THE COMPANY that wanted to develop a quarry on Digby Neck will seek damages of at least US$188 million for the way Canada handled its environmental review of the project.
In a notice of intent to be filed today in Ottawa, Bilcon of Delaware is seeking a massive compensation package under the North American Free Trade Agreement, or NAFTA.
And be warned, folks: If Canada loses this trade action, Nova Scotia will end up coughing up a lot of cash.
Under international trade law, Bilcon has to name the federal government as the respondent in this dispute. But sources say Ottawa would go after Nova Scotia as a key player if compensation is awarded to the firm.
Bilcon is part of the Clayton family empire, a New Jersey concrete conglomerate, that is arguing — in essence — that the environmental assessment of this project uncovered anti-Americanism.
"This is perhaps the worst example of regulatory failure that I have ever seen," said Toronto trade lawyer Barry Appleton, who is representing the Claytons in the NAFTA dispute.
The notice of intent alleges that Canada violated NAFTA by taking "discriminatory" actions against Bilcon — imposing "treatment far less favourable than that accorded to similar Canadian-owned investments."
Asked to elaborate on this, Mr. Appleton referred to the new gold mine project at Moose River, which he says was reviewed and assessed by the province in 11 months.
The review process for the Whites Point quarry took 5 1/2 years.
"That’s a tremendous difference of treatment," Mr. Appleton said in an interview. "The Clayton family was treated significantly less favourably."
Mr. Appleton said other odious (or unfavourable) comparisons will be cited when Bilcon tables its formal complaint under NAFTA after a 90-day waiting period.
Today’s action triggers a process that should take about two years to complete, he said. After adjudicating the facts, a NAFTA tribunal would award appropriate compensation — or not.
Last October, environmentalists heaped praise on the work of the federal-provincial environmental panel that reviewed the proposed Whites Point quarry.
The panel, chaired by Robert Fournier of Dalhousie University, called on the federal and provincial governments to reject the project. (Both governments did just that.)
Mr. Fournier’s panel also suggested Nova Scotia should put in place a comprehensive management plan for coastal development. More dramatically, it cited community values as a key factor in its decision.
At the time, the use of core community values was praised as precedent-making.
"We are making history here in Nova Scotia," said Gretchen Fitzgerald of the Sierra Club of Canada.
But neither the Claytons nor their lawyer were impressed. Mr. Appleton, a veteran international trade litigator who has written books on NAFTA, said Monday that the "wheels fell off" this regulatory process.
The Fournier panel "included novel, non-scientific criteria" in its decision, Mr. Appleton said.
"They used this concept of community core values, which they had no authority to invoke. Bilcon was never informed of these community core value criteria so it could address them."
Mr. Appleton says, in essence, that the Fournier panel stepped outside its jurisdiction.
In the notice of intent, Bilcon also says the panel ignored favourable submissions from government departments, including Transport Canada, Natural Resources Canada and the Nova Scotia Department of Environment and Labour.
Mr. Appleton’s comments make it clear that the Claytons also expected a warmer reception from the province. Nova Scotia promotes international investment, he said, but you sure wouldn’t know it from the treatment that Bilcon received here.
"It takes a lot of beautiful tourism advertising to try to overcome this kind of international investment record," he said. Are there other signs that this dispute is turning bitter, if not personal? My impression is that the Claytons are determined to get a fair hearing at NAFTA, after they feel they were denied one by a Nova Scotia government they see as hypocritical. (Politicians here got behind the project, until the opponents started winning the war for hearts and minds.)
And then there’s the personal and symbolic stuff. Sources say at least one government minister cancelled a meeting with members of the Clayton family. They also say the photograph of the supposed quarry site, on the cover of the panel’s report, missed the target by several hundred metres.
Are they bitter?
Maybe not. But Clayton family interests will clearly argue that the loss of "aggregate" from the quarry and a flawed regulatory process will cost their companies a fortune — at least $188 million, I guess.
In short, the real battle is just beginning. In all likelihood, Bilcon will never develop a quarry on Digby Neck. But it might just grab the Nova Scotia government by the scruff of the neck and give it a good shake, instead.