Introduction
Some people have been asking what is happening with the
Inquiry into the Muskrat Falls project. This is our first update. Next time, a
web site, which is under development, will be ready. Future updates will be
found there and that platform is expected to offer timely communication
throughout the period of the Inquiry.
What's Been Happening?
The Coalition was created to serve as an intervenor in the
Muskrat Falls Inquiry. Upon invitation of the Commissioner the group submitted
our interpretation of the TOR, as did a number of others. It can be found
here. The goals of the Inquiry are set
out on the Inquiry Website, particularly in the Commissioner’s Interpretation
of his Terms of Reference (TOR) here.
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| David Vardy |
Several months ago we met with legal counsel to the Commission
and made a presentation on the key issues surrounding Muskrat Falls. We also
provided the Commission with submissions, letters and articles we have written
regarding the Muskrat Falls project.
We responded to the Inquiry’s invitation for groups and
individuals to apply for standing and for funding and attended the Hearing held
on April 6, 2018.
The Commissioner accepted our application for standing and
agreed to recommend to government that funding be provided to allow the
Coalition to retain legal counsel. We learned that 22 applications for standing
had been received by the Commission.
In his decision of April 6, 2018, approving our application
for standing, the Commissioner wrote as follows:
All three
of the individual applicants on behalf of the entity to be incorporated have
been critics of the Muskrat Falls Project for some time. Mr. Penney is a
retired public servant who has served in many high level capacities in the
government’s public service. He is trained as a lawyer. Mr. Vardy has served as
Clerk of the Executive Council in the past as well as having senior positions
in other government agencies. He is an economist. Mr Sullivan is a former
executive assistant to Premier Frank Moores and Premier Brian Peckford. He is
President of the Sullivan Group of Companies and has been publishing the Uncle
Gnarley Blog since 2012 dealing with public policy in this Province, including
issues involving the Muskrat Falls Project. All three of these individuals have
maintained a significant public presence regarding the Muskrat Falls Project
and appear to represent the views of other people in the Province who have
concerns emanating from the sanction and construction of this Project. I am
satisfied that these three individuals have been writing and researching on
this Project for some time and, as a result, could if permitted, assist in the
conduct of this Inquiry as well as contributing to openness and fairness.
Subsequent to receiving Standing at the Inquiry the group
began a search for legal counsel. That may seem like an innocuous task.
However, it was necessary to find Counsel who was not in any way conflicted; a
challenge in a small community.
We can now confirm that Mr. Geoff Budden of the law firm of
Budden and Associates has now been appointed as the Coalition's legal counsel.
The group has already begun a process of meetings to brief him on the
Inquiry.
In addition, a Company incorporated under the Corporations
Act, under the name The Muskrat Falls Concerned Citizens Coalition Inc. (the
"Coalition"). The founding directors are Ronald G. Penney, Des
Sullivan and David Vardy.
What's
next?
The Coalition is working to develop a website for the purpose
of providing information to Coalition members and to the general public.
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| Ron Penney |
While funding for the Coalition will be provided by
government, it will cover the cost of legal counsel only. Other expenses will
require private sector fund raising. For this purpose a Fundraising Committee
will be established.
The Coalition is also appraising the requirements to get ready
for the first phase of the Inquiry. The formation of a technical committee to
advise the Coalition and to assess documents made available by the Commission
will be among the first orders of business.
Other Committees will be formed later and Members sought who
possess a skill-set having a direct bearing on the issues under consideration
in each phase of the Inquiry.
The Forensic Audit
The Commission has engaged the consulting firm of Grant
Thornton to undertake a forensic audit. The Coalition has requested that the
terms of reference for the audit be made public. The group has also asked what
other research, analysis and data collection have been instigated by the
Commission.
Public funding will not be available for Intervenors to retain
technical experts or to undertake research. Instead all research will be
initiated and managed by the Commission. The Coalition intends to review the
Commission’s research program and make recommendations where gaps have been
identified. The Commission has indicated that all documents shared with
Intervenors must be kept confidential until released publicly by the Commission
itself.
Hearings
to Have Three Phases
The hearings will take place in three phases. The first phase
will focus on pre-sanctioning decisions and will take place from September 17
to December 24, 2018.
The second will deal with project management and is scheduled
to run from February 4 to April 4 2019.
The third phase of the hearings will deal with policy issues
and the future of megaprojects. This phase will run from June 17 to July 12,
2019. Closing submissions will take place from July 29 to August 2, 2019. The
final report of the Commissioner is due December 31, 2019.
A
Reminder what the Inquiry is About
The Inquiry is expected to find out the reasons why such a
seriously flawed Muskrat Falls project received Sanction. It will examine if
the damage can be minimized, identify how the benefits of the project can be
maximized and make recommendations to government on how the public interest can
be advanced by changes in public policy.
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| Des Sullivan |
The Coalition will assist the Inquiry find the truth around
all facets of project sanction, implementation, cost overruns and other issues
within the Commission's scope.
The Coalition will use the expertise of the founding members
and others who have volunteered their time and have knowledge of the Muskrat
Falls project as well as experience in public service and public policy.
The Coalition believes the Commission should take a holistic
approach, which recognizes that health and safety, environmental and social
impacts are no less important than engineering, financial and project
management.
As already noted, the Coalition will appoint technical
committees in order to bring to bear information and technical advice to ensure
that the Commission has all the information it requires.
Public
Information a Key Goal of the Coalition
The Coalition believes that the Commission has a
responsibility to ensure that the public is given all the information needed to
understand the full magnitude of the obligations and impact of Muskrat Falls.
To that end the Coalition will seek to have the many legal agreements
summarized and the complex financial details of the project explained in simple
language, removing jargon and technical terms.
The Coalition also believes that the Commission must test and
compare the practices and policies adopted in the planning phase of the
project, including the exemption of the project from the jurisdiction of the
PUB, with internationally accepted best practices. Similarly, we will seek to
have the financial management and project management practices adopted for the
project contrasted and compared with international best practices. We do need
to learn why the project has become such a public policy fiasco.
The Coalition believes in a balanced approach, one which
identifies the mistakes of the past as well as the future changes in policy and
practice needed to reduce the negative impact of the Muskrat Falls project.
Now that the Coalition has been incorporated and legal counsel
appointed, we expect that the period up to the final report of the Commission
will be a busy one. We encourage people who support our goal to join the
Coalition. When our new website becomes operational we expect to provide
regular updates on our work.
Ronald G. Penney, Des Sullivan and David Vardy
ANNEX
Excerpts from the Commissioner’s Interpretation:
[29]
Generally speaking, it is clear to me that the Order in Council, and
specifically section 4, is geared to focus the Commission's work and mandate,
primarily at the least, on the business case put forward by Nalcor leading to
the official sanction of the Muskrat Falls Project by Government in December
2012 as well as the reasons why the costs of construction of the Project have
escalated from the initial estimates made. By business case, I mean
specifically the case advanced by Nalcor, and accepted by the Government, for
the need, financial viability, costs and benefits of the Muskrat Falls Project.
Really what is primarily being asked of the Commission is to explain what was
done by Nalcor and the Government of Newfoundland and Labrador to cause the Muskrat
Falls Project to be sanctioned, whether the analysis done by Nalcor and the
Government was reasonable considering best industry practice and why the
Project cost has escalated so significantly.
[30] Also
to be considered is why the Project was exempted from PUB scrutiny,
notwithstanding that ultimately a reference was made to the PUB to compare two
potential options for supplying power to the island part of the Province. Once
that assessment by the PUB was commenced, the Government decided it would not
give the PUB the extension of time that it requested to complete its work. To
assess the possible impact of the PUB exemption or lack of scrutiny of the
development, costs and operation of the Project, the Commission will be
investigating the full circumstances surrounding the PUB’s degree of
involvement.
[31]
Based upon section 4( d), it will also be necessary for the Commission to
investigate the involvement of the Government in the Project prior to sanction
and whether it was fully informed and was made aware of any risks or problems
anticipated with the Project so as to assess whether it had "sufficient
and accurate information upon which to
appropriately decide to permit the Project to proceed". Once sanction was
given, the Commission of Inquiry must consider what measures the Government has
taken to oversee the Project. In doing so, the Commission is directed to focus
on governance arrangements and decision-making processes as related to the
Project. Such an examination will be a broad one and will have to include both
the prior governments as well as the present government for the Province.
[41]
While there is some overlap between the issues to be considered under terms
4(a) and 4(b), matters for consideration under 4(b) will include such things as
Nalcor's ability to oversee and manage a project of the magnitude of the
Muskrat Falls Project, whether construction scheduling for the Project was
reasonable, whether the contractual arrangements with contractors,
subcontractors, consultants and others, including embedded contractors, were
appropriately entered into in accordance with industry best practice, whether
any reports or risk assessments were obtained by Nalcor, who they were shared
with and how they were responded to by Nalcor. One such report will be the SNC
Lavalin Report dated April 23, 2013 which will merit particular attention by
the Commission. As well, I must consider whether appropriate or proper
consideration was given and actions taken regarding potential risk to the
environment, human safety and property related to the stability of the North
Spur and methylmercury contamination. How these reports or assessments were
received by Nalcor and whether they were made available to the Board of Nalcor
as well as the Government will also be a part of the investigation to be
conducted.
