The Nova Scotia Legislature

The House resumed on:
September 21, 2017.

HANSARD

NOVA SCOTIA HOUSE OF ASSEMBLY

COMMITTEE

ON

PUBLIC ACCOUNTS

Wednesday, April 3, 2002

LEGISLATIVE CHAMBER

Mark-Lyn Construction

Printed and Published by Nova Scotia Hansard Reporting Services

PUBLIC ACCOUNTS COMMITTEE

Mr. William Estabrooks (Chairman)

Mr. James DeWolfe

Mr. Richard Hurlburt

Mr. Barry Barnet

Mr. Jon Carey

Mr. Kerry Morash

Mr. Graham Steele

Mr. Russell MacKinnon

Mr. Donald Downe

In Attendance:

Ms. Mora Stevens

Legislative Committee Coordinator

Mr. Roy Salmon

Auditor General

Mr. Claude Carter

Deputy Auditor General

WITNESSES

Department of Economic Development

Mr. Chris Bryant

Executive Director, Strategic Management and Rural Development

Nova Scotia Business Inc.

Mr. George Reid, Manager - Real Estate

Department of Environment and Labour

Mr. Ron L'Esperance, Deputy Minister

Mr. Gerald MacLellan

Executive Director - Environmental, Monitoring and Compliance Division

Mr. David Wigmore, System Manager

Mr. Sheldon Stone, Inspector - Western Region

Department of Transportation and Public Works

Mr. Ron Larder, Manager - Annapolis Valley Industrial Park

Mr. Don Sutherland, Director - Real Property Services

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HALIFAX, WEDNESDAY, APRIL 3, 2002

STANDING COMMITTEE ON PUBLIC ACCOUNTS

8:00 A.M.

CHAIRMAN

Mr. William Estabrooks

MR. CHAIRMAN: Good morning. Welcome to this session of the Public Accounts Committee. My name is Bill Estabrooks. I am the MLA for Timberlea-Prospect and I have the privilege and the responsibility of being the Chairman of the Public Accounts Committee. I hope everyone has his program because you will need a program to keep track of the players here, if I can be candid with you. I do welcome our witnesses today, and it is of some consequence. I thank Mora for the seating arrangement because, for the benefit of Legislative TV, if and when a question is directed to a particular person, they have to know where you are seated. I will ask you to introduce yourselves in a moment and we will get to the matter at hand, but first I would encourage my colleagues on this side of the House to, in turn, introduce themselves.

MR. CHAIRMAN: Thank you and could we begin our introductions here, sir?

MR. CHAIRMAN: Thank you. It is nice to see our Auditor General here this morning in the staff. I went quickly from one to the other. I hope you picked that up. I know some of these witnesses better than others, and I have quite candidly pointed out to them that I am going to stick to a 15 minute presentation. So, knowing the gentleman to my right, it is 8:06 a.m. and at 8:21 a.m. I will politely clear my throat and say we would like to begin with some questions. So who is first?

MR. CHRISTOPHER BRYANT: I will lead off and I will talk fast.

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MR. CHAIRMAN: No. I will give you some, but I would really like to stay within - the best part of this committee is the exchange we find between the members and the witnesses.

MR. BRYANT: Why I am representing the office here is when questions first arose about the dealings between the department and Mark-Lyn Construction, our solicitor did an initial review of the loan files. When questions persisted, our then Deputy Minister, Mr. L'Esperance, asked me to do a further review and meet the people involved. What do I hope to do today? I want to make members aware of the background to this loan, the structures in place to make small business loans, what we know about Mark-Lyn and its business and what we have done since the questions arose about the loan.

Let me start with small business. The Nova Scotian economy is built around small business. Statistics Canada data show that Nova Scotia has 49,945 businesses and, of these, only 1,338 have 50 or more employees; 48,607 have less than 50 employees. Mark-Lyn is one of those small businesses. When it applied for a loan it employed eight people. Like many small businesses, Mark-Lyn seeks to grow. To start a business takes energy, drive and resources. To grow that business requires continuing doses of energy and drive, plus the ability to adapt to market forces. It also requires skillful management, productive employees, markets willing to purchase the business products, goods or services and capital.

Getting capital is an ongoing challenge for any small business. A typical Nova Scotia business starts with money provided by the owners or their family and friends. Sometimes these resources are enough; often businesses need more. They seek investors or they borrow money to help grow their business. For small businesses in rural Nova Scotia getting equity poses real challenges. The commercial banking system is a source for the loan small businesses need. Banks and credit unions lend money to businesses. There have been extensive discussions over the years about how hard it is for small businesses to get loans. Banks have been taken to task on this point and have developed some programs in response. Credit unions are getting more involved now.

Country-wide, governments have programs designed to supplement, but not replace, the work of banks and credit unions. One example is the federal government's Small Business Loans program. In Nova Scotia, government has lent money to business for many years. In the summer of 2000, I participated in some meetings in which we sought advice about what government should do to increase the rate of economic growth. The result of those meetings was Opportunities for Prosperity, our growth strategy. We frequently heard those meetings was Opportunities for Prosperity, our growth strategy. We frequently heard from businesses how hard it was, especially in rural Nova Scotia, to borrow money and how valuable people felt government lending programs were. This was a recurrent theme and the views were strongly held.

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Until recently, the Nova Scotia Business Development Corporation, the BDC, handled government's lending program. It was established under legislation in 1989. It was led by a board of directors and it also had a property management committee. The day-to-day work of the BDC was managed by the president, a civil servant, and carried out by a team of lending officers. Under the regulations associated with the BDC Act, loans are processed as follows. A client applies for a loan by a letter, memorandum, supported by a formal business plan or other information that essentially cover the topics included in a business plan. Staff begin due diligence and analysis. If staff have not been to the business site, a visit takes place. Typically, assessment of the information leads to other requests for information or clarification. Calls to suppliers, companies, bankers, credit checks, et cetera, are performed.

Step three, if staff are satisfied with the request, a specific proposal is developed and provided to BDC management with a recommendation to approve if management agrees or disagrees. Step four, if management agrees, the proposal goes to the board where it is scrutinized and, again, approved or disapproved. If the board approves, a written offer is made to the company. If the company accepts the offer in writing, arrangements are made to disburse the loan through the staff of those who ensure all securities are in place before disbursement. Ongoing supervision of the loan includes ensuring payments are made as agreed. Financial information is providing by the company at least annually and periodic contact occurs to see how the company is doing.

Over the years the BDC lending operations have grown. Details of the size of its portfolio can be found in its annual report tabled in the Legislature each year. The BDC loan to Mark-Lyn Construction is one of those loans. An outcome of the consultations to develop opportunities for prosperity was an agreement to split the Department of Economic Development into two parts. The first, a smaller, more focused department, would concentrate on government policy, industrial benefits, rural development and management of protocols to promote economic growth and development. A second was to focus on governments dealing with business.

These two new agencies are now up and running. I work with the new department, now the Office of Economic Development. About one-half of my former department colleagues have gone to work for Nova Scotia Business Inc., NSBI. It was established under the Nova Scotia Business Incorporated Act in November 2000, and it has taken on many of the functions previously performed by the BDC loan portfolio. It also manages trade and investment activities. Much care and attention went into developing the regulations which guide the work of NSBI. We wanted to make sure that the new organization modelled best practices in providing loans. The department hire KPMG to undertake a comprehensive review of BDC lending procedures and make recommendations for how NSBI should work. The department wanted to make sure that lending practices, governance and risk management were as robust as could be, given our public accountability. NSBI is implementing the changes suggested by KPMG.

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A word on industrial parks - one of Mark-Lyn's three places of business is the Annapolis Valley Industrial Park. This industrial park is one of 17 owned by the province. There are about 35 others owned privately or municipally. Industrial parks typically consist of a collection of serviced lots that are made available to businesses. The Annapolis Valley Industrial Park has been successful. It currently has 47 company tenants. It covers 195 acres divided into 59 lots. The province owns the unsold portions of the park. The Department of Transportation and Public Works staff handle the day-to-day management of the park. The unsold portions of the park are generally available for purchase or lease. The current price for serviced lands in the park is $35,000 an acre. Unserviced land is also available at a reduced price. Of the total 195 acres of park land, 51 per cent is developed, 10 per cent serviced and immediately available for sale, 26 per cent available for future development and 13 per cent devoted to streets. Land is sold or leased under the authority of the property management committee by the manager of industrial property for approval. That's background.

Let me talk a little bit about Mark-Lyn Construction. Mark-Lyn Construction Limited was registered in 1991 as a Nova Scotia limited company. It is owned and operated by Peter Thomas, a Kings County businessman in the soils and landscaping business for more than 15 years. Mark-Lyn Construction has been a tenant at the industrial park since 1995. Mark-Lyn's major products are lawn and garden soils, mulch and compost.

The department has had two sets of financial dealings with Mark-Lyn: first, payment for land improvements in the park, and second, a loan to purchase a piece of property in Coldbrook known as Baltzer Bog. After starting in the park in 1995, Mark-Lyn's business operation grew. By 1999 its land needs had increased and it was allowed to clear, grub and gravel 6.6 acres of land for its immediate and future needs. When it was asked to cease composting operations in the fall of 1999, its operation and land needs in the park greatly diminished to that of a retail sales and soil mixing operation. It gave up all interest it had in 4.17 acres of land and returned it to the province in an improved state.

Mark-Lyn attested that it had spent $30,000 per acre to improve the land it was abandoning and sought reimbursement which it could use to help set up its composting operation elsewhere. The BDC approved and paid for land improvements at the rate of $17,500 per acre for a total of $72,975. The loan, after discussions going back to October 1999, Peter Thomas formally approached government for a loan to purchase Baltzer Bog,

May 24, 2000. A loan for $91,000 was approved on July 11, 2000. The loan is current, i.e. repayments are being made on schedule.

Baltzer Bog is a piece of property on South Bishop Road in Coldbrook. Mark-Lyn purchased this property with the help of a loan from the BDC. It sought and received permission from the Environment Department to remove topsoil from four hectares of

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Baltzer Bog. I have a chronology of activities that took place and perhaps rather than reading it through, I could hand that out and in that chronology it summarizes the events as we see them from our files, going back to starting up in 1991; 1996, permission to manufacture and sell topsoil; 1998, a composting permit and so on. You can look over that and it is fairly extensive because there have been a lot of dealings with both Mark-Lyn and some of the residents involved.

Input of other departments to this situation, the Mark-Lyn loan demonstrates the complexity of shared jurisdiction and the importance of coordination. On a loan like this one, BDC staff do the financial due diligence. The basic needs are always to determine whether the loan will contribute to the growth of the business applying and whether the business can repay that loan. This loan had environmental aspects to it. BDC staff rely on staff from Environment and Labour to recommend on those aspects of the loan. BDC staff also expect that the applicants for loans are aware of and will abide by all relevant environmental regulations or municipal requirements. Because this loan was to an applicant in an industrial park, Transportation and Public Works staff are also involved. TPW deal with any complaints about alleged bad practices in the park.

Although not directly involved in either the loan or the park improvements aspect of this situation, the Department of Natural Resources has also come into it. In a separate arrangement Mark-Lyn acquired access to a sand pit which abuts Baltzer Bog. Mark-Lyn has used the pit for sand to add to the soil it digs at Baltzer Bog and mixes in the park to make topsoil. The trucking of the sand from the pit down the South Bishop Road and back to the park has been cited as a noisy and dusty disruption of the neighbourhood by residents there. Concerned residents have also sought to engage DNR to deal with their view that Mark-Lyn may be digging too deeply into Baltzer Bog, a matter over which they feel DNR has jurisdiction. The municipal government is also at work here. The Municipality of the County of Kings as jurisdiction over several aspects of the situation. The county council had to be asked for permission to mix soil in the bog. After hearing citizen concerns, it withheld that permission. Kings also has jurisdiction over some of the concerns about noise and dust on South Bishop Road.

A word about the Freedom of Information and Protection of Privacy. The residents concerned about the situation have used the Freedom of Information and Protection of Privacy Act, FOIPOP, to get information about what happened and how decisions were made. Applicants have made 11 formal applications under FOIPOP to the Office of Economic Development for records from December 2000 up to and including February 2002. Eight of the 11 applications have been responded to and three additional applications have been narrowed a number of times in an attempt to determine what the applicant was looking for. These three have now been encompassed into one request with specific issues detailed and the processing is nearing completion. Six out of the 11 applications received were from one applicant and fees were waived in all of them. Four out of the 11 applications were from the same office and fees were also waived on those.

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It is my understanding that FOIPOP applications have also been made to Natural Resources, Transportation and Public Works, and Environment and Labour. When I met Belinda Manning, Ms. Brown and Ms. Harder, it was clear that they had a comprehensive picture of this situation. Documents acquired under FOIPOP provided that information.

What have we been doing at NSED, the first review, the file was conducted in March 2001 by our departmental solicitor. It was done in response to concerns raised by Belinda Manning and other people living on or near South Bishop Road. The second file review was conducted by me in August 2001 in response to continuing concerns from Ms. Manning and her colleagues.

Since I first met Ms. Manning and I have been part of an ongoing e-mailing trafficker on this situation, in my files on this issue I have over 400 pieces of mail, most generated by Ms. Manning. I have tried to respond to those that have involved me. I have also been the point person on preparing several departmental responses. Ms. Manning and her colleagues have impressed me with their sincerity and their zeal. If I have been kept busy with this file, I can only imagine how many hours they put into it.

I discussed what I saw and heard with the deputy minister on several occasions. We've taken this issue very seriously. We considered a range of options of what we could do. We've always come back to the conclusion that the loan was properly made under our regulations. Following my file review, Deputy Minister L'Esperance wrote to both parties, and in those November 1st letters the deputy proposed, and I quote from the letter to Ms. Manning, "To try to come closer to a solution that works for both parties, we are prepared to offer to pay a reasonable amount for the short-term services of a mediator, acceptable to both you and Mr. Thomas and on mutually agreeable terms, to see if we can find specific solutions that will enable the community and the company to exist more harmoniously. Please let my staff know whether you would like to follow up on this offer. We can discuss details if you are so inclined."

I had follow-up discussions with Mr. Thomas about the mediation suggestion. There was no acknowledgment of the proposal from Ms. Manning until February when she requested that Ministers Morse and Balser meet with residents in Coldbrook. With this appearance at the Public Accounts Committee already scheduled, the department has not seen anything to be gained by the two ministers going to Coldbrook at this time.

Essentially this concludes my presentation. Whatever your views of this situation, I hope you're now better informed about it. I hope, too, that you recognize, as I did when I did the departmental review of the loan, that this is a complicated issue over which several thoughtful public servants spent considerable time and took care and attention to handle. Our review concluded that the loan and the payments for land improvements were correctly done paying heed to existing regulations. I emphasize that this is an issue which involves four departments: ourselves, Environment and Labour, Transportation and Public Works, and

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Natural Resources. I hope you will recognize that on several occasions the system has limited what Mark-Lyn could do with the land at Baltzer Bog and fined Mark-Lyn for questionable practices. I hope you will recognize, too, that we have taken concerns about eh issue seriously and attempted to find a broadly satisfactory solution. Unfortunately, we have not found that solution yet.

How are we doing for time?

MR. CHAIRMAN: I am going to ask you to stop because you've used up 15 minutes and, knowing Mr. L'Esperance, I want to give him the courtesy, or someone from that department if that's appropriate, sir, to make a quick statement if I may, with the agreement of the House. How does five minutes sound Mr. L'Esperance?

MR. RONALD L'ESPERANCE: I will try to work within that. I have a few opening comments.

MR. CHAIRMAN: Please, go ahead then.

MR. L'ESPERANCE: I think it's important that we put them on the table. As noted, I am now Deputy Minister of Environment and Labour and I want to put a fairly fine point on this for the member os the committee, I am beginning my fourth week as we convene here today, so I don't in any way hold myself out as particularly an expert in the field at the moment, although it is an exciting portfolio and a lot of very interesting work underway. We're ably represented here today by my colleagues who are accompanying me and particularly Kim MacNeil who is the district manager for the Kentville office. Kim is the gentleman who's been dealing with this file on a local level and so Kim will be able to take questions respecting technical issues arising form the Baltzer Bog issue.

Personally, I have had the opportunity to see this file from both an Economic Development and more recently from the environment side. The original decisions associated with the operation of the Baltzer Bog facility dates back to November 1999 and it certainly predates my appointment even to Economic Development. Notwithstanding, I have had more than a passing involvement with the file while at Economic Development as concerns were advanced on the file. As Chris has noted, we had two file reviews undertaken. The first was done by our Department of Justice lawyer at the time, Jeannine Lagassé who's a very thorough and professional solicitor, for those of you who know Jeannine.

Subsequently I asked Chris to conduct a file review. I also met in the presence of my former minister, Honourable Gordon Balser with Ms. Manning and with a colleague, Ms. Brown, who is here today - a meeting which, as I recall, took place about one year ago. It was in the evening and it lasted until close to 11:00 p.m. on that particular evening, so we had a very thorough airing of the issue from the point of view of the matters that Ms. Brown and Ms. Manning were bringing before the minister and I at the time. As Chris has also noted,

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there's been a huge volume of e-mail traffic and communication with the concerned citizens' group, and I had ongoing correspondence with Ms. Manning, principally, to numerous and often very voluminous e-mails throughout the process.

Throughout the various reviews and ongoing issues associated with the file I also spoke periodically to my predecessor, who was the Deputy Minister of Environment and Labour at the time, Mr. Kevin McNamara. All of this, I guess, to make a couple of key points and in part to reiterate a couple of the points that Chris made; we all took the concerns and issues raised by the concerned citizens very seriously. Our track record collectively, I believe, on this file is one of attempting to deal with the issues and concerns raised and trying to find a resolve to them that would be mutually satisfactory. There were attempts made in the very early stages of this to establish a citizens' liaison committee. A lot of these kinds of opportunities or initiatives really didn't get traction as the process went forward. I am not exactly sure why, but certainly there were attempts made to try to find some kind of mutually satisfactory solution between the proponent and the concerned citizens.

Secondly, from a due diligence point of view, both departments assigned key senior staff to the file and conducted comprehensive reviews. I want to read into the record the terms of reference for the review that was undertaken at the Department of Environment and Labour. That review had six items: to review all activities on the approvals granted; two, to advise if our Act and regulations were correctly interpreted and acted upon; three, the review was to deal with the environmental issues only; four, to meet with the proponents and, in the report, to address the items raised by the concerned citizens; five, to review all the necessary files of the department; and six, to give me a written report of the review. That review initiative was advanced in the Department of Environment and Labour by the then deputy minister, Mr. Kevin McNamara.

A point of importance to me personally - and I will go over it quickly because Chris has already raised it, but I think it's extremely important for the deliberations of this committee to recognize that we put forward absolutely best efforts to try to accommodate the concerns of the citizens on South Bishop Road and in the Baltzer Bog area. Chris has noted and read into the record the excerpt from my earlier correspondence to the concerned citizens regarding the offer of a mediator to try to help sort through some of the issues that existed and to allow for, at least, an opportunity to consider a peaceable co-existence between the various parties. Of course, that offer was not taken up and legitimately it was not taken up on either side. I think at the end of the day, that's a little unfortunate.

With the committee's indulgence, I would like to finish my presentation by making a few quick comments from a Department of Environment and Labour perspective, and again, my colleagues will be available if there are detailed technical questions that committee members have to answer those. The Department of Environment and Labour is in the business, as you know, of maintaining and improving the regulatory systems that protect our environment and the health and safety of our citizens. We do this always trying to balance

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those requirements with the interests of business, small business and economic opportunity in our various communities to create wealth, to create employment. Arguably, as Chris has noted in the metrics on the small business community in Nova Scotia, a business like Mark-Lyn is more typical than atypical of the small business sector in Nova Scotia. it's a very significant sector, a very significant part of our economic wealth-generating capacity, and employs a lot of people throughout the province. The Department of Environment and Labour has more than 60 per cent of its work force committed to conducting and supporting inspection services.

MR. CHAIRMAN: Mr. MacKinnon.

MR. RUSSELL MACKINNON: I would expect our witnesses to speak to the issue that is before the committee and not what I would conjecture as being a promotional tour about what is going on broad policy issues, and time is passing on . . .

MR. CHAIRMAN: I am more interested in the time and I apologize, Mr. L'Esperance, but I would ask you to wrap up, if you could, in the next minute or so.

MR. L'ESPERANCE: Mr. Chairman, I guess the final point that I would then make is there was a point in leading to this. I wanted to outline for members of the committee so that they can put it into context the fact that Environment and Labour issued slightly in excess of 6,500 environmental approvals last year; so it is a very significant volume of work.

I guess the final point that I would make - and I will skip through the other items I wanted to cover - is in our analysis of the situation, Environment and Labour did do a lessons-learned kind of debrief on the Mark-Lyn situation. They noted areas where improvement in process could have been made and specifically these were issues associated with excavation outside the original footprint. This was fixed by requiring the company to remediate anything outside the original footprint. There was also an issue relating to the need to be more precise in requiring him to comply to the original survey plan, and again that was dealt with. This one had to do with the depth to which excavation was taking place in the particular area.

So my assessment of the Department of Labour and Environment's response is that they looked objectively at process and acknowledged a couple of areas where the process could have been improved and also considered the implications as an example of how it might inform our outgoing practice.

MR. MACKINNON: Well . . .

MR. CHAIRMAN: Excuse me, Mr. MacKinnon, I am watching the time and I am

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asking Mr. L'Esperance to wrap up and he said it was his final point. So, sir, do you have anything else to add?

MR. L'ESPERANCE: No, that is fine.

MR. CHAIRMAN: That is great. Lessons learned. Perhaps in the future the committee could look at the number of people we invite, but that is an editorial comment. I would like to also note that we have Mr. Kim MacNeil here, who is the Regional Manager for the Western Region. Thank you for attending, Mr. MacNeil. It is 8:33 a.m. I am going to turn the next 20 minutes over to my colleague from the NDP.

MR. GRAHAM STEELE: Mr. Chairman, part of the problem around this whole story is in one way it is very, very complicated, and in another way it is very simple. To try to get to the bottom of this story, I have 20 minutes, and I have nine witnesses in front of me, which may be the most witnesses ever appearing on a single topic in the Public Accounts Committee. It is not the witnesses' fault. It is important that this committee finally get to the bottom of this issue which has been swirling around for the better part of two years now. It has been swirling around because of the persistence of the local residents.

I said it was in one way a complicated story, and in another way it is a very simple story. It is a very simple story because it is a story about governments following their own imperatives and leaving, as apparently the very, very last consideration, the needs of the residents living in the area around which this business is operating. I would like to have a lot of time to explore that, but I don't have that, so I would like to try to get right to the heart of the issue.

The first thing I would like to do is that in the opening statements, there has been reference to at least three separate internal reviews that have been done, namely the Department of Environment lessons-learned review, which would be very interesting, I am sure, for the residents to read; the review done by Mr. Bryant; and the review done by Ms. Lagassé. So I guess my first question to Mr. L'Esperance is whether he will table, for this committee's consideration, all three of those reports.

MR. L'ESPERANCE: Certainly, Mr. Steele, the report related to the review undertaken by the Department of Environment and Labour was transmitted to the concerned citizens and we would be happy to make it available to the committee.

MR. STEELE: Okay, and what about the others?

MR. BRYANT: In the case of Jeannine Lagassé's report, certainly I can see that if it can be made available, but I am not sure of all the details of FOIPOP and stuff, but I don't think there is anything in there that shouldn't make it available. I did no formal report. What I concluded is included in the letter that the deputy wrote to Mr. Thomas and Ms. Manning.

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So I have lots of notes here and files, but I did not do a formal report.

MR. STEELE: Mr. Bryant, in your review, did you come to the conclusion that the Business Development Corporation had made any mistakes and, if so, what were they?

MR. BRYANT: I don't think they made mistakes. Certainly, the issue around the reimbursement for land improvements in the park was treated fairly carefully. I think there were three meetings of the property management committee to discuss it. Mr. Thomas submitted a certain amount that he felt was appropriate. The BDC Property Management Committee recommended a much smaller amount. I think that was fair given that we had asked them to cease the composting operation. The loan was a fairly standard loan. The due diligence appears to have been done properly. The fact that the loan is being paid back suggests that the business aspects of it were fairly straightforward. So I think that within the regulations that BDC was working, I think it was done properly, yes.

MR. STEELE: The regulations that the BDC was operating under say in part that the board has to be satisfied that the loan will represent a net economic benefit to the province. Is it BDC's opinion that a loan that created no new jobs and established no new business was of - in fact, it seems primarily motivated by the desire to get Mark-Lyn out of the industrial park. Was that of net economic benefit to the province?

MR. BRYANT: I think the board concluded it was, yes.

MR. STEELE: And why did it come to that conclusion when no jobs were created, no new business was created and, in fact, the operation that was funded by the loan was for an operation that was, in fact, contrary to the Environment Act? Can you tell me how exactly that is of net economic benefit to the province?

MR. BRYANT: I think the net economic benefit came through the fact that Mr. Thomas ceased a large part of his business, the composting business. He ceased that. He was told to stop the business, he stopped the business, and yet the business survived that. The survival of the company, I think, is the net economic benefit. If it just had ended the composting business with no sort of alternative steps taken, I think you would have seen that business go out of business.

MR. STEELE: But it sounds to me like primarily this money went to get a business to stop operating, to get them out of the industrial park and, at that point, BDC didn't seem to much mind where he went as long as he was out of the industrial park. In the documents that BDC had just to support the loan, the very first line of this document, dated June 24, 2000, addressed to the board of directors of the BDC says it is "A $90,000 loan to assist the Company purchase a 70 acre property in Coldbrook, N.S. which property contains significant quantities of peat moss . . ." The problem is that if it had peat moss, that under the Environment Act a full environmental assessment was required. So the very first line of the

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document indicates that the loan was for something that was contrary to the Act, because no environmental assessment has ever been done. So it is hard for me to see how this is of net economic benefit to the province.

The regulation goes on to say that the board has to be satisfied that the loan is in the best interest of the community in which the business is or is to be located. Is it BDC's opinion, today, that this business is in the best interest of the community in which it is located?

MR. BRYANT: Just to back up a little on the peat moss issue, there is a lot of debate on that. When we discussed this with Environment, what was issued was a topsoil permit. Our loans officer is not an expert in peat, peat moss, topsoil. What they did was replace the composting material with material from the bog. That seems to have been a legitimate thing to do. As the business operates now, they are digging soil in a well-defined area in Baltzer Bog. Certainly, there is potential for this to cause some trouble, but I think Environment has watched it pretty closely. I don't think there is a net major problem for the community there. So I think what we have seen is the survival of a business, replacement of a process that wasn't working very well with a process that is within regulation. So I think that the BDC Act has been observed, yes.

MR. STEELE: The regulation says that it has to be in the best interests of the community in which it is located. In your opinion, is this business in the best interests of the community in which it is located?

MR. BRYANT: Given the presence of a quarry nearby, given the presence of a buffer zone according to regulations, I don't think it is detrimental to the community, no.

MR. STEELE: Mr. Bryant, in your review did you come to the conclusion that the Department of Environment and Labour had made some mistakes?

MR. BRYANT: Not being an expert in the Department of Environment and Labour's regulations, I wouldn't want to comment. My sense was that they had certainly done a serious job of trying to apply their regulations. Clearly, in environmental lessons learned, I think the whole question of definition of peat and regulations around soil mixing and so on may be areas that need attention, but I think they applied their regulations in a diligent manner.

MR. STEELE: Did you tell the local residents that you had come to the conclusion the Department of Environment and Labour had made mistakes?

MR. BRYANT: Certainly when I listened to Ms. Manning's concerns, it appeared to me, before I had seen all the energy that the Department of Environment and Labour had put into it, that there were some errors made, but as I looked at the way in which Environment

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had approached it and understood better the regulations they were operating under, I learned that it is not quite as easy as I thought it was at the beginning.

MR. STEELE: So, Mr. Bryant, is it fair to say that at one time you thought the Department of Environment and Labour had made mistakes, but you've changed your mind on that?

MR. BRYANT: Yes.

MR. STEELE: Mr. L'Esperance, I would like to turn to you now as the Deputy Minister of Environment and Labour and I do realize that you've been on the job for only a few weeks. I am going to direct the questions to you as deputy minster, but if you would like to toss them to some of your colleagues in the back row, feel free.

Mr. L'Esperance, is it your opinion, on behalf of the department, that the environmental permit that was issued was properly issued?

MR. L'ESPERANCE: I think generally, Mr. Steele, it is my opinion that it was properly issued. In the review of the chronology from the point of view of the Department of Environment and Labour that I've undertaken, there were certainly a couple of areas, and I've noted those in my earlier comments, where in fact departmental staff corrected a couple of issues that arose during the course of Mr. Thomas executing excavation on the property. One might argue that the department might have been more specific in actually designing the footprint in which activity would take place and, certainly, dealing with the depth of excavation issue. When any of those concerns were made known to departmental staff, they were dealt with expeditiously and, I think, diligently.

I think it's also important for the committee to understand that in the point that I was making on the issue of the activities of the department, we do a lot of compliance monitoring and there have been a couple of situations where we have actually had to issue ministerial

orders to Mr. Thomas at the Baltzer Bog site. So I raise that point to be illustrative of the fact that we took those responsibilities, as a department, very seriously and executed orders when we saw things that were inappropriate from the point of view of the original approval that was issued and so forth. So to summarize, in my opinion the approval was properly executed.

MR. STEELE: The permit that was granted to Mark-Lyn Construction was for topsoil removal. Is that actually what's going on in Baltzer Bog today? Is it just simply and solely topsoil removal?

MR. L'ESPERANCE: That's certainly my understanding. As Chris has noted in his comments, there has been a great deal of debate on the finer points of what constitutes the definitions of peat moss, peat and topsoil. I could certainly ask my colleagues from the department to give a more technical review of those issues than I can, but the approval is for

[Page 14]

the removal of topsoil. That particular area in my understanding - I think it's a matter of record - the Department of Natural Resources had a scientist look at the site there and determined that this was not an operational wetland. This land had apparently been used in previous exigencies for agricultural purposes. There have been drainage tiles installed and ditching in the land, but the fact of the matter is that there's a great deal of organic matter there, apparently, and as Chris has noted in his comments to your earlier question, the issue of composting and enriching soil for sale in his various operations around the province and I think he has three or four retail outlets, Mr. Thomas, in Nova Scotia. He is actually substituting the compost material for the organic material that's derived from the topsoil extraction at Baltzer Bog. That's my understanding of the situation.

MR. STEELE: The problem from the resident's point of view is that as far as they're concerned the permit was improperly issued in the first place because it was a permit for land that at that point Mark-Lyn didn't even own, which I assume is not normal departmental practice to issue environmental permits to people for land they don't yet own. It was for an operation, namely topsoil removal, which is not actually what's going on in the bog. So what appears to be happening is that the owner gets a permit for one thing and then goes ahead and does whatever he feels like doing. He's not just restricting himself to topsoil removal, and the reason why the owner keeps getting caught out in violating the permit is because the residents are calling your department, the residents are watching. The residents are the ones who are being the police on the site and your inspectors come out when the residents tell them to and the residents tell them where to go and tell them what to look for and, if they weren't doing that, there would be no compliance with the permit. How many times, Mr. L'Esperance, are you aware that your inspectors have gone out without first being called by the local residents?

MR. L'ESPERANCE: I really can't answer that question directly. I certainly would refer it to Kim, if he has that information for you, Mr. Steele.

MR. CHAIRMAN: Mr. MacNeil, I'm sorry - I'm not sorry - but you have to stand so we can pick you up on Legislative TV, okay, if you could stand in your place, thank you, and answer the question standing.

MR. MACNEIL: And remain standing, okay. (Interruptions) The approval that was issued was for topsoil removal which, in this case, included the peat, inspectors do go out on a regular basis to that site, not just when they're called upon by the residents. I am sure when the residents would see them there would be most likely when after they had spoken to them, but that is part of the environmental process. We can't have inspectors everywhere around the province. We rely on the citizens in any area to report violations; the citizens, in many cases, are the eyes and the ears of the department.

[Page 15]

MR. CHAIRMAN: Thank you for your answer, Mr. MacNeil, and following my explicit instructions. You have four minutes remaining, Mr. Steele.

MR. STEELE: I think it seems to me that that answer from Mr. MacNeil, which is a truthful answer, just about sums up what the problem is here, and that is that the Department of Environment, as the Auditor General has pointed out in his latest report, simply doesn't have the resources to enforce its orders. It can't be everywhere all the time and operators know that. They know that. There is a series of environmental problems in the Annapolis Valley that are simply not being dealt with. There is the ongoing irritant of the water system in Garland. There's the Twin Mountain issue which is still not resolved. There is this issue in Baltzer Bog, and we could give a long list of issues where - the local residents do what they can, but they are not experts. They can't do everything. They can only see what they can see.

These local residents have caught Mark-Lyn dumping compost in the bog which had to be removed by ministerial order, but it was the residents who saw it. They have caught Mark-Lyn dumping garbage in the bog and he had to remove that, but it was the residents who saw that, and it's the residents who found out that he was digging into the bog when it's supposed to be for topsoil removal. In fact, there's a real issue here about whether there's any topsoil in the bog at all. It's a bog, you know, it may be a technical point about the difference between topsoil and peat and peat moss, but they all have different environmental requirements and the department seems to shift back and forth as to what's in the bog depending on what serves its purpose of not actually enforcing the permit. The BDC loan documents call it peat moss. Well, if it's peat moss, you have to have a full environmental assessment. If it's peat, you have to do something else with restrictions.

The one thing that doesn't require any permit, really, is topsoil removal, and that is what Mark-Lyn says it is doing, but it's not. The residents themselves can't watch everything and be there all the time and see everything. They have lost faith in their government being able to enforce the environmental permit. That is really the fundamental problem here.

My question, I guess, is best directed to Mr. MacNeil. How many violations have been committed by Mark-Lyn on the Baltzer Bog property?

MR. MACNEIL: On the Baltzer Bog property, there has been certainly one violation for which Mr. Thomas has been charged and found guilty and that was for the burial of construction demolition debris.

MR. STEELE: How many warnings was he issued?

MR. MACNEIL: He was issued at least one warning on the site, but environmental monitoring isn't charging people all the time. We work towards compliance and there are various ways to work towards that compliance. In the opinion of the inspectors, sometimes

[Page 16]

the best way is to charge and other times it is to work with the proponent to achieve compliance. So there's a variety of compliance mechanisms out there and ti was a variety that was used at this site to achieve compliance.

MR. STEELE: Is the department currently working with Mark-Lyn to try to achieve compliance and if so, on what issues?

MR. MACNEIL: No, we are not currently. Mr. Thomas is in compliance at that site.

MR. STEELE: In your opinion, Mr. MacNeil, is Mark-Lyn in full compliance with all the terms and conditions of its environmental permit and all the environmental Acts and regulations in Nova Scotia?

MR. MACNEIL: At this point in time, yes, it's my belief that he is. Certainly if he is not and information is brought forward that is reliable information, we will proceed with that as we have done in the past.

MR. STEELE: Good. Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Steele. I turn it over to the Leader of the Liberal Party, Mr. Gaudet.

MR. WAYNE GAUDET: Mr. Chairman, the issues around this composting company were brought to my attention several months ago. I have followed this very closely ever since. There's lots of information here. It's quite complicated. There are many people involved. Looking at composting in the Province of Nova Scotia, and I think it's probably where we should begin, it's part of a strategy of waste diversion, including recycling, that even the present government points to as a Nova Scotia success.

Looking closely at Mark-Lyn Construction, in 2000, complaints about the presence of Mark-Lyn Construction in the industrial park outside Kentville came to a head. Charges were laid by the Department of Environment and Labour and these charges certainly gave those complaints a lot of credibility. There has been a lot of public pressure, and perhaps even political pressure, that has led to a suggestion to move this composting facility to a local bog adjacent to homes and wealth. There has been more public outcry. No composting company.

I guess the question we're trying to find out here this morning is at what cost has all this been to the taxpayers of this province? I am going to start off with a response to my questions in the media about whether or not Mark-Lyn was offered financial incentives by the Department of Economic Development to leave the park. I will table this and I will start off with this article that appeared in The Daily News, January 20, 2002. It says: "Economic Development spokeswoman Mary Jane Fumerton said the company wasn't paid off to give up composting." So we have an individual here in the department that says this company was

[Page 17]

not paid off to leave.

I have a copy of a briefing note - and I think this is in your binder - it is a briefing note that was prepared by Mr. George Reid, Manager of the Industrial Properties with BDC. This briefing note that was prepared for the Minister of Economic Development, March 23, 2000, says "incentives via payment for land improvements made to the park property have been offered to Mark-Lyn if the company leaves the park." So this is a briefing note prepared for the minister by George Reid indicating that Mark-Lyn would be provided with some incentives if the company leaves the park.

Maybe my first question could go to Mr. Reid. If you could explain the discrepancies between your spokesperson in the department and your minister's briefing note. We have Mary Jane Fumerton indicating that the company was not paid off to give up composting, but the briefing note that you've prepared for your minister indicates otherwise. So I'm just wondering if Mr. Reid could provide us with some feedback.

MR. BRYANT: I would like to make a comment first on that, to reflect a little bit on what Mr. Gaudet said. In fact the discussions about removing the composting operation from the park began in mid- to late 1999. In fact at that time Mark-Lyn had applied for topsoil removal and a composting operation in Baltzer Bog. The composting operation was withdrawn during the approval process and so t his goes back a little earlier than when you were talking.

So, what do you do? You've got a guy running a business, a business which, in fact, the Government of Nova Scotia has pushed very hard for; composting is generally a good thing. So here's a guy who starts a composting business, and there were some doubts, even in the early days, of whether you could do this kind of business in a site like the industrial park but an attempt was made to do it. It didn't work out in the sense that it was not an appropriate business to be in that park - the odour if nothing else, and there's lots of documentation of that said, composting in an industrial park is probably not the way to go.

So what do you do to a guy who has taken on a business that has been encouraged by the government who says it's a good thing to do, and then you say, geez, I don't think you can do that anymore? Well, two steps. One, he starts looking for other sites, and he looked at a number of sites. One of the sites he looked at, Baltzer Bog, during the process of assessing it, you can't do composting there and make it clear, nobody has ever permitted composting to be done in Baltzer Bog.

So, you have a business person who's running a business that was encouraged to be set up, and it's now no longer appropriate for the park. What happens? Well, the man had used some of his own money to improve land in the park so he could run his business. The way to get him, in a sense, out of the composting business without ending his business entirely, BDC Property Committee, looking back, they talked about it first in the fall of 1999,

[Page 18]

they finalized the agreement in January saying, okay, we'll pay for the improvements you made to the land, you go back to doing something that works in the park and we'll work with you for an alternative location.

He hasn't found an alternative location; he's not in the composting business anymore. He's now in the soil mixing business and he's done, I think, a reasonably entrepreneurial thing here. He has found a source of sand, he has found a source of topsoil, he mixes that sand and topsoil, and to make it a marketable product in the park. What's left in the park is a business which occupies less land, doesn't create the odour and other problems that the composting business was doing. So that's the way I interpret what the BDC did. Maybe, George, you can add to that.

MR. CHAIRMAN: Mr. Gaudet, I assume you want Mr. Reid to respond?

MR. GAUDET: If possible.

MR. REID: I think my colleague, Mr. Bryant, summarizes it very well. It was not our intention to put Mark-Lyn out of business, and when the suggestion of him stopping composting in the park, which was the nub of his operation, he suggested that's like asking me to commit suicide. We wanted to work with him and maintain his business presence and we wanted to help him find a solution which led him to a search for another site. He had been operating, removing, call it peat, call it topsoil, or call it peat moss, I'm not sure which, from that site for some time. He had an option to buy the property, he could go down there.

I would quote from a letter I had written summarizing a meeting I had with Mr. Thomas on January 7th. "It was pointed out it was not the intention of NSBDC to put Mark-Lyn out of business and the NSBDC will co-operate to the extent possible in facilitating his move . . ." to a different site. "Possible methods of co-operation . . ." the co-operation and the word incentive could probably be interchanged, it was co-operation, three considerations

that were discussed at the meeting in January, "a) payments for land improvements in the park at $17,500 an acre, b) loan or mortgage money on the new property; . . ." or possible "c) rent concessions, if warranted, could be presented to the Property Management Committee for consideration." I think at that point in time, Jan 10th, I possibly had approval to offer him $17,500 an acre as reimbursement. So payment to move, it was an effort to co-operate in keeping him in business while he managed to find a new location, I think.

MR. GAUDET: So, Mr. Reid, are you saying that Mark-Lyn Construction was being offered an incentive to shut down, or to move out of the park?

MR. REID: They were encouraged to continue their business operation. We didn't want them to go out of business and we wanted to co-operate with them to find a new

[Page 19]

location. He had made substantial investments in the land in the park in anticipation of expanding his composting operation. It was our decision, as the landlord, to refuse to allow him to continue to compost, which was putting a very, very serious strain on his business and threatened the continuity of his business. But we told him we did not want him to continue composting in the park.

MR. GAUDET: Thank you, Mr. Chairman, I want to refer to a report done by George Reid, again, to the property management committee and in this briefing note - I will table this as well - it says, "In January 2000 the committee agreed to reimburse to him $17,500 per acre for the remaining 4.5 acres if he left the park entirely." So maybe Mr. Reid could indicate to the committee if Mr. Peter Thomas was given this money to leave the park because of probably some pressure coming from somewhere. Why was the money being offered to Mark-Lyn to move out of the park?

MR. REID: Because his operation was determined detrimental to future land use. It irritated the present clients in the park, in particular, the pie makers, the apple food and the other pie maker in the park and it was going to jeopardize the future sales of land in the park. So the longer that we would keep him there, as he composted, it would probably ruin future sales in the park. So it was to our best advantage to have that operation cease. One alternative that was considered by Mr. Thomas was to leave the park altogether and set up not only his composting activity elsewhere but also his soil sales, because he does sell soil from that location and it was an advertised site and there were a lot of customers used to going to it.

MR. GAUDET: Good, thank you. Mr. Reid, something I do not understand, you must have had a change of heart here because the letter dated January 15, 2001 that you wrote to Peter Thomas, you indicate in this letter that you have not been asked to vacate the park. So it's quite confusing to understand. We've been trying to offer incentives to Mark-Lyn Construction to move his composting site, at the same time you're indicating to Peter Thomas that he has not been asked to vacate the park. I'm trying to find out, has he been requested to move out, or what's really going on here?

MR. REID: He was specifically requested to cease his composting. I think if you take the context in time, and I'm only reaching back in my mind for memory, but at that point in time he had applied for a permit to do composting and soils mixing on Baltzer Bog. That, as I understand, was a municipal decision. He was encouraged to believe he would get that approval from municipal staff. At that point in time, it was like a bargaining arrangement that we were trying to negotiate. Had he been successful in getting a permit to move everything to Baltzer Bog, he was considering doing that. The objectionable part of his activity at the park was composting, not soils mixing, so he was asked to stop composting. He was never specifically asked to leave the park, but it was one consideration given at one point in time, where could he leave, could he get reimbursement for all of the land.

MR. CHAIRMAN: Mr. Gaudet, I would just remind you, you were going to table

[Page 20]

something.

MR. GAUDET: Yes, I will. Mr. Reid, again, briefing notes you prepared for your minister, a report that you provided with the property management committee indicates that incentives would be provided to Mark-Lyn if he left the park. Then on January 15, 2001, you wrote a letter to Peter Thomas and indicated, you have not been asked to vacate the park. I'm just wondering, were you pressured to change your story on this?

MR. REID: No, I wasn't pressured at all, I was trying to work with Mr. Thomas to help him change his operation, his business, to allow it to survive without composting in the park. We explored a number of alternatives, one of which was pending an approval by the municipality to relocate his business to Baltzer Bog. He never did get that permission.

MR. GAUDET: Mr. Reid, did you get any calls from the local MLA?

MR. REID: I had one call from a local MLA prior to a public meeting, yes.

MR. GAUDET: You had one call from the local MLA, David Morse?

MR. REID: Yes.

MR. GAUDET: Prior to what meeting?

MR. REID: I think it was a public meeting associated with the rezoning by the municipality.

MR. GAUDET: One call. Did you get any calls from the Premier's office?

MR. REID: Not that I recall. No, not that I recall.

MR. GAUDET: No calls from the Premier's office? Okay. I find it strange. I'm sure any public employee would probably recall if they had received a call from the Premier's office. I'm just curious, what did the local MLA want when he called your office, Mr. Reid?

MR. REID; I guess he wanted a briefing on what was happening with the Mark-Lyn file and what our position was. He wanted to satisfy himself that what we were doing was appropriate.

MR. GAUDET: At any time, did he make any suggestions to you how this should be resolved?

MR. REID: I think there was consideration being made at that time because the municipality was considering giving him a permit. I think that was what the meeting was

[Page 21]

about. I think there was some discussion, possibly related to, did we own another piece of property that he could transfer to? I think there may have been some discussion of other land in the park - would that be suitable - possibly something related to the transfer station which is located adjacent to the park where they carry on a waste transfer activity. It was primarily what have we done so far, what are we intending to do, and a confirmation that it is our strong feeling that Mr. Thomas must stop composting in the park.

MR. GAUDET: Mr. Reid, it appears from the paper trail that your department paid this company to shut down. You wrote a report, a ministerial briefing note and an e-mail that all state that the company would be offered reimbursement to shut down. Do you agree with that?

MR. REID: No.

MR. GAUDET: You don't agree with it. Okay. What don't you agree with?

MR. REID: We don't want the company to shut down; we wanted the company to cease composting. We very much wanted the company to continue its operation.

MR. GAUDET: This is a letter, Mr. Chairman, from Peter Thomas, addressed to Sheldon Stone with the Department of Environment and Labour. I will table this. I just want to make reference before my time expires here. The first line, "In regards to the above mentioned letter and formal warning dated for the same day, I have prepared the following for you explaining what will happen to our compost yard as we are forced to shut down." Now, Mr. Reid, Peter Thomas believes that the department was definitely attempting to shut him down, and you don't agree with Peter Thomas?

MR. REID: I disagree in one sense, that he felt at a certain point in time that it would be impossible for him to continue with business if he could not compost. That was the understanding at that time. When it was first indicated to him that he must stop composting,

he said, George, that's like asking me to commit suicide. As it has worked out, he has been able to continue his business without composting, but that certainly wasn't known when we began our deliberations.

It was felt that he must compost somewhere in order to make soil. That was the only part of his operation that we had a fault with. That's where all the smell came from; that's where the odours came from; that's where the birds were coming from. Just mixing soil, you don't have that problem. You don't have the smells. The smells all came from the composting, so it was the composting that we wanted him to stop. We did not want him to go out of business.

MR. CHAIRMAN: Thank you, Mr. Reid, and thank you, Mr. Gaudet. I turn the next 20 minutes over to the member of the government caucus, the honourable member for Kings

[Page 22]

West, Mr. Cary.

MR. JON CAREY: Mr. Chairman, I will try to keep my questions short and perhaps we could just have short answers. I'm basically concerned with the permitting and the financial aspect of it. In 1995, when Mr. Thomas went to park to establish a business, what permits would he have had to have, and what was the business?

MR. CHAIRMAN: Excuse me, Mr. Carey, to whom are you directing that question?

MR. CAREY: I don't know who is going to be able to answer - whoever has the knowledge on permits and the relationship between the municipalities and the province in coordinating information and sharing.

MR. CHAIRMAN: Mr. L'Esperance, could you give us some guidance there?

MR. L'ESPERANCE: Yes, Mr. Chairman. I would suggest that Kim MacNeil be asked to respond to that question.

MR. MACNEIL: Mr. Thomas was issued a composting application on February 5, 1996 to compost in the industrial park.

MR. CAREY: So that would have been a provincial permit?

MR. MACNEIL: Sorry, the application came in. The industrial approval was issued on July 12, 1996.

MR. CAREY: But the province issued the permit allowing him to do composting in the park.

MR. CHAIRMAN: Just let the record show that - I have to do this, Mr. MacNeil - that you nodded approval.

MR. CAREY: What part does the municipality have - I know Kings County is fairly involved in permitting and land use and so on. I would like to establish the relationship between the provincial department and the municipality, if there is one, and if discussion goes back and forth before permits are issued.

MR. MACNEIL: Yes, there normally is a discussion on an informal basis. The normal procedure at this point in time is when an application comes to the municipality for a composting operation as well as a variety of other operation, the department is asked to appear before council to address the department's role in that approval.

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MR. CAREY: So between 1996 and 1998 there was no problem with the composting that Mr. Thomas was doing?

MR. MACNEIL: We received no complaints up until that point.

MR. CAREY: Did he increase the volume of composting? I assume permits dictate the volume that you can do at any location?

MR. MACNEIL: I don't think it was the volume as much as it was the nature of the compost material that he was accepting.

MR. CAREY: In 2000 he proceeded to clear adjacent land so that would seem to indicate that there hadn't been any problem between 1996 and 2000.

MR. MACNEIL: Yes.

MR. CAREY: So there were no problems up to that point. Then, in 2001, a problem developed and he was asked to move. Does Mr. Thomas still have any part of his business in the park?

MR. MACNEIL: Yes, he does.

MR. CAREY: What does he do there?

MR. MACNEIL: He's mixing soil there, but he no longer has a compost operation there.

MR. CAREY: And he's taking the soil from Baltzer Bog to the park to mix it - is that the . . .

MR. MACNEIL: Yes, sir.

MR. CAREY: When he moved, or at least took another location, was he asked to commit not to apply to compost?

MR. MACNEIL: Certainly, by our department, he was never asked not to apply to compost.

MR. CAREY: He was never asked not to compost?

MR. MACNEIL: No. The department requested that his approval in the park be upgraded. He would have been required to do additional work at the time and it's our understanding that he decided from an environmental standpoint alone not to conduct that

[Page 24]

work.

MR. CAREY: Okay. At this particular time he went up to Baltzer Bog - which I believe we've been told this morning is not really a bog. If it's not a bog and I know the county has guidelines for topsoil removal, how much topsoil can he take off this land? What depth?

MR. CHAIRMAN: Mr. MacNeil. Go ahead, sir.

MR. MACNEIL: There's no specific depth that's issued. He's removing the peat which can vary from several inches in some places to a couple of feet in other areas.

MR. CAREY: But there seems to be a problem here though. He has a topsoil permit?

MR. MACNEIL: Yes.

MR. CAREY: And if it's topsoil, how much topsoil are you allowed to take off a property?

MR. MACNEIL: In this case, the permit doesn't specify the amount of topsoil. As in any topsoil removal operation, the depth of topsoil would vary, as it does in this case.

MR. CAREY: These are the confusing things that I find when I try to work with my constituents on this type of thing, which is quite common in Kings County. In some areas, people who have permits to remove topsoil, I think it's two or three inches or something of that nature and then they have to have reclamation after that. We're not talking about topsoil here then, are we? Or are we?

MR. MACNEIL: Yes, we are. We're talking about the soil that's on the top of the hardpan, as it's known, and there are remediation requirements in this case as well, as there would be in any topsoil removal operation.

MR. CAREY: Well, I am confused because I have a photograph here which I will be happy to table that shows a depth of perhaps seven feet or maybe more that it looks to me like an excavator would be going down. I guess my question is, is topsoil peat or is peat topsoil? I don't understand the permit.

MR. MACNEIL: As was outlined in Lawrence MacDonald's report, the department has never disputed the point that the material being extracted from Baltzer Bog is indeed peat. It doesn't mean that the approval for topsoil is in error; it could just as easily have read topsoil removal/peat extraction, which is what is happening at this location.

MR. CAREY: Given that it's going down to whatever depth - it looks like several feet

[Page 25]

- I know there are concerns about the residents in the area. How close can an operation like this be to residents?

MR. CHAIRMAN: I'm sorry, who's going to answer this one?

MR. MACNEIL: I will take it. There are separation differences involved in the approval of which this site meets all the separation distances.

MR. CAREY: Excuse me. What are the separation distances?

MR. MACNEIL: I believe they're 50 metres, but I will check on that and get back to you on that.

MR. CAREY: Fifty metres? Okay. So this type of operation could work within 150 feet or 160 feet of residents?

MR. MACNEIL: To a property boundary.

MR. CAREY: Would this be a municipal or a provincial law?

MR. MACNEIL: It's provincial.

MR. CAREY: Having said that, if you go down this six, seven feet, whatever it happens to be - and this has been an area that's been drained, is what we're being told - then you have handy this property, I understand, is a property that is called Wood Lake. How close would Wood Lake be to this property? Are we talking a mile or are we talking . . .

MR. MACNEIL: No. Certainly not a mile. Maybe several hundred yards.

MR. CAREY: Is there any concern that by digging this out it's going to have any environmental impact on Wood Lake?

MR. MACNEIL: No, not at this point in time in the area where the operation is now located; however, if the operation ever did expand he would have to go through an environmental assessment. At that time an assessment would look into impacts on lakes and any other water in the area.

MR. CAREY: This type of operation can be within 150, 160 feet of residents and I understand there are approximately 100 or so residents in the area that - and all would be on their own water supply, which up in the Valley could be a shallow well, a dug well, even to some degree could be a point which I realize can't be replaced but it could be still there. They could be getting water from 12, 15 feet down to maybe a couple of hundred or something in that area, is that right?

[Page 26]

MR. MACNEIL: Yes, that's correct.

MR. CAREY: And the position of the Department of Environment and Labour is that this work would have no impact on their water supply or quality of water?

MR. MACNEIL: That's correct. But the approval does state that if there is ever an impact as a result of the operation or - - it's a standard term or condition of approvals - impact on any other water supplies, then the approval holder is responsible to ensure that the situation is remedied.

MR. CAREY: The financial - I know we've been given all kinds of information on this, but in the most simplified terms, would it be that Mr. Thomas has a loan from the Office of Economic Development for approximately $92,000?

MR. CHAIRMAN: Mr. Bryant, that answer again, please?

MR. BRYANT: Yes, $91,000.

MR. CAREY: This is a normal loan, paying interest and . . .

MR. BRYANT: Paying interest at 9.75 per cent.

MR. CAREY: It is not a gift from the government, not a grant? Now the approximately $73,000 was paid to Mr. Thomas when he moved or ceased operation of composting. This was for improvements to the land owned by your department?

MR. BRYANT: Yes.

MR. CAREY: Did Mr. Thomas say he worked so many hours doing this and this is what it cost to clear this land?

MR. BRYANT: Mr. Thomas submitted to us a costing of approximately $30,000 for work on one acre, and this is 4.17 acres, I believe, that we are paying for improvements on. So we pro-rated. We said we are not going to pay the $30,000 because he has used that for awhile, reduce it and pay him for the 4.17 acres.

MR. CAREY: So how much land does Mr. Thomas use in the park now?

MR. BRYANT: At his peak he was using 6.6 acres. He has abandoned 4.17 because he doesn't do the composting anymore. You do the math, but I think it is about 2.5 acres that he is still occupying. If you know the park, you know that is the piece up by the road. On one side it is pretty clear, where his boundary is, because there is a business; on the other side it is essentially bush. So he has cleared and grubbed that bush. We have had to, on at least one

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occasion, get him back in within his boundary.

MR. CAREY: So at this point in time Mr. Thomas is leasing a little over two acres, or has he retained the whole thing?

MR. BRYANT: George tells me it is 2.43 acres.

MR. CAREY: So he has relinquished his lease or right, or whatever he had, the agreement that he had for the other part of that, so it is available for you to lease to someone else.

MR. BRYANT: Yes.

MR. CAREY: I still have a little problem with the time frame that he was developing this and that no one seemed to tell him that he wouldn't be able to do composting, but perhaps that's just because there weren't any complaints or whatever. At one time there was a concern that Mr. Thomas might have been dumping fuel on the premises, was that investigated?

MR. MACNEIL: Yes, that was investigated and there was no evidence that there had been a fuel oil spill there when the situation was investigated.

MR. CAREY: You have had several complaints regarding Mr. Thomas' operation and Mr. Thomas. Would you care to make a guesstimate of how many?

MR. MACNEIL: No. there were volumes of complaints regarding that particular site, but we have had, I believe, two formal complaints most recently made about it.

MR. CAREY: I know that there have been public meetings and I know that you have had discussions with Mr. Thomas but, ast this present time, what is the status with the relationship between the community, the Department of Environment and Labour, the municipality, the whole situation, where does it really stand? Are people becoming informed and satisfied that their water is going to be safe and that Mr. Thomas can carry on an operation here, or is it something that we are still looking at more problems with? Where is this going? These things cost money; this is why I am concerned.

MR. MACNEIL: The department has brought Mr. Thomas into compliance. Any issues that were brought to our attention of a compliance nature, he was brought under compliance. The question regarding water, the department did sample 19 wells in the vicinity of the operation for total and faecal coliform, which all came back negative, all 19. I think there are still some people in the community that do not want the operation there. The operation is legal. He is operating with an approval.

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MR. CAREY: I am running out of time, I believe. My concern is that if anything comes out of this, a concern I have had for a long time, and I wondered if it was supported by you people, is I believe there needs to be more co-operation between the Department of Environment and Labour and the municipalities, and more discussion and sharing of information when people are going to set up operations and so on so that we don't, down the road, run into this type of problem. Is there anything happening in that direction? As a member trying to represent my constituents, I feel a real need for this and I don't like to see the Environment people labelled as policemen or enforcers. I like to see them as a helping hand to help industry, yet protect citizens and business, as well. Do you see anything happening there?

MR. MACNEIL: Regarding sort of working co-operatively with the municipality, we do meet with the municipality on a fairly regular basis. Most o four staff are on a first name basis with staff down at the Municipality of Kings. Copies of all our industrial approvals are sent to the municipality and, again, as I previously stated, in cases of larger approvals, quite often the department is represented at council meetings regarding the approval from the municipality standpoint.

MR. CHAIRMAN: Excuse me, Mr. Carey. I am aware of the fact that Mr. L'Esperance has a few comments on this question.

MR. L'ESPERANCE: I think the question Mr. Carey raises is an important one. It is one, in my early observation in the department, is an area where we need to look at better harmonizing our relationships with all of our government partners. I think if there is one issue that comes forward compellingly from the Baltzer Bog situation is the fact that I think many of the members have acknowledged that this is a very complex issue. In that complexity lies some specific challenges from a public policy and from a service delivery perspective. Again, going back to my comments on lessons learned here, I think one of the areas that we want to look at very carefully is the whole nature of our relationship with the local municipalities and so forth. This is an issue that comes forward from a variety of parts of the province and it is an area that I think we do need to look at in some detail.

MR. CHAIRMAN: Thank you, Mr. Carey, and thank you, Mr. L'Esperance. We are going to go into our second round of questions. Looking at time constraints and a wrap-up from a couple of our witnesses, I am going to ask each caucus to have five minutes only for the second round. Mr. Steele, it is 9:34 and 4 seconds. You are on.

MR. STEELE: Mr. Chairman, before I get to my real question, I would just like to turn back to Mr. Reid. I was just intrigued by the time it took you to think about whether you'd received any calls from the Premier's Office. It made me wonder whether you'd received any calls that you would consider political calls, although maybe not strictly speaking, from the

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Premier's Office.

MR. REID: I am not sure of the question. My mind wandered.

MR. STEELE: Did you get calls from politicians or on behalf of politicians, other than the call you have already spoken about from David Morse?

MR. REID: None that I can recall.

MR. STEELE: Thank you. Mr. Chairman, I would like to use my time really to summarize what is really a fairly complicated issue. The problem here is that this could happen to any of us. The South Bishop Road is a quiet, country cul-de-sac. There is some truck traffic at the upper end of the road from a long-standing industrial operation, which has been described to me by the local residents as a good neighbour. It has been there for a long time. Nobody has any trouble with that particular operation, but one day the residents of South Bishop Road woke up and realized that they had a new neighbour, a new neighbour working and operating not very far at all from where they lived.

The problem here and the reason why it's before the Public Accounts Committee of the Legislature is not the fact that there's a private operator trying to run a business in the bog. It's that the local residents turn to their government for help and found instead that their government was so wrapped up in this operation that they couldn't get any help, that the only help they were going to get was what they were able to do for themselves because what happened here was that there was an operation in the Kentville Industrial Park and there were some complaints from neighbours and there was a complaint from a prospective tenant in the industrial park and those people were looked after because the Business Development Corporation moved to get the composting operation out of the park. So they were happy.

The business operator said that he would go out of business if they made him do that in this memorable phrase, it's like asking him to commit suicide. So the Business Development Corporation loaned him money to buy a new property and they paid him to get out of the park on top of that and he's happy. He's looked after. It doesn't seem to have occurred to the Business Development Corporation that the operation that they were paying for Mark-Lyn to operate actually couldn't be operated in the bog. It was contrary to zoning and it was contrary to the Environment Act, but nevertheless the loan went ahead. So the government bought the property for Mark-Lyn, and the people living on this quiet country cul-de-sac, zoned country-residential, found a big increase in truck traffic on their road. They have fears of water contamination and they simply have a concern for the natural environment of the bog that they've been living beside for all these years.

But like many people in the Valley and perhaps in the province, they've lost faith in the ability of the Department of Environment to provide adequate protection of their environment, the environment in which they live. They don't trust the Business Development

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Corporation because now the Business Development Corporation, they need this business to succeed because the Business Development Corporation is on the hook for $91,000. So the Business Development Corporation isn't very well going to find that it has made any mistakes. We need to get to the bottom of this. We do. Once and for all we need to get to the bottom of this and not to have it go on and on and on. I've heard from the witnesses today how much time of theirs it has taken, how much they have done to look into this. Certainly it has kept all of us busy. It has kept the residents busier than anybody. We need to put an end to this.

The department has said that they have money, or were willing to put aside money for a mediator. So I have a proposal that I want to put to the department and see if they can agree. Will the department agree with the residents to refer this to the Office of the Ombudsman so the Office of the Ombudsman can take an objective arm's length look at everything that has happened here and make an objective report about who's right and who's wrong so we can once and for all put an end to this? Mr. L'Esperance - you're the senior government official here - can you agree to that kind of a referral?

MR. L'ESPERANCE: I think I would defer to the wisdom of the committee. We certainly feel we've done a thorough investigation of the matter. I think it's fairly clear that the Department of Economic Development has as well. I'm not an expert here on protocol, Mr. Chairman, but I assume that it's within the power of the committee to so recommend and I would leave that to the wisdom of the committee.

MR. CHAIRMAN: Thank you for the answer. Mr. L'Esperance. I'm coming up to 9:40 a.m. and the next five minutes will go to the Liberal caucus.

MR. GAUDET: Mr. Chairman, I want to go back to Mr. Reid. Mr. Reid has had time to look back and think back if he did receive any contact from the Premier's Office. I want to know again, for the record, Mr. Reid, did you receive any contact from the Premier's Office, yes or no?

MR. REID: I said before I can't recall. If I have to say yes or no, that means that I would probably say no, but I may . . .

MR. GAUDET: Thank you. Mr. Chairman, I am going to table this e-mail from Laura Lee Langley, a communication officer with the Department of Transportation and Public Works, to the Premier's staff. I will table that, please. Mr. Reid, did the company Mark-Lyn Construction receive approximately $78,000 from the provincial government, yes or no, for land improvements?

MR. REID: You said approximately $78,000?

MR. GAUDET: Approximately $78,000, I think.

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MR. REID: Yes.

MR. GAUDET: Yes. Did the company stop composting?

MR. REID: Yes.

MR. GAUDET: Is the company still doing business in the Annapolis Valley Industrial Park?

MR. REID: Yes.

MR. GAUDET: They are. Mr. Reid, from your own notes we have proven to the committee this morning that Mark-Lyn Construction was asked to leave the park. That was from your notes. I want to make reference here to - Mr. Reid, my office contacted you back in January. We wanted to find out if Mark-Lyn had received written permission to make the so-called land improvements. You indicated at that time that they had received written permission and you would be forwarding that information.

Mr. Chairman, I am going to be tabling an e-mail from George Reid dated January 16, 2002, 12:15 p.m. The e-mail is sent out to Ron Larder. We still have not received the information that Mr. Reid has indicted he would be providing us as far as permission given to Peter to clear and make these land improvements. I will just quote from Mr. George Reid's e-mail. It says, "I said Peter did the work with our permission and I thought it was in writing. Do you have any written information about his clearing of the additional land. If so could you fax it to me." So, Mr. Reid, was there written permission given to Mark-Lyn Construction to carry out these land improvements?

MR REID: Yes.

MR. GAUDET: There was. Could you table that information, that permission?

MR. REID: Yes.

MR. GAUDET: You can, okay. Mr. Chairman, we have heard - unfortunately, we're running out of time - there have been many people involved in the community talking about this whole issue from day one. We have gone from Mark-Lyn Construction that's located in the industrial park to Baltzer Bog. The next question is to Mr. Kim MacNeil.

MR. CHAIRMAN: One minute remaining, Mr. Gaudet.

MR. GAUDET: Mr. MacNeil indicated that Mark-Lyn Construction did receive a permit to remove topsoil and I think you've acknowledged that he's removing peat. Is that correct, yes or no?

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MR. MACNEIL: Yes, he is removing peat.

MR. GAUDET: Yes, he is removing peat. According to Agriculture Canada, they state that peat is not topsoil. Mr. MacNeil, do you agree with Agriculture Canada that peat is not topsoil? I will table that, Mr. Chairman.

MR. MACNEIL: I am not privy to the document that you have. We consulted with one of the experts, well, in fact, two experts, one with Agriculture and Agri-Food Canada, a Mr. Webb, and also with the Canadian National Committee for the International Peat Society, a gentleman by the name of Jean-Yves Daigle, who is considered one of the foremost experts on peat in the country, and based on the information provided to us by those two gentlemen we felt that the approval that had been issued for topsoil removal that included peat in this case, and that was correct.

MR. CHAIRMAN: I'm sorry, Mr. Gaudet, your time has elapsed. Time flies when you're having fun. It's 9:45 a.m. I have turned the questions over to the member of the government caucus, the honourable member for Yarmouth, Mr. Hurlburt.

MR. RICHARD HURLBURT: Mr. Chairman, my first question is to Kim, if I may call you Kim. Has Mark-Lyn Construction been working within the guidelines set out by the Department of Environment and Labour?

MR. MACNEIL: Yes, he is currently in compliance with the terms and conditions of his approval.

MR. HURLBURT: And he has been in the past - you have told this committee that there has been one charge and there was one warning to the company.

MR. MACNEIL: Yes. At Baltzer Bog there was one charge, and there was another charge for an unrelated matter at the industrial park.

MR. HURLBURT: I guess we still have a grey area here on the definition of peat versus topsoil.

MR. MACNEIL: Yes. Not from our standpoint, there's no grey area.

MR. HURLBURT: Could you give me the definition of a bog versus just a piece of ground? My definition of a bog was a wet piece of ground. If they have extracted up to seven feet from this area, is that still called a bog, is it by definition a bog?

MR. MACNEIL: In this case the experts term it that it's not a functioning wetland

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because it had been used for agricultural purposes, and it had been extensively drained and in fact there were drainage pipes and ditches throughout the property.

MR. HURLBURT: Kim, how many pits and quarries do you have? Your jurisdiction goes from Kentville around down to beautiful Yarmouth and back up the South Shore; am I correct?

MR. MACNEIL: Yes.

MR. HURLBURT: How many pits and quarries do you have in your jurisdiction? A ballpark figure.

MR. MACNEIL: Many. Hundreds.

MR. HURLBURT: How many inspectors do you have?

MR. MACNEIL: We have approximately 20 inspectors.

MR. HURLBURT: Do you feel that you should have an inspector for every pit and quarry in the Province of Nova Scotia?

MR. MACNEIL: No, sir, we do not.

MR. HURLBURT: Are you familiar with the group in Yarmouth known as TREPA?

MR. MACNEIL: Very Familiar.

MR. HURLBURT: In my terminology of TREPA, they're a watchdog for the environment and they wok very closely with your department.

MR. MACNEIL: Yes, they do.

MR. HURLBURT: I think that in Yarmouth we're very fortunate to have TREPA as a watchdog and working with the Department of Environment and labour. Do you agree with that statement?

MR. MACNEIL: Yes, they're certainly an asset to the community and the environment.

MR. HURLBURT: So, if I could go back to the closing comments of Mr. Steele, he stated that we do not have enough resources in the Department of Environment and Labour to have enough inspectors. Just within your jurisdiction, not talking about the rest of the Province of Nova Scotia.

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MR. MACNEIL: That's correct.

MR. HURLBURT: Well, if that's the case then maybe we should have a police officer on every street in the Province of Nova Scotia. Anyhow, that's just my - if I may now go over to Mr. Bryant. The loan to Mark-Lyn Construction, that met all the criteria, the same as it does all across this province from Yarmouth to Cape Breton?

MR. BRYANT: Yes, sir.

MR. HURLBURT: So you had that. Do you have a personal guarantee from this corporation or company?

MR. BRYANT: We certainly have all the documents signed and approved. I don't know if there's a personal guarantee. I can check that.

MR. HURLBURT: My final question to maybe Ron and Chris, could you give me an estimation of what it has cost the taxpayers to date for this inquiry of Mark-Lyn, where I have been told here this morning that they have been within the guidelines of the Province of Nova Scotia and the Department of Environment and Labour, that they met within the loan guidelines of the Province of Nova Scotia? What has it cost the taxpayers to date?

MR. CHAIRMAN: I believe that is going to Mr. Bryant and Mr. L'Esperance, is it?

MR. HURLBURT: To the department; yes, sir.

MR. L'ESPERANCE: Well, a conservative estimate in our department indicates probably about 1,600 hours have been devoted across all parts of the department that have dealt with this issue and an attributed cost factor of somewhere around $80,000.

MR. CHAIRMAN: Mr. Bryant.

MR. BRYANT: We haven't don't any calculations. Certainly over the summer it used up a lot of my time, but we don't have a ballpark figure like that. We don't generally operate that way, although I think we could dig up a number. I'm not sure it would mean very much, but we could certainly do that.

MR. CHAIRMAN: Thank you, Mr. Hurlburt. At this stage I would encourage the witnesses to make a few wrap-up comments, and I would like to look at the constraints of time. We have a quick item of business that has been brought to my attention. If Mr. L'Esperance, Mr. Bryant or any of the witnesses would like to make a comment, it's 9:51 a.m. and I am going to cut you off at 9:56 a.m.

MR. L'ESPERANCE: Mr. Chairman, in closing what I would say from a Department

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of Environment and Labour perspective is that it's been acknowledged around the table that this is an extremely complicated and complex issue. On the one hand it's, to some extent, a struggle between the interests of a small businessman who's trying to make a living in the Annapolis Valley, who employs people in our province, who is very much a part of a strong vertical that's a central component of the economy of Nova Scotia and that is the small business community. On the other hand, there are legitimate concerns being raised by citizens who live in proximity to the Baltzer Bog area. I think we all understand those concerns.

I hope that if nothing else, in all of this - and these are difficult public policy issues around which there is not often complete unanimity as to what their best resolution is, but the one thing that I do hope is - that in the examination of this matter this morning, the members of the Public Accounts Committee understand that these issues have been taken very seriously by government officials, and I can say from the point of view of both the Economic Development side and in Environment and Labour I have not seen any evidence of anybody who has been dismissive or otherwise deleterious in their comments with respect to the citizens' group that has come forward with its issues. We've taken the issues very seriously.

I think the situation to some extent - I am most respectful of public servants in Nova Scotia and this situation signals to some extent the difficult job that public servants have in mediating what are often very challenging and, in some cases, completely intractable situations where there is not a clear resolve. I think everybody wants to say there's a right answer and a wrong answer and, in this particular situation, I'm not sure that's the case.

I have had an opportunity to meet with the concerned citizens. I have had an opportunity to communicate with them by e-mail. I have to say that there were times when I wished those e-mails weren't showing up on my screen because they were numerous, they were voluminous and they were very time-consuming. Notwithstanding, I would be the first to respect the right of citizens to, in fact, push back against their government and to make their views known to senior officials.

I think the test of good public policy always is, what do you do when you know? If there are particular situations in the handling of this matter from the point of view of the intersection of four departments of government, ourselves, Natural Resources, Transportation and Public Works, Economic Development, and Environment and Labour as well as the municipal level of government. We've just heard Kim say that there has been, throughout this, consultation with Agriculture Canada as well. I think the test of good public policy is how do you deal with issues when you find there are constraints or challenges in the way in which we work amongst and between departments. I think one of the challenges that we have at the official's level is to say how can we learn from the lessons of the situation at Baltzer Bog and how can we make improvements in our general practice that will help make sure that we don't run into these kinds of situations again.

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Having said that, there is no guarantee. We've increasingly, across the country, seen very challenging issues from Walkerton to a variety of others where people are expecting strong stewardship from their government and from senior officials and I guess it simply, in closing, illustrates the challenge we face as public servants and governments in Canada today.

MR. CHAIRMAN: Thank you, sir. Does anyone else wish to fill up the remaining 50 seconds? I told you I was diplomatic. Mr. Bryant.

MR. BRYANT: Mr. Chairman, I actually thought Ron would use the whole five minutes so I have nothing prepared.

MR. CHAIRMAN: That's fine. Thank you. Mr. Gaudet.

MR. GAUDET: Mr. Chairman, again, I would like the chairman to remind Mr. Reid to provide the committee members with that permission that was provided to Mark-Lyn Construction to carry out those land improvements.

MR. CHAIRMAN: Thank you, Wayne. There was a reminder there and there are copies of the minutes. I would like to take a quick recess as our guests leave and then we have an item of business. I thank our witnesses for appearing this morning and your patience is appreciated.

MR. CHAIRMAN: Could I have the attention of the committee members, please. We have an item of business, I would encourage you to take your conversations outside of the Chamber and if we could turn to the item of business. I thank members for their co-operation today with the number of witnesses; however, I have been informed of an item of business and I turn the floor over to Mr. Steele.

MR. STEELE: Mr. Chairman, I have two quick motions that I would like to make. I believe that we have the same topic on our schedule for two weeks from now. (Interruption) Oh, it is one week. It is next week.

MR. CHAIRMAN: Mr. Thomas will be here next week.

MR. STEELE: That is Mr. Thomas from Mark-Lyn. It just seems to me that an essential element of this story is the residents' perspective. Rightly or wrongly, they feel their legitimate complaints have been overlooked. I think all of us who have been involved in this know that no one knows more about this than the local residents. So my first motion is that

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Belinda Manning and Susan Brown from the residents association be invited to share the time next week with Mr. Thomas. Perhaps an hour with Mr. Thomas and an hour with the residents would be fair. So that's my first motion, Mr. Chairman.

MR. CHAIRMAN: Thank you. You have heard the motion. Could I have comments? I hear the question being call for. No speakers? Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is defeated.

Mr. Steele, do you have another motion?

MR. STEELE: Mr. Chairman, I think I would like to ask for a standing vote on that, please.

MR. CHAIRMAN: Mr. Steele, I don't think that's necessary. I heard it very clearly and I would like to move on to your second motion, if I may.

MR. STEELE: Mr. Chairman, there is more than one reason to call for a standing vote and the other one is simply to put on the record who voted which way, whether it was clear or not. So I would like to ask again for a standing vote.

MR. CHAIRMAN: And I would like to move on to your second motion, please.

MR. STEELE: I will just say for the record then that the members of the government caucus voted against that motion.

MR. CHAIRMAN: Your motion, please.

MR. STEELE: My second motion, Mr. Chairman, is that this committee directs its chairman to write to the Office of the Ombudsman, inviting them to inquire into and report on the matter of Baltzer Bog.

MR. CHAIRMAN: Thank you. That's further to your comments earlier to Mr. L'Esperance about the Ombudsman becoming involved.

MR. STEELE: If I could make one quick comment on that. I think we all want this issue to be settled once and for all. Today's session won't resolve it. I certainly don't expect next week's session will. We need to settle once and for all what happened here. The only way to do that is to have somebody who is perceived to be objective to look into it. The department has already said that they are willing to spend money on a mediator. My proposal

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is instead of spending more money on a mediator, let's get an existing office to look into this and, once and for all, get the facts on the table and put it behind us so that everybody can move on. So that is the reason for that proposal.

MR. CHAIRMAN: The motion is that I will be asked to contact the Ombudsman to become involved in this particular issue. Are we clear on the motion? I recognize Mr. MacKinnon.

MR. MACKINNON: Mr. Chairman, I am wondering if it would be more prudent to wait to receive the results of the proceedings next week before we go that step? Then we could go back and revisit Mr. Steele's motion at that point.

MR. CHAIRMAN: Are there other speakers on this motion? Mr. DeWolfe.

MR. JAMES DEWOLFE: Yes, I concur with Mr. MacKinnon that we indeed have to see this through before we make any determination. It is a complicated issue and I certainly look forward to having Mr. Thomas here.

MR. CHAIRMAN: Mr. Steele, how do you feel about putting off your motion until next week?

MR. STEELE: That is fine, Mr. Chairman. Anybody who thinks that this issue is going to get magically resolved by hearing from Peter Thomas next week, I think is dreaming. But since it appears that the motion would be defeated otherwise, then we can defer until next week and bring it up at the end of the meeting next week.

MR. CHAIRMAN: Mr. MacKinnon.

MR. MACKINNON: Mr. Chairman, I think those patronizing comments are really an affront to members of this committee. We like to be fair-minded and hear both sides of the story. Just because Mr. Steele doesn't feel his motion is going to pass, I don't know if he is working on a thesis, or what in the name of heaven he is doing, but that is a fair-minded statement, I would believe, to hear both sides of the story before we go off half-cocked just to try to score a few political points.

MR. CHAIRMAN: Thank you. I am aware of the fact that Mr. Steele has agreed to defer this motion until the end of next week's meeting. Is that agreed?

It is agreed.

I am going to bring it on as an item of business at the conclusion of next week's meeting. Is there any other business? Then I would ask for a motion for adjournment.

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MR. MACKINNON: Move to adjourn.

MR. CHAIRMAN: It is so moved.

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