STANDING COMMITTEE ON PUBLIC ACCOUNTS
Mr. Howard Epstein
DEPUTY CHAIRMAN
MR. CHAIRMAN: Now that we have a quorum assembled, I would like to call to order this meeting of the Standing Committee on Public Accounts of the Nova Scotia Legislature. Our meeting today is to continue having a look at the Resource Recovery Fund Board. We have with us this morning three persons, two of them former board members and one a former staff member. We have Mr. Elwood Dillman and Ms. Jeanne Cruikshank, both of whom were former board members of the Resource Recovery Fund Board and Mr. David Howell, formerly a staff member. I welcome the three of you to our committee.
Let me just explain that our normal procedure is to invite any of our witnesses to make any introductory comments. We have already met with the staff of the Auditor General's Office to go through his report insofar as it pertains to the Resource Recovery Fund Board so we do have some background about this but we would invite you to make any opening comments that you wish to make and after that, members of the committee will ask questions. We have approximately an hour and one-half. Do any of you have any opening statements you wish to make to us?
MR. ELWOOD DILLMAN: Not really, Mr. Chairman.
MS. JEANNE CRUIKSHANK: Yes, given the opportunity, I guess, maybe just a little bit of history to give the context to this. The announcement of the Nova Scotia Waste Strategy in October 1995 allowed for the sunsetting of the existing Resource Recovery Fund which was a creature of the Legislature and allowed for the development and opportunity for
a Resource Recovery Fund Board and a Resource Recovery Fund Board Inc., the body corporate. The body corporate shareholders are all the residents of Nova Scotia. The Resource Recovery Fund Board was comprised of 10 private sector individuals, three government appointees. I guess I would like to emphasize that I, with my nine male colleagues on that board, was there as an individual, not necessarily representing a particular sector or one's employment. In my case, in particular, I guess my expertise given the importance of education and consumer behaviour change in Nova Scotia was my formal qualifications in education. I was selected by the board as the Vice-Chairman and was, in fact, President of the company as well as a board member and fulfilled that role until October 1996.
MR. DAVID HOWELL: No comments, just here to answer questions.
MR. CHAIRMAN: Well, that makes it nice and simple. I will open it up for questioning. I wonder if any members of the committee have any points that they want to raise with our three witnesses. Mr. Chard.
MR. DONALD CHARD: Mr. Chairman, I guess you could say that this might be an occasion where the rubber hits the road. My particular interest, or I should say one of my main interests, about the Resource Recovery Fund Board relates to its dealings with the province's efforts to recycle rubber tires. There has been a lot of speculation as to the relationship of the Resource Recovery Fund Board to TRACC and how that enterprise got off the ground. I would be very interested in knowing if any of you had any difficulty with the contract that was proposed between the Resource Recovery Fund Board and TRACC?
It has been suggested to me that the contract deviated, in some respects, from the stated intentions of the government and, indeed, there have been apparent problems with the operation over the time that it has been going on at Cornwallis. There have been suggestions, for example, that the old interprovincial tire recycling committee had actually favoured giving the contract to a company other than TRACC and that in the end the contract was given to TRACC perhaps largely on the basis of cost but without looking at whether TRACC had better ability to deliver on the contract and comply with it.
I guess I would also like to ask a question relating to compliance and variances and put it in terms of what would constitute a major variance from the contract that was negotiated with TRACC? I think there is a legitimate question here as to when a minor variance is all right but a major variance really compromises the original intent in the tire recycling program. I have been told by present members of the Resource Recovery Fund Board that TRACC has restructured and is no longer expected to produce moulded rubber product at Cornwallis. That would seem to be a major deviation from the contract and from the government's original intentions. I wonder if that gives you enough to start with?
MR. CHAIRMAN: Are there any volunteers to answer?
MS. CRUIKSHANK: Well, I guess I wasn't on the board at the time of the implementation of the contract but certainly I was there during the development of the contract and, as with most business operations, there was the involvement of lawyers, both for TRACC and for Resource Recovery Fund but much prior to that, the transition team had been appointed or had been asked to sit by the minister, Wayne Adams, to put toward development of this whole creature.
There were in excess of 50 applications to address the tire issue. We hired a consultant among a screening process, one that we felt had the best qualifications. He looked at all the applications but from my recollection, what he was most looking for is what company could best deliver a value-added product, provide revenue for Nova Scotia, create jobs, address the objectives and do so without government dollars. Based on that and probably a number of other criteria that I don't recall at this time, it came down to two finalists. They were looked at with great scrutiny and the suggestion to the board was to go forward with TRACC. That started the process of negotiation and legal contracts but the actual contract that was developed with a great deal of input from board members was one that had an allowance for penalty clauses, for dates, for times and certainly seemed to address all the business realities and the business objectives that were necessary.
MR. CHARD: I wonder if either of the other two individuals would care to comment on the nature of the negotiations. There has been speculation, for example, that you were not happy with the contract that was being proposed and that that was a significant factor in your departure from the Resource Recovery Fund Board. Is there any substance to those rumours?
MR. DILLMAN: The first comment I would like to make is that I think Ms. Cruikshank summed it up well, my feeling as to where we were during that period of time. If you had a more specific question with respect to the issue of the difficulties, I would be more than happy to see if I could help you with it.
MR. CHARD: Yes, I think I would like to ask about the actual nature of the contract and where it originated. To what extent was the proposed contract with TRACC drawn up by the Resource Recovery Fund Board or was the nature of the contract, in effect, something that was put in your hands?
MR. DILLMAN: Mr. Chairman, the contract itself was put together with, I think, more than a minimum amount of care by legal counsel, examined every step of the way by members of the board and, for what it is worth, I personally felt that the board had a good contract. There were, as Ms. Cruikshank said, a number of penalty clauses, a number of provisions there that the board could act upon if the contract wasn't going the way it was supposed to go. So the contract was not an issue with me.
MS. CRUIKSHANK: In fact, just to add, perhaps the discussion on it was really more to clarification of areas. I think there was discussion. There was a working group of the board
comprised of people who had expertise in this who certainly worked with a lawyer. But the contract itself was developed and we were able to draw from other jurisdictions that were involved in a similar process, take the best from it. I guess our questions were for the board because, as you might expect, this board certainly took seriously their commitment to making sure what they were agreeing to and understanding the magnitude of it and that it was done correctly. So there was considerable time spent on that and clarification and the working group spent time and came back to the board.
The contract that was approved by the board while I was there was passed and there was an area, I believe, as it related to payment of a bond or that sort of thing, that had to be clarified. Then it went forward for the legal folks to finesse and that was really the point of departure of one of the more recent board meetings I was involved in, but certainly the board passed the contract that was before them.
MR. CHARD: How significant were factors such as the criteria that you have outlined, the value-added product that TRACC was to produce, for example? Was this a major consideration or would you have seen any problems if TRACC at Cornwallis was not producing a value-added product? Perhaps you would care to comment on what was intended by value-added product.
MS. CRUIKSHANK: Well, it certainly was a question that came up because one of the tangible items that was mentioned was these collars for manhole covers and animal mats. At every step of the process it was a key criteria, what value-added product was going to be produced from this. As well, the consultant also had a task in looking at the Nova Scotia landscape to determine what existing industries, cottage industries or larger, were already utilizing tires. So one of the first things he had to do was determine the volume of product out there and it was a key consideration.
In the discussions with TRACC, the products I mentioned were examples of what they would do. They had operations elsewhere. It was a key consideration that a value-added product be made. That is the total philosophy of the waste management strategy and the creation of jobs, in fact, was also one that was of importance.
MR. CHARD: Would any of you have had concerns if you had seen any potential problems in TRACC's ability to produce sort of high-end, value-added product? I think it is necessary to get at what we mean by value-added product. Obviously products that just involve shredding the tires, stuffing the shredded rubber or the crumb into bags for mattresses for cows, is probably not nearly as valuable a product as a moulded rubber product. You mentioned the collars for manholes.
MS. CRUIKSHANK: But, in fact, these animal mats were a produced final product. I mean they were a moulded rubber product and the contract was certainly comprehensive enough to cover that key criteria; that value-added product was the objective required.
MR. CHARD: You mentioned existing cottage industries in the province. Was there any discussion about whether TRACC should be producing products or concentrating on products that were not already being made in Nova Scotia? There certainly has been concern expressed by people operating cottage industries in this province that much of the product TRACC produced initially was in competition with them and they were not receiving any subsidy from the province.
MR. DILLMAN: May I, Mr. Chairman? That was an important issue and, as a matter of fact, it was raised by the minister's staff on the board and we think rightly so. Until that time, quite frankly, I was not aware of the importance of so-called cottage industries to the province. But when that came to the fore, there was agreement at the board that whatever the board did, and whoever they signed the contract with, whether it was TRACC or someone else, the board's position was that it would do everything it could to protect the interest of cottage industries that were already established. This applied to TRACC or anybody else who was there. We just simply didn't think it was fair that a company like this, or any other, could come in and have a detrimental effect on small cottage industries that were already trying to survive. That was our policy.
MR. CHARD: And yet this was not reflected in the contract, was it?
MR. DILLMAN: No.
MR. CHARD: Was there a particular reason? Was there consideration of stipulating to TRACC that it was to concentrate on sort of high-end, value-added product and not produce products that would compete with these unsubsidized cottage industries?
MS. CRUIKSHANK: I think it has to do with magnitude of numbers. My memory is that the cottage industries comprised something like 40,000 tires in the Nova Scotia picture and certainly our emphasis was on a value-added product from a much larger number than that and it was certainly the philosophy that it was not to displace those cottage industries. Perhaps that was not reflected in the contract but, I mean, as there were ongoing discussions, it certainly was the discussion around the board.
MR. CHARD: What about employment levels, because the contract that was arrived at with TRACC does indicate a level of employment which the board had hoped to see and there certainly are provisions, as you have indicated, about penalties if there was a failure to comply with some of the targets that were established. It has been difficult to get accurate figures on employment levels over time but it has been suggested that TRACC has not met its target in terms of providing, I believe the contract stipulated around 40 to 50 or 55 full-time positions . . .
MS. CRUIKSHANK: Fifty to 60.
MR. CHARD: . . . or full-time equivalents. What kind of variance in those targets, or deviation from those targets, would you have seen as acceptable? I am not suggesting that there shouldn't be some latitude in a venture of this nature for some variation but I think the problem that we are looking at with this operation is where we stray from a minor variation in the contract, short-term variation, to a significant failure to meet the overall intent of the contract in terms of employment levels.
MR. DILLMAN: We are at somewhat of a disadvantage here, and the others can speak for themselves, because I had resigned from the board prior to the contract being executed. So what went in the contract after I resigned, I don't know. So I hesitate to go too far into the provisions of the contract. I am not sure whether it was changed, modified or whether anything happened to it after that time that it was signed. So it is a little dangerous for me to get into the contract itself when I don't know what was in the last version.
MR. CHAIRMAN: A question, Mr. Dillman. Can you help us out here just with a timetable? Could you just let us know when your term was on the board and perhaps the same for Ms. Cruikshank?
MR. DILLMAN: I resigned from the board on November 11, 1996 but had very little contact with the board or with the minister for several months prior to that.
MR. CHAIRMAN: And when were you appointed?
MS. CRUIKSHANK: October.
MR. DILLMAN: No, it was - what was it?
MS. CRUIKSHANK: The legislation actually passed, I think, on February 6, 1996. There was this transition team between October and February. So I guess for purposes of passage within this House, it would be about February 6, 1996.
MR. CHAIRMAN: You were both appointed at that time?
MS. CRUIKSHANK: No, in fact my situation is quite different. Elwood is one of the three government appointees of a 13 member board; Finance, Environment and the chairman are appointed by the minister. I was one of the private sector, at-large members, so I was there by choice and I guess my position as vice-chairman was selected by my fellow board members at the first meeting. So the time-frame for the official board would be similar and my resignation was effective October 22, 1996.
MR. CHAIRMAN: Thank you. Sorry to interrupt, Mr. Chard.
MR. CHARD: That is all right. Did any of you leave the board because of concern or dissatisfaction with the proposed contract with TRACC or any other aspects of the TRACC operation?
MS. CRUIKSHANK: My letter of resignation is before you. I guess mine was rather a simple task of three being a crowd. I was the vice-chairman. The chairman was on hunting leave and I was requested to convene a meeting of the board by conference call at a specific time on a specific day that had a conflict with my day job. Given the importance of the duly constituted meeting and the necessity of a chairman, I indicated my concern that I wasn't able to do the call if it had to be at that time. So the minister appointed a chairman and I guess I saw that as some lack of faith in both the process of the vice-chairman assuming the role of chairman and the fellow board members apparently supported that there was a third chairman as well, so I figured it was time to move on.
MR. CHAIRMAN: Mr. Dillman.
MR. DILLMAN: It is true that I had a policy difference with the minister regarding the TRACC contract. I think we both struggled to try to resolve those differences. When I found that the possibility of resolving them was probably not going to happen, I felt it in the best interest of the province, the best interest of the project, that I step aside and let someone else take over and run the board.
MR. CHARD: What was the nature . . .
MR. CHAIRMAN: Sorry, Don, I have to interrupt. Sorry, when it is getting interesting. We are over to Mr. Taylor now, 20 minutes.
MR. BROOKE TAYLOR: Mr. Chairman, I would like to thank the witnesses for coming in this morning. I apologize if some of my questions are blunt and frank but I have several concerns about this whole business of the contract between the Resource Recovery Fund Board and Tire Recycling Atlantic Canada Corporation.
The original expressions of interest clearly stated, and these are dated November 15, 1994, that in Nova Scotia there is a ban on incineration of tires for energy recovery and the export of tires for incineration for energy recovery yet, in the contract that you people had, as former members and present members still have, it clearly states that TRACC, Tire Recycling Atlantic Canada Corporation, ". . . shall be entitled, during each year of the Term of this Agreement, to sell or otherwise dispose of PTEs, . . .", passenger tire equivalents, ". . . whether Processed or Unprocessed, for use as tire derived fuel or as crumb rubber, provided however, that the total amount of PTEs sold or disposed of does not, in aggregate, exceed Thirty Percent (30%) of the PTEs collected . . .".
You indicated earlier that this contract was drafted up by legal counsel and every step of the way, every clause, and you didn't say every sentence but I would expect, knowing a couple of you individuals as I do, that you examined it very closely. Yet that concession was made after the expressions of interest were received from all the other applicants. Why was that concession made and why did the board approve it if they examined all the clauses?
MS. CRUIKSHANK: I guess my answer is, in all those areas it was certainly checked against what provincial and/or other jurisdictional legislation existed. In this case, that same clause would have been checked against what was in place with the province. Department counsel was also involved in the discussion and from their perspective of legal advice, apparently it was approved to proceed. That was the advice that came to the board.
[8:30 a.m.]
MR. TAYLOR: I wonder if Mr. Dillman has any comments on the ability to burn 30 per cent, or export 30 per cent, of the passenger tire equivalents?
MR. DILLMAN: I think, Mr. Taylor, that that provision would naturally have jumped out at a lot of people, including you and a lot of others, because it certainly was at variance with what the original plan was. There was a committee of the board set up to examine and bring back recommendations to the board on the details of this. That provision that you are referring to was one of the recommendations brought back by the committee to the board, and they felt very strongly that it should be included. I can't help you any more than that, that it was there. It obviously caused some concerns when you looked at what we were trying to do was to start recycling and have value-added products here in Nova Scotia that could be marketed.
MR. TAYLOR: I wonder, Mr. Howell, do you have any comments on that?
MR. HOWELL: Only in the negotiations that were done with TRACC and the committee that met with them. TRACC was very concerned that, at least, in the initial stages of any contract that they would need time to get up and get operating and to develop the products that they were going to make out of the tires, and they wanted some leeway to be able to do something with at least a portion of them, if they could not use them in the production of value-added product. That was their concern.
MR. TAYLOR: I think that was a major concession, Mr. Chairman, and I think it was very unfair to the other bidders, if you will, the other companies, the other individuals who submitted expressions of interest, to find out later on that the successful applicant received that type of concession - 30 per cent - when, in fact, in Nova Scotia we are not permitted to burn a tire and the terms of reference clearly stated, or to export to other jurisdictions. So, that was a major deviation from the original terms of reference.
Now, there are several provisions in the original contract that was signed back on October 1996, several clauses that speak to a start-up date, that speak to processing and unprocessing. When we look a little further into the contract, we see that there are penalties if you don't meet some of these expectations, some of these targets. For example, "It shall be a condition of the Performance Security that if TRACC fails to comply with the requirements of Article 2.05 . . .". Article 2.01 speaks to the actual start-up date. In fact, it talks about a processing plant and in the definitions it tells us what a processing plant is and it is actually crumbing rubber, not just shredding rubber, it is actually crumbing rubber, processing into value-added product. It states that, "TRACC shall locate, construct and operate, at its cost, the Processing Plant and Storage Facilities in the Province of Nova Scotia for the purpose of collecting, storing and processing Used Tires into crumb rubber and for the purpose of manufacturing that crumb rubber into moulded rubber products for resale.".
Mr. Chairman, Article 6.01 of the agreement, which is mentioned under the security interest clause in the contract, states, "TRACC agrees to process Used Tires into crumb rubber at its Processing Plant and to utilize that processed crumb rubber to manufacture moulded rubber products for resale . . . 6.02 TRACC agrees to operate its business, at all times, in an environmentally responsible manner.", and we know there were some violations relative to the Fire Marshal's Office and things of that nature.
The start-up date; June 30, 1997, that is the date that TRACC was supposed to be up and running, according to the contract. I know there was an extension, and I have to ask, why was the extension granted? Why wasn't the penalty of $10,000, for each and every week that TRACC is not in compliance with just a couple of those provisions, to my knowledge, was the penalty clause ever enacted or was TRACC, again, granted another so-called generous concession?
MR. DILLMAN: Mr. Taylor, that was part of the due diligence clauses that were in that contract, I think rightly so, to protect the interests of the Resource Recovery Fund and, therefore, the interests of Nova Scotia. I think the lawyers of the board did a good job by making sure that those provisions were in there.
Were the breaches acted on? I have no idea. You would have to get that from the current board. I am sorry, I wish I could answer the question. That took place substantially after I had left the board, so I can't help you with that one.
MS. CRUIKSHANK: In fact, all three of us are has-beens as it relates to this one, given the dates on it. You have in front of you a contract that is a final contract, I had never seen it but my discussion is based on what I understood was the development of a contract prior to my departure. So that is a question for those there during that time-frame or currently.
MR. TAYLOR: I can appreciate that. Mr. Dillman, in fact, resigned on November 11, 1996 and the contract was signed in October. I wonder, Mr. Dillman, wouldn't it be normal practice for the chairman of the Resource Recovery Fund Board to sign this contract off? In fact, there is a provision at the back and there is a signature and it sure as heck, unless you write differently than I expect you do, it sure doesn't look like your signature. You resigned in November but yet the contract was signed in October.
MS. CRUIKSHANK: Actually at that time, Mr. Taylor, as you recall, there were two chairpeople. Mr. Dillman was on leave and the minister had appointed another chairman. So, there were a couple of possible signatories.
MR. TAYLOR: Yes, I would like to direct my question, Mr. Chairman, to Mr. Dillman. The contract was signed and he attended most meetings, in fact, we have the minutes of some meetings where, in fact, the Minister of the Environment was present, but we won't go down that road right now. But I would like to ask Mr. Dillman, Mr. Chairman, through you, why his name isn't attached to this contract? I want Mr. Dillman to be specific because he worked hard, attended all board meetings and I wonder if Mr. Dillman could give us a little detail as to why he did not specifically sign this contract? It seems rather strange, very unusual that the chairman of the board would resign a month after the contract was signed by somebody else.
MR. DILLMAN: I will be candid because I know that is what you want me to be. I had some very deep concerns about the ability of the proponent to carry out the provisions of that contract. I did not have a problem with the contract itself, because there were lots of penalty provisions in it. I thought it was well drawn-up. It talked about marketing strategy, it talked about value added, it talked about all these things that we were interested in. Perhaps, as you pointed out earlier, Mr. Taylor, the board was lax in not having more specific information in there with respect to protection of cottage industries but be that as it may it was the policy of the board. It is fair to say that I had an increasing concern as to whether or not the proponent had the capability to carry out the provisions of that contract.
MR. TAYLOR: I will direct this question to all three. We have a copy of the minutes of the July 26, 1996, meeting, keeping in mind, of course, the contract was signed in October and it names the board members that were present and also indicates that the Minister of the Environment of the day, Wayne Adams, was present. One of the board members, Mr. Ernie Bolivar, noted that he felt that the presence of the minister in addition to the regular Department of the Environment board representative created pressure in the decision-making process, this is relative to the contract. I wonder if you former board members had similar concerns, if you also had concerns like Mr. Bolivar had?
MR. DILLMAN: Well, first let me say that in my view, and I think the view of the board, the minister had the right to attend meetings of the board. We always thought that was his purview, he was able to do that. The board meeting to which you refer was a very
important board meeting, because most of the time had been set aside to deal with the provisions of the contract and to try to move it forward. The minister did attend that meeting. He came very late, I mean late in terms of the meeting had started, and he was with us all through the deliberations on the contract issue. The extent to which he may have influenced other board members, I cannot answer that because you have to ask the other board members. I can tell you that he was there and sat through the meeting. I cannot go beyond that.
MR. TAYLOR: You didn't feel any additional pressure yourself because of the minister's presence?
MR. DILLMAN: Perhaps I felt a little bit more at ease because I knew I was not going to be voting.
MR. TAYLOR: Well, that may be, but I understand and government told us that the RRFB was originally designed to operate at arm's length from government to create an agency that would be more successful in negotiating environmental stewardship programs. I just felt it a little bit unusual. Perhaps the other board members feel the same as you, Mr. Dillman, that there was no pressure because the minister was present even though it was an arm's length agency, arm's length from government.
MS. CRUIKSHANK: As one of the voting board members, I can respond. The vote that I cast, regardless of who else was in the room, was based on my understanding of what was the right way to support or not support what was before us. I can only speak on behalf of myself, but the presence of the minister did not influence to any degree the way I voted on the contract.
MR. TAYLOR: I am just curious as to whether or not the Minister of the Environment participated in the discussion relative to the contract.
MS. CRUIKSHANK: The minister was present during the meeting. In fact, he sat to my left at the board table but, obviously, he does not vote. I think he was there to listen. I guess I would also say that it was certainly an issue of interest, but the board, and particularly the committee, had done a lot of work and background on it that I think we were probably armed with some of the basics on it and to a greater degree perhaps those than the minister could have been for input, but he did attend the meeting.
MR. TAYLOR: I wonder if you could just kind of go back to the question. Maybe I did not make it clear, Mr. Chairman. Mr. Bolivar clearly stated he felt pressured and again I appeal to former board members to tell us whether or not the minister - obviously he did not vote - we understand that, but did the minister participate in discussions at that board meeting, from your recollection?
MS. CRUIKSHANK: I recall a personal discussion which had to do with an implementation method, which was the levy, and the discrepancy between New Brunswick and Nova Scotia. There were some questions I had of the minister relative to how, with the neighbouring jurisdictions, that would be worked out. I guess that was part of the discussion to which the minister would have been involved. To the best of July, 1996, recollection, I do know that was part of the discussion.
MR. TAYLOR: How about the other board members, any recollection of that meeting? I guess mum's the word, Mr. Chairman.
MR. CHAIRMAN: There was no answer to that question given by any of the witnesses. I think the question probably really was whether any of the witnesses today either had an impression as to what any of the other board members might have said or felt at the time or whether any of the other board members said anything to them. That is really what it gets down to.
HON. RUSSELL MACKINNON: On a point of order, I think it is only appropriate this forum, this process, I am almost afraid to say my light is not on. (Interruption) It probably hasn't been for quite some time but that is beside the point.
Mr. Chairman, the fact of the matter is the question that was posed by the honourable member for Colchester-Musquodoboit Valley is a question that should be posed to the individual members that he is securing the answer from and to start asking witnesses to presuppose or to guesstimate what is in other people's minds because he is on a fishing trip, I think is highly inappropriate for this forum.
MR. CHAIRMAN: We are not operating under strict rules of evidence. I think what the member was getting at was whether these witnesses can help us with what might have been the atmosphere of the meeting, or what was said to other members, and if they have got nothing to say on it, they have got nothing to say and that is it.
MR. TAYLOR: Absolutely, Mr. Chairman, and the point perhaps by the Minister of Labour is well taken but having a copy of the meetings, it clearly states that attendees were Elwood Dillman, David Howell, and Jeanne Cruikshank. I can appreciate we sometimes cannot remember everything that goes on yesterday let alone back a year or so ago but nonetheless one board member at least expressed at that meeting that he felt pressured by the very presence of the minister and a representative, and perhaps if I might dare, Mr. Chairman, there may have been others.
I will just simply say that. Earlier on in comments, I believe Mr. Dillman, or perhaps it was Mrs. Cruikshank, indicated that a consultant was hired regarding this contract. Some in the industry and, in fact, other bidders, if you will, other companies that submitted expressions of interest indicated that the consultant, Mr. Barry Alexander, was largely
unqualified. I appeal to each and every one of you from your recollection, again, from your memory, from your knowledge, did Mr. Alexander have any expertise in setting up an initiative, a project such as this previously?
MS. CRUIKSHANK: I will answer. We did a request for a proposal for consultants. There were in excess of 50 applications and considerations of who might best do this job. Barry Alexander's specific task was not about implementing it in that infrastructure stage, it was which of the applicants before him would best meet the criteria that were established. As I recall, he had experience in screening, scrutinizing and evaluating on those elements and so from the considered consultants before us, he had the best qualifications and had some experience in doing that, the practical experience and the knowledge that he gained during the - it was a very tight time-frame as well.
The announcement was in October or November. The legislation did not pass until February. There was at that time in the books an April 1st time-frame to meet. So it was the best qualified person with the background that could meet rather challenging time-frames to get us the best answer.
MR. CHAIRMAN: We move now to the Liberal caucus. Mr. MacKinnon.
MR. MACKINNON: Thank you, Mr. Chairman. Ms. Cruikshank, are you generally satisfied with the work that TRACC is doing?
MS. CRUIKSHANK: I really have no knowledge of what TRACC is doing.
MR. MACKINNON: I mean has there been any follow-up process since the contract has been awarded?
MS. CRUIKSHANK: I was there before the contract was finalized. When I buy my tires, I pay my levy and I guess have some passing interest in what is in the media but other than that I have had no involvement or really could not give any statement on their performance.
MR. MACKINNON: I guess a general question then, was there at that time a fairly good comfort level in signing the contract?
MS. CRUIKSHANK: The contract before us was passed by the board after a lot of questions and I think the contract, in the feeling of the board and the recommendation of the committee, addressed those concern areas that we had.
MR. MACKINNON: I guess I am being a bit pointed on this observation because the honourable member for Colchester-Musquodoboit Valley has a real concern about this issue, he has raised it on a number of occasions in the House. I think perhaps in fairness to the
honourable member, he has lost perspective because my understanding is he lobbied quite hard for this particular contract for a vested interest in his own constituency. That didn't materialize and created an expectation that didn't materialize and created an environmental problem, certainly, for the fire marshal's office and a number of other government agencies. His continued battering of TRACC and any of the positives that have been put forth, obviously, seemed to surface.
I am trying to look ahead because the issue of the 30 per cent incineration factor was raised. In looking at the big picture we are reducing incineration by 70 per cent. So given the fact that this is a new process, the utopian view would be we would get 100 per cent total recycling and so on.
MS. CRUIKSHANK: The only thing, any variance from what was originally intended in the signing of the contract was really subsequent to my departure. So only as a person on the street would I have any opinion on that and that isn't really valid for the time here.
MR. MACKINNON: One other question with regard to the cottage industries, you referred to 40,000 tires. What is the total number of tires that are disposed of and become residual in the run of a year?
MS. CRUIKSHANK: Again, from memory, it has been a while. I think my recollection is somewhere in the 700,000 range, so these were . . .
MR. MACKINNON: So you are talking less than 5 per cent?
MS. CRUIKSHANK: Yes, I believe there were things like tires made into horses for swings and some with the fishing industry but in the total picture of things . . .
MR. MACKINNON: It really didn't have a major impact?
MS. CRUIKSHANK: Well, the consultant was asked to address them and know what existed and know from that what the balance was and was the balance sufficient to go forward with a viable industry. We certainly were not ignoring them but had the tire issue been dealt with in a significant way, I don't think it would be one of the agenda items coming forward.
MR. MACKINNON: I have always raised the issue of these road barriers, these concrete road barriers, dividers that they use on construction sites and so on, they are always made of concrete. Was there ever any consideration given to using recycled tires as a mode of . . .
MS. CRUIKSHANK: Look, there certainly was discussion in trying to scope this out of rubber used in roads, the Internet is a wonderful tool to explore what was possible, what
was viable. There certainly were avenues looked at but I guess the viability of them and the application of them didn't necessarily come up with the answer that was the best value-added answer. We had some discussion with the Department of Transportation on that, but there are other fire department regulations and there are all kinds of rules and regulations that didn't necessarily enhance that.
MR. MACKINNON: Standing aside and looking back from where you were in 1996 and where this process is in 1998, would you say that we do have some success in the total recycling process?
MS. CRUIKSHANK: Looking at the total picture, certainly. One of the first initiatives of the Resource Recovery Fund Board was to deal with the deposit refund system on beverage containers. This conversation is focusing on tires but the April 1st ban was corrugated, it was lead acid automotive batteries, it was beverage containers, subsequent time-frames have been addressed. The concern of the board was when these materials were banned from landfill the agreement with the minister was that they would be addressed.
I think if you look at the overall success and, in fact, this private-sector model to deal with waste management is an enviable model, when looked at by other jurisdictions. I think at its time, and it probably still is unique in Canada, if not North America, as being a private-sector body to address this issue. So certainly, we had some learning curve issues but, overall that waste strategy process was very much enhanced and there were some positives. I would sure hope the positives don't get mired in some of the other discussion.
MR. MACKINNON: Mr. Dillman?
MR. DILLMAN: Mr. Minister, I think the accurate measure of the success of this venture relative to tires, in my view, had to be the performance of the company against the contract. I do not know what that is and I think very few people do but if the proponent - even though they may have been late and even though there may have been other breaches - of the contract is doing what the provisions of the contract said should be done, then that is success. That is real success.
If on the other hand an examination of the operations shows that the company is not performing as per the provisions of the contract and there are breaches which are not being addressed by someone, then the success is much more limited. As a Nova Scotian who has spent a lot of time trying to get it right here, I sure hope that it works and I sure hope that at some point in time it reaches success, and it may already be there. Since my departure from the board I have had no contact with the board. I have had no contact with the plant. I have had no contact with the owners. I made it a point just to stay away from it entirely lest my opinion got mixed up and facts and fiction could not be sorted out.
MR. MACKINNON: Your area of expertise is recycling, is it not?
MR. DILLMAN: I spend a lot of time at it, yes. Of course, I have tried to preach this as I have gone around Nova Scotia supporting the solid waste plan which, as Ms. Cruikshank said, was an excellent piece of legislation, I took my time to speak in almost every corner of the province promoting this. That was before the tire contract.
I am a great believer in this but I also have enough experience to know that you cannot successfully take product out of the waste stream and recycle it unless you have got a market. If you have got a market somewhere, it does not matter where, that makes any kind of economic sense, then you can do wonderful things for solid waste management but the whole thing in my view, gentlemen, has to be driven from the market concept because otherwise all you do is make a whole lot of things and pile them up in a pile somewhere and they stay there and you keep them above the ground as opposed to underground. I am not supposed to do that in this forum but I did it anyway.
MR. CHAIRMAN: Mr. Fraser.
MR. HYLAND FRASER: Mr. Chairman, I guess I am going to stay on track for a couple of minutes. I am interested in the first question there when he wanted to talk about when rubber hits the road but then he wanted to know when it got off the ground. I am not sure what the time period was between there but, Ms. Cruikshank, you had mentioned about the consultants coming in to analyze the proposals for tire recycling. What was their opinion to the board? What did they bring to you?
MS. CRUIKSHANK: The final successful consultant was Barry Alexander. He brought to us his recommendation - and he certainly narrowed it down - out of the 50-plus applications he had would best suit the criteria that had been established and then from the two finalists determined which of the two from his scrutiny did the value added, no taxpayer dollar, greater number of jobs, lower levy as I recall, and met that criteria. So his recommendation to the board was to proceed with TRACC.
MR. FRASER: What was in the Auditor General's Report on the contract? Are you aware of that?
MS. CRUIKSHANK: I have no idea.
MR. FRASER: Maybe we will save that for another day.
MS. CRUIKSHANK: It was obviously delivered subsequent to my departure but I did not even realize there was one.
MR. FRASER: I am going to go back a little bit because after you folks are complete, we have some present board members coming in. The work that was done, the studies and
that, into recycling I guess and waste management, prior to the board being established, I would like to maybe have Mr. Dillman start off.
What led to the establishment of the Resource Recovery Fund Board, what kinds of goals and objectives were set prior to the legislation being proclaimed?
[9:00 a.m.]
MR. DILLMAN: When the legislation was enacted, the transition team, there were four of us appointed by the minister to look at this very issue of appointment of board members. Our criteria was that we would not invite any representative of associations to the table simply because if you have got every association that had an interest in this, you would have a 50-member board.
The other thing we did was we decided that companies, private corporations, could not sit at the table as private corporations because it would take on the appearance that there was a vested interest. So what we did, we searched about to find the individual in Nova Scotia that we thought had the most in-depth knowledge of the items that were coming out of the waste stream in the next four or five years that needed to be dealt with. We picked an expert on plastics, on corrugated, on beverage containers, on tires, on the items that came out of the waste stream. These people sat on the board representing the issue as opposed to representing a company or an organization. I think we ended up with 12 members on the board and it was a good, workable board. So those were the criteria that were used to put in place this first board.
We also had on the board a representative of the Union of Nova Scotia Municipalities who they nominated and their first nominee was Ernie Bolivar, the Mayor of Bridgewater. They wanted to be included and we thought rightly so and so they were. That is generally how it went.
MR. FRASER: The goals that were established were, I understand, 50 per cent diversion by the year 2000?
MR. DILLMAN: Yes.
MR. FRASER: What sorts of things did the initial board take besides tires to work towards that? I notice in the Auditor General's Report that HRM, or metro Halifax, accomplished a lot of that early in the game whereas some rural areas were late coming. Was there an effort made to assist rural areas to come onside?
MS. CRUIKSHANK: As part of this also the Department of the Environment had seven regions in the province and we worked closely and there was, in fact, another
coordinating committee I think, or liaison committee - I forget the wording right now - that worked with the importance of making sure municipalities were on track.
As Mr. Dillman mentioned, board members went across the province and met with Union of Nova Scotia Municipalities' members in community meetings. There was on the board also a representative of those and, in fact, the board provided an amount which went toward a waste reduction coordinator in each region to make sure that at the ground level this was happening. The task before us was very much spelled out in the materials banned from landfill as of a certain date in Schedule B or Schedule A of the legislation. So it was the beverage containers. It was newspaper. It was corrugated, lead acid automotive batteries, and originally tires were April 1st.
The concern of the board was that we did not want to put something in place until we were ready to have it in place and markets and other things. So that date was later moved. The board would now be dealing, under that same legislative responsibility, with organic and those things that are listed. They were part of the agreement between the board and the minister to fulfil.
MR. FRASER: One of the items, as I recall, that originally was being recycled and was then changed were milk cartons. Was that during your terms and what has happened to those?
MS. CRUIKSHANK: They were not a designated material in the schedule of the legislation. However, given their similarity and the intent being to ease the consumer role in this when you are trying to roll out a provincial plan, for example, in some jurisdictions, like Halifax, milk cartons were already going in the blue bag. We were hoping to simplify and make easy and get ownership of this by the residents of Nova Scotia. It was determined at that time that they could go back to either the depot or in the blue bag, where those systems were in place. Again, they were not designated in the schedule. Maybe that was because markets were a problem and, subsequent to my departure, I think that market economic reality became even clearer.
MR. FRASER: Mr. Dillman indicated earlier that the focus on trying to recycle was to have something value added, something that had a market down the road. That is what you indicated was the goal with tires or whatever it was that was coming out, that there be a market for it. I guess composting and that sort of thing are what is being focused on now, that landfills will not take those anymore, but there is no value to that, is there, except in the household, is there?
MS. CRUIKSHANK: Sure there is. I mean, like anything else, quality product and segregated product by the householder can create a value-added compost commodity that is desirable, that is marketable. Quality product in gives quality product out. That is why such an education effort is important towards what are the right materials for compost. I think in
that the philosophy is true, to recycling those things that the value added collectively of all these apple cores and potato peelings is a commodity that is marketable and desirable.
MR. FRASER: The province in the seven regions, as I understand it and you can correct me if I am wrong on that, but I believe the goal would be that there would be only one landfill in each of these areas. Was that part of your mandate, to work towards that, or were you just instruments to try to take enough out of the waste stream to allow that to happen?
MR. DILLMAN: Mr. Chairman, the reason that I am having difficulty with this is that I have not been on the board for a year and a half. I know that things have changed since that time and speculation in this forum is always very dangerous. Let me just say that insofar as the whole recycling aspect of it goes, the provincial department makes the rules, they implement the regulations and the Resource Recovery Fund and/or the private sector are responsible, along with the municipalities, for carrying them out. If you have markets for any of those products that make any kind of sense, it is not a big job to make that happen. The problem backs up when you do not have a market. That is why the question that somebody asked earlier, did I know if the tire experiment is working. The only way that this committee will know if it is working is to know how much value-added product they are selling, and are they operating against the provisions of the contract that they signed.
MR. CHAIRMAN: We are into our second round. Six minutes each, and it is Mr. Dexter.
MR. DARRELL DEXTER: I want to go back and just touch on something that earlier was touched on by Mr. Taylor. I think this is important because really what we are talking about in terms of the TRACC contract and how it evolved out of the tendering process is the integrity of the tendering process itself. If you make a change which amounts to a change in 30 per cent of the volume of the product that you are going to deal with in the tendering process, haven't you substantially altered the playing field? Was the tender ever re-let so that the other 49 proponents knew this substantial change?
MR. DILLMAN: Let me try this for a start. In terms of the ability to handle, for the private sector or somebody else to handle solid waste management articles, there was not a tender process as such. It was done through expressions of interest. In the tire issue, there were some 60 to 70 expressions of interest which came to the government from people who said, yes, we can do this and, yes, we would like to do it. The government, I believe, did a lot of work in narrowing the list down to something like 8, 10, 12 or some short list. When we were asked to start negotiating a contract, there were only 2, 3 or 4 that were still left and our consultant did extensive interviews with them.
If your question is, doing a contract with somebody, whether it is expressions of interest or whether it is a tender, and then allow that company to change the rules in the
middle of game, it is something that I would have trouble with if I was on the other side of that issue.
MR. DEXTER: Exactly, and did you have trouble with it on the side of the issue that you were on? I mean, you were on the other side of this expression of interest. Is this the policy difference that you were talking about, that arose between yourself and the minister?
MR. DILLMAN: There were a number of issues that came up surrounding this issue which I had great difficulty with.
MR. DEXTER: Well, what were they?
MR. DILLMAN: I guess the principal one had to do with the ability of this proponent. You see, a lot of people in Nova Scotia thought at that time that the Resource Recovery Fund was dealing with the Mennonites Central Committee. This contract was always referred to as the Mennonites. Well, the contract was never signed with the Mennonites. I should not say that because I don't know, I did not sign it, but it was not intended to be signed with the Mennonites.
So that kind of got me thinking a little bit. I was not satisfied with the fullness of a business plan. I was not satisfied that we had enough protection to cover off cottage industries. As you know, there are three companies in Nova Scotia, small guys - one in Pictou County, one in Argyle and one in Digby County - who have had terrible times lately feeling poorly done by this company.
As a fair-minded individual, I think I am, I have difficulty with that. My trouble was, since I resigned from the board, I took myself out of the thing completely.
MR. DEXTER: We have a very short time here, at least I do. Do you recall writing a letter back in November 1996 in which you indicated that at no time did you ever invite the minister to any of the Resource Recovery Fund Board meetings and that, in fact, prior to the meeting to discuss the contract, the minister's office called you and asked to attend that meeting and you related that in a letter?
MR. DILLMAN: I can assure the committee that I did not invite the minister to attend the meeting of July 26th. I am a little less sure about whether I ever invited him to a meeting or not.
MR. DEXTER: Do you recall being called 15 minutes before a board meeting and you were asked if the minister could attend?
MR. DILLMAN: Yes.
MR. DEXTER: I don't know if I still have time left. I just want to run through this. The criteria that were originally set out in the request for proposals were ended . . .
MR. CHAIRMAN: Time is up for you. You can ask the question later. Moving right along to Mr. LeBlanc.
MR. NEIL LEBLANC: Mr. Chairman, I just want to ask one very specific question because I do represent one of the three cottage industries he refers to. It is a very specialized one, especially dealing towards products for fishermen. They feel very much threatened and they have been trying to develop an industry whereby they can pass it on to their sons and, hopefully, hire some more employees. I want to ask if maybe you could clarify something and I appreciate that both board members have indicated that you had some concerns and to try to protect those specific industries that are there.
Was there something in the contract originally drafted by the board that would have offered those people some protection?
MS. CRUIKSHANK: It certainly was part of the obligation we had of Barry Alexander and within his recommendations. I don't believe it was in the contract, but it certainly was in the recommendations coming forward, a consideration not only of the number but what was already operating in Nova Scotia.
MR. LEBLANC: I know it is not in the contract, but what I am asking is, was it going to be in the contract per the directions of the board?
MS. CRUIKSHANK: I really can't answer that. I know it was in Barry Alexander's recommendations but perhaps it didn't carry through to the discussions of the contract.
MR. LEBLANC: Mr. Dillman, can you answer that question, please?
MR. DILLMAN: I can't add much to that although I know it is a concern. I have talked to those gentlemen who called me and said, is there anything you can do for us? Unfortunately, there wasn't much that I could do because I was out of the system, I was away from the board, I wasn't part of it. The only thing I could add, I guess, is that the matter of impact on existing cottage industries was discussed, at least, at one board meeting and it was my clear recollection that the board's policy was that with whomever we signed the contract, those industries needed to be protected. We were not going to allow a monopoly situation to take out a resource of this province and create a hardship for small operators who were already operating here. It was not in the contract and I don't know why, at least not the last one I saw. But I can tell you that it was the policy of the board as I understood it when I was there.
MR. LEBLANC: Thank you very much.
MR. CHAIRMAN: Mr. Taylor.
MR. TAYLOR: To Mr. Dillman, the processing fees that were established by the Resource Recovery Fund Board, do you have any concerns that it is a fair deal for the shareholders, the taxpayers of Nova Scotia? Consumers pay, as you know, $3.00 for a car tire, without getting into the specifics of a car tire, and $9.00 for a commercial tire; the contract provides TRACC with the sum of $1.25 for each unprocessed passenger tire equivalent. The point I am making is that from a commercial tire, I don't know how many passenger tire equivalents you could process but it seems like there might be an imbalance there. Do you have any concerns about that formula and whether it is a good deal for Nova Scotians, or is it a good deal for TRACC or is it both?
MR. DILLMAN: Mr. Taylor, as I understand it - but bear in mind, I didn't sign it and I wasn't there when the final one was done, but from what I saw - I thought it was a good deal for TRACC and it was a good deal for Nova Scotia, providing - and this is a very important provision - that the provisions of the contract were carried out by the proponent. If they were not and if any organization was going to allow the company, the proponent, to do things other than they agreed to in the contract, then probably Nova Scotia got less for its value. However, if all of the provisions were carried out and then the product was recycled into value-added products, yes, it probably was a good deal for TRACC and Nova Scotia. The issue then is, what was done?
MS. CRUIKSHANK: Just a comment though on the levy, it was not paid in its entirety at the beginning. The breakdown was that a part was paid in collection and the balance was not paid until there was an assurance of processing. Again, it is my recollection that in looking at levies and the best deal for consumers, I think the other finalist in this consideration had, in fact, a higher levy cost initially and that was sort of one of the criteria certainly that was looked at.
MR. TAYLOR: I just wonder about the location of the tire recycling facility and perhaps again to Mr. Dillman in the concern for time, do you think that is a strategically good location in the Province of Nova Scotia?
MR. DILLMAN: I cannot answer that question. The board consistently had an policy when we started negotiating with a proponent that we would have no input. The board was unanimous on this, we would have no input into the location of that contract. We received dozens of calls from industrial development people and mayors and wardens, and even some MLAs, to have the plant in their area. The agreement we had with Mr. Vickers was that if we got a call from any municipal unit, he was obligated under our deal to go talk to them and to hear them out and to take a good look at what they had to offer, but the location, the decision to put the plant wherever it was, was entirely his.
MR. CHAIRMAN: Thank you, and back to the Liberal caucus. Mr. MacKinnon.
MR. MACKINNON: Thank you, Mr. Chairman. Do any one of you know how many tires TRACC processes in the run of a year?
MR. CHAIRMAN: There's a great pile of them in their yard, I went and had a look. I don't know how many they process.
MS. CRUIKSHANK: I only know that under the original contract they do not receive the balance of the levy until they do process them; that was one of the checks and balances.
MR. MACKINNON: What was the initial intent?
MS. CRUIKSHANK: I think $1.25 initially was paid and then the balance was paid upon proof. There certainly was an incentive . . .
MR. MACKINNON: In volume, I mean.
MS. CRUIKSHANK: Oh, in volume. Well, again, from memory, it was . . .
MR. MACKINNON: Approximately.
MS. CRUIKSHANK: . . . the numbers were in there, I thought, because they were passenger tire equivalents, they are not really tires and all that major science, but I thought it was in the range of 700,000.
MR. DILLMAN: Mr. David Howell might be able to help you with that because he is in operations.
MS. CRUIKSHANK: He's the numbers guy.
MR. HOWELL: The intent when the contract was negotiated was that TRACC would, in its first year of operation, get somewhere around 70 per cent to 75 per cent of the tires that were available, you know, that were being created, not those that were currently sitting in stockpiles, landfills or what have you. With the annual production of used tires they would get to the point of having 70 per cent to 75 per cent of those being gathered and have something done with them by the time they got to the end of year one of the contract.
MR. MACKINNON: I guess I am trying to quantify, are they consuming 100,000, 200,000, 300,000?
MR. HOWELL: You can use the numbers, I think Jeanne said earlier that the number of tires in the province was estimated at somewhere around 700,000, so they should be dealing with somewhere in the 450,000 to 500,000 range in terms of what would go through their plant.
MR. MACKINNON: So, in reality, there is enough room for another industry.
MR. HOWELL: I couldn't speak to that at this point. When you say room, are you talking about the cottage industries now?
MR. MACKINNON: Even a mirror-type company to TRACC, a competitor, if you want to use that word.
MR. HOWELL: The economics of that would have to be looked at, I am not sure.
MR. MACKINNON: It is a question of supply and demand.
MR. DILLMAN: There were two distinct parts to this. One was the collecting of the tires, for which there was a payment, to get them away from service stations, to get them away from garages, to get them out of landfills. That was the first part of this equation. So far as I know, the company did a pretty good job at that. Then they took them somewhere, and the somewhere we know is Cornwallis. The next question is, and was, how many of those tires that were collected were actually made into manufactured and value-added products and sold? The last contract I saw was very explicit that the second payment of $1.25 would only be paid to the company when they sold the product, so that is not for us to say. We were not there. I just point that out because that is the two aspects of this.
It may be, Mr. Minister, that if that kind of thing is looked at and examined and another look is taken at how many tires are out there and how many these people are able to operate on, there may be another opportunity. I don't know.
MR. MACKINNON: Perhaps I am just going by the number of stockpiles that have been identified by the fire marshal's office within our department. It would appear to suggest to me that there is sufficient supply to allow for perhaps not another 450,000 tire consumption, but anywhere between 200,000 to 250,000. Was that within your scope or within your vision at the time, or was it primarily to get this recycling process up and running with the idea of having someone like TRACC come into the process to start utilizing this recyclable product?
MR. DILLMAN: It all depends on what they are able to do with the tire now, but we all should understand that in this 30 per cent that somebody talked about earlier, which got into the contract somewhere along the line, which was allowed to be taken for tire-dried fuel, that rubber mass is not permitted to be landfilled in this province and it is not allowed to be incinerated in this province, it has to be shipped out of here. The whole concept of tires, glass and corrugated was that we would put together a plan by which those products would be manufactured and value-added here and create jobs here, that was the process.
MR. MACKINNON: And we have created jobs.
MR. DILLMAN: You don't make many jobs by just breaking something down and shipping it out, you have to add value in order to get the maximum job input, and I don't know how much of that is being done.
MR. MACKINNON: Because you have left the board and you were kind of out of the loop, so to speak, but that is another measure. I am not sure if any of you are still on the board, but what is still outstanding in terms of payment to TRACC, in terms of its obligation?
MR. DILLMAN: No idea.
MR. MACKINNON: You are all out of the loop. You have all gone on to the promised land.
MS. CRUIKSHANK: I just trust when I pay my $3.00 that it is being properly looked after and contributing to the benefit of Nova Scotia. I guess I will ask questions to make sure it is.
MR. CHAIRMAN: We are actually finished the rounds in terms of equal time. Were there any other final questions that anyone had.
MR. FRASER: Just a short question. The $3.00 that is paid per tire, how is it split up? Where does it go when I pay $3.00 when I buy a tire?
MR. HOWELL: I am sure the math in general is fairly easy. It is $1.25 for collection, it is $1.25 for processing, and 50 cents into a general fund that was to help deal with other issues such as the stockpile of tires that existed out there that don't create a $3.00 fee.
Your comment about room for another industry, you have to keep in mind that anything that is already out there it does not generate that revenue to subsidize anything, only the new tires being sold do.
MR. FRASER: So wherever I buy my tires, they get to keep $1.25 of it and pass the other $1.75 off to the board?
MS. CRUIKSHANK: As I would understand, the administration of it is conducted by the Resource Recovery Fund. You will have other folks who can explain that better, but the $3.00 is then broken down as the $1.25 for transportation collection, the $1.25 for the value-added final product, and then the 50 cents was to address those elements that were the backlog of material as well and perhaps development of other areas.
MR. DEXTER: Two very quick questions. This goes back to a question Mr. Taylor asked earlier about board members and their concern over the minister's attendance. Did any of the other board members voice concerns about the attendance of the minister?
MS. CRUIKSHANK: No, you have the minister in front of you, and Ernie Bolivar voiced that and it is minuted. I guess all I can say in general is that the board, by that point, had had a lot of meetings and had a lot of discussion. Had there been a significant feeling that that was the case and had it been voiced, then perhaps some other matter would have been addressed. There was not, other than Mr. Bolivar who is minuted in that. There was not a significant expression of concern and they were not necessarily shy or withdrawn people, so I think they would have been pretty forthcoming if that was the case.
MR. DEXTER: We have seen a number of comments about the production of cattle mats. The production of this does not, in any way, really alter the tire other than having it shredded apparently?
MS. CRUIKSHANK: Oh, it is a little more complicated than that. It is shredded, then there is glue. It is like making mud pies, you put it together and squish it up and bake it.
[9:30 a.m.]
MR. DEXTER: I guess the question is, in a few years are we going to have a cattle mat recovery program because you had essentially the same thing? It is not a tire anymore.
MS. CRUIKSHANK: Well, cattle mats is the primary market, but they use them in gymnasiums and they are used in a number of places. There is a market for these and I guess they are happier cows and animals because they are standing on them. The Agricultural College has done some study on it.
MR. CHAIRMAN: Recycling goes on forever. Thank you very much to our witnesses for appearing here today. It was very useful to hear your comments in response to the questions. We will just take a minute break because we change our set of witnesses. Thank you very much.
MR. DILLMAN: Mr. Chairman, we are grateful for the good questions we got. Your members were very professional and we appreciate the way that they asked the questions, and maybe it is not always the case in this House, but I think they went pretty easy on us. So, we appreciate it.
MR. CHAIRMAN: Thank you.
[9:31 a.m. The committee recessed.]
[9:39 a.m. The committee reconvened.]
MR. CHAIRMAN: We have a quorum and we have our next panel of witnesses. I would like to welcome, to the proceedings here this morning, three persons. We have Mr.
Bob Langdon who is the interim Chair of the Board of the Resource Recovery Fund; Derek Firth, the Controller and Corporate Secretary; and Mr. Adrian White, the Chief Operating Officer. Gentlemen, thank you for attending and welcome to the proceedings of this committee.
What we normally do is invite any of the witnesses who are here to make any introductory comments that they might wish to offer us, and then the floor is offered to members of the committee to ask questions. So, if there are any of you who have comments to make, please go right ahead.
MR. ADRIAN WHITE: Thank you, Mr. Chairman, committee members. I am here today to speak to questions and issues around the Resource Recovery Fund Board. I would like to begin by just taking a moment to talk to you about the board, its history and its mandate.
Resource Recovery Fund was established by the province in 1990 to provide financial support for waste management practices and to encourage recycling and protection of the environment. As the demand for environmental protection and awareness heightened, in 1995 Nova Scotia developed a solid waste resource management strategy. It commits the province to achieving 50 per cent waste diversion by the year 2000.
In 1996, the solid waste resource management regulations came into effect under the Environment Act. The strategy called for the administration of the Resource Recovery Fund to be transferred to the private sector, not-for-profit organization, which would be responsible for managing much of the new solid waste regulations.
The key objectives of the new Resource Recovery Fund Board are to develop and implement industry stewardship programs; fund municipal or regional diversion programs; develop and operate a deposit refund system for beverage containers; develop education and awareness programs targeting reduction, reuse, recycling and composting; and promoting the development of value-added manufacturing in Nova Scotia.
I am pleased to report, to this committee, that we are making progress on all of these objectives. I would like to take this opportunity to point out some of the milestones and successes of resource recovery in Nova Scotia.
In a very short time, three years in fact, Nova Scotia has gone from an 8 per cent diversion rate to one of 31 per cent. This, in itself, is remarkable. To demonstrate this success even more, in real terms, this translates into over 350 million recycled beverage containers, enough to mark a path around the world; 600,000 tires; hundreds of direct and indirect jobs through recycling and value-added manufacturing; and countless new business opportunities for Nova Scotians.
Just last week, we celebrated the grand opening of Novapet Incorporated - Ernie Fage had an opportunity to attend and we appreciate that very much - which was in Amherst. This company collects and processes plastic beverage containers that are used to make new carpet and new plastic packaging; today employs 10 people; and its business plan projects growth that could see that number quadruple. I point this out as the latest example of many positive and successful initiatives developed in Nova Scotia under the solid waste resource management strategy.
Resource Recovery Fund programs are working for Nova Scotians. In fact, in this last fiscal year, $6.8 million was given back to municipalities in Nova Scotia. This assists them with waste reduction costs, landfill costs, and education and awareness programs. The board and management of RRF have taken a proactive approach to management of the company. Solid waste is a valuable resource for Nova Scotians. When you consider that just a few short years ago much of the material we recycle today was simply thrown away, it is not hard to understand just how valuable it has become to us in terms of jobs and opportunity for the people of our province. Thank you.
MR. CHAIRMAN: Thank you very much. Questions? Mr. Chard.
MR. CHARD: I would like to ask a couple of questions about the relationship of the Resource Recovery Fund Board to Clean Nova Scotia. I understand that at one time members of the Clean Nova Scotia organization were on the Resource Recovery Fund Board and that in that period, Resource Recovery Fund Board was doing business with Clean Nova Scotia. I have heard figures of approximately $400,000 worth of business a year at that time. What I would like to know is what safeguards were in place to avoid even the appearance of any conflict of interest? I should perhaps acknowledge that I understand that there are, at this time, no people from Clean Nova Scotia on your board. Is that correct?
MR. ADRIAN WHITE: That is correct.
MR. CHARD: In that period, when they were on your board, how did you ensure that there would not be the appearance of a conflict?
MR. ADRIAN WHITE: That was before my time, actually, on the board that those members were there. So, I really could not comment on what safe measures were taken when the board was composed of some members of Clean Nova Scotia.
MR. ROBERT LANGDON: Perhaps I could, I was on the board at that time. As I recall in the meetings when that came up, there were one or two members from Clean Nova Scotia, but I can't remember the number. When that item came up for discussion, they were specifically asked to identify themselves and they did not have any vote on any of those agenda items that dealt with Clean Nova Scotia.
MR. CHARD: Did they participate in discussions relating to Clean Nova Scotia matters or excuse themselves from the discussion as well?
MR. LANGDON: That, I am not too sure. If there was involvement, it was very low. They did not participate very much at that time. The issue the board was facing was the education and awareness issue. We needed a partner to take that recycling message out to the people of Nova Scotia. With the work that Clean Nova Scotia had done over the years, the board, including myself, felt that they would be the excellent partner to go out and work with them.
What was done, Clean Nova Scotia has expertise in recycling and public relations firms do not have that expertise but public relations firms have expertise on general messages and those types of items. So it was a public relations firm that was also hired to scrutinize to ensure that the common message was getting out, there was no duplication of effort or missed messages, but we felt that Clean Nova Scotia was very critical to get the strategy up and going.
MR. CHARD: Was the business that ended up with Clean Nova Scotia open tendered? Did other organizations have opportunities to submit proposals for the kind of business that you entered into with Clean Nova Scotia?
MR. LANGDON: The Clean Nova Scotia side of it was, I believe, sole-sourced. The other one, with the public relations firm, there were quotes received on that aspect of it.
MR. CHARD: I have some other questions on the subject of tire recycling and TRACC. What I would like to ask is if TRACC has met its targets in terms of employment as specified in the contract that was given to them?
MR. ADRIAN WHITE: I can maybe answer that question for you. Currently, the employment at the site, at the Cornwallis plant, is 40 people. In addition to the 40 people, there are 12 individuals involved in the collection program. So the total number of jobs is approximately 52 at this point in time.
MR. CHARD: If the intent of the contract was that the plant at Cornwallis produced moulded rubber product, why would the Resource Recovery Fund Board allow a reorganization that would have TRACC producing moulded rubber products not at Cornwallis but at its operation in Minto? Is not this a significant departure from the contract?
MR. ADRIAN WHITE: What you have to, I guess, focus in on is the definition of moulded rubber product in that particular case. The product that TRACC is making at the Cornwallis plant fits our definition of moulded rubber products. There are two kinds of mats that are made. There is the cow pillow, which looks like an air mattress, it is essentially a cover that is stuffed with a certain size of crumb rubber. We have had legal counsel on our
side look at that definition and look at the product and we feel very comfortable that it does meet the definition of a moulded rubber product.
The other product that is currently being made in New Brunswick is a hard rubber mat. It will be a mat that you would see on the floor of a hockey rink for instance. As a matter of fact, they just took an order for 1,500 of those mats for the Hartford Arena in Hartford, Connecticut for the NHL team there to put all around the rink. So there are two different kinds of mats that they are currently making.
MR. CHARD: Have other companies in Nova Scotia made similar products?
MR. ADRIAN WHITE: Not that I am aware of. There is no other company making a cow mattress that is fitting the design of the one that is made in Cornwallis.
MR. CHARD: At the present time, to your knowledge.
MR. ADRIAN WHITE: At the present time, yes.
MR. CHARD: I have had representations made to me that there have been, certainly, in the past, other companies in Nova Scotia that have made similar products and it gets back to the issue of competition.
We had a witness earlier stating that there was an understanding that TRACC would not be competing with cottage industries in Nova Scotia. I understand that the issue of competition, at least in some forms, has now been addressed but certainly there was some element of competition in the past. I think I would like to turn the rest of my time over to Mr. Dexter, if that is all right, Mr. Chairman.
MR. CHAIRMAN: Mr. Dexter.
MR. DEXTER: A short time ago in this Chamber, the former chairman indicated that the criteria for the selection of the tire processor had been changed so that the eventual winner of the contract was able to use 30 per cent of the resource for export for fuel, for incineration. So far as we could determine, that change in the criteria was never communicated to other potential proponents. He then went on to say that the contract with TRACC was good for Nova Scotia if there was strict contract compliance. I guess my question is, is there strict contract compliance and how do you know?
MR. ADRIAN WHITE: We do have a method or a means of auditing and reconciling tires collected and the pay-out, what has been processed at the TRACC site. Basically what would happen, for instance, and nothing would prevent this from happening but we would have a record of it from TRACC, TRACC could, for instance, collect a tire. As you all know, people in Nova Scotia when they change tires on cars, some of the tires are fairly worn and
not much good for anything but a crumbing process. Some of the tires are in good enough shape. The casings are adequate to be retreaded. Some of that is done not only in Nova Scotia but outside of Nova Scotia in different parts of the world. Some of the tires are actually in fairly good condition, they have come off vehicles that maybe have only put 30,000 or 40,000 kilometres on them so they are only half worn. Those tires can be sold as used tires to Third World countries, for instance.
When that happens in our system, there is no remuneration paid to TRACC whatsoever. He would collect the tire, for instance, from the service station. If he felt that this tire was good enough to be resold, it is sold. A record is then passed through to the Resource Recovery Fund Board indicating that, yes, I picked up this tire but do not hold an accrual on your account or on your books to pay me for it because I am not going to process it. I have sold it. He has probably sold it for something more than what he would get from us, in particular, in that case.
So we have an audit and a reconciliation of how many tires are collected. We know what the inventory is. We have had a professional organization do an inventory count of TRACC's location, where all the tires are, so we know what he has in inventory. We know what he is collecting so we can backtrack and we know every month he has a reporting to us of what products have been made and sold and how many PTEs or how many tires have been used in that process.
MR. DEXTER: Is that contained in your annual report?
MR. ADRIAN WHITE: The number of tires picked up and processed?
MR. DEXTER: Yes, processed and how . . .
MR. ADRIAN WHITE: In our annual report, we would make reference to the number of tires collected, but I do not know if we would make reference to . . .
MR. DEXTER: How they were processed?
MR. ADRIAN WHITE: Yes, that sort of thing. Tons of that. Quite handily it could be done, it is not a problem for us to do that though.
MR. DEXTER: Have you any areas of concern in the contract compliance?
MR. ADRIAN WHITE: I think our major area of concern with TRACC was the slow start, basically. As a management team we were quite concerned about that because there was a time when certainly tires were being collected and the processing of tires, or the rate of processing of tires, was far below the rate at which tires were being collected. So we were quite concerned for quite some time there that all we were doing was moving a pile of tires
from one part of the province to another part of the province and we certainly did not want a Hagersville location in Cornwallis, that is for sure.
We expressed our concerns on several occasions to the Board of Directors of TRACC and to the Cornwallis Park Development Authority. In February 1998 there were some significant changes in management and direction taken by the company so that has worked out wonderfully I think for all of us. We have seen some great progress since then in the organization; progress to the point now where TRACC is processing tires at a fairly significant rate to make the mattress. We have been able to initiate the collection of these old tire stockpiles which had been in different landfill sites, or private stockpiles in the hands of salvage yards, for instance, prior to the start of the program in January 1997. They are all above ground so we were able to use some of the surplus funding from the tire fund to address those stockpiles.
We did not do that in the first year simply because we were afraid that we were going to add to another problem, that is the stockpile problem. So we left the stockpiles in place until this turnaround took place and feel very comfortable in moving those tires in there now. We have moved about 50,000 to 60,000 tires into that organization and we will be working right through the winter to do that. We plan to get 150,000 tires in before the end of the fiscal year.
MR. DEXTER: You said just a short time ago that, I think you said we took an order for 1,500, was that the number for Hartford, Connecticut?
MR. ADRIAN WHITE: They took an order I should say.
MR. DEXTER: You are not in the business of selling their product for them?
MR. ADRIAN WHITE: No, not at all. They have as a matter of fact contracted with some people in the province. I know down in the Yarmouth area where a lot of the scallop draggers are coming in, they have got a person down there, actually he is an enviro-depot operator who was interested and had known of the TRACC process and the manufacture of the mats. Now he has a deal where he is on a commission basis selling the mats to the scallop draggers for the coverings in the back of the dragger apparently. It makes for a lot less wear and tear on the deck of the boat.
MR. DEXTER: On that point, those kinds of related products, which were manufactured prior to the advent of the TRACC contract, means that there was competition, in fact, some would say oppressive competition from TRACC in the manufacture of items which were previously part of the cottage industry of Nova Scotia. Have you received complaints about it and how do you deal with them?
MR. ADRIAN WHITE: Although the intent was to protect cottage industries, there was certainly some discussion here this morning and I think everyone around the contract understood that there was nothing ever put in the contract to say that TRACC could or could not make certain products. The whole objective of the TRACC contract, the overall objective was to have our tires picked up in Nova Scotia, processed and create employment in the Province of Nova Scotia and we are quite pleased to do that. However, there was this concern, it was raised this morning, about the cottage industries. The only incident that has come up here in Nova Scotia has been the issue from three manufacturers of scallop rings and they have written letters to us. We held a meeting between TRACC and those three individuals. TRACC, incidentally, their scallop ring manufacturing was all going down to Boston which was a very big market there for them. To make a scallop ring, you can use any tire but the best tire to use is a bias-ply tire. Bias-ply tires are very rare today. Most people have radial tires on their cars.
The difference between the two is that the bias-ply sidewalls are more nylon whereas radials have a lot of steel in them and when you are punching these rings out of the sidewall of the tire, if there is a lot of steel in them, the punch gets worn out a lot faster and so there is a high maintenance and upkeep to doing that. The small guys seemed to be able to tolerate that. TRACC, obviously, looked at the cost of continuing on with this business but we did have a meeting, a convenient meeting with the three individuals in Cornwallis with TRACC to see if we could work together as three people.
TRACC certainly had markets and TRACC was willing to take all of their product and market it for them. There was not much interest on the part of the three individuals to work with TRACC. We had some further discussions with TRACC and at this point in time TRACC was getting geared up to do the cow mattress big time and TRACC conceded that it was not a big part of their business and if it meant that leaving the business would create some peace with these three individuals and make them feel more comfortable being in that market place, TRACC would stop making the product and they did.
[10:00 a.m.]
MR. CHAIRMAN: Mr. Taylor.
MR. TAYLOR: I wonder if Mr. Firth could tell me who is responsible for enforcing the terms and conditions of the contract that your board incorporated has with TRACC?
MR. DEREK FIRTH: The corporation as a whole has a responsibility to administer that contract. My position, I am controller and corporate secretary, I also have a responsibility for the auditing and enforcement activities of the Resource Recovery Fund Board. We now have two people employed in that area and part of that process will be, in fact, to audit the TRACC operation to make sure they are, in fact, in compliance with the contract.
MR. TAYLOR: Mr. Chairman, the contract under definitions explains what a processing plant is and what a process passenger tire equivalent is. According to the contract, the proponent was to have been up and running by June 30, 1997 and if TRACC did not do so, did not comply, they were to be penalized and, in fact, the Resource Recovery Fund Board was entitled to demand and receive under the performance security the sum of $10,000 for each and every week that TRACC is not in compliance therewith.
My information is that the plant was not up and running in June. It was several months later under the terms regarding a processing plant, under that definition, and I furthermore would point out that I have a copy of an announcement that the then minister made that he expected TRACC to be up and running by November 30, 1996. The contract said June 1997. When were they up and running?
MR. FIRTH: They would have been up and running in September 1997. Now, the original date, the November 1996 date that you referred to there, that was predicated on the program starting on April 1, 1996 and, as you know, the program was delayed until January 1997. So, obviously, we cannot blame TRACC for that delay in the start-up of the program.
They also experienced delays with respect to weather which was outside of their control and we looked at all these factors at the end of June when TRACC came to us and said, look, we are not in a position, we are running late. They came to us and explained that by September they would be up and running. We felt that it was a reasonable thing to do to extend that contract, or extend the deadline from June to September.
MR. CHAIRMAN: Mr. Firth, did I hear you say the weather? Is that what you said was a problem?
MR. FIRTH: As far as the construction of the plant goes, yes.
MR. CHAIRMAN: Thank you. (Interruption)
MR. FIRTH: Oh, no, they would have started construction back in December, or January 1997.
MR. TAYLOR: If they were given an extension to September, then perhaps we can live with that. I maybe do not agree with it but I can understand for different reasons, maybe not the ones you articulated just now, but if they were granted an extension without penalty and I was to say to you that they were not up and running by September 1997, under the terms and conditions and under the definition of a processing plant, what evidence can you offer to say that they were up and running?
MR. FIRTH: We visited the site on different occasions and satisfied ourselves that they were, in fact, shredding tires at that point in time. There was evidence of that on-site.
MR. TAYLOR: Exactly, shredding tires. The definition states that a tire must be crumbed. There was no processing plant in place to crumb the tires in September 1997?
MR. ADRIAN WHITE: Can I, just to make a comment here, I actually was on the site on September 30th. The shredding of tires began on June 30th down at the site. Equipment was brought in at that point in time. The plant began crumbing tires because I was there and saw the actual shred being made into crumb on that very day, September 30th, because I remember it distinctly. I was there. Members of the Board of Directors of Cornwallis Park Development Authority were there as well and we went for a tour of the plant and the facility.
Crumbing did commence on that particular day and he was making small mats on a press at that point in time. What we didn't understand at that point in time was that the equipment that was being used to make this material or these products were certainly undersized and not perhaps the right specification equipment to do a full-scale, full-blown, day-to-day operation.
The plant had certain problems after September 30th, it was down a lot. It would come up for a week and would be down for two weeks. That was where we ran into the problem and I shared with you the concern we had about the delays in the start-up of the operation. It was producing and when we had our legal counsel look at the contract, there is nothing in the contract that said that he had to produce at certain volumes or levels. He had to be functional and he was functional on September 30th.
MR. TAYLOR: As far as I am concerned the contract which I am reading from states, that, "TRACC shall locate, construct and operate, at its cost, the Processing Plant and Storage Facilities in the Province of Nova Scotia for the purpose of . . . manufacturing that crumb rubber into moulded rubber products for resale.". I would offer that TRACC was not making a high-end, value-added product at the end of September. They had a few examples and we have it on good source and information that the plant was down a considerable length of time. From September 30th onward they were granted an extension and I think that the Resource Recovery Fund Board was very kind to TRACC for whatever reason.
The former president left TRACC and I wonder if you would be kind enough to tell the committee this morning what happened, what is your information on Mr. Doug Vicar's leaving? If you look at the Joint Stocks, at one time he was chief cook and bottle washer. What happened to Mr. Vicars?
MR. ADRIAN WHITE: I asked that question myself of the Chairman of the Board of Cornwallis Park Development Authority. The response that I got was that there was a philosophical difference between the way Mr. Vicars wanted to run the operation and the way that the park felt it should be run. I think basically what had happened was that there was a letter that the bank had sent to the Board of Directors of Cornwallis Park Development
Authority, indicating that the bank had some very serious concerns. That triggered a bit more of an investigation on the part of the board of directors as to what the real status of the company was at that point in time.
MR. TAYLOR: Mr. Chairman, I am not sure if Mr. Vicars resigned or was fired, nonetheless he is gone and I trust things are moving along much more smoothly down in Cornwallis. Deborah Diggs from the community of Preston and four or five of her employees were doing all of the collection in the Halifax Regional Municipality and we have stacks of letters from her former customers saying that she did an A-one job. Now we are told that Mr. Vicars' wife, Rosemary, same address, 4 Boling Green in Dartmouth, is now doing the collection. As you know, she was relieved of her duties and treated very poorly, as far as I am concerned.
The former Minister of the Environment who represented that area of the province indicated that he would do what he could to help the Black community to obtain jobs. At the tire recycling facility there was a rumour at one time that perhaps it may even go to that community. It did not go but nonetheless, some of the people were working and doing a darn good job. Now Mr. Vicars and his wife are doing the collection in the Halifax Regional Municipality. Do you have any concerns? I know the contract gives TRACC the right to collect, there is no question about that, but do you have any concerns about who is doing the collection now or do you think that is appropriate?
MR. ADRIAN WHITE: I personally do not have any concerns. Our concern is that the service that the retailers require is being delivered. As long as the tires are being collected and no one is complaining about stockpiles or the building up of tires, we are quite pleased with that.
MR. TAYLOR: I realize the collection is the responsibility of TRACC but I would think as trustee and overseer of the shareholders, the taxpayers of this province, that you maybe would have concern but you indicated you do not.
The Resource Recovery Fund Board recently, within the last month or so, has been conducting spot field audits on a number of recreational vehicle dealers in the Province of Nova Scotia, travel trailer sales outlets, motor home dealers, fifth wheel, et cetera. A number of the business people, the retailers, have indicated that they never received formal notification from the Resource Recovery Fund Board or the Department of the Environment that they were required to collect the tire tax; nonetheless, they have been told that they are to submit, based on the audit, the tire tax that reflects their sales. They also indicated that never has the collector - whether it is Mr. Vicars or whoever comes around and gathers up the tires - come to their site; yet you are demanding that they pay the tire tax. I ask you if you think that is fair and why are you doing that?
MR. ADRIAN WHITE: Maybe I will let the controller answer that question, since it is an area of responsibility he has.
MR. FIRTH: The tire program was introduced in November 1996, at a press conference here in Halifax with TRACC representatives, myself, and the minister. Following that announcement, we conducted an advertising campaign over the space of three months. There were two thrusts of that campaign: one was directed at the general public, to make them aware of this new program in Nova Scotia; and the second, the ads - and these were basically full-page ads - were directed to tire retailers and said that if you sell tires or sell tires on a vehicle in Nova Scotia, that you should call a 1-800 number and register with the Resource Recovery Fund Board.
We have RV dealers who registered at the start of the program, and we have dealers of all-terrain vehicles, boat trailers and so on, who have been registered from the start of the program, so there were people out there who were certainly aware of it. By the middle of January, we had over 800 tire retailers around the province that had called the 1-800 line and registered with the Resource Recovery Fund Board. Pick-up of the tires is predicated by registration. If you do not register, you do not get your tires picked up, so in their case, if they were not registered with the Resource Recovery Fund Board, then TRACC would not be going to their location to pick up tires.
MR. TAYLOR: I think it is, quite frankly and with all respect, a second-rate way of doing business. I have spoken with a number of these recreational travel trailer dealers who were unaware - and they have customers in the United States and they have customers in other provinces - and it is going to be very difficult for them to go back and now collect the tire tax when their invoices clearly discern that they did not collect it in the first place. Is there consideration for the fact that they, quite frankly, did not know?
MR. FIRTH: We are certainly prepared to sit down and negotiate with these people, with respect to the collection of any outstanding amounts under the program.
MR. TAYLOR: Were they notified that the intent is to make it retroactive to the first of January 1997?
MR. FIRTH: Were they notified?
MR. TAYLOR: When the audits are being conducted, have the dealers been told, the retailers, that the tire tax will be retroactive?
MR. FIRTH: The regulations came into effect on January 2, 1997, and the regulations are quite clear that if you sell a tire in Nova Scotia, you must register with the Resource Recovery Fund Board. You must enter into an industry stewardship agreement with the Resource Recovery Fund Board and you must remit the fees in accordance with that
agreement. Those are the regulations that exist in Nova Scotia, and my role at the Resource Recovery Fund Board is to enforce those regulations.
MR. TAYLOR: Okay. I just have concerns that you waited nearly two years to start enforcing compliance relative to trailer sales people. That information was readily available to the Resource Recovery Fund Board. Mr. Chairman, an ad appeared in The Daily News, yesterday - it may have been in The Chronicle-Herald - it was sponsored by the Resource Recovery Fund Board, indicating that businesses may not be aware as to how the banning, the prohibition of recyclables and compostables is going to impact them. Nonetheless, the Resource Recovery Fund Board is prepared to sponsor workshops across the province and charge businesses $10 for admission to learn how the bans and prohibitions impact them. I am wondering if individuals who are concerned as to how it impacts them would also have to pay the $10 admission fee or are they welcome to come to the meetings?
MR. ADRIAN WHITE: I would think $10 is not a big issue with the Resource Recovery Fund Board, and if an individual needed to be in attendance at a meeting to find out what you can do in business, that is not anything that would prevent someone from attending, no.
MR. TAYLOR: You articulated your mandate, don't you see yourself or the Resource Recovery Fund Board as a body that would actually promote and provide business with this information without a charge?
MR. ADRIAN WHITE: We have been trying to encourage business to get involved in the strategy since the beginning. The general public has embraced the strategy overwhelmingly, but business is lagging in the embracing of the strategy. We have petitioned business to get involved and visited businesses but, obviously, business is a very competitive world and there appears to be many higher priority issues that business is dealing with than this strategy at the present moment. I don't believe that this nominal fee is a deterrent for interested businesses, and so far the response to the ad is quite good and I think we will have some good response. We are planning to move it about, and we may do this a few more times as well. It is our initial approach to get business involved.
In all cases, we are not expecting business to ante up dollars to the Resource Recovery Fund Board, but we are certainly looking for the support of business in looking after their own backyard, if you want, as best they possibly can.
MR. TAYLOR: Mr. Chairman, how much time do I have?
MR. CHAIRMAN: Three minutes.
MR. TAYLOR: Just one quick question. What percentage of the used tires that are collected are being shipped, and have been shipped, to other jurisdictions to be burned?
MR. ADRIAN WHITE: Less than 5 per cent.
MR. TAYLOR: Could I yield to my colleague for Argyle?
MR. CHAIRMAN: Yes. Mr. LeBlanc.
MR. LEBLANC: Mr. Chairman, I would like to pick up on a question from my colleague, Mr. Taylor, about the fees that are being charged to recreational vehicles, and I only have a couple of minutes so I will make it fast.
The controller mentioned the fact that he is enforcing the regulations and, as such, these people should pay or they are talking about it. I would just like to make the point that we have heard here from the testimony this morning that you waived the penalties for TRACC for approximately three months, which is a considerable amount of money, we are talking $100,000 - perhaps more than that - and we have small recreational vehicle operators in this province that we are talking $3.00 a tire and we are sitting here saying that the law is the law and the regulations are the regulations. It kind of begs the question, do we have our eyes focused on where we want to go?
If there is a problem, sit down with the people and say that from now on we are going to deal with it. When you say you can't waive it, but you just waived hundreds of thousands of dollars in penalties for a company, it creates a picture that I think most Nova Scotians cannot support.
I know that you are the messenger and you are saying that you are enforcing the regulations and that the penalties were waived by someone other than yourself, but I am just saying that for the Resource Recovery Fund, it just sends the wrong message out, and you really should be sitting down and trying to deal with these people, so that small business people who are just making a few dollars are not forced into the situation of having to cough up this money while you let the company basically get away with situations - and they may be justifiable - but the same thing here, you are looking at small operators and every so often government should look at itself and ask if they did everything possible to ensure that these people were notified. Did we go to the association, so that everyone in that association was notified so that we were sure that we did everything to inform them, other than put a publication in the paper saying that everyone has to register?
MR. FIRTH: If I could just respond to that. The directive we have taken against the recreational vehicle dealers have come from complaints from other RV dealers that were, in fact, registered with the Resource Recovery Fund Board and were concerned about a level playing field, that if I am charging the $3.00 or whatever that fee is, if it is $9.00, depending upon the size of the tire, how come my competitor up the road is not charging the same fee? Those concerns were raised to us as we got out there in the field and started doing our audit process.
MR. CHAIRMAN: I am sorry, we have to move to the Liberal caucus, but we will get back. Mr. Samson.
MR. MICHEL SAMSON: Gentlemen, I just want to take you back to the issue raised by Mr. Taylor in regard to the extensions given to the operations of the plant. I noted one of the reasons that you did give, other than the late start-up of the program, was construction delays based on the weather. I noticed that the member for Dartmouth-Cole Harbour and the Chairman laughed at that and I think that is just an expression of their ignorance of the construction industry. But if you guys could just go further into that and make it clear to us what exact concerns were raised by TRACC with the issues of weather and with the program itself.
MR. ADRIAN WHITE: There were several major freeze/thaw cycles that took place on that location during that three month period. What happened was they were constructing a brand new building, putting foundations in and laying floors and concrete and whatnot. They buried several heavy pieces of machinery in the mucky, muddy, soft ground in that area to the point where they couldn't access the site from the road, and they built two or three access roads to try to do that, but each one of those access roads broke down and it was very expensive, obviously, to get in there. So, not only did they have the thawing and the sinking but they also had the freezing aspect, where equipment would freeze in the ground at the same time. So, it was not a consistent temperature which, obviously, sometimes in Nova Scotia we don't get and that basically was the reason for the delay.
MR. SAMSON: Mr. [Adrian] White, did you and your board members consider this to be trivial on the part of TRACC or just some further trivial attempt by them to get an extension or did you see this as a legitimate concern?
MR. ADRIAN WHITE: We had legal counsel from both companies sit down and talk about it at length, and we believe that it was a legitimate delay due to circumstances that they themselves could do nothing about to prevent.
MR. SAMSON: Mr. [Adrian] White, I would like to go back to the question of the 30 per cent clause and there has been a light made of that and the fact that this clause was brought in and how it has affected other competitors. Could you explain to us how you and your board came to decide on this 30 per cent clause and what were the reasons behind it?
MR. ADRIAN WHITE: Maybe I could defer to the chairman, who was on the board at that time.
MR. LANGDON: I can try to answer that one. The board struck a tire committee to negotiate with TRACC. On that board we had a municipal representative; we had an industry representative, who happened to be a vice-president of finance, we wanted to make sure we had that end covered; myself; plus the chairman of the board at the time. He attended a
number of meetings, he didn't attend them all. Also, the general manager at the time, who was David Howell, was there.
The tire business or the recycling of tire rubber is going through various growth pains across the industry. Our rubber person on the board was very adamant in that there had to be some outlet for issues as markets changed and there should be a clause there to get them out. TRACC did not ask for that clause. TRACC said, no, we don't want it, if you want to put it in, put it in. This was put in by the rubber industry. They were concerned that if you were not flexible, any processing facility put in would fail. We all felt that the idea here is to get tires out of the landfills and get them into a value-added product.
The issue of the burning that was there. I was with the department. I fought that clause. When we started the process, what we were told by the board is that we are free to do whatever we want. It was myself who asked them to look at these 50 submissions. I said, let's not reinvent the wheel of what is going on in North America in rubber recycling. We have had all the submissions. It was made very clear to me, by the chairman, that the board would not use that as a legal document, we would hire a consultant to review the people who are interested in that thing to proceed and come back with a recommendation to the board. They did do that and, again, in those negotiations that 30 per cent issue came up.
The burning issue was there. When we looked at the hard-core policy, the policy of the department as written, the policy was applying to tires that are imported to Nova Scotia. You can look at the policy. That is exactly what it refers to. Somehow it got spread across the board. The intent of the department was to push as much value-added as possible. The incineration of tires for fuel is not what we would consider value-added manufacturing. I want to put that down as much as possible.
That is basically where that 30 per cent came from, and it was on the recommendation of the tire person on information that he received. There is a tire recycling group, I forget the name, in the U.S. The Executive Director is Michael Blumenthal. He was very adamant on flexibility.
MR. SAMSON: Just to reiterate that, you are indicating to us that TRACC itself was not the one who pushed for this 30 per cent clause?
MR. LANGDON: That is correct.
MR. SAMSON: Again, I think one of Mr. Taylor's final questions was, what percentage of what is being collected is actually being burned and that answer was what, 5 per cent?
MR. LANGDON: Well, I was surprised to hear that there was anything being burned.
MR. ADRIAN WHITE: There is nothing being burned. The tires that I mentioned in that, less than 5 per cent are tires that are being sold for recapping or as good used tires to other people.
MR. SAMSON: Is there any tire burning taking place in Nova Scotia, at this time, that you are aware of?
MR. ADRIAN WHITE: Not that I am aware of.
MR. SAMSON: Again, to take you to the issue of competition and I know that has been raised, especially the member for Argyle had serious concerns about that, in regard to the fishing industry and scallop rings. You have indicated that there has actually not been anything specifically put in the regulations regarding competition, but what steps have you, as a board, taken to try to protect the small industries, or try to see that TRACC is not in direct competition with some of the smaller existing industries?
MR. ADRIAN WHITE: What we have asked TRACC to do is when they are going to begin the marketing of any new products other than the ones that they are currently marketing, they are to advise Resource Recovery Fund Board of that initiative. Then we will review the product and do due diligence to ensure that there is nobody else in Nova Scotia making that product or, if there is, to find out more about what the impact might be on that individual or other company, or whatever, before we would give approval to pay the processing fee for that product.
MR. SAMSON: So, in other words, before TRACC can actually make some of these new products, they actually need board approval?
MR. ADRIAN WHITE: That is correct.
MR. SAMSON: Am I correct, in my note-taking here, you indicated that TRACC is no longer producing scallop rings?
MR. ADRIAN WHITE: That is correct.
MR. LANGDON: Can I respond to that to make it a little clearer. When the tire committee was negotiating the contract, the issue that was brought to the tire committee, through the chairman and through the consultant, was they were concerned about getting their supply of tires. That was their issue that came before the board. There was a clause put in the contract with TRACC that TRACC could not take 100 per cent of the tires and therefore leave them void of its supply of tires. I am not quite sure of the wording of it, but there was something put in. It was solely on the issue of supply.
MR. SAMSON: So, there is some protection there for the small cottage-type industry that they can actually get a supply, that TRACC is not going to take every tire in Nova Scotia and leave them with absolutely nothing?
MR. LANGDON: That is correct.
MS. SAMSON: Now as far as you gentlemen are concerned, has this system worked with TRACC? Are you happy with the way the system is operated, that the board gives the approval first and the board gets involved with these decisions when a new product comes on line?
[10:30 a.m.]
MR. ADRIAN WHITE: I think one of the things that everyone wants to make sure of here is that the whole Used Tire Management Program is a successful program. We want to generate employment and support TRACC in its manufacture of whatever products can be sold outside of Nova Scotia, to bring much-needed revenue into the province and to employ the people that they do. I don't think anybody in this room is against that, I think everybody is for that. So we are looking at all the products but we are looking at them in a way that we hopefully can approve of the manufacturing of those products to get them out in the market place.
MR. SAMSON: Since TRACC has been up and operating, as a board, did you have the opinion that TRACC was a hostile company here with the intent to destroy small competitors and eat up all of their markets?
MR. ADRIAN WHITE: That has not been my impression of the current organization. The current organization is very open, unlike the original TRACC. With this organization you can talk to any member of the board, the president and general manager are available and return all of your telephone calls. There is a very healthy communication link between their organization and ours and it seems to work very well.
MR. SAMSON: Mr. [Adrian] White, we all realize that with such a new initiative there are a number of growing pains but I would ask you currently, looking at the entire picture, are you happy overall with how tire recycling is working in Nova Scotia?
MR. ADRIAN WHITE: The only thing is I would like to see the production at the plant increase beyond what it currently is. The situation we have here at the present time is that TRACC is processing not only the tires picked up on the daily collection but they are also processing tires that are coming out of these old stockpiles. They are going to need a substantial amount of tires to make crumb to make these mattresses and there will come a point in time when more than likely, TRACC will be looking to import used tires into Nova Scotia to process them to manufacture enough crumb to meet the market demand they have
for their products. At the present moment they are supplying all of their cow mattresses into the United States, for the most part. They are currently negotiating to take over a substantial portion of production from a European division of the company that they are currently supplying the mat to. It has a very bright future, I believe.
MR. SAMSON: Going back to the issue of the relationship with Clean Nova Scotia. This is more of an educational type question, how did the relationship develop with Clean Nova Scotia and how has the relationship been with that organization?
MR. ADRIAN WHITE: Clean Nova Scotia, as the Chairman of the Resource Recovery Fund Board just referred to, has had a long history in Nova Scotia of being involved in this initiative. We felt that they were an excellent partner to team up with because they could hit the ground running. We have been working with them for a few years now and we still are working with them. They have a responsibility to do our education and awareness in the metro Halifax area, as well as up in the Colchester-Cumberland area, down as far as Antigonish, so things have worked very well. They also do the French communities for us in that capacity. They are a high profile company in our foundation and we are very pleased to be associated with them.
MR. SAMSON: So in other words the relationship is working out quite successfully at this point.
MR. ADRIAN WHITE: Yes, it is.
MR. SAMSON: Mr. [Adrian] White, just going back to some of the numbers you gave us, just astounding numbers, I think all Nova Scotians are to be proud that Nova Scotia went from 8 per cent to 31 per cent in recycling and I am wondering if you could just give us an idea of what kind of steps led to such a large jump in recycling and what you would credit as to the reasons for this very successful result?
MR. ADRIAN WHITE: I think the best person to answer that question is probably our chairman here, who is from the Department of the Environment. I know that a lot of that initiative has come from efforts on the part of municipalities. Municipalities have certainly taken a lead role in their curbside collection and in complying with the regulations and diverting those banned materials from landfills and a significant contribution obviously coming up in the compost area as well.
MR. LANGDON: I will try to answer that question. It has been fairly successful but I will take no credit for it. We have a solid waste group within the department which is now headed by a fellow by the name of Gerard MacLellan. Gerard has been negotiating with everybody under the sun. We have the seven waste regions, which are made up of the mayors and wardens of those municipalities and of all those regions. They have a chairman and then they have a chair of the chair, so this is a group of seven chairmen who meet and they have
a chair of the chair. The department has been working very closely with them to get the strategy through. Since I came in as interim chairman in the last few months, I think that has jelled. We have a very cohesive group and agreement to move forward in unison, almost as if you look at it as a triad you will see the department or solid waste people, you will see the RRFB and you see the chairman of the municipal waste regions, working together toward the common goal. I think that is what is bringing the whole thing together.
There were some municipalities which went out and took a lead and got ahead of others. The chair, they have negotiated how money goes from the RRFB to the municipalities. As you are aware, a minimum of 50 per cent of the money, I guess of net profit, that is left over, by law has to go back to the municipality for waste diversions. They are looking at how they can feed that in a better way to help some needy causes. They have a value-added program that moves ahead and looks at how we can get companies going to manufacture those things from the waste stream. Novapet, as I think Adrian referred to earlier, up in Amherst is a prime example of where some of that funding was going to do that. Municipalities have been aggressive in moving ahead with that. The RRFB cannot take sole credit for that. The department cannot take sole credit for that, nor can municipalities. It is them working together to that common goal. It is all toward getting to the value-added, creating jobs here, getting to a higher environmental standard and showing that landfills are built to an exacting standard. It is very successful.
I attended a rubber forum where a number of provinces were, in Toronto, for the RRFB and they are really looking at the Nova Scotia model as a way to go. None of them have a sole waste sort of thing. They have a tire group, they have a bottle group, they have all these other ones. They are now looking at the multimedia approach that the RRFB is now doing.
I am pretty pleased with the outcome as it was. I remember when they first came back with that 50 per cent diversion rate. At that time I was manager of the hazardous materials. I am not a recycling fellow. If you want to spill something hazardous, I feel comfortable in that area. I said to myself, how can we ever meet that 50 per cent diversion. It was just a matter of getting at it, setting the goal and going at it. There are municipalities that are at that 50 per cent diversion rate now; some are not, but there are a number of municipalities now that are there and I think we should be very proud of that.
MR. SAMSON: I certainly think you all deserve to be congratulated and the municipalities. I am just curious. One of the comments that you made is that Nova Scotia is being looked at as a model. I am just wondering if any comparisons have been made with other provinces here in Canada or even some of the states that are near us as to how we compare on the issue of recycling with our counterparts, both provincially and down in the United States. Have any studies been made or any reports as to how we compare?
MR. LANGDON: There are none that I am aware of. I am aware of Newfoundland looking at our model. I am aware that Quebec is now looking at our model. When I was at the rubber side, I was informed through the Alberta Stewardship Board that they were now looking at that type of model. I am not sure what is going on in the United States.
MR. SAMSON: Mr. Langdon, is it a fair statement to say that, based on the answers you have given, you are happy with the model that currently exists here in Nova Scotia?
MR. LANGDON: I would say yes. The critical thing to me, and I think Mr. Doane pointed it out, is to get to that value-added and there are all kinds of ways to get there. You have to make a use for the articles coming out of the waste stream. You cannot just pull them out and store them somewhere and hope that somebody will come along and buy them from you. One of the major components of the strategy and one of the mandates of the RRFB is to get to this value-added manufacturing on different parts of the waste stream. Again, the plastics, Novapet is doing pop bottles. We are working. I think an expression of interest has gone out for the other types of plastics. Where can we do the same thing? Where can we move ahead? How many jobs can be created here? Let's not ship those jobs. I would like to move the jobs out of Ontario or Ohio to Nova Scotia. So, let us do as much value-added here as we can. It is a step-by-step process.
MR. CHAIRMAN: We are into the second round. Six minutes each. Actually I have a couple of short questions I might ask on behalf of the NDP caucus. First, I wondered, Mr. [Adrian] White, you made mention of the involvement of Cornwallis Park and their administration at one point, but the TRACC plant did not seem to me to be in the Cornwallis Park. Is that land up the hill also part of their administration?
MR. ADRIAN WHITE: It belongs to the park, yes, it does.
MR. CHAIRMAN: Okay, just a small point. Mr. Langdon, you have always worked, or worked in recent years, for the Department of the Environment and you still are an employee, is that correct?
MR. LANGDON: That is correct.
MR. CHAIRMAN: So, did you become chair of the Resource Recovery Fund Board after Mr. Dillman?
MR. LANGDON: I was chair for 30 days then I left the board at that point in time and Gilbert Veinot was the chair for a year. Gilbert retired from the position at the end of the last fiscal year. Because of the time lines of doing ads and getting people in to fill that position, the minister asked if I would do it. He promised me it would only take me a couple of days a month. So, I am interim chair to try to keep the board things going in the . . .
MR. CHAIRMAN: Is there an expectation of the department that a private sector individual will take over as chair again?
MR. LANGDON: Well, the first one is the board was intended to bring the knowledgeable private sector in to make this happen. I guess who applies for the job and those will be evaluated on their merits and, hopefully, a recommendation will come to the Human Resources Committee and I will be able to go back to my other job.
MR. CHAIRMAN: At any rate, you are not expecting to continue permanently?
MR. LANGDON: No.
MR. CHAIRMAN: Okay, that is fine. Thank you. The other was this question about incineration of tires. Mr. Langdon, you can probably help me on this as well. My recollection is that about six years ago, the department actually gave environmental assessment approval to Canada Cement LaFarge to burn hazardous materials as a fuel stock including, I thought at the time, rubber. Did this lapse or am I mis-remembering it? I don't think it ever went ahead, but is it still on the books?
MR. LANGDON: Canada LaFarge applied for that. They went through the environmental assessment. I am not sure where it went after that, but the issue that they were facing is, pollution prevention was coming in as an issue, and we are seeing less and less hazardous waste generated that would be valuable for them. I think, in the end, the question came down, there was not enough hazardous waste in Nova Scotia to allow this . . .
MR. CHAIRMAN: Well, I have a specific request for you. My recollection is that they did get permission from the department to burn hazardous waste, including tires. If it is of concern to you, as you said, you are concerned with hazardous materials, then if this is something that you might want to go and re-examine and see if there might be a way to terminate whatever permission was granted at the time. Just a suggestion for follow-up.
In any event, a comment for Mr. Samson, I guess, is that the last construction project I was involved with was building the $1.5 million office building in Dartmouth. So, I do have some direct experience. The reaction was not of amusement, but of incredulity that people who negotiate construction contracts don't think about the weather at the time.
Mr. Dexter.
MR. DEXTER: Mr. Chairman, I also want to get back to that whole question as well and the lapse of the contract. I, too, would point out to the member for Richmond that when he was still in short pants, I was working on sites in this
