Sierra Club of Canada

The CANDU Court Case

 

January 1997 affidavit from the Sierra Club of Canada submitted to the Federal Court of Canada in connection with the environmental assessment of CANDU agreements with China.


File No. T-85-97IN THE FEDERAL COURT OF CANADA

TRIAL DIVISION

 

BETWEEN:
 

SIERRA CLUB OF CANADA, a national organization concerned with environmental protection and restoration and a non-profit corporation duly constituted on April 27, 1992 by Letters Patent under the Canada Corporations Act, having its head office at 1 Nicholas Street, Suite 412, Ottawa, Ontario, K1N 7B7

APPLICANT
 

and

THE MINISTER OF FINANCE OF CANADA, having his principal office at the House of Commons, Room 515-S, Centre Block, Ottawa, Ontario, K1A 0A6
 

and

THE MINISTER OF FOREIGN AFFAIRS OF CANADA, having his principal office at the House of Commons, Room 418-N, Centre Block, Ottawa, Ontario, K1A 0A6
 

and

THE MINISTER FOR INTERNATIONAL TRADE OF CANADA, having his principal office at the House of Commons, Room 365, West Block, Ottawa, Ontario, K1A 0A6
 

and

THE ATTORNEY GENERAL OF CANADA, having his principal office at 239 Wellington Street, Ottawa, Ontario, K1A 0H8 and his Montreal office at Guy Favreau Complex, 200 René-Lévesque Blvd. West, East Tower, 9th floor, Montreal, Quebec, H2Z 1X4

RESPONDENTS
 



AFFIDAVIT OF ELIZABETH E. MAY
in support of Application for Judicial Review



I, Elizabeth E. May, Executive Director of the Sierra Club of Canada, make oath and say as follows:

1. By virtue of my experience, activities and responsibilities, notably as set out hereinafter, I may depose to all the facts herein of my own knowledge.

2. I am a non-practising member of the Law Society of Upper Canada and since 1989 I have been National Representative and since 1993, Executive Director of the Sierra Club of Canada.

3. I have a long history of involvement in matters of environmental law and policy, including questions of environmental assessment, nuclear power and the export of CANDU reactors.

4. In 1981, while I was in my second year at Dalhousie University School of Law, I represented the Canadian Coalition for Nuclear Responsibility in hearings before the National Energy Board concerning the export of nuclear generated electricity from the Point Lepreau nuclear reactor in New Brunswick. I am thoroughly familiar with the environmental assessment of the Point Lepreau "CANDU 600" reactor completed under the then federal Environmental Assessment and Review Process.

5. From 1986 to 1988, I was Senior Policy Advisor to the federal Minister of the Environment, the Honourable Tom McMillan. In that capacity, I had duties related to environmental assessment, including notably with respect to the process of public consultation on reforming federal environmental assessment which led eventually to the adoption by Parliament of the Canadian Environmental Assessment Act (hereinafter "CEAA").

6. The Sierra Club of Canada is a national, non-profit organization concerned with environmental protection and restoration, duly constituted as a non-profit corporation on April 27, 1992 by letters patent under the Canada Corporations Act. The letters patent of the Sierra Club of Canada are Exhibit A to this my affidavit.

7. In accord with the objects, interests and purposes of the Sierra Club of Canada, the Board of Directors has approved making the following matters of priority for the organization: environmental assessment law and policy, including matters relating to assessment in cases of financial assistance using the public money of Canada for projects outside of Canada, and nuclear power including the export of Canadian "CANDU" reactors. As events have unfolded, the Board of Directors has now authorized the commencement of the present Application for Judicial Review.
8. The Sierra Club of Canada has a long history of involvement in issues relating to nuclear power and CANDU exports, as well as to environmental assessment law and policy in Canada.

9. That involvement is founded on concern for the environmental implications of the use and export by Canada of nuclear reactors and concerns relating to the lack of public information and accountability in regard thereto, as well as the conviction that comprehensive environmental assessment with guaranteed public participation and access to information is important in trying to ensure that decisions are taken which are sustainable and environmentally responsible.

10. In pursuing the interest of the Sierra Club of Canada in these matters, I have served at least since the early 1990's as a representative for the Sierra Club of Canada on the Environmental Assessment Caucus of the Canadian Environmental Network ("CEN"). The CEN is the national network of some 2,000 environmental non-governmental organizations.

11. The Sierra Club of Canada was actively involved throughout the legislative development of CEAA. Notably, on behalf of the Sierra Club of Canada, I testified before the Parliamentary Committee reviewing the proposed new federal environmental assessment legislation.

12. I also direct the efforts of the Sierra Club of Canada as a member of the Campaign for Nuclear Phaseout (hereinafter "CNP"). CNP is a non-profit alliance of safe-energy and environmental groups from across Canada which was founded in 1989. CNP is dedicated to the phaseout of nuclear power in favour of safer, cleaner energy alternatives.

13. From November 1993 to September 1995, I served as an appointed member of the multistakeholder Projects Outside Canada Subcommittee of the Minister of the Environment's Regulatory Advisory Committee on the Canadian Environmental Assessment Act (hereinafter respectively "RAC" and "POC Subcommittee").

14. In sum, the Sierra Club of Canada is a person directly affected by the matter in respect of which relief is sought in the present Application for Judicial Review. Without restricting the foregoing, this is so by reasons of its corporate objects, membership (principally Canadian taxpayers with interests in matters of environmental protection), history, activities and expertise.

15. Of particular note is our ongoing work on the important public issue of the sale of CANDU nuclear reactors to China with Canadian public financing and our sustained efforts to ensure that federal authorities comply with the requirement of environmental assessment under CEAA in regard thereto.

16. The Minister of Finance of Canada has powers, duties and functions which include the management of the Consolidated Revenue Fund (hereinafter "CRF") comprising the public money of Canada, and the supervision, control and direction of all matters relating to the financial affairs of Canada, including authority to guarantee loans of up to $1.5 billion to be entered into by the State Development Bank of China for the purpose of financing the purchase of nuclear reactors from Atomic Energy of Canada Limited (hereinafter "AECL").

17. The Minister of Foreign Affairs has powers, duties and functions which extend generally to international trade and commerce and exports, responsibility for the finances and spending of the Department of Foreign Affairs and International Trade, including that part of the public money of Canada in the CRF known as the "Canada Account" and carried on the books of his Department, and furthermore his concurrence is required for actions by Respondent the Minister for International Trade.

18. The Minister for International Trade of Canada, assisting and with the concurrence of Respondent the Minister of Foreign Affairs, has powers, duties and functions with respect to Canada's international trade, commerce and export sales, with respect to certain public money of Canada, including the Canada Account, and as the Minister for the purposes of the Export Development Act and the appropriate Minister under the Financial Administration Act, with respect to the affairs of the Export Development Corporation (hereinafter "EDC").

19. The Minister of Finance, the Minister of Foreign Affairs and the Minister for International Trade are each a federal board, commission or other tribunal for the purposes of s. 18 of the Federal Court Act with respect to the matter to which the present Application for Judicial Review relates. They are also each a "federal authority" and a "responsible authority" for the purposes of CEAA.

20. In November 1993, I accepted an appointment to the POC Subcommittee of RAC. The work of RAC and the POC Subcommittee was coordinated by the Canadian Environmental Assessment Agency ("the Agency").

21. The Subcommittee was comprised of representatives of the nuclear industry from the Canadian Nuclear Association, and representatives of the Canadian Exporters Association, the Canadian Association of Consulting Engineers, and various federal government departments, agencies and Crown corporations concerned with matters of environment, foreign affairs, development assistance and the promotion of Canadian exports. There were also representatives of non-governmental organizations working in the fields of environment and development of which I was one. The list of POC Subcommittee members is Exhibit B to my affidavit.

22. The mandate of the POC Subcommittee was to develop, by consensus, a regulation regarding the environmental assessment of projects outside of Canada pursuant to the regulation making powers found in sub-paragraph 59 (i)(ii) of CEAA. The preparation of such regulations has been a priority of the Agency since even before CEAA received Royal Assent on June 23, 1992.

23. Absent such regulations, the full environmental assessment regime under CEAA applies as set out therein to projects outside of Canada. I have observed that this has always been the universal understanding of those most knowledgeable regarding CEAA and its application, including the members of the POC Subcommittee. This notably included the federal government members and officials advising the Subcommittee.

24. In fact, CEAA has been applied to projects outside Canada since the coming into force of CEAA.

25. The POC Subcommittee operated under the understanding that only limited changes to the Act were permitted under the regulation-making power in s.59(i). We were told that only ss.14-45 of CEAA could be varied or excluded, and only if the changes were limited to adaptations of the environmental assessment process which were consistent with the overall scheme, direction and purpose of the Act.

26. In September 1995, the POC Subcommittee completed its work and submitted the consensus draft regulation to the RAC itself. The RAC fully endorsed the draft regulation prepared by the POC Subcommittee, and referred it to the Agency and the Minister of the Environment for the making of regulations. The consensus Projects Outside of Canada Regulation is Exhibit C to this my affidavit.

27. On November 8, 1994, AECL, the Canadian Crown corporation responsible for the development and sale of Canadian nuclear technology, signed a Memorandum of Understanding with the China National Nuclear Corporation (hereinafter "CNNC") to begin negotiations on the sale of two "CANDU - 6" 700 megawatt nuclear reactors. We have been unable to obtain a copy of the Memorandum of Understanding, but it is reported in the CANDU Update of November 8, 1994 which is Exhibit D to this my affidavit.

28. This is a "project" for the purposes of CEAA. It comprises every proposed construction, operation, eventual decommissioning and all other works, undertakings and physical activities in China, Canada and elsewhere in relation to and necessary to fulfil the purpose of the two nuclear reactors. The reactors are to be located at the Qinshan facility on the coast of Hangzhou Bay in Zhejiang Province, 126 km southwest of Shanghai, China.

29. Without restricting the foregoing, the project includes any related mining and processing of uranium to fuel the reactors, production and provision of heavy water from Canada, transport of fuel and heavy water and storage and disposal of radioactive waste.

30. Excluding the Memorandum of Understanding of November 8, 1994 as such, all of the things described in the three preceding paragraphs are referred to hereinafter as "the project".

31. The type of reactors to be sold to China are essentially the same models as are currently installed at Point Lepreau, New Brunswick and Gentilly, Quebec.

32. The project is and has been at least in its planning stages.

33. The project is not among the projects for which an environmental assessment is not required pursuant to CEAA and its regulations.

34. The project is within the classes of projects which the Governor in Council is satisfied are likely to have significant adverse environmental effects and which fall under the Comprehensive Study List Regulations made pursuant to CEAA.

35. Following reports that the Prime Minister of Canada intended to sign an agreement to sell two "CANDU" reactors to China on the occasion of Chinese Premier Li Peng's visit to Canada in October, 1995, I sent letters on October 10, 1995 to the federal Minister of the Environment, the Minister of Foreign Affairs and the Minister responsible for the Canadian International Development Agency, as well as Crown corporations AECL and EDC.

36. All of the letters were to similar effect. I explained the Sierra Club of Canada's understanding that the federal government was proposing to fund projects in China. We notified the addressees that CEAA applies where federal Ministers, governmental agencies or Crown corporations provide such funding. We also expressed view that until and unless the requirements of CEAA are met, any such funding commitment would be illegal. I have been unable to locate my copies of the other letters, the originals of which are in the possession of the addressees, but my letter of October 10, 1995 to the Minister of the Environment is Exhibit E to this my affidavit.

37. In effect, on October 13, 1995, the sale of the two CANDU reactors to China was agreed to in preparation for completion of work on a commercial contract. Documents were signed by Chinese Premier Li Peng and the Prime Minister of Canada, as well as AECL President Reid Morden and his counterpart in the China National Nuclear Corporation, Jiang Xinxiong. Despite our best efforts, we have been unable to obtain a copy of the agreements and documents signed at that time, and must rely on the press release of AECL, "AECL Closer to China Reactor Sale" of October 13, 1995 which is Exhibit F to this my affidavit.

38. Also on October 13, 1995, a Memorandum of Understanding was signed between Canada's then Minister for International Trade and the Chinese Minister of the State Planning Commission on cooperation for the construction of two CANDU units at the Qinshan site. This MOU related to China's interest in the Canadian CANDU nuclear technology and the commitment to continue negotiations with AECL on the purchase of two nuclear reactors. Despite our best efforts, we have been unable to obtain copies of the Memorandum of Understanding signed on October 13, 1995. However, the October 13, 1995 press release of the Prime Minister's Office, together with Background Information on the agreements signed, are Exhibit G to this my affidavit.

39. The responses of the Ministers and heads of Crown corporations to our letters of October 10, 1995 uniformly took the view that Crown corporations have no obligations to conduct environmental assessments under the CEAA until such time as a regulation covering them is made. In addition, in his response of December 18, 1995, the then Minister of Foreign Affairs also clearly stated that CEAA applies to projects outside of Canada for Canadian development assistance. The letter of December 18, 1995 and the other responses are together Exhibit H to this my affidavit.

40. In February 1996, reporting on the progress of negotiations, AECL President Reid Morden indicated that the Chinese terms were onerous and that certain key issues were still outstanding, including matters of financing. He was reported in the Trade Journal Nucleonics Week saying that "the Canadian Government alone has committed $1.5 billion in financing... and the AECL obtained commitments for additional financing from external partners," (but) "the Chinese still require more to make this viable according to their terms." The relevant articles from Nucleonics Week are together Exhibit I to this my affidavit.

41. I have subsequently learned that on March 28, 1996, Royal Assent was given to Appropriation Act No. 4, 1995-96, S.C. 1996, c. 4. That Act came into force on that day, with explicit effects as regards appropriations as of April 1, 1995. Sections 2 and 3 authorized amounts to be paid and applied out of the Consolidated Revenue Fund only for the purposes and subject to the terms and conditions specified in the Schedule. Schedule Vote No. 31b deals with a Special Program of the Department of Finance and authorizes the Minister of Finance pursuant to s. 29 of the Financial Administration Act to guarantee all amounts payable under or pursuant to loans and other financial arrangements not exceeding $1.5 billion for loans or financial arrangements to be entered into by the State Development Bank of China for the purpose of financing the purchase of nuclear reactors from Atomic Energy of Canada Limited. The excerpted relevant parts of that Act are Exhibit J to this my affidavit.

42. I learned that in April and May 1996, officials and representatives of the Government of Canada were involved in high-level meetings with the Chinese with a view to enabling the sale of the two reactors to go ahead and the project to be carried out. As part of that effort, the Honourable Anne McLellan, Minister of Natural Resources travelled to Beijing in May 1996 for high-level meetings with Chinese officials. The Globe &;Mail newspaper report of that visit and the Minister's own confirmation of it in a true cassette tape recording of an interview on CBC Radio's "As It Happens" on November 26, 1996 are together Exhibit K to this my affidavit.

43. In 1996, in anticipation of the making of CEAA regulations for projects outside of Canada, the Sierra Club of Canada was contracted by the Canadian Environmental Assessment Agency to study how CEAA and its regulations would apply in practice to projects outside of Canada. I researched and wrote the report with Juli Abouchar, an Associate of the Foundation for International Environmental Law and Development ("FIELD"), London, England, and practising lawyer in New Brunswick.

44. In this connection, we reviewed environmental assessment practices for projects outside national borders of selected donor countries including the United States, Japan, Germany and Norway, and environmental assessment practices within China, India, Indonesia, Costa Rica, the Russian Federation and Zimbabwe. We also studied the environmental assessment practices of the World Bank, the Asian Development Bank and the African Development Bank.

45. From our research, I am aware that it is common among advanced industrial states and multilateral development agencies providing financial assistance for projects in recipient countries to conduct environmental assessments of those projects. I note also that states with a democratic form of government consider it important and proper for the public to be consulted through a democratic participatory process where significant sums of public money are to be spent on projects in other countries.

46. I learned that on July 12, 1996 in Beijing, the CNNC and AECL signed the Project Award Agreement for AECL's sale and construction of the two "CANDU - 6" nuclear reactors. In its press release of July 13, 1996, AECL explained that the Project Award Agreement finalized the price and commercial terms for the project, as well as the fees, the financing scope and conditions from the Canadian Export Development Corporation and other export credit agencies. [my emphasis] Despite our best efforts, we have been unable to obtain the Project Award Agreement, but the AECL press release of July 13, 1996 is Exhibit L to this my affidavit.

47. Over the course of the summer of 1996, the Sierra Club of Canada attempted to verify the nature of the proposed reactor sale to China and the provision, if any, which was being made for environmental assessment under CEAA.

48. On August 1, 1996, I wrote to the Minister of Foreign Affairs and International Trade as well as to the Minister of Natural Resources and the Minister responsible for the Canadian International Development Agency. Among other matters, in those letters, I noted the absence of public disclosure of any significant details of the July 12, 1996 Agreement and sought information and assurances on a number of matters.

49. In particular, I sought information regarding the terms and amount of financing to be provided by Canada, the mechanisms for that financing and details regarding the involvement of the Export Development Corporation and other Canadian organizations. I also formally sought a commitment that the environmental assessment process under CEAA would be followed with respect to the CANDU reactor sale. I asked when that assessment would be undertaken and more generally what provisions were being made for public involvement in the decisions to proceed with the proposed reactor sale. My letters of August 1, 1996 are together Exhibit M to this my affidavit.

50. On August 1, 1996, I also wrote to the Export Development Corporation, requesting information concerning EDC's role in the sale of CANDU reactors to China. The reply I received from Rod Giles on behalf of EDC President and Chief Executive Officer Paul Labbé confirmed that EDC was participating in discussions regarding the financing of AECL's sale of CANDU reactors to China. That reply also confirmed that any financing from EDC would take the form of loans to which interest rates and fees would be applied. [my emphasis] In that letter, EDC also refused on grounds of commercial confidentiality to disclose the terms or conditions of the transactions in question. The reply of August 21, 1996 is Exhibit N to this my Affidavit.

51. By letter of September 27, 1996, the Minister of Foreign Affairs on behalf of himself and the Minister of Natural Resources replied to my letters of August 1, 1996 to them. The letter of September 27, 1996 is Exhibit O to this my affidavit.

52. On Monday, November 11, 1996, I received a telephone call from Robert Connelly, Vice-President of the Canadian Environmental Assessment Agency. He said that he was personally calling each member of the POC Subcommittee to inform us that Cabinet had passed a regulation which was different from the consensus draft regulation. He told me that this had occurred at a Cabinet meeting on the evening of November 6, 1996. He also told me that the final POC regulation had already entered into force without pre-publication in the Canada Gazette and without the public comment period that is customary for important regulations. In fact he said, it was already law, but would not be published in the Canada Gazette until November 27, 1996.

53. The connection between the project and the late changes to the POC Regulations was discussed and confirmed by the Minister of National Resources. The Minister of Natural Resources insisted that the regulations were merely passed to "clarify" the law for the peace of mind and benefit of the Chinese buyers. Two exhibits to this affidavit contain interviews with the Minister of Natural Resources to this effect. The first is the radio interview, the tape recording of which is part of Exhibit K hereto. The second is a television interview given by her on CBC TV's Newsworld on "The Lead" on November 26, 1996, a true videotape of which is Exhibit P to this my affidavit.

54. The Minister of International Trade made similar comments, tying the passage of the POC Regulations to the project. The comments of Minister of International Trade are found in an article from the Globe &;Mail of November 8, 1996, titled "Candu salespitch to China cleared." Together with a newspaper report of November 7, 1996 by Shawn McCarthy of the Toronto Star "Loophole alleged in Candu sale to China", this is found as Exhibit Q to this my affidavit.

55. The Cabinet in fact departed from the consensus draft regulation as recommended by the POC Subcommittee and the full RAC. The final POC regulation was made through an unusual expedited procedure, apparently for reasons related to the desire to quickly change the legal requirements for environmental assessment for the project to which the present Application for Judicial Review relates.

56. Specifically, the Project Outside of Canada Environmental Assessment Regulations (hereinafter the "POC Regulations") were adopted without publication for public comment in draft form. They came into force the very next day, November 7, 1996.

57. The POC Regulations would remove comprehensive study. The Sierra Club of Canada's concern in this regard is that the effect of this would be to remove CEAA's statutory guarantee of the right to public participation of Canadians and others in the environmental assessment of projects outside of Canada which receive Canadian public money and which, by definition, are likely to have significant adverse environmental effects.

58. The power to make regulations under CEAA varying and excluding procedures and requirements of the environmental assessment process is limited to "prescribed circumstances" and to "adapting the process". The attempt at a blanket elimination of comprehensive study does not adapt. It eliminates altogether what is for the Sierra Club of Canada at least an essential feature of the regime mandated by Parliament.

59. The Preamble and purposes of CEAA commit to Canadian international leadership in anticipating and preventing environmental degradation and to ensuring an opportunity for public participation in environmental assessment. The Sierra Club of Canada is most concerned that, without comprehensive study, there is no assurance of public participation under the POC Regulations. For screening, public participation is discretionary. Similarly, there is no assurance that environmental assessment by mediation, review panel or advisory committee under the POC Regulations will ever occur for the project which is in question in the present Application for Judicial Review or for other projects outside of Canada.

60. In any case, the project and the financial assistance had been proposed and were - at least - well into the planning stages when the POC Regulations were made. The obligation to conduct an environmental assessment and to proceed by way of comprehensive study had already been legally engaged. The POC Regulations cannot be given retroactive effect to undo the public statutory legal obligations of the federal authorities who are involved in the financial assistance for the project.

61. The integrity of the environmental assessment process and the effective assessment of mega projects, like nuclear reactors, with potential for highly significant environmental effects, is essential for the Sierra Club of Canada.

62. In respect of the matter which is the subject of the present Application for Judicial Review, only through comprehensive study or referral to the Minister of the Environment in accordance with s. 29 of CEAA can it be assured that the project and the financial assistance to enable the project to be carried out will attract thorough, independent and public environmental assessment.

63. For example, only through comprehensive study or referral in accordance with s. 29 of CEAA will the Sierra Club of Canada and Canadians in general be assured:

a. That the environmental assessment will be comprehensive, including consideration of a full range of factors, and notably those set out in subsection 16(2) of CEAA;

b. That the environmental assessment will be independent by virtue of the involvement of not just the responsible authorities who have already decided on the financial assistance without environmental assessment under CEAA, but also of the Minister of the Environment and of the Canadian Environmental Assessment Agency, and (in the case of s. 29) the mediator or review panel, in the key decisions regarding the assessment process, public involvement and the significance of environmental effects requiring further assessment.

c. That the environmental assessment will legally require public notice and a right for the public to participate in the process.

64. On November 26, 1996, the Office of the Prime Minister issued a news release, "Prime Minister Announces Final Sale of CANDU-6 to China", announcing that the Prime Minister had witnessed that very day in Shanghai the signing by AECL and the China National Nuclear Corporation of the final contract for the sale of two "CANDU-6" nuclear reactors to China. Despite our best efforts, we have been unable to obtain the agreements and documents signed on November 26, 1996. However, the press release of November 26, 1996 is Exhibit R to this my affidavit.
65. On the same day, the Prime Minister addressed the Canada China Business Council in Shanghai. The Prime Minister's speech detailed his role on behalf of Canada in working since 1994 with Premier Li Peng to push forward the negotiation of the sale of two CANDU reactors to China. The notes for the Prime Minister's address of November 26, 1996 are Exhibit S to this my affidavit.

66. Also on November 26, 1996, AECL issued a media release regarding the signature of the contract of sale for two "CANDU-6" reactors to the China National Nuclear Corporation. That release also confirmed that as an addition and part of the overall arrangement, AECL entered into a heavy water lease agreement to provide moderator for the CANDU reactors in their first 15 years of operation. The AECL press release and the backgrounder thereto are Exhibit T to this my affidavit.

67. Having conducted brief legal and other research on the relevant legislation, I determined that the Ministers who must have been involved in the federal financial assistance for the sale of the CANDU reactors and the project, out of the public money of Canada in the Consolidated Revenue Fund, must have included the Minister of Finance and the Minister for International Trade.

68. As we had not previously written these Ministers requesting environmental assessment of the project, on November 26, 1996, I wrote both the Minister of Finance and the Minister for International Trade. In that letter, the Sierra Club of Canada set out that the decisions taken by the two Ministers with respect to the financing of the sale of the CANDU reactors triggered a legal requirement for environmental assessment pursuant to section 5 of CEAA. We said that the POC regulations may be invalid and that they could not apply retroactively so as to exclude comprehensive study and the public participation which goes with it.

69. In that letter we formally demanded the conduct of an environmental assessment as required by law of the CANDU project in China and requested a response within 30 days. If the environmental assessment had proceeded, the Sierra Club of Canada offered its assistance in expediting the required review. In the case of refusal, we informed the Ministers of our intention to seek judicial review in the Federal Court. My letter of November 26, 1996 is Exhibit U to this my affidavit.

70. On November 27, 1996, the day after the signing in Shanghai attended by the Prime Minister, the Projects Outside of Canada Environmental Assessment Regulations, registered on November 7, 1996, were published in the Canada Gazette Part II. The regulations were accompanied by a regulatory impact analysis statement ("RIAS") providing notice that they would not be pre-published in draft form, but inviting only ex post facto comments. The RIAS also clearly stated that without the regulations, CEAA applies in its entirety to projects outside of Canada. The POC Regulations and RIAS as published in the Canada Gazette Part II are Exhibit V to this my affidavit.

71. Having had no formal response to our letter of November 26, 1996 and anticipating Christmas delays in communication, I transmitted letters by facsimile on December 20, 1996 to the Minister of Finance and the Minister for International Trade.

In those letters, I requested a response to our letter of November 26, 1996, and notified them that without a response we would infer a decision not to comply with the requirement of environmental assessment under the Canadian Environmental Assessment Act and would proceed to file an Application for Judicial Review. My letters of December 20, 1996 are together Exhibit W to this my affidavit.

72. By undated letter, marked by the facsimile machine at the office of the Minister for International Trade as December 21, 1996 at 5:20 a.m., the Minister for International Trade responded on behalf of himself and the Minister of Finance to my letter of November 26, 1996. In fact that letter was received by facsimile at our offices on Friday evening, December 20, 1996 at 5:20 p.m., at the start of our two-week closure for Christmas.

73. The Ministers confirmed their involvement in authorizing financing through the EDC of $1.5 billion, but maintained that CEAA had not been triggered. The letter of response clearly notified us for the first time of the decision of the Minister for International Trade and of the Minister for Finance as responsible authorities to refuse to comply, as demanded, with the requirement of environmental assessment pursuant to s. 5 of CEAA. The letter on behalf of the two Ministers is Exhibit X to this my affidavit.

74. We have been faced with the refusal to disclose information, documents, agreements and contracts regarding the use of public money from the CRF to provide the financial assistance for the project. However on the basis of all of the information we have gathered, by legal research and especially the letter of the Minister for International Trade which is Exhibit X hereto, I now know certain key facts which give rise to environmental assessment under CEAA.

75. In the exercise of public powers, duties or functions, the Minister of Finance, the Minister of Foreign Affairs, and the Minister for International Trade, as Ministers and as federal authorities, have made or authorized or are in the process of making or authorizing the financial assistance using the public money of Canada from the CRF for the purpose of enabling the project to be carried out in whole or in part.

76. The powers, duties and functions the said Ministers propose to exercise or are in the process of exercising or have exercised in respect of the project include:

a. Representations, promises and agreements over the last two years by Ministers and their officials to and with China and various Chinese, Canadian and other persons and entities respecting the sale of the reactors and the use of the public money of Canada to provide the financial assistance for the project and the sale of the reactors.

b. The determination by the Minister for International Trade and the concurrence by the Minister of Foreign Affairs that it is in the national interest to provide the financial assistance, including a loan of some $1.5 billion for the project and the export and sale of reactors for the project, all from the public money of Canada in the CRF, including from the Canada Account. Information regarding that loan is provided by the "CANDU 6 Backgrounder" from the Canadian Nuclear Association which is Exhibit Y to this my affidavit.

c. The concurrence by the Minister of Finance and the authorization of the Minister for International Trade for the EDC to enter into and administer a transaction with public money flowing through from the CRF and relating to the provision of the financial assistance for the project and the export and sale of reactors for the project, including a loan of some $1.5 billion.

d. The decision of the Minister of Finance to pay amounts out of or make charges against the public money of Canada in the CRF to provide the financial assistance for the project, including notably for the purposes referred to above in subparagraphs (b) and (c) above.

e. The decision of the Minister of Finance to provide and enter into a guarantee or other similar form of financial arrangement for the purpose of the project and the purchase of reactors for the project as part of the financial assistance, including a guarantee for loans or other financial arrangements entered into by the State Development Bank of China for the purpose of financing the purchase of nuclear reactors from AECL.

77. The financial assistance thus included at least two distinct elements: (1) a loan out of the Consolidated Revenue Fund administered by the Export Development Corporation; and, (2) a guarantee also on the basis of an appropriation by Parliament out of the Consolidated Revenue Fund.

78. Despite sustained efforts, including through Access to Information requests, the Sierra Club of Canada has been unable to obtain many facts, financial records and accounts, agreements, contracts, documents and legal instruments relating to the matter to which the present Application for Judicial Review relates, including the project and the financial assistance, and the role of the Minister of Finance, the Minister of Foreign Affairs, the Minister for International Trade and their officials and of other actors and persons, including the Prime Minister, the Minister of Natural Resources, the Canadian International Development Agency, AECL and the EDC and their officials.

79. Regrettably, Parliament and the Auditor General of Canada, a high officer of Parliament, have experienced similar difficulties with respect to financial and information accountability.

For example, upon a question of the Honourable Charles Caccia, MP on November 29, 1996 regarding the terms and conditions of the sale of the CANDU reactors to China and the structure and source of the financing, the Parliamentary Secretary to the Leader of the Government in the House of Commons invoked commercial confidentiality and provide little information except assertions that the financing was in the form of loans and not grants or subsidies. The relevant passage from Hansard is Exhibit Z to this my affidavit.

80. Similarly, the Auditor General of Canada has had to go to considerable lengths to obtain information and accounting regarding the use of the public money of Canada from the Consolidated Revenue Fund through the Department of Finance and the Department of Foreign Affairs and International Trade for the purpose of providing loans, guarantees and other forms of financial assistance for export sales. The difficulties in obtaining relevant information have extended to transactions involving AECL and the EDC. Relevant excerpts from the Annual Reports of the Auditor General of Canada for 1989, 1990, 1992 and 1994 are together Exhibit AA to this my affidavit.

81. Nonetheless, certain public information is available regarding the exercise of the powers, duties and functions of the Minister of Finance, the Minister of Foreign Affairs, the Minister for International Trade, Atomic Energy of Canada Limited and the Export Development Corporation in the use of public money from the Consolidated Revenue Fund to provide financial assistance for exports, as in this case for the project. In this regard, excerpts from the 1995 Annual Report to Parliament of the President of the Treasury Board on Crown Corporations provides corporate abstracts for AECL and EDC, together with audited financial statements for each of them, all of which together is Exhibit BB to this my affidavit.

82. In addition, the EDC itself has provided certain general and limited information on its administration of public money of Canada from the CRF. The information sheet on the Canada Account from the EDC is Exhibit CC to this my affidavit.

83. The Minister of Finance, the Minister of Foreign Affairs, and the Minister for International Trade together have responsibility for and authority over the CRF, including the Canada Account and their use for financial assistance, including loans and guarantees to boost export sales. The role of the EDC with respect to a part of this public money from the CRF is to merely manage or administer it for the federal authorities of Canada. EDC is neither the source of the public money used for the financial assistance, nor does it absorb losses or enjoy receipts and recoveries arising therefrom. It may, however, receive from the Minister of Finance the authorization to retain certain amounts to meet the expenses and overhead associated with the services it provides in the management or administration of public money from the CRF.

84. The difficulty Sierra Club of Canada has experienced in obtaining information regarding the project, the financial assistance, the agreements which have been negotiated and reached, and matters of environmental assessment in relation thereto, are repugnant to the principles of public participation and access to information and environmentally responsible decision-making, as well as financial accountability of the use of the public money of Canada.

85. In all of these circumstances, the Sierra Club of Canada is faced with the following situation. We believe that federal authorities have triggered environmental assessment pursuant to section 5(1) of CEAA with respect to the project. The Sierra Club of Canada has formally demanded and the Minister of Finance and the Minister for International Trade have clearly refused to carry out their non-discretionary public duty to ensure that the environmental assessment of the project is conducted.

86. The performance of that duty is due and overdue. An environmental assessment of the project is entirely practicable, especially given the flexible and textured process under CEAA where other jurisdictions are involved.

87. The Sierra Club of Canada has no remedy available other than seeking the relief sought in the present Application for Judicial Review to require the Minister of Finance, the Minister of Foreign Affairs and the Minister for International Trade to comply with their legal obligations.

88. As a final check before filing an application for judicial review, I spoke by telephone on January 17, 1997 with Robert Connelly, Vice-President of the Canadian Environmental Agency, to verify whether any environmental assessment under CEAA has been commenced with respect to the project. Mr. Connelly responded that he was unaware of any assessment.

89. In view of the date on which notice of the decision to refuse to carry out the required environmental assessment was communicated, the Sierra Club of Canada has had considerable difficulty with bringing the present Application for Judicial Review before the Court. Notably, the short notice and the Christmas season caused us considerable difficulty with respect to retaining legal counsel. In fact, many lawyers were approached, but were in positions of possible conflict of interest.
90. In the circumstances, in the present Application for Judicial Review the Sierra Club of Canada has availed itself of Rule 1612 of the Federal Court Rules to obtain material on it which it wishes to rely.

91. Therefore, the relief sought and the grounds set out in the present Application for Judicial Review, as well as the facts alleged in this affidavit and the facts, documents and other evidence relied upon by the Sierra Club of Canada are all under reserve of the material to be provided under Rule 1612 or by any other party or which is otherwise obtained.

92. I make this affidavit in support of the Application for Judicial Review dated January 20, 1997.

AND I HAVE SIGNED at Montreal, this 20th day of January, 1997.
 
 

Elizabeth E. May

Sworn to before me at Montreal
this 20th day of January 1997
 
 
 
 
 

Commissioner of Oaths



Sierra Club of Canada