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Studies in government management of oil and gas resources in Canada Crommelin, Michael 1974

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STUDIES IN GOVERNMENT MANAGEMENT OF OIL AND GAS RESOURCES IN CANADA by MICHAEL CROMMELIN B . A . , U n i v e r s i t y o f Q u e e n s l a n d , 1967, L L . B . ( H o n s . ) , U n i v e r s i t y o f Q u e e n s l a n d , 1 9 7 1 , L L . M . , U n i v e r s i t y o f B r i t i s h C o l u m b i a , 1972. A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY i n t h e F a c u l t y o f Graduate S t u d i e s We a c c e p t t h i s t h e s i s as c o n f o r m i n g t o t h e r e q u i r e d s t a n d a r d THE UNIVERSITY OF BRITISH COLUMBIA O c t o b e r , 1974 I n p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f t h e r e q u i r e m e n t s f o r a n a d v a n c e d d e g r e e a t t h e U n i v e r s i t y o f B r i t i s h C o l u m b i a , I a g r e e t h a t t h e L i b r a r y s h a l l m a k e i t f r e e l y a v a i l a b l e f o r r e f e r e n c e a n d s t u d y . I f u r t h e r a g r e e t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s m a y b e g r a n t e d b y t h e H e a d o f my D e p a r t m e n t o r b y h i s r e p r e s e n t a t i v e s . I t i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l n o t b e a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . D e p a r t m e n t o f / T h e U n i v e r s i t y o f B r i t i s h C o l u m b i a V a n c o u v e r 8. C a n a d a D a t e 2<f A/OU. / f 74 ( i a ) A B S T R A C T M o s t o f t h e u n p r o d u c e d o i l a n d g a s i n C a n a d a i s s u b j e c t t o p u b l i c o w n e r s h i p . T h i s f a c t p l a c e s a d u t y u p o n g o v e r n m e n t t o d e v i s e a m a n a g e m e n t s y s t e m f o r t h e s e r e s o u r c e s w h i c h g o e s b e y o n d t h e m e r e r e g u l a t i o n o f p r i v a t e r i g h t s , a n d e n s u r e s t h a t t h e b e n e f i t s f r o m d e v e l o p m e n t f l o w t o s o c i e t y a s a w h o l e . T h i s d i s s e r t a t i o n c o n s i s t s o f t w o r e l a t e d s t u d i e s o f g o v e r n m e n t m a n a g e -m e n t o f o n s h o r e o i l a n d g a s i n C a n a d a . T h e f i r s t c o n s i d e r s t h e q u e s t i o n o f j u r i s d i c t i o n u n d e r t h e C a n a d i a n c o n s t i t u t i o n , a p r e r e q u i s i t e t o a n y a s s i g n -m e n t o f g o v e r n m e n t r e s p o n s i b i l i t y f o r r e s o u r c e m a n a g e m e n t . P u b l i c o w n e r -s h i p o f o n s h o r e o i l a n d g a s i n C a n a d a t r a d i t i o n a l l y m e a n s o w n e r s h i p b y t h e p r o v i n c e s . A t t h e s a m e t i m e , t h o u g h , b o t h t h e D o m i n i o n p a r l i a m e n t a n d t h e p r o v i n c i a l l e g i s l a t u r e s h a v e e x c l u s i v e l e g i s l a t i v e p o w e r s w h i c h a r e i m p o r -t a n t i n t h e d e v e l o p m e n t o f t h e s e r e s o u r c e s . T h e l i m i t s o f t h e l e g i s l a t i v e a u t h o r i t y a r e e x p l o r e d , a n d t h e r e l a t i o n s h i p b e t w e e n D o m i n i o n l e g i s l a t i v e a u t h o r i t y a n d p r o v i n c i a l r e s o u r c e o w n e r s h i p i s e x a m i n e d . T h e c o n c l u s i o n s r e a c h e d r e g a r d i n g j u r i s d i c t i o n a r e t h e n a p p l i e d t o t h e p r i n c i p a l s t a g e s o f o i l a n d g a s d e v e l o p m e n t , f r o m t h e a l l o c a t i o n o f r i g h t s t o p r i v a t e o p e r a t o r s t h r o u g h e x p l o r a t i o n , p r o d u c t i o n , t r a n s p o r t a t i o n , e x p o r t a n d p r i c i n g . T h e s e c o n d s t u d y r e v i e w s t h e A l b e r t a m a n a g e m e n t s y s t e m f o r C r o w n o i l a n d g a s . A g a i n a f u n c t i o n a l a p p r o a c h i s a d o p t e d , t h e s y s t e m b e i n g d e s c r i b e d a n d e v a l u a t e d i n t e r m s o f i t s p r i n c i p a l s t a g e s . Two c r i t e r i a o f e f f i c i e n c y a n d e q u i t y a r e e m p l o y e d f o r e v a l u a t i o n . E f f i c i e n c y i s d e f i n e d a s t h e b e s t p o s s i b l e a l l o c a t i o n o f l a b o u r a n d c a p i t a l a m o n g a l t e r n a t i v e u s e s , b o t h (ib) p r e s e n t and f u t u r e , w h i l e e q u i t y r e f e r s t o t h e d i s t r i b u t i o n o f b e n e f i t s and c o s t s from o i l and gas development between t h e A l b e r t a government and p r i -v a t e i n d i v i d u a l s . The r e v i e w i s c o n c l u d e d w i t h an assessment o f t h e p r o b -lems i n h e r e n t i n managing p u b l i c l y - o w n e d o i l and gas r e s o u r c e s , and s u g g e s -t i o n s f o r improvement o f t h e c u r r e n t A l b e r t a s y s t e m . T h e s i s S u p e r v i s o r ( i i ) CONTENTS L i s t o f T a b l e s L i s t o f F i g u r e s Acknowledgment P r e f a c e PART I : JURISDICTION OVER ONSHORE OIL AND GAS A . INTRODUCTION B. PROVINCIAL OWNERSHIP OF OIL AND GAS C. THE NATURE OF PROPERTY RIGHTS D. THE DIVISION OF LEGISLATIVE AUTHORITY E. JURISDICTION ON A FUNCTIONAL BASIS 1. A l l o c a t i o n o f R i g h t s 2. E x p l o r a t i o n 3. P r o d u c t i o n 4. T r a n s p o r t a t i o n 5. E x p o r t s 6. P r i c i n g F. CONCLUSION PART I I : GOVERNMENT MANAGEMENT OF OIL AND GAS IN ALBERTA A. INTRODUCTION B. ALLOCATION OF OIL AND GAS RIGHTS 1. P e t r o l e u m and N a t u r a l Gas R e s e r v a t i o n 2. P e t r o l e u m and N a t u r a l Gas L e a s e 3. B l o c k A 4. N a t u r a l Gas L i c e n c e and Lease 5. Crown R e s e r v e s 6. C r i t i q u e ( i i i ) C. EXPLORATION 38 1 . G e o p h y s i c a l Work 38 2 . Government I n c e n t i v e s 38 D. PRODUCTION 45 1 . W e l l S p a c i n g 51 2 . P r o d u c t i o n Rate L i m i t a t i o n 54 3 . M a r k e t Demand P r o r a t i o n i n g 62 4 . U n i t i z a t i o n 7 6 E. TRANSPORTATION 82 F. EXPORTS 87 G. PRICING 95 H. CONCLUSION 108 B i b l i o g r a p h y T a b l e o f Cases T a b l e o f S t a t u t e s (1) (10) (17) ( i v ) LIST OF TABLES P e t r o l e u m R o y a l t y Formula Crown R o y a l t y - N a t u r a l Gas and R e s i d u e Gas Revenues: Crown O i l and Gas D r i l l i n g I n c e n t i v e C r e d i t - C l a s s A Footage D r i l l i n g I n c e n t i v e C r e d i t - C l a s s B Footage (v) LIST OF FIGURES 1 P e t r o l e u m R o y a l t y S c a l e s P a r t I I , 21 2 N a t u r a l Gas R o y a l t y S c a l e s P a r t I I , 23 3 R e l a t i o n s h i p between MER and Well S p a c i n g P a r t I I , 57 (v i ) ACKNOWLEDGMENT I am g r e a t l y i n d e b t e d t o P r o f e s s o r Andrew Thompson, my s u p e r v i s o r , f o r h i s i n i t i a l s u g g e s t i o n t h a t I embark upon t h i s p r o j e c t , f o r t h e s t i m -u l a t i o n he has o f f e r e d t h r o u g h o u t t h e p e r i o d o f r e s e a r c h , and f o r h i s v a l u a b l e comments upon d r a f t s o f t h i s w o r k . Most o f a l l , I a p p r e c i a t e h i s u n s t i n t i n g g e n e r o s i t y w i t h h i s t i m e and h i s e n t h u s i a s t i c p e r s o n a l i n t e r e s t . S e v e r a l o t h e r s have a l s o h e l p e d w i t h t h e p l a n n i n g o f my r e s e a r c h , a n d , more r e c e n t l y , w i t h p r o b i n g c r i t i c i s m and c o n s t r u c t i v e s u g g e s t i o n s . In p a r t i c u l a r , I w o u l d l i k e t o thank P r o f e s s o r s Anthony S c o t t , Paul B r a d l e y John Chapman and " B l u e " E v a n s , who r e a d page upon page o f my w r i t i n g and gave me the b e n e f i t o f t h e i r comments. In c o n d u c t i n g my r e s e a r c h i n t o t h e A l b e r t a management system f o r o i l and gas I was f o r t u n a t e enough t o r e c e i v e t h e a s s i s t a n c e o f many p e o p l e who a r e c l o s e l y i n v o l v e d w i t h t h e a d m i n i s t r a t i o n o f t h a t s y s t e m . Dr. G . B . M e l l o n , Deputy M i n i s t e r f o r Mines and M i n e r a l s , M i s s S p a d y , l e g a l a d v i s o r t o t h e Department o f Mines and M i n e r a l s , M r . F . J . H o l u b o w i c h , D i r e c t o r o f M i n e r a l s , M r . D.R. C r a i g , V i c e - C h a i r m a n o f t h e Energy Resources Con-s e r v a t i o n B o a r d , M r . G . A . Warne, T e c h n i c a l A s s i s t a n t t o t h e Chairman o f t h e B o a r d , M r . H. McFadyen, Manager o f t h e Economics Department a t t h e B o a r d , and Mr. A. M c L a r t y , Board S o l i c i t o r , a l l went t o c o n s i d e r a b l e t r o u b l t o f a m i l i a r i z e me w i t h the w o r k i n g s o f the management s y s t e m . I a p o l o g i s e to them for any f a i l u r e on my part to understand i t s i n t r i c a c i e s . In a d d i t i o n , Mr. R . S . G i b b s , Q . C . , gave me a f a s c i n a t i n g a c c o u n t of t h e ( v i i ) h i s t o r y o f P a n - A l b e r t a Gas L t d . , w h i l e Mr. Dale J o r d a n s h a r e d t h e b e n e f i t s o f h i s knowledge o b t a i n e d d u r i n g a l o n g a s s o c i a t i o n w i t h t h e Department o f Mines and M i n e r a l s . Much o f my r e s e a r c h was f i n a n c e d by a g r a n t f r o m t h e Department o f E n e r g y , Mines and R e s o u r c e s t o s t u d y t h e q u e s t i o n o f j u r i s d i c t i o n o v e r o i l and gas r e s o u r c e s i n C a n a d a , and t o r e v i e w the o p e r a t i o n s o f t h e Energy R e s o u r c e s C o n s e r v a t i o n Board i n A l b e r t a . T y p i n g t h e d r a f t and f i n a l c o p i e s o f t h i s work proved an onerous t a s k , and I w o u l d l i k e t o thank M i s s Jamie R e i d , M i s s Karen Ankerson and M r . Marcos L o r e n z o f o r t h e i r c o n t r i b u t i o n . To R o s , my w i f e , I am p a r t i c u l a r l y g r a t e f u l , n o t o n l y f o r t y p i n g most o f t h e m a n u s c r i p t i n c i r c u m s t a n c e s c o m p l i c a t e d by a l i v e l y a d d i t i o n t o o u r f a m i l y , b u t m a i n l y f o r h e r u n f a i l i n g encouragement t h r o u g h o u t t h e e n t i r e p r o j e c t . ( v i i i ) PREFACE The e s s e n t i a l p r i n c i p l e o f p r o p e r t y b e i n g t o a s s u r e t o a l l p e r s o n s what they have p r o d u c e d by t h e i r l a b o u r and a c c u m u l a t e d by t h e i r a b s t i n e n c e , t h i s p r i n c i p l e cannot a p p l y t o what i s not the produce o f l a b o u r , t h e raw m a t e r i a l o f t h e e a r t h . I f t h e l a n d d e r i v e d i t s p r o d u c t i v e power w h o l l y from n a t u r e , and not a t a l l from i n d u s t r y , i t n o t o n l y would not be n e c e s s a r y , b u t i t would be t h e h e i g h t o f i n j u s t i c e , t o l e t t h e g i f t o f n a t u r e be e n g r o s s e d by i n d i v i d u a l s . John S t u a r t Mi 11 . I t i s n o t i n t h e n a t i o n a l i n t e r e s t u l t i m a t e l y f o r q u e s t i o n s o f c o n -s t i t u t i o n a l a u t h o r i t y where u n c e r t a i n t y e x i s t s t o be put a s i d e Report o f the A u s t r a l i a n S e n a t e S e l e c t Committee on O f f - S h o r e P e t r o l e u m R e s o u r c e s . The management o f o i l and gas r e s o u r c e s i n Canada i n v o l v e s a duty f o r government. For n o t o n l y do t h e s e r e s o u r c e s c o m p r i s e an i m p o r t a n t p a r t o f the n a t i o n a l h e r i t a g e , b u t most o f t h e o i l and gas i n t h e ground c o n t i n u e s t o be s u b j e c t t o p u b l i c o w n e r s h i p . T h i s f a c t o r has c l e a r i m p l i c a t i o n s f o r the n a t u r e and scope o f t h e r e s o u r c e management r e g i m e . What i s needed i s n o t s i m p l y a s y s t e m f o r r e g u l a t i n g r i g h t s as between p r i v a t e r e s o u r c e o w n e r s , b u t r a t h e r a s y s t e m w h i c h r e c o g n i z e s t h i s f a c t o f p u b l i c o w n e r s h i p and a l l o w s the b e n e f i t s o f r e s o u r c e development t o f l o w t o s o c i e t y as a w h o l e . In a f e d e r a l s t a t e , h o w e v e r , t h e r e a r e u s u a l l y d i f f i c u l t i e s i n v o l v e d in ta lk ing about spec i f i c government r ights and duties. Plenary authority i s not v e s t e d i n a s i n g l e u n i t o f government. I n s t e a d , powers a r e d i v i d e d -and t h i s d i v i s i o n has i m p l i c a t i o n s r e g a r d i n g both r i g h t s and d u t i e s . In ( i x ) C a n a d a , onshore o i l and gas r e s o u r c e s p r o v i d e a good example o f t h i s s i t -u a t i o n . P u b l i c o w n e r s h i p o f t h e s e r e s o u r c e s means o w n e r s h i p by t h e p r o -v i n c e s and n o t by t h e D o m i n i o n . A t t h e same t i m e , t h o u g h , t h e Dominion p a r l i a m e n t i s g i v e n l e g i s l a t i v e powers w h i c h a r e i m p o r t a n t i n the d e v e l -opment o f t h e s e r e s o u r c e s . The e s t a b l i s h m e n t o f a government management regime f o r o i l and / gas p r e s u p p o s e s a c l e a r u n d e r s t a n d i n g o f the scope o f both f e d e r a l and p r o -v i n c i a l a u t h o r i t y i n t h i s r e s p e c t . No such u n d e r s t a n d i n g p r e s e n t l y e x i s t s i n Canada. The c o u r t s have seldom been c a l l e d upon t o r e s o l v e i s s u e s o f j u r i s d i c t i o n r e l a t i n g t o t h e s e r e s o u r c e s , and i n t h e c a s e s t h a t have been d e c i d e d , t h e e x p e d i e n t has u s u a l l y been adopted o f r u l i n g upon t h e m a t t e r i n q u e s t i o n w i t h o u t a t t e m p t i n g t o d e f i n e the l i m i t s o f f e d e r a l and p r o v -i n c i a l a u t h o r i t y i n g e n e r a l . The r e s u l t i s t h a t d i s p u t e s between g o v e r n -ments o v e r o i l and gas r e s o u r c e s , o f w h i c h the p r e s e n t energy c o n f r o n t a t i o n between Ottawa and t h e p r o d u c i n g p r o v i n c e s i s a c l a s s i c e x a m p l e , a r e argued i n t h e c o n t e x t o f c o n s i d e r a b l e doubt c o n c e r n i n g l i m i t s t o a u t h o r i t y . T h i s u n c e r t a i n t y i s t o be d e p l o r e d . I t p r o v i d e s a government w i t h t h e o p p o r t u n i t y t o evade r e s p o n s i b i l i t y f o r t h e management o f r e s o u r c e s as i m p o r t a n t , as o i l and gas.. I t a l s o encourages r e s o r t t o a c r i m o n y and c o n f r o n t a t i o n as t h e means o f r e s o l v i n g the d i f f e r e n c e s w h i c h must i n e v i t a b l y a r i s e between g o v e r n m e n t s , i n s t e a d o f t h e open b a r g a i n i n g w h i c h may be e x p e c t e d i f the p a r t i e s a r e f u l l y aware o f t h e - s t r e n g t h s and weaknesses o f t h e i r r e s p e c t i v e p o s i t i o n s . The f i r s t p a r t o f t h i s d i s s e r t a t i o n s e t s o u t to c a s t some l i g h t upon t h i s q u e s t i o n o f the d i v i s i o n o f powers r e l a t i n g to o i l and gas r e s o u r c e s . In t h e absence o f d e f i n i t i v e r u l i n g s by the Supreme C o u r t o f C a n a d a , a (x) review i s undertaken of the heads of power l i k e l y to be invoked to estab-l i s h j u r i s d i c t i o n . So f a r as the federal government i s concerned, the greatest potent ia l l i e s in the trade and commerce power. The l i m i t s of th i s power have f luctuated considerably since 1867, but the present trend appears to be unmistakably in the d i rec t ion of increased federal author i ty . The question to be answered i s how f a r th i s trend may continue. There i s the example of the United States Supreme Court 's extension of the i n t e r -state commerce power in that country to the point where the federa l govern-ment may control a l l a c t i v i t i e s , back to the wellhead, in r e l a t i o n to gas destined f o r i n te r s ta te markets.^ Is Canada headed for the same re su l t ? The thes is advanced here i s that Canada, by v i r tue of i t s p a r t i c u l a r con-s t i t u t i o n a l prov i s ions, f inds i t s e l f in a pos i t ion fundamentally d i f f e r e n t from that of the United States. In p a r t i c u l a r , the bar to the continued expansion of the trade and commerce power in Canada i s found in p rov inc ia l author i ty r e l a t i ng to the management and sale of provincial ly-owned resources. The scheme adopted in the B r i t i s h North America, Act,_1867, f o r the d i v i s i o n of powers between the federal and prov inc ia l governments requires a pecu l i a r accommodation to be reached - each level of government i s given exc lus ive l e g i s l a t i v e author i ty in r e l a t i on to matters which come wi th in classes of subjects l i s t e d in sections 91 and 92 of the Act. A matter which comes wi th in one class i s thereby excluded from a l l others. In t h i s respect, the l e g i s l a t i v e authority of the Dominion and the provinces i s exc lus ive. Thus, a matter coming with in the management and sale of provincial ly-owned P h i l l i p s Petroleum Company v. State of Wisconsin et a l . , 347 U.S. 672 (1954]~~upholding""the v a l i d i t y of the Natural Gas Act, 52 Stat. 821 , as amended, 15 U.S.C. para. 717 et seq. ( x i ) r e s o u r c e s can not a l s o come w i t h i n t h e r e g u l a t i o n o f t r a d e and commerce. The r e c o n c i l i a t i o n o f t h e s e two powers w i l l go a l o n g way towards d e f i n i n g t h e l i m i t s o f f e d e r a l and p r o v i n c i a l a u t h o r i t y o v e r o i l and gas i n Canada. P r o v i n c i a l o w n e r s h i p o f o i l and gas r e s o u r c e s i s a l s o i m p o r t a n t f o r a n o t h e r r e a s o n . The e x c l u s i v e n e s s o f f e d e r a l and p r o v i n c i a l l e g i s l a t i v e a u t h o r i t y s u g g e s t s t h a t , even i n t h e absence o f a c t i o n by one l e v e l o f g o v e r n m e n t , t h e o t h e r l e v e l can n o t e n t e r i n t o a r e a s c l o s e d t o i t by the d i v i s i o n o f powers. The o w n e r s h i p o f r e s o u r c e s , q u i t e a p a r t f r o m e x c l u s i v e l e g i s l a t i v e a u t h o r i t y , p r o v i d e s an e x c e p t i o n t o t h i s r u l e . A p r o v i n c e has a l l t h e r i g h t s o f a p r i v a t e owner o f r e s o u r c e s and may a c t a c c o r d i n g l y i n managing o r d i s p o s i n g o f them. However, i n t h i s r e g a r d a p r o v i n c e i s , j u s t l i k e a p r i v a t e owner, s u b j e c t t o t h e r e q u i r e m e n t s o f v a l i d f e d e r a l l e g i s l a t i o n r e s t r i c t i n g i t s freedom o f a c t i o n . There a r e , t h e r e f o r e , two i n d e p e n d e n t s o u r c e s o f p r o v i n c i a l j u r i s -d i c t i o n o v e r o i l and gas r e s o u r c e s . One i s the e x c l u s i v e l e g i s l a t i v e a u t h o r i t y o f the p r o v i n c e s under the c o n s t i t u t i o n , w h i l e t h e o t h e r i s t h e f a c t o f o w n e r s h i p o f most o f t h e s e r e s o u r c e s w i t h i n p r o v i n c i a l b o u n d a r i e s . The s c o p e o f t h e j u r i s d i c t i o n d e r i v e d from each s o u r c e may w e l l be d i f f e r e n t , d e p e n d i n g i n t h e f o r m e r c a s e upon c o n s t i t u t i o n a l i n t e r p r e t a t i o n and i n t h e l a t t e r c a s e upon t h e e x t e n t t o w h i c h t h e Dominion has e x e r c i s e d i t s l e g i s -l a t i v e a u t h o r i t y . The second p a r t o f the d i s s e r t a t i o n examines the management system f o r p u b l i c l y - o w n e d o i l and gas r e s o u r c e s adopted i n A l b e r t a , t h e l a r g e s t o i l and gas producing province in Canada, to ascertain the extent to which t h i s p r o v i n c e has succeeded i n m e e t i n g i t s o b l i g a t i o n s i n r e l a t i o n t o t h e s e r e s o u r c e s . The a p p r o p r i a t e measure o f s u c c e s s , i t i s s u g g e s t e d , i s t h e s i z e ( x i i ) o f n e t s o c i a l b e n e f i t s d e r i v e d i n A l b e r t a from r e s o u r c e d e v e l o p m e n t . However, s o c i a l b e n e f i t s may t a k e many forms and may be pursued by a g o v e r n -ment i n a v a r i e t y o f ways. The A l b e r t a government has not made c l e a r i t s chosen o b j e c t i v e s , and so an e v a l u a t i o n o f t h e management s y s t e m i n terms o f t h e s e i s i m p o s s i b l e . What can be d o n e , t h o u g h , i s t o s u g g e s t o b j e c t i v e s w h i c h c o u l d be p u r s u e d by a government i n d e v i s i n g a management s y s t e m f o r p u b l i c l y - o w n e d o i l and gas r e s o u r c e s . The o b j e c t i v e s proposed i n t h i s p a r t a r e e f f i c i e n c y and e q u i t y . E f f i c i e n c y i s d e f i n e d i n terms o f the b e s t p o s s i b l e a l l o c a t i o n o f s o c i e t y ' s r e s o u r c e s o f l a b o u r and c a p i t a l among a l t e r n a t i v e u s e s , both p r e s e n t and f u t u r e , w h i c h r e s u l t s i n t h e l a r g e s t p o s s i b l e n e t b e n e f i t s t o s o c i e t y . The advantage o f t h i s c r i t e r i o n l i e s i n t h e f a c t t h a t i t i n d i c a t e s t h a t s o c i a l c o s t s a r e i n c u r r e d i n t h e i m p l e m e n t a t i o n o f p o l i c i e s w h i c h d e v i a t e f r o m e f f i c i e n c y r e q u i r e m e n t s . T h i s f a c t a l o n e i s not s u f f i c i e n t t o c a u s e a condemnation o f t h e s e p o l i c i e s , o f c o u r s e , but the r e c o g n i t i o n o f t h e i r c o s t i s i n i t s e l f i m p o r t a n t . E q u i t y r e f e r s t o t h e d i s t r i b u t i o n o f t h e b e n e f i t s and c o s t s a r i s i n g from t h e development o f p u b l i c l y - o w n e d o i l and gas r e s o u r c e s , b u t o n l y as between government and t h e r e s t o f s o c i e t y . The a p p r o a c h a d o p t e d i s t h a t t h e g o v e r n m e n t , a c t i n g on b e h a l f o f A l b e r t a s o c i e t y as a w h o l e , i s under an o b l i g a t i o n t o c o l l e c t t h e s u r p l u s v a l u e t h a t i t s r e s o u r c e s have o v e r a l l n e c e s s a r y c o s t s o f p r o d u c t i o n . T h i s i s an onerous d u t y , t h e r e can be no d o u b t , but n e v e r t h e l e s s i t i s a d u t y w h i c h i s i m p l i c i t i n t h e p r o v i n c i a l o w n e r s h i p o f o i l and gas r e s o u r c e s . N e e d l e s s t o s a y , p e r h a p s , i t i s i n h e r e n t l y u n l i k e l y t h a t any r e s o u r c e management system would c o m p l e t e l y s a t i s f y t h e s e t w i n c r i t e r i a o f e f f i c i e n c y and e q u i t y . A number o f f a c t o r s s t a n d i n t h e way o f any such a c h i e v e m e n t . ( x i i i ) The d e t a i l e d r e v i e w o f the A l b e r t a management s y s t e m f o r o i l and gas r e v e a l s f o u r b a s i c problems w h i c h p r e c l u d e s i m p l e s o l u t i o n s : a l a c k o f knowledge o f t h e l o c a t i o n and v a l u e o f o i l and gas d e p o s i t s , t h e element o f r i s k i n e x p l o r a t i o n and p r o d u c t i o n , t h e absence o f p e r f e c t c o m p e t i t i o n a t d i f f e r e n t s t a g e s o f o i l and gas d e v e l o p m e n t , and t h e e x i s t e n c e o f p o l i t i c a l u n c e r t a i n t y among p r i v a t e o p e r a t o r s . In t h e p r e s e n c e o f t h e s e f a c t o r s , any c r i t i c i s m o f t h e e x i s t i n g management s y s t e m must be q u a l i f i e d by a s k i n g w h e t h e r a change i n the s y s t e m would n e c e s s a r i l y produce a b e t t e r r e s u l t . One would be i n a p o s i t i o n t o g i v e a c o n f i d e n t answer o n l y when armed w i t h e m p i r i c a l s t u d i e s showing t h e s i z e s o f t h e d i s t o r t i o n s produced by d i f f e r e n t p o l i c i e s . N e v e r t h e l e s s , a p u r e l y q u a l i t a t i v e a n a l y s i s o f t h e management system i s j u s t i f i e d as d e m o n s t r a t i n g where t h e system does i n f a c t d e v i a t e from t h e r e q u i r e m e n t s o f e f f i c i e n c y and e q u i t y . Rather than p r o v i d i n g c o n c l u s i v e a n s w e r s , i t g i v e s r i s e t o f u r t h e r q u e s t i o n s . In a d d i t i o n , s i n c e a government management system f o r r e s o u r c e s i s u s u a l l y adopted i n a c l i m a t e o f l e s s than p e r f e c t i n f o r m a t i o n , a q u a l i t a t i v e a n a l y s i s p r o v i d e s a f i r m e r f o u n d a t i o n , a l t h o u g h a d m i t t e d l y s t i l l an u n s t a b l e o n e , f o r s p e c u l a t i o n on t h e improvement o f t h a t s y s t e m . - l a -PART I JURISDICTION OVER ONSHORE OIL AND GAS - 1b-A. INTRODUCTION In t h e s e days o f a n x i e t y about energy s u p p l y and p r i c e s , the i m p o r t a n c e o f o i l and gas i n a n a t i o n a l economy need h a r d l y be s t a t e d . In C a n a d a , t h e s e s u b s t a n c e s s a t i s f y a l m o s t t w o - t h i r d s o f t o t a l e n e r g y demand. The c o n t r o l o f d o m e s t i c o i l and gas r e s o u r c e s i s , t h e r e f o r e , a p r i z e worthy o f most government e n d e a v o u r s . However, t h e i s s u e o f j u r i s d i c t i o n o v e r onshore o i l and gas e x h i b i t s many o f the c o m p l e x i t i e s o f Canadian c o n s t i t u t i o n a l law and p r a c t i c e . In the f i r s t p l a c e , t h e r e i s the q u e s t i o n o f o w n e r s h i p o f t h e s e r e s o u r c e s and t h e degree o f c o n t r o l t h a t f l o w s t h e r e f r o m . T h e n , t h e r e i s t h e m a t t e r o f the d i v i s i o n o f l e g i s l a t i v e a u t h o r i t y which i s nowhere s p e c i f i c i n r e l a t i o n t o o i l and g a s , b u t must be d i s e n t a n g l e d from such g e n e r a l powers as " t h e r e g u l a t i o n o f t r a d e and commerce" and " t h e management and s a l e o f t h e p u b l i c l a n d s b e l o n g i n g t o the p r o v i n c e " . F i n a l l y , t h e r e i s t h e problem o f r e c o n c i l i a t i o n o f c o n f l i c t i n g c l a i m s t o c o n t r o l t h r o u g h competing r i g h t s o f o w n e r s h i p and l e g i s l a t i v e a u t h o r i t y . The r e s u l t , o f c o u r s e , i s u n l i k e l y t o be c l e a r o r p r e c i s e . The o n l y c o n c l u s i o n w h i c h l i e s beyond any doubt i s t h a t c o n t r o l o v e r onshore o i l and gas does n o t r e s i d e e x c l u s i v e l y w i t h e i t h e r l e v e l o f government. In r e c o g n i t i o n o f t h i s f a c t , t h e a p p r o a c h a d o p t e d here i s f u n c t i o n a l . The d i f f e r e n t s t a g e s o f development o f onshore o i l and gas are i d e n t i f i e d and the q u e s t i o n o f c o n t r o l i s c o n s i d e r e d i n r e l a t i o n t o e a c h . To do t h i s , however, i t i s n e c e s s a r y t o a s s i g n some c o n t e n t t o the powers o f o w n e r s h i p and l e g i s l a t i v e a u t h o r i t y and so a r e v i e w o f e x i s t i n g c o n s t i t u t i o n a l a u t h o r i t i e s i s i n i t i a l l y u n d e r t a k e n . - 2 -B. PROVINCIAL OWNERSHIP OF OIL AND GAS 1 In t h e a r e a s o f Canada t h a t were o r i g i n a l l y s e t t l e d by B r i t i s h c o l o n i s t s , such p a r t s o f the common law as were a p p r o p r i a t e t o t h e s i t u a t i o n and c o n d i t i o n s a p p l i e d . Thus the Crown owned a l l u n g r a n t e d l a n d s and was e n t i t l e d t o the same t e r r i t o r i a l and c a s u a l r e v e n u e s a r i s i n g f r o m p r e r o g a t i v e r i g h t as i n E n g l a n d . In the a r e a s w h i c h were a c q u i r e d f r o m t h e French k i n g the p o s i t i o n was l e s s c l e a r . I t has n e v e r been f i n a l l y d e t e r m i n e d w h e t h e r , on c e s s i o n o r c o n q u e s t , the F r e n c h law as to the r o y a l p r e r o g a t i v e was r e p l a c e d by t h e law o f E n g l a n d o r c o n -2 t i n u e d i n f o r c e w i t h the b e n e f i t s a c c r u i n g t o the E n g l i s h Crown. However, so f a r as u n g r a n t e d l a n d s a r e c o n c e r n e d t h e r e i s no p r a c t i c a l d i f f i c u l t y f o r under French as w e l l as E n g l i s h law a t the t i m e t h e 3 Crown was e n t i t l e d t o o w n e r s h i p . I n i t i a l l y , i t s e e m s , the Crown h e l d and d i s p o s e d o f t h e s e l a n d s f o r the b e n e f i t o f t h e c o l o n i e s i n w h i c h t h e y were s i t u a t e d . S t i l l , f o r many y e a r s the revenues were under t h e c o n t r o l o f the B r i t i s h p a r l i a m e n t and n o t t h e l o c a l a s s e m b l i e s . A change i n t h i s s i t u a t i o n f i r s t took p l a c e i n New B r u n s w i c k i n 1837, and f o i l owed s h o r t l y a f t e r w a r d s i n t h e p r o v i n c e s o f 4 Canada and Nova S c o t i a . The r e s u l t was t h a t f u l l c o n t r o l o f t h e C r o w n ' s T h i s h i s t o r i c a l r e v i e w i s based upon La F o r e s t , G e r a r d V . , N a t u r a l  R e s o u r c e s and P u b l i c P r o p e r t y Under t h e Canadian C o n s t i t u t i o n , T o r o n t o , U n i v e r s i t y o f T o r o n t o P r e s s , 1 9 6 9 , 3 - 1 4 . A t t o r n e y - G e n e r a l o f Canada v . A t t o r n e y - G e n e r a l o f Quebec, [1921] 1 A . C . 4 1 3 , a t 4 2 3 ; i b i d . , 8 - 9 . 3 S t . C a t h e r i n e ' s M i l l i n g & Lumber Co. v . The Queen (1887), 13 S . C . R . 577, p e r T a s c h e r e a u J . , a t 6 4 4 ; i b i d . , 9 . 4 I b i d . , 1 2 . - 3 -c a s u a l and h e r i d i t a r y revenues a r i s i n g i n the p r o v i n c e s p a s s e d t o t h e l e g i s l a t u r e s o f t h e p r o v i n c e s c o n c e r n e d . The p o s i t i o n a t C o n f e d e r a t i o n was t h e r e f o r e as f o l l o w s : . . . t h e e n t i r e c o n t r o l , management, and d i s p o s i t i o n o f t h e crown l a n d s , and t h e proceeds o f t h e p r o v i n c i a l p u b l i c domain and c a s u a l r e v e n u e s , were c o n f i d e d t o t h e e x e c u t i v e a d m i n i s t r a t i o n o f t h e p r o v i n c i a l government as r e p r e s e n t i n g t h e C r o w n , and t o t h e a c t i o n o f the p r o v i n c i a l l e g i s l a t u r e s , so t h a t t h e crown l a n d s , though s t a n d i n g i n t h e name o f the Queen, were w i t h t h e i r a c c e s s o r i e s and i n c i d e n t s , to a l l i n t e n t s and p u r p o s e s t h e p u b l i c p r o p e r t y o f t h e r e s p e c t i v e p r o -v i n c e s i n w h i c h t h e y were s i t u a t e 5 The d i s t r i b u t i o n o f r e s o u r c e s between the Dominion and t h e p r o v i n c e s a t C o n f e d e r a t i o n was e f f e c t e d l a r g e l y by P a r t V I I I o f t h e B r i t i s h N o r t h  A m e r i c a A c t , 1867. 6 S e c t i o n 108 a s s i g n s s p e c i f i e d p r o p e r t y t o t h e D o m i n i o n , and s e c t i o n s 109 and 117 c o n f i r m t h a t the r e s i d u e i s to remain w i t h the p r o v i n c e s . / G e n e r a l l y , o i l and gas r e s o u r c e s f a l l w i t h i n t h i s r e s i d u e . A c o u p l e o f e x c e p t i o n s a r e p o s s i b l e . Among the items o f p r o p e r t y t r a n s f e r r e d t o the Dominion by s e c t i o n 108 a r e " P u b l i c H a r b o u r s " . I t remains ah open q u e s t i o n whether o w n e r s h i p o f t h e beds o f p u b l i c h a r b o u r s ( i n c l u d i n g mines and m i n e r a l s ) was v e s t e d i n the D o m i n i o n , o r s i m p l y r i g h t s s u f f i c i e n t f o r t h e 5 P e r R i t c h i e C . J . i n M e r c e r v . A t t o r n e y - G e n e r a l o f O n t a r i o ( 1 8 8 1 ) , 5 S . C . R . 5 3 8 , a t 6 3 3 ; i b i d . , 14. 6 30 & 31 V i c t . , c . 3 ( I m p . ) . 7 A t t o r n e y - G e n e r a l f o r Canada v . A t t o r n e y s - G e n e r a l f o r O n t a r i o , Quebec and Nova S c o t i a ( F i s h e r i e s C a s e ) , L1898] A . C . 7 0 0 , 7 0 9 . " ~ - 4 -Dominion t o e x e r c i s e i t s l e g i s l a t i v e f u n c t i o n s r e s p e c t i n g n a v i g a t i o n and 8 s h i p p i n g . . A s i m i l a r i s s u e a r i s e s i n r e s p e c t o f S a b l e I s l a n d , n a m e l y , whether t h e t r a n s f e r t o t h e Dominion i n c l u d e d mines and m i n e r a l s o r , i n view o f t h e f a c t t h a t i t i s l i n k e d w i t h " L i g h t h o u s e s and P i e r s " , more 9 l i m i t e d r i g h t s were i n t e n d e d . When B r i t i s h Columbia and P r i n c e Edward I s l a n d e n t e r e d C o n f e d e r a t i o n i n 1871 and 1873, r e s p e c t i v e l y , t h e terms o f u n i o n i n each c a s e p u t t h e s e p r o v i n c e s i n a s i m i l a r p o s i t i o n r e g a r d i n g p u b l i c p r o p e r t y as t h e f o u r o r i g i n a l p r o v i n c e s . ^ B r i t i s h Columbia agreed t o convey t o t h e Dominion a t r a c t o f l a n d twenty m i l e s i n b r e a d t h on each s i d e o f a r a i l w a y t o be b u i l t c o n n e c t i n g i t t o C a n a d a , but o t h e r w i s e t h e p u b l i c p r o p e r t y p r o v i s i o n s o f t h e B . N . A . A c t , 1867 , a p p l i e d t o i t . T h i s agreement was s u b s e q u e n t l y amended t o i n c l u d e t h r e e and o n e - h a l f m i l l i o n a c r e s o f l a n d i n t h e Peace R i v e r D i s t r i c t , known as t h e Peace R i v e r B l o c k , i n the t r a n s f e r t o t h e D o m i n i o n . ^ In t h e c a s e o f t h e p r a i r i e p r o v i n c e s , a d i f f e r e n t a p p r o a c h was a d o p t e d . In 1670 the H u d s o n ' s Bay Company had r e c e i v e d a c h a r t e r from The i s s u e has n o t y e t been s q u a r e l y r a i s e d , and s u c h a u t h o r i t y as does e x i s t i s c o n f l i c t i n g . In Holman v . Green ( 1 8 8 1 ) , 6 S . C . R . 707, t h e Supreme C o u r t o f Canada t h o u g h t t h a t s . 108 t r a n s f e r r e d o w n e r s h i p t o t h e D o m i n i o n ; h o w e v e r , i n A t t o r n e y - G e n e r a l f o r Canada v . A t t o r n e y s - G e n e r a l f o r  O n t a r i o , Quebec and Nova S c o t i a , i b i d . , the P r i v y C o u n c i l a d o p t e d a v e r y r e s t r i c t i v e approach t o Dominion r i g h t s . For f u r t h e r d i s c u s s i o n o f t h i s p o i n t , see La F o r e s t , o p . c i t . , note 1 , 5 7 - 6 0 , 6 3 - 6 4 . 9 The Dominion l e g i s l a t i v e power i n r e s p e c t o f the i s l a n d i s , m o r e o v e r , c o u p l e d w i t h " b e a c o n s , bouys and l i g h t h o u s e s " : B . N . A . A c t , 1867, s e c t i o n 9 1 ( 9 ) . . S e c t i o n 7 o f t h e A c t a l s o c o n t e m p l a t e s t h a t the i s l a n d remains w i t h i n t h e l i m i t s o f Nova S c o t i a ; i b i d . , 7 2 - 7 3 . 1 0 I b i d . , 3 1 - 3 4 . 1 1 I b i d . , 32 - 5 -C h a r l e s I I , g r a n t i n g t i t l e to a v a s t a r e a o f l a n d , l a r g e l y u n d e f i n e d - 1 i n s c o p e , d r a i n i n g i n t o H u d s o n ' s Bay. In 1869 t h e s e l a n d s were s u r r e n d e r e d 12 t o t h e Crown, and i n 1870 an I m p e r i a l O r d e r i n C o u n c i l t r a n s f e r r e d both them and t h e N o r t h w e s t T e r r i t o r i e s to Canada. M a n i t o b a was c r e a t e d 13 as a p r o v i n c e o f t h e new Dominion i n t h e same y e a r . In 1 9 0 5 , A l b e r t a 14 and Saskatchewan v/ere f o r m e d . The r e m a i n i n g n o r t h e r n r e g i o n s became the N o r t h - W e s t and Yukon T e r r i t o r i e s , s t i l l s u b j e c t t o f e d e r a l a d m i n i s -t r a t i o n . As r e g a r d s p u b l i c l a n d s , the p r a i r i e p r o v i n c e s a t f i r s t were n o t p l a c e d on a s i m i l a r f o o t i n g t o the o t h e r members o f t h e C o n f e d e r a t i o n . The l a n d s c o n t i n u e d under Dominion o w n e r s h i p , and i t was n o t u n t i l 1930 15 t h a t t h e y were t r a n s f e r r e d t o the p r o v i n c e s . The agreements between the Dominion and each o f t h e p r o v i n c e s e f f e c t i n g t h i s t r a n s f e r r e c i t e d t h a t [ i ] n o r d e r t h a t t h e P r o v i n c e may be i n the same p o s i -t i o n as the o r i g i n a l P r o v i n c e s o f C o n f e d e r a t i o n a r e i n v i r t u e o f s e c t i o n one hundred and n i n e o f t h e B r i t i s h N o r t h A m e r i c a A c t , 1867, the i n t e r e s t o f the Crown i n a l l Crown l a n d s , m i n e s , m i n e r a l s ( p r e c i o u s and base) and r o y a l t i e s d e r i v e d t h e r e f r o m w i t h i n the P r o v i n c e . . . s h a l 1 . . . belong t o t h e P r o v i n c e . . . a n d the s a i d l a n d s s h a l l be a d m i n i s t e r e d by t h e P r o v i n c e f o r t h e p u r p o s e s t h e r e o f . . J ° A s i m i l a r agreement was a l s o made between the Dominion and B r i t i s h C o l u m b i a f o r t h e purpose o f r e t r a n s f e r r i n g t o t h a t p r o v i n c e a l l u n g r a n t e d p o r t i o n s 1 2 R u p e r t ' s Land A c t , 1868, 31-32 V i c t . , c . 105. 13 The M a n i t o b a A c t , 1870, 33 V i c t . , c . 3 , s . 3 0 ( C a n . ) , c o n f i r m e d by B r i t i s h N o r t h A m e r i c a A c t , 1871, 3 4 - 3 5 V i c t . , c . 2 8 . 1 4 The A l b e r t a A c t , 1 9 0 5 , 4 Edw. 7 , c . 3 , s . 2 1 ( C a n . ) - , t h e Saskatchewan  A c t , 1 9 0 5 , 4 Edw. 7 , c . 4 3 , s . 2 1 ( C a n . ) . 15 For the h i s t o r y o f t h i s t r a n s f e r , see La F o r e s t , o p . c i t . n o t e 1 , 3 5 - 4 5 ; and Thompson, A . R . , " B a s i c C o n t r a s t s Between P e t r o l e u m Land P o l i c i e s o f Canada and the U n i t e d S t a t e s " , 36 U n i v e r s i t y o f C o l o r a d o Law Review 187, 216 ( 1 9 6 4 ) . ^ The agreements were c o n f i r m e d by f e d e r a l and p r o v i n c i a l l e g i s l a t i o n , as w e l l as the B . N . A . A c t , 1 9 3 0 , 21 Geo. V , c . 2 6 ( I m p . ) . o f the r a i l w a y b e l t and t h e Peace R i v e r B l o c k . ^ F i n a l l y , when Newfound-18 l a n d became a p r o v i n c e i n 1949 s p e c i f i e d i t e m s of p u b l i c p r o p e r t y were t r a n s f e r r e d t o t h e Dominion as under s e c t i o n 108 o f t h e B . N . A . A c t , 1867, 19 b u t the r e m a i n d e r ( i n c l u d i n g mines and m i n e r a l s ) was l e f t t o t h e p r o v i n c e . The g e n e r a l p o s i t i o n i s , t h e r e f o r e , t h a t o i l and gas r e s o u r c e s w i t h i n t h e p r o v i n c e s t h a t have n o t been a l i e n a t e d by t h e Crown a r e v e s t e d i n the Crown i n t h e r i g h t o f t h e p r o v i n c e c o n c e r n e d , and are s u b j e c t t o p r o v i n c i a l l e g i s l a t i v e and e x e c u t i v e a c t i o n i n t h i s c a p a c i t y . I n d i a n l a n d s p r e s e n t a d i f f i c u l t y . I t has l o n g been r e c o g n i z e d t h a t t i t l e t o I n d i a n l a n d s i n f e e i s v e s t e d i n t h e Crown, and I n d i a n t i t l e i s " a p e r s o n a l and u s u f r u c t u a r y r i g h t , dependent upon the good w i l l of t h e 20 S o v e r e i g n " . The scope o f t h i s r i g h t i s , h o w e v e r , f a r from c l e a r . The r e f e r e n c e t o i t s " p e r s o n a l " n a t u r e has been e x p l a i n e d by the f a c t t h a t the 21 r i g h t i s " i n a l i e n a b l e e x c e p t by s u r r e n d e r t o the Crown". B u t t h i s has no b e a r i n g upon w h e t h e r t h e r i g h t i n c l u d e s e n t i t l e m e n t t o mines and m i n e r a l s . Such a u t h o r i t y as t h e r e i s a v a i l a b l e tends t o s u p p o r t t h e v i e w t h a t I n d i a n 22 t i t l e amounts t o a b e n e f i c i a l i n t e r e s t i n t h e l a n d , and a l t h o u g h t h i s ^ Agreement o f 20 F e b r u a r y 1930 (Term 1 ) , c o n f i r m e d by f e d e r a l and p r o v i n c i a l l e g i s l a t i o n and the B . N . A . A c t , 1930. 1 8 12 & 13 Geo. V I , c . 2 2 ( I m p . ) . 19 La F o r e s t , op. c i t . note 1 , 4 5 - 4 7 ; see Term 37 o f t h e Terms o f Union between Newfoundland and Canada. Of) S t . C a t h e r i n e ' s M i l l i n g & Lumber Co. v . The Queen ( 1 8 8 9 ) , 14 A . C . 46 21 P e r D u f f J . i n A t t o r n e y - G e n e r a l f o r Quebec v . A t t o r n e y - G e n e r a l f o r  Canada ( S t a r Chrome c a s e ) , L1921J 1 A . C . 408. 22 L y s y k , K . , "The I n d i a n T i t l e Q u e s t i o n i n Canada: An A p p r a i s a l i n the L i g h t o f C a l d e r " , 51 Canadian Bar Review 4 5 0 , 467-475 ( 1 9 7 3 ) . - 7 -i n t e r e s t has u s u a l l y been d e s c r i b e d i n terms o f o c c u p a t i o n , h u n t i n g and f i s h i n g r i g h t s , t h e r e seems no r e a s o n i n p r i n c i p l e why i t s h o u l d n o t 23 e x t e n d t o the e x p l o i t a t i o n o f m i n e r a l s . Upon s u r r e n d e r o f I n d i a n t i t l e t o t h e C r o w n , t h e P r i v y C o u n c i l has h e l d t h a t t h i s b e n e f i c i a l i n t e r e s t i s e x e r c i s a b l e by t h e p r o v i n c e r a t h e r than t h e D o m i n i o n , d e s p i t e f e d e r a l l e g i s l a t i v e a u t h o r i t y i n r e s p e c t o f " I n d i a n s , and Lands R e s e r v e d 24 f o r I n d i a n s " . So f a r as I n d i a n r e s e r v e s a r e c o n c e r n e d , t h e p o s i t i o n i s governed by t h e terms o f many f e d e r a l - p r o v i n c i a l agreements d e a l i n g 25 w i t h the s u b j e c t . The p r o p e r t y s u b j e c t t o p r o v i n c i a l government c o n t r o l i s p u b l i c p r o p e r t y , n o t l a n d s h e l d as p r i v a t e p r o p e r t y w i t h i n , a p r o v i n c e . S e c t i o n 109 o f t h e B . N . A . A c t , 1867, r e f e r s t o " a l l l a n d s , m i n e s , m i n e r a l s and r o y a l t i e s b e l o n g i n g t o t h e p r o v i n c e s " ; t h a t t h i s e x p r e s s i o n does n o t i n c l u d e p r i v a t e p r o p e r t y was a l l u d e d t o i n A t t o r n e y - G e n e r a l o f O n t a r i o v . M e r c e r . S e c t i o n 117 r e f e r s d i r e c t l y to " p u b l i c p r o p e r t y " . The n a t u r e o f I n d i a n t i t l e d i d n o t a r i s e f o r d e t e r m i n a t i o n i n -C a l d e r e t a l . v . A t t o r n e y - G e n e r a l o f B r i t i s h C o l u m b i a , 34 D . L . R . ( 3 d . ) 145 ( 1 9 7 3 ) . However, H a l l J . d e s c r i b e d t h e t i t l e as " a . u s u f r u c t u a r y r i g h t and a r i g h t t o occupy t h e l a n d s and t o e n j o y t h e f r u i t s o f t h e s o i l , the f o r e s t and o f the r i v e r s and s t r e a m s " , i b i d . , a t 173-174. L i k e w i s e , i n Re P a u l e t t e ' s A p p l i c a t i o n t o F i l e a C a v e a t , [1973] 6 W.W.R. 9 7 , 1 4 8 , Morrow J . found t h a t the i n d i g e n o u s p e o p l e v/ere " p r i m a f a c i e the owners o f t h e Lands" i n q u e s t i o n b u t d i d n o t s p e c i f i c a l l y c o n s i d e r m i n e r a l r i g h t s . B . N . A . A c t , 1867 , s . 9 1 ( 2 4 ) . See S t . C a t h e r i n e ' s M i l l i n g & Lumber  Co. v . The Queen, op. c i t , n o t e 2 0 , 5 9 . 25 F o r d e t a i l s see La F o r e s t , o p . c i t . n o t e 1 , 1 0 8 - 1 3 3 . 2 6 ( 1 8 8 2 - 8 3 ) , 8 A . C . 7 6 7 , a t 775-76; La F o r e s t , op. c i t . n o t e 1 , 2 4 - 2 5 . - 8 -The degree o f p u b l i c o w n e r s h i p . o f o i l and gas r e s o u r c e s v a r i e s c o n -s i d e r a b l y from one p r o v i n c e t o a n o t h e r , depending l a r g e l y upon the t i m e 27 a t w h i c h d i f f e r e n t a r e a s o f Canada were f i r s t s e t t l e d . U n t i l t h e l a t t e r p a r t o f the n i n e t e e n t h c e n t u r y i t was the p r a c t i c e f o r Crown g r a n t s o f b o t h Dominion and p r o v i n c i a l l a n d t o i n c l u d e mines and m i n e r a l s , and so p u b l i c o w n e r s h i p o f o n s h o r e o i l and gas r e s o u r c e s i n O n t a r i o , Quebec and t h e e a s t e r n p r o v i n c e s i s n o t s u b s t a n t i a l . In 1887 t h e r e was 28 a change o f Dominion p o l i c y . An o r d e r o f the G o v e r n o r - G e n e r a l i n C o u n c i l 29 made under t h e a u t h o r i t y o f t h e Dominion Lands A c t o f 1886 d e c r e e d t h a t a l l f u t u r e g r a n t s o f Dominion l a n d c o n t a i n a c l a u s e r e s e r v i n g mines and m i n e r a l s t o the Crown. T h i s o r d e r a p p l i e d to l a n d s s i t u a t e i n t h e N o r t h w e s t T e r r i t o r i e s west o f t h e t h i r d m e r i d i a n , w h i c h a p p r o x i m a t e l y b i s e c t s S a s k a t c h e w a n . In 1889 a f u r t h e r o r d e r s i m i l a r l y r e s e r v e d m i n e r a l r i g h t s from Crown p a t e n t s o f Dominion l a n d s e a s t o f t h e t h i r d 30 m e r i d i a n . Thus when p u b l i c l a n d s were t r a n s f e r r e d t o t h e p r a i r i e p r o v i n c e s and B r i t i s h Columbia i n 1 9 3 0 , p u b l i c o w n e r s h i p o f m i n e s and m i n e r a l s was s t i l l s i g n i f i c a n t . T h i s p o l i c y o f r e s e r v a t i o n r e s u l t e d i n p u b l i c o w n e r s h i p o f m i n e r a l r i g h t s i n about 90 per c e n t o f t h e Peace 31 R i v e r B l o c k i n N o r t h e a s t e r n B r i t i s h C o l u m b i a , 80 p e r c e n t o f t h e l a n d s i n A l b e r t a and S a s k a t c h e w a n , and 25 p e r c e n t o f the s e d i m e n t a r y b a s i n i n 32 s o u t h w e s t M a n i t o b a . In a d d i t i o n , p u b l i c o w n e r s h i p o f o i l and gas i s a l m o s t u n i v e r s a l i n t h e Yukon and Northwest T e r r i t o r i e s . 2 7 Thompson, o p . c i t . note 1 5 , 197-200. 2 8 P . C . 1070 o f O c t o b e r 3 1 , 1887. 29 Can. Rev. S t a t . , c . 5 4 (1886) 3 0 P . C . 2167 o f September 17, 1889. 3 ^ T h i s c o n t a i n s most o f the s e d i m e n t a r y b a s i n i n t h e p r o v i n c e . 3 2 Thompson, o p . c i t . n o t e 1 5 , 2 0 0 . - 9 -C. THE NATURE OF PUBLIC PROPERTY RIGHTS From t h e f o r e g o i n g h i s t o r i c a l r e v i e w i t i s c l e a r t h a t , p r i o r t o C o n f e d e r a t i o n i n 1867, the p r o v i n c e s had a c q u i r e d l e g i s l a t i v e and e x e -33 c u t i v e c o n t r o l o v e r t h e p u b l i c p r o p e r t y w i t h i n t h e i r b o u n d a r i e s . A f t e r 1867, t h e r e was no need t o l o o k t o the B . N . A . A c t as a s o u r c e o f such a u t h o r i t y . T h a t A c t a l l o c a t e d e x i s t i n g p u b l i c p r o p e r t y among t h e 34 Dominion and the p r o v i n c e s , and a l s o p r o v i d e d f o r a d i v i s i o n o f 35 e x c l u s i v e l e g i s l a t i v e a u t h o r i t y , b u t i n no way i n t e r f e r e d w i t h t h e r i g h t s a l r e a d y won to a d m i n i s t e r p r o v i n c i a l p r o p e r t y f o r t h e b e n e f i t o f 36 the p r o v i n c e s . These were i n h e r e n t i n the p r o p e r t y i t s e l f . A c c o r d i n g l y , i n c o n s i d e r i n g the n a t u r e o f t h e r i g h t s e x e r c i s a b l e by the p r o v i n c e s i n r e l a t i o n to t h e i r p u b l i c p r o p e r t y , i t i s n e c e s s a r y to d i s t i n g u i s h between p r e - C o n f e d e r a t i o n l e g i s l a t i v e and e x e c u t i v e r i g h t s on the one h a n d , and e x c l u s i v e l e g i s l a t i v e a u t h o r i t y p u r s u a n t t o s e c t i o n 92 o f the B . N . A . A c t on the o t h e r . T h i s l a t t e r i s s u e w i l l be c o n s i d e r e d 37 s u b s e q u e n t l y . As t o the f o r m e r , two p r i n c i p l e s a p p l y . F i r s t l y , i n i t s c a p a c i t y as owner o f r e s o u r c e s a p r o v i n c e may a c t l i k e a p r i v a t e p r o p e r t y owner and d e a l w i t h i t s r e s o u r c e s as i t sees f i t . S e c o n d l y , and i n s o d o i n g , t h e p r o v i n c e i s s u b j e c t t o any r e s t r i c t i o n s imposed by t h e common law o r v a l i d l y - e n a c t e d l e g i s l a t i o n , whether f e d e r a l o r p r o v i n c i a l . 3 3 S u p r a , 3 . 3 4 Ibid. 3 5 B . N . A . A c t , 1867 , s e c t i o n s 91 and 9 2 . S t . C a t h e r i n e ' s M i l l i n g and Lumber Co. v . The Queen, op. c i t . note 2 0 , 5 6 - 5 9 ; O n t a r i o M i n i n g Co. v . S e y b o l d , [1903] A . C . 7 3 , 79. 3 7 I n f r a , 11. - 10 -There i s l i t t l e d e c i d e d a u t h o r i t y t o be found e i t h e r f o r o r a g a i n s t t h e s e p r i n c i p l e s , and n o n e , i t w o u l d seem, so f a r as they r e l a t e to o i l and gas r e s o u r c e s . However, two c a s e s c o n c e r n i n g management o f p r o v i n c i a l t i m b e r r e s o u r c e s a r e o f i n t e r e s t . 3 8 In S m y l i e v . The Queen, t h e v a l i d i t y o f an O n t a r i o s t a t u t e p r o -v i d i n g t h a t a c o n d i t i o n be i n s e r t e d i n a l l Crown t i m b e r l i c e n c e s t h a t a l l t i m b e r c u t t h e r e u n d e r be m a n u f a c t u r e d i n Canada, was c h a l l e n g e d on t h e ground t h a t i t d e a l t w i t h a m a t t e r r e s e r v e d t o the Dominion P a r l i a m e n t by t h e B . N . A . A c t , s e c t i o n 9 1 ( 2 ) , " t h e r e g u l a t i o n o f t r a d e and commerce". The a c t u a l d e c i s i o n i n the c a s e w i l l be c o n s i d e r e d l a t e r as i t t u r n e d upon t h e scope o f f e d e r a l and p r o v i n c i a l l e g i s l a t i v e a u t h o r i t y under • 5 0 s e c t i o n s 91 and 92 o f t h e B . N . A . A c t . A t t h i s s t a g e , what i s o f i n t e r e s t i s a f u r t h e r argument adopted by Moss J . A . i n r e a c h i n g h i s c o n -c l u s i o n f a v o u r i n g v a l i d i t y o f t h e s t a t u t e : And I see no r e a s o n f o r t h i n k i n g t h a t t h e L e g i s l a t u r e may n o t , i n r e s p e c t o f t h i s p r o p e r t y , do what any s u b -j e c t p r o p r i e t o r m i g h t d o , when p r o p o s i n g to d i s p o s e o f h i s p r o p e r t y , v i z . , a t t a c h t o the c o n t r a c t a c o n d i t i o n n o t i m p o s s i b l e o f p e r f o r m a n c e , o r u n l a w f u l p e r s e , o r p r o h i b i t e d by an e x i s t i n g l a w . 4 0 3 8 ( 1 9 0 0 ) , 27 O . A . R . 172. 3 9 I n f r a , 34 . 4 0 ( 1 9 0 0 ) , 27 O . A . R . 192. T h i s emphasizes t h e f a c t t h a t t h e r e v/as no v a l i d Dominion l a w r e s t r i c t i n g t h e r i g h t o f the p r o v i n c i a l l e g i s l a t u r e t o i n c l u d e w h a t e v e r c o n d i t i o n s i t saw f i t i n g r a n t s o f t i m b e r l i c e n c e s o v e r p u b l i c l a n d s . I t was n o t n e c e s s a r y f o r the c o u r t to d e t e r m i n e whether t h e impugned O n t a r i o s t a t u t e was i n r e l a t i o n t o a m a t t e r coming w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce". A s u f f i c i e n t ground f o r t h e d e c i s i o n was t h a t t h e O n t a r i o l e g i s l a t u r e a c t e d i n i t s c a p a c i t y o f p r o p e r t y owner i n a c c o r d a n c e w i t h e x i s t i n g , a p p l i c a b l e l a w . In B r o o k s - B i d l a k e and W h i t t a l l , L i m i t e d v . A t t o r n e y - G e n e r a l f o r B r i t i s h 41 Columbia e t a l . , a c a s e w h i c h a l s o i n v o l v e d t h e v a l i d i t y o f c o n d i t i o n s i n c l u d e d i n p r o v i n c i a l Crown t i m b e r l i c e n c e s , the f a c t s p r e s e n t e d t h e P r i v y C o u n c i l w i t h an o p p o r t u n i t y to use t h i s approach i n r e a c h i n g i t s d e c i s i o n . No r e f e r e n c e was made t o i t , t h o u g h , t h e i r L o r d s h i p s ' judgment b e i n g based e n t i r e l y upon s e c t i o n s 91 and 92 o f the B . N . A . A c t . A t t i m e s t h e v i e w has been e x p r e s s e d t h a t t h e r e i s a l i m i t beyond w h i c h f e d e r a l l e g i s l a t i o n can n o t a f f e c t p r o v i n c i a l p u b l i c p r o p e r t y . A u t h o r i t y f o r t h i s view i s s a i d t o be found i n the d e c i s i o n o f t h e P r i v y C o u n c i l i n A t t o r n e y - G e n e r a l f o r Canada v . A t t o r n e y s - G e n e r a l f o r O n t a r i o , Quebec and 42 Nova S c o t i a . To t h e e x t e n t t h a t t h i s i m p l i e s t h a t t h e r e i s an a r e a w i t h i n w h i c h v a l i d f e d e r a l l e g i s l a t i o n can n o t o p e r a t e , i t i s m i s l e a d i n g . That t h e r e i s a l i m i t to f e d e r a l l e g i s l a t i v e a u t h o r i t y i s n o t open t o d o u b t , b u t t h i s l i m i t i s d e r i v e d from s e c t i o n s 91 and 92 o f t h e B . N . A . A c t and n o t from the f a c t o f p r o v i n c i a l p r o p e r t y o w n e r s h i p . Thus when f e d e r a l [1923] A . C . 4 5 0 . The i s s u e s i n t h i s case a r e d e s c r i b e d i n d e t a i l i n f r a , 30-34. 42 Op. c i t . note 7. - 12 -l e g i s l a t i o n a f f e c t s p r o v i n c i a l p r o p e r t y r i g h t s t h e r e l e v a n t c o n s i d e r a t i o n i s n o t p r o v i n c i a l o w n e r s h i p but whether t h e f e d e r a l s t a t u t e i s a v a l i d e x e r c i s e o f Dominion l e g i s l a t i v e a u t h o r i t y . The f o l l o w i n g passage f r o m t h e judgment i n the c a s e shows t h a t t h e i r L o r d s h i p s a p p r e c i a t e d the f o r c e o f t h i s d i s t i n c t i o n : A t t h e same t i m e , i t must be remembered t h a t the power t o l e g i s l a t e i n r e l a t i o n t o f i s h e r i e s does n e c e s s a r i l y t o a c e r t a i n e x t e n t e n a b l e t h e L e g i s l a t u r e so empowered t o a f f e c t p r o p r i e t a r y r i g h t s The s u g g e s t i o n t h a t t h e power m i g h t be abused so as t o amount t o a p r a c t i c a l c o n f i s c a t i o n o f p r o p e r t y does not w a r r a n t the i m p o s i t i o n by the C o u r t s o f any l i m i t upon the a b s o l u t e power o f l e g i s l a t i o n c o n f e r r e d . The supreme l e g i s l a t i v e power i n r e l a t i o n t o any s u b j e c t - m a t t e r i s a l w a y s c a p a b l e o f a b u s e , b u t i t i s n o t t o be assumed t h a t i t w i l l be i m p r o p e r l y u s e d ; i f i t i s , t h e o n l y remedy i s an appeal t o t h o s e by whom the L e g i s l a t u r e i s e l e c t e d . I f , however, t h e L e g i s -l a t u r e p u r p o r t s t o c o n f e r upon o t h e r s p r o p e r i e t a r y r i g h t s where i t p o s s e s s e s none i t s e l f , t h a t i n t h e i r L o r d s h i p s ' o p i n i o n i s n o t an e x e r c i s e o f the l e g i s l a t i v e j u r i s d i c t i o n c o n f e r r e d by s . 9 1 . I f the c o n t r a r y were h e l d , i t w o u l d f o l l o w t h a t the Dominion m i g h t p r a c t i c a l l y t r a n s f e r t o i t s e l f p r o p e r t y w h i c h h a s , by the B r i t i s h N o r t h A m e r i c a A c t , been l e f t to the p r o v i n c e s and n o t v e s t e d i n i t . 43 An extreme example o f t h e r e l a t i o n s h i p between f e d e r a l l e g i s l a t i v e a u t h o r i t y and p r o v i n c i a l p r o p e r t y r i g h t s i s p r e s e n t e d by Dominion a t t e m p t s t o e x p r o p r i a t e p r o v i n c i a l p r o p e r t y . The c a s e s on t h i s s u b j e c t g i v e r i s e 44 t o c o n s i d e r a b l e d i f f i c u l t y . I t has been s u g g e s t e d t h a t some heads o f 45 f e d e r a l power i n c l u d e such a r i g h t o f e x p r o p r i a t i o n w h i l e o t h e r s do n o t ; t h a t p r o p e r t y r i g h t s awarded by s e c t i o n 109 o f the B . N . A . A c t by t h e i r v e r y I b i d . , 712-13. La F o r e s t , op. c i t . note 1 , 1 5 0 - 5 5 . R e f e r e n c e r e Waters and Water P o w e r s , [1929] S . C . R . 2 0 0 . - 13 -46 n a t u r e c u r t a i l t h e scope o f f e d e r a l l e g i s l a t i v e a u t h o r i t y under s e c t i o n 9 1 ; and t h a t i n t h e e x e r c i s e o f some o f i t s powers ( a t l e a s t ) , t h e f e d e r a l g o v e r n -ment may n o t a u t h o r i z e the c o m p u l s o r y a c q u i s i t i o n o f p r o v i n c i a l l a n d s w i t h o u t 47 payment o f c o m p e n s a t i o n . However, t h e r e i s n o t h i n g i n the t e r m i n o l o g y o f . the B . N . A . A c t t o s u p p o r t any o f t h e s e as s t a t e m e n t s o f g e n e r a l a p p l i c a t i o n . There i s no reason why f e d e r a l e x p r o p r i a t i o n l e g i s l a t i o n s h o u l d be j u d g e d on any b a s i s o t h e r t h a n t h a t a p p l i c a b l e t o a l l o t h e r f e d e r a l l e g i s l a t i o n . The q u e s t i o n i s w h e t h e r a f e d e r a l s t a t u t e t r u l y comes w i t h i n t h e scope o f f e d e r a l l e g i s l a t i v e a u t h o r i t y . The f a c t t h a t i t may a f f e c t p r o v i n c i a l p u b l i c p r o -p e r t y i s n o t d e t e r m i n a t i v e . T h i s was t h e view o f t h e P r i v y C o u n c i l i n A t t o r n e y - G e n e r a l f o r Quebec v . N i p i s s i n g C e n t r a l R a i l w a y Co. and A t t o r n e y - General f o r Canada: 4 8 . . . . w h i l e t h e p r o p r i e t a r y r i g h t i n each P r o v i n c e i n i t s own Crown l a n d s i s beyond d i s p u t e , t h a t r i g h t i s s u b j e c t to be a f f e c t e d by l e g i s l a t i o n passed by t h e P a r l i a m e n t o f Canada w i t h i n t h e l i m i t s o f the a u t h o r i t y c o n f e r r e d on t h a t P a r l i a m e n t . R e f e r e n c e was made t o c e r t a i n p a s -sages i n judgments pronounced on b e h a l f o f the Board i n e a r l i e r c a s e s , i n which emphasis was l a i d on t h e v i e w t h a t the r e g u l a t i v e powers c o n f e r r e d upon the Dominion P a r l i a m e n t by s . 91 o f t h e B r i t i s h N o r t h A m e r i c a A c t d i d n o t a u t h o r i z e t h a t P a r l i a m e n t t o t r a n s f e r t o i t s e l f o r o t h e r s t h e p r o p r i e t a r y r i g h t s o f a P r o v i n c e . But t h o s e e x p r e s s i o n s m u s t , o f c o u r s e , be t a k e n s u b j e c t t o the o b s e r v a t i o n o f Lord H e r s c h e l l i n the f i r s t F i s h e r i e s c a s e t h a t t h e power t o l e g i s l a t e i n r e s p e c t o f any m a t t e r must n e c e s s a r i l y t o a c e r t a i n e x t e n t e n a b l e t h e L e g i s l a t u r e so empowered to a f f e c t p r o p r i e t a r y r i g h t s ; and i t may be added t h a t where (as i n t h i s c a s e ) t h e l e g i s l a t i v e power c a n n o t be e f f e c t u a l l y e x e r c i s e d w i t h -o u t a f f e c t i n g t h e p r o p r i e t a r y r i g h t s b o t h o f i n d i v i d u a l s i n a P r o v i n c e and o f t h e P r o v i n c i a l Government, the power so t o a f f e c t t h o s e r i g h t s i s n e c e s s a r i l y i n v o l v e d i n t h e l e g i s l a t i v e power. . 4 6 I b i d . . 4 7 C i t y o f M o n t r e a l v . M o n t r e a l Harbour C o m m i s s i o n e r s , [1926] A . C . 2 9 9 , 3 1 2 - 1 3 . 4 8 [1926] A . C . 7 1 5 , 7 2 3 - 2 4 . - 14 -F u r t h e r m o r e , no w o r t h w i l e d i s t i n c t i o n can be drawn between f e d e r a l l e g i s l a t i o n " a f f e c t i n g " and " e x p r o p r i a t i n g " p r o v i n c i a l p r o p e r t y . The i n t e r e s t o f a p r o v i n c e i n i t s p u b l i c p r o p e r t y , w h i l e commonly r e f e r r e d t o as " o w n e r s h i p " , c o m p r i s e s i n f a c t a number o f r i g h t s amounting t o b e n e f i c i a l 49 e n t i t l e m e n t . Whenever f e d e r a l l e g i s l a t i o n a f f e c t s p r o v i n c i a l p r o p e r t y t h e e x t e n t o f t h e s e p r o p r i e t a r y r i g h t s i s d i m i n i s h e d , and e x p r o p r i a t i o n i s m e r e l y t h e l i m i t i n g c a s e where the r i g h t s a r e e x t i n g u i s h e d e n t i r e l y . The s o l u t i o n t o t h e problem i s n o t t o be found i n the degree o f i n t e r -f e r e n c e w i t h p r o v i n c i a l p r o p e r t y r i g h t s . On t h e c o n t r a r y , i t l i e s i n a c a r e f u l d e t e r m i n a t i o n o f the s u b s t a n c e o f f e d e r a l l e g i s l a t i o n and t h e scope o f Dominion l e g i s l a t i v e a u t h o r i t y under s e c t i o n 91 o f the B . N . A . A c t . In summary, t h e r e a r e two p r i n c i p l e s a p p l i c a b l e i n d e f i n i n g the n a t u r e o f r i g h t s e x e r c i s a b l e by the p r o v i n c e s as owners o f n a t u r a l r e s o u r c e s w i t h i n t h e i r b o u n d a r i e s . In the f i r s t p l a c e , the p r o v i n c e s a r e i n a p o s i t i o n s i m i -l a r t o t h a t o f p r i v a t e r e s o u r c e owners. They may d e a l w i t h t h e i r p r o p e r t y as t h e y see f i t and a r e i n no way r e s t r i c t e d i n t h e i r l e g i s l a t i v e and e x e -c u t i v e a c t i o n s t o t h i s end by the d i v i s i o n o f e x c l u s i v e l e g i s l a t i v e a u t h o r i t y e f f e c t e d by s e c t i o n s 91 and 92 o f t h e B . N . A . A c t . T h i s has s p e c i a l s i g n i -f i c a n c e when the v a l i d i t y o f a p r o v i n c i a l government a c t i o n i n r e l a t i o n t o i t s p r o p e r t y i s c o n s i d e r e d i n the absence o f a p p l i c a b l e f e d e r a l l e g i s l a t i o n , f o r the a u t h o r i t y f o r such a c t i o n need n o t be s o u g h t i n s e c t i o n 9 2 . In the S u p r a , 3. - 15 -second p l a c e , t h e s e p r o v i n c i a l p r o p e r t y r i g h t s a r e s u b j e c t t o t h e p r o v i s i o n s o f v a l i d l y - e n a c t e d f e d e r a l l e g i s l a t i o n t h e a u t h o r i t y f o r w h i c h i s d e r i v e d . , f r o m t h e B . N . A . A c t , 1867. There i s no p r e s u m p t i o n o f t h e i n v i o l a b i l i t y o f p r o v i n c i a l p u b l i c p r o p e r t y . - 16 -D. THE DIVISION OF LEGISLATIVE AUTHORITY P a r t VI o f the B . N . A . A c t , 1867, a l l o c a t e s l e g i s l a t i v e a u t h o r i t y between the Dominion and t h e p r o v i n c e s . The most i m p o r t a n t s e c t i o n s i n t h i s p a r t a r e 91 and 92 w h i c h d e a l w i t h the e x c l u s i v e l e g i s l a t i v e a u t h o -r i t y o f t h e d i f f e r e n t l e v e l s o f government. These s e c t i o n s a r e i n t e r -r e l a t e d and must be c o n s i d e r e d t o g e t h e r . S e c t i o n 9 1 . a u t h o r i z e s the Dominion P a r l i a m e n t t o make Laws f o r t h e P e a c e , Order and Good Government o f C a n a d a , i n r e l a t i o n t o a l l M a t t e r s n o t coming w i t h i n t h e C l a s s e s o f S u b j e c t s by t h i s A c t a s s i g n e d e x c l u s i v e l y t o the L e g i s l a t u r e s o f the P r o v i n c e s T h i s i s the " g e n e r a l " p o w e r . I t s c o n t e n t i s d e t e r m i n e d by s u b t r a c t i o n o f p r o v i n c i a l l e g i s l a t i v e a u t h o r i t y a s s i g n e d by s e c t i o n 9 2 : In each P r o v i n c e the L e g i s l a t u r e may e x c l u s i v e l y make laws i n r e l a t i o n t o M a t t e r s coming w i t h i n t h e C l a s s e s o f S u b j e c t s n e x t h e r e i n - a f t e r enumerated There a r e s i x t e e n such c l a s s e s , t h e l a s t o f w h i c h i s G e n e r a l l y a l l M a t t e r s o f a m e r e l y l o c a l o r p r i v a t e Nature i n the P r o v i n c e . T h i s a l l o c a t e s p a r t o f the r e s i d u a r y l e g i s l a t i v e powers t o the p r o v i n c e s , the r e m a i n d e r b e i n g g i v e n t o the Dominion under the g e n e r a l power a b o v e . However, t h e r e i s a f u r t h e r p r o v i s i o n i n s e c t i o n 91 w h i c h r e a d s as f o l l o w s : . . . f o r g r e a t e r C e r t a i n t y , b u t not so as t o r e s t r i c t t h e G e n e r a l i t y o f the f o r e g o i n g Terms o f t h i s S e c t i o n , i t i s hereby d e c l a r e d t h a t ( n o t w i t h s t a n d i n g a n y t h i n g i n t h i s A c t ) the e x c l u s i v e L e g i s l a t i v e A u t h o r i t y o f t h e P a r l i a -ment o f Canada e x t e n d s t o a l l M a t t e r s coming w i t h i n C l a s s e s o f S u b j e c t s n e x t h e r e i n - a f t e r enumerated . 50 o f w h i c h t h e r e a r e t h i r t y - o n e . The s e c t i o n then c o n c l u d e s w i t h the s t a t e m e n t t h a t any M a t t e r coming w i t h i n any o f the C l a s s e s o f S u b j e c t s enumerated i n t h i s S e c t i o n s h a l l n o t be deemed t o come w i t h i n the C l a s s o f M a t t e r s o f a l o c a l o r p r i v a t e N a t u r e c o m p r i s e d i n t h e Enumeration o f t h e C l a s s e s o f S u b j e c t s by t h i s A c t a s s i g n e d e x c l u s i v e l y t o t h e L e g i s l a t u r e s o f t h e P r o v i n c e s . The scheme o f s e c t i o n s 91 and 92 i s a p p a r e n t . L e g i s l a t i v e a u t h o r i t y i s g i v e n to t h e Dominion and the p r o v i n c e s i n r e l a t i o n t o " m a t t e r s " ; t h e s e " m a t t e r s " f r e q u e n t l y come w i t h i n " c l a s s e s o f s u b j e c t s " ; t h e p r o v i n c e s may l e g i s l a t e e x c l u s i v e l y i n r e l a t i o n t o " m a t t e r s " coming w i t h i n t h e " c l a s s e s o f s u b j e c t s " l i s t e d i n s e c t i o n 92 and t h e Dominion may l e g i s l a t e e x c l u -51 s i v e l y i n r e l a t i o n t o a l l o t h e r " m a t t e r s " i n c l u d i n g t h o s e coming w i t h i n t h e " c l a s s e s o f s u b j e c t s " l i s t e d i n s e c t i o n 9 1 ; " c l a s s e s o f s u b j e c t s " a r e so d e f i n e d i n scope t h a t each " m a t t e r " i s i n c a p a b l e o f coming w i t h i n more 52 than one c l a s s a t any p a r t i c u l a r t i m e . A l t h o u g h t h e r e has been f r e q u e n t r e c o g n i t i o n o f t h e e x c l u s i v e n e s s 50 The B . N . A . A c t , 18 67 , c o n t a i n e d 29 c l a u s e s o f s u b j e c t s i n t h i s s e c t i o n . Two were added s u b s e q u e n t l y ; number ( I A ) by 13 Geo. V I , c . 81 ( U . K . ) and number (2A) by 3 - 4 Geo. V I , c . 36 ( U . K . ) 51 I t seems t h a t n o t a l l m a t t e r s come w i t h i n the l e g i s l a t i v e competence o f e i t h e r t h e p r o v i n c e s o r t h e D o m i n i o n : see L a s k i n , Canadian C o n s t i t u t i o n a l Law, T o r o n t o , C a r s w e l l , 1 9 7 3 , 4 t h e d . (by A l b e r t S . A b e l ) , 9 2 - 9 7 . However, t h e e x c e p t i o n s w i l l n o t be c o n s i d e r e d h e r e . For a d e t a i l e d d i s c u s s i o n o f the scheme o f s e c t i o n s 91 and 9 2 , see A b e l , A l b e r t S . , "The N e g l e c t e d L o g i c o f 91 and 9 2 " , 1 9 U n i v e r s i t y  o f T o r o n t o Law J o u r n a l 487 ( 1 9 6 9 ) . - 18 -53 o f the l e g i s l a t i v e a u t h o r i t y o f the p r o v i n c e s and the Dominion t h e c o u r t s have p a i d l i t t l e a t t e n t i o n to t h e scheme i n h e r e n t i n s e c t i o n s 91 and 9 2 . The r e s u l t has been the development o f a number o f d o c t r i n e s o f 54 55 c o n s t i t u t i o n a l i n t e r p r e t a t i o n such as the " t r e n c h i n g " and t h e " a n c i l l a r y " d o c t r i n e s w h i c h a r e i n c o n s i s t e n t w i t h the w o r d i n g o f the s e c t i o n s . I n more r e c e n t t i m e s , however, s u p p o r t f o r t h e s e d o c t r i n e s has been d i m i n i s h i n g and t h e c o u r t s have e x h i b i t e d a w i l l i n g n e s s t o r e - e x a m i n e t h e p r o v i s i o n s o f s e c t i o n s 91 and 92 w i t h o u t t h e c o m p l i c a t i o n o f t h e s e a r t i f i c i a l a i d s t o i n t e r p r e t a t i o n . ^ A f u r t h e r example o f t h e f a i l u r e o f t h e c o u r t s t o r e c o g n i z e t h e i n t e r r e l a t i o n s h i p o f s e c t i o n s 91 and 92 i s found i n many o f t h e r e f e r e n c e s C u s h i n g v . Dupuy ( 1 8 8 0 ) , 5 App. C a s . 4 0 9 , 415-16-, A t t o r n e y - G e n e r a l  f o r Canada v . A t t o r n e y s - G e n e r a l f o r O n t a r i o , Quebec and Nova S c o t i a , o p . c i t . n o t e 7 , 715-717; Union C o l l i e r y Co. v . B r y d e n , L1899J A . C . 5 8 0 , 5 8 8 ; G r e a t West S a d d l e r y Company, L i m i t e d v . The K i n g , [1921] 2 A . C . 9 1 , 9 9 - 1 0 1 ; A t t o r n e y - G e n e r a l f o r Canada v . A t t o r n e y - G e n e r a l f o r O n t a r i o ( L a b o u r C o n v e n t i o n s c a s e ) , [1937] A . C . 3 2 6 , 3 5 4 ; A t t o r n e y - G e n e r a l f o r A l b e r t a v . A t t o r n e y - G e n e r a l f o r Canada ( A l b e r t a Bank T a x a t i o n c a s e ) , [ 1 9 3 9 ] A . C . 117, 129; A t t o r n e y - G e n e r a l f o r A l b e r t a v . A t t o r n e y - G e n e r a l f o r Canada ( A l b e r t a B i l l o f R i g h t s A c t r e f e r e n c e ) , [1947] A . C . 5 0 3 , 517; A t t o r n e y - G e n e r a l f o r  Nova S c o t i a v . A t t o r n e y - G e n e r a l f o r Canada ( I n t e r d e l e g a t i o n c a s e ) , [1951] S . C . R . 3 1 , 3 4 , 5 1 , [1950] 4 D . L . R . 3 6 9 , 3 7 1 , 387. 54 Tennant v . Union Bank o f C a n a d a , [1894] A . C . 4 1 , 4 5 - 4 6 ; A t t o r n e y - G e n e r a l f o r Canada v . A t t o r n e y - G e n e r a l f o r B r i t i s h C o l u m b i a e t a l . ( F i s h C a n n e r i e s c a s e ) , [1930] A . C . I l l , 118. ; 55 A t t o r n e y - G e n e r a l f o r O n t a r i o v . A t t o r n e y - G e n e r a l f o r Canada ( V o l u n t a r y A s s i g n m e n t s c a s e ) , [1894] A . C . 1 8 9 , 2 0 0 - 2 0 1 ; A t t o r n e y - G e n e r a l  f o r O n t a r i o v . A t t o r n e y - G e n e r a l f o r Canada ( L o c a l P r o h i b i t i o n c a s e ) , [1896] A . C . 3 4 8 , 3 5 9 - 6 0 ; Grand Trunk R a i l w a y Co. v . A t t o r n e y - G e n e r a l f o r Canada, [1907] A . C . 6 5 , 6 8 . J D D u p l a i n v . Cameron, [1961] S . C . R . 6 9 3 , 30 D . L . R . (2d) 3 4 8 ; A t t o r n e y - G e n e r a l f o r Canada v . Mykorak ( 1 9 6 2 ) , 33 D . L . R . 2d) 373. t o the "paramountcy" o f f e d e r a l o v e r p r o v i n c i a l l e g i s l a t i o n . The scope f o r such a d o c t r i n e i s v e r y l i m i t e d i f due r e g a r d i s p a i d t o t h e f a c t t h a t a " m a t t e r " may come w i t h i n o n l y one " c l a s s o f s u b j e c t " as enumerated i n t h o s e s e c t i o n s . ^ Thus the o n l y case i n w h i c h "paramountcy" becomes an i s s u e i s where f e d e r a l and p r o v i n c i a l l e g i s l a t i o n , each i n r e l a t i o n t o a d i f f e r e n t " m a t t e r " , come i n t o c o n f l i c t . M o r e o v e r , the d o c t r i n e i s e n t i r e l y t h e c r e a t i o n o f j u d i c i a l d e c i s i o n , t h e r e b e i n g no e x p r e s s p r o v i s i o n f o r i t i n the B . N . A . A c t . D e s p i t e the n e g l e c t t o w h i c h t h e scheme o f s e c t i o n s 91 and 92 has been s u b j e c t e d i n Canadian c o n s t i t u t i o n a l c a s e s , r e c o u r s e t o i t may be j u s t i f i e d i n the p r e s e n t c i r c u m s t a n c e s . As w i l l be d e m o n s t r a t e d l a t e r , t h e q u e s t i o n o f l e g i s l a t i v e a u t h o r i t y over p r o v i n c i a l o i l and gas r e s o u r c e s i s unencumbered by b i n d i n g a u t h o r i t y . More i m p o r t a n t l y , p e r h a p s , the scheme p r o v i d e s a c l e a r and w o r k a b l e p a t t e r n f o r the i n t e r p r e t a t i o n o f s e c t i o n s 91 and 92 w h i c h r e s p e c t s t h e h i s t o r i c a l r e a l i t y o f r e g i o n a l i n f l u e n c e i n r e s o u r c e management. Of c o u r s e , i t i s no d i s a d v a n t a g e e i t h e r t h a t the scheme a c c o r d s w i t h t h e p l a i n meaning o f the words u s e d i n s e c t i o n s 91 and 9 2 . D e t e r m i n a t i o n o f the " m a t t e r " o f a s t a t u t e , o r , i n o t h e r w o r d s , 58A i t s " p i t h and s u b s t a n c e " , r e q u i r e s a c l o s e e x a m i n a t i o n o f t h e s t a t u t e 57 Tennant v . Union Bank o f C a n a d a , o p . c i t . n o t e 5 4 , 4 5 ; F i s h -C a n n e r i e s c a s e , o p . c i t . n o t e 5 4 , 118. 5 8 0 ' G r a d y v . S p a r l i n g , [1960] S . C . R . 7 0 4 , 25 D . L . R . (2d) 145; John M. Trouo L i m i t e d e t a l . v . Royal Bank o f C a n a d a , [1962] S . C . R . 4 8 7 , 34 D . L . R . (2d) 5 5 6 . 58A T h i s e x p r e s s i o n was f i r s t used by L o r d Watson i n Union C o l l i e r y  Co. L t d . v . B r y d e n , o p . c i t . note 5 3 , and has s i n c e been used r e p e a t e d l y : A b e l , op. c i t . note 5 2 , 4 8 9 . - 20 -i t s e l f . The c a s e s o f f e r l i t t l e a s s i s t a n c e h e r e . The e x e r c i s e w i l l be u n d e r t a k e n s u b s e q u e n t l y d u r i n g the f u n c t i o n a l a n a l y s i s o f the o i l and gas i n d u s t r y . For t h e moment, i t i s t i m e t o t u r n t o the r e l e v a n t " c l a s s e s o f s u b j e c t s " . In g e n e r a l , t h e c o u r t s have n o t made any c o n -s i s t e n t a t t e m p t t o d e f i n e t h e l i m i t s o f t h e s e c l a s s e s . T h e i r d e c i s i o n s m e r e l y p r o v i d e examples o f c h o i c e s made among c l a s s e s o f s u b j e c t s w h i c h were c o m p e t i n g as r e p o s i t o r i e s f o r impugned l e g i s l a t i o n . T h e i r p r e d i c t i v e v a l u e i s , t h e r e f o r e , l i m i t e d . The r e l e v a n t c l a s s e s i n s e c t i o n 91 a r e : 2 . The R e g u l a t i o n o f Trade and Commerce. 3 . The r a i s i n g o f Money by any Mode o r System o f T a x a t i o n . 2 9 . Such C l a s s e s o f S u b j e c t s as a r e e x p r e s s l y e x c e p t e d i n t h e Enumeration o f the C l a s s e s o f S u b j e c t s by t h i s A c t a s s i g n e d e x c l u s i v e l y t o t h e L e g i s l a t u r e s o f the P r o v i n c e s . In s e c t i o n 92 they a r e : 2 . D i r e c t T a x a t i o n w i t h i n t h e P r o v i n c e i n o r d e r t o the r a i s i n g o f a Revenue f o r P r o v i n c i a l P u r p o s e s . 5 . The Management and S a l e o f the P u b l i c Lands b e l o n g -i n g to the P r o v i n c e and o f t h e Timber and Wood t h e r e o n . 10. L o c a l Works and U n d e r t a k i n g s o t h e r than such as a r e o f the f o l l o w i n g c l a s s e s : -a . L i n e s o f Steam o r o t h e r S h i p s , R a i l w a y s , C a n a l s , T e l e g r a p h s , and o t h e r Works and U n d e r t a k i n g s c o n n e c t -i n g the P r o v i n c e w i t h any o t h e r o r o t h e r s o f t h e P r o v i n c e s , o r e x t e n d i n g beyond the L i m i t s o f t h e P r o v i n c e , b c . Such Works a s , a l t h o u g h w h o l l y s i t u a t e w i t h i n t h e P r o v i n c e , are b e f o r e o r a f t e r t h e i r E x e c u t i o n d e c l a r e d by the P a r l i a m e n t o f Canada to be f o r the g e n e r a l Advantage o f Canada o r f o r the Advantage o f Two o r More o f the P r o v i n c e s . - 21 13. P r o p e r t y and C i v i l R i g h t s i n the P r o v i n c e . 16. G e n e r a l l y a l l M a t t e r s o f a m e r e l y l o c a l o r p r i v a t e n a t u r e i n the P r o v i n c e . F i n a l l y , t h e Dominion has the g e n e r a l power t o make laws f o r t h e p e a c e , o r d e r and good government o f Canada i n r e l a t i o n t o a l l m a t t e r s n o t coming w i t h i n one o f t h e enumerated c l a s s e s . B e f o r e c o n s i d e r i n g the c a s e s i t i s i m p o r t a n t t o n o t i c e t h e i n t e r -59 p r e t a t i o n p l a c e d by the c o u r t s upon t h e f i n a l p a r a g r a p h o f s e c t i o n 9 1 . A t f i r s t the P r i v y C o u n c i l s t a t e d t h a t i t " a p p l i e s i n i t s g r a m m a t i c a l c o n s t r u c t i o n o n l y t o No. 16 o f s . 9 2 " , the s o u r c e o f the r e s i d u a r y p r o v i n c i a l l e g i s l a t i v e a u t h o r i t y . B e f o r e l o n g , however, t h a t v i e w was r e p u d i a t e d and the P r i v y C o u n c i l h e l d t h a t the p a r a g r a p h was a p p l i c a b l e 61 t o a l l s i x t e e n c l a s s e s o f s u b j e c t s i n s e c t i o n 9 2 . T h i s h a r d l y seems j u s t i f i e d by the w o r d i n g o f t h e p a r a g r a p h o r t h e scheme o f s e c t i o n s 91 and 9 2 . An i n d i s c r i m i n a t e a p p l i c a t i o n o f t h i s l a t t e r i n t e r p r e t a t i o n c o u l d have the e f f e c t o f e m a s c u l a t i n g p r o v i n c i a l l e g i s l a t i v e a u t h o r i t y . There i s no e v i d e n c e o f such a t r e n d , however, and the p a r a g r a p h seems l a r g e l y t o have been i g n o r e d . The c l a s s e s o f s u b j e c t s w i t h the g r e a t e s t p o t e n t i a l i m p o r t a n c e i n the management o f o i l and gas r e s o u r c e s a r e " t h e r e g u l a t i o n o f t r a d e and commerce" and " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g t o the p r o v i n c e " . Both a r e d e f i n e d i n broad terms and t h e boundary l i n e 59 Quoted s u p r a , T7 . fin C i t i z e n s I n s u r a n c e Co. o f Canada v . P a r s o n s ( 1 8 8 1 - 8 2 ) , 7 App. C a s . 9 6 , 108. fil L o c a l P r o h i b i t i o n c a s e , o p . c i t . note 5 5 , 3 5 9 - 6 0 ; G r e a t West  S a d d l e r y Co. v . The K i n g , o p . c i t . n o t e 5 3 , 9 9 - 1 0 0 . - 22 -between the two i s f a r from c l e a r . They have seldom been c o n s i d e r e d 62 t o g e t h e r . The l i m i t s o f the f e d e r a l t r a d e and commerce power have t r a d i t i o n a l l y been d i s c u s s e d i n r e l a t i o n to p r o v i n c i a l a u t h o r i t y o v e r " p r o p e r t y and c i v i l r i g h t s i n the p r o v i n c e " and " m a t t e r s o f a m e r e l y l o c a l o r p r i v a t e n a t u r e i n the p r o v i n c e " , w h i l e the e x t e n t o f p r o v i n c i a l power o v e r p u b l i c l a n d s has been c o n s i d e r e d i n t h e c o n t e x t o f f e d e r a l a u t h o r i t y o v e r " f i s h e r i e s " , " a l i e n s " and " i n d i a n s " . I t t h e r e f o r e seems n e c e s s a r y t o r e v i e w t h e c a s e s upon each o f the two c l a s s e s s e p a r a t e l y b e f o r e a t t e m p t i n g to c o n s i d e r them t o g e t h e r . From t h e b e g i n n i n g the P r i v y C o u n c i l f e l t t h a t the B . N . A . A c t r e q u i r e d t h a t t h e f e d e r a l t r a d e and commerce power be r e a d down so as to a l l o w a wide scope f o r s e c t i o n s 92(13) and 9 2 ( 1 6 ) . In Ci t i zens 63 I n s u r a n c e Co. v . P a r s o n s , a case i n v o l v i n g t h e v a l i d i t y o f an O n t a r i o s t a t u t e p r o v i d i n g f o r s t a t u t o r y c o n d i t i o n s i n f i r e i n s u r a n c e p o l i c i e s , the Board c o n c l u d e d : C o n s t r u i n g t h e r e f o r e the words " r e g u l a t i o n o f t r a d e and commerce" by the v a r i o u s a i d s to t h e i r i n t e r p r e t a t i o n above s u g g e s t e d , t h e y would i n c l u d e p o l i t i c a l a r r a n g e m e n t s i n r e g a r d t o t r a d e r e q u i r i n g the s a n c t i o n o f p a r l i a m e n t , r e g u l a t i o n o f t r a d e i n m a t t e r s o f i n t e r p r o v i n c i a l c o n c e r n , and i t may be t h a t t h e y would i n c l u d e g e n e r a l r e g u l a t i o n o f t r a d e a f f e c t i n g the whole d o m i n i o n . T h e i r L o r d s h i p s a b s t a i n on the p r e s e n t o c c a s i o n from any a t t e m p t t o d e f i n e the l i m i t s o f the a u t h o r i t y o f the d o m i n i o n p a r l i a m e n t i n t h i s d i r e c t i o n . I t i s enough f o r t h e d e c i s i o n o f t h e p r e -s e n t c a s e t o say t h a t , i n t h e i r v i e w , i t s a u t h o r i t y t o l e g i s l a t e f o r t h e r e g u l a t i o n o f t r a d e and commerce d o e s ' n o t comprehend t h e power t o r e g u l a t e by l e g i s l a t i o n the c o n t r a c t s o f a p a r t i c u l a r b u s i n e s s o r t r a d e , such as t h e b u s i n e s s o f f i r e i n s u r a n c e i n a s i n g l e p r o v i n c e , and t h a t i t s l e g i s l a t i v e a u t h o r i t y does n o t i n the p r e s e n t c a s e c o n f l i c t o r compete w i t h the power o v e r p r o p e r t y and c i v i l r i g h t s a s s i g n e d t o the l e g i s l a t u r e o f O n t a r i o by No. 13 o f s e c t . 9 2 . ° 4 6 2 The o n l y example would appear t o be S m y l i e v . The Queen, o p . c i t . note 4 0 ; f o r a f u r t h e r d i s c u s s i o n o f t h i s case see i n f r a , 34-6 3 Op- c i t . n o t e 6 0 . 6 4 I b i d . , 113. - 23 -65 T h i s v i e w was s u s t a i n e d i n a number o f ' s u b s e q u e n t c a s e s . I t was even contended f o r a t i m e t h a t the t r a d e and commerce power was v i r t u a l l y n o n - e x i s t a n t i n t h a t i t c o u l d be i n v o l v e d o n l y i n f u r t h e r a n c e o f a g e n e r a l 66 power w h i c h the Dominion p o s s e s s e d i n d e p e n d e n t l y o f i t , b u t t h e P r i v y 67 C o u n c i l soon w i t h d r e w from t h i s extreme p o s i t i o n . I t was a l s o s u g -68 g e s t e d t h a t " r e g u l a t i o n " d i d n o t i n c l u d e o u t r i g h t p r o h i b i t i o n , but 69 a g a i n t h i s was n o t f o r l o n g . Up t o the t i m e when a p p e a l s t o the P r i v y C o u n c i l were a b o l i s h e d the l o c u s c l a s s i c u s o f the law on t h i s p o i n t was a judgment o f D u f f C . J . , i n w h i c h he s a i d : I t w o u l d appear t o r e s u l t from these d e c i s i o n s t h a t t h e R e g u l a t i o n o f Trade and Commerce does n o t c o m p r i s e , i n the sense i n w h i c h i t i s used i n s . 9 1 , the r e g u l a t i o n o f p a r t i c u l a r t r a d e s o r o c c u p a t i o n s o r o f a p a r t i c u l a r k i n d o f b u s i n e s s such as t h e i n s u r a n c e b u s i n e s s i n t h e P r o v i n c e s , o r the r e g u l a t i o n o f t r a d e i n p a r t i c u l a r com-m o d i t i e s o r c l a s s e s o f commodites i n so f a r as i t i s l o c a l i n the p r o v i n c i a l s e n s e ; w h i l e , on the o t h e r h a n d , i t does embrace t h e r e g u l a t i o n o f e x t e r n a l t r a d e and t h e r e g u l a t i o n o f i n t e r p r o v i n c i a l t r a d e and such a n c i l l a r y l e g i s l a t i o n as may be n e c e s s a r i l y i n c i d e n t a l t o t h e e x e r c i s e o f such powers. 70 6 Bank o f T o r o n t o v . Lambe ( 1 8 8 7 ) , 12 App. C a s . 5 7 5 ; M o n t r e a l v . M o n t r e a l S t r e e t R a i l w a y C o . , 1.1912] A . C . 3 3 3 ; A t t o r n e y - G e n e r a l f o r Canada v . A t t o r n e y - G e n e r a l f o r A l b e r t a (Dominion I n s u r a n c e A c t r e f e r e n c e ) , [1916] 1 A . C . 5 8 8 . cc In Re the Board o f Commerce A c t and t h e Combines and F a i r P r i c e s A c t , 1 9 1 9 , L1922L 1 A . C . 1 9 1 , 198; T o r o n t o E l e c t r i c C o m m i s s i o n e r s v . S n i d e r , [1925] A . C . 3 9 6 , 4 0 9 . ^ P r o p r i e t a r y A r t i c l e s Trade A s s o c i a t i o n v . A t t o r n e y - G e n e r a l f o r C a n a d a , [1913] A . C . 310. ~ ^ L o c a l P r o h i b i t i o n c a s e , o p . c i t . n o t e 5 5 , 365. 69 Per D u f f J . i n G o l d S e a l L i m i t e d v . Dominion E x p r e s s Co. and A t t o r n e y - G e n e r a l f o r A l b e r t a ( 1 9 2 1 ) , 62 S . C . R . 4 2 4 , 4 5 8 , 62 D . L . R . 6 2 , 8 0 . 70 R e f e r e n c e Re N a t u r a l P r o d u c t s M a r k e t i n g A c t , [1936] S . C . R . 3 9 8 , 4 1 0 , 3 D . L . R . 6 2 2 , 629. I t was i n A t t o r n e y - G e n e r a l f o r Canada v . A t t o r n e y - G e n e r a l  f o r O n t a r i o (Labour C o n v e n t i o n s c a s e ) , op. c i t . note 53, 353, t h a t t h i s judg-ment was commended as a s t a t e m e n t o f the e x i s t i n g l a w . The p r i n c i p l e s were f i n a l l y approved i n Canadian F e d e r a t i o n o f A g r i c u l t u r e v . A t t o r n e y - G e n e r a l f o r Q u e b e c , [1951] A . C . 1 7 9 , one o f the l a s t a p p e a l s to t h e P r i v y C o u n c i l . - 24 -In more r e c e n t t i m e s the Supreme C o u r t has shown a w i l l i n g n e s s t o move away from t h i s r a t h e r narrow v i e w o f t h e f e d e r a l t r a d e and commerce power. T h i s t r e n d may be seen i n a s e r i e s o f c a s e s c o n c e r n e d w i t h t h e v a l i d i t y o f l e g i s l a t i o n , both f e d e r a l and p r o v i n c i a l , e s t a b l i s h i n g m a r k e t i n g boards f o r a g r i c u l t u r a l p r o d u c t s . 7 ^ There a r e d i f f e r e n c e s i n a p p r o a c h d i s c e r n i b l e among the members o f t h e C o u r t b u t the f o l l o w i n g p r i n c i p l e s appear t o have been e s t a b l i s h e d : f i r s t , t h e r e has been a r e j e c t i o n o f t h e P r i v y C o u n c i l ' s v i e w t h a t the scope of f e d e r a l l e g i s l a t i v e a u t h o r i t y i n r e l a t i o n t o t r a d e and commerce i s n o t s u f f i c i e n t t o e n a b l e P a r l i a m e n t 72 t o r e g u l a t e a p a r t i c u l a r t r a d e o r b u s i n e s s ; s e c o n d , i t c o n t i n u e s t o be r e c o g n i z e d t h a t " t h e r e i s a f i e l d o f t r a d e w i t h i n p r o v i n c i a l p o w e r , such 73 power b e i n g a s u b t r a c t i o n from t h a t comprehened w i t h i n s . 9 1 ( 2 ) " ; t h i r d , i n g e n e r a l terms t h e Dominion has power i n r e s p e c t o f i n t e r p r o -v i n c i a l and e x t e r n a l t r a d e and commerce w h i l e the p r o v i n c e s have power i n 74 r e l a t i o n to i n t r a p r o v i n c i a l t r a d e and commerce; f o u r t h , i n d e t e r m i n i n g R e f e r e n c e Re t h e Farm P r o d u c t s M a r k e t i n g A c t , R . S . C . 1 9 5 0 , c . 1 3 1 , As Amended, L1957] S . C . R . 1 9 8 , 7 D . L . R . (2d) 2 5 7 ; Murphy v . Canadian P a c i f i c  R a i l w a y and A t t o r n e y - G e n e r a l f o r C a n a d a , [1958] S . C . R . 6 2 6 , 15 D . L . R . (2d) 1 4 5 ; Hammerstein v . B r i t i s h Columbia C o a s t V e g e t a b l e M a r k e t i n g Board ( 1 9 6 2 ) , 37 D . L . R . (2d) 153; C a r n a t i o n Company L i m i t e d v . Quebec A g r i c u l t u r a l Mar- k e t i n g B o a r d , [1968] S . C . R . 238", 67 D . L . R . (2d) 1 ; A t t o r n e y - G e n e r a l f o r  M a n i t o b a v . M a n i t o b a Egg and P o u l t r y A s s o c i a t i o n , [1971] S . C . R . 6 8 9 , 19 D . L . R . (3d) 169; B r a n t D a i r y Co. L t d . e t a l . v . M i l k Commission o f O n t a r i o , [1973] S . C . R . 131 , ( 1 9 7 2 ) , 30 D . L . R . (3d) 5 5 9 ; Burns Foods L t d . e t a l . v . A t t o r n e y - General f o r Manitoba e t a l . ( 1 9 7 4 ) , 40 D . L . R . (3d) 731. y j f Murphy v . C . P . R . and A t t o r n e y - G e n e r a l f o r C a n a d a , i b i d . , 6 3 2 , 1 5 8 , p e r Locke J . T h i s was a c c e p t e d w i t h o u t q u e s t i o n i n C a l o i 1 I n c . v . A t t o r n e y - General f o r Canada, [1971] S . C . R . 5 4 3 , 20 D . L . R . 4 7 2 , where t h e i s s u e was whether t h e f e d e r a l government c o u l d a t t a c h c o n d i t i o n s as t o a r e a o f use t o o i l i m p o r t l i c e n c e s . 73 A t t o r n e y - G e n e r a l f o r M a n i t o b a v . M a n i t o b a Egg and P o u l t r y A s s o c i a -t i o n , op. c i t . note 7 1 , 7 0 6 , per L a s k i n J . T h i s i s a l s o the b a s i s o f the C o u r t ' s d e c i s i o n i n C a r n a t i o n Company L i m i t e d v . Quebec A g r i c u l t u r a l M a r k e t i n g  B o a r d , op. c i t . note 71. 74 R e f e r e n c e Re Farm P r o d u c t s M a r k e t i n g A c t , o p . c i t . n o t e 71. - 25 -w h e t h e r a s t a t u t e comes w i t h i n f e d e r a l o r p r o v i n c i a l a u t h o r i t y , the f a c t t h a t i t s p r o v i s i o n s a f f e c t i n t e r p r o v i n c i a l o r e x t e r n a l t r a d e i s n o t c o n -c l u s i v e ; t h e q u e s t i o n i s whether t h e s t a t u t e i s " i n r e l a t i o n t o " i n t e r -p r o v i n c i a l o r e x t e r n a l t r a d e and commerce, and f o r t h i s t h e s t a g e a t w h i c h t h e r e g u l a t i o n i s imposed and i t s purpose a r e i m p o r t a n t c o n s i d e r a -75 t i o n s ; f i n a l l y , i n t e r p r o v i n c i a l and e x t e r n a l t r a d e and commerce c o n n o t e s 76 a f l o w o f p r o d u c t s w h e r e a s i n t r a p r o v i n c i a l t r a d e and commerce s u g g e s t s t r a n s a c t i o n s c o m p l e t e d w i t h i n the p r o v i n c e b e f o r e any such f l o w b e g i n s . On o n l y one o c c a s i o n has a member o f t h e Supreme C o u r t t a k e n any s t e p s t o d e f i n e the b o u n d a r i e s o f t h e c l a s s o f s u b j e c t s d e s c r i b e d as " t h e r e g u l a t i o n o f t r a d e and commerce" i n a d d i t i o n to g i v i n g judgment upon t h e v a l i d i t y o f the s t a t u t e i n q u e s t i o n . In A t t o r n e y - G e n e r a l f o r 77 M a n i t o b a v . M a n i t o b a Egg and P o u l t r y A s s o c i a t i o n , L a s k i n J . s a i d : E t y m o l o g i c a l l y , commerce r e f e r s t o the buying and s e l l i n g o f g o o d s , and t r a d e has among i t s meanings ( o t h e r than commerce) t h a t o f m e r c a n t i l e o c c u p a t i o n . A l t h o u g h l i t e r a l a p p l i c a t i o n i s u n t h i n k a b l e , t h e s e meanings do i n d i c a t e the c a p a c i t y w h i c h i n h e r e s i n s . 9 1 ( 2 ) . 78 The s t e p s t a k e n were a d m i t t e d l y t e n t a t i v e , b u t t h e y c o u l d be an i n d i c a t i o n 7 C a r n a t i o n Company L i m i t e d v . Quebec A g r i c u l t u r a l M a r k e t i n g B o a r d : o p . c i t . n o t e 7 1 , 2 5 2 , 14; A t t o r n e y - G e n e r a l f o r M a n i t o b a v . M a n i t o b a Egg  and P o u l t r y A s s o c i a t i o n , op. c i t . n o t e 7 1 , 7 0 3 , 1 6 9 , p e r M a r l a n d 0 . 7 6 R e f e r e n c e Re Farm P r o d u c t s M a r k e t i n g A c t , op. c i t . n o t e 7 1 , 2 0 5 , 2 6 5 , p e r Kerwin C . J . C . ; A t t o r n e y - G e n e r a l f o r M a n i t o b a v . M a n i t o b a Egg and  P o u l t r y A s s o c i a t i o n , i b i d . , 7 0 3 , 1 7 9 , p e r M a r t l a n d J . , 7 1 3 , 187, per L a s k i n J . 77 T , • . I b i d . 7 8 I b i d . , 7 0 8 , 183-4 - 26 -t h a t t h e Supreme C o u r t i s on the b r i n k o f a s u b s t a n t i a l r e v i s i o n o f t h e f e d e r a l t r a d e and commerce power. Such a r e v i s i o n , i f i t were t o f o l l o w L a s k i n J . ' s l e a d , would i n v o l v e an a t t e m p t t o s t r e t c h the l i m i t s o f t h i s c l a s s o f s u b j e c t s by r e f e r e n c e t o the words used i n s e c t i o n 91(2) o f t h e B . M . A . A c t r a t h e r t h a n the d e c i s i o n i n e a r l i e r c a s e s . I t seems i n e v i t a b l e t h a t t h i s would r e s u l t i n a w i d e r scope b e i n g g i v e n t o " t h e r e g u l a t i o n o f t r a d e and commerce" and a c o r r e s p o n d i n g l y n a r r o w e r i n t e r p r e t a t i o n b e i n g p l a c e d upon " p r o p e r t y and c i v i l r i g h t s i n the p r o v i n c e " and " a l l m a t t e r s o f a m e r e l y l o c a l o r p r i v a t e n a t u r e i n the p r o v i n c e " . However, i t i s t o o e a r l y t o do more than s p e c u l a t e upon t h i s f u t u r e p o s s i b i l i t y . The c o u r t s have p a i d l i t t l e a t t e n t i o n t o the scope o f s e c t i o n s 92(13) and 92(16) and t o t h e i r r e l a t i o n s h i p i n t e r s e . An e x a m i n a t i o n o f t h e h i s t o r i c a l usage o f t h e term " p r o p e r t y and c i v i l r i g h t s " i n s t a t u t e s e n a c t e d p r i o r t o the B . N . A . A c t , 1 8 6 7 , s u g g e s t s t h a t i t s meaning was w e l l s e t t l e d a t t h a t time and encompassed s o c i a l r a t h e r than c o m m e r c i a l 79 r e l a t i o n s h i p s . I t f o l l o w s t h a t p r o v i n c i a l r e g u l a t i o n o f economic a c t i v i t y s h o u l d seek j u s t i f i c a t i o n f r o m s e c t i o n 92(16) r a t h e r than s e c -t i o n 9 2 ( 1 3 ) , but the c o u r t s have u s u a l l y been c o n t e n t t o mention b o t h as p o s s i b l e s o u r c e s o f t h e r e q u i r e d a u t h o r i t y w i t h o u t d i s t i n g u i s h i n g between 80 them. I t s h o u l d a l s o be n o t e d t h a t a r e s t r i c t i o n upon p r o v i n c i a l l e g i s -l a t i v e a u t h o r i t y i s i n h e r e n t i n t h e words " i n the p r o v i n c e " c o n t a i n e d i n s e c t i o n 9 2 ( 1 3 ) . Attempts by a p r o v i n c e t o l e g i s l a t e i n r e s p e c t o f . 79 A b e l , op. c i t . n o t e 5 2 , 504. 80 An e x c e p t i o n i s p r o v i d e d by Rand J . i n R e f e r e n c e Re O n t a r i o Farm P r o d u c t s M a r k e t i n g A c t , o p . c i t . note 7 1 , 2 1 1 , 2 7 0 , who t h o u g h t t h a t s e c t i o n 92(16) was the a p p r o p r i a t e head o f p r o v i n c i a l power. - 27 -" p r o p e r t y and c i v i l r i g h t s " o u t s i d e the p r o v i n c e a r e , o f c o u r s e , u l t r a . 81 v i r e s . The r e l i a n c e p l a c e d upon s e c t i o n s 92(13) and 92(16) as s o u r c e s o f p r o v i n c i a l l e g i s l a t i v e a u t h o r i t y , and t h e broad scope a t t r i b u t e d by the P r i v y C o u n c i l t o t h e s e s e c t i o n s as compared w i t h s e c t i o n 9 1 ( 2 ) , has o b v i a t e d the need f o r a c l o s e e x a m i n a t i o n o f the c l a s s o f s u b j e c t s d e s -s c r i b e d i n s e c t i o n 9 2 ( 5 ) , " t h e management and s a l e o f t h e p u b l i c l a n d s b e l o n g i n g t o t h e p r o v i n c e and o f t h e t i m b e r and wood t h e r e o n " . T h i s s i t u a t i o n can n o t p e r s i s t , h o w e v e r , i f t h e Supreme C o u r t c o n t i n u e s t o expand t h e scope o f s e c t i o n 9 1 ( 2 ) . A number o f q u e s t i o n s a r i s e i n r e l a t i o n t o s e c t i o n 9 2 ( 5 ) . The f i r s t i s whether the e x p r e s s i o n " p u b l i c l a n d s " i n c l u d e s p r o v i n c i a l o i l and gas r e s o u r c e s . There a r e arguments i n f a v o u r of a n e g a t i v e r e s p o n s e . I f " p u b l i c l a n d s " a r e g i v e n t h e i r w i d e s t meaning then the r e f e r e n c e t o " t h e t i m b e r and wood t h e r e o n " appears r e d u n d a n t , f o r t h e y w o u l d be normal i n -c i d e n t s t o the l a n d . M o r e o v e r , s e c t i o n 109 o f t h e B . N . A . A c t r e f e r s t o " a l l l a n d s , m i n e s , m i n e r a l s and r o y a l t i e s b e l o n g i n g t o t h e s e v e r a l p r o v i n c e s " w h i c h s u g g e s t s t h a t a narrow i n t e r p r e t a t i o n was i n t e n d e d f o r " l a n d s " i n t h a t s e c t i o n . However, t h e s e arguments have n o t g e n e r a l l y p r e v a i l e d a g a i n s t the t r a d i t i o n a l tendency o f the c o u r t s t o g i v e t h e s e words t h e i r normal m e a n i n g , so as to i n c l u d e a l l i n c i d e n t s to l a n d . In A t t o r n e y - G e n e r a l o f O n t a r i o v . 8 1 Royal Bank o f Canada v . The. K i n g , [1913] A . C . 2 3 8 ; B e a u h a r n o i s L i g h t , Heat & Power Co. L t d . v . H y d r o - E l e c t r i c Power Commission o f O n t a r i o , [1937] 3 D . L . R . The e x t r a - p r o v i n c i a l n a t u r e of t h e r e g u l a t i o n was an i m p o r t a n t f a c t o r i n the Supreme C o u r t ' s d e c i s i o n i n Burns Foods L t d . e t a l . v . A t t o r n e y -G e n e r a l f o r M a n i t o b a e t a l . , op. c i t . note 71. - 28 -82 M e r c e r the P r i v y C o u n c i l r e g a r d e d " l a n d s " i n s e c t i o n 109 as i n c l u d i n g mines and m i n e r a l s . In A t t o r n e y - G e n e r a l o f B r i t i s h Columbia v . A t t o r n e y -83 G e n e r a l o f Canada ( P r e c i o u s M e t a l s c a s e ) a s i m i l a r i n t e r p r e t a t i o n was p l a c e d upon " p u b l i c l a n d s " i n the agreement between B r i t i s h Columbia and the Dominion w h i c h formed p a r t o f the terms o f e n t r y o f t h a t p r o v i n c e i n t o C o n f e d e r a t i o n ; h o w e v e r , p r e c i o u s m e t a l s were n o t i n c l u d e d . In B u r r a r d 84 Power Co. L t d . v . The K i n g the P r i v y C o u n c i l h e l d t h a t " p u b l i c l a n d s " i n the same agreement i n c l u d e d " t h e w a t e r r i g h t s i n c i d e n t a l t o t h o s e l a n d s " . A l t h o u g h the q u e s t i o n does n o t appear t o have been r a i s e d d i r e c t l y , t h e P r i v y C o u n c i l h e l d i n A t t o r n e y - G e n e r a l f o r Canada v . A t t o r n e y s - G e n e r a l f o r 85 O n t a r i o , Quebec and Nova S c o t i a t h a t " p u b l i c l a n d s " i n s e c t i o n 9 2 ( 5 ) i n c l u d e d f i s h i n g r i g h t s w h i c h were an i n c i d e n t t o t h e o w n e r s h i p of l a n d s . F i n a l l y , t h e word " l a n d s " i n s e c t i o n 109 i s n o t l i m i t e d t o l a n d s i n w h i c h t h e p r o v i n c e has u n l i m i t e d o w n e r s h i p , b u t i n c l u d e s a l l e s t a t e s and i n t e r e s t s oc i n l a n d . The same view would u n d o u b t e d l y be taken o f " p u b l i c l a n d s " i n s e c t i o n 9 2 ( 5 ) so t h a t i t e x t e n d s t o mines and m i n e r a l s r e s e r v e d from f r e e h o l d g r a n t s . I t t h e r e f o r e seems c l e a r t h a t s e c t i o n 92(5) r e f e r s to o i l and gas r e s o u r c e s i n the p r o v i n c e s the t i t l e t o w h i c h i s v e s t e d i n t h e Crown on b e h a l f o f t h e p r o v i n c e s , I t remains t o d e t e r m i n e t h e meaning o f "management and s a l e " o f t h e s e r e s o u r c e s . 8 2 Op. c i t . n o t e 2 6 . 8 3 ( 1 8 8 9 ) , 14 App. C a s . 2 9 5 . 8 4 [1911] A . C . 87. 85 Op. c i t . note 7. OC A t t o r n e y - G e n e r a l f o r O n t a r i o v . M e r c e r , o p . c i t . n o t e 2 6 . - 29 -In A t t o r n e y - G e n e r a l f o r Canada v . A t t o r n e y s - G e n e r a l f o r O n t a r i o , 87 Quebec and Nova S c o t i a , t h e P r i v y C o u n c i l spoke o f the r e l a t i o n s h i p between " t h e management and s a l e o f . . . . p u b l i c l a n d s " and " s e a c o a s t and 88 i n l a n d f i s h e r i e s " . T h e i r L o r d s h i p s s a i d : . . . t h e terms and c o n d i t i o n s upon w h i c h the f i s h e r i e s which a r e the p r o p e r t y o f t h e p r o v i n c e may be g r a n t e d , l e a s e d o r o t h e r w i s e d i s p o s e d o f , and the r i g h t s w h i c h c o n s i s t e n t l y w i t h any g e n e r a l r e g u l a t i o n s r e s p e c t i n g f i s h e r i e s e n a c t e d by the Dominion P a r l i a m e n t may be c o n -f e r r e d t h e r e i n , appear p r o p e r s u b j e c t s f o r p r o v i n c i a l l e g i s l a t i o n , e i t h e r under c l a s s 5 o f s . 9 2 , "The Manage-ment and S a l e o f P u b l i c Lands" o r under the c l a s s " P r o -p e r t y and C i v i l R i g h t s . " Such l e g i s l a t i o n d e a l s d i r e c t l y w i t h p r o p e r t y , i t s d i s p o s a l , and the r i g h t s t o be e n j o y e d i n r e s p e c t o f i t , and was n o t i n t h e i r L o r d s h i p s " o p i n i o n i n t e n d e d t o be w i t h i n the scope o f t h e c l a s s " F i s h e r i e s " as t h a t word i s used i n s . 9 2 . 89 T h i s s t a t e m e n t i s a c l e a r r e c o g n i t i o n o f the e x c l u s i v e l e g i s l a t i v e a u t h o r i t y o f the p r o v i n c e s p u r s u a n t to s e c t i o n 9 2 ( 5 ) , b u t t h e scope o f t h e c l a s s o f s u b j e c t s d e s c r i b e d t h e r e i n i s l i m i t e d . The m a t t e r o f d i s -p o s i t i o n o f p r o p r i e t a r y r i g h t s i s c o n f i r m e d as coming w i t h i n t h e c l a s s , but t h e s e r i g h t s a r e r e q u i r e d to conform i n n a t u r e w i t h v a l i d Dominion l e g i s l a t i o n on m a t t e r s w i t h i n the " f i s h e r i e s " c l a s s o f s u b j e c t s . P r o -v i n c i a l l e g i s l a t i v e a u t h o r i t y i s d e s c r i b e d i n terms o f " t h e s a l e o f . . . p u b l i c l a n d s " r a t h e r than " t h e management and s a l e p u b l i c l a n d s " , so f a r as f i s h e r i e s a r e c o n c e r n e d . A l t h o u g h the P r i v y C o u n c i l was n o t a t t e m -p t i n g an e x h a u s t i v e d e f i n i t i o n o f the p r o v i n c i a l c l a s s o f s u b j e c t s i t does appear t h a t l i t t l e scope was l e f t f o r meaning to be a t t r i b u t e d t o Op. c i t . n o t e 7. 8 8 B . N . A . A c t , 1867, s e c t i o n 9 1 ( 1 2 ) . 8 9 Op- c i t . n o t e 7 , 716. The f i n a l r e f e r e n c e to " s . 92" must be a m i s t a k e ; s . 91 i s c l e a r l y i n t e n d e d . - 30 -"management". T h i s may be e x p l a i n e d by the f a c t t h a t , i n the n i n e t e e n t h c e n t u r y , l i t t l e t h o u g h t was g i v e n t o t h e management o f f i s h e r i e s . A t t e n t i o n was c o n f i n e d t o t h e o n l y m a t t e r o f economic s i g n i f i c a n c e i n r e l a t i o n t o t h e s e r e s o u r c e s , t h e s a l e o f f i s h i n g r i g h t s . The i s s u e was d i f f e r e n t i n the c a s e s on I n d i a n l a n d s . I t was n o t whether t h e scope o f one c l a s s o f s u b j e c t s , " t h e management and s a l e o f 90 p u b l i c l a n d s " , had t o be r e s t r i c t e d t o accommodate a n o t h e r c l a s s , " i n d i a n s 91 and l a n d s r e s e r v e d f o r i n d i a n s " . I n s t e a d , t h e c a s e s i n v o l v e d t h e n a t u r e o f I n d i a n t i t l e . T h i s was r e g a r d e d as an encumbrance upon p r o p e r t y w h i c h p r e v e n t e d the d e a l i n g w i t h t h a t p r o p e r t y i n a manner i n c o n s i s t e n t w i t h 92 I n d i a n t i t l e . T h u s , t h e i n t e r e s t o f a p r o v i n c e i n l a n d s s u b j e c t t o 93 I n d i a n t i t l e was l i m i t e d u n t i l s u r r e n d e r o f t h a t t i t l e t o t h e Crown. The scope o f s e c t i o n 92(5) was c o n s i d e r e d a g a i n i n B r o o k s - B i d ! a k e 94 and W h i t t a l l , L i m i t e d v . A t t o r n e y - G e n e r a l f o r B r i t i s h C o l u m b i a , e t a l . , 95 t h i s t i m e i n r e l a t i o n to f e d e r a l l e g i s l a t i v e a u t h o r i t y o v e r " a l i e n s " . The c a s e i n v o l v e d t i m b e r l i c e n c e s i s s u e d by the B r i t i s h C o l u m b i a government o v e r p r o v i n c i a l Crown l a n d s . The l i c e n c e s were f o r a y e a r o n l y , b u t were renewable from y e a r t o y e a r i f t h e r e had been c o m p l i a n c e w i t h t h e terms and c o n d i t i o n s . ' One o f the c o n d i t i o n s was t h a t no C h i n e s e o r Japanese s h o u l d be employed i n c o n n e c t i o n w i t h t i m b e r o p e r a t i o n s . T h i s was i n s e r t e d p u r s u a n t 90 B . N . A . A c t , 1867 , s . 9 2 ( 5 ) . 9 1 B . N . A . A c t , 1867, s . 9 1 ( 2 e ) . 92! L y s y k , o p . c i t . note 2 2 . 9 3 S t . C a t h e r i n e ' s M i l l i n g & Lumber Co. v . The Queen, op. c i t . n o t e 2 0 , 6 0 , I t s h o u l d a l s o be n o t e d t h a t s e c t i o n 109 o f the B . N . A . A c t , 1867, s t a t e s t h a t l a n d s s h a l l belong to the p r o v i n c e s s u b j e c t t o "any i n t e r e s t o t h e r than t h a t o f the p r o v i n c e i n the same". 94 Op. c i t . n o t e 41. 9 5 B . N . A . A c t , 1867, s . 9 1 ( 2 5 ) . - 31 -t o O r d e r s o f the L i e u t e n a n t - G o v e r n o r i n C o u n c i l made b e f o r e t h e l i c e n c e s were i s s u e d . S u b s e q u e n t l y , by the O r i e n t a l Orders i n C o u n c i l V a l i d a t i o n A c t o f  B r i t i s h C o l u m b i a , 1 9 2 1 , i t was d e c l a r e d t h a t t h e Orders i n C o u n c i l and t h e c o n d i t i o n i n q u e s t i o n were v a l i d and had the f o r c e o f l a w , and t h a t t h e v i o l a t i o n o f any such c o n d i t i o n s h o u l d be a s u f f i c i e n t ground f o r t h e c a n c e l -l a t i o n o f a l i c e n c e . The a p p e l l a n t employed both C h i n e s e and J a p a n e s e i n i t s t i m b e r o p e r a t i o n s upon Crown l a n d s . The B r i t i s h C o l u m b i a government r e f u s e d t o renew the a p p e l l a n t ' s l i c e n c e s , whereupon t h e a p p e l l a n t commenced an a c t i o n s e e k i n g a d e c l a r a t i o n t h a t i t was e n t i t l e d t o employ C h i n e s e and Japanese i n i t s o p e r a t i o n s and an i n j u n c t i o n r e s t r a i n i n g t h e government f r o m i n t e r f e r i n g w i t h the enjoyment o f the l i c e n c e s . The P r i v y C o u n c i l d e c i d e d the c a s e i n f a v o u r o f t h e B r i t i s h C o l u m b i a government. T h e i r L o r d s h i p s s a i d : S e c t . 91 r e s e r v e s t o the Dominion P a r l i a m e n t t h e g e n e r -a l r i g h t t o l e g i s l a t e as to t h e r i g h t s and d i s a b i l i t i e s o f a l i e n s and n a t u r a l i z e d p e r s o n s ; b u t the Dominion i s n o t empowered by t h a t s e c t i o n to r e g u l a t e t h e management o f t h e p u b l i c p r o p e r t y o f t h e P r o v i n c e , o r t o d e t e r m i n e whether a g r a n t e e o r l i c e n s e e o f t h a t p r o p e r t y s h a l l o r s h a l l n o t be p e r m i t t e d t o employ p e r s o n s o f a p a r t i c u l a r r a c e . These f u n c t i o n s a r e a s s i g n e d by s . 9 2 , head 5 , and s . 109 o f t h e A c t t o the L e g i s l a t u r e o f t h e P r o v i n c e ; and _ t h e r e i s n o t h i n g i n s . 91 w h i c h c o n f l i c t s w i t h t h a t v i e w . T h i s i m p l i e s a somewhat b r o a d e r v i e w o f t h e c l a s s o f s u b j e c t s i n s e c t i o n 92(5) than t h a t t a k e n by t h e P r i v y C o u n c i l i n A t t o r n e y - G e n e r a l 97 f o r Canada v . A t t o r n e y s - G e n e r a l f o r O n t a r i o , Quebec and Nova S c o t i a . However, a subsequent c a s e has done much t o c l o u d the i s s u e . The d e c i s i o n 9 6 Op- c i t . n o t e 4 1 , 4 5 7 . 97 Op. c i t . note 7. - 32 -i n t h e B r o o k s - B i d i a k e c a s e d i d not r e s o l v e a l l the q u e s t i o n s o u t s t a n d i n g i n r e l a t i o n to employment o f C h i n e s e and Japanese on p r o v i n c i a l f o r e s t l a n d s i n B r i t i s h C o l u m b i a . W h i l e the appeal i n t h i s c a s e was p e n d i n g , the Gover-n o r - G e n e r a l i n C o u n c i l r e f e r r e d to t h e Supreme C o u r t o f Canada t h e q u e s t i o n whether t h e O r i e n t a l O r d e r s i n C o u n c i l V a l i d a t i o n A c t was i n e x c e s s o f the powers o f t h e l e g i s l a t u r e o f B r i t i s h C o l u m b i a . In due c o u r s e t h i s a l s o came 98 b e f o r e the P r i v y C o u n c i l f o r d e t e r m i n a t i o n . The a c t u a l d e c i s i o n i n t h i s case i s n o t r e l e v a n t here as i t was n o t 99 based upon s e c t i o n 9 2 ( 5 ) . What i s i m p o r t a n t i s the P r i v y C o u n c i l ' s e x p l a n a t i o n o f i t s e a r l i e r d e c i s i o n i n the B r o o k s - B i d i a k e c a s e . One may have been e x c u s e d f o r t h i n k i n g t h a t B r o o k s - B i d i a k e was a u t h o r i t y f o r t h e p r o p o s i t i o n t h a t t h e O r i e n t a l O r d e r s i n C o u n c i l V a l i d a t i o n A c t was l e g i s -l a t i o n i n r e l a t i o n t o a m a t t e r coming w i t h i n " t h e management and s a l e o f . . . p u b l i c l a n d s " r a t h e r than " a l i e n s " , ^ b u t t h e P r i v y C o u n c i l d e c l i n e d t o c o n f i r m t h i s . W i t h o u t d e c i d i n g the p o i n t t h e i r L o r d s h i p s s a i d t h a t t h e B r i t i s h Columbia s t a t u t e may n o t a l t o g e t h e r u n r e a s o n a b l y be l o o k e d on as c o n t a i n -i n g an a p p r o a c h t o the l a y i n g down o f something more than a mere c o n d i t i o n f o r t h e renewal o f t h e r i g h t to use P r o v i n c i a l p r o p e r t y . ^ 1 98 A t t o r n e y - G e n e r a l o f B r i t i s h Columbia v . A t t o r n e y - G e n e r a l of C a n a d a , [1924] A . C . 2 0 3 . ~ ~ 99 I n s t e a d , i t was based upon t h e v a l i d i t y o f a f e d e r a l s t a t u t e , t h e Japanese T r e a t y A c t , 1 9 1 3 , e n a c t e d p u r s u a n t t o s e c t i o n 132 o f t h e B . N . A .  A c t , 1867. ^ When t h e c a s e was b e f o r e t h e Supreme C o u r t , the members o f t h e Court d i v i d e d e q u a l l y on t h i s q u e s t i o n , D a v i e s C . J . , A n g l i n and M i g n a u l t J J . d e c i d i n g t h a t the s t a t u t e was i n r e l a t i o n to a m a t t e r coming w i t h i n s e c t i o n 9 1 ( 2 5 ) , and I d i n g t o n , Duff and B r o d e u r J J . d e c i d i n g t h a t i t came w i t h i n s e c t i o n 9 2 ( 5 ) : In Re t h e Employment o f P e r s o n s on Crown P r o p e r t y ( 1 9 2 2 ) , 63 Can. S . C . R . 293. -101 [1924] A . C . 2 0 3 , 211. - 33 -A d i s t i n c t i o n was drawn between a c o n d i t i o n i n s e r t e d i n t h e g r a n t o f a l i c e n c e , t h e b r e a c h o f w h i c h a f f e c t e d p r o p e r t y r i g h t s i n the f u t u r e , and a s t a t u t e r e q u i r i n g i n s e r t i o n o f s u c h a c o n d i t i o n and c o m p l i a n c e w i t h i t , upon p e n a l t y o f l o s s o f p r o p e r t y r i g h t s . On t h i s b a s i s the B r o o k s - B i d l a k e c a s e was r e g a r d e d as h a v i n g s a i d n o t h i n g w h a t s o e v e r about the scope o f p r o v i n c i a l l e g i s l a t i v e a u t h o r i t y under s e c t i o n 9 2 ( 5 ) . T h i s d i c t u m l e n d s w e i g h t t o t h e v i e w t h a t t h e l i m i t s p l a c e d upon e x c l u s i v e l e g i s l a t i v e a u t h o r i t y by s e c t i o n s 91 and 92 o f t h e B . N . A . A c t do n o t d e f i n e the e x t e n t o f t h e e x e c u t i v e power e x e r c i s a b l e by b o t h l e v e l s 102 o f government. The terms o f the B . N . A . A c t a r e not e x p l i c i t i n t h i s r e g a r d , b u t s e c t i o n 1 2 , when r e a d w i t h s e c t i o n s 64 and 65 o f t h e A c t , u n d o u b t e d l y e f f e c t s some d i v i s i o n o f e x e c u t i v e power. The P r i v y C o u n c i l 103 i n an e a r l i e r c a s e , Bonanza Creek G o l d M i n i n g Co. L t d . v . The K i n g , n o t o n l y r e c o g n i z e d t h a t such a d i v i s i o n e x i s t e d but a l s o s t a t e d t h a t the d i v i s i o n c o r r e s p o n d e d w i t h t h a t a c h i e v e d by the A c t f o r l e g i s l a t i v e a u t h o r i The e f f e c t o f t h e s e s e c t i o n s o f the B r i t i s h N o r t h A m e r i c a  A c t i s t h a t , s u b j e c t to c e r t a i n e x p r e s s p r o v i s i o n s i n t h a t A c t and t o the supreme a u t h o r i t y o f t h e S o v e r e i g n , who d e l e -g a t e s to the G o v e r n o r - G e n e r a l and t h r o u g h h i s i n s t r u m e n t a -l i t y t o the L i e u t e n a n t - G o v e r n o r s t h e e x e r c i s e o f the p r e -r o g a t i v e on terms d e f i n e d i n t h e i r c o m m i s s i o n s , t h e d i s t r i -b u t i o n under the new g r a n t o f e x e c u t i v e a u t h o r i t y i n s u b s t a n c e f o l l o w s the d i s t r i b u t i o n under the new g r a n t o f l e g i s l a t i v e p o w e r s . 103A 102 I t has been s u g g e s t e d t h a t t h e f e d e r a l " s p e n d i n g " power i s a n o t h e r example o f e x e c u t i v e power e x c e e d i n g t h e l i m i t s o f l e g i s l a t i v e a u t h o r i t y . However, t h e b a s i s f o r the s p e n d i n g power may l i e i n S e c t i o n 91(1A) o f t h e B . N . A . A c t , " t h e p u b l i c debt and p r o p e r t y " . 1 0 3 [1916] 1 A . C . 566. 1 0 3 A I b i d , 580. - 34 -T h e i r L o r d s h i p s ' e x p l a n a t i o n o f the B r o o k s - B i d i a k e d e c i s i o n i n t h e O r i e n t a l O r d e r s i n C o u n c i l r e f e r e n c e i s i n c o n s i s t e n t w i t h t h i s p o s i t i o n . However, t h i s i s n o t t h e o n l y r e a s o n why the e x p l a n a t i o n i s u n s a t i s f a c t o r y . F i r s t , i t does n o t a c c o r d w i t h the a c t u a l d e c i s i o n r e a c h e d i n the B r o o k s - B i d i a k e c a s e , o n l y a y e a r e a r l i e r . . S e c o n d , and more i m p o r t a n t l y , s i n c e t h e r e was v a l i d f e d e r a l l e g i s l a t i o n i n e f f e c t p r o h i b i t i n g t h e t y p e o f d i s c r i m i n a t i o n p r a c t i s e d by t h e B r i t i s h Columbia Government t h e e x p l a n a t i o n i m p l i e s t h a t the e x e r c i s e o f p r o v i n c i a l e x e c u t i v e power i n a r e a s c l o s e d to p r o v i n c i a l l e g i s l a t i o n i s n o t s u b j e c t t o f e d e r a l l e g i s l a t i o n . T h i s would make a mockery o f t h e d i v i s i o n o f l e g i s l a t i v e a u t h o r i t y i n t h e B . N . A . A c t . In o n l y one c a s e has t h e i s s u e been r a i s e d d i r e c t l y o f t h e r e l a t i o n -s h i p between " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g t o the p r o v i n c e " and " t h e r e g u l a t i o n o f t r a d e and commerce". T h i s was S m y l i e v . The Queen, 1 0 4 t h e f a c t s o f w h i c h have a l r e a d y been r e c o u n t e d . The O n t a r i o C o u r t o f Appeal d e c i d e d t h a t the p r o v i n c i a l s t a t u t e r e q u i r i n g t h e i n s e r t i o n o f the r e s t r i c t i v e c o n d i t i o n i n a l l Crown t i m b e r l i c e n c e s was i n r e l a t i o n to a m a t t e r coming w i t h i n s e c t i o n 92(5) r a t h e r t h a n s e c t i o n 9 1 ( 2 ) . No a t t e m p t was made t o d e f i n e t h e l i m i t s o f e i t h e r c l a s s , t h o u g h , a p a r t from the c o n c l u s i o n t h a t t h e a t t a c h m e n t o f c o n d i t i o n s to t h e a c q u i s i t i o n o f p u b l i c p r o p e r t y came w i t h i n " t h e management and s a l e o f p u b l i c l a n d s " even though t h i s may a f f e c t " t r a d e and commerce". T h i s g i v e s a b r o a d e r scope to s e c t i o n 92(5) than d i d A t t o r n e y - G e n e r a l 106 f o r Canada v . A t t o r n e y s - G e n e r a l f o r O n t a r i o , Quebec and Nova S c o t i a . 1 0 4 Op- c i t . n o t e 38. 1 0 5 S u p r a , 1 0 . Op- c i t . n o t e 7. - 35 -However, t h i s would appear t o be j u s t i f i e d by the w o r d i n g o f s e c t i o n s 91 and 9 2 . The " f i s h e r i e s " c l a s s o f s u b j e c t i s more s p e c i f i c a l l y d e s i g n a t e d than t h e " t r a d e and commerce" c l a s s , and s o , i n c o n s i d e r i n g each i n r e l a t i o n t o " t h e management and s a l e o f p u b l i c l a n d s " i t seems r e a s o n a b l e t h a t t h e b o u n d a r i e s o f t h e " f i s h e r i e s " c l a s s s h o u l d c u r t a i l t h e l i m i t s o f t h e " p u b l i c l a n d s " c l a s s w h i l e the " t r a d e and commerce" c l a s s s h o u l d n o t . T h i s i s m e r e l y an example o f t h e r u l e o f s t a t u t o r y i n t e r p r e t a t i o n t h a t t h e g e n e r a l g i v e s way t o t h e s p e c i f i c . " F i s h e r i e s " i s a more s p e c i f i c c l a s s t h a n " p u b l i c p r o p e r t y " , b u t , on the o t h e r h a n d , " p u b l i c p r o p e r t y " i s more s p e c i f i c than " t r a d e and commerce". T h i s r a t i o n a l i z a t i o n does n o t s u c c e e d i n d e f i n i n g the l i m i t s o f the " p u b l i c l a n d s " c l a s s v i s - a - v i s the " t r a d e and commerce" c l a s s , b u t i t does s u g g e s t a rea son why the F i s h e r i e s c a s e need n o t cause a narrow v i e w t o be taken o f s e c t i o n 9 2 ( 5 ) i n a l l r e s p e c t s , and a l s o p o i n t s t o a b a s i c p r i n c i p l e to be a p p l i e d i n accommodating t h e b o u n d a r i e s o f com-p e t i n g c l a s s e s : the g e n e r a l must y i e l d t o t h e p a r t i c u l a r . ^ 7 A t t h i s p o i n t i t i s i n t e r e s t i n g t o c o n s i d e r the r e l a t i o n s h i p o f s e c -t i o n s 9 1 ( 2 ) , 9 2 ( 5 ) , 91(3) and 125 o f t h e B . N . A . A c t , 1867. S e c t i o n 9 1 ( 3 ) , 1 gg i t has a l r e a d y been n o t e d , d e f i n e s the l e g i s l a t i v e a u t h o r i t y o f the Dominion r e g a r d i n g t a x a t i o n . S e c t i o n 125 s a y s : No Lands o r P r o p e r t y b e l o n g i n g to Canada o r any P r o v i n c e s h a l l be l i a b l e to T a x a t i o n . I t has been h e l d by the P r i v y C o u n c i l i n A t t o r n e y - G e n e r a l f o r B r i t i s h Colum-109 bra v . A t t o r n e y - G e n e r a l f o r Canada t h a t s e c t i o n 125 d i d n o t p r e v e n t the 1 0 7 A b e l , o p . c i t . note 5 2 , 510. 108 _ 9 n  S u p r a , 2 0 . 1 0 9 [1924] A . C . 222. - 36 -l e v y i n g o f f e d e r a l customs d u t i e s upon goods i m p o r t e d i n t o t h e p r o v i n c e f o r s a l e t h e r e i n , d e s p i t e t h e f a c t t h a t the goods were t h e p r o p e r t y o f the p r o v i n c e . T h e i r L o r d s h i p s e x p l a i n e d the r e l a t i o n s h i p o f t h e s e c t i o n s i n t h e f o l l o w i n g way: S e c t i o n 9 1 , w h i c h a s s i g n s powers to the D o m i n i o n , p r o -v i d e s , among o t h e r t h i n g s , t h a t i t s h a l l e n j o y e x c l u -s i v e l e g i s l a t i v e a u t h o r i t y o v e r a l l m a t t e r s enumerated i n t h e s c h e d u l e , i n c l u d e d among which a r e the r e g u l a -t i o n o f t r a d e and commerce and r a i s i n g o f money by any mode o r system o f t a x a t i o n . The i m p o s i t i o n o f customs d u t i e s upon goods i m p o r t e d i n t o any c o u n t r y may have many o b j e c t s ; i t may be d e s i g n e d to r a i s e revenue o r t o r e g u l a t e t r a d e and commerce by p r o t e c t i n g n a t i v e i n d u s -t r i e s , o r i t may have t h e t w o - f o l d purpose o f a t t e m p t -i n g t o s e c u r e both e n d s ; i n e i t h e r c a s e i t i s a power r e s e r v e d t o the D o m i n i o n . I t has n o t i n d e e d been d e n i e d t h a t such a g e n e r a l power does e x i s t , b u t i t i s s a i d t h a t a b r e a c h i s c r e a t e d i n t h e t a r i f f w a l l , w h i c h the Dominion has power t o e r e c t , by s e c . 125, w h i c h e n a b l e s goods o f t h e P r o v i n c e o r the Dominion t o p a s s t h r o u g h , u n a f f e c t e d by t h e d u t i e s . But s e c . 125 c a n -n o t , i n t h e i r L o r d s h i p s ' o p i n i o n , be so r e g a r d e d . I t i s to be found i n a s e r i e s o f s e c t i o n s w h i c h b e g i n n i n g w i t h s e c . 102 d i s t r i b u t e as between the Dominion and t h e P r o v i n c e c e r t a i n d i s t i n c t c l a s s e s o f p r o p e r t y and c o n f e r c o n t r o l upon t h e P r o v i n c e w i t h r e g a r d to t h e p a r t a l l o c a t e d to them. But t h i s does not e x c l u d e t h e o p e r a t i o n o f Dominion laws made i n e x e r c i s e o f t h e a u t h o r i t y c o n f e r r e d by s e c . 9 1 . The Dominion has t h e power t o r e g u l a t e t r a d e and commerce t h r o u g h o u t t h e D o m i n i o n , a n d , t o t h e e x t e n t t o which t h i s power a p p l i e s , t h e r e i s no p a r t i a l i t y i n i t s o p e r a t i o n . S e c t i o n 125 m u s t , t h e r e f o r e , be so c o n s i d e r e d as to p r e v e n t t h e paramount purpose t h u s d e c l a r e d from b e i n g d e f e a t e d . ' ' ^ C e n t r a l t o t h i s r e a s o n i n g was the c o n c l u s i o n t h a t t h e f e d e r a l l e g i s -l a t i o n i m p o s i n g the customs d u t i e s came w i t h i n the scope o f Dominion l e g i s l a t i v e a u t h o r i t y under s e c t i o n 9 1 . No i s s u e was r a i s e d as t o the b o u n d a r i e s o f competing c l a s s e s o f s u b j e c t s i n s e c t i o n s 91 and 92 a n d , i n I b i d . , 2 2 5 . - 37 -p a r t i c u l a r , s e c t i o n 92(5) was n o t i n q u e s t i o n , f o r t h e goods i n the c a s e were c o n s i g n m e n t s o f l i q u o r and n o t " p u b l i c l a n d s " . T h e r e f o r e , the c a s e does n o t go so f a r as t o s a y t h a t a l l f e d e r a l customs d u t i e s a r e v a l i d l y imposed. There remains the p r e l i m i n a r y q u e s t i o n whether t h e a c t l e v y i n g the d u t i e s i s i n r e l a t i o n to a m a t t e r coming w i t h i n one o f t h e c l a s s e s o f s u b j e c t s i n s e c t i o n 9 1 . ^ N e v e r t h e l e s s , the d e c i s i o n i n t h i s case g i v e s r i s e t o c o n s i d e r a b l e 112 d i f f i c u l t y and i t may be doubted w h e t h e r i t i s c o r r e c t i n p r i n c i p l e . I f s e c t i o n 125 i s to be r e a d s u b j e c t t o t h e f u l l e x t e n t o f Dominion l e g i s -l a t i v e a u t h o r i t y under s e c t i o n 91 i t has no e f f e c t w h a t s o e v e r i n p r e v e n t i n g Dominion t a x a t i o n o f p r o v i n c i a l l a n d s and p r o p e r t y . Y e t t h i s seems to be the p o s i t i o n a d o p t e d by the P r i v y C o u n c i l . The o n l y o t h e r i n t e r p r e t a t i o n w h i c h s u p p o r t s the d e c i s i o n i n the c a s e i s ' t h a t s e c t i o n 125 r e s t r i c t s the scope o f Dominion t a x i n g a u t h o r i t y under s e c t i o n 91(3) b u t n o t t h e f e d e r a l t r a d e and commerce power under s e c t i o n 9 1 ( 2 ) . Each case o f Dominion t a x a -t i o n o f p r o v i n c i a l l a n d s and p r o p e r t y w o u l d then r e q u i r e a d e c i s i o n whether t h e l e g i s l a t i o n i m p o s i n g the t a x was i n r e l a t i o n t o a m a t t e r coming w i t h i n s e c t i o n 9 1 ( 2 ) , when i t would be v a l i d , o r s e c t i o n 9 1 ( 3 ) , when i t would n o t . The c o u r t s have c o n s i s t e n t l y h e l d t h a t the Dominion can not use i t s t a x i n g power t o a c h i e v e a r e g u l a t o r y purpose w h i c h i t c a n n o t r e a l i z e t h r o u g h d i r e c t r e g u l a t i o n : In r e I n s u r a n c e A c t o f C a n a d a , [1932] A . C . 4 1 , 5 2 ; A t t o r n e y - G e n e r a l f o r Canada v . A t t o r n e y - G e n e r a l f o r O n t a r i o (Employment and S o c i a l I n s u r a n c e r e f e r e n c e ) , [1937] A . C . 355. 112 The e a r l i e r s t a t e m e n t by C l e m e n t , W i l l i a m , The Law o f t h e C a n a d i a n  C o n s t i t u t i o n , T o r o n t o , C a r s w e l l , 1916 ( 3 r d e d . ) , 6 4 3 , t h a t s . 125 "would o p e r a t e no doubt to exempt from customs d u t i e s goods p u r c h a s e d abroad by a p r o v i n c i a l government" i s to be p r e f e r r e d . - 38 -But the P r i v y C o u n c i l made no such d i s t i n c t i o n i n r e a c h i n g i t s c o n c l u s i o n * as the passage quoted e a r l i e r c l e a r l y shows. T u r n i n g now t o the q u e s t i o n o f l i m i t s to f e d e r a l and p r o v i n c i a l t a x i n g a u t h o r i t y , i t becomes n e c e s s a r y to ask what c o n s t i t u t e s t a x a t i o n , The c r i -t e r i a l a i d down by the c o u r t s a r e i n broad t e r m s . In Lawson v . I n t e r i o r 113 T r e e , F r u i t and V e g e t a b l e Committee Duff J . r e g a r d e d l e v i e s imposed on p r o d u c t s marketed by a p r o v i n c i a l m a r k e t i n g a u t h o r i t y i n o r d e r t o r e c o v e r o p e r a t i n g c o s t s as t a x e s because t h e y were (a) e n f o r c e a b l e by l a w ; (b) imposed under a u t h o r i t y o f l e g i s l a t i o n ; (c) imposed by a p u b l i c b o d y ; and (d) made f o r a p u b l i c p u r p o s e . 1 1 4 S i m i l a r l y , e q u a l i z a t i o n c h a r g e s d e s i g n e d t o e f f e c t u a t e p r o v i n c i a l schemes o f p r i c e f i x i n g as an a i d t o o r d e r l y mar-115 k e t i n g have been h e l d by t h e P r i v y C o u n c i l to be t a x e s . In A t t o r n e y -115 G e n e r a l f o r B r i t i s h Columbia v . E s q u i m a u and Nanaimo R a i l w a y Company a f o r e s t p r o t e c t i o n fund l e v y was s a i d t o be a tax. s i n c e i t v/as imposed 117 c o m p u l s o r i l y by l e g i s l a t i o n and was r e c o v e r a b l e a t the s u i t o f t h e Crown, even though i t a p p l i e d t o a l i m i t e d c l a s s of p e r s o n s , was f o r a s p e c i f i c p u r p o s e , and i t s p r o c e e d s d i d n o t f a l l i n t o g e n e r a l r e v e n u e . 1 1 3 [1931] S . C . R . 3 5 7 , 2 D . L . R . 193. 1 1 4 I b i d . , 3 6 3 , 197. 115 Lower M a i n l a n d D a i r y P r o d u c t s S a l e s A d j u s t m e n t Committee v . C h r y s t a l  D a i r y L t d . , [1933] A . C . 168; Lower M a i n l a n d D a i r y P r o d u c t s Board v . T u r n e r ' s  D a i r y L t d . , [1941] S . C . R . 5 7 3 , 4 D . L . R . 209. 1 1 6 [1950] A . C . 87. 1 1 7 I b i d . , 121. - 39 -However, t h e r e a r e l i m i t a t i o n s t o be p l a c e d upon t h e s e b r o a d d e f i n i -t i o n s . In p a r t i c u l a r , a d i s t i n c t i o n has been n o t e d i n more r e c e n t c a s e s between t a x a t i o n l e v i e d a t t h e time o f s a l e and charges imposed under c o o p e r a t i v e m a r k e t i n g schemes. In R e f e r e n c e r e the Farm P r o d u c t s M a r -d e v e l o p e d i n the e a r l i e r c a s e s d i d n o t i n c l u d e a m a r k e t i n g scheme i n v o l -v i n g s i m p l y the p o o l i n g o f p r o d u c t s and r e t u r n s by p r o d u c e r s even though 1 l c t h i s was r e q u i r e d by l e g i s l a t i o n . In Murphy v . Canadian P a c i f i c R a i l w a y s the C o u r t c o n f i r m e d t h a t a s t a t u t o r y p o o l i n g scheme d i d n o t n e c e s s a r i l y amount t o t a x a t i o n . Even more s i g n i f i c a n t l y , i t seems, t h e C o u r t i n C r a w f o r d and H i l l s i d e Farm D a i r y L t d . , e t a l . v . A t t o r n e y - G e n e r a l f o r 120 B r i t i s h C o l u m b i a , e t a l . h e l d t h a t p r o v i n c i a l l e g i s l a t i o n was n o t i n r e s p e c t o f t a x a t i o n where i t e s t a b l i s h e d a c o m p u l s o r y m a r k e t i n g scheme r e q u i r i n g the p o o l i n g o f a l l produce under the c o n t r o l o f a d e s i g n a t e d body w h i c h was empowered t o a r r a n g e a l l s a l e s and d i s t r i b u t e t h e n e t p r o -ceeds t h e r e o f among p r o d u c e r s a c c o r d i n g to s t a t u t o r y f o r m u l a e . Thus i t i s no l o n g e r t h e c a s e t h a t a m a r k e t i n g b o a r d i s p r e v e n t e d f r o m d e d u c t i n g o p e r a t i n g expenses from g r o s s p r o c e e d s o f s a l e s b e f o r e d i s t r i b u t i o n among p r o d u c e r s , and t h e a c c e p t a n c e o f t h e s t a t u t o r y f o r m u l a e i n t h e C r a w f o r d  and H i l l s i d e Farm case s u g g e s t s t h a t t h e a d j u s t m e n t o f r e t u r n s among c l a s s e s o f r e g u l a t e d p r o d u c t s i s n o t t a x a t i o n e i t h e r . T h e r e may s t i l l be d o u b t , t h o u g h , where a m a r k e t i n g scheme c l e a r l y p r o v i d e s f o r t h e t r a n s f e r k e t i n g A c t 118 t h e Supreme C o u r t h e l d t h a t the d e f i n i t i o n s o f t a x a t i o n 118 Op. c i t . n o t e 71. 119 Op. c i t . note 71. 120 [1960] S . C . R . 3 4 6 , 22 D . L . R . (2d) 321. - 40 -o f the p r o c e e d s o f s a l e f r o m one c l a s s o f p r o d u c e r t o a n o t h e r , b u t i t seems l i k e l y t h a t the Supreme C o u r t would c h a r a c t e r i z e such a scheme as a m a t t e r coming w i t h i n the r e g u l a t i o n o f t r a d e and commerce r a t h e r t h a n t a x a t i o n . 121 P r o v i n c i a l t a x i n g a u t h o r i t y i s c o n f i n e d t o d i r e c t t a x a t i o n , and a g r e a t many c a s e s have t u r n e d upon the d i s t i n c t i o n between t h i s and i n d i r e c t 122 t a x a t i o n . The c l a s s i c a l v i e w i s s e t o u t i n Bank o f T o r o n t o v . Lambe where t h e P r i v y C o u n c i l a d o p t e d the d e f i n i t i o n o f John S t u a r t M i l l : Taxes a r e e i t h e r d i r e c t o r i n d i r e c t . A d i r e c t t a x i s one w h i c h i s demanded from t h e v e r y p e r s o n s who i t i s i n t e n d e d o r d e s i r e d s h o u l d pay i t . I n d i r e c t t a x e s a r e t h o s e w h i c h a r e demanded f r o m one p e r s o n i n the e x p e c -t a t i o n and i n t e n t i o n t h a t he s h a l l i n d e m n i f y h i m s e l f i n t h e expense o f a n o t h e r ; such a r e the e x c i s e o r c u s t o m s . T h e i r L o r d s h i p s were o f t h e o p i n i o n t h a t t h i s d e f i n i t i o n e x p r e s s e d a common u n d e r s t a n d i n g o f the i n d i c i a o f d i r e c t and i n d i r e c t t a x a t i o n i n 1 8 6 7 , and was t h u s l i k e l y t o have been p r e s e n t i n the minds o f t h e f r a m e r s o f the B . N . A . A c t . For t h i s r e a s o n t h e y r e f u s e d t o s p e c u l a t e w h e t h e r M i l l had s t i p u l a t e d t h a t a t a x , t o be d i r e c t , must be g e n e r a l , f o r t h i s w o u l d have run c o u n t e r to such u n d e r s t a n d i n g and c o u l d n o t , t h e r e f o r e , have been i n -c o r p o r a t e d i n the B . N . A . A c t . S t r e s s was a l s o l a i d on the f a c t t h a t t h e Board was n o t c o n c e r n e d w i t h t h e a c t u a l i n c i d e n c e o f a t a x , t h i s b e i n g a m a t t e r o f c o n s i d e r a b l e c o m p l e x i t y upon which e c o n o m i s t s found d i f f i c u l t y i n a g r e e i n g . R a t h e r , i t was i n t e r e s t e d i n the i n t e n d e d o r d e s i r e d i n c i d e n c e . 1 2 1 B . N . A . A c t , 1867 , s e c t i o n 9 2 ( 3 ) , quoted s u p r a , 2 0 . 1 2 2 Op. c i t : note 6 5 . 123 I b i d . , 582. - 41 -A p p l i c a t i o n o f t h e s e p r i n c i p l e s has r e s u l t e d i n d e c i s i o n s t h a t t a x e s 124 imposed upon the f i n a l consumers o f goods are d i r e c t , whereas t a x e s upon i n t e r m e d i a t e t r a n s a c t i o n s i n t h e p r o d u c t i o n o r d i s t r i b u t i o n o f goods 125 a r e i n d i r e c t . A t a x c a l c u l a t e d upon the g r o s s v a l u e o f p r o d u c t i o n from 12g a mine i s i n d i r e c t , b u t a t a x l e v i e d on n e t revenue f r o m m i n i n g , c a l c u -127 l a t e d a c c o r d i n g to a s t a t u t o r y f o r m u l a , i s d i r e c t . A l s o d i r e c t i s a 12g t a x c a l c u l a t e d a t a f i x e d r a t e p e r a c r e o f m i n e r a l l a n d . However, where a t a x i s i n i t s r e a l n a t u r e an e x p o r t t a x i t w i l l be v e r y d i f f i c u l t t o show t h a t i t i s d i r e c t , f o r an e x p o r t t a x i s n o r m a l l y c o l l e c t e d on m e r c h a n t a b l e goods i n c o u r s e o f t r a n s i t i n pursuance o f c o m m e r c i a l t r a n s a c t i o n s w h i c h 129 t h e m s e l v e s d e t e r m i n e t h e u l t i m a t e i n c i d e n c e o f t h e t a x . P r o v i n c i a l t a x i n g a u t h o r i t y i s f u r t h e r l i m i t e d t o t a x a t i o n " w i t h i n the p r o v i n c e " , w h i c h o f t e n r e q u i r e s a c l o s e e x a m i n a t i o n o f t h e o p e r a t i v e l e g i s -l a t i o n to i d e n t i f y the p e r s o n o r t h i n g upon w h i c h t h e t a x i s i m p o s e d . I f t h e p e r s o n or t h i n g i s i n f a c t w i t h i n t h e p r o v i n c e then t h e v a l i d i t y o f the t a x i s u n i m p a i r e d by i t s a s s e s s m e n t on the b a s i s o f e x t r a - p r o v i n c i a l a t t r i b u t e s . 130. 124 A t t o r n e y - G e n e r a l o f B r i t i s h C o l u m b i a v . Kingcome N a v i g a t i o n Co. L t d . , [1934] A . C . 4 5 ; A t l a n t i c Smoke Shops L t d . v . C o n l o n and A t t o r n e y - G e n e r a l f o r C a n a d a , [1942] A . C . 5 5 0 . 125 Lawson v . I n t e r i o r T r e e , F r u i t and V e g e t a b l e C o m m i t t e e , op. c i t . n o t e 113; Lower M a i n l a n d D a i r y P r o d u c t s S a l e s A d j u s t m e n t Committee v . C h r y s t a l D a i r y L t d . , op. c i t . note 115. 1 2 6 The K i n g v . C a l e d o n i a n C o l l i e r i e s L t d . , [1928] A . C . 3 5 8 . 1 2 7 N i c k e l Rim Mines L t d . v . A t t o r n e y - G e n e r a l f o r O n t a r i o , [1967] S . C . R . 2 7 0 , 60 D . L . R . (2d) 576. ~~ ~ ~ . 128 Canadian P a c i f i c R a i l w a y s v . A t t o r n e y - G e n e r a l f o r S a s k a t c h e w a n , [1952] 2 S . C . R . 2 3 1 , 4 D . L . R . 11. 129 A t t o r n e y - G e n e r a l o f B r i t i s h Columbia v . McDonald Murphy Lumber Co. L t d . , [1930] A . C . 357. 130 Bank o f T o r o n t o v . Lambe,op. c i t . note 6 5 . - 42 -M o r e o v e r , s e c t i o n 92(2) o f the B . N . A . A c t s t a t e s t h a t t h e c l a s s o f s u b -j e c t s w h i c h d e f i n e s the p r o v i n c i a l t a x i n g a u t h o r i t y i s r e s t r i c t e d t o m a t t e r s w i t h the common purpose of " t h e r a i s i n g o f a revenue f o r p r o v i n c i a l p u r p o s e s . " The c o u r t s have n o t c o n s t r u e d t h i s p r o v i s i o n n a r r o w l y and have r e j e c t e d t h e s u g g e s t i o n t h a t s e c t i o n 92(2) does n o t a u t h o r i z e t a x a t i o n f o r a l o c a l p u r -131 pose imposed upon a p a r t i c u l a r l o c a l i t y . A l s o , , the w o r d i n g o f t h e s e c -t i o n i s an i n d i c a t i o n t h a t c o o p e r a t i v e m a r k e t i n g schemes d e s i g n e d t o a c h i e v e o r d e r l y and e q u i t a b l e m a r k e t i n g o f p r o d u c t s and n o t t o r a i s e government revenue would n o t come w i t h i n the c l a s s . . The l i m i t s t o Dominion t a x i n g a u t h o r i t y under s e c t i o n 91(3) o f t h e B . N . A . A c t a r e n o t i c e a b l y l e s s c o n f i n e d . There i s no d i s t i n c t i o n drawn between d i r e c t and i n d i r e c t t a x a t i o n , n o r a r e t h e purposes o f t a x a t i o n s p e c i f i e d . A l l t h a t i s r e a l l y n e c e s s a r y to say i s t h a t the same r u l e s o f c o n s t r u c t i o n a p p l y i n d e f i n i n g the c l a s s o f s u b j e c t s i n s e c t i o n 91(3) as w i t h any o t h e r c l a s s i n s e c t i o n s 91 o r 9 2 . C l a s s e s a r e m u t u a l l y e x c l u s i v e i n s c o p e , and a m a t t e r w h i c h comes w i t h i n one c l a s s , such as t h e management 132 and s a l e o f p u b l i c l a n d s , can n o t a l s o come w i t h i n s e c t i o n 9 1 ( 3 ) . Next t o be c o n s i d e r e d a r e the c l a s e s o f s u b j e c t s d e f i n e d by s e c t i o n 9 2 ( 1 0 ) ( a ) and ( c ) o f the B . N . A . A c t , 1867. , , w S e c t i o n 91(29) o f t h e A c t 1 3 1 Dow v . B l a c k ( 1 8 7 5 ) , L . R . 6 P . C . 2 7 2 ; R e f e r e n c e Re Employment and  S o c i a l I n s u r a n c e A c t , [1936] S . C . R . 4 2 7 , 4 3 4 , 3 D . L . R . 6 4 4 , 6 4 9 , p e r D u f f C.J . C . 132 T h i s p r i n c i p l e has sometimes been e x p r e s s e d i n the c a s e s i n terms o f " c o l o u r a b l e " a t t e m p t s t o l e g i s l a t e by i m p o s i t i o n o f t a x e s : In r e I n s u r a n c e  A c t o f C a n a d a , [1932] A . C . 4 1 , 5 2 ; A t t o r n e y - G e n e r a l o f Canada v . A t t o r n e y - General o f O n t a r i o (Employment and S o c i a l I n s u r a n c e A c t c a s e ) , [1937] A . C . 3 5 5 . 1 3 3 Quoted s u p r a , 20 . - 43 -p l a c e s t h e s e w i t h i n the e x c l u s i v e l e g i s l a t i v e a u t h o r i t y o f the D o m i n i o n , so t h a t they a r e t o be c o n s t r u e d as i f they were s p e c i a l l y enumerated i n 134 s e c t i o n 9 1 . For p r e s e n t p u r p o s e s t h e meaning a t t r i b u t e d t o "works and u n d e r t a k i n g s " i s o f g r e a t i m p o r t a n c e . No g e n e r a l d e f i n i t i o n has been e s t a b l i s h e d so f a r 135 but the c o u r t s have r e j e c t e d s u g g e s t i o n s t h a t a narrow v i e w was i n t e n d e d . 1 "Works" have been r e g a r d e d as p h y s i c a l t h i n g s r a t h e r t h a n s e r v i c e s , w h i l e " u n d e r t a k i n g s " d e s c r i b e s the arrangements under w h i c h p h y s i c a l t h i n g s a r e 137 u s e d . T h i s d i s t i n c t i o n i s made s i g n i f i c a n t by t h e f a c t t h a t t h e p h r a s e used i n s e c t i o n 92(10) (a) i s "works and u n d e r t a k i n g s " whereas i n s e c t i o n 92(10) ( c ) o n l y " w o r k s " i s u s e d . The c l a s s o f s u b j e c t s i n s e c t i o n 9 2 ( 1 0 ) ( a ) i s f u r t h e r l i m i t e d by t h e r e q u i r e m e n t t h a t t h e works and u n d e r t a k i n g s c o n n e c t two o r more p r o v i n c e s . T h i s p r e s e n t s a q u e s t i o n o f f a c t w h i c h i n many c i r c u m s t a n c e s w i l l n o t g i v e r i s e to any d i f f i c u l t y . The c o n n e c t i o n e x i s t s n o t w i t h s t a n d i n g t h e p a r t i a l 138 use of the system by p u r e l y i n t r a p r o v i n c i a l t r a f f i c . In some c a s e s , 134 M o n t r e a l v . M o n t r e a l S t r e e t R a i l w a y , op. c i t . note 6 5 , 3 4 2 . 135 S e e , f o r e x a m p l e , t h e r e a s o n s f o r judgment o f t h e P r i v y C o u n c i l i n A t t o r n e y - G e n e r a l f o r O n t a r i o v . W i n n e r , [1954] A . C . 5 4 1 . M o n t r e a l v . M o n t r e a l S t r e e t R a i l w a y , op. c i t . note 6 5 , 3 4 2 ; W i I s o n v . E s q u i m a u and Nanaimo R a i l w a y Company, [1922] 1 A . C. 2 0 2 , 2 8 0 ; In r e  R e g u l a t i o n and C o n t r o l o f Radio Communication i n C a n a d a , [1932] A . C . 3 0 4 , 315; A t t o r n e y - G e n e r a l f o r O n t a r i o v . W i n n e r , i b i d . 137 Radio c a s e , i b i d . 3 1 5 ; Quebec R a i l w a y L i g h t and Power Company B e a u f o r t , [1945] S . C . R . 1 6 , 2 4 , 1 D . L . R . 1 4 5 , 1 5 1 , per R i n f r e t C . J . 138 M o n t r e a l v . M o n t r e a l S t r e e t R a i l w a y , op. c i t . n o t e 6 5 . - 44 -t h o u g h , where the f a c t o f c o n n e c t i o n i s e s t a b l i s h e d , t h e r e i s a r e l a t e d problem o f how f a r the i n t e r p r o v i n c i a l system e x t e n d s b e f o r e t h e c o n n e c -t i o n i s b r o k e n . An example i s p r o v i d e d by L u s c a r C o l l i e r i e s L i m i t e d v . 139 McDonald where the P r i v y C o u n c i l h e l d t h a t a branch l i n e f e e d i n g i n t o an i n t e r p r o v i n c i a l r a i l w a y was p a r t o f t h a t r a i l w a y and a c c o r d i n g l y w i t h i n f e d e r a l l e g i s l a t i v e competence under s e c t i o n 9 2 ( 1 0 ) ( a ) . The b r a n c h l i n e i n t h i s i n s t a n c e was o p e r a t e d by t h e company c o n t r o l l i n g t h e i n t e r -p r o v i n c i a l r a i l w a y and t h e i r L o r d s h i p s n o t e d t h a t t r a f f i c on t h e b r a n c h l i n e c o u l d pass w i t h o u t i n t e r r u p t i o n t o such p a r t s o f the Dominion as 140 were s e r v e d by t h e i n t e r p r o v i n c i a l r a i l w a y , but i t i s n o t c l e a r whe-t h e r t h i s formed the b a s i s o f t h e d e c i s i o n o r i f t h e p h y s i c a l c o n n e c t i o n a l o n e was s u f f i c i e n t . ^ An i n t e r p r o v i n c i a l o i l p i p e l i n e has been h e l d 142 t o come w i t h i n s e c t i o n 9 2 ( 1 0 ) ( a ) b u t t h i s i s s u e of t h e e x t e n t o f such a l i n e has n o t y e t been r a i s e d f o r d e t e r m i n a t i o n by the c o u r t s . ^ 4 2 A 139 [1927] A . C . 925. 140 I b i d . , 9 2 9 - 9 3 0 . ^ In a s u b s e q u e n t c a s e , B . C . E l e c t r i c R a i l w a y v . C a n a d i a n N a t i o n a l  R a i l w a y , [1932] S . C . R . 1 5 1 , 2 D . L . R . 7 2 8 , the Supreme C o u r t o f Canada h e l d t h a t p h y s i c a l c o n n e c t i o n a l o n e was n o t s u f f i c i e n t . 142 C a m p b e l l - B e n n e t t L i m i t e d v . C o m s t o c k . M i d w e s t e r n L i m i t e d and T r a n s  M o u n t a i n P i p e L i n e Company, [1954] S . C . R . 2 0 7 , 3 D . L . R . 4 8 1 . 142A T ^ e . j s s u e a n - s e r i ) however, b e f o r e the f e d e r a l Board o f T r a n s p o r t C o m m i s s i o n e r s . Westspur P i p e l i n e Company, w h i c h owned and o p e r a t e d an e x t r a -p r o v i n c i a l p i p e l i n e under t h e P i p e L i n e s A c t , R . S . C . 1952, c . 2 1 1 , a p p l i e d t o t h e Board f o r l e a v e to c e l l t o a s u b s i d i a r y company t h o s e p a r t s o f i t s - 45 -The terms o f s e c t i o n 9 2 ( 1 0 ) ( c ) s u g g e s t t h a t the c l a s s o f s u b j e c t s d e f i n e d t h e r e i n i s l i m i t e d o n l y by the meaning a t t r i b u t e d t o " w o r k s " . No s u p p o r t i s o f f e r e d f o r the p r o p o s i t i o n t h a t the c o u r t s may r e v i e w a d e c l a r a t i o n i n o r d e r t o e s t a b l i s h whether i t was p r o p e r l y made i n t h e 143 p r e v a i l i n g c i r c u m s t a n c e s . I t has been h e l d t h a t a d e c l a r a t i o n must 144 have s t a t u t o r y f o r c e , b u t , t h i s b e i n g s o , t h e c o u r t s have n o t chosen 145 t o s t i p u l a t e r e q u i r e m e n t s as t o f o r m . R e c e n t l y , the Supreme C o u r t o f Canada has c o n f i r m e d the v a l i d i t y o f a d e c l a r a t i o n w h i c h i s g e n e r a l i n i t s t e r m s , and e x p r e s s e d t o c o v e r works t o be c o n s t r u c t e d as w e l l as • ^ 4 - u i 146 e x i s t i n g ones o f t h e c l a s s . f a c i l i t i e s f o r m i n g i s g a t h e r i n g system i n Saskatchewan. The s u b s i d i a r y d i d n o t have a u t h o r i t y under t h e P i p e L i n e s A c t t o o p e r a t e e x t r a - p r o v i n -c i a l p i p e l i n e s , so the q u e s t i o n was r a i s e d w h e t h e r , a f t e r t h e s a l e , the g a t h e r i n g system would remain p a r t o f an e x t r a - p r o v i n c i a l p i p e l i n e . The Board c o n s i d e r e d f i v e f a c t o r s as r e l e v a n t i n t h i s d e t e r m i n a t i o n : (1) p h y s i c a l c o n n e c t i o n ; (2) o w n e r s h i p ; (3) o p e r a t i o n ; (4) purpose o f t h e g a t h e r i n g l i n e s ; (5) whether t h e g a t h e r i n g l i n e s were p a r t o f t h e u n d e r -t a k i n g o f W e s t s p u r . I t c o n c l u d e d t h a t they were p h y s i c a l c o n n e c t i o n was i n s u f f i c i e n t to d e c i d e the i s s u e , as was o w n e r s h i p . As t o o p e r a t i o n , t h e Board found t h a t the r o l e w o u l d n o t r e s u l t i n any r e a l s e p a r a t i o n o f the t r u n k l i n e b u s i n e s s from the g a t h e r i n g b u s i n e s s . The purpose o f t h e g a t h e r i n g l i n e s was c l e a r , t o f e e d the t r u n k l i n e s - a s w e l l as t o o p e r a t e f o r the b e n e f i t o f p r o d u c e r s . F i n a l l y , the change i n o w n e r s h i p d i d n o t p r e v e n t the g a t h e r i n g l i n e s from f o r m i n g an i n t e g r a l p a r t o f W e s t s p u r 1 s i n t e r p r o v i n c i a l u n d e r t a k i n g . T h e r e f o r e , the Board c o n c l u d e d t h a t t h e g a t h e r i n g u n i t s c o u l d n o t be r e g a r d e d s e v e r a b l e , and hence e n t i r e l y l o c a l i n c h a r a c t e r . The Board h a s t e n e d to a s s e r t , t h o u g h , t h a t t h i s f i n d i n g d i d n o t mean t h a t i n a l l c i r c u m s t a n c e s g a t h e r i n g l i n e s l o c a t e d w h o l l y w i t h i n a p r o v i n c e and c o n n e c t e d t o i n t e r - p r o v i n c i a l t r u n k l i n e s w o u l d be r e g a r d e d as p a r t o f t h e i n t e r - p r o v i n c i a l u n d e r t a k i n g : (1957) 76 C . R . T . C . 1 5 8 , e s p e c i a l l y a t 177-179. 143 P e r I d i n g t o n J . i n L u s c a r C o l l i e r i e s L i m i t e d v . M c D o n a l d , [1925] S . C . R . 4 6 0 , 4 6 7 , 3 D . L . R . 2 2 5 , 2 2 9 . : ~ 144 M o n t r e a l v . M o n t r e a l S t r e e t R a i l w a y , o p . c i t . n o t e 6 5 , 3 4 2 . 145 L a s k i n , o p . c i t . n o t e 5 1 , 481. 146 J o r g e n s o n v . A t t o r n e y - G e n e r a l f o r C a n a d a , [1971] S . C . R . 7 2 5 , 18 D . L . R . (3d) 297; i b i d . " \ "~. - 46 -F i n a l l y , t h e g e n e r a l Dominion power " t o make laws f o r t h e P e a c e , O r d e r , and Good Government o f Canada" has been s u b j e c t e d t o n o t i c e a b l y d i f f e r e n t i n t e r p r e t a t i o n s by t h e c o u r t s . A t f i r s t i t was t h o u g h t t o o p e r a t e when-e v e r u n i f o r m l e g i s l a t i o n was r e q u i r e d i n r e l a t i o n t o a m a t t e r a f f e c t i n g 147 s e v e r a l p r o v i n c e s . T h i s d i d n o t l a s t l o n g , t h o u g h , and i n s t e a d t h e g e n e r a l power was a f f o r d e d a d u a l o p e r a t i o n , f i r s t l y , as a r e s i d u a r y power where a m a t t e r d i d n o t come w i t h i n any o f t h e c l a s s e s o f s u b j e c t s l i s t e d i n s e c t i o n s 91 and 9 2 , and s e c o n d l y , i n an emergency c o n t e x t where a m a t t e r was n o t o n l y o f " n a t i o n a l c o n c e r n " b u t a l s o o f " s u c h d i m e n s i o n s as t o a f f e c t t h e body p o l i t i c o f the D o m i n i o n " . The f i r s t o p e r a t i o n 148 a l l o w e d t h e i n c o r p o r a t i o n o f Dominion companies b u t s i n c e a t t h i s t i m e the P r i v y C o u n c i l took a v e r y wide v i e w o f t h e c l a s s e s o f s u b j e c t s l i s t e d 149 i n s e c t i o n 92(13) and (16) t h e r e was l i t t l e scope f o r much e l s e . The second o p e r a t i o n c o n f i r m e d t h e v a l i d i t y o f v a r i o u s f e d e r a l w a r t i m e r e g u -150 l a t i o n s b u t d i d n o t e x t e n d t o the s e t t l e m e n t o f w i d e s p r e a d i n d u s t r i a l 151 152 d i s p u t e s o r t h e r e s o l u t i o n o f c r o p m a r k e t i n g p r o b l e m s . More R u s s e l l v . The Queen ( 1 8 8 2 ) , 7 App. C a s . 8 2 9 ; a f f i r m e d l a t e r on somewhat d i f f e r e n t grounds i n A t t o r n e y - G e n e r a l f o r O n t a r i o v . Canada Tem- p e r e n c e F e d e r a t i o n , [1946] A . C . 193. 1 4 8 John Deere P l o w Company, L i m i t e d v . W h a r t o n , [1915] A . C . 3 3 0 ; G r e a t West S a d d l e r y Company, L i m i t e d v . The K i n g , [1921] 2 A . C . 91 ^ 4 9 S u p r a , 2 2 ; s e e a ] s o L o c a l P r o h i b i t i o n c a s e , op. c i t . note 5 5 . 150 Board o f Commerce c a s e , op. c i t . , note 6 6 ; F o r t F r a n c i s P u l p and  Power Company L i m i t e d v . Manitoba Free P r e s s Company L i m i t e d , [1923] A . C . 6 9 5 ; C o o p e r a t i v e Committee on Japanese Canadians v . A t t o r n e y - G e n e r a l f o r  C a n a d a , [1947] A . C . 8 7 ; R e f e r e n c e Re V a l i d i t y o f Wartime L e a s e h o l d Regu- l a t i o n s , [1957] S . C . R . 124, 2 D . L . R . 1 . 151 T o r o n t o E l e c t r i c Commissioners v . S n i d e r , [1925] A . C . 395. 152 N a t u r a l P r o d u c t s M a r k e t i n g r e f e r e n c e , op. c i t . n o t e 70. - 47 -r e c e n t l y , t h i s v e r y narrow v i e w o f t h e g e n e r a l power has been e f f e c t i v e l y abandoned by the Supreme C o u r t o f Canada w h i c h has chosen t o j u d g e t h e v a l i d i t y o f f e d e r a l l e g i s l a t i o n a c c o r d i n g t o c r i t e r i a such as w h e t h e r i t "goes beyond l o c a l o r p r o v i n c i a l c o n c e r n " o r d e a l s w i t h a m a t t e r " o f 153 n a t i o n a l c o n c e r n " d e v o i d o f any s u g g e s t i o n o f emergency. Two p r i n c i p l e s appear t o have been e s t a b l i s h e d r e g a r d i n g t h e g e n e r a l power. F i r s t l y , i t does n o t e x t e n d t o m a t t e r s coming w i t h i n t h e c l a s s e s o f s u b j e c t s l i s t e d i n s e c t i o n 9 2 , t h e scope o f w h i c h i s t h e r e f o r e c r u c i a l . S e c o n d l y , w h i l e i t does i n c l u d e a l l m a t t e r s coming w i t h i n t h e c l a s s e s o f s u b j e c t s i n s e c t i o n 91 ( t h e s e h a v i n g been enumerated " f o r g r e a t e r C e r t a i n t y , but n o t so as t o r e s t r i c t t h e G e n e r a l i t y " o f t h e p o w e r ) , i t does n o t amount s i m p l y t o a r e s i d u a r y p o w e r , f o r t o r e g a r d i t so would be t o i g n o r e s e c t i o n 9 2 ( 1 6 ) . T h i s s u b - s e c t i o n , when c o n s i d e r e d t o g e t h e r w i t h s e c t i o n 9 1 , e f f e c t s a d i v i s i o n o f the r e s i d u a r y l e g i s l a t i v e a u t h o r i t y between the p r o v i n c e s and the D o m i n i o n , the f o r m e r h a v i n g power o v e r " g e n e r a l l y a l l m a t t e r s o f a m e r e l y l o c a l o r p r i v a t e n a t u r e i n t h e p r o v i n c e " and the l a t t e r h a v i n g power t o l e g i s l a t e f o r " t h e P e a c e , O r d e r and Good Government q f C a n a d a " . Regarded i n t h i s way the c o n t e n t o f t h e g e n e r a l power becomes c l e a r e r : i t encom-154 p a s s e s l e g i s l a t i o n w h i c h i s " t h e c o n c e r n o f the Dominion as a w h o l e " . One a s p e c t o f t h e g e n e r a l power d e s e r v e s f u r t h e r m e n t i o n . I t i s the i n c o r p o r a t i o n o f Dominion Companies. On a number o f o c c a s i o n s t h e i s s u e has a r i s e n n o t as t o the e x i s t e n c e o f t h i s power b u t r a t h e r as to t h e e x t e n t t o w h i c h i t a l l o w s t h e r e g u l a t i o n o f t h e a c t i v i t i e s o f such c o m p a n i e s . 1 5 3 Johannesson v . West S t . P a u l , [1952] 1 S . C . R . 2 9 2 , [1951] 4 D . L . R . 6 0 9 ; Munro v . N a t i o n a l C a p i t a l C o m m i s s i o n , [1966] S . C . R . 6 6 3 , 57 D . L . R . (2d) 753. 154 A b e l , A . S . , "What P e a c e , O r d e r and Good G o v e r n m e n t ? " , 7 Western O n t a r i o Law Review 1 , 7 ( 1 9 6 8 ) . 48 The c o u r t s have g e n e r a l l y r e c o g n i z e d t h a t i n c o r p o r a t i o n and t h e r e g u l a t i o n o f s p e c i f i e d a c t i v i t i e s a r e s e p a r a t e m a t t e r s and t h a t t h e f o r m e r does not 155 n e c e s s a r i l y i n c l u d e t h e l a t t e r . T h i s d i s t i n c t i o n was n o t d e c i s i v e i n B r i t i s h Columbia Power C o r p o r a t i o n L i m i t e d v . A t t o r n e y - G e n e r a l o f B r i t i s h 156 C o l u m b i a , h o w e v e r , where the f a c t o f f e d e r a l i n c o r p o r a t i o n o f one o f t h e companies i n v o l v e d r e s u l t e d i n a s i g n i f i c a n t c u r t a i l m e n t o f t h e p r o -v i n c e ' s power t o r e g u l a t e e n e r g y d i s t r i b u t i o n i n the p r o v i n c e by the means chosen ( p u b l i c o w n e r s h i p o f d i s t r i b u t i o n f a c i l i t i e s ) . I t may be doubted whether t h i s d e c i s i o n i s c o r r e c t as i t appears t o go beyond t h e p r i n c i p l e s e s t a b l i s h e d i n the e a r l i e r P r i v y C o u n c i l judgments t h a t f e d e r a l companies were e n t i t l e d t o become e s t a b l i s h e d as such and c o u l d n o t be s u b j e c t e d t o d i s c r i m i n a t i o n , b u t had no c o n s t i t u t i o n a l g u a r a n t e e o f b e i n g a b l e to c a r r y 157 on any p a r t i c u l a r b u s i n e s s w i t h i n p r o v i n c i a l r e g u l a t o r y power. There i s no a u t h o r i t y g o v e r n i n g the s i t u a t i o n where t h e company c o n -c e r n e d i s a Crown c o r p o r a t i o n and thus an agent o f t h e C r o w n , w h e t h e r f e d e r a l o r p r o v i n c i a l . I t may be s a i d t h a t complex q u e s t i o n s o f Crown immunity a r i s e b u t i t i s s u b m i t t e d t h a t , n o t w i t h s t a n d i n g , t h e r e s u l t s h o u l d be the same. The a u t h o r i t y o f t h e Dominion and p r o v i n c e s t o e s t a b l i s h such b o d i e s may n o t be doubted b u t t h e p r o v i s i o n s o f t h e B . N . A . A c t as t o the d i v i s i o n o f l e g i s l a t i v e a u t h o r i t y are c l e a r and s h o u l d be t a k e n as o v e r r i d i n g any immunity w h i c h may e x i s t a t common l a w . 1 5 5 G r e a t West S a d d l e r y Company, L i m i t e d v . The K i n g , op. c i t . note 5 3 ; c o n t r a , La Compagnie H y d r a u l i q u e de S t . F r a n c o i s v . C o n t i n e n t a l Heat and  L i g h t C o . , L1909J A . C . 194. 1 5 5 ( 1 9 6 3 ) , 44 W.W.R. 6 5 , 47 D . L . R . (2d) 6 3 3 . 157 L a s k i n , o p . c i t . note 5 1 , 5 6 0 . 1 5 8 In t h e c a s e o f t h e p r o v i n c e s , h o w e v e r , t h e r e a r e l i m i t s to be p l a c e d on such a company's a c t i v i t i e s by v i r t u e o f s e c t i o n 92(11) o f t h e B . N . A . A c t . - 4 9 . -E. JURISDICTION ON A FUNCTIONAL BASIS The complex p r o c e s s o f e x p l o i t a t i o n o f o i l and gas r e s o u r c e s may be d i v i d e d i n t o a number o f s t a g e s . A l t h o u g h t h i s i n v o l v e s a degree o f a r t i f i c i a l i t y , s i n c e the l i n e s e p a r a t i n g one f u n c t i o n from t h e n e x t may be d i f f i c u l t t o draw i n p r a c t i c e , i t a l l o w s the q u e s t i o n o f j u r i s -d i c t i o n o v e r t h e s e r e s o u r c e s t o be c o n s i d e r e d i n r e l a t i o n t o t h e i r a c t u a l development r a t h e r than i n the a b s t r a c t . 1. A l l o c a t i o n o f R i g h t s . A p r o v i n c e may d i s p o s e o f p u b l i c l y - o w n e d o i l and gas r e s o u r c e s as an i n c i d e n t o f i t s ownership power. In s o d o i n g , the p r o v i n c e has a l l t h e r i g h t s o f a p r i v a t e owner o f r e s o u r c e s and i s n o t c u r t a i l e d by l i m i t s p l a c e d upon i t s e x c l u s i v e l e g i s l a t i v e a u t h o r i t y . On the o t h e r h a n d , t h o u g h , 159 t h e d i s p o s a l i s s u b j e c t t o t h e p r o v i s i o n s o f v a l i d f e d e r a l l e g i s l a t i o n . Of g r e a t e r i m p o r t a n c e i s the scope o f p r o v i n c i a l l e g i s l a t i v e a u t h o r i t y . I t seems beyond doubt t h a t the a l l o c a t i o n o f r i g h t s o v e r Crown o i l and gas r e s o u r c e s i s a m a t t e r coming w i t h i n " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g to the p r o v i n c e . " ^ The c a s e s have n o t d e t e r m i n e d t h e l i m i t s o f t h i s c l a s s o f s u b j e c t s . ^ The h i s t o r y o f d e a l i n g s w i t h Crown l a n d s i n t h e c o l o n i e s p r i o r t o c o n f e d e r a t i o n s u g g e s t s t h a t t h e e n t i r e 1 5 9 S u p r a , 9 - 1 5 . 1 6 0 b \ N j ^ A c l » s.92(5). 1 6 1 S u p r a , 27 e t ^ e o , . - 50 -c o n t r o l was i n t e n d e d t o r e s i d e w i t h t h e p r o v i n c e s and t h a t r e v e n u e s t h e r e -from were t o p l a y a c r u c i a l r o l e i n t h e maintenance o f p r o v i n c i a l b u d g e t s . 1 T h i s a c c o r d s w i t h t h e o r d i n a r y meaning a t t r i b u t a b l e t o "management and s a l e " o f a r e s o u r c e . The t i m e a t w h i c h p r o p e r t y i n o i l and gas p a s s e s f r o m t h e Crown i n t o p r i v a t e o w n e r s h i p p u r s u a n t t o t h e p r o v i n c i a l a l l o c a t i o n s y s t e m i s o f v i t a l i m p o r t a n c e t o the l i m i t s o f t h i s c l a s s . Once p r o p e r t y p a s s e s , the s a l e i s c o m p l e t e and the o i l and gas no l o n g e r f i t the d e s c r i p t i o n , " t h e p u b l i c l a n d s b e l o n g i n g t o t h e p r o v i n c e " . However, even i f p r o p e r t y i n o i l and gas remains i n the Crown a f t e r p r o d u c t i o n , t h e s u b s t a n c e s c e a s e t o be l a n d o r i n c i d e n t s t o l a n d , and become c h a t t e l s . T h u s , the l i m i t s t o t h e c l a s s d e s c r i b e d i n s e c t i o n 92(5) a r e c e r t a i n l y exceeded a f t e r o i l and gas are p r o d u c e d , and may be r e a c h e d e a r l i e r i f the a l l o c a t i o n s y s t e m t r a n s f e r s p r o p e r t y from the Crown p r i o r t o p r o d u c t i o n . In g e n e r a l , the p r o c e s s o f s e l e c t i o n o f t h e p a r t y t o r e c e i v e Crown o i l and gas r i g h t s , the n a t u r e o f s u c h r i g h t s , t h e i r e x t e n t , d u r a t i o n , and the c o n s i d e r a t i o n p a i d t h e r e f o r , a r e a l l m a t t e r s coming w i t h i n " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g t o the p r o v i n c e " . However, q u e s t i o n s a r i s e i n r e l a t i o n t o some s p e c i a l c i r c u m s t a n c e s . The f i r s t i s whether a Dominion company o r a f e d e r a l Crown c o r p o r a t i o n i s p l a c e d i n any f a v o u r e d p o s i t i o n v i s a v i s a l l o t h e r p a r t i e s i n t h e a c q u i -s i t i o n o f Crown o i l and gas r i g h t s . The view o f t h e a u t h o r i t i e s a d o p t e d 163 h e r e , t h a t Dominion companies were e n t i t l e d t o be e s t a b l i s h e d and to 162 r- o o S u p r a , 2 - 3 . ^ 3 S u p r a , 4 8 . - 51 -c a r r y on b u s i n e s s w i t h o u t d i s c r i m i n a t i o n , but were o t h e r w i s e s u b j e c t t o p r o v i n c i a l r e g u l a t o r y power, r e q u i r e s t h e c o n c l u s i o n t h a t such companies occupy no f a v o u r e d p o s i t i o n . To f i n d o t h e r w i s e would be t o s u g g e s t t h a t . the scope o f t h e c l a s s o f s u b j e c t s d e s c r i b e d i n s e c t i o n 9 2 ( 5 ) s h o u l d be r e a d down t o accommodate the v e r y much b r o a d e r f e d e r a l r e s i d u a r y p o w e r , 164 c o n t r a r y t o t h e scheme i n h e r e n t i n s e c t i o n s 91 and 9 2 . N e x t , t h e r e i s t h e q u e s t i o n w h e t h e r a p r o v i n c e i s r e s t r i c t e d as t o the method by w h i c h t h e c o n s i d e r a t i o n f o r the s a l e o f Crown o i l and gas r i g h t s may be c a l c u l a t e d and p a i d . Three examples are r e a d i l y a v a i l a b l e . U n t i l r e c e n t l y , t h e A l b e r t a government a s s e s s e d r o y a l t i e s on o i l p r o -d u c t i o n from Crown l e a s e s a c c o r d i n g t o a s l i d i n g s c a l e w h i c h r o s e w i t h i n c r e a s e d r a t e o f p r o d u c t i o n p e r w e l l from 5% t o a l m o s t 25% o f g r o s s w e l l h e a d v a l u e . A new s c a l e w h i c h took e f f e c t on A p r i l 1 , 1974, r e t a i n s the o l d s c a l e as a b a s i c r o y a l t y and adds a s u p p l e m e n t a r y r o y a l t y w h i c h a l s o v a r i e s w i t h r a t e o f p r o d u c t i o n and i s c a l c u l a t e d upon the d i f f e r e n c e between the c u r r e n t p r i c e o f c r u d e o i l and the p r i c e p r e v a i l i n g on March 3 1 , 1974. The a v e r a g e s u p p l e m e n t a r y r o y a l t y r a t e i s 65% f o r " o l d " o i l 1 6 5 and 35% f o r "new" o i l . The second example i s p r o v i d e d by the A l b e r t a gas r o y a l t y w h i c h i s a l s o c a l c u l a t e d on a s l i d i n g s c a l e b a s i s r i s i n g n o t 166 w i t h r a t e o f p r o d u c t i o n b u t w i t h s e l l i n g p r i c e a t the w e l l h e a d . T h i r d l y , 1 6 4 S u p r a , 17. 1 6 5 The r o y a l t y i s d e s c r i b e d i n g r e a t e r d e t a i l i n P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a " , 18. 1 6 6 I b i d , , 19. Saskatchewan has a p p l i e d an o i l " r o y a l t y s u r c h a r g e " c a l c u l a t e d by d e d u c t i n g the " b a s i c w e l l h e a d p r i c e " ( s p e c i f i e d by l e g i s l a t i o n ) from t h e " i n t e r n a t i o n a l w e l l h e a d p r i c e " ( d e t e r m i n e d by t h e M i n i s t e r as the w e l l h e a d v a l u e o f o i l 167 h a v i n g r e g a r d t o p r e v a i l i n g p r i c e s and t r a n s p o r t a t i o n c o s t s ) . The i s s u e i s whether t h e l e g i s l a t i o n i m p o s i n g t h e s e charges i s i n r e l a t i o n t o a m a t t e r coming w i t h i n " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g t o t h e p r o v i n c e " , o r , i n s t e a d , w i t h i n a f e d e r a l c l a s s s u c h as i n d i r e c t t a x a t i o n o r " t h e r e g u l a t i o n o f t r a d e and commerce". Two approaches a r e o p e n . The n a r r o w e r o f them asks w h e t h e r t h e c h a r g e s 168 i n q u e s t i o n may be r e g a r d e d as r o y a l t i e s a t common l a w , a n a l a g o u s t o r e n t , g i v i n g t h e h o l d e r t h e r e o f an i n t e r e s t i n l a n d . I f s o , i t seems c l e a r t h a t t h e y must be c h a r a c t e r i z e d n e i t h e r as t a x a t i o n n o r as an i n t e r f e r e n c e w i t h t r a d e and commerce. The common law has not sought to c u r t a i l t h e i n g e n u i t y o f landowners i n a s s e s s i n g r o y a l t i e s o r r e n t a c c o r d i n g t o w h a t e v e r c r i t e r i a 169 may be a g r e e d upon i n the c i r c u m s t a n c e s . In The Queen v . W e s t b r o o k , the c o n s i d e r a t i o n f o r a l e a s e t o d i g c l a y f o r making b r i c k s was an a n n u a l r e n t a l o f two pounds p e r a c r e p l u s " a r o y a l t y o f one s h i l l i n g and s i x pence f o r e v e r y t h o u s a n d o f b r i c k s moulded i n any one y e a r . " L o r d Denman C . J . , g i v i n g the judgment o f t h e C o u r t o f Queen's B e n c h , s a i d : 167 The O i l and Gas C o n s e r v a t i o n , S t a b i l i z a t i o n and Development A c t , 1 9 7 3 , S . S . 1 9 7 3 - 7 4 , c . 7 2 , amended by S . S . 1973-74, c . 7 3 . 1 CO ' • T h i s e x p r e s s i o n was adopted by L a s k i n , J . i n Saskatchewan M i n e r a l s v . Keyes , [1972j S . C . R . 7 0 3 , 23 D . L . R . (3d) 5 7 3 , 2 W.W.R. 108. 1 6 9 ( 1 8 4 7 ) , 10 Q.B. 178. - 5 3 -W h e n t h e c a s e i s t h u s l a i d b a r e , t h e r e i s n o d i s t i n c t i o n b e t w e e n i t . a n d t h a t o f t h e l e s s e e o f c o a l m i n e s , o f c l a y p i t s , o f s l a t e q u a r r i e s : i n a l l t h e s e t h e o c c u p a t i o n i s o n l y v a l u a b l e b y t h e r e m o v a l o f p o r t i o n s o f t h e s o i l : a n d w h e t h e r t h e o c c u p a t i o n i s p a i d f o r i n m o n e y o r k i n d , i s f i x e d b e f o r e h a n d b y t h e c o n t r a c t , o r m e a s u r e d a f t e r w a r d s b y t h e a c t u a l p r o d u c e , i t i s e q u a l l y i n s u b s t a n c e a r e n t : i t i s t h e c o m p e n s a t i o n w h i c h t h e o c c u p i e r p a y s t h e l a n d l o r d f o r t h a t s p e c i e s o f o c c u p a t i o n w h i c h t h e c o n t r a c t b e t w e e n t h e m a l l o w s . 1 7 0 M o r e r e c e n t l y , t h e P r i v y C o u n c i l w a s o f t h e o p i n i o n , i n A t t o r n e y - G e n e r a l o f A l b e r t a v . H u g g a r d A s s e t s L t d . a n d A t t o r n e y - G e n e r a l o f C a n a d a , ^ t h a t t h e f a c t t h a t a r o y a l t y w a s " v a r i a b l e " , i n t h a t i t s a m o u n t m a y d e p e n d u p o n t h e w h i m , f r o m t i m e t o t i m e , o f t h e g r a n t o r , d i d n o t c a u s e i t t o b e 1 7 2 s o " u n c e r t a i n " a s t o p r e v e n t i t f r o m b e i n g r e n t . T h e b r o a d e r a p p r o a c h d o e s n o t r e q u i r e t h a t t h e s e c h a r g e s b e c h a r a c -t e r i z e d a s r o y a l t i e s o r r e n t . I t s i m p l y a s k s w h e t h e r t h e y f o r m p a r t o f t h e c o n s i d e r a t i o n p a i d f o r t h e a c q u i s i t i o n o f o i l a n d g a s r i g h t s . T h e f a c t t h a t t h e y d o n o t a m o u n t t o r o y a l t i e s o r r e n t , s t r i c t l y c o n s t r u e d , d o e s n o t p r e v e n t t h e m f r o m c o n s t i t u t i n g p a r t o f t h i s c o n s i d e r a t i o n . S t i r l i n g L . J . 1 7 3 p u t t h e p o s i t i o n t h u s i n R e A d a m ' s E s t a t e : I t i s a l s o t o b e b o r n e i n m i n d t h a t t h e o b j e c t o f a m i n i n g l e a s e i s t o e n a b l e t h e l e s s e e t o r e m o v e f o r h i s o w n b e n e f i t t h e m i n e r a l s d e m i s e d , a n d w i d e l y d i f f e r s f r o m t h a t o f a l e a s e o f a p o r t i o n o f t h e s u r f a c e w h e r e t h e l e s s e e i s e x p e c t e d , a f t e r e n j o y i n g t h e u s e a n d o c c u p a t i o n o f t h e d e m i s e d p r o p e r t y f o r a t e r m o f y e a r s , t o d e l i v e r i t u p t o t h e l e s s o r i n t h e s a m e s t a t e a n d c o n d i t i o n a s a t t h e c o m m e n c e m e n t o f t h e l e a s e . T h e r e n t r e s e r v e d b y a m i n i n g l e a s e r a t h e r r e s e m b l e s a n i n s t a l m e n t o f p u r c h a s e - m o n e y f o r t h e d e m i s e d m i n e r a l s t h a n w h a t i s u n d e r s t o o d b y r e n t r e s e r v e d o n a n o r d i n a r y d e m i s e o f t h e s u r f a c e . 1 7 0 I b i r J ^ , 2 0 4 . 1 7 1 [ 1 9 5 3 ] A . C 4 2 0 . 1 7 2 ibid. , 4 4 0 . 1 7 3 [ 1 9 0 2 ] 2 C h . 4 6 . 1 7 4 i b i d . , 5 8 . - 54 -I r r e s p e c t i v e o f whether the A l b e r t a and Saskatchewan l e a s e s amount 175 t o a demise o f o i l and gas i n t h e g r o u n d , a q u e s t i o n taken up l a t e r , t h e r e seems l i t t l e doubt t h a t the r o y a l t i e s imposed on p r o d u c t i o n , however c a l c u l a t e d , form p a r t o f t h e c o n s i d e r a t i o n f o r the s a l e o f Crown r i g h t s . T h i s b e i n g the c a s e , the l e g i s l a t i o n i m p o s i n g o r amending t h e s e r o y a l t i e s ' i s i n r e l a t i o n t o a m a t t e r coming w i t h i n " t h e management and s a l e o f t h e p u b l i c l a n d s b e l o n g i n g t o t h e p r o v i n c e " . T h e n , t h e r e i s the vexed q u e s t i o n o f t h e e x t e n t t o w h i c h a p r o v i n c e can make the s a l e o f Crown o i l and gas r i g h t s s u b j e c t t o c o n d i t i o n s . In t h e absence o f c o n f l i c t i n g f e d e r a l l e g i s l a t i o n t h e p r o v i n c e may s i m p l y r e l y upon i t s o w n e r s h i p power t o i n s e r t any c o n d i t i o n s t h a t c o u l d be i n -e l u d e d by a p r i v a t e r e s o u r c e owner. Where such f e d e r a l l e g i s l a t i o n does e x i s t , t h o u g h , the p r o v i n c e i s r e s t r i c t e d to the scope o f i t s e x c -l u s i v e l e g i s l a t i v e a u t h o r i t y . A s t a t u t e i n s e r t i n g c o n d i t i o n s i n a s a l e o f o i l and gas r i g h t s w i l l be v a l i d o n l y to the e x t e n t t h a t i t i s i n r e l a t i o n t o a m a t t e r coming w i t h i n a p r o v i n c i a l c l a s s o f s u b j e c t s , u s u a l l y " t h e management and s a l e o f t h e p u b i c l a n d s b e l o n g i n g t o the p r o v i n c e " . An example i s p r o v i d e d by t h e A l b e r t a s t a t u t e , The Gas R e s o u r c e s P r e s e r v a t i o n A c t . ^ 7 7 F i r s t e n a c t e d i n 1956, t h i s s t a t u t e s e e k s t o 1 7 5 I n f r a , 6 2 . 1 7 6 T h i s may be done by e i t h e r l e g i s l a t i v e o r e x e c u t i v e a c t , w i t h o u t a f f e c t i n g the c o n s e q u e n c e s : s u p r a , 9 - 1 5 . 1 7 7 R . S . A . 1970, c . 157, as amended by S . A . 1971, c . 3 0 , S . A . 1 9 7 2 , c . 4 4 , and S . A . 1973, c . 9 0 . - 55 -r e g u l a t e the removal o f gas produced p u r s u a n t t o a Crown l e a s e o r o t h e r 178 t i t l e from A l b e r t a . The i n t e n t o f the A c t i s s t a t e d t h e r e i n , as f o l l o w s : The i n t e n t , purpose and o b j e c t o f t h i s A c t i s t o e f f e c t the . p r e s e r v a t i o n and c o n s e r v a t i o n o f the o i l and gas r e s o u r c e s o f t h e P r o v i n c e b e l o n g i n g t o the Crown i n r i g h t o f A l b e r t a and t o p r o v i d e f o r t h e i r e f f e c t i v e u t i l i z a t i o n h a v i n g r e g a r d t o t h e p r e s e n t and f u t u r e needs o f p e r s o n s w i t h i n t h e P r o v i n c e . ' ' y T h i s a l o n e does n o t i n d i c a t e the s u b j e c t m a t t e r o f t h e s t a t u t e , t h o u g h . A p e r s o n w i s h i n g t o remove gas from t h e p r o v i n c e may a p p l y t o t h e Energy 180 R e s o u r c e s C o n s e r v a t i o n Board f o r a p e r m i t t o do s o , and t h e Board i s n o t a l l o w e d t o g r a n t a p e r m i t -u n l e s s i n i t s o p i n i o n i t i s i n the p u b l i c i n t e r e s t t o do so h a v i n g r e g a r d t o (a) the p r e s e n t and f u t u r e needs o f p e r s o n s w i t h i n t h e P r o v i n c e , and (b) the e s t a b l i s h e d r e s e r v e s and the t r e n d s i n growth and d i s c o v e r y o f r e s e r v e s o f gas o r propane i n the P r o v i n c e . 181 A person who removes gas from A l b e r t a w i t h o u t a s u b s i s t i n g p e r m i t a u t h o -1Q2 r i z i n g t h e removal i s g u i l t y o f an o f f e n c e . 1 7 8 I b i d . , s . 2 . 1 , i n s e r t e d by S . A . 1 9 7 3 , c . 9 0 , s . 2 . P r i o r t o 1973, the A c t a p p l i e d a l s o t o gas produced from f r e e h o l d o i l and gas l e a s e s . 1 7 9 I b i d . , s . 3 , added by S . A . 1 9 7 3 , c . 9 0 , s . 3 . 1 8 0 I b i d . , s . 4 . I b i d . , s . 6 ( 3 ) . F o r a d e t a i l e d d e s c r i p t i o n o f t h e p r o c e d u r e f o l -lowed by t h e Board and t h e F a c t o r s c o n s i d e r e d i n r e a c h i n g i t s d e c i s i o n , see P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a " , 8 9 e t s e q . 1 8 2 I b i d . , s . 2 1 . - 56 -Two p o s s i b i l i t i e s p r e s e n t t h e m s e l v e s . One i s t h a t t h i s i s an A c t i n r e l a t i o n to the c o n s e r v a t i o n o f p u b l i c l y - o w n e d o i l and gas i n A l b e r t a , the o t h e r i s t h a t i t i s an A c t i n r e l a t i o n t o the removal o f gas f r o m t h e p r o v i n c e . I t i s s u b m i t t e d t h a t t h e l a t t e r d e s c r i p t i o n f i t s t h e s t a t u t e b e t t e r . The p e r m i t system o p e r a t e s w i t h r e s p e c t t o removal o f gas r a t h e r than p r o d u c t i o n . The two o p e r a t i o n s a r e c l o s e l y l i n k e d , i n t h a t p r o d u c t i o n may n o t o c c u r u n l e s s removal i s p o s s i b l e , b u t t h i s i s n o t n e c e s s a r i l y the c a s e . I t i s a l s o t r u e t h a t a p r i m a r y (though n o t the o n l y ) f a c t o r c o n -s i d e r e d by t h e Board i n r e v i e w i n g an a p p l i c a t i o n f o r a p e r m i t i s t h e i n -1 oo v e n t o r y o f gas a v a i l a b l e f o r A l b e r t a u s e . N e v e r t h e l e s s , t h e method chosen f o r i n f l u e n c i n g the l e v e l o f A l b e r t a s u p p l i e s i s the c o n t r o l o f gas removal from the p r o v i n c e . C o n s e r v a t i o n may be a c h i e v e d by t h e A l b e r t a government w i t h o u t r e s o r t t o t h i s i n d i r e c t mechanism. The A c t i s , t h e r e f o r e , i n r e l a t i o n t o a m a t t e r coming w i t h i n , " t h e r e g u l a t i o n o f t r a d e and commerce" r a t h e r than " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g t o the p r o v i n c e " and l i e s beyond t h e l i m i t s o f the e x c l u s i v e l e g i s l a t i v e a u t h o r i t y o f t h e p r o v i n c e . The n e x t q u e s t i o n i s whether a c o n d i t i o n i n c l u d e d i n the g r a n t o f Crown o i l and gas r i g h t s , h a v i n g t h e same e f f e c t as the p r o v i s i o n s o f The Gas R e s o u r c e s P r e s e r v a t i o n A c t o r r e q u i r i n g c o m p l i a n c e w i t h t h e m , has any g r e a t e r e f f e c t . For e x a m p l e , a term o f t h e A l b e r t a p e t r o l e u m and 184 n a t u r a l gas l e a s e reads as f o l l o w s : 183 P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a " , 8 9 . 184 A l b e r t a Mines and M i n e r a l s , M i n e r a l s D i v i s i o n , Form 1 6 0 - A , C l a u s e 3. - 57 -The l e s s e e s h a l l comply w i t h the p r o v i s i o n s o f the O i l and Gas C o n s e r v a t i o n A c t , and The Gas Resources P r e s e r v a t i o n A c t , and any A c t o r A c t s p a s s e d i n s u b s t i t u t i o n f o r them o r e i t h e r o f t h e m , and any o r d e r o f the Energy Resources C o n s e r v a t i o n Board made p u r s u a n t t o any o f s u c h A c t s , and any r e g u l a t i o n s t h a t a t any time may be made under the a u t h o r i t y o f any o f s u c h A c t s , and a l l such p r o v i s i o n s , o r d e r s and r e g u l a t i o n s s h a l l be deemed t o be i n c o r p o r a t e d i n t o t h i s l e a s e and s h a l l b i n d t h e l e s s e e i n the same manner and t o t h e same e x t e n t as i f the same were s e t o u t h e r e i n as c o v e n a n t s on the p a r t o f t h e l e s s e e . Each and e v e r y p r o v i s i o n , o r d e r o r r e g u l a t i o n h e r e a f t e r made s h a l l be deemed t o be i n c o r p o r a t e d i n t o t h i s l e a s e and s h a l l b i n d t h e l e s s e e as and from the d a t e i t comes i n t o f o r c e , b u t i n t h e e v e n t o f c o n f l i c t between any o r d e r o r r e g u l a t i o n h e r e a f t e r made and any o r d e r o r r e g u l a t i o n p r e v i o u s l y made the o r d e r o r r e g u l a t i o n l a s t made s h a l l p r e v a i l . In t h e absence o f f e d e r a l l e g i s l a t i o n t o the c o n t r a r y , t h i s c o n d i t i o n r e p r e s e n t s a v a l i d e x e r c i s e o f t h e p r o v i n c e ' s o w n e r s h i p powers i n r e l a t i o n t o o i l and gas and i s t h e r e b y e n f o r c e a b l e . Where f e d e r a l l e g i s l a t i o n does e x i s t r e g u l a t i n g the movement o f gas f r o m one p r o v i n c e t o a n o t h e r , t h o u g h , t h e c o n d i t i o n must bow t o t h i s l e g i s l a t i o n . To h o l d o t h e r w i d e w o u l d p r o -v i d e an immunity f o r p r o v i n c i a l e x e c u t i v e a c t i o n i n r e l a t i o n t o m a t t e r s 185 coming w i t h i n t h e scope o f e x c l u s i v e f e d e r a l l e g i s l a t i v e a u t h o r i t y . However, a f u r t h e r c l a u s e i n the A l b e r t a p e t r o l e u m and n a t u r a l gas •j Qg l e a s e must a l s o be n o t e d . I t p r o v i d e s : 6 . The l e s s e e c o v e n a n t s , and i t i s an e x p r e s s c o n d i t i o n upon w h i c h t h i s l e a s e i s g r a n t e d , t h a t n a t u r a l gas p r o d u c e d f r o m the l o c a t i o n s h a l l be used w i t h i n the P r o v i n c e o f A l b e r t a , u n l e s s the c o n s e n t o f t h e L i e u t e n a n t Governor i n C o u n c i l t o i t s use e l s e w h e r e has been p r e v i o u s l y o b t a i n e d . Upon any b r e a c h o f t h i s c o v e n a n t and c o n d i t i o n o c c u r r i n g , w h e t h e r w i t h o r w i t h o u t the c o n s e n t o r knowledge o f the l e s s e e , t h i s l e a s e , i n so f a r as i t r e l a t e s to the n a t u r a l gas w i t h i n and u n d e r the l o c a t i o n , s h a l l f o r t h w i t h be t e r m i n a t e d , s h a l l become n u l l and v o i d , and s h a l l c e a s e t o have any f u r t h e r f o r c e o r e f f e c t , and the n a t u r a l gas w i t h i n and under t h e l o c a t i o n , f r e e d and d i s -c h a r g e d from any i n t e r e s t o r c l a i m o f the l e s s e e o r any o t h e r p e r s o n o r p e r s o n s whomsoever c l a i m i n g b y , t h r o u g h o r u n d e r t h e l e s s e e . 185 c 0 / 1  S u p r a , 34. 1 8 6 A l b e r t a Mines and M i n e r a l s , M i n e r a l s D i v i s i o n , Form 1 5 0 - A , c l a u s e 6. - 58 -T h i s does not p r o h i b i t t h e removal o f gas from A l b e r t a w i t h o u t a p e r m i t , o r make such removal an o f f e n c e , N e v e r t h e l e s s , t h e l i n k w i t h The Gas R e s o u r c e s  P r e s e r v a t i o n A c t i s c l e a r . The a p p r o v a l of the L i e u t e n a n t G o v e r n o r i n Coun-c i l has n e v e r been g r a n t e d , as a m a t t e r o f p r a c t i c e , u n l e s s a p e r m i t has 187 f i r s t been i s s u e d by t h e B o a r d . T h i s l i n k may be s u f f i c i e n t t o make t h e c l a u s e i n o p e r a t i v e i n t h e f a c e o f f e d e r a l l e g i s l a t i o n r e g u l a t i n g i n t e r p r o v i n -c i a l movement o f g a s , i f t h e c o u r t s a r e p r e p a r e d t o l o o k b e h i n d t h e words o f I oo t h e s t a t u t e s t o t h e i r a d m i n i s t r a t i o n . However, t h e i s s u e i s not f r e e from d o u b t . In any e v e n t , t h o u g h , i t seems t h a t t h e v a l i d i t y o f t h e c l a u s e m a t t e r s l i t t l e t o t h e end r e s u l t . F i r s t l y , t h e c l a u s e i s d r a f t e d i n t h e form o f a d e t e r m i n a b l e l i m i t a -t i o n r a t h e r than a c o n d i t i o n s u b s e q u e n t . I t does not p r o h i b i t t h e removal o f gas from A l b e r t a w i t h o u t a p p r o v a l o r g i v e t h e A l b e r t a government a cause o f a c t i o n f o r b r e a c h . I n s t e a d , i t p r o v i d e s t h a t t h e r i g h t s o f t h e l e s s e e under t h e Crown l e a s e s h a l l d e t e r m i n e upon t h e h a p p e n i n g o f such an e v e n t , w i t h o u t t h e n e c e s s i t y o f any f u r t h e r a c t i o n on t h e p a r t o f t h e A l b e r t a government. The c o u r t s have l o n g drawn a d i s t i n c t i o n between t h e e f f e c t s d f a d e t e r m i n a b l e l i m i t a t i o n and a c o n d i t i o n s u b s e q u e n t . In p a r t i c u -l a r , t h e r e s u l t s a r e d i f f e r e n t i f t h e p r o v i s i o n s are v o i d . A g r a n t s u b j e c t t o a c o n d i t i o n s u b s e q u e n t , w h i c h i s judged t o be v o i d , becomes a b s o l u t e , 189 s i n c e t h e g r a n t i s p r o p e r l y l i m i t e d even though the c o n d i t i o n f a i l s . However, a g r a n t s u b j e c t t o a d e t e r m i n a b l e l i m i t a t i o n w h i c h i s v o i d w h o l l y 187 See P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a " , 88 e t s e q . 188 The c a s e f o r such r e c o u r s e by t h e c o u r t s i s e l o q u e n t l y made by A b e l , o p . c i t . , n o t e 5 2 , 4 9 5 - 4 9 6 . 189 Megarry and Wade, The Law o f Real P r o p e r t y , L o n d o n , S t e v e n s , 1966 ( 3 r d e d i t i o n ) , 8 2 , c i t i n g Re Greenwood, [1903] 1 C h . 7 4 9 . - 59 -190 f a i l s , s i n c e t h e g r a n t has no p r o p e r l i m i t a t i o n . T h u s , even i f t h e c l a u s e e f f e c t i n g t h e l i m i t a t i o n o f t h e l e s s e e ' s i n t e r e s t was h e l d t o be i n o p e r a t i v e as g o i n g beyond t h e powers o f t h e A l b e r t a g o v e r n m e n t , t h e l e a s e would d e t e r m i n e , w i t h t h e consequence t h a t t h e f u t u r e removal o f gas f r o m t h e p r o v i n c e w o u l d be p r e v e n t e d . S e c o n d l y , t h e r e i s a u t h o r i t y f o r t h e p r o p o s i t i o n t h a t i f a c o v e n a n t forms p a r t o f t h e c o n s i d e r a t i o n f o r w h i c h t h e l e a s e i s g r a n t e d , a f i n d i n g t h a t t h e c o v e n a n t i s v o i d may cause t h e e n t i r e g r a n t t o f a i l f o r want o f a d e q u a t e c o n s i d e r a t i o n . In A t t o r n e y - G e n e r a l f o r B r i t i s h C o l u m b i a e t a l . 191 v . B r o o k s - B i d i a k e & W h i t t a l l , L i m i t e d , f o u r j u d g e s o f t h e Supreme C o u r t o f Canada s u g g e s t e d t h a t i f t h e c o n d i t i o n t h e r e i n q u e s t i o n was v o i d , t h e n t h e l i c e n c e i t s e l f was v o i d as t h e c o n d i t i o n formed p a r t o f t h e c o n s i d e r a -192 t i o n f o r t h e g r a n t o f t h e l i c e n c e . I t seems t h a t whether t h e r e i s a f a i l u r e o f c o n s i d e r a t i o n i s a q u e s t i o n o f f a c t t o be d e c i d e d i n a l l t h e c i r c u m s t a n c e s o f t h e c a s e . The r e s u l t i s i n no way i l l o g i c a l . D e s p i t e t h e i m p a c t o f t h e d e t e r -m i n a b l e l i m i t a t i o n upon i n t e r p r o v i n c i a l t r a d e and commerce, and t h e f a c t t h a t a p r o v i n c e may use such a d e v i c e t o r e g u l a t e i n t e r p r o v i n c i a l t r a d e and commerce i n d i r e c t l y , a p r o v i n c e i s f r e e t o g r a n t such r i g h t s as i t •\ . • t t h i n k s f i t o v e r p u b l i c l y - o w n e d o i l and gas r e s o u r c e s . The a s s o c i a t i o n between t h e d u r a t i o n o f t h e s e r i g h t s and i n t e r p r o v i n c i a l t r a d e and commerce i s o f c o n s i d e r a b l e i m p o r t a n c e t o t h e l e s s e e , who s h o u l d be aware t h a t t h e g r a n t i s n o t a b s o l u t e , but t h e r e i s no ground f o r a r g u i n g t h a t t h e c o u r t s I b i d . , c i t i n g Re M o o r e , [ 1 8 8 8 ] 39 C h . D . 116. 1 9 1 ( 1 9 2 2 ) , 63 S . C . R . 4 6 6 . 1 9 2 Per D a v i e s C . J . and M i g n a u l t J . ( a t 4 8 0 ) , A u g l i n J . ( a t 479) and I d i n g t o n J . (at 4 7 2 ) . \ - 60 -s h o u l d i n t e r v e n e to g i v e t h e l e s s e e something w h i c h t h e p r o v i n c e d i d n o t o f f e r i n the f i r s t p l a c e . A f a i l u r e t o g i v e e f f e c t t o t h e d e t e r m i n a b l e l i m i t a t i o n would produce t h i s c o n s e q u e n c e . A c c o r d i n g l y , a p r o v i n c e may use an a l l o c a t i o n s y s t e m t o e x e r c i s e c o n s i d e r a b l e c o n t r o l o v e r p u b l i c l y - o w n e d o i l and gas r e s o u r c e s w h i l e they remain i n the g r o u n d . Once p r o d u c t i o n has t a k e n p l a c e , t h e o p p o r t u -n i t y f o r c o n t i n u i n g c o n t r o l i s s u b s t a n t i a l l y r e d u c e d a l t h o u g h e v e n t s t a k i n g p l a c e a f t e r p r o d u c t i o n may have an e f f e c t upon f u t u r e r i g h t s i n r e l a t i o n t o r e s o u r c e s s t i l l i n t h e g r o u n d . 2 . E x p l o r a t i o n . E x p l o r a t i o n f o r Crown o i l and gas r e s o u r c e s i s a m a t t e r coming w i t h i n " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g t o t h e p r o v i n c e " . A p r o v i n c i a l government i s f r e e to choose the method by w h i c h s u c h e x p l o -r a t i o n i s c o n d u c t e d , e i t h e r by a Crown c o r p o r a t i o n o r by government s u b s i d y 193 o f p r i v a t e i n d u s t r y o p e r a t i o n s . Once an a l l o c a t i o n o f Crown o i l and gas r i g h t s has been made t o p r i v a t e i n d u s t r y , w h e t h e r o r n o t s u b s e q u e n t e x p l o r a t i o n i s f o r Crown o r p r i v a t e r e s o u r c e s depends upon the n a t u r e o f the r i g h t s g r a n t e d . More s p e c i f i c a l l y , i t depends upon w h e t h e r p r o p e r t y i n the o i l and gas p a s s e s w i t h t h e g r a n t o r a t some l a t e r t i m e . In A l b e r t a , most e x p l o r a t i o n i s c o n d u c t e d p u r s u a n t to Crown r e s e r v a t i o n s w h i c h convey the e x c l u s i v e r i g h t t o d r i l l w e l l s f o r o i l and gas i n t h e s u b j e c t l a n d s and For e x a m p l e , see the E x p l o r a t o r y D r i l l i n g I n c e n t i v e R e g u l a t i o n s , 1974, A l t a . Reg. 18/74, d e s c r i b e d i n d e t a i l i n P a r t I I , "Government Manage-ment o f O i l and Gas i n A l b e r t a " , 38 e t s e q . - 61 -t h e r i g h t t o produce t h e s e s u b s t a n c e s i f d i s c o v e r e d , b u t do n o t c o n v e y 194 p r o p e r t y i n t h e o i l and g a s , w h i c h remains w i t h the Crown. H e n c e , t h i s e x p l o r a t i o n may be d e s c r i b e d as b e i n g f o r Crown o i l and gas r e s o u r c e s and l i e s w i t h i n t h e e x c l u s i v e l e g i s l a t i v e a u t h o r i t y o f t h e p r o v i n c e . E x p l o r a t i o n f o r p r i v a t e o i l and gas r e s o u r c e s i s a m a t t e r coming w i t h i n e i t h e r " p r o p e r t y and c i v i l r i g h t s i n t h e p r o v i n c e " o r " g e n e r a l l y a l l m a t t e r s o f a m e r e l y l o c a l o r p r i v a t e n a t u r e i n the p r o v i n c e " , d e p e n d i n g upon t h e v i e w t a k e n o f the scope o f t h e f o r m e r c l a s s o f s u b j e c t s . The 195 l a t t e r i s t o be p r e f e r r e d i n p r i n c i p l e , b u t i n any e v e n t t h e r e s u l t i s the same. In sum, a p r o v i n c e ' s l e g i s l a t i v e c o n t r o l o v e r e x p l o r a t i o n w i t h i n i t s b o r d e r s does n o t seem t o be i n d o u b t . 3. P r o d u c t i o n . The volume o f o i l and gas r e c o v e r a b l e from a pool and the r a t e o f p r o d u c t i o n a t t a i n a b l e a r e both d e t e r m i n e d by i n d i v i d u a l r e s e r v o i r c h a r a c t e -r i s t i c s . Of p a r t i c u l a r i m p o r t a n c e i s the n a t u r e o f t h e r e s e r v o i r e n e r g y , o r d r i v e . P r o d u c t i o n o f o i l o r gas from a p o o l i s n e c e s s a r i l y accompanied by a d e c l i n e i n r e s e r v o i r p r e s s u r e w h i c h i n t u r n reduces p r o d u c t i v e c a p a -c i t y . Above a c r i t i c a l p r o d u c t i o n r a t e , w h i c h w i l l v a r y from one r e s e r v o i r t o t h e n e x t , the t o t a l volume o f o i l and gas u l t i m a t e l y p r o d u c e d from a P e t r o l e u m and N a t u r a l Gas R e s e r v a t i o n R e g u l a t i o n s , 1 9 6 2 , A l t a . Reg. 2 5 1 / 6 2 , as amended by A l t a . Regs. 299/66 and 3 9 6 / 6 8 ; s . 9 . For d e t a i l s see P a r t I I , i b i d . , 1 0 . , y o S u p r a , 2 6 . - 62 -196 p o o l depends upon the chosen r a t e o f p r o d u c t i o n . A l l t h e s e f a c t o r s demonstrate the l i n k between r e g u l a t i o n o f p r o d u c t i o n and r e s o u r c e manage-ment i n r e l a t i o n to o i l and g a s . P r o d u c t i o n o f Crown o i l and gas i s c l e a r l y a m a t t e r coming w i t h " t h e management and s a l e o f t h e p u b l i c l a n d s b e l o n g i n g t o the p r o v i n c e " . T h i s c l a s s o f s u b j e c t s i n c l u d e s development o f a p o o l and c o n t r o l o v e r t h e r a t e o f p r o d u c t i o n o f o i l and gas t h e r e f r o m . A g a i n , the t i m e a t w h i c h p r o p e r t y i n o i l and gas p a s s e s f r o m t h e Crown i n t o p r i v a t e o w n e r s h i p p u r s u a n t to the a l l o c a t i o n p r o c e s s i s o f c o n s i d e r a b l e s i g n i f i c a n c e . I f p r o p e r t y passes b e f o r e the p o i n t o f p r o -d u c t i o n , the r e g u l a t i o n o f p r o d u c t i o n i s n o t i n r e l a t i o n t o Crown o i l and gas and so i s n o t a m a t t e r coming w i t h " t h e management and s a l e o f t h e p u b l i c l a n d s b e l o n g i n g t o t h e p r o v i n c e " . On t h e o t h e r h a n d , i f p r o p e r t y p a s s e s upon o r a f t e r p r o d u c t i o n , t h e r e g u l a t i o n o f p r o d u c t i o n i s a m a t t e r coming w i t h i n t h i s c l a s s . The A l b e r t a p e t r o l e u m and n a t u r a l gas l e a s e g r a n t s t h e r i g h t t o the o i l and gas t h a t a r e the p r o p e r t y o f t h e Crown i n the l e a s e a r e a s u b j e c t 197 t o any e x c e p t i o n s e x p r e s s e d i n the l e a s e . The n a t u r e o f t h i s r i g h t i s l e f t t o the l e a s e document i t s e l f , t h e g r a n t i n g c l a u s e o f w h i c h r e a d s as f o l l o w s : . . . i n c o n s i d e r a t i o n o f the r e n t s and r o y a l t i e s h e r e i n a f t e r p r o -v i d e d and s u b j e c t t o t h e terms and c o n d i t i o n s h e r e i n a f t e r e x p r e s s e d , Her M a j e s t y hereby g r a n t s unto the l e s s e e i n so f a r as t h e Crown has the r i g h t t o g r a n t t h e same t h e e x c l u s i v e r i g h t t o e x p l o r e f o r , w o r k , win and r e c o v e r p e t r o l e u m and n a t u r a l gas w i t h i n and under the l a n d s more p a r t i c u l a r l y d e s c r i b e d as f o l l o w s . . . , t o g e t h e r w i t h t h e r i g h t to d i s p o s e o f t h e p e t r o l e u m and n a t u r a l gas r e c o v e r e d . 198 1 Qg A more d e t a i l e d d e s c r i p t i o n i s c o n t a i n e d i n P a r t . I I , "Government Management o f O i l and Gas i n A l b e r t a " , • 4 6 - 4 8 and 5 5 - 5 8 . 1 9 7 The Mines and M i n e r a l s A c t . R . S . A . 1 9 7 0 , c . 2 3 8 , as amended by S . A 1 , 30 and 9 6 , S . A . 1972, c . 6 7 , 6 8 , 91 and 119, and S . A . 1 9 7 3 , c . 3 4 and 9 4 ; s t i o n 121. A l b e r t a Mines and M i n e r a l s , M i n e r a l s D i v i s i o n , Form 160-A. - 63 -The c l a u s e i s n o t s p e c i f i c as to t h e t i m e when p r o p e r t y i n o i l and gas p a s s e s t o t h e l e s s e e , b u t the i m p l i c a t i o n t o be d e r i v e d from t h e c o n c -l u d i n g p h r a s e i s t h a t t h i s does n o t o c c u r u n t i l the s u b s t a n c e s a r e p r o -d u c e d . T h i s i s c o n s i s t e n t w i t h t h e v i e w t h a t the l e s s e e does n o t have an i n t e r e s t i n l a n d b u t r a t h e r a bare l i c e n c e t o c o n d u c t s p e c i f i e d a c t i -199 v i t i e s w i t h i n t h e l e a s e a r e a . I t f o l l o w s t h a t the A l b e r t a g o v e r n -ment may c o n t r o l the method and r a t e o f p r o c u t i o n from Crown p e t r o l e u m and n a t u r a l gas l e a s e s . The r e s u l t w o u l d n o t be d i f f e r e n t even i f t h e l e s s e e were j u d g e d t o have an i n t e r e s t i n l a n d , such as a p r o f i t a p r e n d r e , p r i o r t o p r o d u c t i o n . In t h i s e v e n t t h e Crown would s t i l l r e t a i n a r e v e r s i o n a r y i n t e r e s t i n the o i l and gas i n t h e ground s u f f i c i e n t f o r t h e s e s u b s t a n c e s t o f i t t h e d e s c r i p t i o n , " t h e p u b l i c l a n d s b e l o n g i n g t o p r o v i n c e " . Only i n t h e case where t h e Crown made an a b s o l u t e g r a n t o f o i l and gas i n s i t u would p r o v i n c i a l j u r i s d i c t i o n o v e r p r o d u c t i o n be r e l i n q u i s h e d as from the date o f the g r a n t . O i l and gas p r o d u c t i o n i n A l b e r t a i s r e g u l a t e d i n a v a r i e t y o f ways. The r e l e v a n t s t a t u t e i s The O i l and Gas C o n s e r v a t i o n A c t . 2 0 0 G e n e r a l l y , t h e r e i s a p r o h i b i t i o n a g a i n s t " w a s t e " , d e f i n e d to mean underground o r s u r f a c e l o s s o f r e c o v e r a b l e o i l o r g a s , e x c e s s i v e d i s s i p a t i o n o f r e s e r v o i r 201 e n e r g y o r f a i l u r e t o use s u i t a b l e enhanced r e c o v e r y o p e r a t i o n s . More 1 9 9 See P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a " , 14. 2 0 0 R . S . A . 1970, c . 2 6 7 , as amended by S . A . 1971, c . 3 0 and 119, S . A . 1972, c . 6 7 and S . A . 1974, c . 4 8 . 201 I b i d . , s e c t i o n s 1 3 8 , 2 . - 64 -s p e c i f i c a l l y , the Energy R e s o u r c e s C o n s e r v a t i o n B o a r d , w h i c h i s c h a r g e d w i t h the a d m i n i s t r a t i o n o f The O i l and Gas C o n s e r v a t i o n A c t , a s s i g n s m a x i -mum r a t e l i m i t a t i o n s to o i l w e l l s and p o o l s , w i t h the o b j e c t o f o b t a i n i n g 202 p r o d u c t i o n o f t h e g r e a t e s t p o s s i b l e volume o f o i l t h e r e f r o m . S i m i l a r l i m i t a t i o n s a r e n o t a p p l i e d t o gas p r o d u c t i o n b u t t h e p r o h i b i t i o n a g a i n s t 203 waste i s e n f o r c e d by t h e B o a r d . In a d d i t i o n , t h e Board a d m i n i s t e r s a s y s t e m o f market demand p r o r a t i o n i n g f o r o i l , w h i c h c o n s i s t s o f a d e t e r -m i n a t i o n o f the demand f o r o i l from t h e p r o v i n c e on a m o n t h l y b a s i s and 204 the a l l o c a t i o n o f t h i s demand among a l l p r o d u c i n g p o o l s and w e l l s . There i s no comparable scheme i n e f f e c t f o r gas p r o d u c t i o n b u t t h e Board i s empowered to r e s t r i c t the t o t a l amount o f gas p r o d u c e d from a p o o l d u r i n g any p e r i o d and t o d i s t r i b u t e the t o t a l p r o d u c t i o n i n an e q u i t a b l e manner among w e l l s i n the p o o l , i n o r d e r t o g i v e each p r o d u c e r t h e o p p o r t u -205 n i t y o f p r o d u c i n g h i s s h a r e o f gas i n the p o o l . The most c o n t r o v e r s i a l o f t h e s e measures i s u n d o u b t e d l y t h e m a r k e t demand p r o r a t i o n i n g scheme f o r o i l . I t o p e r a t e s as a p r o d u c e r s ' c a r t e l , t e n d i n g to keep the p r i c e o f o i l above what i t would o t h e r w i s e b e , and 2DR e n c o u r a g i n g economic i n e f f i c i e n c y a t the p r o d u c t i o n s t a g e . I t s p r i n c i p a l o b j e c t i v e s appear to be m a i n t e n a n c e o f p r i c e s t a b i l i t y and 202 For a d e t a i l e d d e s c r i p t i o n o f the system o f maximum r a t e l i m i t a -t i o n s see P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a " , 5 9 - 6 0 . 2 0 3 I b i d . , 6 0 . 2 ^ 4 For a d e s c r i p t i o n and c r i t i c i s m o f the m a r k e t demand p r o r a t i o n i n g s c h e m e , . s e e i b i d . , 62 e t s e q . 205 The O i l and Gas C o n s e r v a t i o n A c t , o p . c i t . n o t e 1 9 9 , s . 3 5 ; s e e i b i d . See P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a " , 62 e t s e q . - 65 -207 s h a r i n g o f t h e a v a i l a b l e m a r k e t among competing p r o d u c e r s . N e v e r t h e -l e s s , t h e r e can be l i t t l e doubt t h a t t h e s u b s t a n c e o f the scheme i s t h e r e g u l a t i o n o f r a t e s o f p r o d u c t i o n . A c c o r d i n g l y , so f a r as Crown l e a s e s a r e c o n c e r n e d , t h e l e g i s l a t i o n e s t a b l i s h i n g t h e scheme i s i n r e l a t i o n t o a m a t t e r coming w i t h i n " t h e management and s a l e o f t h e p u b l i c l a n d s b e -l o n g i n g t o t h e p r o v i n c e " . The o b j e c t i v e s s o u g h t to be a c h i e v e d by t h e government i n i t s chosen management scheme, t o g e t h e r w i t h any i n c i d e n t a l e f f e c t s c a u s e d t h e r e b y , a r e n o t such as to a l t e r t h e b a s i c c h a r a c t e r o f the a c t i v i t y , w h i c h i s management o f p u b l i c l y - o w n e d r e s o u r c e s . In t h e c a s e o f p r i v a t e l y - o w n e d o i l and g a s , however, the p o s i t i o n i s more c o m p l i c a t e d as r e l i a n c e i s n e c e s s a r y upon e i t h e r s e c t i o n 92(13) o f t h e B . N . A . A c t , " p r o p e r t y and c i v i l r i g h t s i n the p r o v i n c e " o r s e c t i o n 9 2 ( 1 6 ) , " g e n e r a l l y a l l m a t t e r s o f a m e r e l y l o c a l o r p r i v a t e n a t u r e i n the p r o v i n c e " . The p r o h i b i t i o n a g a i n s t waste and the a s s i g n m e n t o f maximum r a t e l i m i t a t i o n s t o w e l l s and p o o l s a r e c l e a r l y m a t t e r s coming w i t h i n one o r t h e o t h e r o f t h e s e c l a s s e s , as a l s o i s the a l l o c a t i o n o f t o t a l p o o l p r o d u c t i o n among c o m p e t i n g o p e r a t o r s w i t h i n t h e p o o l . A u t h o r i t y f o r t h i s p r o p o s i t i o n i s to be f o u n d i n t h e judgment o f the Supreme C o u r t o f Canada i n Spooner O i l L i m i t e d and Spooner v . The T u r n e r V a l l e y Gas C o n s e r v a t i o n Board and The 208 A t t o r n e y - G e n e r a l o f A l b e r t a . I t was t h e r e h e l d t h a t the T u r n e r V a l l e y 209 Gas C o n s e r v a t i o n A c t , w h i c h e s t a b l i s h e d a Board w i t h power t o l i m i t 2 0 7 I b i d . 2 0 8 [1933] S . C . R . 6 2 9 , 4 D . L . R . 545. 2 0 9 S . A . 1 9 3 2 , c . 6 . - 66 -p r o d u c t i o n o f naptha and gas from any w e l l i n the f i e l d w i t h a v i e w t o r e d u c i n g the waste o f gas by f l a r i n g , was n o t i n r e l a t i o n t o a m a t t e r coming w i t h " t h e r e g u l a t i o n o f t r a d e and commerece", b u t i n r e l a t i o n t o a m a t t e r 2 coming w i t h i n one o f t h e c l a s s e s o f s u b j e c t s i n S e c t i o n 92 o f t h e B . N . A . A c t . On t h e same b a s i s , t h e r e can be no r e a l doubt t h a t a p r o v i n c e can l e g i s l a t e 211 r e q u i r i n g c o m p u l s o r y u n i t i z a t i o n o f p o o l s . However, the m a r k e t demand p r o r a t i o n i n g scheme goes beyond t h e p r e -v e n t i o n o f waste and the s h a r i n g o f p r o d u c t i o n among w e l l s i n a common p o o l by a l l o c a t i n g t o t a l p r o v i n c i a l demand among p o o l s i n the p r o v i n c e . The q u e s t i o n i s whether t h i s a s p e c t o f t h e scheme, as r e g a r d s t h e p r o d u c t i o n o f p r i v a t e l y - o w n e d o i l , comes w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce". The answer depends upon a c h a r a c t e r i z a t i o n o f t h e scheme and a d e f i n i t i o n o f the s c o p e o f t h i s c l a s s o f s u b j e c t s . The p r o r a t i o n i n g scheme u n d o u b t e d l y has an e f f e c t upon the m a r k e t i n g o f p r i v a t e l y - o w n e d o i l . But i s t h e scheme, i n e s s e n c e , i n r e l a t i o n to m a r k e t i n g o r p r o d u c t i o n ? The c o n t r o l s a r e p l a c e d s q u a r e l y on p r o d u c t i o n . T h e r e a f t e r , a p r i v a t e owner i s f r e e t o m a r k e t h i s o i l as he sees f i t . The i n f l u e n c e o f the scheme on p r i c e i s s i g n i f i c a n t b u t i s n o t o f such i m p o r t a n c e as t o p r e v e n t t h e scheme as a whole from b e i n g r e g a r d e d as one e s t a b l i s h i n g p r o d u c t i o n q u o t a s . The scope o f t h e f e d e r a l c l a s s o f s u b j e c t s i s t o be d e r i v e d from t h e meaning a t t r i b u t a b l e t o the words " t r a d e " and "commerce". L a s k i n J . has s u g g e s t e d 210 [1933] S . C . R . 6 2 9 , 6 4 8 - 9 , 4 D . L . R . 5 4 5 , 5 6 3 - 4 . 211 C f . The O i l and Gas C o n s e r v a t i o n A c t , o p . c i t . n o t e 1 9 9 , s s . 8 7 - 9 5 , w i t h The O i l and Gas C o n s e r v a t i o n A c t ( S a s k ) , R . S . S . 1 9 6 5 , c . 3 6 0 ; , as amended by S . S . 1 9 6 6 , c . 6 6 ; s s . 3 4 - 4 3 a . - 67 -t h a t "commerce" r e f e r s t o b u y i n g and s e l l i n g w h i l e " t r a d e " i n c l u d e s . 212 m e r c a n t i l e o c c u p a t i o n . Of c o u r s e , he was c a r e f u l t o p o i n t o u t t h a t t h e s e d e f i n i t i o n s s h o u l d n o t be r e g a r d e d as e x h a u s t i v e , and t h i s seems p a r t i c u l a r l y so i n r e l a t i o n t o " t r a d e " . The r e a l q u e s t i o n i s w h e t h e r c o n t r o l o v e r p r o d u c t i o n comes w i t h i n " t r a d e and commerce". I t i s s u b -m i t t e d t h a t , i n o r d i n a r y c i r c u m s t a n c e s , i t s h o u l d n o t . P r o d u c t i o n i s an a c t i v i t y d i s t i n c t from t h a t o f exchange w h i c h i s i m p l i c i t i n t r a d e 212A and commerce. On t h i s b a s i s , t h e f e d e r a l c l a s s o f s u b j e c t s c o m p r i s -i n g " t h e r e g u l a t i o n o f t r a d e and commerce" does n o t e x t e n d t o t h e a s s i g n -ment o f p r o d u c t i o n q u o t a s f o r o i l w i t h i n the p r o v i n c e , e s p e c i a l l y s i n c e i t i s a p p a r e n t t h a t t h i s p r o c e d u r e i s n o t d i r e c t e d towards r e g u l a t i o n o f the i n t e r p r o v i n c i a l movement o r s a l e of g o o d s . I t i s , t h e r e f o r e , s u g g e s t e d t h a t c o n t r o l o f the r a t e s o f p r o d u c t i o n o f p r i v a t e l y - o w n e d o i l i s a m a t t e r coming w i t h i n t h e p r o v i n c i a l r e s i d u a r y c l a s s o f s u b j e c t s . F i n a l l y , o i l and gas p r o d u c t i o n f a c i l i t i e s c o u l d be the s u b j e c t o f a d e c l a r a t i o n by the P a r l i a m e n t o f Canada under s e c t i o n 9 2 ( 1 0 ) ( c ) o f t h e B . N . A . A c t , s i n c e t h e y a p p a r e n t l y f a l l w i t h i n t h e d e f i n i t i o n o f " w o r k s " 213 a p p l i e d by t h e c o u r t s . T h i s would have t h e e f f e c t o f t a k i n g the r e g u l a t i o n o f p r o d u c t i o n from t h e s e f a c i l i t i e s o u t s i d e p r o v i n c i a l l e g i s -214 l a t i v e a u t h o r i t y and i n c l u d i n g i t i n the f e d e r a l s p h e r e . H o w e v e r , 212 c S u p r a , 2 5 . 212A There a r e d i c t a o f Rand J . t o the c o n t r a r y i n R e f e r e n c e re Farm  P r o d u c t s M a r k e t i n g A c t , o p . c i t . note 7 1 , 2 1 0 , 2 6 9 . 2 1 3 S u p r a , 4 3 - 4 5 . 214 C f . A t o m i c Energy C o n t r o l A c t , R . S . C . 1970, c . A - 1 9 ; and See Re P e r i n i  L t d . v . Can. M e t . E x p l o r a t i o n s L t d . and Guaranty T r u s t , (1959) 15 D . L . R . (2d) 3 7 5 , 17 D . L . R . (2d) 715. - 68 -the power t o c o n t r o l p r o d u c t i o n must be d i s t i n g u i s h e d from t h e power t o g r a n t r i g h t s i n r e s p e c t o f o i l and gas i n the g r o u n d . The p r o v i n c i a l o w n e r s h i p o f o i l and gas r e s e r v e s and t h e p r o v i n c i a l a u t h o r i t y t o a l l o c a t e p r o d u c t i o n r i g h t s i n r e s p e c t o f t h e s e r e s e r v e s would n o t be a f f e c t e d by f e d e r a l a s s u m p t i o n o f the power t o l e g i s l a t e i n r e s p e c t o f p r o d u c t i o n f a c i l i t e s . A d e c l a r a t i o n w i t h r e g a r d t o t h e s e works would a l l o w f e d e r a l c o n t r o l o f p r o d u c t i o n w i t h i n t h e scope o f r i g h t s g r a n t e d by a p r o v i n c e t o p r i v a t e o p e r a t o r s o v e r p r o v i n c i a l o i l and gas r e s o u r c e s , b u t w o u l d n o t a l l o w t h e f e d e r a l government t o expand s u c h r i g h t s i n e x t e n t o r d u r a t i o n . I f t h e r i g h t s were d e t e r m i n a b l e upon t h e making o f a f e d e r a l d e c l a r a t i o n , o r s i m p l y e x p i r e d w i t h the passage o f t i m e , the f e d e r a l l e g i s l a t i v e a u t h o -r i t y o v e r p r o d u c t i o n f a c i l i t i e s would n o t a l l o w c o n t i n u e d p r o d u c t i o n i n the absence o f a f u r t h e r p r o v i n c i a l g r a n t . B a r r i n g such a d e c l a r a t i o n , i t may be s a i d t h a t the r e g u l a t i o n o f p r o d u c t i o n o f o i l and g a s , w h e t h e r Crown o r p r i v a t e l y - o w n e d , f a l l s w i t h i n the scope o f e x c l u s i v e p r o v i n c i a l l e g i s l a t i v e a u t h o r i t y . I t i s o n l y where c o n t r o l s go beyond the r e g u l a t i o n o f p r o d u c t i o n and a t t e m p t t o i n f l u e n c e the i n t e r p r o v i n c i a l o r i n t e r n a t i o n a l movement o f o i l and gas t h a t f e d e r a l power i s i n v o k e d . The market demand p r o r a t i o n i n g scheme does n o t have t h i s e f f e c t . 4. T r a n s p o r t a t i o n . The q u e s t i o n o f j u r i s d i c t i o n o v e r t r a n s p o r t a t i o n p r i m a f a c i e i n v o l v e s a number o f c l a s s e s o f s u b j e c t s , n a m e l y : L o c a l Works and U n d e r t a k i n g s o t h e r than such as a r e o f the f o l l o w i n g C l a s s e s : -- 69 -(a) L i n e s o f Steam o r o t h e r S h i p s , R a i l w a y s , C a n a l s , T e l e g r a p h s , and o t h e r Works and U n d e r t a k i n g s c o n n e c t i n g the P r o v i n c e w i t h any o t h e r o r o t h e r s o f t h e P r o v i n c e s , o r e x t e n d i n g beyond t h e L i m i t s o f t h e P r o v i n c e ; ( c ) Such Works a s , a l t h o u g h w h o l l y s i t u a t e w i t h i n the P r o v i n c e , are b e f o r e o r a f t e r t h e i r E x e c u t i o n d e c l a r e d by the P a r l i a m e n t o f Canada t o be f o r t h e General Advantage o f Canada o r f o r t h e Advantage o f Two o r more o f the P r o v i n c e s ; The R e g u l a t i o n o f Trade and Commerce; P r o p e r t y and C i v i l R i g h t s i n the P r o v i n c e ; G e n e r a l l y a l l M a t t e r s o f a m e r e l y l o c a l o r p r i v a t e N a t u r e i n the P r o v i n c e . In t h e s e c i r c u m s t a n c e s i t has been s u g g e s t e d t h a t c o n s i d e r a t i o n be g i v e n 215 f i r s t to the more s p e c i f i c c l a s s e s and then t o the more g e n e r a l . The b u i l d i n g and o p e r a t i o n o f p i p e l i n e s f o r the i n t e r p r o v i n c i a l movement o f o i l and gas a r e m a t t e r s coming w i t h i n "works and u n d e r t a k i n g s c o n n e c t i n g the p r o v i n c e w i t h any o t h e r o r o t h e r s o f t h e p r o v i n c e s , o r e x -t e n d i n g beyond the l i m i t s o f t h e p r o v i n c e " . T h a t much seems c l e a r . How-e v e r , q u e s t i o n s a r i s e n o t i n r e l a t i o n to i n t e r p r o v i n c i a l t r u n k l i n e s b u t w i t h r e s p e c t t o g a t h e r i n g and f e e d e r l i n e s w h i c h c o l l e c t o i l and gas from t h e p r o d u c i n g f i e l d s and c a r r y them t o consumption p o i n t s i n the p r o v i n c e as w e l l as to the t r u n k l i n e s . I n i t i a l l y , i t i s i n t e r e s t i n g t o note the e x t e n t o f t h e j u r i s d i c t i o n p r e s e n t l y e x e r c i s e d by the Dominion t h r o u g h c o n f e r r a l o f powers upon t h e 216 N a t i o n a l Energy B o a r d . The N a t i o n a l Energy Board A c t c l a i m s c o n t r o l o v e r any p i p e l i n e w i t h i n the f o l l o w i n g d e f i n i t i o n : A b e l , o p . c i t . note 5 2 , 510; s u p r a , 3 5 . 2 1 6 R . S . C . 1 9 7 0 , c . N - 6 , as amended by R . S . C . 1970, c . 1 0 ( 1 s t S u p p . ) and c . 2 7 ( 1 s t S u p p . ) , and S . C . 1973 ( 1 s t S e s s . ) , c . 5 2 . - 70 -" p i p e l i n e " means a l i n e f o r t h e t r a n s m i s s i o n o f gas o r o i l c o n n e c t i n g a p r o v i n c e w i t h any o t h e r o r o t h e r s o f t h e p r o -v i n c e s , o r e x t e n d i n g beyond t h e l i m i t s o f a p r o v i n c e , and i n c l u d e s a l l b r a n c h e s , e x t e n s i o n s , t a n k s , r e s e r v o i r s , s t o -rage f a c i l i t i e s , pumps, r a c k s , c o m p r e s s o r s , l o a d i n g f a c i l i t i e s , i n t e r s t a t i o n systems o f communication by t e l e p h o n e , t e l e g r a p h o r r a d i o , and r e a l and p e r s o n a l p r o p e r t y and works c o n n e c t e d t h e r e w i t h . 217 D e s p i t e t h i s broad d e f i n i t i o n , t h o u g h , j u r i s d i c t i o n has m a i n l y been e x e r -218 c i s e d i n r e s p e c t o f t r u n k l i n e s . Whether a l i n e c o n n e c t s one p r o v i n c e w i t h a n o t h e r i s a q u e s t i o n o f 219 f a c t , making g e n e r a l i z a t i o n d i f f i c u l t . A t one end o f t h e s p e c t r u m i s a b r a n c h l i n e l i n k i n g a p r o d u c i n g f i e l d t o an i n t e r p r o v i n c i a l t r u n k l i n e , 220 and used s o l e l y f o r c a r r y i n g o i l o r gas f o r i n t e r p r o v i n c i a l m a r k e t s . A t the o t h e r i s a g a t h e r i n g system f o r p r o d u c t s used e x c l u s i v e l y w i t h i n the p r o v i n c e . In between a r e g a t h e r i n g and f e e d e r l i n e s w h i c h s e r v e both i n t r a p r o v i n c i a l and e x t r a p r o v i n c i a l m a r k e t s to d i f f e r i n g d e g r e e s . A good example i s the A l b e r t a Gas Trunk L i n e S y s t e m . I t c o l l e c t s a l l gas w h i c h i s t o be removed from t h e p r o v i n c e and c a r r i e s i t t o v a r i o u s b o r d e r p o i n t s where the gas passes i n t o t h e systems o f t h e t r u n k l i n e c o m p a n i e s . The b u i l d i n g and o p e r a t i o n o f i t s f a c i l i t i e s have t r a d i t i o n a l l y been 2 1 7 I b i d . , s . 2 . 218 In A l b e r t a , f o r e x a m p l e , g a t h e r i n g and f e e d e r l i n e s have come under the c o n t r o l o f t h e Department o f Mines and M i n e r a l s a n d , more r e c e n t l y , the Energy Resources C o n s e r v a t i o n B o a r d ; see P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a " , 8 2 e t s e q . 219 c , a  S u p r a , 4 6 . ? ? o In Re Westspur P i p e L i n e Co. E x t e n s i o n ( 1 9 5 7 ) , 74 C . R . T . C . 2 6 3 , t h e f e d e r a l Board o f T r a n s p o r t Commissioners had l i t t l e doubt t h a t the b u i l d i n g and o p e r a t i o n o f such a l i n e was m a t t e r w i t h i n the f e d e r a l c l a s s o f s u b j e c t . s u b j e c t t o p r o v i n c i a l c o n t r o l . " 1 The q u e s t i o n o f f a c t i n t h i s c a s e , whether t h i s l o c a l work and u n d e r t a k i n g c o n n e c t s A l b e r t a w i t h o t h e r p r o -v i n c e s o r , on the o t h e r h a n d , m e r e l y c o n n e c t s the p r o v i n c i a l s y s t e m w i t h o t h e r f a c i l i t i e s w h i c h t h e m s e l v e s a r e i n t e r p r o v i n c i a l , a d m i t s o f no easy a n s w e r . I t i s s u b m i t t e d t h a t A l b e r t a Gas Trunk L i n e Company L i m i t e d ' s e x i s t e n c e as an o p e r a t i n g e n t i t y s e p a r a t e from t h e i n t e r p r o v i n c i a l t r a n s -222 m i s s i o n companies s u p p o r t s the l a t t e r c o n c l u s i o n . T h i s does n o t mean, t h o u g h , t h a t the Trunk L i n e Company's de f a c t o monopoly o v e r g a t h e r i n g and f e e d e r f a c i l i t i e s c o u l d n o t be broken by t h e N a t i o n a l Energy B o a r d ' s g r a n t i n g o f a p e r m i t to T r a n s - C a n a d a P i p e l i n e s L i m i t e d t o e x t e n d i t s o p e r a t i o n s i n A l b e r t a . The c h a r a c t e r i z a t i o n o f the b u i l d i n g and o p e r a t i o n o f p i p e l i n e s as m a t t e r s coming w i t h i n " l o c a l works and u n d e r t a k i n g s " a u t o m a t i c a l l y e x c l u d e s them from " t h e r e g u l a t i o n o f t r a d e and commerce" and the o t h e r b r o a d e r c l a s s e s . As r e g a r d s o t h e r a c t i v i t i e s , t h o u g h , the r e s u l t may be d i f f e r e n t . For e x a m p l e , the q u e s t i o n has a r i s e n whether a l i e n c l a i m e d under a p r o -v i n c i a l a c t . c a n be e n f o r c e d a g a i n s t the p r o p e r t y o f a f e d e r a l l y - r e g u l a t e d i n t e r p r o v i n c i a l p i p e l i n e . The answer must depend upon w h e t h e r t h e s t a t u t e p r o v i d i n g f o r the l i e n i s viewed as b e i n g i n r e l a t i o n t o a m a t t e r coming w i t h i n " l o c a l works and u n d e r t a k i n g s . . . c o n n e c t i n g the p r o v i n c e w i t h any o t h e r o r o t h e r s o f t h e p r o v i n c e s " o r a m a t t e r coming w i t h i n " p r o p e r t y For an a c c o u n t o f the f o r m a t i o n o f A l b e r t a Gas Trunk L i n e Company L i m i t e d and i t s o p e r a t i o n s , see P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a , " 84 e t s e q . 222 The Dominion P a r l i a m e n t c o u l d b r i n g t h e s e works w i t h i n f e d e r a l j u r i s d i c t i o n , t h o u g h , by an a p p r o p r i a t e d e c l a r a t i o n p u r s u a n t to s e c t i o n 9 2 ( 1 0 ) ( c ) o f the B . N . A . A c t . - 72 -and c i v i l r i g h t s i n the p r o v i n c e " . The Supreme C o u r t o f Canada p r e f e r r e d 223 -the f o r m e r . On the o t h e r h a n d , i f t h e A l b e r t a L e g i s l a t u r e were t o e n a c t a s t a t u t e r e q u i r i n g A l b e r t a Gas Trunk L i n e Company L i m i t e d t o c a r r y o n l y s p e c i f i e d volumes o f gas i n i t s system f o r removal from t h e p r o v i n c e , t h i s s t a t u t e would be i n r e l a t i o n t o a m a t t e r coming w i t h i n " t h e r e g u l a t i o n 224 o f t r a d e and commerece" r a t h e r than " l o c a l works and u n d e r t a k i n g s " . Most a s p e c t s o f the i n t e r p r o v i n c i a l movement o f o i l and gas a r e s u b -j e c t to f e d e r a l j u r i s d i c t i o n whereas i n t r a p r o v i n c i a l movement i s a m a t t e r f o r the p r o v i n c e s . So f a r as t h e b u i l d i n g and normal o p e r a t i o n o f p i p e l i n e s are c o n c e r n e d , t h o u g h , j u r i s d i c t i o n depends upon a q u e s t i o n o f f a c t i n e a c h c a s e , w h e t h e r t h e l i n e c o n n e c t s two o r more p r o v i n c e s o r e x t e n d s beyond the l i m i t s o f any o n e . Works w i t h i n p r o v i n c i a l j u r i s d i c t i o n may be t r a n s -f e r r e d t o f e d e r a l j u r i s d i c t i o n i f d e c l a r e d by P a r l i a m e n t to be f o r t h e g e n e r a l advantage o f Canada o r f o r the advantage o f two o r more p r o v i n c e s . 5 . E x p o r t s . The e x p o r t o f o i l and gas from Canada i s a m a t t e r coming w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce". P a r l i a m e n t may thus c o n t r o l t h e q u a n t i t y , type and p r i c e o f p r o d u c t s s e n t o u t s i d e the c o u n t r y . A t p r e s e n t t h i s power 225 i s e x e r c i s e d by the N a t i o n a l Energy Board t h r o u g h a s y s t e m o f e x p o r t l i c e n c e s . 223 C a m p b e l l - B e n n e t t L i m i t e d v . Comstock M i d w e s t e r n L i m i t e d and T r a n s  Mountain P i p e L i n e Company, o p . c i t . n o t e 142, a p p l i e d i n Cant v . C a n a d i a n  B e c h t e l L i m i t e d ( 1 9 5 7 ) , 12 D . L . R . (2d) 2 1 5 , as r e g a r d s p r o v i n c i a l wage l e g i s -l a t i o n ; c o n t r a , Canadian P a c i f i c R a i l w a y v . A t t o r n e y G e n e r a l o f B r i t i s h C o l u m b i a . e t a l , [ 1 9 5 0 T A . C . 1 2 2 , and Backmeier v . Beaverlodg'e ( 1 9 " 6 2 ) , 35 D . L . R . (2d) 241. The l a t t e r view has c o n s i d e r a b l e a p p e a l . 224 C f . The Gas Resources P r e s e r v a t i o n A c t , d i s c u s s e d s u p r a , 54 e t s e q . 2 2 5 N a t i o n a l Energy Board A c t , o p . c i t . n o t e 2 2 3 , P a r t V I . - 73 -226 In a d d i t i o n , the Oi 1 E x p o r t Tax A c t imposed a l e v y o f v a r i a b l e amounts 227 upon o i l l e a v i n g Canada between 1 O c t o b e r , 1973, and 1 A p r i l , 1974. The i n t e r p r o v i n c i a l movement o f o i l and gas w i t h i n Canada i s a l s o a m a t t e r coming w i t h " t h e r e g u l a t i o n o f t r a d e and commerce", and f o r t h i s 228 r e a s o n i t has been s u g g e s t e d t h a t The Gas R e s o u r c e s P r e s e r v a t i o n A c t 229 i s i n v a l i d . Is t h i s p o s i t i o n any d i f f e r e n t as r e g a r d s o i l and gas owned by a p r o -v i n c e a f t e r p r o d u c t i o n , such as r o y a l t y o i l d e l i v e r e d i n k i n d t o t h e A l b e r t a P e t r o l e u m M a r k e t i n g Commission o r gas p u r c h a s e d a t the w e l l h e a d by 230 t h e B r i t i s h Columbia P e t r o l e u m C o r p o r a t i o n ? The movement o f such o i l and gas a c r o s s p r o v i n c i a l o r n a t i o n a l b o u n d a r i e s can n o t be r e g a r d e d as a m a t t e r coming w i t h i n " t h e management and s a l e o f t h e p u b l i c l a n d s b e l o n g i n g t o the p r o v i n c e " s i n c e , a f t e r p r o d u c t i o n , o i l and gas a r e no l o n g e r " l a n d " . T h e r e f o r e , such movement i s a m a t t e r coming w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce" and i s s u b j e c t t o e x c l u s i v e f e d e r a l l e g i s l a t i v e a u t h o r i t y . N e v e r t h e l e s s , the f e d e r a l government may be r e s t r i c t e d i n t h e forms o f e x p o r t c o n t r o l s t h a t may be a p p l i e d t o p r o v i n c i a l l y - o w n e d o i l and g a s . S e c t i o n 125 o f the B . N . A . A c t p r o v i d e s t h a t : S . C . 1973 ( 1 s t S e s s . ) , c . 5 3 . The A c t i s d i s c u s s e d i n a somewhat b r o a d e r c o n t e x t i n f r a , 76. 227 E x p o r t e r s have been a d v i s e d by the f e d e r a l government t h a t the l e v y w i l l be c o n t i n u e d , r e t r o a c t i v e t o 1 A p r i l , 1974, by new l e g i s l a t i o n t o be p a s s e d a t the n e x t s e s s i o n o f P a r l i a m e n t . 2 2 8 O p . c i t . note 177. 229 S u p r a , 5 6 . 230 The e s t a b l i s h m e n t and o p e r a t i o n s o f t h e s e p r o v i n c i a l Crown c o r p o -r a t i o n s i s d e s c r i b e d i n f r a , 8 4 , 8 7 . - 74 -No Lands o r P r o p e r t y b e l o n g i n g t o Canada o r any P r o v i n c e s h a l l be l i a b l e t o T a x a t i o n . 231 I f the words o f t h i s s e c t i o n were g i v e n t h e i r o r d i n a r y m e a n i n g , t h e y would p r e v e n t the i m p o s i t i o n o f a f e d e r a l e x p o r t t a x on p r o v i n c i a l l y -owned o i l and g a s . The f e d e r a l government w o u l d be f o r c e d t o t u r n t o o t h e r methods o f e x p o r t c o n t r o l , such as q u o t a s o r o u t r i g h t p r o h i b i t i o n , f o r such o i l and g a s . However, i t has a l r e a d y been n o t e d t h a t the P r i v y C o u n c i l has i n t e r p r e t e d t h e p r o h i b i t i o n i n s e c t i o n 125 as s u b j e c t t o the e x p r e s s f e d e r a l l e g i s l a t i v e powers i n s e c t i o n 91 o f the A c t , i n c l u d i n g 232 the t r a d e and commerce power and t h e t a x i n g p o w e r , and i f t h i s i n t e r -p r e t a t i o n i s a d o p t e d i n f u t u r e t h e r e w i l l be no l i m i t s p l a c e d upon f e d e r a l c o n t r o l o v e r e x p o r t s by v i r t u e o f p r o v i n c i a l o w n e r s h i p o f o i l and g a s . 6 . P r i c i n g . C o n t r o l o v e r p r i c i n g o f o i l and gas i s l i n k e d c l o s e l y w i t h the d i s t r i -b u t i o n o f t h e b e n e f i t s a r i s i n g from t h e p r o d u c t i o n and use o f t h e s e r e s o u r c e s . The main c o n t e n d e r s f o r t h e s e b e n e f i t s a r e f o u r i n number: p r o d u c e r s , e n -gaged i n o p e r a t i o n s upon Crown and p r i v a t e l e a s e s i n A l b e r t a , Saskatchewan and B r i t i s h C o l u m b i a ; c o n s u m e r s , l o c a t e d m a i n l y i n the U n i t e d S t a t e s and t h e more p o p u l o u s Canadian p r o v i n c e s o f O n t a r i o and Quebec; the governments o f the p r o d u c i n g p r o v i n c e s , w h i c h o w n t h e m a j o r i t y 'of the o i l and gas r e -s o u r c e s w i t h i n t h e i r b o u n d a r i e s ; and t h e f e d e r a l government. An i n c r e a s e i n the p r i c e o f o i l o r gas works t o t h e d e t e r i m e n t o f c o n s u m e r s , o f c o u r s e , 231 A p o s i t i o n a d v o c a t e d s u p r a , 37. 2 3 2 S u p r a , 3 5 - 3 7 . - 75 -b u t o f f e r s new p o t e n t i a l f o r revenues f o r p r o d u c e r s , the governments o f t h e p r o d u c i n g p r o v i n c e s and the f e d e r a l government. The d i s t r i b u t i o n o f such i n c r e a s e d revenues between t h e p r o d u c e r s and the governments o f the p r o d u c i n g p r o v i n c e s depends l a r g e l y upon t h e terms under w h i c h p r o d u c e r s a r e g i v e n r i g h t s o v e r Crown o i l and gas r e s o u r c e s , and t o a l e s s e r e x t e n t upon t h e t a x i n g power o f t h e p r o d u c i n g p r o v i n c e s . The d e g r e e t o w h i c h t h e f e d e r a l government s h a r e s i n t h e s e revenues depends upon the scope o f i t s t a x i n g p o w e r . M o r e o v e r , t h e f e d e r a l government may a t t e m p t t o e x e r c i s e o t h e r p o w e r s , such as the t r a d e and commerce power, t o p r e v e n t p r i c e i n c r e a s e s and t h e r e b y b e n e f i t consumers o f o i l and g a s . The r e c e n t c o n s t i t u t i o n a l c o n f l i c t between Ottawa and " t h e West" p r o v i d e s a good example o f e f f o r t s by b o t h f e d e r a l and p r o v i n c i a l g o v e r n -ments t o e x e r c i s e c o n t r o l o v e r t h e p r i c i n g o f o i l and gas i n Canada. I t a l s o d e m o n s t r a t e s t h e complex i s s u e s o f j u r i s d i c t i o n t h a t a r i s e i n r e l a t i o n to p r i c i n g . 233 T r a d i t i o n a l l y , Canadian o i l p r i c e s west o f the Ottawa V a l l e y have been d e t e r m i n e d by r e f e r e n c e t o the p r i c e s p r e v a i l i n g i n t h e m i d - w e s t e r n 234 U n i t e d S t a t e s , the m a j o r e x p o r t m a r k e t f o r Canadian crude o i l . Cana-d i a n gas p r i c e s have a l s o been i n f l u e n c e d s t r o n g l y by U n i t e d S t a t e s p r i c e s , w h i c h i n t u r n have been r e g u l a t e d by t h e F e d e r a l Power Commission i n t h a t S i n c e 1971, when t h e N a t i o n a l O i l P o l i c y was a d o p t e d , t h e domes-t i c m a r k e t f o r c r u d e o i l w e s t o f t h e Ottawa V a l l e y has been r e s e r v e d f o r l o c a l p r o d u c t i o n . 234 For f u r t h e r d e t a i l s see P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a " , 95 e t s e q . - 76 -c o u n t r y on a c o s t o f s e r v i c e b a s i s . However, i n S e p t e m b e r , 1973, t h i s l i n k between Canadian and U n i t e d S t a t e s o i l and gas p r i c e s was broken when o i l p r i c e s i n the U n i t e d S t a t e s began t o r i s e s h a r p l y , r e f l e c t i n g h i g h e r i n t e r -n a t i o n a l p r i c e s , t h e M i d d l e E a s t c o n f l i c t and s u b s e q u e n t o i l embargo, and t h e p r o s p e c t s o f e n e r g y s h o r t a g e s i n the U n i t e d S t a t e s . In C a n a d a , the f e d e r a l government responded t o t h i s movement i n o i l p r i c e s w i t h a " t w o - p r i c e p o l i c y " f o r o i l , adopted as p a r t o f i t s a n t i - i n f l a t i o n programme. T h i s p o l i c y com-p r i s e d a v o l u n t a r y f r e e z e on d o m e s t i c o i l p r i c e s s u p p o r t e d by a f e d e r a l s u b s i d y f o r r e f i n e r s e a s t o f t h e Ottawa V a l l e y , who were dependent upon the i n t e r n a t i o n a l m a r k e t f o r t h e i r s u p p l i e s , and a f e d e r a l e x p o r t t a x imposed on d o m e s t i c o i l s o l d t o the U n i t e d S t a t e s . The t a x was c a l c u l a t e d t o r e f l e c t the d i f f e r e n c e between the r i s i n g U n i t e d S t a t e s and the s t a b l e Canadian o i l p r i c e s . A t t h i s time the average w e l l h e a d p r i c e f o r A l b e r t a o i l was about $ 3 . 8 0 p e r b a r r e l and the e x p o r t t a x was s e t a t $ 0 . 4 0 p e r b a r r e l . By F e b r u a r y , 1974, the f e d e r a l tax had r i s e n t o $ 6 . 4 0 p e r b a r r e l 235 as U n i t e d S t a t e s o i l p r i c e s c o n t i n u e d t o i n c r e a s e . The f e d e r a l p o l i c y p r o v i d e d c l e a r b e n e f i t s f o r C a n a d i a n o i l consumers i n the form o f p r o d u c t p r i c e s c o n s i d e r a b l y below i n t e r n a t i o n a l l e v e l s . I n i t i a l l y , t h e f e d e r a l t r e a s u r y a l s o b e n e f i t e d from t h e p r o c e e d s o f t h e e x p o r t tax b u t t h e s e were u s e d , i n the m a i n , t o pay t h e s u b s i d y t o r e f i n e r s e a s t o f the Ottawa V a l l e y . These b e n e f i t s to consumers were o b t a i n e d a t the expense o f revenues f o r e g o n e by the p r o d u c e r s and t h e governments o f 235 The t a x was imposed by t h e O i l E x p o r t Tax A c t , o p . c i t . n o t e 2 2 6 , e n a c t e d i n J a n u a r y , 1974, b u t made r e t r o a c t i v e to O c t o b e r 1 , 1973. D u r i n g the i n t e r v e n i n g p e r i o d t h e t a x was i n f a c t l e v i e d by t h e N a t i o n a l Energy Board through i t s r e f u s a l t o g r a n t e x p o r t l i c e n c e s u n l e s s p r i c e s were i n -c r e a s e d by t h e d i f f e r e n c e between Canadian and U n i t e d S t a t e s p r i c e s , w h i c h was to be p a i d s u b s e q u e n t l y t o the Canadian t r e a s u r y . - 77 -the o i l - p r o d u c i n g p r o v i n c e s . Such revenues were s u b s t a n t i a l . By F e b r u a r y , 1974, t h e f e d e r a l e x p o r t t a x was r a i s i n g about $6 m i l l i o n p e r day on e x p o r t s o f j u s t l e s s than one m i l l i o n b a r r e l s o f o i l p e r day. In a d d i t i o n , s i m i l a r amounts were l o s t on the one m i l l i o n b a r r e l s o f o i l produced each day f o r c o n s u m p t i o n w i t h i n Canada. The p r o d u c i n g p r o v i n c e s o b j e c t e d s t r o n g l y t o both the d o m e s t i c p r i c e f r e e z e and t h e e x p o r t t a x , and r e s p o n d e d to the f e d e r a l p o l i c i e s i n a v a r i e t y o f w a y s . In December, 1 9 7 3 , A l b e r t a amended The Mines and M i n e r a l s p oc A c t i n o r d e r t o g i v e the L i e u t e n a n t Governor i n C o u n c i l the power t o p r e s c r i b e new r o y a l t y s c a l e s f o r o i l and gas produced from a l l Crown l e a s e s 237 238 i n the p r o v i n c e . A t the same t i m e , The P e t r o l e u m M a r k e t i n g A c t was p a s s e d e s t a b l i s h i n g the A l b e r t a P e t r o l e u m M a r k e t i n g C o m m i s s i o n , a p r o -v i n c i a l Crown c o r p o r a t i o n , w i t h broad powers r e l a t i n g t o the s a l e o f a l l o i l p r o d u c e d from Crown l e a s e s . Amendments were a l s o made t o The A r b i t r a -239 t i o n A c t c o n c e r n i n g the r e d e t e r m i n a t i o n o f gas p r i c e s under some 240 e x i s t i n g , l o n g - t e r m c o n t r a c t s . In S a s k a t c h e w a n , the l e g i s l a t u r e 2 3 6 R . S . A . 1970, c . 2 3 8 , amended by S . A . 1971 , c . l , 30 and 9 6 , S . A . 1972, c . 6 7 , 6 8 , 91 and 119, and S . A . 1 9 7 3 , c . 34 and 9 4 . 2 3 7 S . A . 1 9 7 3 , c . 9 4 , s . 4 . 2 3 8 S . A . 1 9 7 3 , c . 9 6 . 2 3 9 R . S . A . 1970, c . 2 1 240 The A r b i t r a t i o n Amendment A c t , 1973, S . A . 1 9 7 3 , c . 8 8 . - 78 -?41 e n a c t e d The O i l and Gas C o n s e r v a t i o n , S t a b i l i z a t i o n and Development A c t ~ w h i c h , i n t e r a l i a , e x p r o p r i a t e d most f r e e h o l d o i l and gas r i g h t s i n t h e p r o v i n c e , imposed a r o y a l t y s u r c h a r g e on a l l o i l p r o d u c e d from Crown l e a s e s , and p r o v i d e d f o r payment o f a m i n e r a l income t a x whenever the r o y a l t y s u r -c h a r g e was i n a p p l i c a b l e . Events i n B r i t i s h C o l u m b i a p r o c e e d e d somewhat d i f f e r e n t l y . The g o v e r n -ment t h e r e was c o n c e r n e d w i t h gas r a t h e r than o i l . S e v e r a l months b e f o r e the f e d e r a l p o l i c i e s were announced f o r o i l , t h e government had e s t a b l i s h e d 242 t h e B r i t i s h Columbia Energy Commission and had r e q u e s t e d i t t o i n v e s t i -gate t h e e x p o r t p r i c e s p a i d f o r gas produced i n the p r o v i n c e . I n S e p t e m b e r , 1 9 7 3 , the Commission r e p o r t e d t h a t , owing to an absence o f e f f e c t i v e com-p e t i t i o n i n the p u r c h a s e , o f gas i n the f i e l d , t h e p r i c e s p a i d t o p r o d u c e r s were c o n s i d e r a b l y below the v a l u e o f gas based upon p r i c e s o f c o m p e t i n g 243 forms o f e n e r g y . In f a c t , o n l y one b u y e r , W e s t c o a s t T r a n s m i s s i o n Company, a f e d e r a l l y r e g u l a t e d t r a n s m i s s i o n company w h i c h o p e r a t e d t h e t r u n k l i n e system s e r v i n g b o t h B r i t i s h Columbia d i s t r i b u t o r s and t h e e x -p o r t m a r k e t , was a c t i v e i n t h e p u r c h a s e o f gas i n the f i e l d . M o r e o v e r , a p p r o x i m a t e l y 70% o f t h e gas produced i n the p r o v i n c e was e x p o r t e d t o the U n i t e d S t a t e s . In November, 1 9 7 3 , a c t i n g on the C o m m i s s i o n ' s r e c o m m e n d a t i o n , • 2 4 1 O p : c i t . note 167. 2 4 2 Energy A c t , S . B . C . 1 9 7 3 , c . 2 9 . 243 R e p o r t on M a t t e r s C o n c e r n i n g the N a t u r a l Gas I n d u s t r y i n B r i t i s h  C o l u m b i a , V a n c o u v e r , B . C . E . C . , S e p t e m b e r , 1973. - 79 -244 the B r i t i s h Columbia l e g i s l a t u r e p a s s e d the P e t r o l e u m C o r p o r a t i o n A c t w h i c h c r e a t e d t h e B r i t i s h Columbia P e t r o l e u m C o r p o r a t i o n , an agent o f t h e Crown, w i t h power t o e x p l o r e f o r , d e v e l o p , p r o d u c e , buy and s e l l o i l and g a s . The d i f f e r e n c e s between the f e d e r a l government and the governments o f the p r o d u c i n g p r o v i n c e s were d i s c u s s e d a t a f e d e r a l - p r o v i n c i a l F i r s t M i n i s t e r s ' C o n f e r e n c e i n J a n u a r y , 1974, where an agreement was r e a c h e d t o c o n t i n u e t h e d o m e s t i c p r i c e f r e e z e and the e x p o r t tax u n t i l A p r i l 1 , i n exchange f o r t h e r e m i t t a n c e o f h a l f o f the p r o c e e d s o f t h e e x p o r t 245 t a x t o t h e p r o d u c i n g p r o v i n c e s . A t a f u r t h e r such m e e t i n g i n A p r i l , c a new arrangement was worked o u t whereby the w e l l h e a d p r i c e o f o i l w o u l d be a l l o w e d t o r i s e by $ 2 . 7 0 p e r b a r r e l , the e x p o r t tax would be r e d u c e d a c c o r d i n g l y , and t h e f e d e r a l government would r e t a i n a l l revenues r a i s e d by t h e t a x t o s u b s i d i z e o i l p r i c e s e a s t o f t h e Ottawa V a l l e y . The i n -c r e a s e i n w e l l h e a d p r i c e s f o r o i l took e f f e c t on A p r i l 1 , 1974, and t h e 246 A l b e r t a government i n t r o d u c e d new r o y a l t y s c a l e s as o f t h a t d a t e . A l s o i n A p r i l , 1974, the f e d e r a l P a r l i a m e n t gave f i r s t r e a d i n g t o 247 the P e t r o l e u m A d m i n i s t r a t i o n A c t c o n t a i n i n g s e v e r a l p r o v i s i o n s d e a l i n g w i t h t h e p r i c i n g o f o i l i n Canada. F i r s t l y , the B i l l w o u l d c o n -t i n u e the e x p o r t t a x beyond i t s e x p i r y d a t e o f A p r i l 3 0 , 1974. S e c o n d l y , 2 4 4 S . B . C . 1 9 7 3 , c . 1 4 0 . 245 T h i s agreement was implemented i n t h e O i l E x p o r t Tax A c t , o p . c i t . note 2 2 6 , s . 4 . 2 4 6 S u p r a , 5 1 . 2 4 7 1974 (2nd S e s s . ) , B i l l C-18. the B i l l would a u t h o r i z e the M i n i s t e r f o r E n e r g y , Mines and R e s o u r c e s , w i t h the a p p r o v a l o f the Governor i n C o u n c i l , to e n t e r i n t o an agreement w i t h t h e government o f an o i l - p r o d u c i n g p r o v i n c e e s t a b l i s h i n g m u t u a l l y a c c e p -t a b l e p r i c e s f o r o i l produced i n t h a t p r o v i n c e . T h i r d l y , i n t h e absence o f such an a g r e e m e n t , t h e B i l l would empower the Governor i n C o u n c i l t o e s t a b l i s h maximum p r i c e s f o r o i l " t h a t e n t e r s i n t o i n t e r p r o v i n c i a l o r i n t e r n a t i o n a l t r a d e o r t h a t i s mixed o r b l e n d e d w i t h c r u d e o i l t h a t has been a c q u i r e d f o r movement o u t o f t h e p r o v i n c e o f p r o d u c t i o n . " F o u r t h l y , the B i l l would e s t a b l i s h a scheme f o r the payment o f s u b s i d i e s t o i m p o r t e r s o f o i l f o r consumption i n Canada. The B i l l v/as n o t passed p r i o r t o t h e d i s -s o l u t i o n o f P a r l i a m e n t b u t i s t o be i n t r o d u c e d a g a i n i n t h e f o r t h c o m i n g s e s s i o n . F i n a l l y , t h e f e d e r a l budget o f 6 May, 1974, proposed t h a t p r o v i n c i a l r o y a l t i e s s h o u l d be made n o n - d e d u c t i b l e i n the c a l c u l a t i o n o f t a x a b l e income from o i l and gas p r o d u c t i o n . T h i s measure a l s o was n o t e n a n c t e d b e f o r e the d i s s o l u t i o n o f P a r l i a m e n t . T h i s manoeuvring d e m o n s t r a t e s the t h r e e p o i n t s a t w h i c h c o n t r o l o f p r i c i n g may be s o u g h t , n a m e l y , a t the w e l l h e a d , upon e n t r y i n t o i n t e r -p r o v i n c i a l o r i n t e r n a t i o n a l t r a d e , and a t the s t a g e o f f i n a l c o n s u m p t i o n . They w i l l be c o n s i d e r e d i n t u r n . The t r a n s a c t i o n by w h i c h p r o p e r t y i n Crown o i l and gas p a s s e s i n t o p r i v a t e o w n e r s h i p i s a m a t t e r coming w i t h " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g t o t h e p r o v i n c e " . T h i s a l l o w s a p r o v i n c e t o i n f l u e n c e the w e l l h e a d p r i c i n g o f o i l and gas i f p r o p e r t y p a s s e s upon p r o d u c t i o n . The f l e x i b i l i t y t h a t a p r o v i n c e has i n f i x i n g the c o n s i d e r a t i o n - 81 -247A f o r s a l e has a l r e a d y been n o t e d , and u n d o u b t e d l y has n o t been e x h a u s t e d y e t . For e x a m p l e , i n s t e a d o f r e l y i n g upon r o y a l t i e s , a p r o v i n c e c o u l d d i s p o s e o f p u b l i c l y - o w n e d o i l and gas r e s o u r c e s under an arrangement w h e r e -by the w e l l h e a d p r i c e f o r t h e s e r e s o u r c e s was f i x e d by t h e p r o v i n c e as and when p r o d u c t i o n took p l a c e , t h i s p r i c e i n t u r n g o v e r n i n g the amount o f the c o n s i d e r a t i o n p a i d by the l e s s e e t o t h e Crown f o r t h e r i g h t t o p r o d u c e o i l and g a s . However, once p r o p e r t y has p a s s e d i n the produced s u b s t a n c e s a p r o -v i n c e can no l o n g e r r e l y upon s e c t i o n 92(5) o f the B . N . A . A c t . A t t e m p t s by a p r o v i n c e t o r e g u l a t e t h e p r i c e s a t w h i c h o i l and gas a r e s o l d a t any s u b s e q u e n t t r a n s a c t i o n , such as between a p r i v a t e p r o d u c e r and p u r c h a s e r , can n o t be j u s t i f i e d on t h i s b a s i s . N e v e r t h e l e s s , examples o f a t t e m p t s by p r o v i n c e s to r e g u l a t e p r i c e s a f t e r p r o d u c t i o n a r e numerous. For i n s t a n c e , the A l b e r t a P e t r o l e u m M a r k e t i n g Commission i s made the e x c l u s i v e agent t o s e l l each Crown l e s s e e ' s s h a r e o f o i l on b e h a l f o f the owner t h e r e o f , w i t h the power t o n e g o t i a t e and agree to a p r i c e a t w h i c h t h e o i l i s t o be s o l d , and i s d i r e c t e d t o s e l l w i t h i n A l b e r t a t h e l e s s e e ' s s h a r e o f o i l a t t h e h i g h e s t p r i c e t h a t i t may r e a s o n a b l y n e g o t i a t e h a v i n g 2 4 7 R r e g a r d t o m a r k e t c o n d i t i o n s p r e v a i l i n g a t the t i m e o f the s a l e . So f a r as o i l d e s t i n e d f o r t h e i n t e r p r o v i n c i a l m a r k e t i s c o n c e r n e d , t h e q u e s -t i o n i s w h e t h e r t h i s s t a t u t e i s i n r e l a t i o n t o a m a t t e r coming w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce". The s u b s t a n c e o f t h i s p a r t o f t h e 2 4 7 A S u p r a , 51 e t sea^. 2 4 7 B The P e t r o l e u m M a r k e t i n g A c t , o p . c i t . note 2 3 8 , s . 2 1 - 82 -s t a t u t e i s n o t d i f f i c u l t to a s c e r t a i n ; i t i s the r e g u l a t i o n o f p r i c e s p a i d t o p r i v a t e o i l p r o d u c e r s . S i n c e the o r d i n a r y meaning o f "commerce" i s b u y i n g and s e l l i n g , prima f a c i e the m a t t e r comes w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce". However, t h e c a s e s l e a v e room f o r c o n s i d e r a b l e d o u b t . In 248 C a r n a t i o n Company L i m i t e d v . Quebec A g r i c u l t u r a l M a r k e t i n g B o a r d , the Supreme C o u r t o f Canada h e l d t h a t r e g u l a t i o n o f the p r i c e p a i d t o p r o d u c e r s f o r goods w h i c h , a f t e r p r o c e s s i n g , l e f t the p r o v i n c e to a s u b s t a n t i a l d e g r e e , was a m a t t e r coming w i t h i n a p r o v i n c i a l c l a s s o f s u b j e c t . On t h e o t h e r 249 h a n d , d i c t a i n the R e f e r e n c e Re the Farm P r o d u c t s M a r k e t i n g A c t s u p p o r t s t h e p o s i t i o n t h a t as soon as goods have e n t e r e d t h e i n t e r p r o v i n c i a l f l o w t h e i r p r i c i n g i s a m a t t e r w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce". The case o f A t t o r n e y - G e n e r a l f o r M a n i t o b a v . M a n i t o b a Egg and P o u l t r y 250 A s s o c i a t i o n d e a l t w i t h p r o v i n c i a l c o n t r o l s , a p p l i e d n o t b e f o r e goods l e f t a p r o v i n c e , but upon t h e i r e n t r y from o u t s i d e . The d e c i s i o n p r o v i d e s f u r t h e r a u t h o r i t y f o r the p r o p o s i t i o n t h a t i f goods a r e moving i n t h e i n t e r p r o v i n c i a l f l o w , they a r e n o t s u b j e c t to p r o v i n c i a l p r i c e r e g u l a t i o n . N e v e r t h e l e s s , the Supreme C o u r t acknowledged the c o r r e c t n e s s o f i t s e a r l i e r judgment i n t h e C a r n a t i o n c a s e ; L a s k i n J . emphasised t h a t t h e s t a g e o f d e a l i n g a t w h i c h the r e g u l a t i o n i s i m p o s e d , and i t s p u r p o s e , a r e i m p o r t a n t 251 c o n s i d e r a t i o n s , and t h a t i t can n o t be c a t e g o r i c a l l y s t a t e d t h a t u l t i m a t e 2 4 8 O P - c i t . note 71. ' . 2 4 9 O p . c i t . note 7 1 , 2 1 0 , 2 6 9 , p e r Rand J . ; 2 3 1 - 2 , 2 8 9 - 9 0 , p e r Locke J . 2 5 0 O p . c i t . note 71. 2 5 1 [1971] S . C . R . 6 8 9 , 709. - 83 -e x t r a - p r o v i n c i a l d e s t i n a t i o n w i l l f o r e c l o s e p r o v i n c i a l r e g u l a t i o n o f i n t e r -252 m e d i a t e s t e p s i n the m a r k e t i n g p r o c e s s . N e v e r t h e l e s s , i f t h e C a r n a t i o n case i s to be r e c o n c i l e d w i t h the M a n i t o b a Egg c a s e , i t must be on t h e b a s i s o f a f i n d i n g o f f a c t t h a t the goods i n t h e f o r m e r case had n o t e n t e r e d the i n t e r p r o v i n c i a l f l o w a t the time o f the p r o v i n c i a l p r i c e r e g u l a t i o n . No g u i d a n c e i s g i v e n on t h e s u b j e c t o f when goods a r e deemed t o have e n t e r e d 253 t h i s i n t e r p r o v i n c i a l f l o w . In any e v e n t , The P e t r o l e u m M a r k e t i n g A c t goes beyond t h e p o s i t i o n c o n -s i d e r e d i n the C a r n a t i o n c a s e . For n o t o n l y does the s t a t u t e seek t o c o n t r o l the p r i c e o f a l l o i l produced and s o l d i n the p r o v i n c e , i t a l s o r e q u i r e s t h a t a l l o i l p r o d u c e d i n the p r o v i n c e be s o l d i n t h e p r o v i n c e . In t h e s e c i r c u m s t a n c e s i t seems d i f f i c u l t to argue t h a t the m a t t e r o f t h e s t a t u t e , the p r i c i n g o f o i l p r o d u c e d i n A l b e r t a , comes w i t h i n e i t h e r " p r o p e r t y and c i v i l r i g h t s i n the p r o v i n c e " o r " g e n e r a l l y a l l m a t t e r s o f a m e r e l y l o c a l o r p r i v a t e n a t u r e i n the p r o v i n c e " . I n s t e a d , i t comes w i t h i n " t h e r e g u -l a t i o n o f t r a d e and commerce". 254 In a d d i t i o n , The Mines and M i n e r a l s Amendment A c t , 1973 makes e v e r y Crown p e t r o l e u m and n a t u r a l gas l e a s e s u b j e c t t o a c o n d i t i o n t h a t the l e s s e e ' s s h a r e o f o i l produced under the l e a s e s h a l l be s o l d t h r o u g h 255 the A l b e r t a P e t r o l e u m M a r k e t i n g Commission. I t i s s u b m i t t e d t h a t , i n the c i r c u m s t a n c e s , t h i s p r o v i s i o n i s n o t i n r e l a t i o n t o a m a t t e r coming 2 5 2 I b i d . , 7 1 3 . 253 For a c r i t i c i s m o f t h e s e c a s e s , see W e i l e r , P a u l C. , "The Supreme C o u r t and the Law o f Canadian F e d e r a l i s m " , 23 U n i v e r s i t y o f T o r o n t o Law J o u r n a l 3 0 7 , 3 3 3 - 3 3 8 ( 1 9 7 3 ) . 2 5 4 O p . c i t . note 2 3 4 . 255 I b i d . , s . 5 , i n s e r t i n g s . 1 7 0 . 2 i n The Mines and M i n e r a l s A c t . - 84 -w i t h i n " t h e management and s a l e o f t h e p u b l i c l a n d s b e l o n g i n g t o t h e p r o -v i n c e " , even though t h e A l b e r t a government r e t a i n s t h e r i g h t under a l e a s e 256 t o a l t e r i t s terms and c o n d i t i o n s from time t o t i m e , but r a t h e r a m a t t e r coming w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce". T h e r e f o r e , i n t h e f a c e o f c o n f l i c t i n g f e d e r a l l e g i s l a t i o n , both t h e p r o v i s i o n i n t h e A c t and t h e c o n d i t i o n i t s e l f would be v o i d , a l t h o u g h i n t h e absence o f such l e g i s -l a t i o n t h e y amount t o a v a l i d e x e r c i s e o f t h e p r o v i n c e ' s o w n e r s h i p p o w e r s . The A l b e r t a P e t r o l e u m M a r k e t i n g Commission i s a l s o c h a r g e d w i t h t h e r e s p o n s i b i l i t y o f a c c e p t i n g d e l i v e r y w i t h i n A l b e r t a o f t h e C r o w n ' s r o y a l t y s h a r e o f o i l , i n k i n d , and i s r e q u i r e d t o s e l l t h i s o i l w i t h i n A l b e r t a 257 a t a p r i c e t h a t i s i n t h e p u b l i c i n t e r e s t o f A l b e r t a . The s u b s t a n c e o f t h i s p r o v i s i o n i s t h e s a l e o f p u b l i c p r o p e r t y w i t h i n t h e p r o v i n c e , a m a t t e r coming w i t h i n " g e n e r a l l y a l l m a t t e r s o f a m e r e l y l o c a l o r p r i v a t e n a t u r e i n t h e p r o v i n c e " . The o n l y q u e s t i o n t h a t a r i s e s i s whether a s a l e by t h e Commission would be s u b j e c t , as r e g a r d s p r i c e , t o t h e r e q u i r e m e n t s o f a v a l i d f e d e r a l m a r k e t i n g scheme f o r o i l moving i n i n t e r p r o v i n c i a l t r a d e . I t i s s u b m i t t e d t h a t t h e Crown o w n e r s h i p o f t h e o i l would n o t t a k e i t o u t -s i d e such a scheme and w h i l e t h e Commission would not be r e q u i r e d t o s e l l i n t h e i n t e r - p r o v i n c i a l m a r k e t , i f i t chose t o do so i t would have t o comply w i t h t h e scheme i n t h e same way as a p r i v a t e s e l l e r . 2 5 6 . See P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a , " 1 5 - 1 6 . 2 5 7 . The P e t r o l e u m M a r k e t i n g A c t , o p . c i t . note 2 3 8 , s . 1 5 . - 85 -257A The P e t r o l e u m A d m i n i s t r a t i o n A c t , i f s u b s e q u e n t l y p a s s e d by P a r l -i a m e n t , would e s t a b l i s h a v a l i d f e d e r a l m a r k e t i n g scheme f o r o i l e n t e r i n g i n t e r p r o v i n c i a l o r i n t e r n a t i o n a l t r a d e . Both the f i x i n g o f p r i c e s f o r such o i l and t h e l i c e n s i n g o f p e r s o n s engaged i n such t r a d e would be mat-t e r s coming w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce". A q u e s t i o n a r i s e s , t h o u g h , as t o when o i l e n t e r s i n t e r p r o v i n c i a l o r i n t e r n a t i o n a l t r a d e . The d e t e r m i n a t i o n o f t h i s i s s u e i s o f v i t a l i m p o r t a n c e t o t h e scope o f f e d e r a l and p r o v i n c i a l p o w e r s . I t i s s u b m i t t e d t h a t o i l produced from Crown l e a s e s does n o t e n t e r i n t e r p r o v i n c i a l o r i n t e r n a t i o n a l t r a d e u n t i l a f t e r p r o d u c t i o n . The r e g u l a t i o n o f a c t i v i t i e s , i n c l u d i n g p r i c i n g , up t o and i n c l u d i n g t h e p o i n t o f p r o d u c t i o n i s , s o f a r a s p r o v i n c i a l l y -owned o i l and gas a r e c o n c e r n e d , ' a m a t t e r coming w i t h i n " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g t o t h e p r o v i n c e " . In t h e c a s e o f p r i v a t e l y - o w n e d r e s e r v e s , t h o u g h , o i l may sometimes e n t e r i n t e r p r o v i n c i a l o r i n t e r n a t i o n a l t r a d e p r i o r t o p r o d u c t i o n a s , f o r e x a m p l e , when r e s e r v e s are s o l d f o r p r o d u c t i o n and shipment a c r o s s p r o v i n c i a l b o u n d a r i e s . 2 ^ 7 8 258 T u r n i n g now t o g a s , The A r b i t r a t i o n Amendment A c t , 1973 c o n t a i n s r u l e s t h a t a p p l y whenever t h e p u r c h a s e p r i c e o f gas i n A l b e r t a may be r e d e t e r m i n e d by a r b i t r a t i o n p u r s u a n t t o t h e terms o f a gas p u r c h a s e c o n t r a c t . The A c t r e q u i r e s t h a t t h e a r b i t r a t o r must be a Canadian c i t i z e n o r d i n a r i l y r e s i d e n t i n A l b e r t a . I t a l s o p r o v i d e s t h a t a r b i t r a t i o n p r o c e e d i n g s r e l a t i n g to t h e p u r c h a s e p r i c e o f gas may be commenced a t t h e o p t i o n o f e i t h e r p a r t y 2 5 7 A 0 p . c i t . n o t e 247. 2 5 7 8 E v e n i n t h i s c a s e , t h o u g h , c e r t a i n a s p e c t s o f p r o d u c t i o n such as a s s i g n m e n t o f q u o t a s and p r e v e n t i o n o f waste may be m a t t e r s coming w i t h i n a p r o v i n c i a l c l a s s o f s u b j e c t s ; s u p r a , 67. 2 5 8 0 p . c i t . n o t e 2 4 0 . - 86 -under t h e c o n t r a c t n o t w i t h s t a n d i n g t h a t the terms o f the c o n t r a c t r e q u i r e the c o n c u r r e n c e o f both p a r t i e s . Most i m p o r t a n t l y , t h o u g h , the A c t s e t s o u t the f o r m u l a w h i c h must be a p p l i e d by the a r b i t r a t o r i n r e d e t e r m i n i n g the p u r c h a s e p r i c e . The a r b i t r a t o r i s r e q u i r e d t o a s c e r t a i n t h e " f i e l d v a l u e " o f gas based upon i t s "commodity v a l u e " , w h i c h i n t u r n i s d e f i n e d as t h e t h e r m a l v a l u e o f gas p l u s any premium v a l u e d e t e r m i n e d by r e f e r e n c e t o the i n h e r e n t s p e c i a l q u a l i t i e s o f gas when compared w i t h c o m p e t i n g energy s o u r c e s . I t i s t h i s f e a t u r e o f the A c t t h a t d e m o n s t r a t e s t h a t i t i s n o t s i m p l y i n r e l a t i o n t o the r e g u l a t i o n o f c o n t r a c t u a l r i g h t s i n A l b e r t a , I n s t e a d , t h e A c t e s t a b l i s h e s a p r i c e - f i x i n g scheme f o r gas s o l d under t h o s e c o n t r a c t s w h i c h a l l o w f o r p r i c e r e d e t e r m i n a t i o n by a r b i t r a t i o n , i r r e s p e c t i v e o f the d e s t i n a t i o n o f the g a s . U n l i k e The P e t r o l e u m M a r k e t i n g A c t , The A r b i t r a t i o n Amendment A c t does o p e r a t e w i t h r e s p e c t t o a c t u a l t r a n s a c t i o n s t a k i n g p l a c e w i t h i n t h e p r o v i n c e . However, t h i s f a c t a l o n e does n o t e n s u r e t h a t the A c t i s w i t h i n 259 p r o v i n c i a l competence. The a u t h o r i t i e s a r e such t h a t i t i s d i f f i c u l t t o be c o n f i d e n t c o n c e r n i n g the outcome o f a c o n s t i t u t i o n a l c h a l l e n g e t o t h e A c t . The C a r n a t i o n case s u g g e s t s t h a t t h e u l t i m a t e d e s t i n a t i o n o f goods w i l l n o t n e c e s s a r i l y p r e c l u d e p r o v i n c i a l r e g u l a t i o n o f p r i c e s p a i d i n t r a n s -a c t i o n s c o m p l e t e d i n the p r o v i n c e . However, the q u e s t i o n i s w h e t h e r t h i s See the d e c i s i o n o f the M a n i t o b a C o u r t o f Appeal i n The Queen v . K l a s s e n ( 1 9 5 9 ) , 20 D . L . R . (2d) 4 0 6 , from w h i c h l e a v e t o a p p e a l t o t h e Supreme C o u r t o f Canada was d e n i e d . In t h i s c a s e i t was h e l d t h a t a p u r e l y i n t r a p r o v i n c i a l t r a n s a c t i o n was s u b j e c t to f e d e r a l l e g i s l a t i o n v a l i d l y e n a n c t e d under the t r a d e and commerce power. 87 -d e c i s i o n must be viewed r e s t r i c t i v e l y i n o r d e r t o r e c o n c i l e i t w i t h t h e l a t e r M a n i t o b a Egg c a s e . I t i s s u b m i t t e d t h a t t h i s d i f f i c u l t y s h o u l d be overcome by an e x a m i n a t i o n o f t h e s u b s t a n c e o f the s t a t u t e i n q u e s t i o n , p e n i n the l i g h t o f i t s l e g i s l a t i v e h i s t o r y . The A r b i t r a t i o n Amendment  A c t s e e k s t o r e g u l a t e the p r i c i n g o f gas s o l d under a c e r t a i n c l a s s o f c o n t r a c t s . I t does more than p r o v i d e a p r o c e d u r a l mechanism f o r use i n d e t e r m i n i n g p r i c e s - t h e A c t a l s o s e t s o u t the f a c t o r s t o be c o n s i d e r e d i n d e t e r m i n i n g such p r i c e s . In t h i s r e s p e c t t h e A c t goes beyond the s t a t u t e w h i c h came b e f o r e t h e Supreme C o u r t o f Canada i n t h e C a r n a t i o n c a s e . I t i s t h e r e f o r e s u g g e s t e d t h a t The A r b i t r a t i o n Amendment A c t i s i n r e l a t i o n t o a m a t t e r coming w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce" r a t h e r than any o f t h e p r o v i n c i a l c l a s s e s of s u b j e c t s . C o n t r a r y t o the s i t u a t i o n i n A l b e r t a , the B r i t i s h Columbia P e t r o l e u m C o r p o r a t i o n has r e l i e d upon i n d i r e c t a c t i o n t o i n f l u e n c e b o t h t h e e x p o r t p r i c e s and the w e l l h e a d p r i c e s o f gas produced i n the p r o v i n c e . The C o r p o r a t i o n i n i t i a l l y n e g o t i a t e d an agreement w i t h W e s t c o a s t T r a n s m i s s i o n Company whereby W e s t c o a s t became, i n e f f e c t , a c o n t r a c t c a r r i e r o f gas f o r t h e C o r p o r a t i o n i n s t e a d o f a w h o l e s a l e buyer and s e l l e r o f g a s . W e s t c o a s t a g r e e d t o a s s i g n a l l i t s p r o d u c e r c o n t r a c t s t o t h e C o r p o r a t i o n and to buy a l l i t s gas from the C o r p o r a t i o n a t a p r i c e e q u a l t o t h e v a l u e o f i t s d o m e s t i c and e x p o r t s a l e s l e s s a c o s t o f s e r v i c e and a r e t u r n on i t s r a t e b a s e . An i n c r e a s e i n the e x p o r t p r i c e o f gas was a c h i e v e d t h r o u g h r e l i a n c e upon a term o f the s a l e s c o n t r a c t between W e s t c o a s t and i t s For f u r t h e r d e t a i l s o f t h e l e g i s l a t i v e h i s t o r y o f The A r b i t r a t i o n  Amendment A c t , see P a r t I I , "Government Management o f O i l and Gas i n A l b e r t a " , 9 9 e t seq~l - 88 -U n i t e d S t a t e s p u r c h a s e r . T h i s term r e q u i r e s t h a t the e x p o r t p r i c e be a t l e a s t 105% o f the p r i c e c h a r g e d t o the B r i t i s h Columbia Hydro and Power A u t h o r i t y , a p r o v i n c i a l Crown c o r p o r a t i o n w h i c h d i s t r i b u t e s gas i n t h e l o w e r m a i n l a n d r e g i o n o f the p r o v i n c e . B . C . Hydro was persuaded t o i n -c r e a s e the p r i c e t h a t i t p a i d t o W e s t c o a s t f o r g a s , t h e r e b y t r i g g e r i n g an i n c r e a s e i n the e x p o r t p r i c e p u r s u a n t t o the 105% c l a u s e . F i n a l l y , the B r i t i s h C o l u m b i a P e t r o l e u m C o r p o r a t i o n has used t h e de f a c t o monopoly p o s i t i o n t h a t i t a c q u i r e d from W e s t c o a s t as t h e p u r c h a s e r o f the b u l k o f t h e gas produced i n the p r o v i n c e t o s e t w e l l h e a d p r i c e s a t d e s i r e d l e v e l s . The d i f f e r e n c e between the p r i c e s p a i d by t h e C o r p o r a t i o n t o gas p r o d u c e r s and the p r o c e e d s o f i t s s a l e s t o W e s t c o a s t becomes p a r t . . , r 261 o f p r o v i n c i a l Crown r e v e n u e s . The s i g n i f i c a n c e o f t h i s scheme l i e s i n t h e f a c t t h a t t h e r e i s no l e g i s l a t i v e r e q u i r e m e n t f o r gas p r o d u c e r s to s e l l t o the B r i t i s h C o l u m b i a P e t r o l e u m C o r p o r a t i o n , and n e i t h e r has t h e r e been any a t t e m p t on t h e p a r t o f the B r i t i s h Columbia government t o c o n t r o l e x p o r t p r i c e s e x c e p t by r e l i a n c e upon the terms o f e x i s t i n g o r n e g o t i a t e d c o n t r a c t s . W e s t c o a s t T r a n s m i s s i o n Company remains s u b j e c t t o f e d e r a l r e g u l a t i o n r e g a r d i n g gas e x p o r t s , b o t h as t o p r i c e and as t o q u a n t i t y , under the N a t i o n a l Energy 262 Board A c t . The B r i t i s h Columbia P e t r o l e u m C o r p o r a t i o n would s i m i l a r l y be s u b j e c t t o such f e d e r a l r e g u l a t i o n i f i t s h o u l d choose t o s e l l gas i n e x p o r t m a r k e t s on i t s own a c c o u n t , r a t h e r than t h r o u g h W e s t c o a s t . By way T h i s a c c o u n t i s d e r i v e d from A r m s t r o n g , G.A. and Thompson, A . R . , "The B r i t i s h Columbia N a t u r a l Gas I n d u s t r y : A Case Study i n I n t e r n a t i o n a l Energy D e v e l o p m e n t " , a paper p r e s e n t e d t o the B r i t i s h Columbia Energy I n d u s t r y C o n f e r e n c e , V a n c o u v e r , A p r i l 1 8 - 1 9 , 1974. 2 6 2 O P - c i t . note 216. - 8 9 -2 6 3 o f c o n t r a s t , The P e t r o l e u m M a r k e t i n g A c t r e q u i r e s p r o d u c e r s o f a l l o i l from Crown l e a s e s i n A l b e r t a t o a c c e p t the A l b e r t a P e t r o l e u m M a r k e t i n g Commission as t h e i r agent f o r s e l l i n g t h e i r o i l , i r r e s p e c t i v e o f t h e m a r k e t i n w h i c h the o i l i s consumed. 2 6 4 I t has a l r e a d y been n o t e d t h a t the O i l E x p o r t Tax A c t was e n a c t e d as p a r t o f a b r o a d f e d e r a l scheme s e e k i n g the c o n t r o l o f d o m e s t i c o i l p r i c e s 264A t h r o u g h o u t Canada. Does t h i s f a c t o r mean t h a t the A c t i s , i n r e a l i t y , i n r e l a t i o n t o a m a t t e r coming w i t h i n , n o t " t h e r e g u l a t i o n o f t r a d e and commerce", b u t one o f the p r o v i n c i a l c l a s s e s o f s u b j e c t s ? There i s no doubt t h a t the t a x had an e f f e c t upon t h e management and s a l e o f Crown o i l and gas i n the p r o v i n c e s by r e d u c i n g the scope f o r p r o v i n c i a l r e v e n u e t h e r e f r o m . N e v e r t h e l e s s , i t does n o t seem p o s s i b l e t o s a y t h a t t h e s u b -s t a n c e o f the A c t i s o t h e r than the c o n t r o l o f the i n t e r n a t i o n a l f l o w o f o i l , a m a t t e r coming w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce". I t s i m p a c t upon p r o v i n c i a l government revenues i s m e r e l y one example o f t h e i n t e r r e l a t e d n a t u r e o f f e d e r a l and p r o v i n c i a l powers. J u r i s d i c t i o n o v e r the p r i c i n g o f o i l and gas a t the c o n s u m p t i o n s t a g e w i t h i n a p r o v i n c e i s s u b j e c t t o some d o u b t . The d i f f i c u l t y a r i s e s when such p r i c i n g has an e f f e c t upon the f l o w o f o i l and gas i n t o the p r o v i n c e O p . c i t . n o t e 2 3 8 . 2 6 4 O p . c i t . n o t e 2 2 6 . 2 6 4 A S u p r a , 7 6 . - 90 -from o u t s i d e i t s b o u n d a r i e s . In Home O i l D i s t r i b u t o r s L i m i t e d v . A t t o r n e y -265 General o f B r i t i s h C o l u m b i a , the Supreme C o u r t o f Canada f a c e d j u s t t h i s s i t u a t i o n . The B r i t i s h Columbia s t a t u t e i n q u e s t i o n p r o v i d e d f o r the c o n -t r o l o f p r i c i n g o f c e r t a i n c o a l and o i l p r o d u c t s w i t h i n t h e p r o v i n c e by a s t a t u t o r y b o a r d . There was c l e a r e x t r i n s i c e v i d e n c e t h a t one o f the o b j e c t s , a t l e a s t , o f such c o n t r o l was the r e g u l a t i o n o f t h e i n f l o w o f c e r t a i n o i l p r o d u c t s from C a l i f o r n i a . However, the Supreme C o u r t l o o k e d o n l y t o t h e a c t u a l w o r d i n g o f the s t a t u t e and h e l d t h a t i t r e l a t e d t o t r a n s a c t i o n s t a k i n g p l a c e e n t i r e l y w i t h i n t h e p r o v i n c e , a m a t t e r coming w i t h i n one o f 266 t h e p r o v i n c i a l c l a s s e s o f s u b j e c t s . However, a d i f f e r e n t approach was e v i d e n t i n the more r e c e n t case o f A t t o r n e y - G e n e r a l f o r M a n i t o b a v . M a n i t o b a 2fi7 Egg and P o u l t r y A s s o c i a t i o n , where the a c t i v i t i e s o f a m a r k e t i n g b o a r d a f f e c t e d the f l o w o f eggs i n t o Manitoba and the Supreme C o u r t found t h a t the m a r k e t i n g scheme had as " a d i r e c t o b j e c t " the r e g u l a t i o n o f the i m p o r t a -268 t i o n o f e g g s . The r e s u l t seems t o r e q u i r e a c l o s e e x a m i n a t i o n o f t h e s t a t u t e i n q u e s t i o n t o a s c e r t a i n i t s " m a t t e r " . I f t h i s i s t h e p r e v e n t i o n o f e x c e s s i v e p r i c e s f o r goods s o l d i n the p r o v i n c e i t i s l i k e l y t o come w i t h i n " g e n e r a l l y a l l m a t t e r s o f a m e r e l y l o c a l o r p r i v a t e n a t u r e i n the p r o v i n c e " . On the o t h e r h a n d , i f i t i s the c u r t a i l m e n t o f t h e i n f l o w o f goods o r t h e s u b j e c t i o n o f i m p o r t e d goods t o d i s c r i m i n a t o r y m a r k e t i n g c o n d i t i o n s , i t comes 2 6 5 [1940] S . C . R . 4 4 4 . 266 The f a c t t h a t a t r a n s a c t i o n t a k e s p l a c e e n t i r e l y w i t h i n a p r o v i n c e no l o n g e r seems t o be s u f f i c i e n t to b r i n g a l l i t s a s p e c t s w i t h i n p r o v i n c i a l l e g i s l a t i v e a u t h o r i t y , s u p r a , 8 6 . 2 ^ 7 O p . c i t . n o t e 71. 2 6 8 I b i d . , 717, 1 8 9 , p e r L a s k i n J . w i t h i n " t h e r e g u l a t i o n o f t r a d e and commerce". 269 The P e t r o l e u m A d m i n i s t r a t i o n A c t w o u l d , i f passed by P a r l i a m e n t , seek t o c o n t r o l the p r i c i n g o f o i l p r o d u c t s a t the consumption s t a g e by r e s t r i c t i n g the s u b s i d y p a i d on i m p o r t e d o i l t o those companies which have v o l u n t a r i l y m a i n t a i n e d the l e v e l o f p r o d u c t p r i c e s s u g g e s t e d by t h e f e d e r a l government. The a t t a c h m e n t o f t h i s c o n d i t i o n t o the s u b s i d y does n o t , i t i s s u b m i t t e d , p r e v e n t the s u b s i d y scheme from b e i n g r e g a r d e d as a m a t t e r 270 coming w i t h i n " t h e p u b l i c d e b t and p r o p e r t y . " S i m i l a r l y , a l t h o u g h t h e r e i s no c l a s s o f s u b j e c t s i n s e c t i o n 92 o f the B . N . A . A c t c o r r e s p o n d i n g t o t h a t d e s c r i b e d i n s e c t i o n 9 1 ( I A ) , t h e r e appears n o t h i n g t o p r e v e n t a p r o -v i n c i a l government from o f f e r i n g g r a n t s t o s e l l e r s o f o i l i n t h e p r o v i n c e s u b j e c t t o a c o n d i t i o n t h a t t h e i r p r i c e s conform w i t h p r o v i n c i a l g u i d e l i n e s . In f a c t , t h i s approach has been adopted by t h e B r i t i s h Columbia Energy 271 Commission i n s t i p u l a t i n g a l l o w a b l e p r i c e i n c r e a s e s f o r p e t r o l e u m p r o d u c t s . Where p r o v i n c i a l p r i c e g u i d e l i n e s d i f f e r from f e d e r a l g u i d e l i n e s c o n c e r n i n g the same p r o d u c t , t h e r e i s no s u g g e s t i o n t h a t one must g i v e v/ay t o the o t h e r . Each s e l l e r i s f r e e t o choose between the t w o , o r may d e c i d e t o comply w i t h n e i t h e r . 269 " 3 O p . c i t n o t e 247. 970 B . N . A . A c t , s . 9 1 (IA) - t h e f e d e r a l " s p e n d i n g p o w e r " . 271 The B r i t i s h Columbia scheme has n o t o f f e r e d cash g r a n t s t o s e l l e r s . I n s t e a d , p r i c e i n c r e a s e s on some p r o d u c t s ( e . g . h e a t i n g o i l ) have been a l l o w e d c o n d i t i o n a l upon the e x e r c i s e o f p r i c e r e s t r a i n t r e g a r -d i n g o t h e r p r o d u c t s ( e . g . g a s o l i n e ) . The B . C . Energy Commission i s g i v e n l e g i s l a t i v e a u t h o r i t y t o c o n t r o l p r i c e s d i r e c t l y , by the Energy Amendment A c t , 1974, ( B i l l 1 8 ) , but has not used t h i s a u t h o r i t y so f a r . - 92 -A s i d e from t h e q u e s t i o n o f c o n t r o l o v e r p r i c i n g , t h e scope o f t h e t a x i n g powers o f t h e p r o v i n c e s and o f the Dominion i s i m p o r t a n t i n d e t e r -m i n i n g the d i s t r i b u t i o n o f b e n e f i t s f l o w i n g from an i n c r e a s e i n p r i c e s f o r o i l and g a s . I t has a l r e a d y been noted t h a t the t a x i n g power of t h e 272 p r o v i n c e s i s l i m i t e d t o " d i r e c t t a x a t i o n w i t h i n the p r o v i n c e " . An 273 example o f such t a x a t i o n i s t h e A l b e r t a F r e e h o l d M i n e r a l T a x a t i o n A c t w h i c h l e v i e s a t a x a t a f l a t r a t e upon the a s s e s s e d v a l u e o f f r e e h o l d o i l and gas r e s e r v e s i n the g r o u n d . The v a l i d i t y o f t h i s A c t i s n o t open t o 274 q u e s t i o n . Of g r e a t e r i n t e r e s t i s t h e p r o p o s a l i n t h e f e d e r a l budget o f 6 May, 1974, to make p r o v i n c i a l r o y a l t i e s n o n - d e d u c t i b l e i n the c a l c u l a t i o n o f 275 t a x a b l e income from o i l and gas p r o d u c t i o n . The o n l y l i m i t p l a c e d upon the f e d e r a l t a x i n g power i s t h a t d e r i v e d from t h e scheme o f s e c t i o n s 91 and 92 o f the B . N . A . A c t . I t must t h e r e f o r e be a s k e d w h e t h e r t h i s 2 76 p r o v i s i o n , i f i n c l u d e d i n the Income Tax A c t by f u t u r e f e d e r a l l e g i s -l a t i o n , i s i n r e l a t i o n t o a m a t t e r coming w i t h i n " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g t o the p r o v i n c e " o r " t h e r a i s i n g o f money by 277 any mode o r system o f t a x a t i o n " . The background t o t h e p r e s e n t 272. S u p r a , 4 0 . 2 7 3 . ' S . A . 1973, c . 8 9 . 274. S u p r a , 4 1 . 275. The budget a l s o c o n t a i n e d a number o f o t h e r i t e m s r e l a t i n g t o t h e o i l and gas i n d u s t r y , i n c l u d i n g a r e d u c t i o n o f t h e f e d e r a l c o r p o r a t i o n income t a x r a t e by 10 p e r c e n t a g e p o i n t s f o r o i l and gas p r o d u c t i o n p r o f i t s , changes i n the d e p l e t i o n a l l o w a n c e and i n t h e speed o f d e d u c t i o n o f e x p l o r a t i o n and development e x p e n s e s . 276. S . C . 1 9 7 0 - 7 1 - 7 2 , c . 63 as amended. 277. There a r e d i c t a o f t h e P r i v y C o u n c i l r e c o g n i z i n g t h a t t h e f e d e r a l t a x i n g power may not be used t o usurp t h e l e g i s l a t i v e a u t h o r i t y o f the p r o v i n c e s ; s u p r a , 4 2 . - 93 -f e d e r a l - p r o v i n c i a l energy c o n f r o n t a t i o n i s a v i t a l i n g r e d i e n t i n t h e d e t e r -m i n a t i o n o f t h i s q u e s t i o n . In p r i n c i p l e , i t i s s u b m i t t e d t h a t t h e f o r m e r c l a s s i s t o be p r e f e r r e d i n a l l t h e c i r c u m s t a n c e s . To make t h e m a j o r element o f t h e c o n s i d e r a t i o n p a i d t o t h e p r o v i n c e s f o r Crown o i l and gas r i g h t s n o n - d e d u c t i b l e f o r income t a x p r u p o s e s i s t o d i s c r i m i n a t e by t a x a t i o n a g a i n s t t h e development o f t h e s e r e s o u r c e s , a m a t t e r coming w i t h -i n t h e p r o v i n c i a l c l a s s o f s u b j e c t s . A n o t h e r i s s u e o f p o t e n t i a l s i g n i f i c a n c e i s the t a x a t i o n o f p r o v i n c i a l Crown c o r p o r a t i o n s . A t p r e s e n t , t h e Income Tax A c t e x p r e s s l y exempts s u c h 278 b o d i e s f r o m i t s a m b i t . The c o n s t i t u t i o n a l exemption from s u c h t a x a t i o n d e p e n d s , h o w e v e r , upon t h e i n t e r p r e t a t i o n p l a c e d on t h e words o f s e c t i o n 125 o f t h e B . N . A . A c t . The o n l y d e c i d e d a u t h o r i t y has t h e e f f e c t o f em-279 a s c u l a t i n g t h e s e c t i o n . N e v e r t h e l e s s , as p r e v i o u s l y a r g u e d , t h i s a u t h o r i t y i s open t o q u e s t i o n and t h e o r d i n a r y meaning o f s e c t i o n 125 would a l l o w e x e m p t i o n o f p r o v i n c i a l Crown, c o r p o r a t i o n s f r o m t h e scope o f t h e f e d e r a l t a x i n g power. In summary, t h e i s s u e o f p r i c i n g o f o i l and gas i s one where l e g i s -l a t i v e a u t h o r i t y i s s h a r e d between t h e Dominion and t h e p r o v i n c e s . The l a t t e r have the r i g h t t o d i c t a t e w e l l h e a d p r i c i n g o f Crown r e s o u r c e s a n d , i n o r d i n a r y c i r c u m s t a n c e s , t h e p r i c i n g o f p r o d u c t s consumed i n t h e p r o v i n c e . However, t h e Dominion can c o n t r o l t h e p r i c i n g o f goods moving t o i n t e r -278. I b i d . , s . 149 ( l ) ( d ) . 279. A t t o r n e y - G e n e r a l f o r B r i t i s h Columbia v . A t t o r n e y G e n e r a l f o r  C a n a d a , o p . c i t . n o t e 109. 2 8 0 . S u p r a , 3 7 - 3 9 . - 94 -p r o v i n c i a l and i n t e r n a t i o n a l m a r k e t s . The p o s s i b i l i t y f o r c o n f l i c t between f e d e r a l and p r o v i n c i a l p r i c i n g regimes i s o b v i o u s , b u t s h o u l d n o t r e q u i r e r e s o r t to any q u e s t i o n o f paramountcy. An impasse between p r o v i n c i a l w e l l -head p r i c i n g and f e d e r a l e x p o r t p r i c i n g may h o p e f u l l y be r e s o l v e d by n e -g o t i a t i o n , b u t i f n o t , w i l l i n f a c t be r e s o l v e d by c e s s a t i o n o f e x p o r t s . S i m i l a r l y , i f a f e d e r a l p r i c i n g scheme f o r i n t e r p r o v i n c i a l o i l s e t s l i m i t s l o w e r than those r e q u i r e d by p r o v i n c i a l w e l l h e a d p r i c i n g , t h e a u t h o r i t y o f the p r o v i n c e i s n o t r e q u i r e d t o y i e l d t o t h a t o f the D o m i n i o n . What g i v e s v/ay i t i s s u g g e s t e d , i s t h e f l o w o f i n t e r p r o v i n c i a l o i l u n t i l t h e i n c o n -s i s t e n c y i s r e s o l v e d . T h i s a f f o r d s a p r o v i n c e g r e a t b a r g a i n i n g p o w e r , i n e f f e c t amounting t o a v e t o , b u t t h i s power i s no more than i s i m p l i c i t i n i t s e x c l u s i v e l e g i s l a t i v e a u t h o r i t y r e g a r d i n g the management and s a l e o f i t s r e s o u r c e s . F. CONCLUSION Canada a p p e a r s t o be on t h e v e r g e o f an e x t e n s i o n o f t h e f e d e r a l t r a d e and commerce power, such as o c c u r r e d i n t h e U n i t e d S t a t e s some t h i r t y y e a r s a g o . In t h a t c o u n t r y , the i n c r e a s e i n f e d e r a l l e g i s l a t i v e a u t h o r i t y l e d t o 281 the N a t u r a l Gas A c t , p a s s e d by Congress i n 1938 and u p h e l d by t h e Supreme 282 C o u r t i n 1954. T h i s A c t a l l o w e d the F e d e r a l Power Commission t o r e g u l a t e a l l s a l e s , as f a r back as t h e w e l l h e a d , o f gas d e s t i n e d f o r i n t e r p r o v i n c i a l m a r k e t s . The q u e s t i o n f o r Canada i s whether an e x p a n s i o n i n f e d e r a l power 281 52 S t a t . 8 2 1 , as amended; 15 U . S . C . p a r a . 717 e t s e q . 282 P h i l l i p s P e t r o l e u m Company v . S t a t e o f W i s c o n s i n e t a l . , 3 4 7 U . S . 672 ( 1 9 5 4 ) . The C o u r t h e l d t h a t a company engaged i n p r o d u c t i o n , g a t h e r i n g , p r o c e s s i n g and s a l e o f g a s , though not i n the i n t e r s t a t e t r a n s m i s s i o n o f g a s , was s u b j e c t t o r e g u l a t i o n by the F . P . C . under the A c t . The company i n q u e s -t i o n s o l d i t s gas t o f i v e i n t e r s t a t e p i p e l i n e companies w h i c h i n t u r n t r a n s -p o r t e d and r e s o l d the gas t o consumers i n 14 s t a t e s . - 95 -c o u l d c o n t i n u e t o t h e same l i m i t s . The Canadian c o n s t i t u t i o n i s v e r y d i f f e r e n t from t h e U n i t e d S t a t e s c o u n t e r p a r t . The scheme i n h e r e n t i n the d i v i s i o n o f powers c o n t a i n e d i n s e c t i o n s 91 and 92 o f t h e B . N . A . A c t r e q u i r e s an e x c l u s i v e n e s s i n the l e g i s l a t i v e a u t h o r i t y o f the p r o v i n c e s and the D o m i n i o n . The l i m i t s t o f e d e r a l power must t h e r e f o r e be sought n o t o n l y i n the c l a s s e s o f s u b -j e c t s a s s i g n e d t o t h e D o m i n i o n , b u t a l s o i n t h e c l a s s e s o f s u b j e c t s a s s i g n e d t o t h e p r o v i n c e s . In p a r t i c u l a r , what d i s t i n g u i s h e s t h e Canadian s i t u a t i o n f r o m t h a t i n the U n i t e d S t a t e s i s the ownership o f most o i l and gas r e s o u r c e s by the p r o v i n c e s i n w h i c h t h e y a r e l o c a t e d . But t h i s o w n e r s h i p a l o n e does n o t s e c u r e t h e p o s i t i o n o f t h e o i l and gas p r o d u c i n g p r o v i n c e s a g a i n s t the encroachment o f f e d e r a l l e g i s l a t i o n . What d o e s , i s the f a c t t h a t the B . N . A . A c t g i v e s the p r o v i n c e s the e x c l u s i v e r i g h t t o make laws i n r e l a t i o n t o m a t t e r s coming w i t h i n " t h e management and s a l e o f the p u b l i c l a n d s b e l o n g i n g t o " t h e p r o v i n c e s . T h i s r i g h t , combined w i t h the f a c t o f s u b s -t a n t i a l r e s o u r c e o w n e r s h i p , p r o v i d e s an e f f e c t i v e b a r t o u n l i m i t e d e x p a n s i o n o f the f e d e r a l t r a d e and commerce power. P r o v i n c i a l o w n e r s h i p o f o i l and ga~, r e s o u r c e s a l s o has a n o t h e r r e s u l t . Q u i t e a p a r t from i t s e x c l u s i v e l e g i s l a t i v e a u t h o r i t y i n r e l a t i o n t o t h e s e r e s o u r c e s , a p r o v i n c e has a l l the r i g h t s o f a p r i v a t e owner i n . d e a l i n g w i t h them. A p r o v i n c e may t h e r e f o r e manage i t s r e s o u r c e s w i t h more freedom than i s s u g g e s t e d by an e x a m i n a t i o n o f t h e scope o f i t s l e g i s l a t i v e a u t h o r i t y under s e c t i o n 92 o f the B . N . A . A c t . T h i s r e p r e s e n t s an i m p o r t a n t e x c e p t i o n t o the p r i n c i p l e o f e x c l u s i v e n e s s of l e g i s l a t i v e a u t h o r i t y and p r e v e n t s a - 96 -c h a l l e n g e by p r i v a t e p a r t i e s t o p r o v i n c i a l l e g i s l a t i o n w h i c h w o u l d , i n t h e absence o f ownership o f r e s o u r c e s , be beyond p r o v i n c i a l competence. However, i n a c t i n g as an owner o f r e s o u r c e s a p r o v i n c e i s , j u s t l i k e a p r i v a t e o w n e r , s u b j e c t t o the r e q u i r e m e n t s o f v a l i d f e d e r a l l e g i s l a t i o n r e s t r i c t i n g t h e p r o v i n c e ' s freedom o f a c t i o n . A l t h o u g h l i m i t s must be p l a c e d upon f e d e r a l l e g i s l a t i v e a u t h o r i t y i n r e l a t i o n t o o i l and g a s , i t i s c l e a r t h a t the p r o d u c i n g p r o v i n c e s do n o t have a b s o l u t e power o v e r t h e s e r e s o u r c e s . Both l e v e l s o f government may e x e r c i s e c o n t r o l a t d i f f e r e n t s t a g e s i n the development p r o c e s s . However, t h i s f a c t i n no way d i m i n i s h e s the i m p o r t a n c e o f an e x a m i n a t i o n o f t h e scope o f f e d e r a l and p r o v i n c i a l a u t h o r i t y . I t s h o u l d be remembered t h a t government powers i m p l y n o t o n l y r i g h t s b u t a l s o a d u t y , to e x e r c i s e t h e s e powers p r o p e r l y on b e h a l f o f c o n s t i t u e n t s . A s i m i l a r d u t y i s even more c l e a r l y i n v o l v e d i n the p u b l i c o w n e r s h i p o f r e s o u r c e s i n the p r o v i n c e s . A government can n o t be e x p e c t e d t o p e r f o r m i t s o b l i g a t i o n s w i t h o u t knowledge o f t h e l i m i t s o f i t s a u t h o r i t y . M o r e o v e r , i t i s s u g g e s t e d t h a t the b a r -g a i n i n g t h a t must i n e v i t a b l y r e s u l t between the p r o v i n c e s and the Dominion r e g a r d i n g the development o f r e s o u r c e s as i m p o r t a n t as o i l and g a s , w o u l d be c o n d u c t e d b e t t e r , w i t h l e s s r e s o r t t o a c r i m o n y and w a s t e f u l c o n f r o n t a t i o n , i n a c l i m a t e o f u n d e r s t a n d i n g o f the l i m i t s of r e s p e c t i v e p o w e r s . - 97a -PART I I GOVERNMENT MANAGEMENT OF OIL AND GAS IN ALBERTA - 9 7 b -- 1 -A. INTRODUCTION The d i s c o v e r y o f t h e Leduc f i e l d i n 1947 marked t h e e s t a b l i s h m e n t o f A l b e r t a as a m a j o r o i l and gas p r o d u c i n g p r o v i n c e . In t h e t w e n t y - seven y e a r s s i n c e t h e n , A l b e r t a has n e v e r been s e r i o u s l y c h a l l e n g e d f o r i t s p o s i t i o n as the l e a d i n g p r o d u c e r o f o i l and gas i n Canada. A t t h e same t i m e , the dominance o f t h e o i l and gas i n d u s t r y i n t h e economy o f A l b e r t a has n e v e r been open t o q u e s t i o n . The Crown i n t h e r i g h t o f t h e p r o v i n c e owns some 80% o f m i n e r a l s i n t h e g r o u n d , i n c l u d i n g o i l and g a s . N e v e r t h e l e s s , i n many r e s p e c t s t h e Crown has been t h e p a s s i v e p a r t n e r o f p r i v a t e e n t e r p r i s e i n t h e d e v e l o p -ment o f t h e s e r e s o u r c e s . The i n f l u e n c e o f p r i v a t e o w n e r s h i p o f m i n e r a l s has been d i s p r o p o r t i o n a t e l y s t r o n g , perhaps because the e a r l i e s t d i s -c o v e r i e s were made i n a r e a s where i t was s i g n i f i c a n t , ^ and c e r t a i n l y because e x p e r i e n c e i n t h e development o f t h e s e r e s o u r c e s was g a i n e d from T e x a s , L o u i s i a n a , Oklahoma and C a l i f o r n i a , where p r i v a t e o w n e r s h i p was the norm. A l b e r t a has m a i n t a i n e d an unbroken t r a d i t i o n o f r e l i a n c e upon p r i v a t e e n t e r p r i s e f o r t h e c o n d u c t o f e x p l o r a t i o n and p r o d u c t i o n o p e r a t i o n s f o r Crown m i n e r a l s as w e l l as t h o s e s u b j e c t t o p r i v a t e o w n e r s h i p , and when problems have a r i s e n r e q u i r i n g government i n t e r v e n t i o n , t h e p r o t e c t i o n o f • p r i v a t e r i g h t s has been paramount i n any s o l u t i o n a d o p t e d . The s u b j e c t o f t h i s e s s a y i s government management o f Crown' o i l The s i t e o f the Leduc d i s c o v e r y w e l l , f o r e x a m p l e , was t h e f a r m o f Mike T u r t a , where m i n e r a l r i g h t s were p r i v a t e l y owned. - 98 -- 2 -2 gas r e s o u r c e s i n A l b e r t a . I t i s n o t an h i s t o r i c a l r e v i e w o f t h e d i f f e r e n t p o l i c i e s t h a t have been a d o p t e d f r o m t i m e t o t i m e d u r i n g A l b e r t a ' s l i f e as a p r o d u c i n g p r o v i n c e , b u t r a t h e r an a n a l y s i s o f t h e management s y s t e m p r e s e n t -l y i n f o r c e . As s u c h , i t d e a l s w i t h government a c t i o n f r o m t h e t i m e o f f i r s t a l l o c a t i o n o f p r i v a t e r i g h t s o v e r Crown o i l and gas t h r o u g h the e x p l o r a t i o n and p r o d u c t i o n phases o f the i n d u s t r y t o t h e t r a n s p o r t a t i o n , e x p o r t and s a l e o f t h e produced s u b s t a n c e s . In o r d e r t o g i v e something more than a d e s c r i p t i v e a c c o u n t o f t h i s management p r o c e s s , some method o f e v a l u a t i o n needs t o be a d o p t e d . H e r e , t h e management s y s t e m i s j u d g e d a c c o r d i n g t o e f f i c i e n c y and e q u i t y c r i t e r i a . The c o n c e p t o f e f f i c i e n c y i s d i r e c t e d towards net s o c i a l b e n e f i t . I t t h u s t a k e s i n t o a c c o u n t t h e b e n e f i t s d e r i v e d by A l b e r t a s o c i e t y from o i l and gas r e s o u r c e s as w e l l as t h e c o s t s i n c u r r e d by s o c i e t y i n f i n d i n g , d e v e l o p i n g and u s i n g t h e m . Two m a t t e r s a r e i m p o r t a n t h e r e : t h e amount o f s o c i e t y ' s i n v e s t m e n t o f l a b o u r and c a p i t a l i n p r o d u c i n g t h e s e r e s o u r c e s , and the t i m i n g o f t h i s i n v e s t m e n t . F i r s t l y , i f t h e amount o f i n v e s t m e n t i s t o o l o w , s o c i e t y w i l l n o t o b t a i n a l l t h e a v a i l a b l e b e n e f i t s from t h e s e r e s o u r c e s , w h i l e i f t h e amount o f i n v e s t m e n t i s t o o h i g h , t h e c o s t o f p r o d u c i n g t h e s e b e n e f i t s , i n terms o f w a s t e d l a b o u r o r c a p i t a l , w i l l be e x c e s s i v e . E i t h e r way, n e t s o c i a l b e n e f i t s w i l l n o t be a t a maximum. Economic t h e o r y shows t h a t t h i s maximum i s a c h i e v e d when t h e m a r g i n a l s o c i a l b e n e f i t s f r o m i n v e s t m e n t e q u a l the m a r g i n a l s o c i a l c o s t s , t h a t i s t o s a y , t h e s o c i a l b e n e f i t s d e r i v e d from i n v e s t m e n t of an a d d i t i o n a l u n i t o f e i t h e r l a b o u r o r c a p i t a l e q u a l t h e s o c i a l c o s t s t h e r e o f . These s o c i a l c o s t s , i n t u r n , a r e r e p r e s e n t e d by t h e s o c i a l b e n e f i t s t h a t c o u l d have been I t i s r e s t r i c t e d t o c o n v e n t i o n a l o i l and gas r e s o u r c e s , t h e r e b y o m i t t i n g r e f e r e n c e t o the q u i t e d i f f e r e n t management s y s t e m adopted f o r t h e o i l sands and o t h e r heavy o i l d e p o s i t s . - 9 9 -- 3 -o b t a i n e d by i n v e s t m e n t o f t h a t u n i t o f l a b o u r o r c a p i t a l i n i t s n e x t most p r o d u c t i v e u s e . S e c o n d l y , t h e t i m i n g o f i n v e s t m e n t has two a s p e c t s . S i n c e s o c i e t y has a p o s i t i v e t i m e p r e f e r e n c e , i n t h a t b e n e f i t s won t o d a y have a g r e a t e r v a l u e than s i m i l a r b e n e f i t s won a t some p o i n t i n t h e f u t u r e , i n v e s t m e n t made too e a r l y o r t o o l a t e w i l l be a k i n t o e x c e s s i v e o r i n a d -equate i n v e s t m e n t . F u r t h e r m o r e , s i n c e one o f t h e c o s t s o f u s i n g o i l and gas r e s o u r c e s today i s t h e p r e s e n t v a l u e o f t h e b e n e f i t s t h a t c o u l d have been o b t a i n e d by d e f e r r i n g t h e i r use t o a f u t u r e t i m e , s o c i e t y w i l l o b t a i n t h e maximum n e t b e n e f i t s f r o m o i l and gas r e s o u r c e s o n l y by a d o p t i o n o f a t i m e path f o r t h e i r use w h i c h makes t h e m a r g i n a l b e n e f i t s o f p r e s e n t use e q u a l t o t h e p r e s e n t v a l u e o f t h e m a r g i n a l b e n e f i t s o f use a t a l l 3 f u t u r e t i m e s . In summary, e f f i c i e n c y i s d e f i n e d i n terms o f t h e b e s t p o s s i b l e a l l o c a t i o n o f s o c i e t y ' s r e s o u r c e s among a l t e r n a t i v e e m p l o y m e n t s , i n c l u d i n g p r e s e n t and f u t u r e u s e s , w h i c h r e s u l t s i n t h e l a r g e s t p o s s i b l e t o t a l o f n e t b e n e f i t s t o s o c i e t y . When an e f f i c i e n t a l l o c a t i o n o f r e s o u r c e s i s a c h i e v e d no i n c r e a s e i n n e t b e n e f i t s may be o b t a i n e d by i n c r e a s i n g o r d e c r e a s i n g t h e employment o f any r e s o u r c e o r by a l t e r i n g t h e t i m e p a t h o f 4 i n v e s t m e n t o f c o n s u m p t i o n . T h i s c o n c e p t , d e s c r i b e d as " u s e r c o s t " , i s d e v e l o p e d f u l l y i n S c o t t , A . D . , N a t u r a l R e s o u r c e s , The Economics o f C o n s e r v a t i o n , T o r o n t o , U n i v e r s i t y o f T o r o n t o P r e s s , 1955. 4 For a more d e t a i l e d d i s c u s s i o n o f economic e f f i c i e n c y , see M c D o n a l d , Stephen L . , P e t r o l e u m C o n s e r v a t i o n i n t h e U n i t e d S t a t e s : An Economic  A n a l y s i s , B a l t i m o r e , The Johns Hopkins P r e s s , 1971, 5 9 - 9 2 ; L o v e j o y * W a l l a c e F. and Homan, Paul T . , Economic A s p e c t s of O i l C o n s e r v a t i o n R e g u l a t i o n , B a l t i m o r e , The Johns Hopkins P r e s s , 1967, 8 - 2 6 ; C a m p b e l l , R i c h a r d S. , P e a r s e , P e t e r H . , and S c o t t , A n t h o n y , "Water A l l o c a t i o n i n B r i t i s h C o l u m b i a : An Economic Assessment o f P u b l i c P o l i c y " , 7 U n i v e r s i t y o f B r i t i s h C o l u m b i a Law J o u r n a l 247, 248-252 ( 1 9 7 2 ) . - 100 --•4 - ; ' There i s no c l e a r i n d i c a t i o n t h a t the A l b e r t a government has s o u g h t t o manage Crown o i l and gas r e s o u r c e s w i t h the o b j e c t i v e o f e f f i c i e n c y i n m i n d . Other f a c t o r s such as the maintenance o f employment i n t h e O i l and gas i n d u s t r y and t h e p r e s e r v a t i o n o f e q u i t y among i n d i v i d u a l p r o d u c e r s a r e f r e q u e n t l y mentioned and r e p r e s e n t , o f c o u r s e , e n t i r e l y l e g i t i m a t e government o b j e c t i v e s . However, t h e v a l u e o f e f f i c i e n c y as a benchmark f o r assessment o f government a c t i o n s l i e s i n t h e f a c t t h a t t h e s e o t h e r p o l i c i e s , t o the e x t e n t t h a t t h e y r e s u l t i n a d e v i a t i o n f r o m e f f i c i e n c y r e q u i r e m e n t s , g i v e r i s e t o s o c i a l c o s t s which s h o u l d a l w a y s be r e c o g n i z e d as the p r i c e p a i d f o r t h e i r p u r s u i t . The second c r i t e r i o n adopted i n t h e assessment o f A l b e r t a ' s manage-ment system f o r o i l and gas r e s o u r c e s , t h a t o f e q u i t y , i s employed i n a somewhat narrow s e n s e . I t r e f e r s t o t h e d i s t r i b u t i o n o f t h e b e n e f i t s and c o s t s a r i s i n g f r o m development o f t h e s e r e s o u r c e s , b u t o n l y as between government and p r i v a t e e n t e r p r i s e . The m a t t e r of d i s t r i b u t i o n among the d i f f e r e n t s e c t o r s o f i n d u s t r y i s l e f t open. The approach a d o p t e d i n the a p p l i c a t i o n o f t h i s e q u i t y c r i t e r i o n i s t h a t t h e government i s o b l i g e d , i n f u l f i l m e n t o f i t s d u t y t o t h e Crown and t h e A l b e r t a p u b l i c , t o c o l l e c t t h e economic r e n t s produced from development o f Crown o i l and gas r e s o u r c e s o r a t l e a s t t o e x p l a i n , i n terms o f government p o l i c y , t h e r e a s o n s f o r d i s t r i b u t i o n o f any p a r t o f t h e s e economic r e n t s among i n d u s t r y o r any Economic r e n t s a r e d e f i n e d as the s u r p l u s o f r e v e n u e s g e n e r a t e d i n t h e development o f o i l and gas r e s o u r c e s o v e r a l l n e c e s s a r y c o s t s i n -c u r r e d i n the p r o c e s s , i n c l u d i n g adequate compensation f o r r i s k and u n -c e r t a i n t y , when development t a k e s p l a c e a t t h e s o c i a l l y - d e s i r e d r a t e . T h u s , p r i v a t e o p e r a t o r s who c o n t r i b u t e l a b o u r or c a p i t a l t o the d e v e l o p -ment o f p u b l i c l y - o w n e d o i l and gas r e s o u r c e s a r e f u l l y compensated w i t h o u t r e s o r t t o the economic r e n t s . - 101 -- 5 -s e c t i o n s o f t h e A l b e r t a , Canadian o r f o r e i g n p u b l i c . T h i s f o l l o w s . f r o m the f a c t o f p u b l i c o w n e r s h i p o f the m a j o r i t y o f A l b e r t a o i l and gas r e s o u r c e s . To t h e e x t e n t t h a t the government f a i l s t o c o l l e c t t h e economic r e n t s g e n e r a t e d by t h e s e r e s o u r c e s , i t a l l o w s the b e n e f i t s o f p u b l i c p r o p e r t y t o be e n j o y e d by a s e c t o r o f s o c i e t y r a t h e r than by s o c i e t y as a w h o l e . Thus t h e q u e s t i o n o f e q u i t y i s t r e a t e d as between government on t h e one h a n d , and p r i v a t e i n d u s t r y and i n d i v i d u a l s on t h e o t h e r . In a d d i t i o n , t h e f a i l u r e by the A l b e r t a government t o c a p t u r e a s u b s t a n t i a l p r o p o r t i o n o f t h e economic r e n t s has e f f i c i e n c y a s w e l l as e q u i t y i m p l i c a t i o n s . T h i s i s due t o the h i g h l e v e l o f i n v e s t m e n t i n o i l and gas o p e r a t i o n s from o u t s i d e A l b e r t a . In t h e absence o f s u c h e x t e r n a l i n v e s t m e n t , t h e d i s t r i b u t i o n o f r e n t s among p r i v a t e o p e r a t o r s would n o t r e s u l t i n i n e f f i c i e n c y because t h e r e n t s w o u l d n o t be l o s t t o A l b e r t a s o c i e t y . T h i s i s n o t t h e c a s e , t h o u g h , where some p r i v a t e o p e r a t o r s a r e n o t members o f the A l b e r t a p u b l i c . To the e x t e n t t h a t t h e y o b t a i n economic r e n t s , t h e r e n t s a r e l o s t t o A l b e r t a . Even i f t h e s e r e n t s a r e r e i n v e s t e d i n A l b e r t a by t h e p r i v a t e o p e r a t o r s , t h e r e s u l t i s t h e same s i n c e r e i n v e s t -ment adds to t h e f o r e i g n i n d e b t e d n e s s o f A l b e r t a s o c i e t y . There are o v e r two hundred companies engaged i n e x p l o r a t i o n f o r , and p r o d u c t i o n o f , o i l and gas i n A l b e r t a . The s i z e o f t h e i r o p e r a t i o n s v a r i e s c o n s i d e r a b l y , r a n g i n g from p r o d u c t i o n o f a few b a r r e l s o f o i l o r a few thousand c u b i c f e e t o f gas d a i l y on the p a r t o f s m a l l i n d e p e n d e n t s t o o v e r two hundred thousand b a r r e l s o f c r u d e o i l and n a t u r a l gas l i q u i d s and a l m o s t f i v e hundred m i l l i o n c u b i c f e e t o f gas per day on t h e p a r t o f the l a r g e s t m a j o r s . E i g h t companies a r e c o n s i d e r e d t o have f u l l y i n t e g r a t e d - 102 -- 6 -Canadian o p e r a t i o n s c o m p r i s e d o f e x p l o r a t i o n , p r o d u c t i o n , t r a n s p o r t a t i o n , r e f i n i n g and m a r k e t i n g . The r e m a i n d e r a r e i n v o l v e d o n l y i n e x p l o r a t i o n and p r o d u c t i o n . The i n t e g r a t e d c o m p a n i e s ' p r i n c i p a l s h a r e h o l d e r s a r e a l l f o r e i g n c o m p a n i e s , w h i l e the n o n - i n t e g r a t e d companies have v a r i o u s owner-s h i p p o s i t i o n s r a n g i n g f r o m w h o l l y Canadian-owned t o w h o l l y f o r e i g n - o w n e d . A s i z e a b l e number o f the Canadian companies a r e p r i v a t e l y - o w n e d a l t h o u g h t h i s number, and i t s c o m p o s i t i o n , f l u c t u a t e s c o n s t a n t l y as does the make-up o f t h a t p o r t i o n o f the i n d u s t r y r e p r e s e n t e d by t h e s m a l l e r p r o d u c e r s . P r o d u c t i o n o f c r u d e o i l and n a t u r a l gas l i q u i d s averaged o v e r 1 . 3 2 m i l l i o n b a r r e l s p e r day d u r i n g 1973, t h e h i g h e s t r a t e i n A l b e r t a ' s h i s t o r y . O i l i s u s u a l l y p u r c h a s e d from p r o d u c e r s by r e f i n e r y o p e r a t o r s on a m o n t h l y b a s i s . In 1973 o n l y 10% o f t o t a l p r o d u c t i o n was consumed i n A l b e r t a , w h i l e 29% was s e n t t o o t h e r Canadian p r o v i n c e s and 61% was e x p o r t e d t o t h e o U n i t e d S t a t e s . O i l i s c a r r i e d o u t o f t h e p r o v i n c e by l a r g e d i a m e t e r p i p e l i n e s , the I n t e r p r o v i n c i a l P i p e l i n e t o S a s k a t c h e w a n , M a n i t o b a , O n t a r i o and t h e m i d - w e s t e r n U n i t e d S t a t e s and the T r a n s M o u n t a i n P i p e l i n e t o B r i t i s h Columbia and t h e n o r t h - w e s t e r n U n i t e d S t a t e s . In 1 9 7 3 , A l b e r t a produced n a t u r a l gas a t an average r a t e o f 7 .16 b i l l i o n c u b i c f e e t p e r d a y , o f w h i c h some 5 . 7 6 b i l l i o n c u b i c f e e t were 0 T h i s a c c o u n t i s taken from the R e p o r t o f t h e Energy R e s o u r c e s C o n s e r v a t i o n Board e n t i t l e d F i e l d P r i c i n g o f Gas i n A l b e r t a , ERCB R e p o r t 72-E-OG, A u g u s t , 1 9 7 2 , 3 - 1 . 7 C u m u l a t i v e and Annual S t a t i s t i c s , A l b e r t a O i l and Gas I n d u s t r y , ERCB R e p o r t 7 4 - 1 7 , 1 9 7 3 , 5 . [ 8 I b i d . , 4 . - 103 -- 7 -9 a v a i l a b l e f o r s a l e a f t e r a l l o w i n g f o r p r o c e s s i n g and f u e l l o s s e s . U n l i k e crude o i l and n a t u r a l gas l i q u i d s , gas i s u s u a l l y p u r c h a s e d on l o n g - t e r m c o n t r a c t s , l a s t i n g from 20 t o 25 y e a r s , by t r a n s m i s s i o n companies when t h e gas i s c a r r i e d o u t o f t h e p r o v i n c e , and by u t i l i t y companies f o r consumption t h e r e i n . A l b e r t a u t i l i t i e s bought 15% o f t o t a l p r o d u c t i o n i n 1 9 7 3 . ^ Gas d e s t i n e d f o r removal f r o m A l b e r t a i s c o l l e c t e d by t h e A l b e r t a Gas Trunk L i n e Company L i m i t e d and c a r r i e d t o b o r d e r p o i n t s where i t e n t e r s t h e i n t e r p r o v i n c i a l p i p e l i n e s o f t h e t r a n s m i s s i o n c o m p a n i e s . TransCanada P i p e L i n e s L i m i t e d s e r v e s Canadian markets e a s t o f A l b e r t a and e x p o r t s t o the e a s t e r n and midwest U n i t e d S t a t e s ; A l b e r t a and S o u t h e r n Gas Company L i m i t e d s u p p l i e s gas t o C a l i f o r n i a ; and W e s t c o a s t T r a n s m i s s i o n Company L i m i t e d p u r c h a s e s s m a l l q u a n t i t i e s o f A l b e r t a gas f o r c a r r i a g e a l o n g w i t h B r i t i s h Columbia gas i n i t s system s e r v i n g B r i t i s h C o l u m b i a and t h e n o r t h - w e s t U n i t e d S t a t e s . In 1 9 7 3 , a l m o s t 40% o f A l b e r t a ' s p r o d u c t i o n o f n a t u r a l gas was e x p o r t e d t o t h e U n i t e d S t a t e s w h i l e more than 40% was consumed i n B r i t i s h Columbia and o t h e r Canadian p r o v i n c e s as f a r e a s t as Q u e b e c . ^ B. ALLOCATION OF, OIL AND GAS RIGHTS The f i r s t s t a g e i n government management o f Crown o i l and gas r e s o u r c e s i n A l b e r t a i s u s u a l l y the a l l o c a t i o n t o p r i v a t e e n t e r p r i s e o f e x p l o r a t i o n and p r o d u c t i o n r i g h t s . T h i s i s a most i m p o r t a n t s t e p , f o r i t e s t a b l i s h e s p r i v a t e e n t e r p r i s e i n the management p r o c e s s r i g h t from t h e b e g i n n i n g and 9 I b i d . , 8. 1 0 I b i d . , 7 . 1 1 I b i d . , 7 . - 104 -8 l i m i t s t h e scope o f f u t u r e government a c t i o n i n r e l a t i o n t o t h e d e v e l o p -ment o f p u b l i c l y - o w n e d o i l and gas r e s o u r c e s . M o r e o v e r , the terms upon w h i c h p r i v a t e e n t e r p r i s e o b t a i n s e x p l o r a t i o n and p r o d u c t i o n r i g h t s d e t e r m i n e t h e e x t e n t t o w h i c h the government w i l l be s u c c e s s f u l i n c o l l e c t i n g t h e economic r e n t s . In e s s e n c e , t h e p r e s e n t a l l o c a t i o n system o p e r a t e s i n two s t a g e s . The f i r s t s t a g e i s g e n e r a l l y r e p r e s e n t e d by a p e t r o l e u m and n a t u r a l gas 12 r e s e r v a t i o n and t h e s e c o n d by a p e t r o l e u m and n a t u r a l gas l e a s e . The two s t a g e s a r e l i n k e d by a p o s s i b i l i t y o f c o n v e r s i o n f r o m r e s e r v a t i o n t o l e a s e upon s u r r e n d e r t o t h e Crown o f 50% o f t h e r e s e r v a t i o n a r e a . G o v e r n -ment revenue i s o b t a i n e d f r o m l e a s e r e n t a l s , p r o d u c t i o n r o y a l t i e s and s a l e s o f s u r r e n d e r e d a r e a s . The e n t i r e p r o c e s s i s governed by The Mines and 13 M i n e r a l s A c t and r e g u l a t i o n s t h e r e u n d e r . 1 . P e t r o l e u m and N a t u r a l Gas R e s e r v a t i o n A r e s e r v a t i o n i s i n i t i a l l y o b t a i n e d i n u n e x p l o r e d a r e a s by a p p l i c a t i o n t o t h e D i r e c t o r o f M i n e r a l s . 1 4 There i s a d i s c r e t i o n t o r e f u s e an a p p l i c -a t i o n b u t no mention i s made i n t h e A c t o r r e g u l a t i o n s o f t h e f a c t o r s t o be c o n s i d e r e d i n e x e r c i s i n g t h i s d i s c r e t i o n . The p r a c t i c e has been t o i s s u e r e s e r v a t i o n s t o q u a l i f i e d a p p l i c a n t s a c c o r d i n g t o t h e t i m e o f f i l i n g . 1 2 E x c e p t i n " B l o c k A " , i n f r a , 2 4 . 1 3 R . S . A . 1 9 7 0 , c . 2 3 8 , as amended by S . A . 1971, c . l , 30 and 9 6 , S . A . 1 9 7 2 , c . 6 7 , 6 8 , 91 and 119, and S . A . 1 9 7 3 , c . 3 4 and 9 4 . 1 4 P e t r o l e u m and N a t u r a l Gas R e s e r v a t i o n R e g u l a t i o n s , 1 9 6 2 , A l t a . Reg. 2 5 1 / 6 2 , as amended by A l t a . Regs. 299/66 and 3 9 6 / 6 8 ; s e c t i o n 4 . - 105 -- 9 -15 There i s a f e e o f $250 p e r r e s e r v a t i o n . The maximum a r e a t h a t may be 16 c o n t a i n e d i n a r e s e r v a t i o n i s 156 s q u a r e m i l e s b u t t h e r e i s no r e s t r i c t -i o n p l a c e d upon the number o f r e s e r v a t i o n s t h a t may be a c q u i r e d by a s i n g l e a p p l i c a n t . The key t o m a i n t a i n i n g a r e s e r v a t i o n i n f o r c e i s t h e c o n d u c t o f an e x p l o r a t i o n programme approved by. t h e M i n i s t e r . A r e s e r v a t i o n h o l d e r i s r e q u i r e d t o s u b m i t a p l a n w i t h i n 90 days d e s c r i b i n g t h e n a t u r e o f t h e proposed e x a m i n a t i o n . ^ 7 A number o f r e s e r v a t i o n s w i t h a t o t a l a r e a n o t e x c e e d i n g 2 0 0 , 0 0 0 a c r e s may be grouped f o r t h e purpose o f t h i s e x p l o r a t i o n •j o programme. I f t h e p l a n i s a c c e p t a b l e t o t h e M i n i s t e r t h e i n i t i a l term 19 o f f o u r months i s e x t e n d e d . P r o v i d e d t h a t s a t i s f a c t o r y p r o g r e s s i s made w i t h e x p l o r a t i o n , f u r t h e r r e n e w a l s a r e a v a i l a b l e upon payment o f s t i p u l a t e d I b i d . , s e c t i o n 5 . I f I b i d . , s e c t i o n 6 . . The a r e a i s 4 i t o w n s h i p s , each c o m p r i s i n g 36 s e c t i o n s . ^ 7 I b i d . , s e c t i o n 11. i I o A group must c o n s i s t o f r e s e r v a t i o n s h e l d by t h e one p e r s o n o r company but t h e r e a r e no r e s t r i c t i o n s upon t h e l o c a t i o n o f r e s e r v a t i o n s t h a t may be i n c l u d e d i n a g r o u p ; i b i d . , s e c t i o n ' 1 5 . 19 The i n i t i a l term i s f o u r months w i t h two r e n e w a l s o f f o u r months e a c h . T h e n , t h e r e may be f o u r f u r t h e r r e n e w a l s o f s i x months each upon s a t i s f a c t o r y p r o g r e s s b e i n g made w i t h e x p l o r a t i o n and upon payment o f a f e e o f t e n c e n t s p e r a c r e f o r each r e n e w a l . Upon a r e p r e s e n t a t i o n t o the Department t h a t t h e n a t u r e o f t h e t e r r a i n o r t h e i n a c c e s s i b i l i t y o f the a r e a under r e s e r v a t i o n o r any o t h e r c o n d i t i o n o v e r w h i c h t h e h o l d e r has no c o n t r o l , has s e r i o u s l y r e t a r d e d t h e p erform an ce o f the e x p l o r a t i o n programme, the M i n i s t e r may g r a n t f u r t h e r e x t e n s i o n s o f up t o two y e a r s upon such terms and c o n d i t i o n s as he sees f i t . T h e r e a f t e r , where a w e l l has been o r i s b e i n g d r i l l e d on l a n d s i n a r e s e r v a t i o n o r group o f r e s e r v a t i o n s , s i x r e n e w a l s o f t h r e e months each may be o b t a i n e d upon payment o f the f o l l o w i n g f e e s : (a) 10 c e n t s p e r a c r e f o r t h e f i r s t r e n e w a l ; (b) 15 c e n t s per a c r e f o r the second r e n e w a l ; ( c ) 20 c e n t s p e r a c r e f o r t h e t h i r d r e n e w a l ; (d) 25 c e n t s p e r a c r e f o r each o f the f o u r t h , f i f t h and s i x t h r e n e w a l s ; I b i d . , s e c t i o n s 11-15. - 106 -- 10 f e e s so t h a t a r e s e r v a t i o n may c o n t i n u e f o r as l o n g as s i x and a h a l f 20 y e a r s . A d e p o s i t i s p a y a b l e upon a p p l i c a t i o n f o r a r e s e r v a t i o n and i f t h e e x p l o r a t i o n programme i s not c o n d u c t e d i n a c c o r d a n c e wi t h t h e approved 21 p l a n t h i s d e p o s i t i s f o r f e i t e d t o t h e Crown. Upon t e r m i n a t i o n o f t h e r e s e r v a t i o n , t h e h o l d e r i s r e q u i r e d t o f u r n i s h a r e p o r t t o t h e Department showing f a c t u a l d a t a o b t a i n e d , i n f o r m a t i o n upon each h o l e f o r w h i c h a w e l l l i c e n c e was not r e q u i r e d , and such f u r t h e r i n f o r m a t i o n as t h e M i n i s t e r may 22 r e q u i r e . To d a t e i t has n o t been t h e p r a c t i c e o f t h e Department t o r e q u i r e d i s c l o s u r e o f raw d a t a o b t a i n e d from g e o p h y s i c a l s u r v e y s . A r e s e r v a t i o n conveys t h e e x c l u s i v e r i g h t t o d r i l l a w e l l o r w e l l s f o r p e t r o l e u m and n a t u r a l gas i n t h e l a n d s c o n t a i n e d i n the r e s e r v a t i o n and t h e r i g h t t o produce t h e s e s u b s t a n c e s i f f o u n d , but does not convey t h e r i g h t 23 t o t h e produced s u b s t a n c e s w h i c h remain t h e p r o p e r t y o f t h e Crown. E n t i t l e -ment t o p e t r o l e u m and n a t u r a l gas i s a c q u i r e d upon t h e g r a n t i n g o f a l e a s e . 2 . P e t r o l e u m and N a t u r a l Gas L e a s e . The h o l d e r o f a r e s e r v a t i o n does n o t have an a b s o l u t e r i g h t t o o b t a i n a l e a s e , but m e r e l y an e x c l u s i v e r i g h t t o a p p l y f o r a l e a s e o r l e a s e s 2 0 i b i d . 21 I b i d . , s e c t i o n 5 . The d e p o s i t i s $ 2 , 5 0 0 f o r each 2 0 , 0 0 0 a c r e s or p a r t t h e r e o f . 22 I b i d . , s e c t i o n 17. Where a l i c e n c e i s o b t a i n e d f o r t h e d r i l l i n g o f a w e l l under The O i l and Gas C o n s e r v a t i o n A c t , d i s c l o s u r e o f d r i l l i n g i n f o r m a t i o n must be made t o t h e Energy Resources C o n s e r v a t i o n B o a r d ; i n f r a , 23 I b i d . , s e c t i o n 9 . - 107 -- 11 -o f t h e p e t r o l e u m and n a t u r a l gas r i g h t s i n p a r t o f t h e l a n d s c o n t a i n e d i n 24 t h e r e s e r v a t i o n . T h i s means t h a t t h e M i n i s t e r , who a p p e a r s t o have t h e 25 r i g h t t o i s s u e l e a s e s under The Mines and M i n e r a l s A c t , has a d i s c r e t i o n t o r e f u s e an a p p l i c a t i o n f o r a l e a s e . N e v e r t h e l e s s , t h e normal p r a c t i c e has been t o g r a n t l e a s e a p p l i c a t i o n s p r o v i d e d t h a t t h e a p p l i c a n t has 26 f u l f i l l e d h i s o b l i g a t i o n s under t h e r e s e r v a t i o n . R e s t r i c t i o n s a r e p l a c e d upon t h e s e l e c t i o n o f l e a s e s f r o m a r e s e r v a t -i o n . Leases may n o t exceed 50% o f t h e a r e a o f any t o w n s h i p i n c l u d e d i n a 27 r e s e r v a t i o n . The maximum a r e a o f a l e a s e i s n i n e s e c t i o n s i f t h e l e a s e a r e a i s square o r e i g h t s e c t i o n s i f i t i s r e c t a n g u l a r ( i n w h i c h c a s e t h e 24 I b i d . , s e c t i o n 19. T h i s d i s t i n c t i o n was i m p o r t a n t i n a Q u e e n s l a n d m i n i n g c a s e , Cudgen R u t i l e ( N o . 2 ) P t y . L t d . e t a l . v . C h a l k (judgment o f t h e f u l l c o u r t o f t h e Supreme C o u r t , as y e t u n r e p o r t e d ) . T h e r e , t h e h o l d e r o f an a u t h o r i t y t o p r o s p e c t c l a i m e d t o be e n t i t l e d t o t h e g r a n t o f a m i n i n g l e a s e upon a p p l i c a t i o n , on t h e b a s i s o f a t e r m ' o f t h e a u t h o r i t y w h i c h r e a d : R i g h t t o A c q u i r e M i n i n g L e a s e s : S u b j e c t t o due performance and o b s e r v a n c e o f the p r o v i s i o n s o f t h e A c t s and t h e t e r m s , c o n d i t i o n s , p r o v i s i o n s and s t i p u l a t i o n s o f t h i s A u t h o r i t y t o P r o s p e c t on t h e p a r t o f t h e H o l d e r t o be p e r f o r m e d o r o b s e r v e d , t h e H o l d e r s h a l l be e n t i t l e d a t any t i m e and f r o m time t o t i m e d u r i n g the s a i d p e r i o d t o a p p l y f o r and have g r a n t e d t o him i n p r i o r i t y t o any o t h e r person o r company, a m i n i n g l e a s e f o r the m i n e r a l s s p e c i f i e d i n c l a u s e 5 h e r e o f under t h e A c t s o v e r any p a r t o f t h e l a n d s c o m p r i s e d w i t h i n t h i s A u t h o r i t y t o P r o s p e c t . The C o u r t r e j e c t e d t h i s c l a i m , r e c o g n i z i n g t h e g o v e r n m e n t ' s d i s c r e t i o n t o r e f u s e a g r a n t . The d e c i s i o n has r e c e n t l y been a p p e a l e d t o the P r i v y C o u n c i l , from w h i c h judgment i s p e n d i n g . 25 The A c t i s n o t e x p l i c i t i n t h i s r e g a r d : see s e c t i o n s 1 1 3 , 9 , 11-12. 26 An e x c e p t i o n a r o s e i n t h e c a s e o f a h o l d e r o f a B l o c k A p e r m i t i n the C y p r e s s H i l l s a r e a . T h i s p e r m i t extended i n t o a p r o v i n c i a l p a r k and t h e p e r m i t h o l d e r , when a p p l y i n g f o r a l e a s e , i n c l u d e d a r e a s w i t h i n t h e park b o u n d a r i e s i n h i s l e a s e a p p l i c a t i o n . The a p p l i c a t i o n was n o t g r a n t e d , and an agreement was n e g o t i a t e d w i t h the p e r m i t h o l d e r whereby o t h e r a r e a s were exchanged f o r t h e a r e a s a p p l i e d f o r i n s i d e t h e park b o u n d a r i e s : Communication w i t h the D i r e c t o r o f M i n e r a l s , Department o f Mines and M i n e r a l s , Edmonton, 22 J u l y , 1974. 27 P e t r o l e u m and N a t u r a l Gas R e s e r v a t i o n R e g u l a t i o n s , 1 9 6 2 , o p . c i t . note 1 4 , s e c t i o n 26(1) . - 1 0 8 -- 1 2 -l e n g t h m a y n o t e x c e e d f o u r s e c t i o n s ) . T h e m i n i m u m a r e a o f a l e a s e i s a 2 8 q u a r t e r - s e c t i o n . L e a s e a r e a s m u s t f o r m a c h e q u e r - b o a r d p a t t e r n o r b e 2 9 s e p a r a t e d f r o m o n e a n o t h e r b y a c o r r i d o r a t l e a s t o n e m i l e w i d e . T h e a r e a s o f a r e s e r v a t i o n n o t s e l e c t e d f o r l e a s e a r e s u r r e n d e r e d a n d b e c o m e r 3 0 C r o w n r e s e r v e s . T h e r e i s n o n e c e s s i t y f o r d i s c o v e r y o f p e t r o l e u m o r n a t u r a l g a s p r i o r t o a n a p p l i c a t i o n f o r l e a s e . H o w e v e r , w h e r e a r e s e r v a t i o n h o l d e r h a s m a d e a c o m m e r c i a l d i s c o v e r y o f o i l h e i s r e q u i r e d t o a p p l y f o r a l e a s e o r l e a s e s o f t h e p e t r o l e u m a n d n a t u r a l g a s r i g h t s i n t h e l a n d s c o n t a i n -31 i n g t h e d i s c o v e r y w e l l . A l e a s e g r a n t s t h e r i g h t t o t h e p e t r o l e u m a n d n a t u r a l g a s t h a t a r e t h e p r o p e r t y o f t h e C r o w n i n t h e l e a s e a r e a s u b j e c t t o a n y e x c e p t i o n s 3 2 e x p r e s s e d i n t h e l e a s e . T h e M i n e s a n d M i n e r a l s A c t d o e s n o t s p e c i f y t h e n a t u r e o f t h i s r i g h t t o p e t r o l e u m a n d n a t u r a l g a s . T o a s c e r t a i n t h i s i t i s n e c e s s a r y t o t u r n t o t h e l e a s e d o c u m e n t , t h e f o r m o f w h i c h i s 2 8 T h e M i n e s a n d M i n e r a l s A c t , o p . c i t . n o t e 1 3 , s e c t i o n s 1 1 4 , 1 1 5 . 2 9 P e t r o l e u m a n d N a t u r a l G a s R e s e r v a t i o n R e g u l a t i o n , 1 9 6 2 , o p . c i t . n o t e 1 4 , s e c t i o n 2 6 ( 4 ) . A n u m b e r o f l e a s e a r e a s m a y b e a c c u m u l a t e d i n t o a " c o n c e n t r a t i o n o f l e a s e s " n o t l a r g e r t h a n t h e m a x i m u m l e a s e a r e a , i f d e s i r e d : i b i d . , s e c t i o n 2 6 ( 3 ) . 3 0 I b i d . , s e c t i o n 3 0 . H o w e v e r , a l e a s e s e l e c t i o n o f l e s s t h a n t h e % e n t i t l e m e n t d o e s n o t r e q u i r e s u r r e n d e r o f a l l o f t h e r e m a i n i n g r e s e r v -a t i o n a r e a . T h e r e s e r v a t i o n r e m a i n s i n f o r c e i n r e s p e c t o f a r e a s n o t c o v e r e d b y l e a s e s o r C r o w n r e s e r v e s e s t a b l i s h e d u p o n t h e i n i t i a l l e a s e s e l e c t i o n : i b i d . , s e c t i o n 1 9 ( 2 ) . 3 1 I b i d . , s e c t i o n 2 0 , 32 T h e M i n e s a n d M i n e r a l s A c t , o p . c i t . n o t e 1 3 , s e c t i o n 121 - 109 -- 13 -33 d e t e r m i n e d by the M i n i s t e r . The g r a n t i n g c l a u s e o f t h e c u r r e n t l e a s e document r e a d s as f o l l o w s : . . . i n c o n s i d e r a t i o n o f t h e r e n t s and r o y a l t i e s h e r e i n a f t e r p r o v i d e d and s u b j e c t t o t h e terms and c o n d i t i o n s h e r e i n a f t e r e x p r e s s e d , Her M a j e s t y hereby g r a n t s unto t h e l e s s e e i n so f a r as t h e Crown has t h e r i g h t t o g r a n t t h e same t h e e x c l u s i v e r i g h t t o e x p l o r e f o r , w o r k , w i n and r e c o v e r p e t r o l e u m and n a t u r a l gas w i t h i n and under t h e l a n d s more p a r t i c u l a r l y d e s c r i b e d as f o l l o w s t o g e t h e r w i t h t h e r i g h t t o d i s p o s e o f t h e p e t r o l e u m and n a t u r a l gas r e c o v e r e d . The n a t u r e o f t h i s d i s p o s i t i o n has n o t been s u b j e c t t o j u d i c i a l d e t e r m i n a t i o n . However, i t i s c l e a r t h a t t h e p r i n c i p l e t o be a p p l i e d i n i n t e r p r e t i n g the l e a s e document i s t o a s c e r t a i n t h e i n t e n t i o n o f t h e 34 p a r t i e s from the words i n the document. There i s no i n d i c a t i o n i n t h e . words chosen t h a t a s e v e r a n c e o f o i l and gas from the e x i s t i n g m i n e r a l e s t a t e i s i n t e n d e d . A c c o r d i n g l y , t h e l e s s e e does not a c q u i r e e i t h e r a f r e e h o l d o r a l e a s e h o l d e s t a t e i n t h e o i l and gas i n the g r o u n d . Whether t h e r e i s an i n t e n t i o n t o g r a n t a l e s s e r i n t e r e s t i n l a n d , such as a p r o f i t a p r e n d r e , i s more d i f f i c u l t t o a n s w e r . The Supreme C o u r t o f 35 Canada has h e l d , i n t h e case o f B e r k h e i s e r v . B e r k h e i s e r e t a l . , t h a t I b i d . , s e c t i o n 122. There are a number o f c a s e s i n w h i c h a v a r i e t y o f i n t e r e s t s i n o i l and gas have been c l a i m e d , where t h e c o u r t s have e s t a b l i s h e d the p r i n c i p l e t h a t the g o v e r n i n g f a c t o r i s the i n t e n t i o n o f t h e p a r t i e s as d e m o n s t r a t e d by t h e words used i n t h e i r a g r e e m e n t s ; f o r e x a m p l e , see S t . Lawrence P e t r o l e u m L t d . e t a l . v . B a i l e y S e l b u r h O i l and Gas L t d . e t a l . ( N o . 2 ) , L1963J S . C . R . 4 8 2 , 45 W.W.R. 2 6 , 41 D . L . R . (2d) 3 1 6 ; B e n s e t t i ""7! Reece ( 1 9 6 9 ) , 70 W.W.R. 7 0 5 ; Emerald Resources L t d . v . S t e r l i n g O i l  P r o p e r t i e s Management L t d . (1969) 3 D . L . R . (3d) 2 5 6 ; Saskatchewan M i n e r a l s v . K e y e s , L1972J S . C . R . 7 0 3 , 2 W.W.R. 1 0 8 , 23 D . L . R . (3d) 573. ~ ~ [1957] S . C . R . 3 8 7 , 7 D . L . R , (2d) 721. - n o - 14 -the f r e e h o l d o i l and gas l e a s e g e n e r a l l y i n use i n w e s t e r n Canada does g i v e a l e s s e e an i n t e r e s t i n l a n d . However, t h e w o r d i n g o f t h e f r e e h o l d o i l and gas l e a s e i s s i g n i f i c a n t l y d i f f e r e n t from t h a t o f t h e Crown l e a s e . The g r a n t i n g c l a u s e o f t h e l e a s e i n t h e B e r k h e i s e r c a s e r e a d as f o l l o w s : The L e s s o r . . . d o t h hereby g r a n t and l e a s e . . . a l l t h e p e t r o l e u m and n a t u r a l g a s . . . w i t h i n , upon and under t h e l a n d s . . . t o g e t h e r w i t h t h e e x c l u s i v e r i g h t and p r i v i l e g e t o e x p l o r e , d r i