Expert Report of T. Murray Rankin, Q.C

IN THE MATTER OF AN ARBITRATION UNDER CHAPTER ELEVEN OF THE NORTH AMERICAN FREE TRADE AGREEMENT AND THE UNCITRAL ARBITRATION RULES BETWEEN: WILLIAM RALPH CLAYTON, WILLIAM RICHARD CLAYTON, DOUGLAS CLAYTON AND DANIEL CLAYTON AND BILCON OF DELAWARE INC. Claimants AND: GOVERNMENT OF CANADA Respondent EXPERT REPORT OF T. MURRAY RANKIN, Q.C. 1 I. PURPOSE OF THIS REPORT 1. I was asked to undertake an independent analysis of the environmental assessment (“EA”) process that was followed with respect to an application by Bilcon of Delaware, Inc. (“Bilcon”) for project approval of a quarry and basalt loading facility to be established at Whites Point, located in Digby County, Nova Scotia. I was asked to consider the decision-making followed prior to, during and after the Joint Review Panel (“JRP”) process established by the Governments of Canada and Nova Scotia. 2. The specific question posed was whether the EA process that was followed, either considered in whole or in part, would be substantively unreasonable and/or procedurally unfair, as viewed through the lens of Canadian public law principles. In doing so, I compared the treatment afforded projects that might objectively be considered substantially similar to the Bilcon project, recognizing, of course, that no two projects are ever identical. It is a hallmark of the “rule of law” principle, which has been held to undergird Canadian constitutional law1, that as much as possible “like cases should be treated alike”. Prevailing notions of justice have long featured adherence to this fundamental principle.2 3. When broadly considered, the issue is whether those projects received better treatment in the application of the two Governments’ EA process when compared to the White Points Quarry (“WPQ”) project, and whether jurisdictional deficiencies arose during the process, including any lack of natural justice and procedural fairness, which would offend principles of Canadian public law. 1 Re Secession of Québec, [1998] 2 S.C.R. 217, 161 D.L.R. (4th) 385 (Investor’s Schedule of Documents at Tab C 816). 2 The Free Online Dictionary provides this alternative definition of “justice”: 2. (Philosophy) Ethics a. the principle of fairness that like cases should be treated alike b. a particular distribution of benefits and burdens fairly in accordance with a particular conception of what are to count as like cases. (emphasis added) 2 4. In preparing this Report, I reviewed the JRP Report; the Bilcon Memorial; the Counter-Memorial submitted by the Government of Canada; the various expert reports submitted by the parties, including those of David Estrin, Robert G. Connelly, and Lawrence Smith, Q.C.3; the witness statements of Hugh Fraser and Paul Buxton4; as well as the exhibits, portions of the transcripts of the JRP hearing and certain internal government correspondence that were provided to me. I was asked to provide my opinion on both the environmental law and public law aspects of what occurred. I was asked to draw on my academic and practice experience in administrative law and environmental law to inform my perspective. 3 In preparing this Report, I was only provided copies of the initial expert reports of Mr. Estrin and Mr. Lawrence E, Smith, QC. I understand that subsequent reports may have been filed but these were not provided to me before this report was submitted. I have never spoken to either Mr. Estrin or Mr. Smith in advance of preparing this report. 4 In the case of Buxton, I have reviewed both his initial witness statement from July 20, 2011, and his supplementary witness statement. 3 II. PROFESSIONAL BACKGROUND 5. I first studied environmental law at the Harvard Law School and then taught the subject as a Professor of Law at the University of Victoria for over a decade before joining Heenan Blaikie LLP, where I was a partner and a mediator/arbitrator in the environmental law field. I remain an Adjunct Professor at the University of Victoria, where I am Co-Chair of the Environmental Law Centre, which operates a clinic in public interest environmental law. I am a founding member of the Canadian Centre for Environmental Arbitration and Mediation, Co-Chair of the National Environmental Law Forum, and regularly advise governments, corporations, and law firms on environmental matters. 6. I advised the British Columbia Ministry of Environment on reform of environmental protection legislation, and represented the Province on the Commission on Resources and Environment in the development of strategic land use plans. I am a former Chair of the BC Public Interest Advocacy Centre, the Land Conservancy of BC, and the West Coast Environmental Law Association. I served as Commission Counsel to a Federal/Provincial Environmental Assessment Panel, and have been jointly retained by the Governments of Canada and British Columbia as an expert in Canadian environmental law in litigation before District Court of the United States. 7. I was appointed Queen’s Counsel in 1999, and have appeared at all levels of Court on environmental matters. I have been ranked as a leading practitioner in Environmental Law in the LEXPERT Directory, as an expert in Environmental Law by Chambers & Partners Global, in its UK-based legal directory, and as an expert in Natural Resources Law in Best Lawyers International. I currently head a firm specializing in public and environmental law. I also serve as a director of Hummingbird Urban Biomass Ltd., a waste-to-energy corporation with offices in Canada and the United States. 4 8. I am a Regional Editor of the Canadian Journal of Administrative Law and Practice, and among my publications is a translation of the leading three-volume administrative law text by René Dussault and Louis Borgeat, Administrative Law: A Treatise. 5 III. EXECUTIVE SUMMARY 9. This Report arrives at six conclusions: a) The Joint Review Panel (JRP) did not fulfill its mandate. b) The JRP exceeded the jurisdiction conferred on it by the enabling legislation and its stipulated Terms of Reference. c) The JRP did not accord natural justice and procedural fairness to Bilcon. d) The JRP made erroneous findings of fact, provided opinions that were not based on the evidence provided to it, and took into account irrelevant considerations. e) As a result of the JRP process, the decisions made by the federal and provincial ministers were in consequence also deficient in law. f) This process was fundamentally flawed. A. Mandate Omissions 10. The recommendations made by the JRP are circumscribed by the specific requirements of the Panel’s statutory jurisdiction, the sources of which are the Canadian Environmental Assessment Act5, the Nova Scotia Environment Act6 and the JRP’s Terms of Reference.7 The Panel could not lawfully do anything contrary to the legislation under which it was constituted or the specific Terms of Reference under which the review was to take place. Examples of the JRP acting contrary to the legislation and its Terms of Reference include the following: a) it did not provide the Ministers with any recommendations concerning “the environmental effects of malfunctions or accidents that may occur in 5 Canadian Environmental Assessment Act, S.C. 1992, c. 37 (Investor’s Schedule of Documents at Tab C 255). 6 Nova Scotia Environment Act, 1994-95, c. 1, as amended by S.N.S. 1998, c. 18, s. 557 (Investor’s Schedule of Documents at Tab C 258). 7 Terms of Reference for the Joint Review Panel, Appendix to the Agreement concerning the Establishment of a Joint Review Panel, dated November 3, 2004 (Investor’s Schedule of Documents at Tab C 363). 6 connection with the Project”, contrary to the mandatory terms of the “Scope of the Environmental Assessment and Factors to be considered in the Review”, contained in Part III of the Terms of Reference; b) it did not limit its analysis of cumulative environmental effects to those that are “likely to result from the Project in combination with other projects or activities that have been or will be carried out”; and c) it did not make recommendations concerning “measures that are technically and economically feasible and that would mitigate any significant adverse environmental effects of the Project”. B. Excess of Jurisdiction 11. The JRP’s conclusion that the project would negatively impact “community core values” was ultra vires. In light of the definition of “environmental effects” contained in the Terms of Reference, “community core values” is not an “environmental effect” as that term is defined. Any conclusion based on a notion of “community core values”, therefore exceeded the JRP’s jurisdiction. 12. Similarly, the JRP’s decision to adopt sustainable development and the precautionary principle as part of its “five guiding principles” also constituted jurisdictional errors. They are considerations outside the JRP’s jurisdiction as codified in the Terms of Reference, as was the JRP’s evaluation of “benefits and burdens”, and what it considered to be in the public interest. 13. In introducing its first Recommendation, the JRP stated: The Panel's mandate was to determine whether the Project presented by Bilcon would result in significant adverse or beneficial physical, biological or socioeconomic environmental effects and would be in the public interest. Based on its comprehensive synthesis and analysis of all the information provided, the 7 Panel found that the Project would have a significant adverse effect on a Valued Environmental Component represented by the “core values” of the affected communities. The Panel's review of core values advocated by the communities along Digby Neck and Islands, as well as community and government policy expectations, led the Panel to the conviction that community has an exceptionally strong and well-defined vision of its future.8 Even if the “affected communities…advocated” certain things – and the evidence shows clearly that Digby Neck was a classically divided community – this could not change the legal mandate of the JRP.

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