This document was prepared by the staff of the Parliamentary Research Branch to provide Canadian Parliamentarians with plain language background and analysis of proposed government legislation. Legislative summaries are not government documents. They have no official legal status and do not constitute legal advice or opinion. Please note, the Legislative Summary describes the bill as of the date shown at the beginning of the document. For the latest published version of the bill, please consult the parliamentary internet site at www.parl.gc.ca.

LS-353E

BILL C-15:  AN ACT TO AMEND THE
INTERNATIONAL BOUNDARY WATERS TREATY ACT

Prepared by:
David Johansen
Law and Government Division
30 November 1999

TABLE OF CONTENTS

BACKGROUND

DESCRIPTION AND ANALYSIS

   A.  Background
   B.  Definitions
   C.  Licences
   D.  Prohibition on Removal of Boundary Waters
   E.  General
   F.  Powers of the Minister of Foreign Affairs
   G.  Regulations
   H.  Offences and Punishment
   I.  Injunctions
   J.  Coming into Force

COMMENTARY

BILL C-15: AN ACT TO AMEND THE INTERNATIONAL
BOUNDARY WATERS TREATY ACT

BACKGROUND

On 22 November 1999, Bill C-15, an Act to amend the International Boundary Waters Treaty Act, was introduced in the House of Commons by the Minister of Foreign Affairs, the Hon. Lloyd Axworthy. The bill would provide for a clearer Act and more effective implementation of the 1909 Treaty relating to Boundary Waters and Questions arising along the Boundary between Canada and the United States (commonly referred to as the Boundary Waters Treaty) by: a) prohibiting the bulk removal of boundary waters from the water basins in which they are located; b) requiring persons to obtain licences from the Minister of Foreign Affairs for water-related projects in boundary or transboundary waters that would affect the natural level or flow of waters on the United States side of the border; and c) providing clear sanctions and penalties for violation. The prohibition on boundary water removals would apply principally to the Great Lakes but would also affect other boundary waters, such as part of the St. Lawrence River, the St. Croix and Upper St. John Rivers, and the Lake of the Woods. At the time the bill was introduced in the House, Mr. Axworthy stated:

We’re taking decisive action within our jurisdiction to protect critical boundary waters for future generations. These amendments will give us the authority to prevent the damage that bulk water removals can cause our environment.

The amendments to the International Boundary Waters Treaty Act proposed in Bill C-15 are part of a larger three-pronged strategy announced by the federal government on 10 February 1999 to prohibit bulk water removals, including those for export, from all Canadian water basins. The provinces have primary responsibility for the management of water resources; however, the Boundary Waters Treaty gives the federal government clear jurisdiction over boundary waters to the extent stipulated in the Treaty. Pursuant to section 132 of the Constitution Act, 1867, only the federal government has the authority to fulfil the Treaty’s obligations with respect to boundary waters.

In addition to proposing amendments to the International Boundary Waters Treaty Act and thereby prohibiting bulk water removal from Canadian boundary waters, including the Great Lakes, the federal strategy also announced that there would be a joint reference, with the United States, to the International Joint Commission (IJC) to study the effects of water consumption, diversion and removal (including for export) from boundary waters, with an initial emphasis on the Great Lakes. In its interim report Protection of the Waters of the Great Lakes, released in August 1999, the IJC was generally supportive of an environmental approach. A final report is expected to be submitted to the governments by February 2000. Among other things, the interim report concluded that:

• "Water is a non-renewable resource,"

• "If all interests in the [Great Lakes] Basin are considered, there is never a ‘surplus’ of water. Every drop of water has several potential uses…"

• "Provisions of the [NAFTA and WTO] agreements, including the [GATT] do not prevent Canada and the U.S. from taking measures to protect their water resources and preserve the integrity of the Great Lakes Basin ecosystem so long as there is no discrimination by decision makers against individuals from other countries in the application of those measures. Canada and the U.S. cannot be compelled by trade laws to endanger the waters of the Great Lakes ecosystem."

The IJC recommended that governments should exercise caution and called for a moratorium on any bulk water removals from the Great Lakes, pending its final report.

The third part of the federal government’s strategy included a proposal to develop, jointly with the governments of the provinces and territories, a Canada-wide accord to prohibit bulk water removals from Canadian watersheds. The accord would represent a commitment by all jurisdictions (federal, provincial and territorial) to act through legislation, regulations or policy. In the case of jurisdictions with measures already in place, the accord would re-affirm their commitment. As an interim measure, the federal government urged the provinces and territories to institute a moratorium preventing bulk removals from watersheds, including those for export, until such time as the accord is in place. The federal government is currently seeking the endorsement of the accord by the provinces and territories. This endorsement would complement the amendments to the International Boundary Waters Treaty Act proposed in Bill C-15 by extending protection to all of Canada’s waters. At the time of the introduction of Bill C-15 in the House, the Minister of the Environment, the Hon. David Anderson, stated in part:

I will be seeking agreement on a Canada-wide accord for the prohibition of bulk water removal from all of Canada’s major watersheds when I meet with my provincial and territorial colleagues later this month. This is an environmental issue to be decided by Canadians. We will stop bulk removals at the source, not at the border.

DESCRIPTION AND ANALYSIS

   A. Background

The Boundary Waters Treaty ("the Treaty"), signed by Great Britain (on behalf of Canada) and the United States in 1909, established principles and procedures to prevent and resolve disputes, primarily those concerning the quantity and quality of boundary waters between Canada and the United States. To help implement its provisions, the Treaty also created the International Joint Commission (IJC). Through the Treaty, Canada and the U.S. are mutually obliged to protect natural levels or flows of waters shared by the two countries. With some exceptions, Article III of the Treaty provides that there shall be no use, obstruction or diversion of boundary waters on either side of the boundary line affecting the natural flow on the other side of the line, except by the authority of the United States or Canada within their respective jurisdictions and with the approval of the IJC. According to Article IV of the Treaty, the countries agree that, except in cases provided for by special agreement between them, or unless with the approval of the IJC, they will not permit, on their respective sides of the boundary, the construction or maintenance of any remedial or protective works, or any dams or other obstructions, in waters flowing from boundary waters, or in waters at a lower level than the boundary in rivers flowing across the boundary, resulting in a rise in the natural level of waters on the other side of the boundary.

Parliament enacted the International Boundary Waters Treaty Act in 1911 to implement the Treaty. The Act gives the federal government jurisdiction over boundary waters, such as the Great Lakes, in order to fulfil Canada’s obligation under the Treaty not to affect unilaterally the level and flow of waters on the U.S. side of the boundary. The bill consists of two clauses. Clause 1 would add proposed sections 10 to 26 to the Act, while clause 2 concerns the coming into force of the bill.

   B. Definitions

Proposed section 10 would define certain terms for purposes of proposed sections 11 to 26 of the Act.

The term "boundary waters" would mean boundary waters as defined in the Treaty:

For the purposes of this treaty, boundary waters are defined as the waters from main shore to main shore of the lakes and rivers and connecting waterways, or the portions thereof, along which the international boundary between the United States and the Dominion of Canada passes, including all bays, arms, and inlets thereof, but not including tributary waters which in their natural channels would flow into such lakes, rivers, and waterways, or waters flowing from such lakes, rivers, and waterways, or the waters of rivers flowing across the boundary.

For example, boundary waters include the Lake of the Woods, the Great Lakes, the section of the St. Lawrence River from the outlet of Lake Ontario to Cornwall, Ontario – Massena, New York, the Upper St. John River (Quebec/New Brunswick) and the St. Croix River (New Brunswick). A river that runs along the boundary, as opposed to crossing it, is a boundary water (for example, a section of the St. Lawrence River).

A "licence" would be a licence issued under proposed section 16. "Minister" would mean the Minister of Foreign Affairs and "water basin" would be defined in the regulations.

   C. Licences

The amendments to the International Boundary Waters Treaty Act proposed in Bill C-15 would formalize a 90-year process under which the federal government (and the IJC, through its own process) has, under the terms of the Boundary Waters Treaty, informally examined and approved or rejected certain projects in boundary or transboundary waters that would have the effect of altering the natural level or flow of waters on the United States side of the border. These projects have always required federal approval. The federal government has in this way met its international obligations under the Treaty. In light of increasing pressures on freshwater resources, however, the federal government is now of the view that stronger protections are required and that the licensing arrangements need to be formalized. Hence, Bill C-15 proposes that these projects would now require a licence from the Minister of Foreign Affairs (proposed section 16).

Except in accordance with such a licence, no person would be permitted to use, obstruct or divert any boundary waters in a manner that affected, or would be likely to affect, the natural level or flow of the boundary waters on the U.S. side of the international boundary (proposed section 11(1)). This proposed provision would not apply, however, in respect of the ordinary use of waters for domestic or sanitary purposes (in accordance with Article III of the Treaty) or in the cases provided for in the regulations (proposed section 11(2)). Traditional uses, such as agricultural and industrial withdrawals that remained within the basin, would not be covered by the licensing system. The above provision would more effectively implement Article III of the Boundary Waters Treaty.

Also, except in accordance with a licence issued under proposed section 16, no person would be permitted to construct or maintain any remedial or protective work or any dam or other obstruction in waters flowing from boundary waters, or in downstream waters of rivers flowing across the international boundary, where the effect would, or would be likely to, raise the natural level of waters on the U.S. side of the international boundary (proposed section 12(1)). The above would not apply in cases provided for in the regulations (proposed section 12(2)). The provision involves neither water removal nor boundary waters. It would more effectively implement the first paragraph of Article IV of the Treatry.

   D. Prohibition on Removal of Boundary Waters

The federal government believes that a definite prohibition on bulk water removal from boundary waters is necessary to protect the ecological integrity of these shared basins. Hence, the bill provides that, notwithstanding proposed section 11, no person would be permitted to remove boundary waters from the water basin in which they were located (proposed section 13(1)). For the purposes of the above provision and the application of the Treaty, removing water from boundary waters and taking it outside its water basin would be deemed, given the cumulative effect of such removals, as affecting the natural level or flow of the boundary waters on the U.S. side of the international boundary (proposed section 13(2)). The above would not apply in cases provided for in the regulations (proposed section 13(3)); possible examples might be ballast water, water required for short-term humanitarian purposes and water used in the production of food or beverages.

According to government background documentation, the above proposed prohibition would recognize that bulk removal of water out of drainage basins should be managed differently from removal of water for use within the basin. Bulk removal involves the permanent loss of water from the basin. In view of the fact that the ecosystems and communities within the basin are dependent on this supply of water, bulk removal is considered to represent an unsustainable use of the resource. The government maintains that a prohibition on bulk removal of boundary waters is also consistent with our international trade obligations as set out in the 1993 Joint Declaration by the governments of Canada, Mexico and the United States. At the time, the three countries stated that water in its natural state is not a good or a product and is not subject to any trade agreement, including the NAFTA.

   E. General

The licensing system and prohibition contained in proposed sections 11 to 13 would be binding on both the federal and provincial Crowns (proposed section 14).

Proposed sections 11 to 13 would not apply in respect of uses, obstructions or diversions that were in existence immediately before these provisions came into force, but would apply in respect of such uses, obstructions or diversions that were significantly changed after these provisions came into force (proposed section 15).

   F. Powers of the Minister of Foreign Affairs

Subject to the regulations, the Minister would be empowered to, on application, issue, renew or amend a licence required under the Act, subject to any terms or conditions the Minister considered appropriate (proposed section 16). It is expected that the licensing system would be consistent with existing informal procedures relating to the required approval of water-related projects in boundary waters.

A licence would not be transferable except with the consent of the Minister (proposed section 17). The Minister could suspend or revoke any licence whenever he or she believed on reasonable grounds that the licensee had contravened the Act or a condition of the licence; however, the Minister would first have to give the licensee written notice of the reasons for the suspension or revocation and a reasonable opportunity to provide an explanation (proposed section 18(1)). The Minister could also suspend or revoke a licence with the consent of, or on application by, the licensee (proposed section 18(2)).

If a person contravened proposed section 11(1), 12(1) or 13(1), the Minister could either: a) order the person to remove or alter any obstruction or work to which the contravention related; or b) order the person to refrain from proceeding with any construction or other work, or to cease the use or diversion, to which the contravention related (proposed section 19(1)). If the person failed to comply with such an order, the Minister could remove or alter the obstruction or work, or anything used in relation to it, or order it to be forfeited to the federal Crown (proposed section 19(2)). Anything so forfeited could be removed, destroyed or otherwise disposed of as the Minister directed (proposed section 19(3)). The Minister’s cost of removing or altering anything under proposed section 19(2) and the costs relating to the removal, destruction or disposition of anything forfeited under proposed section 19(3), less any sum that might be realized from its disposition, would be recoverable in a court of competent jurisdiction by the federal Crown from the person who had contravened the order as a debt due to the Crown (proposed section 19(4)).

According to proposed section 20, the Minister could, with the approval of the Governor in Council, enter into an agreement or arrangement with the government of one or more provinces respecting the activities referred to in proposed sections 11 to 13. The provision would thus enable co-operative understandings with the provinces in order to reduce duplication and costs in connection with reviewing projects under the licensing/prohibition scheme.

   G. Regulations

The amendments to the International Boundary Waters Treaty Act proposed in Bill C-15 would provide for the power to make regulations, something not provided in the current Act. According to proposed section 21(1), the Governor in Council (Cabinet), on the recommendation of the Minister, would be given broad powers to make regulations, including regulations specifying what would constitute a use, obstruction, diversion, or work for purposes of the Act; defining a water basin and any word or expression in proposed sections 11 to 26 that is not already defined in the Act; prescribing classes of licences; prescribing the procedure governing applications for licences; respecting the form of licences; prescribing licensing fees; prescribing the duration of licences; respecting the renewal and amendment of licences; prescribing uses, obstructions, diversions and works for which a licence could not be issued; and generally for carrying out the purposes and provisions of the Act.

   H. Offences and Punishment

A person who contravened proposed section 11(1), 12(1) or 13(1) would be guilty of an offence and liable: a) on conviction on indictment, to a fine not exceeding $1,000,000 or to imprisonment for a term of not more than three years, or to both; or b) on summary conviction, to a fine not exceeding $300,000 or to imprisonment for a term of not more than six months, or to both (proposed section 22(1)). Any such contravention that was continued on more than one day would be deemed to constitute a separate offence for each day during which the violation was committed or continued (proposed section 22(2)).

If a person were convicted of an offence of having contravened proposed section 11(1), 12(1) or 13(1), the convicting court could, if satisfied that the person had thereby acquired monetary benefits, order the person to pay a fine (in addition to the fine imposed under proposed section 22) in an amount equal to those monetary benefits (proposed section 23).

An officer, director, agent or mandatary of a corporation who directed, authorized assented to, acquiesced in or participated in an offence committed by the corporation would be a party to and guilty of the offence and would be liable on conviction to the punishment provided for the offence, regardless of whether the corporation had been prosecuted (proposed section 24).

In any prosecution of an offence under the Act, it would be sufficient proof of the offence to establish that it was committed by an employee, agent or mandatary of the accused, regardless of whether the employee, agent or mandatary was identified or had been prosecuted for the offence, unless the accused exercised all due diligence to prevent the commission of the offence (proposed section 25).

   I. Injunctions

On application by the Minister, a court of competent jurisdiction that believed a person had performed, was about to perform, or would be likely to perform any act or thing constituting, or directed toward the commission of, an offence under the Act, could issue an injunction ordering the person: a) to refrain from doing any such act or thing, or b) to do any act or thing that the court believed might prevent the commission of the offence (proposed section 26(1)). However, no injunction could be issued unless 48 hours’ notice had been given to the party or parties named in the application, or unless the urgency of the situation was such that delay until the notice had been served would not be in the public interest (proposed section 26(2)).

   J. Coming into Force

According to clause 2 of the bill, clause 1 (proposed sections 10 to 26 of the International Boundary Waters Treaty Act), or any of the proposed sections to be enacted by clause 1, would come into force on a day or days to be fixed by order of the Governor in Council.

COMMENTARY(1)

On 23 November 1999, the day after Bill C-15 was introduced in the House of Commons, Mr. Bill Blaikie, M.P. drew the attention of the government to the following motion, which had been adopted by the House on 9 February 1999:

That, in the opinion of this House, the government should, in co-operation with the provinces, place an immediate moratorium on the export of bulk freshwater shipments and inter-basin transfers and should introduce legislation to prohibit bulk freshwater exports and inter-basin transfers, and should not be a party to any international agreement that compels us to export freshwater against our will, in order to assert Canada’s sovereign right to protect, preserve and conserve our freshwater resources for future generations.

Noting that the proposed legislation did not accurately reflect this motion, Mr. Blaikie asked the government why it was now abandoning "its commitment to a national ban on bulk water exports…. which it supported only short months ago? … Why are the Liberals in full denial about the fact that they cannot act the way they said they would act because of NAFTA?"

The Minister of Foreign Affairs, the Hon. Lloyd Axworthy, responded in part:

… the legislation does provide for a prohibition of bulk removal. What it does not do is follow the recommendation of the hon. member and some of his party on the west coast, which is to turn this into a trade issue which would result in a series of trade actions that would totally impede the capacity of Canada to protect its waters.

The government has specifically addressed this issue in its background documentation on Bill C-15. The government has publicly stated that it agrees that measures need to be taken to protect the integrity of Canada’s water resources but feels that this would be best achieved by its strategy of prohibiting the bulk water removal from all major drainage basins in Canada. In the government’s view, such a prohibition would be better than an export ban because "it is more comprehensive, environmentally sound, respects constitutional responsibilities and is consistent with Canada’s international trade obligations…. In this way water is protected in its water basin before the issue of exporting arises." The government views this as an environmental protection measure of general application, aimed at preserving the integrity of ecosystems. It would protect water at its source from bulk removal outside the water basin by any party, Canadian or foreign. As noted earlier, under the Canada-wide accord for which the federal government is seeking endorsement of all provinces and territories, each level of government would have a responsibility to take appropriate action to prohibit bulk water removal from waters under its jurisdiction. In this way, water would be regulated in its natural state, before it became a commercial good or a saleable commodity. The federal government maintains that this would be consistent with Canada’s international trade obligations and the statement made by the three NAFTA countries in 1993 that:

The NAFTA creates no rights to the natural water resources of any Party to the Agreement. Unless water in any form has entered into commerce and become a good or a product, it is not covered by the provisions of any trade agreement, including the NAFTA. And nothing in the NAFTA would oblige any NAFTA Party to either exploit its water for commercial use, or to begin exporting water in any form. Water in its natural state in lakes, river, reservoirs, aquifers, waterbasins and the like is not a good or product, is not traded, and therefore is not and has never been subject to the terms of any trade agreement.

In response to the argument that it should place an outright legislative ban on all water exports from Canada, the federal government claims that this apparently quick and simple solution "does not focus on the environmental dimension, has possible constitutional limitations, and may be vulnerable to a trade challenge." The government maintains that an export ban "would focus on water once it has become a good and therefore subject to international trade agreements. Because these agreements limit the ability of governments to control the export of goods, a ban on exports is likely to be contrary to Canada’s international trade obligations. This contrasts sharply with the federal government’s approach."

The federal government has noted that its strategy is consistent with the conclusions on trade issues reached by the International Joint Commission (IJC) in its interim report on the protection of the waters of the Great Lakes (August 1999). The IJC stated that "it would appear unlikely that water in its natural state (e.g., in lake, river or aquifer) is included within the scope of any of these trade agreements since it is not a product or good…" As well, the government points out that, at an IJC public hearing in Ottawa on 13 October 1999, two independent trade law experts endorsed the federal government’s views on all major trade policy issues.

In an essay entitled "Ottawa’s Leaky Water Policy," published in the Globe and Mail on 18 November 1999, Maude Barlow, national chairperson of the Council of Canadians,(2) noted that the federal and provincial Ministers of the Environment would be meeting shortly in Kananaskis, Alberta, to discuss the federal government’s proposal for a Canada-wide accord on bulk water removal from watersheds in Canada. She urged the provinces " not [to] sign this document if they care about protecting Canada’s water from commercial export." She stated in part:

The federal government is trying to pass the buck on its responsibility. A voluntary accord would be just that – voluntary – and would not bind any province in any meaningful way to protect its water resources now or in the future. As well, although responsibility for fresh water comes largely under provincial jurisdiction, international trade is the domain of the federal government. Only the federal government has the jurisdiction to impose a meaningful national ban on water exports and only the federal government can deal with the trade threat it has unleashed on the provinces.

Ms. Barlow argues that certain key provisions of the NAFTA place Canada’s water at risk. She maintains that if a single province revoked its ban and began exporting water, bans in other provinces would become subject to challenges from companies wanting to buy Canadian water. She maintains that the federal government "… needs to bring in a full, binding, federal ban on bulk-water exports. And it must work to exempt water from pernicious trade deals [such as the NAFTA and GATT] that would privatize, commodify and put our precious water on the open global market for the highest bidder."

The federal government takes the opposite view, arguing that nothing in Canada’s international trade obligations would require approval to be given to future projects for the bulk removal of water for export, just because previous projects of this kind had received approval. Noting that Canadian governments, federal and provincial, retain full sovereignty over Canadian waters, the government declares that, "the key point is that water in its natural state is not a good, and therefore is not subject to trade obligations." It maintains that "From the standpoint of trade obligations, the fact that a government has allowed the extraction and transformation of some water into a good, including for export, does not mean it (or another government within Canada) must allow the extraction and transformation of other water into a good in the future." According to the government, any possible precedent arising out of a water export project would be limited to the province involved and would result from the particular legislation that permitted removal for export, and not from trade agreements. The federal government maintains that a province could even change its legislation to prevent bulk removal, as long as it did so without discrimination on the basis of nationality in treatment of the applicant (as an investor).

According to press reports, at the meeting of the Canadian Council of Ministers of the Environment held in Kananaskis, Alberta, on 29 and 30 November 1999, all the Environment Ministers expressed their support for the protection of Canada’s freshwater from commercial exploitation. Though a number of provinces, including Alberta and British Columbia, had earlier imposed bans on the bulk removal of water from water basins under their jurisdiction, five provinces refused to endorse the accord. British Columbia, Alberta and Quebec raised specific objections, while Manitoba and Saskatchewan said they wanted more time to study the accord. B.C.’s Environment Minister pointed out that the accord does not include a federal ban on water exports, something she believes is necessary in order to put water out of the reach of corporations intent on using international trade law to secure export rights. Alberta’s Environment Minister commented that he did not like the preamble to the accord, which suggests action needs to be taken on the basis of the "precautionary principle." Quebec objected on constitutional grounds, arguing that the federal government’s action to protect international boundary waters interfered with the province’s control of resources. The federal Environment Minister, the Hon. David Anderson, told reporters that he will try to address provincial concerns in time for the Ministers’ meeting to reconsider the accord in the spring of 2000.

(1) A more detailed discussion of some of these following points can be found in: David Johansen, Water Exports and the NAFTA, Library of Parliament, PRB 99-5E, 8 March 1999.

(2) The Council of Canadians is a citizens’ watchdog organization founded in 1985 which came to prominence in its fight against free trade.