendment makes the legal coverage retroactive to the passage of the law in 2015.

It also removes the following clause from the Boat Harbor Act:

“The enactment of this Act shall be deemed not to be a repudiation or anticipated repudiation by Her Majesty in Right of the Province of the Lease Agreement dated December 31, 1995 between Her Majesty in Right of the Province and Scott Maritimes Limited, as as extended by a Lease Extension Agreement dated October 22, 2002 between Her Majesty in Right of the Province and Kimberly-Clark Inc. 2015, c. 4, s. 4. »

The lease and lease extension referred to in the clause obligated the province to provide an effluent treatment facility to the owners of the Abercrombie Point kraft pulp mill until 2030.

Premier Tim Houston said the amendment to the Boat Harbor Act makes it “full clear” that the province owes Northern Pulp nothing. – Francis Campbell / File

Prime Minister: modification of a clarification

Houston called the changes to the Boat Harbor Act a “clarification” rather than changing the original intent.

“It’s fair for the company because the intent of the original bill as written and presented was clear, but I also think we might as well be clearer,” Houston told reporters.

“I’m not going to leave this one up to the lawyers and judges to assign what the intent was. It’s fair to the company in the sense that they knew very well what this bill was about. But it is absolutely to protect the taxpayers of this province, where my primary obligation will always lie.

But former premier Stephen McNeil, whose government passed the Boat Harbor Act, told the Chronicle Herald in 2020 that the provincial government is liable to Northern Pulp for the early cancellation of the lease extension mentioned in the Boat Harbor Act.

In response to questions about an access to information request showing that the province was already in negotiations with Northern Pulp over its liability to the mill and that the redacted estimates were based on the cost of building a replacement effluent treatment plant, McNeil told the Chronicle Herald, “It is believed that we are negotiating to build the effluent treatment facility, but that is not what we are doing. We are looking at what compensation we have for the closure of Boat Harbor nine years ago.

Right of expropriation of governments

Whatever the original intent of the Taxpayer Accountability Act, Canadian courts have consistently upheld the government’s right to expropriate the assets of individuals and businesses.

“The Legislative Assembly within its jurisdiction may do anything which is not naturally impossible and is not restricted by any human or divine rule,” Ontario High Court Justice William Riddell ruled in the landmark case of 1909 Florence Mining Co v. Cobalt Lake Mining Co.

“The ban, ‘Thou shalt not steal’, has no legal force over the sovereign body.”

The owners of Northern Pulp say they are
Northern Pulp owners say they are “disappointed” by the Boat Harbor Act amendment that retroactively removes Nova Scotia’s liability to the company for forcing them to shut down the Boat Harbor effluent treatment facility. – Saltwire / File

Although it has existed for over a century, the precedent is that provincial and federal governments can legislate to avoid 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 the provincial legislatures can pass laws of any kind, including laws that modify or nullify legally binding agreements,” Bruce Pardy, a law professor at Queens University, wrote recently 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 in good faith with the government to enter into the contract in the first place.”

Paper Excellence “disappointed”

In practice, however, the legislation has not proven to be a free get-out-of-jail card.

When, after more than a century of operation, AbitibiBowater closed its Grand Falls-Windsor pulp and paper mill in 2008, Newfoundland and Labrador Premier Danny Williams rushed through by the House of Assembly a bill canceling the company’s extensive water and forest rights in the province and expropriating its hydropower. -Electrical installation.

AbitibiBower filed a $500 million claim against the federal government under the North American Free Trade Agreement (NAFTA). In 2010, the federal government reached a settlement with AbitibiBowater that saw it pay the company $130 million.

For its part, Northern Pulp’s parent company, Paper Excellence, provided a written response on Friday: “We are reviewing the proposed changes. We are disappointed and concerned that the province is considering substantial legislative change to retroactively remove any right to forced plant closure 11 years prior to the end of the effluent treatment lease. Two former Premiers have acknowledged that the Province of Nova Scotia had a responsibility to Northern Pulp for the early closure of the plant caused by the Act. These proposed changes should be of concern to any organization doing business in Nova Scotia. »

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