“MUSKRAT MADNESS” Book Review by David A. Vardy

Muskrat Madness
by Cabot Martin
(Available at Afterwords Bookstore, 245 Duckworth Street, St. John’s
and Online at:  http://www.muskratmadness.ca/)

Cabot Martin has once again
rendered a major public service to the people of Newfoundland and Labrador by
writing his new book
Muskrat Madness.
It is required reading for those interested in sound public policy.
This is the same Cabot Martin
who advised Premiers Frank Moores and Brian Peckford in the early days of
offshore development and who helped develop policies to ensure maximum benefits
to the people of the province from oil and gas development.

Cabot has now prepared a
memoir on Muskrat Falls, an invaluable document that does not claim to cover
everything that happened, but which covers many of the key issues including
project costs and how they fit into the energy economics of 2014. 

His memoir
includes some of his letters to the Telegram. In one of these he concluded that
“Muskrat is a dog-unless, of course, you are Nalcor.” In June 2012 Cabot opined
that future oil prices are key to the viability of Muskrat. He said “the
combination of, say, a 25% increase in cost and a fall to $100 per barrel…would
result in  a similar eradication of
Muskrat’s economic advantage even as constructed by Nalcor-and that’s actually
where we find ourselves in the summer of 2012.” 

Muskrat Madness went to press before the recent announcement by
Nalcor that costs have gone up by $800 million, raising project costs from $5
billion in 2010 to $7 billion by June 26, 2014 (not including financing costs
or the Maritime Link with Nova Scotia) an increase of 40%.
The book gives prominence to
the quick clay problem associated with the North Spur, which is a one-kilometre
component of the natural dam to be joined to the man-made dam, allowing the
impoundment of water at Muskrat Falls. 

Cabot documents his personal journey to
find a world class expert, Dr. Stig Bernander, to obtain his opinion on the
risk associated with the quick clay and on the need to undertake due diligence
to find a solution. Cabot describes how the possibility of instant liquefaction
of the quick clay not only threatens the large investment in the project but also
threatens the life and safety of those living downriver. His book includes a
link to the Norwegian YouTube video describing the Rissa landslide of 1978,
which is a graphic display of what could happen at Muskrat Falls.

Cabot also documents his efforts
to ensure that other options to Muskrat Falls are explored, particularly
natural gas. 

He describes how a full public hearing by the PUB into all the
options was circumvented by an order-in-council exempting the project from the
Board’s jurisdiction. Such a full hearing would have allowed consideration of
how the natural gas resources on the Grand Banks could have been developed as
feedstock for a thermal plant at Holyrood, thereby creating a potentially lower
cost option. 

He believes that government should adopt a proactive policy to
encourage the development of natural gas (much of which is now reinjected for
future use) not only to fuel a thermal plant but also to serve as a catalyst for
a liquefaction plant to produce gas for export, creating enhanced economic
benefits from our growing reserves of natural gas, complementing and enriching
existing oil developments.

The correspondence with Environment Minister
Joan Shea concerning an application to construct a dam, under the Water
Resources Act, is quite enlightening. He asked her to respond to the points
raised by the Swedish expert Dr. Stig Bernander concerning safety risks caused
by quick clay on the North Spur. He asked if Nalcor had sought the necessary
approvals required under the Water Resources Act, section 48.

     (1) A person may apply to the minister for a
permit to carry out an undertaking that under this Act or the regulations
requires a permit and the minister may issue that permit in accordance with
this Act.
 (2)  A person shall not, without obtaining a permit required under
subsection (1), carry out an undertaking for which a permit is required under
this Act or regulations.
Minister Shea did not respond. Instead she sent the
letter to the Minister of Natural Resources, Derrick Dalley and to Nalcor, the

The Minister of Environment should not be turning this letter over
to the proponent for reply. This is a breach of due process and compromises the
independence of the Minister of Environment from the project proponent. Cabot
states that Minister Shea “was the Minister responsible here and that to
involve the Dam Safety applicant, the object of her scrutiny, Nalcor, to help
draft her reply was highly improper.” 

This for me is a “smoking gun”. It raises
a broader question as to the integrity of the whole environmental assessment
process and whether it has been compromised by inappropriate influence by the
The response itself is another “smoking gun”,
where Dalley responded that all the approvals will be sought after the dam is built. He said “these
documents are required prior to impoundment of the reservoir, not with the
start of construction.” 

Why would they seek approval only
after the project is completed? To quote Cabot: “Nalcor is going to spend $10
billion and only then see if it can be considered safe as required under the
Act?” Minister Dalley did his best to downplay the credibility of Dr. Bernander
and the applicability of his expertise to the issues at play. 

Cabot had done
his homework well and leaves the reader with the strong apprehension that this
issue is not only “Nalcor’s worse nightmare” but a concern for all of us.
This is a personal memoir by a person who began
as an advocate but, upon learning more about the project, quickly became an
opponent. It was the “shale revolution” which convinced him that the economics of
the Muskrat Falls project were now compromised by a fundamental and adverse change. 

Cabot’s is not an academic history. It is a history by a participant in the process,
one who has taken a strong stand. It concludes with a commentary on the quality
of democracy in our province: “the way in which Muskrat is being rammed through
has exposed deep fissures in our collective instinct to act in a democratic

The book is a clarion call to “Halt Muskrat Now”.

About David Vardy: Vardy is a graduate of Memorial University and
holds post graduate degrees in Economics from the University of Toronto and
Princeton University. He is an economist who served for close to 30 years in
a variety of senior positions, including Secretary to Cabinet (Clerk of the
Executive Council), President of the Marine Institute, and Deputy Minister of
Fisheries and Chair of the Public Utilities Commission.
David has had a long standing interest in the
development of sound public policy
as a policy advisor,
consultant and university researcher. He is the recipient of the nationally
adjudicated Gold Medal Award from the Professional Institute of the Public
Service of Canada (PIPSC), the Lieutenant Governor’s Award for excellence in
public administration from the Institute of Public Administration (IPAC) of
Canada, and an Honorary Doctorate from Memorial University. 


If a Big Mac costs McDonalds $10 to produce and it is sold for $1.50, McDonalds will go out of business. They would not declare a profit!


Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.


  1. It seems physical risks is NOT to be an issue to be reviewed by the PUB, as Nfld Hydro was applied to get questions on this to be disallowed . Now physical risk from the North Spur stability is a big concern, but is secondary, it seems, to power reliability issues for MF, which is allowed to be looked at. However, in the case of the possibility of the North Spur collapse, it gives rise to both power reliability as well as physical damage from flooding downstream. If the PUB cannot address the physical issue of flooding and possible loss of life, surely the issue of possible collapse affects power reliability…. no dam , no power. Accordingly, it seems the issue should be heard and assessed. In terms of power reliability, a dam stability issue is the same as a transmission line tower failure, but of course much more consequence. It will be interesting to see how the PUB rules on that issue. Winston Adams

  2. Key words in your argument: Economics, economy, economic advantage, risks, costs, costs gone up!

    Your arguments lack – speak in the name of what is really being lost here, speak for goodness sake about 'real people', 'real interests'! When the voice of power speaks, it speaks from a particular perspective with a mind on values important to them and that is visible and audible through the choice of language. Opposition is using the same vocabulary, you are reinforcing the dominance of the powerful voice by sharing in their values – they only hear your fervour for their values. If you care about the Newfoundland (and more importantly for the Labrador) people then you will speak about the culture, the heritage, the traditions, the connection to something that is irreplaceable and is quickly being destroyed.