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Notes for a Presentation by:

The Rt. Hon. Herb Gray, P.C., C.C., Q.C.
Canadian Chair
International Joint Commission of Canada and United States

to a Panel Entitled:

"Blue Gold: Water Commodification"

at the 15th Annual Canadian International Law Students’ Conference (CILSC)
of the Law School of the Unversity of Toronto and
Osgoode Hall Law School (York University)

Osgoode Professional Development Centre
Date: February 9, 2008
Toronto ON

Text in [ ] not presented orally to fit in 20 minute time limit



For a thirsty world of present and looming water shortage - water is “blue gold”! (Incidentally this is the title of one of Maude Barlow’s books. So I hope the aspiring lawyers who organized this session won’t hear from her lawyers about copyright infringement – but this is not my topic today).

It’s about the title of this Panel “Blue Gold: Water Commodification”.

So have trade agreements, in particular NAFTA – enabled all North American water to be treated as a commodity – to be “commodified” – to be an item of trade which can be bought and sold irrespective of Canadian (or American) needs and boundaries?

I will discuss this, based on and using language from the International Joint Commission’s reports in 2000 and 2004 and its interim report in 1999 all on the “Protection of the Waters of the Great Lakes”. These reports were undertaken at the request of the governments of Canada and United States.

I will also base my comments on and use language from some related documents. I will look at water diversions, other removals of water in bulk and in bottled form.

On February 22, 2000, the International Joint Commission did issue its final report on this matter. It concluded that the Great Lakes do not offer a vast reservoir for the use of an increasingly thirsty world. That report found that, although the Great Lakes contain about 20 percent of the fresh water on the earth’s surface, only one percent of this water is renewed each year (by rain or snowmelt). [The Commission concluded that removals of water from the basin reduce the resilience of the system and its capacity to cope with stresses, such as climate change.]

[And contrary to what some people outside of the basin may think, all the water in the Great Lakes is in fact being used: for hydro power, shipping & canals, sport and commercial fishing, recreational boating, municipal and domestic purposes, like water for drinking and sewage treatment as well as water for industry and agriculture.]

The 2004 report confirmed and reasserted the conclusions in its 2000 report. In particular, it stated “existing international trade law obligations do not prevent Canada and the United States from taking measures to protect their water resources and preserve the integrity of the Great Lakes Basin ecosystem.” Indeed, the report reaffirmed that trade agreements do not constrain the protection of water in its natural state. The words of the reports and their conclusions are not limited to the Great Lakes.

The 2004 report stated that a key development since that 2000 report was issued were the amendments adopted by Parliament to the International Boundary Waters Treaty Act through Bill C-6 in 2002.

That Act was originally adopted by Parliament way back in May 19, 1911.

It confirmed Canada’s obligation along with the US under the Boundary Waters Treaty of 1909. Its purpose is to deal with transboundary environmental issues about water and air and to prevent or resolve disputes involving the use of Canada/US boundary waters.

For that purpose the Treaty created the International Joint Commission. It was and is a British Empire Treaty.

Anyway Bill C-6 in 2002 added clauses to the International Boundary Waters Treaty Act of 1911 some of which I quote in part:

13.(1) … no person shall use or divert boundary waters by removing water from the boundary waters and taking it outside the water basin in which the boundary waters are located.1

(3) Subsection (1) applies only in respect of the water basins described in the regulations.

14. [these Sections] are binding on Her Majesty in right of Canada or a province.

The Government’s Regulatory Impact Analysis Statement about the Bill C-6 regulations said: "Amendments to the Act provide for the first time (for) the making of regulations".

The Regulations are necessary for the implementation of the amended Act, which: " ...(b) prohibits out-of-basin removals from those boundary waters."

The Regulatory Impact Statement elaborates on the prohibition contained in the Act by:

...defining bulk water removals as any removals that exceed 50 000 litres per day or removals by diversion;..." that is about the capacity of a tanker truck and trailer"...and

defining the water basins to which the removal prohibition applies.

The Regulations ensure that minor removals that may technically fit within the prohibition are excluded from its application for health, safety and humanitarian reasons. These include ballast water,... and water used for firefighting or humanitarian purposes."

Regulations have been issued by the federal government to prohibit removals from "the Canadian portion of the following water basins": the Great Lakes - St. Lawrence Basin, the Hudson Bay Basin (which is not a boundary water basin) as well as the Saint John - St. Croix Basin.

One might ask what have Ontario and Quebec done in this matter –, since they have jurisdiction over water in their territories based on their proprietary rights.

Also they border on the Great Lakes and the international section of the St. Lawrence River.

The Safeguarding and Sustaining Ontario's Water Act received Royal Assent on June 4, 2007. It amended the existing Ontario Water Resources Act, to implement the key obligations outlined in a good-faith agreement with the U.S. Great Lake States which I will describe later.

It elevated Ontario's existing ban on inter-basin transfers from regulation to legislation. [It banned new or increased transfers of water from one Great Lake watershed to another (i.e., intra-basin transfers);]

In Quebec the Waters Resources Preservation Act was given assent on November 26, 1999. It prohibits the transfer outside of Quebec of surface or ground water taken in that province.

The provincial acts have similar exemptions to those in the federal International Boundary Waters Treaty Act of 1911.

What is the impact of bottled water on the Great Lakes?

The IJC’s 2000 report said in part:

At this time, bottled water appears to have no effect on water levels in the Great Lakes Basin as a whole, although there could be local effects in and around the withdrawal sites."

The Ontario Ministry of Natural Resources confirmed in 2005 that for every 1 litre of bottled water exported from the Great Lakes, 14 litres were imported.

What about diversions?

In 1967 the U.S. Supreme Court authorized an average removal - measured as the rate of flow - of 3,200 cubic feet per second [or 91cubic meters per second] from Lake Michigan into the Mississippi River system through the Chicago Diversion – the Chicago Shipping and Sanitary Canal. This is the only major diversion out of the Great Lakes Basin.

The Long Lac and Ogoki diversions into Lake Superior from the Albany River system in northern Ontario are the only major diversions into the Basin.

At present, more water is diverted into the Great Lakes Basin through Long Lac and Ogoki than is diverted out of the Basin at Chicago and by several small diversions in the United States.

The United States Water Resources Development Act of 1986 (WRDA) prohibited "any diversion of Great Lakes water by any State, Federal agency, or private entity for use outside the Great Lakes basin unless such diversion is approved by the Governor of each of the Great Lakes States".

In the United States, Section 504 of the Water Resources Development Act of 2000 (WRDA 2000) confirmed the Water Resources Development Act of 1986 (WRDA 1986). The 2000 Act, in part, contains these words "it is the purpose and policy of the Congress: to take immediate action to protect the limited quantity of water available from the Great Lakes system for use by the Great Lakes States and in accordance with the Boundary Waters Treaty of 1909";

So far no Great Lake State favours further water diversions or removals of water in bulk from the Great Lakes outside of their state boundaries, nor do Ontario and Quebec.

So what more has been done on the U.S. side of the water basins. Well to quote from a Congressional Research Service Report for Congress entitled, Great Lakes Water Withdrawals: Legal and Policy Issues, Update August 29, 2006:

"The Council of Great Lakes Governors (CGLG) — is a partnership of the governors of the eight Great Lakes states and the Canadian provincial premiers of Ontario and Quebec… On December 13, 2005 it released and approved the final version of (1) the Great Lakes-St. Lawrence River Basin Sustainable Water Resources Agreement and (2) the Great Lakes-St. Lawrence River Basin Water Resources Compact."

The CRS report went on to say "These water management agreements ban new and increased diversions of water outside the Great Lakes Basin with only limited, highly regulated exceptions, and establish a framework for each state and province to enact laws protecting the Basin. The Compact needs to be approved by each state legislature, as well as the U.S. Congress, to achieve full force and effect as an [U.S.] interstate compact. The Canadian federal government and the provinces of Ontario and Quebec are not parties to the Compact; the provinces are, however, signatories to the related international state-provincial Agreement." This is a good faith agreement. As you know provinces do not have treaty making powers.

Anyway, I believe the Compact and the Agreement in effect, parallel the Canadian Federal Bill C-6 and its regulations, as well as the provincial measures I’ve cited.

As of today only two states have fully enacted into law legislation to implement the Compact. (Minnesota and Illinois). Five states have active bills pending in their legislatures, and one Wisconsin - has done nothing as of yet. However, according to a recent news report, two members of the legislature, a Republican and a Democrat, say they will introduce a bill to ratify the agreement ‘soon’.

So what is the current situation? What efforts and by whom are being made to take or commodify Great Lakes and the other basin waters I’ve mentioned.

Well there are not, at present, any active government or private sector proposals for diversions outside the Great Lakes Basin, except to some communities in the US on the edge of or straddling the basin.

Of course this situation could change. The increasing demands for water to supply the needs of these near-basin communities, and potential future demands for diversions from the Great Lakes to other parts of the U.S. make it important for the US Federal and the other state governments to finalize the enactment of this compact.

In its August 1999 interim report the Commission said, "it is unlikely that water in its natural state (e.g., in a lake, river, or aquifer) is included within the scope of any of these trade agreements since it is not a product or good. This view is supported by the fact that the NAFTA parties have issued a statement to this effect." (in 1993)

That 1993 Statement reads in part, "The governments of Canada, the United States and Mexico, in order to correct false interpretations, have agreed to state the following jointly and publicly as Parties to the North American Free Trade Agreement: The NAFTA creates no rights to the natural water resources of any Party to the Agreement.

[Our 1999 interim report was confirmed by the final IJC 2000 report and its update in 2004.]

Also, after issuing its Interim Report in 1999, the Commission received a letter dated November 24, 1999 from the Deputy United States Trade Representative:

It reads in part:

"... The report the IJC issued [November 24, 1999] {contained} a recommendation that federal, state and provincial governments not authorize or permit any new bulk sales or removals of surface water or groundwater from the Great Lakes Basin. In our view, [said the Deputy Trade Representative] implementation of this recommendation would not run afoul of the obligations imposed by international trade agreements to which the United States and Canada are parties.

On November 16, 1999, the Commission received a document dated, entitled "Bulk Water Removal and International Trade Considerations", from the Canadian Department of Foreign Affairs and International Trade.

This document referred to the three country joint NAFTA statement I mentioned [concerning the implications of international trade agreements for the protection of the waters of the Great Lakes Basin].

The document also pointed out that:

"Water does not become a good until it is removed from its natural state and enters into commerce as a saleable commodity, such as in bottles or in bulk containers. It would not include water provided by license or as a service by municipalities or a province for domestic, industrial and agricultural uses where the charge for such waters reflects the cost of supplying it rather than a price for it as a commodity. Even if that water was considered a good, it would only be in respect of that particular water and not water remaining in its natural state. Likewise, the issuance of a licence to withdraw some water for a limited purpose, such as a temporary use, is not sufficient to transform that water into a good. ...

There is nothing in international trade agreements which would require that future projects for the bulk extraction or removal of water, including for export, be approved just because previous bulk water removal projects have been approved."

[These documents are attached as annexes to the Commission’s final report in 2000.

They are consistent with the Commission's views stated that in its reports that international trade law does not prevent the two countries from protecting the water resources of the Great Lakes Basin and the other basins set out in a regulation under the Act and therefore international law does not "commodify" these waters.]

What is the position of the current federal government?

Environment Minister John Baird issued a statement on April 13, 2007 that:

Canada has restrictions in place to prohibit bulk removal of water, including diversion, backed by serious fines and/or imprisonment. Canada is committed to protecting water in its natural state and to preserving the integrity of ecosystems, and will continue to do so."

You may want (or expect) me to comment on a report setting out model federal legislation to "preserve Canada’s Water" issued on February 6, 2008 by the Munk International Centre water programme. However I cannot comment on this document today. I have not studied it in detail and the Commission has not had time to consider it as yet, so I cannot express a view on it as Canadian Chair of the IJC.

I’ve outlined an array of US and Canadian statutes, regulations, agreements, and government policy statements to buttress the conclusions and findings of the IJC reports on the matter of the protection of the waters of the Great Lakes and that NAFTA has not comodified nor does it permit the commodification of our water.

As I’ve said these materials are not limited in their ambit to the Great Lakes alone.

I would argue that they should be considered along with the comments by others when considering the issue of water commodification.

To conclude, when it comes to the possible commodification of water -- our "Blue Gold" – lets remember the oft-quoted words (wrongly)2 attributed to Thomas Jefferson that "Eternal vigilance is the price of Liberty"!

I say we need to apply this concept to the protection of our water, our "Blue Gold" and recognize that the price of doing so is "eternal vigilance" about it, for ourselves, our children and our grandchildren!

1   The term ‘boundary waters’ in the Act has the same meaning as in the Boundary Waters Treaty which defines boundary water in the preliminary article to mean "For the purpose 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."(back)

2   Actually said by Wendell Phillips in a speech before the Mass. Antislavery Society, 1852.(back)
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