Outages and shutdowns at industrial plants are awfully expensive. Unscheduled stoppages are technically called “incidents,” but are otherwise known as massive screw-ups. The scale of the screw-up is the scale of the cost, usually. Keeping costs down means keeping production up. And that’s where Turnarounds come in.
A deliberate, scheduled stoppage for maintenance or reconfiguration is called a turnaround. These are expensive too but, like most maintenance, they improve efficiency, reduce operating costs, they make outages a lot less likely, and they’re a lovely way to clean-up an industrial operation. A turnaround is a fresh start.
The energy sector could surely use a fresh start in regulatory, especially in the heavy-handed, bureaucratized, blithering burden that is Industry Canada’s Canadian Standards Association (CSA).
The CSA is a government Agency mandated with drafting and amending >3,000 laws in Canada, mainly related to industrial activity (electrical laws, engineering standards, HS&E, etc.). Like the industrial plants they regulate, the CSA can get screwed up and bloated without regular cleanup. And they haven’t had a cleanup in decades.
The CSA suffers us with the usual industrial ailments; a top-heavy, hugely expensive management, an under-utilized, under-productive staff, a collection of disparate, unrelated and unsupervised operations units, most with mandates overlapping those of other units, further overlapping with other Government Agencies, and redundantly -and expensively- producing services and standards duplicating those already available throughout industry.
It’s accountability that’s lacking. The CSA’s been given a wide range of immunities and exemptions, such as from the Accountability and Transparency Act and the Access to Information Act, they enjoy immunities from civil litigation, exemptions from reporting requirements, etc. With no-one watching, professional standards at CSA have dropped ever lower, and their flaunting of law ever more brazen, with every legitimization of any claim of exemption. The CSA is also beyond the reach of the RCMP’s Commercial Crimes Unit and Industry Canada’s Competition Bureau. With so many immunities and exemptions, the CSA has been untouchable for decades.
Being above the law is convenient, and profitable. The CSA was caught running an eight-year long counterfeiting operation, selling fake certifications to get non-compliant products across the Canadian border. When they were caught in 2010, there were no prosecutions -they didn’t even repay their ill-gotten gains. Worse, and elsewhere in their empire, the CSA has been granted governmental Accepted-as-Amended provisions, empowering them to change laws to their liking through their own legislative processes. And that’s a valuable power to have, they routinely monetize that power in the sale of votes at legislative committee. The CSA makes $70.0 MM per year in these influence peddling activities.
That’s illegal of course, but at CSA it doesn’t matter. The same goes for CSA’s falsified safety testing, their sales of blank certifications for electrical equipment, or their claims to privately own the law and their resulting shakedowns of business and industry. The list is long and every dodgy item is a CSA profit centre.
Money flows like water at CSA. They spend $89k /day on travel, for instance. That’s enough money to travel from Toronto to Chicago, and return, 304 times per business day, every day, for a full year. That’s rich, but it’s also a drop in the bucket. The lion’s share of taxpayer’s money is spent purchasing foreign corporations to expand the CSA empire. Lately, the CSA’s been acquiring three or four foreign corporations per year. With more than a third of a billion in annual revenues, they’ve got lots of our money to play with.
Think of CSA as an old industrial plant, itself constituted of a dozen reconfigurations and additions, all in different purposes, all to different Codes and standards, and each addition with different equipment, and measuring like a scene from Mr. Bean, as half in metric; half in Church of England. Nothing matches, nothing works together, nothing fits properly, so it’s no small wonder that their productivity is so poor while their costs are so rich, or why they so quickly stray from law and mandate.
The CSA needs a turnaround. That’s hardly a revelation, and it’s widely agreed that CSA should be cleaned up and restored to its mandate. In Ottawa, the ever-increasing liabilities of this government Agency are a source of consternation. Like sitting on a time bomb, every government knows that CSA will someday politically explode, causing carnage all around. Yet successive governments have sat on it, hoping for the best, and hoping to pass the problem onward to some other Prime Minister. They fear a cleanup will make a mess.
Yet, as reorganizations go, a turnaround at CSA will be neat and painless. The Federal Government was recently presented with a comprehensive turnaround plan for CSA. It looks like this;
First, the CSA’s standards activities are decoupled from their commercial ventures, essentially dividing their government role from their private interests. Next, CSA’s financing and specialized operations are grouped for dissolution and their foreign subsidiaries are sold or wound down. Divestiture revenues are directed to an Operations Trust. Revenues from the Operations Trust fund ongoing CSA regulatory activities, such that the government role of CSA going forward will be a zero cost to the taxpayer.
In this plan, the CSA is restored to the focused Federal Agency that it once was, with no commercial distractions, no illicit activities, with an annual budget of ~$4.5MM and a staff of 7 – 10 FTE.
Necessary legislative and regulatory activities will continue unmolested, yet without the extortionate revenues, the shady deals, and the sky-high costs for sub-par services that have come to typify CSA. The public Agency becomes again the public servant of the sector.
It’s an easy turnaround because, unlike most corporate reorganizations, the CSA has no shareholders to pacify, no financial markets to reassure, no debt to manage or a jittery customer base to protect. And it’s fast, a six to eight-month recovery. The plan’s quick, neat and painless. And it’s been handed to government on a platter.
Ottawa is once again pondering a cleanup of CSA. Rightly so, with more than 3,000 laws submerged in the CSA slush box, and with so many of them negatively affecting the energy sector. From an energy processing perspective, we would all be better off with one less encumbrance, one less extravagance, and one less rogue regulator. That’s the beauty of a turnaround; it’s a fresh start.
CSA Public Review Ruling (Jan. 2, 2018)
Reprinted with permission in its entirety from RestoreCSA.com and written by Dr. Gordon Knight. This is an update of P.S. Knight and Associates’ lengthy court battle, defending the company from several CSA copyright lawsuits. This hearing evaluated CSA’s mandatory 60-day public review of Canada’s Electrical Code and found it severely wanting.
The quick summary? We won (mostly). The CSA will be allowed to release the Electrical Code on schedule in January but boy, did they pay a crushing price for that. The hearing pretty much flattened CSA. They lost their jurisdiction arguments, they lost their serious issues arguments, they lost their irreparable harm arguments – frankly, CSA lost all their arguments and positions on all matters of substance and consequence. Catching perhaps a five per cent reprieve with the Code itself, and that only for a few months, until the Justice Manson appeal, is a pittance relative to their losses in this ruling.
This is a really, really big win for us. With this ruling, we are in a dominant position in Court and CSA’s standards racket is now on death watch. Yes, it’s that big. Why? Well, what follows is an explanation of the Court’s lovely, big bloodbath ruling, its significant, and how CSA is now quite screwed.
1. Let’s start with CSA’s first argument. Their first argument to the Court was that the judge, the Hon. Justice B. Richard Bell, had no jurisdiction to rule at all. Apparently, Justice Bell was supposed to “dismiss the entire claim.” They lost that argument.
Quoting the ruling: “At the hearing, CSA contended I had no jurisdiction to consider this application for an interlocutory injunction because the Moving Party [that’s us] had failed to establish it sought injunctive relief on its originating process.” In other words, our motion was new. “But, said the judge,” “I disposed of that argument in the hearing, having satisfied myself that an issue had been raised in the counterclaim which […] was sufficient to ground a claim for injunction.” Justice Bell was being polite; the CSA had falsely told him that we’d never raised these issues before, but, of course, we had, and repeatedly, and at length in past motions and a series of discovery sessions.
2. Alright, next was the matter of CSA’s standards as voluntary in their nature. The CSA has consistently claimed their standards are voluntary, whereas we have claimed, just as consistently, that these standards are passed into law and, as laws, CSA standards cannot be considered voluntary. Obligation is intrinsic to law; voluntary compliance is nonsensical. We won that too.
“The CSA’s Code […] becomes law automatically in some provinces,” with the ruling specifically mentioning Alberta as one such jurisdiction (P.S. Knight is an Alberta-registered corporation). Justice Bell then reiterates, “The Code becomes mandatory in several provinces immediately upon its publication.” And he hammers it. “Contrary to CSA’s assertions, large swathes of the Canadian standards then, are mandatory in their nature.”
Recall that CSA has claimed for convenience, and for decades, that standards passed into law are voluntary. Well, that claim, so central to CSA’s litigations and so routinely relied upon by them in Parliament, has just been decimated.
The CSA also argued that our injunctive motion was “so ill-founded and so obviously bright for improper, vexatious, ulterior motives” and that the sum of our argument is “hopeless,” indeed so utterly baseless as deserving of “rebuke.” The ruling didn’t quite agree. The CSA’s dozens of breathless paragraphs got shut down with one line.
“I am of the view that the Moving Party raises a serious issue for determination by the Court,” stated Justice Bell.
The CSA couldn’t bully the Court from considering the motion on arguments of jurisdiction, and they couldn’t bluster the Court on material issues either.
3. Next on tap – irreparable harm. A successful injunctive application needs to demonstrate irreparable harm. A successful injunctive application needs to demonstrate irreparable harm.
Justice Bell defined it this way. “Irreparable harm is met when there is a risk of damages for which compensation at trial would be impossible to determine.” In this, he rules that “in the event that CSA has failed to meet the [Standard Council of Canada’s] public review requirement, the harm caused to the Moving Party […] would be irreparable for the following reasons.” And then he listed them.
So, if it’s true that CSA has violated public review law, then irreparable harm is proven. Why?
“First,” said Justice Bell, “the Canadian public in many provinces (including the Moving Party in Alberta) would become subject to a regulatory scheme that has been developed in a manner inconsistent with legislative intent.” The intent of any public review law is to enable public review, hence the breach.
“Second, the Moving Party […] would have been denied the opportunity to review the mature draft of the revised standards, contrary to the” public review law. In this then, if the CSA is indeed in breach of the public review law, then irreparable harm necessarily exists.
That brings us to the ultimate question – was CSA found in violation of public review laws? Why yes. “The mature [electric] Code has clearly not been available for public comment for 60 days.” That’s about as clear as rulings get, folks. Using “clearly” is clearly a message from the Court. Ambiguity is fast fading for CSA.
The CSA has been rules in violation of law, which means that irreparable harm exists, and this will shortly start a new and exciting headache for CSA.
4. For all that, however, the Court declined to grant the injunction itself. The reasoning stems from what’s being called “balance of convenience.” That is, the cost to the Moving Party of not getting the injunction must be greater than the cost to the CSA of having an injunction against them.
In this, the Court declined to grant the injunction itself. The reasoning stems from what’s called “balance of convenience.” That is, the cost to the Moving Party of not getting the injunction must be greater than the cost to the CSA of having an injunction against them. In this, the Court noted CSA’s claim that an injunction “will cost [CSA] in excess of $1.0 MM.”
Of course, this is the cost estimate that was one-tenth of that figure in testimony earlier in that same week. It’s also the estimate featuring a $71,000 charge for posting a document to CSA’s website. So, you know, it’s not especially solid, this number. That the Court took CSA’s contradictory cost claims at face value is the result of CSA sending the Court 400 pages of convolutions for a two-hour hearing; the truth gets mightily muddied in the mess they’ve been spreading. They put two radically different numbers into testimony, both under oath, making one of their figure perjurious.
So, CSA escaped the injunction by lying to the Court. But their momentary relief has come at a massive cost. Ruling that the current Code has not been submitted for public review means that the next Code cannot be released without public review. The CSA will be compelled to comply with public review law on the next Code edition in three years’ time. And public review means public access, like any law, for free. See? That’s big.
CSA in Violation on >3,000 Standards Laws
Unless the federal government steps in to bail them out, the 2018 Code is therefore the last iteration of electrical law that CSA can conceal before enactment, and the last law that they can sell for money. We’re seeing the end of CSA’s standards racket.
And it gets even better. The ruling repeatedly noted that violations of public review at CSA are not confined to electrical laws. For instance, in his preamble, Justice Bell mused, “that the Moving Party raises a serious issue as to whether the CSA’s procedure allows for public review of, and comment upon, a mature draft as required” [emphasis added]. This is the “procedure” that the Standards Council of Canada (SCC) “has endorsed” for all CSA standards since 2009.
Recall that CSA standards are updated every three to five years, and that it’s been eight years since the 2009 change to CSA’s public review procedure. In 2018 therefore, every CSA standard currently included in law was released under the “procedure” that Justice Bell ruled in his conclusion as “clearly” not in compliance with public review law. In other words, every current CSA standard in law is in violation of public review law.
According to CSA’s own Court admissions, there are more than 3,000 laws affected. That means CSA is in material breach of public review law in all – more than 3,000 laws that they drafted or amended since 2009.
Jeopardizes Standards Council of Canada with Industry Canada
At this point, one may recall the SCC prescribes immediate suspension of CSA’s accreditation as a standards body in the presence of “one or a number of major non-compliances” with public review law. Three thousand in non-compliance is clearly more than one of them.
The CSA is now in really big trouble with the SCC, for the SCC surely can’t ignore 3,000 violations of law, though they’d just as surely like to. The Ruling also puts the SCC in big trouble with Industry Canada. It was, after all, the SCC that offered a letter of support to CSA in this hearing, assuring the Court that CSA could “define” its own compliance with law.
The inclusion of the SCC letter of assurance was also a violation of the Rules of Court, in that it was inserted into a CSA staffer’s affidavit. This is a no-no, because while our side could cross-examine the affiant, we were denied the chance to cross-examine the author of the letter. It was SCC’s way of trying to influence the Court without submitting themselves to scrutiny in Court.
Dirty Tricks
Dirty tricks aside, the SCC was already on record colluding with CSA’s violation of public review laws. That’s awkward, because the SCC is supposed to police the CSA. And that’s awkward for Industry Canada, the Department responsible for both the SCC and CSA.
What’s odd about this is how CSA seems mystified by it all. They seem shocked that we filed the Motion, though they should have anticipated it, then they were shocked that our arguments had merit, though that should’ve been obvious, then they over-reacted with a massive flailing or shrill schoolyard allegations, somewhat diluting the remnant of their credibility, and all of this without even countenancing the prospect of resolution prior to the hearing.
Nobody called, folks. To paraphrase Abba Eban (1915 – 2002, former Israeli diplomat and politician), the CSA’d ‘never miss an opportunity to miss an opportunity.’ So, what happens next? Well, we’re having friendly discussion with friendlies in Ottawa about how unfriendly CSA/SCC is to this law, and to laws in general. We’re also pressing the SCC to abide by their own regulations by suspending CSA’s accreditation. Next, we’re looking at irreparable harm aspects of the Ruling, for CSA ought to be returning some of their ill-gotten gains to all those harmed by CSA’s abuses and violations.
As for CSA itself, we expect some frantic lobbying in Parliament for yet more special rights a public expense, namely, an exemption to the public review requirement, so they can amend legislation without even the pretext of transparency. It’s bad timing for them though, as Ottawa isn’t desirous of new scandals just now.
5. Finally, we have our appeal of the infamous Manson Verdict coming later this spring. Manson’s Ruling that CSA owns legislation privately, is fatally harmed by this Ruling, for the Court cannot easily reconcile the Ruled necessity of public review with Manson’s affirming the right to prevent public access to those same laws.
Our position on correction the Manson Verdict, already strong before the Justice Bell Ruling, has become nearly unassailable. Yes, we’ve learned that in Court all things are possible, no matter how horrid, so we’ll not get cocky. But if the law is to be respected, then we’re in rather good shape.
The CSA’s completely cornered. We’re quite pleased.
Dr. Gord Knight has more than 15 years consulting experience in communication strategy in corporate and political contexts. He has further served in the development of project viability assessments and asset acquisition research. As a senior strategist, he provides senior strategic counsel to companies across North America, playing a key role in the design and implementation of initiatives that have helped transform corporate cultures as well as companies’ reputations and relationships. He is currently chairman of IREL Group, the developer of the Dominion engineering project, and the CEO of P.S. Knight Co. Ltd., a Canadian publisher of technical manuals since 1967.
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