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Procedures for transferring to British Columbia the federal government’s interest in offshore oil and… Zaharko, Janice 1980

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PROCEDURES FOR TRANSFERRING TO BRITISH COLUMBIA THE FEDERAL GOVERNMENT'S INTEREST IN OFFSHORE OIL AND GAS by JANICE ZAHARKO LL.B, The University of Alberta, 1971 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF LAW in THE FACULTY OF GRADUATE STUDIES (Faculty of Law) We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA (?) OCTOBER, 198 0 In presenting th i s thes is in pa r t i a l fu l f i lment of the requirements for an advanced degree at the Univers i ty of B r i t i s h Columbia, I agree that the L ibrary sha l l make it f ree ly ava i l ab le for reference and study. I further agree that permission for extensive copying of th i s thesis for scho lar ly purposes may be granted by the Head of my Department or by his representat ives. It is understood that copying or pub l i ca t ion of th is thes is for f inanc ia l gain sha l l not be allowed without my writ ten permission. Department of The Univers i ty of B r i t i s h Columbia 2075 Wesbrook Place Vancouver, Canada V6T 1W5 Date Lfjh^ku aatim> ABSTRACT The Provinces of B r i t i s h Columbia, Nova Scotia, Prince Edward Island, New Brunswick and Newfoundland are a l l seeking control over offshore resources, that i s the natural resources within the waters beyond t h e i r coastlines. P r o v i n c i a l demands have ranged from challenges of the federal government's claim to ownership of these resources to discussions of schemes whereby management of the offshore resources would be shared by the p r o v i n c i a l and federal governments. There has not been any conclusive j u d i c a l determination of the ownership of offshore natural resources, though the federal government r e l i e s on the decision by the Supreme Court of Canada i n the Offshore  Minerals Reference, that the resources beyond the ordinary low water mark off B r i t i s h Columbia come within the exclusive l e g i s l a t i v e j u r i s d i c t i o n of the federal government. The a p p l i c a b i l i t y of the decision i n t h i s Reference, to Newfoundland i s being challenged by that Province. The remaining Maritime provinces of Nova Scotia, Prince Edward Island and New Brunswick, had reached a memorandum of understanding with the federal government on a shared management scheme but a subsequent federal proposal to seek c o n s t i t u t i o n a l amendment to transfer ownership of offshore natural resources to the Maritime provinces and B r i t i s h Columbia made the management scheme obsolete since the scheme would have transferred a subs t a n t i a l l y lesser degree of contro l . The present federal p o s i t i o n i s to deal with control over offshore resources through c o n s t i t u t i o n a l amendment; as part of a proposed wholesale amendment to the B r i t i s h North America Act, 18 67. This paper examines the necessity for c o n s t i t u t i o n a l amendment to deal with the transfer of offshore o i l and gas under federal control, to the coastal provinces and i n pa r t i c u l a r to B r i t i s h Columbia. As an alt e r n a t i v e to con s t i t u t i o n a l amendment, t h i s paper examines three procedures, for transf e r r i n g offshore o i l and gas to B r i t i s h Columbia which do not require c o n s t i t u t i o n a l amendment. The f i r s t procedure examines the p o s s i b i l i t y of extending the boundaries of the Province of B r i t i s h Columbia, for the limited purpose of including offshore o i l and gas within the boundaries of B r i t i s h Columbia thus bringing offshore o i l and gas within the l e g i s l a t i v e j u r i s d i c t i o n of the province. The second procedure examines the p o s s i b i l i t y of transferring ownership to either the Province of B r i t i s h Columbia or to a petroleum corporation controlled by the Province. The assumption in t h i s second procedure i s that a transfer of ownership could give a substantial degree of control to the Province i v over offshore o i l and gas. The f i n a l procedure i s to adapt the proposed Maritime shared management scheme to enable B r i t i s h Columbia to share with the federal government management of o i l and gas development off B r i t i s h Columbia's west coast. It i s necessary i n assessing the most viable a l t e r n a t i v e , to examine a shared management scheme even though a discussion of shared management would at f i r s t appear to be reverting to an alternative which has been superseded by offers by the federal government to transfer more substantial control. Supervisor V INTRODUCTION TABLE OF CONTENTS Section 1: Natural Resources and the Constitution Section 2: Procedures for Transferring Offshore O i l and Gas to B r i t i s h Columbia Section 2.2:: Section 2.3: Section 2.1: Procedure I - transfer of l e g i s -l a t i v e authority over offshore o i l and gas to the Province of B r i t i s h Columbia Procedures which do not transfer l e g i s l a t i v e control over o f f -shore o i l and gas to B r i t i s h Columbia Procedure II - transfer of own-ership over offshore o i l and gas to the province of B r i t i s h Columbia or a leg a l e n t i t y under the control of the province of B r i t i s h Columbia Procedure III - transfer of admin-i s t r a t i o n of offshore o i l and gas to the province of B r i t i s h Columbia with l e g i s l a t i v e authority retained by the federal government CHAPTER I - PROCEDURE I - THE TRANSFER OF LEGISLATIVE  JURISDICTION OVER OFFSHORE OIL AND GAS TO  BRITISH COLUMBIA INTRODUCTION - Natural Resources and P r o v i n c i a l Boundaries Section 2.4: Section 1: H i s t o r i c a l Review of the B r i t i s h North America Act, 1871 Section 1.1: the a b i l i t y of the federal p a r l i a ^ ment to create provinces and enact p r o v i n c i a l constitutions i s questioned Section 1.2: provision for the federal and pro-v i n c i a l governments to agree to va r i a t i o n of p r o v i n c i a l constitutions Section 2: The Extent of Variation of P r o v i n c i a l Constitutions Permitted under The B r i t i s h North America Act, 1871 v i Section 2.1: variations i n the terms of admis- 58 sion of a province Section 2.2: variations r e l a t i n g to a p r o v i n c i a l 72 constitutions applicable to t e r -r i t o r y added to an established province Section 2.3: summary of variations to constitutions 82 CHAPTER II - ASSESSMENT OF THE ABILITY1 OF THE FIRST 96 PROCEDURE TO ACCOMMODATE FEDERAL/PROVINCIAL  CONTENTIONS RELATING TO CONTROL OVER OFFSHORE  OIL AND GAS INTRODUCTION 96 Section 1: Description of the Federal GovernmentJs 99 J u r i s d i c t i o n i n the T e r r i t o r i a l Sea and Continental Shelf - the Offshore Areas Section 1.1: in t e r e s t of the coastal state 103 recognized under international law Section 1.1(a): the t e r r i t o r i a l sea - r e l a t i n g 105 federal j u r i s d i c t i o n to i n t e r -national convention Section 1.1(b): the continental shelf - federal 112 j u r i s d i c t i o n over the contin-ental shelf and i t s reliance on international convention Section 2: Determination of Federal - P r o v i n c i a l 121 Boundaries Under a Boundary Extension Pursuant to Section 3 of the B.N.A. Act, 1871 Section 2.1: domestic boundaries 121 Section 2.2: international boundaries 127 Section 3: Determination of Federal J u r i s d i c t i o n i n 130 the T e r r i t o r y and Waters of the T e r r i t o r i a l Sea and Beyond Section 3.1: federal j u r i s d i c t i o n which enables 131 the u n i l a t e r a l setting of t e r r i t o r i a l l i m i t s of the exercise of j u r i s d i c t i o n v i i Section 3.2: federal j u r i s d i c t i o n which w i l l enable i t to exercise j u r i s d i c t i o n beyond declared t e r r i t o r i a l j u r i s -d i c t i o n Section 3.3: federal j u r i s d i c t i o n within a province Section 3.3(a): treaty implementation 134 Section 3.3(b) federal j u r i s d i c t i o n over lands reserved for Indians and Indian claims to offshore resources Section 4: Pro v i n c i a l J u r i s d i c t i o n Within the Extended P r o v i n c i a l Boundaries that Include Offshore O i l and Gas Section 4.1: Section 4.2 Section 4.3 pr o v i n c i a l l e g i s l a t i v e requirements over offshore o i l and gas development the control of coastal states over offshore resources p r o v i n c i a l j u r i s d i c t i o n - terms and conditions Section 5 Transfer of L e g i s l a t i v e J u r i s d i c t i o n Over Offshore Resources from a Central to a Local Government - Recognition of International Convention: the American Proposal CHAPTER III - PROCEDURE II - THE TRANSFER OF OWNERSHIP OVER OFFSHORE OIL AND GAS TO BRITISH COLUMBIA Section 1: Transfer of Ownership of Land Between the Federal and P r o v i n c i a l Governments 136 136 137 139 141 143 149 150 Section 1.1 Section 1.2 statutory provisions for transf e r r i n g land from the federal government to B r i t i s h Columbia the capacity of the Province of B r i t i s h Columbia to deal with public lands, the administration and control of which have been transferred to i t when the public lands are beyond p r o v i n c i a l t e r r i t o r y 167 167 170 174 Section 1.3: the source and nature of executive 178 authority v i i i Section 1.4: executive authority and the d i s t r i - 18 0 bution of property under the constitu-t i o n Section 2: Transfer to a Pr o v i n c i a l Corporation 187 Section 2.1: a b i l i t y to create a corporation to 18 9 carry on business outside the province Section 2.2: obtaining appropriations for the 191 corporation Section 2.3: methods of transf e r r i n g ownership 193 Section 3: Conclusions on Transfer of Ownership to 196 B r i t i s h Columbia CHAPTER IV - PROCEDURE III - THE TRANSFER OF ADMINISTRATIVE 207 CONTROL OVER OFFSHORE OIL AND GAS TO BRITISH COLUMBIA INTRODUCTION Section 1.1: tra n s f e r r i n g l e g i s l a t i v e authority 208 to a le g a l e n t i t y of the province Section 1.2: introduction - delegation of federal 218 l e g i s l a t i v e powers to a designated e n t i t y of the province - to a pr o v i n c i a l o f f i c e r Section 1.2(a): method of delegation of power 220 to dispose of offshore o i l and gas to a p r o v i n c i a l o f f i c e r Section 1.2(b): delegation of l e g i s l a t i v e auth- 223 o r i t y to a p r o v i n c i a l o f f i c e r Section 2: Assignment of Federal Government's Interest 227 as Lessor, In Dispositions of Offshore O i l and Gas to the Province or a Legal E n t i t y Created by the Province Section 3: Conclusions 229 CHAPTER V - CONCLUSION 235 1 INTRODUCTION Section 1: Natural Resources and the Constitution The Supreme Court of Canada decided i n the Offshore  Minerals R e f e r e n c e t h a t , as between the federal government and the Province of B r i t i s h Columbia, the federal govern-ment had exclusive property i n , and exclusive r i g h t to exploit and l e g i s l a t e with respect to minerals and other natural resources i n the t e r r i t o r i a l sea and the* continental shelf, both areas being seaward of the ordinary low water mark on the coast of the mainland and several islands, which the Court decided, was the Province's western boundary. The Province of B r i t i s h Columbia has not 2 accepted t h i s position, and the federal government has been unsuccessful i n i t s attempts to reach a compromise, by t r a n s f e r r i n g some degree of control over offshore 3 minerals to B r i t i s h Columbia, (hereafter referred to i n t h i s paper as the "province" or " B r i t i s h Columbia"). Discussions between the two governments, however, have not progressed beyond the p o l i t i c a l forum. No attempt has been made to i d e n t i f y the l e g a l procedures available to pass varying degrees of control over the offshore minerals to the Province. 2 The p r o v i n c i a l and federal policy-makers have not therefore had the opportunity to focus on such procedures i n developing t h e i r positions on the control of offshore resources. This s i t u a t i o n , i n part, may be responsible for the impasse that has developed between the two lev e l s of government. Faced with viable procedures for t r a n s f e r r -ing control over offshore mineral resources, the policy implications would be c l a r i f i e d and negotiations hopefully f a c i l i t a t e d . It has been said that: " . . . A l l p o l i c y makers must sooner or l a t e r try to select a successful course of action from among alt e r n a t i v e s . This involves a prediction of consequences based on assessed p r o b a b i l i t i e s . " 4 This paper, then, w i l l examine three alternative procedures for t r a n s f e r r i n g a portion of the offshore natural resources, offshore o i l and gas, to the Province, since these two minerals are considered to be of primary in t e r e s t to B r i t i s h Columbia. Limiting discussion to these minerals w i l l not a f f e c t the application of these procedures to other minerals. Before giving a detailed explanation of the proce-dures which w i l l be examined, i t i s necessary to place B r i t i s h Columbia's request, to control resources i n physical proximity to i t s borders, within the c o n s t i t u t i o n a l and 3 h i s t o r i c a l perspective of p r o v i n c i a l demands for control over resources within t h e i r borders. The Canadian constitution envisioned provinces exercising control over natural resources within t h e i r borders, subject only to s p e c i f i e d federal powers. The d i s t r i b u t i o n of property and more p a r t i c u l a r l y land, under the 1867 constitution provided the mechanism for carrying out t h i s d i s t r i b u t i o n . Under section 109 of the B r i t i s h North America Act, 1867 (B.N.A. Act 1867), the four o r i g i n a l provinces of Quebec, Ontario, Nova Scotia and New Brunswick were given ownership of lands, minerals and r o y a l t i e s , commonly referred to as a province's natural resources, within the defined boundaries of each of those provinces. The control of the federal government over property and more s p e c i f i c a l l y land can be viewed as a s p e c i f i c reservation from t h i s general d i s t r i b u t i o n of property to the provinces, since under the B.N.A. Act, 1867, the federal government was given ownership, only of the property set out i n s.117 i . e . , defense and f o r t i f i c -ations, and pursuant to s.108 of the property described i n the t h i r d Schedule of the 1867 Act. The property defined i n t h i s Schedule consists primarily of cer t a i n defined lands i . e . , Public Harbours, Canals with Lands and Water Power connected therewith; though some moveable property 4 i s also referred to, i . e . Steamboats, Dredges and Public Vessels, Railway and Railway Stacks. Any other federal property rights flowed from the exercise of the federal Parliament's exclusive l e g i s l a t i v e powers under section 91 of the B.N.A. Act, 1867. The o r i g i n a l four provinces were afforded two types of control over the natural resources within t h e i r bound-ar i e s . The f i r s t type was control over the natural resources held by the Crown. After confederation these holdings were commonly described as property of Her Majesty i n r i g h t of Canada, or a province. In t h i s paper these holdings of the federal or p r o v i n c i a l government are referred to as the owner-ship by the federal or p r o v i n c i a l government, or property or land. The second type of control i s the l e g i s l a t i v e control given the four o r i g i n a l provinces over property i n the province pursuant to sections 92 (5) and (13) of the B.N.A. Act 1867. This control was not limited to land "owned" by the province. The corresponding federal l e g i s l a t i v e power i s the federal government's r i g h t to l e g i s l a t e over property i n exercising powers within i t s exclusive l e g i s l a t i v e j u r i s -d i c t i o n . Each province established by the Imperial Parliament, after the 1867 Union of the four o r i g i n a l provinces, 5 obtained ownership of the natural resources within t h e i r p r o v i n c i a l boundaries under the scheme established by the B.N.A. Act, 1867. Thus, when the provinces of B r i t i s h Columbia (with the exception of lands reserved for the Railway Belt and the Peace River Block), Prince Edward Island and Newfoundland were created, they had complete control over natural resources within t h e i r borders. These provinces which entered Confederation with control over t h e i r natural resources have one common denominator: they were a l l autonomous colonies under the B r i t i s h Empire. In each Colony the Crown, "Her Majesty", exercised her capacity as a person under the common law. The property d i s t r i b u t -ion under the 186 7 constitution merely confirmed the exis t i n g state of a f f a i r s within these former colonies. The omission i n section 146 of the B.N.A. Act, 1867 of a clear procedure for creating provinces out of the re-maining B r i t i s h t e r r i t o r y that was eventually to be trans-ferred to the Dominion of Canada, emphasized the d i s t i n c t -ion between the provinces created by B r i t a i n and those created by the federal Parliament. The a b i l i t y of the federal government, to create provinces out of the t e r r i t o -ry transferred to i t from B r i t a i n and to provide for the constitution of such newly established provinces, w i l l be discussed i n Chapter I, i n connection with the events leading up to the passing of the B r i t i s h North America 6 Act, 1871.' When the federal government created the g provinces of Manitoba, Saskatchewan and Alberta, these new provinces were not transferred the natural resources held by the Crown i n r i g h t of Canada within t h e i r borders. Since these provinces were carved out of what was essenti-a l l y unoccupied f r o n t i e r lands, i t may have been f e l t that a transfer of the natural resources within P r o v i n c i a l bound-aries would be premature considering t h e i r state of de-velopment. These provinces were s a t i s f i e d , at least i n i t i a l l y , with the subsidies they received to compensate for the withheld resources. Today a si m i l a r s i t u a t i o n i s developing i n the remaining federal t e r r i t o r i e s of Canada -the Yukon T e r r i t o r y and Northwest T e r r i t o r i e s . In t h e i r struggle to a t t a i n p r o v i n c i a l status, the control over resources within t h e i r boundaries w i l l be a major issue i n s e t t l i n g the terms of admission. By 1930 the p r a i r i e provinces of Manitoba, Saskatche-wan and Alberta had successfully negotiated the transfer to them of complete control over natural resources within t h e i r boundaries. The agreements which effected t h i s transfer of control are commonly referred to as the 19 30 Resource Transfer Agreements. While the Province of B r i t i s h Columbia when created, generally had control over natural resources within i t s borders, the 1930 Resource 7 Agreements transferred to B r i t i s h Columbia unalienated lands within the area referred to as the Railway Belt and Peace River Block. These lands had been reserved to Canada, under A r t i c l e 11 of the Terms of Union of B r i t i s h Columbia, for the construction of the railway to the Province. However, while the natural resources within the p r a i r i e provinces had been reserved to the federal government under the federal Acts of Parliament e s t a b l i s h -ing the provinces,"^ the passing of the control over these resources to the p r a i r i e s provinces was authorized by c o n s t i t u t i o n a l amendment requiring the l e g i s l a t i v e sanction of the B r i t i s h Parliament. The process that culminated i n t h i s amendment to the consti t u t i o n took twenty-six years. As early as 1912 the p r a i r i e provinces had requested control over natural r e s o u r c e s , ^ but agreement on the terms of transfer was not reached u n t i l 1929. Today, the position of both major federal p o l i t i c a l parties i n Canada, i s that c o n s t i t u t i o n a l amendment i s necessary, to pass control to the coastal provinces over offshore mineral resources located beyond p r o v i n c i a l boundaries. The former Conservative government under Prime Minister Joseph Clark, i n September of 1979, expressed the federal government's willingness to seek 8 co n s t i t u t i o n a l amendment to transfer federal ownership of offshore minerals to the provinces of Newfoundland, Nova Scotia and B r i t i s h Columbia, and indicated a readiness on the part of the federal government to enter into 12 similar discussions with other concerned provinces. The present L i b e r a l government under Prime Minister Trudeau, has included the question of ownership over o f f -shore mineral resources among twelve issues i t proposed 13 be considered for c o n s t i t u t i o n a l amendment. The attempts by the L i b e r a l government i n 1977 to set up a scheme to share management of offshore resources with the Maritime provinces of Nova Scotia, New Brunswick and Prince Edward Island, never progressed beyond an expression 14 of an "agreement to agree". The f a i l u r e was due partly to the Province of Newfoundland taking a maverick position i n the discussions, by declaring that i t intended to challenge federal ownership of resources o f f i t s coast i n the courts. It eventually withdrew from discussions of a management scheme for offshore resources of the Maritime provinces and took the p o s i t i o n that i t would challenge the a p p l i c a b i l i t y of the Offshore Minerals  Reference to mineral resources o f f i t s coast. The pro-posal by the subsequent Conservative government described above, to transfer ownership of offshore minerals to the 9 Maritime provinces, f i n a l l y closed discussions on a shared management scheme which would have passed r e l a t i v e l y less control to the provinces. The d e t a i l s of t h i s scheme w i l l be described i n Chapter I I I . The premise underlying t h i s paper i s that constitu-t i o n a l amendment to e f f e c t a transfer of control to the coastal provinces and, s p e c i f i c a l l y , to pass control over offshore o i l and gas to B r i t i s h Columbia, i s an unnecessary and i n e f f e c t i v e procedure. F i r s t , h i s t o r i c a l l y , c onstitut-i o n a l amendments such as the 1930 Resource Transfer Agree-ments which passed natural resources to the p r a i r i e provinces, have entailed protracted negotiations and r e f l e c t an attitude that p r o v i n c i a l control over natural resources must be uniform throughout the country. No account i s taken of regional, economic or s o c i a l d i f f e r -ences between the provinces. The development of offshore o i l and gas i n Newfoundland c e r t a i n l y cannot i n any way be compared to the development of B r i t i s h Columbia's o f f -shore o i l and gas p o t e n t i a l . In the case of Newfoundland, there are known potentials and s o c i a l benefits, while the offshore potential of B r i t i s h Columbia has not been explored, nor have the s o c i a l and economic consequences of exploration been weighed. The second, and perhaps most unsatisfactory aspect of c o n s t i t u t i o n a l amendment, i s i t s 10 tendency to be a l l encompassing. Since c o n s t i t u t i o n a l amendment must be debated i n the Canadian Parliament, there i s a tendency to deal with a l l current c o n s t i t u t -ional concerns rather than adopting an ad hoc process of dealing with the objectives of i n d i v i d u a l provinces. This i s the present s i t u a t i o n where the question of passing control over offshore resources to the coastal provinces i s just one issue i n a package of c o n s t i t u t i o n a l matters upon which the federal government i s demanding p r o v i n c i a l agreement. F a i l u r e to agree on other matters t o t a l l y unrelated to control over offshore natural resources could frustrate any consensus that may be reached over offshore development; a good t a c t i c of negotiation, but not one which i s conducive to co-operative c o n s t i t u t i o n a l development. F i n a l l y , both lev e l s of government have not demonstrated any innovativeness i n seeking a r e a l solution to the impasse. Constitutional amendment sanctioning p r o v i n c i a l control over offshore development has been regarded t a l i s m a n i c a l l y by both levels of government. Anything short of c o n s t i t u t i o n a l amendment, i t i s feared, would leave some cloud over the exercise of p r o v i n c i a l authority. The purpose of t h i s paper i s to demonstrate that.there are other procedures available to pass control over offshore o i l and gas to the coastal provinces, that would not leave the provinces' 11 j u r i s d i c t i o n vulnerable to a le g a l challenge. The alternatives which w i l l be examined have not been implemented by any other p o l i t i c a l j u r i s d i c t i o n facing a s i m i l a r d i v i s i o n of control over offshore mineral development between a central and regional government. The solutions adopted by A u s t r a l i a and the United States are p a r t i c u l a r l y relevant to a discussion of alternatives that could be implemented i n Canada. When the coastal states i n A u s t r a l i a demanded control over offshore development, the solution was found i n the Commonwealth and states of A u s t r a l i a each passing i d e n t i c a l l e g i s l a t i o n . The r e s u l t , of course, i s that the same l e g i s l a t i o n , state and Commonwealth, was i n force i n a l l the offshore areas assuring that, i f chal-lenged, one or the other l e g i s l a t i o n could be j u d i c i a l l y upheld. Through t h i s exercise i n c o n s t i t u t i o n a l co-operation, the states obtained some input into the terms of control through th e i r p a r t i c i p a t i o n i n the preparation of the l e g i s l a t i o n , but the necessity of a l l p a r t i e s having to agree to every part of the common l e g i s l a t i o n makes the scheme excessively r i g i d and does not account for the p a r t i c u l a r ambitions of i n d i v i d u a l states. This scheme w i l l be discussed i n greater d e t a i l i n Chapter I I I . 12 In the United States the courts consistently denied claims by various coastal states to ownership of offshore mineral resources. After the Supreme Court had established the exclusive ownership of the federal government i n o f f -shore resources, the United States Congress passed control to the coastal states over a portion of these resources. Considering the geographic and even geological s i m i l a r i t y between some of the coastal states of the United States and the c o s t a l provinces of Canada, i t i s necessary to understand the scheme used i n the United States, and to examine i t s strengths and weaknesses when considering alternative schemes i n Canada. An understanding of the American scheme i s p a r t i c u l a r l y timely i n that the scheme may be modified for Puerto Rico, presently a possession of the United States to entice i t to apply for statehood. A very good case can be made for t r a n s f e r r i n g to Puerto Rico r i g h t s , more extensive than those enjoyed presently by the coastal states. The Puerto Rican case w i l l be examined i n t h i s paper to demonstrate that exclusive control over offshore development by the coastal provinces need not be tantamount to s t r i p p i n g the federal Parliament of other c o n s t i t u t i o n a l powers i t currently exercises over the offshore area and also to emphasize that not a l l coastal regions need be dealt with on equal terms. 13 F i n a l l y , an examination of alt e r n a t i v e procedures must i d e n t i f y areas which w i l l require compromise between the federal government and the Province of B r i t i s h Columbia before any procedure can be implemented. Each procedure w i l l , of course, rais e d i f f e r e n t areas of con-tention, and these w i l l be reviewed i n the context of each procedure. Section 2: Procedures for Transferring Offshore O i l and  Gas to B r i t i s h Columbia The following three procedures for t r a n s f e r r i n g varying degrees of control over offshore o i l and gas to B r i t i s h Columbia w i l l be examined: (a) a procedure which transfers complete l e g i s l a t i v e authority over offshore o i l and gas to the Province, leaving only the general residual power (with cer-t a i n exceptions) over these resources to the federal government; (b) a procedure which transfers ownership of offshore o i l and gas to the Province, but which reserves l e g i s l a t i v e authority to the federal government; and 14 (c) a procedure which transfers administration of o f f -shore o i l and gas to the Province, reserving both l e g i s l a t i v e authority and ownership of the resources to the federal government. There are two aspects to each procedure: f i r s t , consideration of the l e g a l format necessary to e f f e c t the transfer, referred to below as the instrument of transfer, and second, i d e n t i f i c a t i o n of the change i n p r o v i n c i a l -federal j u r i s d i c t i o n that w i l l occur aft e r the transfer i s complete. Each procedure contemplates the r e l i n q u i s h -ment of varying degrees of federal control over offshore o i l and gas to Britis h ' Columbia, which w i l l be determined by the instrument of transfer. This paper w i l l examine the change of control or j u r i s d i c t i o n that could be accomplished by each procedure with a view to exposing the alternative that would best accommodate federal and p r o v i n c i a l objectives over offshore o i l andigas develop-ment. Section 2.1: Procedure I - transfer of l e g i s l a t i v e authority over offshore o i l and gas to the Province of B r i t i s h Columbia The extension of the boundaries of the Province of B r i t i s h Columbia to include offshore o i l and gas i s the 15 maximum control which the Province could obtain over these offshore resources. An amendment to the B.N.A. Act, 1867, ' e n t i t l e d The B r i t i s h North America Act, 1871, 1 6 (B.N.A. Act, 1871), provides a procedure whereby the federal government can increase the t e r r i t o r y of a province, with the province's consent from t e r r i t o r y not included i n any other province. The placing of the new t e r r i t o r y within p r o v i n c i a l boundaries, i f not subject to any reservations, could pass to the province, ownership over undisposed f e -deral interests i n the t e r r i t o r y and l e g i s l a t i v e authority over the new t e r r i t o r y . When t e r r i t o r y i s added to a province i t becomes "Property ... i n the Province" within section 92(13) of the B.N.A. Act, 1867. This section gives the p r o v i n c i a l l e g i s l a t u r e exclusive authority to make laws i n r e l a t i o n to property and more s p e c i f i c a l l y land within i t s boundaries. By the transfer of exclusive l e g i s l a t i v e authority to a province, the federal government, i n e f f e c t , relinquishes i t s ownership of the t e r r i t o r y . Undisposed federal t e r r i t o r y added to a province always remains vested 17 i n the Crown since the Crown i s i n d i v i s i b l e , meaning that the Crown or Her Majesty i n Right of the Province or Her Majesty i n Right of Canada i s the same "l e g a l person at 18 the head of a l l her governments". Ownership of the t e r r i t o r y i s not therefore determined by a transfer of t i t l e 16 between the federal and p r o v i n c i a l governments since the lands remain vested i n the Crown, but rather the "conveyance" i s effected by "the transfer of authority and duty to 19 administer the lands on behalf of Her Majesty". When unalienated federal land i s included within the boundaries of a province without reservation, i t becomes subject to the exclusive j u r i s d i c t i o n of a province. The province, i n e f f e c t , becomes the owner of the land. Where the federal government intends to include within a province, t e r r i t o r y which i t has disposed of i n whole or i n part, the province assumes the t e r r i t o r y subject to these r i g h t s , but s t i l l has l e g i s l a t i v e authority over the encumbered property within i t s boundaries. In t h i s case though i t would not have "ownership" i t would have l e g i s l a t i v e authority over the land. The p r o v i n c i a l ownership or l e g i s l a t i v e authority over land are, of course, always subject to s p e c i f i c powers given the federal government under the B.N.A. Act, 1867. However, as stated e a r l i e r , the procedures which w i l l be examined i n t h i s paper seeks both a p r a c t i c a l and l e g a l solution to passing control over offshore o i l and gas to B r i t i s h Columbia. However, i t i s not p r a c t i c a l to consider that the federal government would unconditionally 17 extend the boundaries of B r i t i s h Columbia i n order to i n c i d e n t a l l y include offshore o i l and gas within the Province. If the boundaries were so extended they would include the waters and a l l other natural resources within the l i m i t s of the extended p r o v i n c i a l boundaries. The r e s u l t would be that the federal government may be re-linquishing more t e r r i t o r y and l e g i s l a t i v e a b i l i t y , than i s necessary for the e f f e c t i v e e x p l o i t a t i o n by B r i t i s h Columbia of offshore o i l and gas. This i s the precise impasse that has developed i n the discussions over c o n s t i -t u t i o n a l amendments that would pass control over offshore minerals to the coastal provinces. The impasse relates to the extent of powers that the federal government i s w i l l i n g to have the province exercise over offshore resources. The federal position i s quite c l e a r : i t w i l l not pass exclusive r i g h t s over offshore resources to the coastal provinces. The description of the limited rights which the coastal provinces would exercise over offshore areas has therefore been thought to require the sanction of an amendment to the constitution. One reason that the B.N.A. Act, 1871 has been overlooked i s that t h i s Act appears only to authorize a procedure by which p r o v i n c i a l boundaries can be extended, thereby e n t i t l i n g a province to exercise a l l l e g i s l a t i v e powers over the added t e r r i t o r y given to i t under i t s constitution. 18 The f i r s t Chapter then w i l l examine the p o s s i b i l i t y of using the B.N.A. Act, 1871 to extend the boundaries of the Province of B r i t i s h Columbia only for the purpose of permitting the Province to obtain l e g i s l a t i v e control over offshore o i l and gas. A l l other l e g i s l a t i v e power over the extended boundaries and ownership i n resources other than o i l and gas would be retained by the federal government. To the writer's knowledge, using the B.N.A. Act 1871 to pass li m i t e d l e g i s l a t i v e j u r i s d i c t i o n over t e r r i t o r y comprising exploitable Canadian offshore resources has not yet been formally considered by the 20 federal government. The Act was considered i n the Maritime Memorandum of Understanding only as a means of 2 defining i n t e r p r o v i n c i a l boundaries i n the offshore areas. The Australian constitution, i n section 123, incorporates the substantive provisions of the B.N.A. Act, 1871. The f i r s t procedure proposes that the 1871 Act could be used to define any powers which the federal government wants to r e t a i n over offshore resources that would come within 22 t e r r i t o r y added to the Province. However, the Australian government does not appear t o have contemplated that section 123 of the Australian c o n s t i t u t i o n could have been used to define the control which the Commonwealth or states 23 would exercise over offshore areas. If t h i s f i r s t proce-19 dure i s sustainable, c o n s t i t u t i o n a l amendment would not be necessary. The knowledge that the control over offshore minerals could be se t t l e d domestically without recourse to the B r i t i s h Parliament may place negotations at a more sat i s f a c t o r y l e v e l , encouraging cooperation and compromise. As stated above i t i s necessary to ensure that t h i s procedure, as well as the other procedures, provide not only a l e g a l method for tran s f e r r i n g offshore o i l and gas to the Province, but that these procedures provide a prac-t i c a l method of accommodating federal and p r o v i n c i a l pos-i t i o n s concerning control over offshore areas. I t i s not enough to conclude that under t h i s f i r s t procedure the l e g i s l a t i v e power which the province now has over t e r r i t o r y within i t s present boundary, could be limited as regards any t e r r i t o r y added to the Province. I t i s also necessary to attempt to define the l i m i t a t i o n s which would be imposed over the added t e r r i t o r y to permit the p r a c t i c a l v i a b i l i t y of t h i s procedure to be assessed. The f i r s t chapter w i l l examine the l e g i s l a t i v e and j u s t i c i a l history of the 1871 Act to ensure that there i s no l e g a l impediment to the general use of t h i s Act to redefine the Province's constit u t i o n as i t would r e l a t e to the added t e r r i t o r y . The second chapter w i l l then examine whether certa i n 20 l i m i t a t i o n s that the federal government would probably i n s i s t on, could be accommodated by the 18 71 Act, without a f f e c t i n g the a b i l i t y of the Province to e f f e c t i v e -l y exploit offshore o i l and gas. Section 2.2: Procedures which do not transfer l e g i s l a t i v e control over offshore o i l and gas to B r i t i s h Columbia The t h i r d and fourth chapter of t h i s paper examine procedures which transfer to:. the Province of B r i t i s h Columbia respectively; ownership and administration of offshore o i l and gas without tr a n s f e r r i n g to the Province l e g i s l a t i v e authority over these resources. The l e g i s l a t i v e authority over offshore o i l and gas would i n both these cases remain with the federal government. There are a number of reasons for considering these a l t e r n a t i v e s . F i r s t , they are alternatives to c o n s t i t u t i o n a l amendment and could be enacted almost immediately, and second, they could pass substantial control to the Province without irrevocably changing the federal government's ultimate control over offshore resources. F i n a l l y , a comparison of the advantages and disadvantages of a l l alternatives w i l l a s s i s t the policy-makers in t h e i r ultimate choice. 21 Section 2.3: Procedure II - transfer of ownership of offshore o i l and gas to the Province of B r i t i s h Columbia or a legal e n t i t y under the control of the Province of B r i t i s h Columbia It i s proposed i n the second procedure that the federal government pass ownership to the Province of B r i t i s h Columbia or to a l e g a l e n t i t y , preferably a petroleum corporation under the control of the Province, but that federal l e g i s l a t i v e power over offshore o i l and gas would continue. While offshore o i l and gas would remain outside of the Province's boundaries and therefore beyond the Province's l e g i s l a t i v e j u r i s d i c t i o n , i t i s assumed that the ownership rights which the Province obtains over offshore o i l and gas, would give i t s u f f i c i e n t control to determine the development of these resources. Also considered i n t h i s Procedure i s a transfer of owner-ship to a p r o v i n c i a l l y controlled petroleum corporation, though not necessarily as an a l t e r n a t i v e . It i s necessary to consider, under t h i s f i r s t Procedure, whether the Province could, under the Canadian c o n s t i t u t i o n , control land beyond i t s boundaries. If the Province cannot own land beyond i t s boundaries, other devices such as trans-f e r r i n g ownership to a corporation controlled by the province w i l l be considered. The instruments of transfer necessary to complete a change i n ownership w i l l have the 22 greatest bearing on determining any l e g a l l i m i t a t i o n s to ef f e c t i n g a transfer of ownership to the Province or to a p r o v i n c i a l petroleum corporation. Section 2.4: Procedure III - transfer of administration of offshore o i l and gas to the Province of B r i t i s h Columbia with l e g i s l a t i v e authority retained by the federal govern-ment An examination of procedures for transf e r r i n g control to B r i t i s h Columbia over offshore o i l and gas would not be complete without attempting to apply the Maritime manage-ment scheme to the west coast. The e f f o r t s of the provin-c i a l governments and the federal government to s e t t l e t h e i r differences over the control of resources o f f the east coast cannot be disregarded. The fourth chapter w i l l then examine as the t h i r d procedure, a transfer of the manage-ment over offshore o i l and gas from the federal government to B r i t i s h Columbia. Regardless of how obsolete t h i s t h i r d procedure may appear i n the context of discussions on c o n s t i t u t i o n a l amendment proposing the transfer of exclusive l e g i s l a t i v e j u r i s d i c t i o n over natural resources to the provinces, there i s merit i n applying the Maritime management scheme or variatio n s of i t to the west coast. One variable i n the Maritime agreement does not e x i s t i n the case of B r i t i s h Columbia. In the case of the east 23 coast, the control of offshore resources has not been referred to the courts for a r u l i n g , while the Supreme Court of Canada has expressed the opinion that the resources o f f the west coast are within the exclusive control of the federal government. This fact w i l l have a bearing on how the Maritime scheme can be adapted to B r i t i s h Columbia. 24 INTRODUCTION FOOTNOTES 1. In the Matter of a Reference by the Governor General  i n Council Concerning the Ownership of and J u r i s - d i c t i o n Over Offshore Mineral Rights as set out i n  Order i n Council P.C. 1965-750 dated A p r i l 26, 1965, L1967J S.C.R. 792. 2. Re: S t r a i t of Georgia (1967), 1 B.C.L.R. 98 (B.C.C.A.). See also Regulations Constituting a Crown Reserve on  Lands Forming Part of the Continental Shelf, B r i t i s h Columbia Order i n Council 3578, Regulations 1968/ 105,106. 3. Statement of Prime Minister Trudeau concerning o f f -shore minerals made on December 2, 1968, reproduced i n Lewis and Thompson on O i l and Gas, Volume I, s.29B. 4. Mayo, L. E. Jones, Legal Policy decision process (1964) 33 Geo. Wash. L. Rev. 341, quoting Nagel on models for legal processes. 5. The terms of union of Prince Edward Island, set out i n Imperial Order in Council dated June 26, 1873, reproduced i n R.S.C. 1970, Appendix No. 12, provided the Province with a subsidy since the government of Prince Edward Island held no lands from the Crown. 6. D.W. Mundell, Legal Nature of Federal and P r o v i n c i a l  Executive Governments; Some Comments on' Transaction's  Between Them (1960-63), 2 Osgoode Hall L.J. 56,66. 7. R.S.C. 1970, Appendix No. 11, hereafter referred to as the "B.N.A. Act, 1871". 8. See Manitoba Act, 1870, the B.N.A. Act, 1871, The Alberta Act, 1905, The Saskatchewan Act, 1905, a l l reproduced i n R.S.C. 1970, Appendix 9. See B r i t i s h North America Act, 1930, reproduced i n R.S.C. 1970, Appendix No. 25. 10, Manitoba Act, 1870, s.30, Alberta Act, 1905, s.21, Saskatchewan Act, 1905, s.21, op.ci t . , supra, n.8. 25 11. The federal Minister of the Interior during debate in the House of Commons on the 1930 Natural Resource Agreements, said that i n 1912 he had been a member of the Alberta government:"...and at that time the premiers of the three p r a i r i e provinces decided they should make a request of the federal government for the return of the natural resources". Canadian  House of Commons Debates, February 18, 1929, p.192. 12. Correspondence between Prime Minister Joseph Clark and Premier Brian Peckford of Newfoundland, dated September 14, 197 9, Premier John Buchanan of Nova Scotia dated September 20, 1979, and Premier William Bennett of B r i t i s h Columbia dated September 24, 1979. 13. Vancouver Sun, 16 July 1980, p.A8; B r i t i s h Columbia Government News, Volume 25, Number 8; September 1980. 14. Memorandum of Understanding in Respect of the Administration and Management of Mineral Resources Offshore of the Maritime Provinces dated February 1, 1977. 15. Reproduced in R.S.C. 1970, Appendix No. 5. 16. Reproduced i n R.S.C. 197 0, Appendix No. 11. 17. Theodore v. Duncan, [1919] A.C. 696 ,706. 18. op. c i t . supra, n.6 at 57. 19. Id., at 71. 20. After writing t h i s paper the writer had the opportunity to discuss i t with Norman Tarnow, lawyer with the Attorney General's O f f i c e i n B r i t i s h Columbia. He advised me that he made a submission i n November, 1979, to the Continuing Committee of O f f i c i a l s on Constitu-t i o n a l Amendment recommending that the B.N.A. 1871 be considered as a method of tran s f e r r i n g offshore resources of B r i t i s h Columbia. 26 21. R.J. Harrison, The Offshore Mineral Resources Agree- ment i n the Maritime Provinces (1978), 4 Dalhousie Law Journal 2 45,25 8. Professor Harrison, who p a r t i -cipated i n the preparation of the Memorandum of Under-standing, suggested that the B.N.A. Act, 1871 could be used to s e t t l e i n t e r p r o v i n c i a l boundaries. The author i s indebted to Professor Harrison for encouraging her to examine other applications of t h i s Act, which examination i s r e f l e c t e d i n t h i s f i r s t procedure. 22. Commonwealth of A u s t r a l i a Constitution, 1900 (Imp.), 63 & 64, V i c t o r i a c.12, s.123: "The Parliament of the Commonwealth may, with the consent of a State, and with the approval of the majority of electors of the State voting on the question, increase, diminish, or otherwise a l t e r the l i m i t s of the State, upon such terms  and conditions as may be agreed on, and may with the l i k e consent, make provision respecting the e f f e c t and operation of any increase or diminution or a l t e r a t i o n of t e r r i t o r y i n r e l a t i o n to any State affected." (emphasis added) 23. Quick and Garran, The Annotated Constitution of the Australian Commonwealth (1901) 974-975. 27 CHAPTER I PROCEDURE I - THE TRANSFER  OF LEGISLATIVE JURISDICTION  OVER OFFSHORE OIL AND GAS TO  BRITISH COLUMBIA INTRODUCTION - Natural Resources and P r o v i n c i a l Boundaries This chapter w i l l assess whether the B r i t i s h North America Act, 1871"1" could be used to pass the exclusive l e g i s l a t i v e authority of the federal government over west coast offshore o i l and gas to the Province of B r i t i s h Columbia. While c o n s t i t u t i o n a l amendment seems the route favoured by the federal government to resolve demands by the various provinces for more control over natural resources, t h i s may not be the appropriate procedure i n the case of offshore resource. The p r o v i n c i a l appeals for more control over natural resources f a l l into two categories. The f i r s t category-are appeals which would require a reconsideration of the l e g i s l a t i v e d i s t r i b u t i o n over natural resources under The B r i t i s h North America Act, 1867. These claims concern federal l e g i s l a t i v e control over natural resources within 28 p r o v i n c i a l boundaries. While the provinces have the exclusive l e g i s l a t i v e control over these natural resources pursuant to section 92(13) of the B r i t i s h North America Act, 1867, i . e . "Property and C i v i l Rights i n the Province", the federal government has an i n c i d e n t a l or residual l e g i s l a t i v e power over these resources i f i t can either bring i t s l e g i s l a t i o n within the categories s p e c i f i c a l l y assigned to i t under section 91 of the B r i t i s h North America Act, 1867 or j u s t i f y the l e g i s l a t i o n under i t s residual power, as a law for the "peace, Order and Good Government of Canada", pursuant to the preamble to section 91. The provinces contend that the exercise of either the federal i n c i d e n t a l or residuary power over p r o v i n c i a l resources, frustrates t h e i r a b i l i t y to control the develop-ment of resources under t h e i r j u r i s d i c t i o n . This a b i l i t y has been described by Professor LaForest as giving to the provinces "A most e f f e c t i v e weapon for c o n t r o l l i n g t h e i r 2 economic destiny". The current impasse between the Province of Alberta and the federal government over the setting of domestic 3 o i l prices i s the most recent example of the extent to which provinces are testing the l i m i t s to which they can exercise control over t h e i r natural resources. The p o s i t i o n 29 of the Province of Alberta i s that i f a s a t i s f a c t o r y price i s not set, the province w i l l refuse to s e l l o i l to the rest of Canada. This position threatens to neutra-l i z e the federal government's ultimatum to u n i l a t e r a l l y force a settlement of an o i l price by using federal powers to control the export of the Alberta o i l . The control which the provinces are seeking i n t h i s f i r s t category i s control over t h e i r l o c a l economies, through guarantees that the p r o v i n c i a l l e g i s l a t i v e powers under the c o n s t i t u -tion to control property within their borders w i l l not be c u r t a i l e d by federal l e g i s l a t i o n . To achieve t h i s end i t may be necessary to obtain a precise commitment from the federal government of the powers i t w i l l exercise over p r o v i n c i a l resources, a commitment which could only be implemented and policed by c o n s t i t u t i o n a l r e v i s i o n . The second category of p r o v i n c i a l appeal for control over natural resources concerns natural resources beyond p r o v i n c i a l boundaries. This category re l a t e s to demands by the coastal provinces for control over east and west coast offshore gas. The only difference between the position of these two regions (at least as concerns the type of control they are demanding over offshore o i l and gas) as stated e a r l i e r i s that the p r o v i n c i a l claims to 30 control over the offshore resources has been adjudicated by the court in the west coast, while the east coast provinces are s t i l l i n a j u r i s d i c t i o n a l dispute with the federal government over control. The basis of both claims, 4 while perhaps h i s t o r i c a l l y d i s s i m i l a r , can e a s i l y be described as a boundary dispute. The Supreme Court of 5 Canada alluded to t h i s i n the Offshore Minerals Reference. After completing a h i s t o r i c a l survey of the events which led the Colony of B r i t i s h Columbia into Confederation, the Court summed up the issue before i t as follows: But i t [the h i s t o r i c a l survey] leaves untouched the problem that we have to face - whether the t e r r i t o r i a l sea was within the boundary of the Province of B r i t i s h Columbia at the time of Confederation. 6 The Court went on to hold that the boundary of the Province was the low water mark on the coast of the main-land and islands of B r i t i s h Columbia placing offshore resources beyond p r o v i n c i a l t e r r i t o r y . Unlike the f i r s t category, t h i s second category does not involve a dispute over natural resources within ex i s t i n g p r o v i n c i a l boundaries, at least o f f the west coast. Though some would argue that the opinion expressed by the Supreme Court of Canada i n the Offshore Minerals Reference was not a binding decision, since i t was merely a reference submitted to the Court by 31 the federal government, i t i s highly u n l i k e l y that the Supreme Court would decide d i f f e r e n t l y i f the matter was brought before i t again by a t h i r d party. The Supreme Court of Canada i n the past has expressed i t s intention to be bound by opinions of the Court r e s u l t i n g from matters brought before i t by way of reference. In the 7 Attorney-General Of Canada v. Higbie, Chief Justice Rinfret, in following a previous reference decision of the Supreme Court stated: It i s needless to mention here that although t h i s was not a judgment i n the true sense of the word, but merely what i s sometimes referred to as an opinion made in a Reference to t h i s Court by the Governor General i n Council as provided for by section 55 of the Supreme  Court Act and the special j u r i s d i c t i o n therein given to t h i s Court, we should regard an opinion of that kind as binding upon t h i s Court. 8 The second category therefore would involve a request by the Province of B r i t i s h Columbia to extend p r o v i n c i a l boundaries so as to bring offshore o i l and gas within the l e g i s l a t i v e influence of the Province. The a b i l i t y of the Province to l e g i s l a t e over offshore o i l and gas i s the most extensive power which the Province could obtain. Constitutional amendment i s not needed to extend p r o v i n c i a l boundaries, and t h i s fact 32 distinguishes the two categories of natural resource con-t r o l described above. The B r i t i s h North America Act, 1871 which i s a c o n s t i t u t i o n a l act i n i t s e l f , provides a mechanism for the federal government and provinces to mutually agree to boundary extensions. But once extended, the province's control over natural resources comes within the f i r s t category, for the resources within the extended boundary would then come within the exclusive l e g i s l a t i v e j u r i s d i c t i o n of a province. The purpose of examining t h i s f i r s t procedure i s to determine whether the B r i t i s h North America Act, 1871 provides authority for the federal government and the Province of B r i t i s h Columbia to define the l i m i t s to which each government w i l l exercise l e g i s l a t i v e j u r i s d i c t i o n over offshore o i l and gas. The issue to be considered i s whether, i n extending the boundaries of the Province to include offshore o i l and gas, the governments could agree on a v a r i a t i o n of the l e g i s l a t i v e power that each would otherwise exercise under the B r i t i s h North America Act, 1867. If such authority e x i s t s , i t becomes superfluous to require further c o n s t i t u t i o n a l sanction to pass l e g i s -l a t i v e control over offshore o i l and gas to the Province. A short h i s t o r i c a l reference to the B.N.A. Act, 1871 33 demonstrates that t h i s l e g i s l a t i o n was to be used to avoid further amendments to the B.N.A. Act, 1867. On January 3 1871 Canada's f i r s t Prime Minister and then Minister of Justice for Canada, S i r John A. Macdonald sent a memorandum to the B r i t i s h Government which substantiated his govern-ment' s request for an amendment to the B.N.A. Act, 1867 (later to be passed as the B.N.A. Act, 1871). The Minister stated i n t h i s Memorandum that one of the reasons for the amendment was to prevent: ...the necessity of repeated application to the Imperial Parliament for l e g i s l a t i o n respecting the Dominion. 9 If the B r i t i s h North America Act, 1871 can l e g a l l y accommodate a sa t i s f a c t o r y resolution of p r o v i n c i a l demands for control over west coast offshore resources, the B r i t i s h Parliament should not be asked once again to confirm the authority of the Canadian government. Section 1: H i s t o r i c a l Review of the B r i t i s h  North America Act, 1871 Consideration of t h i s l e g i s l a t i o n i n the context of the present fe d e r a l / p r o v i n c i a l discussions of control over natural resources and c o n s t i t u t i o n a l amendment i s s l i g h t l y anachronistic. The federal government has taken the posi t i o n that f a i l u r e to reach agreement on outstanding 34 f e d e r a l / p r o v i n c i a l c o n s t i t u t i o n a l differences, which includes control over natural resources, may force the federal government to u n i l a t e r a l l y request that the B r i t i s h Parliament amend the Constitution. Curiously enough, the amendment to the B r i t i s h North America Act, 1871 was very nearly passed s o l e l y at the request of the Canadian Cabinet without reference to Parliament. As Gerin-LaJoie points out: Had the Imperial Government followed to the l e t t e r the course suggested [a request by the Privy Council i n Canada to the Imperial Parliament to pass the c o n s t i t u t i o n a l amendment] a dangerous precedent would have been set since an amendment to the Constitution would have been secured without any intervention of Parliament i n Canada. 10 This s i t u a t i o n was unintentionally averted by the combin-ation of two events. F i r s t l y , the B r i t i s h Colonial Secretary sent the d r a f t B i l l to the Governor General pr i o r to introducing i t to the B r i t i s h Parliament, thus delaying the f i r s t reading. During t h i s delay the second event, was a request by the opposition party i n the Canadian Parliament for d e t a i l s on a possible c o n s t i t u t i o n a l amendment which had been suggested as necessary during the previous Parliamentary session. The Macdonald government was forced into d i s c l o s i n g not only t h e i r action at u n i l a t e r a l l y requesting the amendment (which may have been 35 a legitimate oversight) but the dra f t B i l l as well. Needless to say both the procedure used by the government to secure the amendment and the amendment, were f u l l y debated by the Canadian Parliament. The B i l l was eventual-ly referred to B r i t a i n by a unanimous resolution of the Canadian Parliament which also unanimously adopted a motion to the e f f e c t that no changes i n the B r i t i s h North America Act, 1867 would be sought by the Executive government without the previous assent of the Canadian Parliament.'*"''" However, i t i s more than a h i s t o r i c a l p e c u l i a r i t y that provides s i m i l a r i t i e s between the p o l i t i c a l and co n s t i t u t i o n a l s i t u a t i o n which existed i n Canada when the B.N.A. Act, 1871 was being proposed, a si t u a t i o n which was resolved through c o n s t i t u t i o n a l amendment, and the present circumstances where B r i t i s h Columbia i s seeking control over offshore resources. As the following discussion w i l l indicate the B.N.A. Act, 1871 was proposed to permit the federal government a certain degree of f l e x i b i l i t y i n passing j u r i s d i c t i o n to new provinces over t e r r i t o r y to be set aside as a new province or added to exi s t i n g provinces. This i s the exact s i t u a t i o n which federal government finds i t s e l f i n today with respect to B r i t i s h Columbia. 36 The B r i t i s h North America Act, 1871 contains only six sections. Each of these sections, however, were meant to correct, as one member of the House of Commons described i t i n 1871, "the defective framing of 'The B r i t i s h North 12 America Act of 1867'". The relevance of the provisions of t h i s Act to the f l e x i b i l i t y afforded to the federal government i n determining p r o v i n c i a l j u r i s d i c t i o n w i l l be discussed i n the following sections. Section 1.1: the a b i l i t y of the federal parliament to create provinces and enact p r o v i n c i a l constitutions i s questioned Section 5 of the B r i t i s h North America Act, 1871 confirmed The Temporary Government of Rupert's Land Act, 1869, 1 3 and The Manitoba Act, 1870. 1 4 As a l l lawyers know, a confirming statute always signals the p r i o r passage of doubtful l e g i s l a t i o n , and the B.N.A. Act of 1871 i s no exception. At Confederation, a vast t e r r i t o r y of land then known as Rupert's Land and the North-Western T e r r i t o r y , remained a B r i t i s h possession. This t e r r i t o r y today comprises the three p r a i r i e provinces: Alberta, Saskatchewan and Manitoba, the Northwest T e r r i t o r i e s and the Yukon T e r r i t o r y . While the provinces, as they are known today, 37 of B r i t i s h Columbia, Prince Edward Island and Newfoundland, did not enter the Canadian Confederation i n 1867, t h e i r admission was s p e c i f i c a l l y contemplated under section 14 6 of the B r i t i s h North America Act, 1867. The federal government, however, found i t s e l f i n the unfortunate position i n 1870 of having to negotiate a consti t u t i o n and p r o v i n c i a l status for a portion of the t e r r i t o r y comprising Rupert's Land and the North-Western T e r r i t o r y . The inhabitants of t h i s t e r r i t o r y were not concerned that the t e r r i t o r y had not passed to the control of the federal government or of the fa c t that the B.N.A. Act, 1867 had not anticipated a procedure for setting up a 15 government for t h i s area. The federal government was forced to take action under threat of insurrection within t h i s t e r r i t o r y . The government had already assented, on 16 June 22, 1869 , to The Temporary Government of Rupert's Land Act, 1869, to prepare for the transfer of Rupert's Land and the North-Western T e r r i t o r y to the federal govern-ment from B r i t a i n , and to temporarily provide a c i v i l government within these t e r r i t o r i e s . The government then introduced the Manitoba Act, 1870, a B i l l prepared as a r e s u l t of negotiations with delegates from that part of the s t i l l B r i t i s h t e r r i t o r y which was demanding l o c a l autonomy.' The Manitoba Act, 1870 would give p r o v i n c i a l status and a 38 p r o v i n c i a l constitution to a part of the t e r r i t o r y that B r i t a i n was to transfer to the control of the federal government. While the f i r s t Act, The Temporary Government of Rupert's Land Act, 1869 came into force immediately, The Manitoba Act, 1870 was to come into force on the day upon which Rupert's Land and the North-Western T e r r i t o r i e s were admitted by the B r i t i s h Privy Council into Confederation. While the law o f f i c e r s of the Crown did not question the v a l i d i t y of the l e g i s l a t i o n , s u f f i c i e n t doubts were raised by the Opposition during the debate of the proposed Manitoba Act that the government was compelled to request Imperial confirmation of the l e g i s l a t i o n . I t i s fortuitous that the Opposition members r e l e n t l e s s l y pushed for Imperial confirmation, since the 1871 Act provided clear procedures for creating new provinces or adding t e r r i t o r y to e x i s t i n g provinces. To appreciate the gap which had been l e f t i n the B r i t i s h North America Act, 1867 and the impact of the amendment, the complete history of the doubts surrounding The Manitoba Act, 1870 must be understood. On December 16 and 17, 1867, the House of Commons and Senate respectively had petitioned the Queen pursuant to section 146 of the B r i t i s h North America Act, 1867, to unite Rupert's Land and the North-Western T e r r i t o r y with Canada, and to grant to the Parliament of Canada 39 authority to l e g i s l a t e for the future welfare and good government of these two t e r r i t o r i e s . The law o f f i c e r s of the Crown i n England advised that the address could not be implemented unless the Hudson's Bay Company f i r s t surrendered i t s rights over Rupert's Land. The Rupert's Land Act, 1868, assented to on July 31, 1868, was enacted 19 by the B r i t i s h government to permit B r i t a i n to accept 20 the Company's surrender of i t s charter. The Act affected only the B r i t i s h Crown's pos i t i o n with respect to Rupert's Land and was of no immediate concern to Canada and had no immediate bearing on the Constitution of Canada. Section 5 of the Rupert's Land Act, 1868 (Imp.) provided that i t should be competent for "Her Majesty i n Council on address from the Houses of the Canadian Parliament" to declare Rupert's Land part of the Dominion of Canada. To t h i s extent the Act was merely a r e p e t i t i o n of section 146 of the B r i t i s h North America Act, 1867. However, section 5 also gave the Parliament of Canada the authority to make "Laws ... for the Peace, Order, and Good 21 Government..." of Rupert's Land, a proviso requested i n the December, 1867 addresses. This provision vested i n the Canadian Parliament complete j u r i s d i c t i o n to pass laws for the governing of Rupert's Land, though the exercise of t h i s j u r i s d i c t i o n was dependent on the B r i t i s h 40 Order i n Council which would unite Rupert's Land and the North-Western T e r r i t o r y to Canada. This Order i n Council was not passed u n t i l June 23, 1870, to take e f f e c t on July 15, 1870 - more than a year after the Canadian Parliament enacted The Temporary Government of Rupert's Land Act, 1869, and more than a month afte r The Manitoba Act, 1870 was passed. The action of the federal government i n passing The Manitoba Act, 1870 p r i o r to the Imperial Order i n Council was j u s t i f i e d to the Canadian Parliament by S i r Georges-Etienne Ca r t i e r as follows: ...We stated that though not actually i n possession of the North West t e r r i t o r y , we thought we should l e g i s l a t e i n a manner to be able to annex or deal with i t the moment the Imperial Sanction was given. The advisers of Her Majesty made no objection. On the con-trar y , the action of Canada was endorsed by the B r i t i s h Legislature. The transfer did not take place when we expected owing to the Manitoba trouble. 23 The basic issue concerning the v a l i d i t y of The Temporary Government of Rupert's Land Act, 1869 and The Manitoba Act, 1870 was the r i g h t of the federal government to enact laws for the governing of the former B r i t i s h t e r r i t o r y , or to create provinces from t h i s t e r r i t o r y and enact constitutions for those provinces 2. 4 The constitutions, 41 of course, for the four o r i g i n a l provinces at Confederation -Nova Scotia, New Brunswick, Ontario, Quebec were a l l speci-f i c a l l y dealt with under the B.N.A. Act, 1867, 2 5 while the constitutions of B r i t i s h Columbia, Prince Edward Island and Newfoundland were incorporated as part of th e i r terms of admission to Confederation 2*^ pursuant to the s p e c i f i c d i r e c t i o n concerning the admission of these colonies con-tained i n section 146 of the B.N.A. Act, 1867. The Manitoba Act, 1870, besides creating a p r o v i n c i a l l e g i s l a t i v e structure s i m i l a r to that of ex i s t i n g provinces with s i m i l a r l e g i s l a t i v e authority, provided for represent-ation of the Province i n the House of Commons and Senate. The Act gave Manitoba a consti t u t i o n . The federal govern-ment was therefore assuming i t had the same a b i l i t y to negotiate the terms of entry into the Union of t e r r i t o r y under i t s j u r i s d i c t i o n as the B r i t i s h Parliament had when • i t negotiated the terms of entry of the o r i g i n a l colonies into Confederation. The Memorandum27 referred to above, prepared by the Minister of Jus t i c e , S i r John A. Macdonald for transmittal to the B r i t i s h Secretary of State for the Colonies, i n support of his government's request f o r a co n s t i t u t i o n a l amendment to remove doubts raised by the two Acts, best 42 sums up the co n s t i t u t i o n a l issues raised by the passage of these pieces of l e g i s l a t i o n . In the Memorandum, the Minister of Justice pointed out, that the terms of the December, 1867 Senate and House of Commons Address request-ing the admission of Rupert's Land and the North-Western T e r r i t o r y into the Union did not include a new con s t i t u t i o n for the North West. If i t had, he went on to state, i t would have been subject to the B.N.A. Act, 1867. The Rupert's Land Act, 1868, (Imp.) which provided for the admission into the Dominion of Canada of Rupert's Land, but not of the North-Western T e r r i t o r y by the Imperial Parliament, he noted, provided i n section 5, that the Parliament of Canada could make such "Laws, Ins t i t u t i o n s and Ordinances ... as may be necessary for the peace, order and godd government of Her Majesty's subjects". S i r John A. Macdonald went on to say that: This provision of the Act may f a i r l y be held to have authorized the Canadian Parliament to pass the Act, giving a Constitution to a portion of Rupert's Land; but s t i l l the question remains whether under the two Imperial Acts referred to [B.N.A. Act 1867 and the Rupert's Land Act, 1869] i t had the power to give the people of the new Province representation i n the Senate and House of Commons. The general purview of 'the B r i t i s h North America Act, 1867", seems to be confined to the three Provinces of Canada, Nova Scotia and New Brunswick, o r i g i n a l l y forming the Dominion. 2 8 43 He demonstrated t h i s s i t u a t i o n by r e f e r r i n g to. the provisions i n the Manitoba constitution regarding represent-ation of the provinces i n the Senate and House of Commons. The Manitoba Act, provided for increased representation i n each House which would have changed the numerical represent-ation set out i n the B.N.A. Act, 1867. The B.N.A. Act, 1867, of course, made no references to the increase of numbers i n either House i n the event of any addition to the "Te r r i t o r y of the Dominion". Under these circumstances, he recommended c o n s t i t u t i o n a l amendment to confirm the l e g i s l a t i o n . The B r i t i s h North America Act, 1871 was therefore passed primarily to confirm The Manitoba Act, 1870. I n c i -dental doubts which had arisen regarding the a b i l i t y of Parliament to pass The Temporary Government of Rupert's Land Act, 1869, before the t e r r i t o r y was formally transferred to the Dominion were also l a i d to rest by similar confirmation of t h i s Act i n t h i s c o n s t i t u t i o n a l amendment. But while the primary purpose of t h i s Act was to confirm doubtful l e g i s l a t i o n as stated e a r l i e r , i t was intended that the Act should also avoid repeated applications to the Imperial Parliament for l e g i s l a t i o n respecting federal power to deal with the establishment of or changes to pr o v i n c i a l t e r r i t o r y . As i s so often the case with 44 c o n s t i t u t i o n a l amendments the l e g i s l a t i o n requested by-Canada from the Imperial Parliament, went beyond the immediate issue of confirming the doubtful l e g i s l a t i o n . In addition to confirming the doubtful l e g i s l a t i o n , the 29 federal Cabinet requested that the Imperial Parliament introduce l e g i s l a t i o n that would empower the federal 4. 30 government: (1) to e s t a b l i s h other Provinces i n the North-West T e r r i t o r y with suitable Con-s t i t u t i o n s and Governments possessing powers not greater than those conferred on the Local Governments by the B r i t i s h North America Act, 1867 [B.N.A. Act, 1871, s.2] (2) to admit Representatives from such Provinces into the Parliament of the Dominion [B.N.A. Act, 1871, s.2] (3) to increase or diminish the l i m i t s of the Province of Manitoba, or any of the Provinces, with the consent of the Local Government of such Province. r B . N . A . Act, 1871, s.3; which also p r o v i d e s L f o r the imposition of terms and conditions.] While, as mentioned e a r l i e r , the d r a f t B r i t i s h B i l l 31 was eventually debated i n the Canadian Parliament, the measure was introduced by the Colonial Secretary, the E a r l of Kimberley, and passed i n both Houses of the 32 B r i t i s h Parliament without debate. The Act as passed substantially incorporated the request of the federal Cabinet and also empowered the federal Parliament to make provision for any t e r r i t o r y not for the time being included 45 i n any. province (section 4). The Act can therefore be regarded as having passed to the federal government the powers to create " l o c a l governments" within federal t e r r i t o r y . Curiously enough, while the request of the federal Cabinet s p e c i f i c a l l y stated that provinces subsequently established i n the North-West T e r r i t o r y should not have powers or constitutions greater than those conferred on the l o c a l governments by the B.N.A. Act, 1867, t h i s l i m i t a t i o n appears nowhere i n the B.N.A. Act, 1871. This omission w i l l be discussed further below. A l i m i t a t i o n , however, was placed on the federal powers. The Act provides, i n section 6, that af t e r the federal Parliament establishes a province, i t cannot a l t e r the federal l e g i s l a t i o n establishing a province or i t s con-s t i t u t i o n . This provision appears to have been added to the i n i t i a l d r a f t since the dra f t B i l l prepared i n London and sent to Canada contained no such provision. S i r Georges-Etienne C a r t i e r , acting for the Minister of Justice, seems to have been responsible for t h i s addition *. In a memorandum to the Colonial Secretary he wrote: The Undersigned has to observe that i t i s absolutely necessary that the Province of Manitoba, as well as any which may here-after be erected, should hold the same status as the four Provinces now comprising the Dominion - and B r i t i s h Columbia, when i t comes i n - and l i k e them, should hold i t s Constitution subject only to a l t e r a t i o n by  the Imperial Legislature. 33 (emphasis added) 46 The introduction of t h i s l i m i t a t i o n on federal power i n the Act appears i n the opening words to section 6 which state: "(e)xcept as provided by the t h i r d section of th i s Act..." I t i s t h i s section and these words which make t h i s Act relevant to a transfer of offshore o i l and gas to the Province of B r i t i s h Columbia. Section 1.2: provision for the federal and p r o v i n c i a l governments to agree to variations i n p r o v i n c i a l constitutions  The B.N.A. Act, 1871 i s , i n t h i s writer's opinion, the most important c o n s t i t u t i o n a l amendment e x i s t i n g . I t gave the federal government the power to determine whether a t e r r i t o r y under i t s j u r i s d i c t i o n should be given l e g i s -34 l a t i v e autonomy, and to adapt the l e g i s l a t i v e d i s t r i b u t i o n of powers under sections 91 and 92 of the B.N.A. Act, 1867 to r e f l e c t the stage of development of a p a r t i c u l a r t e r r i t o r y . This power did not only r e l a t e to establishing an administration within t e r r i t o r i e s not included i n provinces (section 4) and establishing new provinces (section 2), but extended to alt e r a t i o n s of the t e r r i t o r y of established provinces (section 3). The extent of t h i s l a s t power has never been f u l l y examined. Section 3 of the B.N.A. Act, 1871 states: 47 3. The Parliament of Canada may from time to time, with the consent of the Legislature of any Province of the said Dominion, increase, diminish, or otherwise a l t e r the l i m i t s of such Province, upon such terms and conditions as may be agreed to by the said Legislature, and may,, with the l i k e ;consent, make provision respecting the e f f e c t and operation of any such increase or diminution or a l t e r a t i o n of t e r r i t o r y i n r e l a t i o n to any Province affected thereby. (emphasis added) Since-boundaries were o r i g i n a l l y determined by the Confederation Act, t h i s section has primarily been regarded as providing the necessary c o n s t i t u t i o n a l s-anction to variations i n p r o v i n c i a l boundaries, and has frequently been used to a l t e r the p r o v i n c i a l boundaries. However, there are two provisions i n the B.N.A. Act, 1871 to suggest that t h i s section carries more authority than merely the establishment of boundary l i n e s . As stated above, the sacrosanct provisions of section 6 of the B.N.A. Act, 1871 do not apply to a l t e r a t -ions of p r o v i n c i a l boundaries. There i s a suggestion therefore i n thi s section that an a l t e r a t i o n of p r o v i n c i a l boundaries could somehow be used to a f f e c t the province's constitution. I f i t did not, the words i n section 6: "c(e)xcept as provided by the t h i r d section of this Act,..." are superfluous. The phrase i n section 3" ...upon the terms and conditions as may be agreed by the said 48 Legislature" hints at the dormant powers of t h i s section. A boundary extension, can, therefore, be conditional, and the suggestion i s that the conditions can r e l a t e to the constitution of the province which embodies the province's l e g i s l a t i v e powers. The reference to "terms and conditions" i n t h i s section brings the entire preceding h i s t o r i c a l review of the B.N.A. Act, 1871 f u l l c i r c l e since these are the words used i n section 146 of the B.N.A. Act, 1867, which determined the terms of entry of new provinces. B r i t a i n was able to determine the terms of entry of certa i n colonies upon "Addresses of the Houses of Parliament and Legislatures", under t h i s section, which also provided: I t s h a l l be lawful for the Queen, by and with the Advice of Her Majesty's Most Honourable Privy Council, ... to admit [those colonies or provinces... Rupert's Land and the North-Western T e r r i t o r y ] . . . into the Union, on such Terms1 and  Conditions i n each<case as are i n the Addresses expressed... subject to the Provisions of t h i s Act [B.N.A. Act, 1867]... (emphasis added) The B.N.A. Act, 1871 i s not s p e c i f i c a l l y subject to the B.N.A. Act, 1867 due to obvious problems i n the lack of lat i t u d e t h i s would have given the federal government i n the establishment of new provinces. However, regardless of how broad a la t i t u d e the federal government has, i t must be remembered that i t could not negotiate entry on terms which exceed the amalgam of powers under the B.N.A. 49 Act, 1867. The powers which are v a l i d topics for negotiation are those powers the federal government can exercise over t e r r i t o r y not included within a province. These powers are extensive and negotiations on terms and conditions under section 3 are concerned with the extent to which the federal government i s w i l l i n g to re l i n q u i s h or subordinate i t s powers to a province. While section 6 of the B.N.A. Act, 1871 assured the province of Manitoba and any province ( t e r r i t o r y administ-ered by the federal government was not covered by the section) subsequently established by the federal Parliament, that the federal l e g i s l a t i o n which established the province and provided for i t s constitution and administration could not be altered by the federal government, t h i s did not necessarily mean that the province could not amend i t s constitution. For example, cert a i n provisions of the B.N.A. Act, 1867 are, except where varied by, incorporated into, The Manitoba Act, 1870. Notably among these provis-ions i s the a b i l i t y of the province under section 92 of the B.N.A. Act, 1867 to amend i t s co n s t i t u t i o n . This point i s important i n assessing the r i s k s involved i n using the B.N.A. Act, 1871, based on the assumption that the Supreme Court's decision i n the Offshore Minerals Reference conclusively determined the boundaries of the Province of 50 B r i t i s h Columbia. I t i s arguable that any doubt over the ownership of offshore resources could be resolved under section 3 as an " a l t e r a t i o n " of p r o v i n c i a l t e r r i t o r y i f any doubts e x i s t over p r o v i n c i a l boundaries making i t unclear whether the offshore areas are an "increase or diminution" of p r o v i n c i a l t e r r i t o r y . Certainly a defined l e g i s l a t i v e and property scheme, imposed as terms and conditions over offshore resources could be considered an a l t e r a t i o n of p r o v i n c i a l t e r r i t o r y . Since the provinces can a l t e r t h e i r constitutions, the combined force of the B.N.A. Act, 1871 and t h i s p r o v i n c i a l a b i l i t y would provide s u f f i c i e n t l e g a l sanction to a transfer of control over offshore resources to the Province. This i s one more reason for the assumption i n t h i s paper of the conclusive-ness of the Supreme Court's decision. The r i s k s involved i n assuming that the boundaries have been conclusively determined by the Court thus permitting the federal and p r o v i n c i a l government to use section 3 to authorize a simple boundary extension, are minimal when one considers the safety "catch" of other provisions of t h i s section. This paper therefore examines the substantive issues a r i s i n g from t h i s f i r s t Procedure by assuming that the Province's boundaries are those determined by the Supreme Court i n the Offshore Minerals Reference. 51 While the federal government could not a l t e r the terms of admission of t e r r i t o r y into the Union once admitted, there was no r e s t r i c t i o n on the terms of entry which the federal government could negotiate. As mentioned e a r l i e r , nowhere i n the B.N.A. Act, 1871 i s there a requirement that a new province be given the same l e g i s l a t i v e powers as the four o r i g i n a l provinces. The statement by Georges-Etienne Cartier that new provinces should hold the "same status" as the four o r i g i n a l provinces refers only to assuring the newly established provinces that the federal government could not, u n i l a t e r a l l y , a l t e r t h e i r terms of entry. The constitu-t i o n of Manitoba provides an example of a v a r i a t i o n from the j u r i s d i c t i o n afforded the o r i g i n a l four provinces. When the terms of entry for Manitoba were negotiated, the federal government withheld c e r t a i n l e g i s l a t i v e power from the province over land within the new province by reserving to i t s e l f ungranted crown lands. Section 30 of The Manitoba Act, 1870 provided: 30. A l l ungranted or wastevlands i n the Province s h a l l be, from and after the date of the said transfer, vested i n the Crown, and administered by the Government of Canada for the purposes of the Dominion... This reservation was a substantial v a r i a t i o n of the terms of entry into the Union of the four o r i g i n a l provinces which retained the a b i l i t y to l e g i s l a t e over lands within t h e i r p r o v i n c i a l boundaries when ownership of Crown lands 52 was passed to them. The l e g i s l a t i v e d i s t r i b u t i o n of property under the constitution was fundamental to the powers a province could exercise, not only as regards the pure economics of revenue generation for a province, but also i t s a b i l i t y to control land would determine i t s d i r e c t i o n of development. The fact that the l o c a l administration within Manitoba p r i o r to i t s becoming a province never had the a b i l i t y to l e g i s l a t e over property, does not r e f l e c t on the a b i l i t y of the federal government to reserve substantial powers. The next two provinces that the federal government established i n the t e r r i t o r i e s , pursuant to the B.N.A. Act, 1871 - Alberta and Saskatchewan - likewise had Crown lands reserved to the federal government as a term of entry. • 35 Section 21 Of both The Alberta Act, and the Saskatchewan 3 6 Act, provided: 21. A l l Crown lands, mines and minerals arid r o y a l t i e s incident thereto, and the i n t e r e s t of the Crown i n the waters within the province under the Northwest I r r i g a t i o n Act, 1898, s h a l l continue to be vested i n the Crown and administered by the Government of Canada for the purposes of Canada... As discussed e a r l i e r , these provinces eventually were able to renegotiate t h e i r terms of entry and obtain control over lands within t h e i r borders, although t h i s procedure required 53 further c o n s t i t u t i o n a l amendment . I t i s not e n t i r e l y clear that c o n s t i t u t i o n a l amendment was required, but there are three possible explanations: f i r s t , a u n i l a t e r a l transfer by the federal government may have been construed as being contrary to the r e s t r i c t i o n s contained i n section 6 of the B.N.A. Act, 1871; secondly, the renegotiated terms provided for the provinces and the federal government to agree on subsequent amendments, a procedure which may have exceeded the a b i l i t y of federal and p r o v i n c i a l governments to renegotiate the terms of p r o v i n c i a l entry contained i n section 3 of the B.N.A. Act, 1871; or t h i r d l y , a constitu-t i o n a l amendment would remove any doubt that the province had obtained j u r i s d i c t i o n over the land, an attitude which appears to be influencing present f e d e r a l / p r o v i n c i a l con-s t i t u t i o n a l negotiations. The federal government has varied the constitutions of provinces through the terms of entry into the Union. In the case of the p r a i r i e provinces, the federal govern-ment did not re l i n q u i s h powers i t held over t e r r i t o r y which was subsequently included within a province. I t would appear that a similar power exists when there i s an agree-ment to a l t e r p r o v i n c i a l t e r r i t o r y under section 3 of the B.N.A. Act, 1871. Writing of t h i s section, Gerin-LaJoie has said: 54 ...section 3 provided that Parliament might, with the consent of the l e g i s l a t u r e of any province, modify the boundaries of such province. This section offers a special i n t e r e s t since i t introduced i n the Constitution the p r i n c i p l e of fed e r a l -p r o v i n c i a l co-operation for the purpose of c o n s t i t u t i o n a l amendment, although i t was r e s t r i c t e d to a p a r t i c u l a r topic. 36 As stated at the beginning of t h i s chapter, the f e d e r a l / p r o v i n c i a l dilemma over offshore minerals i s a problem of determining f e d e r a l / p r o v i n c i a l boundaries. Section 3 may provide the solution. The next section w i l l examine the interpretation which the courts have placed on the extent of the terms and conditions which the federal government could impose on a province over t e r r i t o r y i t i s seeking to be included within i t s borders. Section 2: The Extent of Variation of P r o v i n c i a l  Constitutions Permitted under the B r i t i s h North America  Act, 1871T Generally, the c o n s t i t u t i o n a l v a r i a t i o n necessary to sustain an agreeable f e d e r a l / p r o v i n c i a l regime over o f f -shore o i l and gas development would primarily require the a b i l i t y of the federal government to secure to i t s e l f the categories of exclusive j u r i s d i c t i o n . The f i r s t category i s an ownership j u r i s d i c t i o n over a l l property other than o i l and gas, i n the waters and the resources i n those waters, 55 and the second category i s the l e g i s l a t i v e j u r i s d i c t i o n which would enable i t to continue to negotiate and enforce through federal l e g i s l a t i o n i n t ernational agreements i n o f f -shore areas. These variations w i l l be examined i n greater d e t a i l i n the next chapter, but i t i s e s s e n t i a l at t h i s point to conceptualize the variations contemplated by some of the conditions necessary to reach an amicable solution to the offshore resource controversy. The condition prece-dent, i n the f i r s t Procedure to using section 3 i s the ne-cessity for them to be an extension of p r o v i n c i a l boundaries. However, i t i s intended that only the o i l and gas within these boundaries would pass to the Province. Can the pro-cedure therefore be attacked since, the added t e r r i t o r y would d i f f e r from the o r i g i n a l p r o v i n c i a l t e r r i t o r y where the Province has complete l e g i s l a t i v e j u r i s d i c t i o n over and subject to the 1867 Act ownership of former federal Crown property within i t s borders. The reservation of waters and resources within the waters overlying the o i l and gas would continue the federal government's exclusive j u r i s d i c t i o n over sea coast f i s h e r i e s and a c t i v i t i e s within the waters even including possibly those related to the p r o v i n c i a l o i l and gas a c t i v i t i e s . Federal j u r i s d i c t i o n and the resources of those waters within e x i s t i n g p r o v i n c i a l boundaries, of course, must under B r i t i s h Columbia's constitution be a v a l i d exercise of a s p e c i f i c or residual federal power. 56 The federal government's retention as i s proposed i n t h i s Procedure of the overlying waters i n the offshore area would however be paramount to any p r o v i n c i a l j u r i s d i c t i o n . Confir-mation of the status that the federal government now holds i n the international community i s perhaps the most d i f f i c u l t v a r i a t i o n . Through t h i s v a r i a t i o n the federal government i s seeking assurance that i t could exercise a j u r i s d i c t i o n within the added t e r r i t o r y which i t could not otherwise exercise i n a province. Though the var i a t i o n s are intended to apply only to the added t e r r i t o r y , the f i r s t two catagories, i . e . reservations of residual land and water j u r i s d i c t i o n s , would vary the Province's entitlement under i t s c o n s t i t u t i o n to a l l property within i t s boundaries (subject to the federal-p r o v i n c i a l property d i s t r i b u t i o n under the B.N.A. Act, 1867) and the second category would vary the exclusive l e g i s l a t i v e j u r i s d i c t i o n of the Province by making i t subject to federal l e g i s l a t i v e powers beyond those set out i n the Province's Constitution. The second category i s a d i r e c t v a r i a t i o n of l e g i s l a t i v e j u r i s d i c t i o n , as opposed to an i n d i r e c t v a r i a t i o n as i s the case when land i s not transferred to the province. It i s therefore important to determine how the courts have dealt with challenges to the conditions set by the federal government pursuant to section 3, that have varied p r o v i n c i a l constitutions. 57 The cases on the B.N.A. Act, 1871 break into two groups: f i r s t , cases which arose out of a v a r i a t i o n on 3 8 ' ' l e g i s l a t i v e j u r i s d i c t i o n on admission of a t e r r i t o r y as a province (sections 2 and 4); and, secondly, variations of p r o v i n c i a l l e g i s l a t i v e j u r i s d i c t i o n imposed on t e r r i t o r y added to a province (section 3). I t i s important to examine both l i n e s of j u d i c i a l decisions, since any r e s t r i c t i o n on the a b i l i t y of the federal government to vary the co n s t i -tutions of new provinces pursuant to sections 2 or 4 of the Act, would probably apply to terms and conditions imposed i n r e l a t i o n to t e r r i t o r y added to exist i n g provinces. The decision can also be broken into types of l e g i s l a t i v e j u r i s -d i c t i o n . F i r s t l y , what may be referred to as pure l e g i s l a t i v e a b i l i t y which stems from the d i s t r i b u t i o n of l e g i s l a t i v e a b i l i t y under sections 91 and 92 of the B.N.A. Act, 1867, and secondly, i n c i d e n t a l l e g i s l a t i v e a b i l i t y , that stems from a transfer of property and i n p a r t i c u l a r land under the l e g i s l a t i v e d i v i s i o n of t h i s section and other provisions of the B.N.A. Act, 1867. Both types of l e g i s l a t i v e j u r i s d i c t i o n , p r o v i n c i a l and federal, w i l l be considered i n the terms of transfer under th i s Procedure. I t w i l l therefore be important that the cases on the B.N.A. Act, 1871, support terms and conditions that a f f e c t both types of j u r i s d i c t i o n . 58 Section 2.1: v a r i a t i o n of the terms of admission of a province Variations on admission of a t e r r i t o r y were f i r s t con-sidered by the Privy Council i n Brophy and Others v. The 39 Attorney General of Manitoba . The v a r i a t i o n concerned differences between the education provisions of the B.N.A. Act, 1867 and the provisions of The Manitoba Act, 1870 respecting the same subject - a v a r i a t i o n which can best be described as a v a r i a t i o n of a "pure" l e g i s l a t i v e j u r i s -d i c t i o n . The B.N.A. Act, 1867 provided, i n section 93(3), for appeals to the Governor General i n Council from the decisions of "Prov i n c i a l Authorities" i n cases where the decisions of the P r o v i n c i a l Authorities were considered to be contrary to the rights or p r i v i l e g e s given the Protes-tant and Catholic minorities under t h i s same section. How-ever, The Manitoba Act, 1870, i n section 22(2), i n addition to permitting appeals from decisions of "Provincial Authorities", provided for appeals from decisions"... of the Legislature of the Province". The Brophy case concerned an appeal to the Governor General i n Council from two statutes passed by the Legislature of Manitoba. The Province maintained that the federal government could not vary section 22 of the Manitoba Act, 1870, to provide for appeals from decisions of the province's l e g i s l a t u r e r e f l e c t e d i n the passage of two p r o v i n c i a l statutes which were the basis of the appeal. 59 Counsel for the Attorney-General of Manitoba argued that laws i n r e l a t i o n to education were within the exclusive powers of the p r o v i n c i a l Legislature and that i f an appeal were allowed, i t would be tantamount to denying the r i g h t inherent i n a l l l e g i s l a t u r e s of repealing or a l t e r i n g i t s own l e g i s l a t i o n . In comparing section 22(2) of The Manitoba Act, 1870, with,section 93(3) of the B.N.A. Act, 1867, the Court held: ...In view of t h i s comparison, i t appears to • t h e i r Lordships impossible to come to any other conclusion than the 22nd section of the Manitoba Act was intended to be a substitution for the 93rd section of the B r i t i s h North America Act... I t imposes a l i m i t a t i o n oh the  l e g i s l a t i v e powers conferred. Any enactment contravening i t s provisions i s beyond the competency of the Pr o v i n c i a l Legislature, and therefore n u l l and void... I t must be remembered that the Pr o v i n c i a l L e g i s l a t i v e power i s s t r i c t l y l i m i t e d . I t can only deal with matters declared to be within i t s cognizance by the B r i t i s h North America Act as varied by the Manitoba Act. In a l l other cases l e g i s l a t i v e authority rests with the Dominion Parliament. 41 (emphasis added) The Court therefore had no problem i n destroying the myth that p r o v i n c i a l l e g i s l a t i v e authority emanates solely from the B.N.A. Act, 1867. The Court implied that t h i s i s only the case, where the province's c o n s t i t u t i o n has not varied the powers given provinces generally under the 1867 Consti-t u t i o n a l Act. The B.N.A. Act, 1867 then determines p r o v i n c i a l j u r i s d i c t i o n only to the extent that i t i s adopted by the pr o v i n c i a l constitution. 60 Not s p e c i f i c a l l y argued before the Court i n Brophy was whether the Parliament of Canada, i n exercising i t s authority to es t a b l i s h new provinces given i t by the B.N.A. Act, 1871, could modify, as i t did, section 93 of the fun-damental Act of 1867. This precise question was referred to 43 the Court of Appeal of Alberta, i n Rex v. Ulmer. This case challenged once again the federal govern-ment's a b i l i t y to modify section 93 of the B.N.A. Act, 1867, as i t did by section 17 of The Alberta Act, 1905; the con-s t i t u t i o n a l act of the Province of Alberta, passed under the authority of section 2 of the B.N.A. Act, 1871. I t was apparently believed that i f section 93 stood unaltered and applicable to Alberta i n i t s o r i g i n a l form the class of persons to whom the defendant i n t h i s case belonged would have enjoyed more extensive rights or immunities as against the l e g i s l a t i v e power of the state than those given them under section 17. The Alberta Act, 1905, generally followed The Manitoba Act, 1870. Section 17 of the Alberta Act i s similar to section 22 of The Manitoba Act, and provides that section 93 of the B.N.A. Act, 1867 should apply with cer t a i n exceptions. The r e s u l t , described by the court: 61 ..was to give the whole f i e l d of l e g i s l a t i o n upon the subject of education to the provin-c i a l Legislature because no general power  with respect to any part of that f i e l d was  given to or retained by the federal Parliament. 44 (emphasis added) In dealing with the authority of the federal Parliament to pass section 17, the Court concentrated on the meaning of "constitution" as used i n section 2 of the B.N.A. Act, 1871. Mr. Justice Stuart of the Supreme Court of Alberta held: But one p r i n c i p l e seems c l e a r : An amendment which fixes or a l t e r s the l i n e of demarcation between the f i e l d of p r o v i n c i a l and that of federal l e g i s l a t i v e j u r i s d i c t i o n cannot possibly be'created as part merely of the "constitution" of a province. Obviously sec. 92. subsec. 1, was never intended to give p r o v i n c i a l Legislatures power to a l t e r the  li n e of demarcation as l a i d down i n sec. 91, and 93. The f i x i n g of that l i n e was undoubtedly part of the constitu t i o n of Canada as a whole, not part of the constitution of a province by i t s e l f . Adopting t h i s interpretation of the word "conr-s t i t u t i o n " as applied to a province and applying i t to sec. 2 of The B.N.A. Act, 1871, i t would follow, and I am of the opinion that i t must follow, that although the federal Parliament may provide for the "constitution" of a new province which i t erects i t cannot  under that authority a l t e r the l i n e of demar- cation between the federal and p r o v i n c i a l l e g i s l a t i v e powers. For that i s not f i x i n g the "constitution" of the province merely. It i s f i x i n g the constitution of Canada. 45 (emphasis added) 62 Did t h i s mean that a f t e r a t e r r i t o r y becomes a province or part of a province the federal government can only r e s t r i c t powers given to the province but not reserve to i t s e l f the exclusive exercise of powers i t held p r i o r to the t e r r i t o r y becoming a province? Or that the federal government can modify the B.N.A. Act, 1867 only to the extent necessary to adapt i t to l o c a l circumstances? With regard to offshore o i l and gas, would t h i s mean that Canada could not reserve to i t s e l f , for example, the r i g h t to implement t r e a t i e s concerning the t e r r i t o r i a l seas and continental shelf that r e l a t e to o i l and gas development? However, i n reaching t h i s decision i n t h i s case, Justice Stuart held that: ...by sec. 2 of the Act of 1871 i t did not intend that, under the power to provide a pr o v i n c i a l c onstitution, the federal Parliament might decide upon such s l i g h t l y d i f f e r e n t r e s t r i c t i v e l i m i t a t i o n s i n protection of the righ t s of minorities with respect to l e g i s l a t i o n as might be deemed just i n the circumstances of the p a r t i c u l a r time and t e r r i t o r y . 46 and i t was f o r these narrow reasons that the variatio n s outlined i n section 17 of the Alberta Act were upheld. This case would cause problems i n interpreting the extent to which section 3 could be used to impose terms and conditions on p r o v i n c i a l l e g i s l a t i v e j u r i s d i c t i o n , i f 6 3 the court's discussion i n t h i s case of the extent of v a r i a t -ions permitted i n the constitutions of new provinces, had not been i m p l i c i t l y overruled by subsequent decisions of higher courts. This case did not refer to the Brophy decision though reference was made to Clement's Canadian Constitution and Lefroy's Canada's Federal System. In both 47 these texts the authors discuss the Brophy case . Curiously enough higher courts which subsequently considered the B.N.A. Act, 1871 do not make reference to the Ulmer case, which perhaps r e f l e c t s t h i s author's view that the case was c o r r e c t l y decided but for the wrong reasons. Furthermore, though th i s case questioned federal authority there i s no indi c a t i o n of the Attorney General being n o t i f i e d of the action. The report of the case indicates that only counsel for the defendant and p r o v i n c i a l Crown presented arguments to the court. For these reasons t h i s decision should be regarded more for i t s conclusion rather than for i t s reasons. The question of whether section 17 of the Alberta Act was i n whole or i n part u l t r a v i r e s the Parliament of Canada was again raised i n conjunction with the proposed transfer 48 of natural resources to Alberta, Saskatchewan and Manitoba In a reference to the Supreme Court of Canada by the Attorney-General of Canada, the reasons for reference (hereafter referred to as the 1927 Reference) were stated i n the order as follows: 64 ...as a r e s u l t of certain negotiations looking to the transfer to the province of Alberta of the public lands within the province, now vested i n the Crown and administered by the Government of Canada for the purposes of Canada, an agreement was entered into on the 9th January, 1926, between the governments of the Dominion of Canada and of the Province of Alberta, respectively, whereby i t was agreed that ce r t a i n provisions of the Alberta Act should be modified to the intent that a l l Crown lands...within the province... af t e r coming into force of the said agreement, belong to the province... Notice was given by resolution that a b i l l would be introduced into Parliament, at i t s present session, to approve and give e f f e c t to the said agreement as so modified, but a question having been raised as to the con s t i t u t i o n a l v a l i d i t y of section 17 of the Alberta Act, r e l a t i v e to the subject of edu-cation and schools within the said province, i t was decided not to proceed with the proposed l e g i s l a t i o n as drafted u n t i l t h i s question of doubt could be au t h o r i t a t i v e l y s e t t l e d . 4 9 This case i s important from two p e r s p e c t i v e s : f i r s t l y h i s t o r i c a l l y , as to why the 1930 National Resource Agree-ments could not have been passed under section 3 of the B.N.A. Act 1871 as terms and conditions on an " a l t e r a t i o n of t e r r i t o r y " within the province, and secondly, as to d e f i n i t i v e l y stating that there are no li m i t a t i o n s on the terms and conditions upon which a province and the federal government may agree i n d i s t r i b u t i n g l e g i s l a t i v e power under the B.N.A. Act, 1871. As to the f i r s t point, members of the House of Commons were not clear as to the rationale underlying the 1927 65 Reference. The member of Parliament for Toronto-Northwest commented: . . . I t has been admitted here, as well as by the Department of J u s t i c e , that the v a l i d i t y of clause 17 of the Alberta Act i s not i n dispute. The Minister of the Interior also informed the House that neither the federal nor the p r o v i n c i a l authorities were contesting i t s v a l i d i t y ... clause 17 which was made applicable to them (provinces) was taken from the old Northwest T e r r i t o r i e s Act. The act has been on the statute books for over twenty years and the v a l i d i t y u n t i l recently was never disputed u n t i l some implied doubts were expressed by some unknown persons to the Minister of J u s t i c e . 50 The connection between t h i s reference and the necessity for r a t i f i c a t i o n by the Imperial Parliament of the 1930 Resource Agreements i s alluded to by Mr. Bennett (leader of the Opposition and member - Calgary West) during the debate on the natural resources transfer. He stated at that time: ...As has been suggested to me, there i s a clause i n the agreement that was submitted to t h i s house i n 1926 with respect to the r a t i f i c a t i o n of the l e g i s l a t i o n by the Imperial Parliament. This was inserted because i t i s necessary from the c o n s t i t u t i o n a l standpoint. 52 E a r l i e r i n the same debate Mr. Bennett queried actions by the government to have the Privy Council review the Supreme Court's decision on the Reference, which had been 66 decided i n favour of the federal government, thus confirming the v a l i d i t y of section 17 of the Alberta Act. Mr. Bennett's question to the government was as follows: ...Why i s your government now so anxious to go to the Privy Council on appeal from a judgment i n i t s own favour - a judgment i n i t s own favour mark you? ...The judgment of the Supreme Court of Canada was a unanimous judgment i n support of the federal government's contention as to the proper int e r p r e t a t i o n of section 17 of the Act of 1905... The pos i t i o n i s that the Dominion government made an application for leave to appeal to the Privy Council. I t has not yet received that leave, and when the application for leave was made to the Privy Council, the presiding Lord asked who was the appellant, and as they did not have any appellant except the Dominion government, which could not appeal from a judgment i n i t s own favour, they have apparently been looking ever since for an appellant. 53 There i s no sa t i s f a c t o r y answer as to why the federal government was so anxious to have t h i s case brought before the Privy Council. Was i t seeking support from the Court that c o n s t i t u t i o n a l amendment, as was being proposed by the 1930 Resource Agreements, was not necessary; was i t seeking confirmation that the authority to pass the reserved natural resources to the provinces was within federal competence i f the provinces concurred i n the a l t e r a t i o n . Unfortunately t h i s issue w i l l have to remain i n the realm of speculation. The second aspect of the 1927 Reference has already been alluded to: that i s , what inter p r e t a t i o n should be 67 placed on the terms which Canada could impose on the con s t i -tution of a new province? Mr. Justice Newcombe, who delivered the unanimous judgment of the Supreme Court i n th i s reference, did not refer to either Brophy or Ulmer. Curiously enough, though the Attorney-General of Saskatchewan and the Attorney-General of Alberta were given notice of the hearing, neither f i l e d a factum, though each of them announced t h e i r intention to appear but not to take part i n the argument. The only factum f i l e d was by the Attorney-General of Canada. The Court, therefore, exercised 54 i t s d i s c r e t i o n pursuant to section 60 of the Supreme Court Act, and appointed l e g a l counsel to argue the case i n opposition. The question before the Court, as mentioned above, was whether section 17 of the Alberta Act, 1905 was i n whole or i n part u l t r a v i r e s of the Parliament of Canada. 55 In support of t h i s contention, counsel argued that the T e r r i t o r i e s became c o n s t i t u t i o n a l l y incapable, because of the provisions of section 146 of the B.N.A. Act, 1867, of incorporation into the Union as provinces upon terms or conditions d i f f e r e n t from those which applied equally to Ontario, Quebec, Nova Scotia and New Brunswick. The Court held on t h i s issue that the powers conferred by section 146 of the B.N.A. Act, 1867 were exhausted or spent so far as 68 the T e r r i t o r i e s were concerned, by t h e i r admission under the Imperial Order-in-Council of July 23, 1870. The Court" 1" indicated that section 17 of the Alberta Act, 1905 was necessary to carry forward the rights and p r i v i l e g e s with respect to separate schools, or r e l i g i o u s i n s t r u c t i o n i n public or separate schools that had existed i n the t e r r i t o r y pursuant to the North-West T e r r i t o r i e s Acts and T e r r i t o r i a l Ordinances of 1901, p r i o r to the Union. However, any doubts that these l i m i t a t i o n s were r e s t r i c t e d to situations of t r a n s i t i o n a l powers respecting acquired rights are removed by Mr. Justice Newcombe, who stated: ...at the time of the establishment of the province of Alberta, the Parliament of Canada had the power to define and to regulate the l e g i s l a t i v e powers which were to be possessed by the new province. I t i s , I think, as impossible as i t i s expedient to cast any doubt upon the generality and comprehensive nature of c o n s t i t u t i o n a l powers conferred for peace, order and good government, and I do not f i n d either i n the B r i t i s h North America Act of 1867 or of 1871, anything expressed or implied which limited the power of the Parliament of Canada i n 1905 to define the constitution and powers of the provinces which were at that time established and constituted within the T e r r i t o r i e s . 57 The f i n a l two cases deal with terms and conditions which relate to the second category of l e g i s l a t i v e j u r i s -d i c t i o n - i n c i d e n t a l l e g i s l a t i v e a b i l i t y , stemming from the 69 d i s t r i b u t i o n of property under the 1867 Constitution, to either the provinces or the federal government. In Attorney-General for Alberta v. Attorney-Genera1 5 8 for Canada , (the 1928 Escheats Case) the Privy Council on appeal from the Supreme Court of Canada, was asked to deter-mine the rights of the Dominion and the Province of Alberta i n escheats and bona vacantia i n the Province. The Privy " . 5 9 Council had held i n Atto rney-Geriera1 of Ontario v. Mercer that escheats were r o y a l t i e s from the land and thus reverted to the Province of Ontario pursuant to section 109 of the B.N.A. Act, 1867 which provided that . . '.'All Lands, Mines, Minerals, and Royalties... s h a l l belong to the several Provinces..." As was indicated e a r l i e r i n t h i s paper section 21 of the Alberta Act, 1905, did not pass Crown lands to the province when i t was created. This case con-firmed the a b i l i t y of the federal government to a l t e r the l e g i s l a t i v e d i s t r i b u t i o n by retaining Crown lands and there-fore i n c i d e n t a l l y retaining the r i g h t to l e g i s l a t e with respect to such property pursuant to Section 91(1) (renumbered 1A by the B.N.A. Act (No. 2) 1949) 6 0 of the 1867 Constitution i . e . , the Public Debt and Property. In interpreting section 21 of The Alberta Act, 1905, the Privy Council held that Alberta was placed i n the same pos i t i o n as other provinces i n regard to property 70 ... except as varied by the statute, either by express terms or reasonable implication. Sect. 21 i s only sensible on t h i s hypothesis, for unless i t was assumed that i t was required for the purpose of preserving the Crown righ t s i n the property to which i t r e l a t e s , i t would be meaningless, but i f that be once assumed i t follows that the property to which i t does not relate i s vested i n the Crown, not for the purposes of Canada, but for the purposes of the Province of Alberta. 61 The next case set aside a l l doubts on the extent of the federal powers to l i m i t p r o v i n c i a l j u r i s d i c t i o n by a l t e r i n g as a term of entry into the Union the property d i s t r i b u t i o n under the 1867 const i t u t i o n . In Reference on 6 2 Saskatchewan Natural Resources (the 1930 Saskatchewan Natural Resources case) the Supreme Court of Canada was asked to decide whether the federal government has to account for the use of the land i t reserved "for the purpose of Canada" pursuant to section 21 of The Saskatchewan Act, 1905, after the transfer of the natural resources to the Province under the 1930 Resource Transfer Agreements. The Province of Saskatchewan contended that the authority of the federal government to constitute the Province of Saskatchewan depended upon the B.N.A. Act, 1871, and they submitted "(t)here i s nothing i n the Act authorizing the Dominion to hold the public domain for the purpose of Canada"^ The p r o v i n c i a l argument referred to the d i s t i n c t i o n between l e g i s l a t i v e j u r i s d i c t i o n and proprietary r i g h t s , a position 64 quite c l e a r l y recognized under the Canadian constit u t i o n 71 The province contended that the conferring of one affords no presumption of the transfer of the other. It was then suggested that the federal government had no capacity to enjoy the b e n e f i c i a l i n t e r e s t i n any of the reserved lands and was limited to the benefit from the property d i s t r i b u t e d to the federal Crown under the 18 67 Constitution. Mr. Justice Newcombe, who had sat on the Supreme Court's hearings of the 1927 Reference and the 1928 Escheats Case, applied the Privy Council decision i n the Escheats Case and went on to hold: ...And i t follows also that the l e g i s l a t i o n of the Dominion was paramount and unaffected by any powers granted to the l e g i s l a t u r e or the l o c a l government of the T e r r i t o r i e s , or any t e r r i t o r i a l exercise of those powers which might prove to be repugnant. 65 (emphasis added) The implications of t h i s statement to a l e g i s l a t i v e d i v i s i o n over offshore resources i s obvious. The federal power to reserve property i n constituting new p r o v i n c i a l t e r r i t o r y and to simultaneously preserve federal j u r i s d i c t i o n over such property was upheld i n t h i s case. However, t h i s case dealt with a v a r i a t i o n of the o r i g i n a l c o n s t i t u t i o n of a Province. What must now be examined i s whether there i s any reason to believe that federal powers are any less as regards the imposition of terms on the extension of p r o v i n c i a l t e r r i t o r y under section 3 of the B.N.A. Act, 1871. The next 72 section deals with cases concerning t h i s issue. Section 2.2 - variations r e l a t i n g to the con s t i t u t i o n appliable to t e r r i t o r y added to an established province The key factor i n appreciating the d i s t i n c t i o n between these variations and those discussed i n the previous section i s that once a province i s created i t i s governed not sol e l y by the B.N.A. Act, 1867 but also by i t s own terms of entry, that i s the province's p a r t i c u l a r c o n s t i t u t i o n . The f i r s t section has shown that a province's l e g i s l a t i v e a b i l i t y i s not necessarily determined by the provisions of the B.N.A. Act, 1867, since the province's constitution may have varied by i t s terms of admission. The second group of cases which consider, variations r e l a t i n g to the constitution applicable to t e r r i t o r y added to an established province must therefore examine the con s t i t u t i o n a l powers afforded to provinces under the 1867 Constitutional Act as such powers are varied by the provin-c i a l c o n stitution, declared pursuant to the B.N.A. Act, 1871. The B.N.A. Act, 18 71 deals both with the authority of the federal government to declare p r o v i n c i a l constitutions and to add t e r r i t o r y to provinces on terms and conditions. While the declared p r o v i n c i a l constitution cannot thereafter be altered except by the Imperial Parliament, (s.6 B.N.A. Act, 1871) t h i s does not apply when t e r r i t o r y i s added to a province. 73 The province i n t h i s l a t t e r case can agree to a v a r i a t i o n of i t s c onstitution through the terms and conditions imposed on the added t e r r i t o r y pursuant to section 3, of the B.N.A. Act, 1871. The variations considered i n t h i s section are variations of p r o v i n c i a l l e g i s l a t i v e powers under the B.N.A. Act, 18 67, as may be varied by the province's terms of entry, the sum t o t a l of which i s the province's c o n s t i t u t i o n . Since a l l cases i n t h i s section concerning variations of pro v i n c i a l constitutions on additions to p r o v i n c i a l t e r r i t o r y arise out of a common act si t u a t i o n , the issues a r i s i n g out of these cases have received a thorough consideration by the courts. The cases arose out of a provision i n The Manitoba Act, 1870 which r e s t r i c t e d p r o v i n c i a l taxing power over the lands of the Canadian P a c i f i c Railway (C.P.R.). This r e s t r i c t i o n did not appear i n the Manitoba Act, 187 0, and did not apply to other than the added t e r r i t o r y . The Parliament of Canada i n 1881 following a p e t i t i o n of the Legislature of Manitoba, enlarged the Province of Manitoba by the addition of.a large t e r r i t o r y which, u n t i l then, had been part of the North-Western T e r r i t o r i e s . The addition.to the Province of Manitoba was made by concurrent 6 7 l e g i s l a t i o n of Canada and the Province , enacted pursuant to section 3 of the B.N.A. Act 1871 (hereinafter referred to 74 as the "Manitoba Boundaries Act 1881"). The terms and conditions agreed to and incorporated i n the l e g i s l a t i o n of the Dominion and the Province extended to the new t e r r i t o r y added to Manitoba, a l l Dominion l e g i s l a t i o n which had been since the creation of Manitoba applicable to i t , 6 8 and provided i n section 2 : The said increased l i m i t and the t e r r i t o r y thereby added to the Province of Manitoba s h a l l be subject to a l l such provisions as may have been or s h a l l hereafter be enacted respecting the Canadian P a c i f i c Railway and the lands to be granted i n aid thereof. A month e a r l i e r Canada had r a t i f i e d by statute"^ a contract between the Dominion government and the Canadian P a c i f i c Railway. Clause 16 of the contract read: ...the company s h a l l be forever free from taxation by the Dominion or by any province hereafter to be established or by any municipal corporation therein, and the lands of the company i n the North-Western T e r r i t o -r i e s u n t i l they are either sold or occupied s h a l l also be free from such taxation for twenty years aft e r the grant thereof from the Crown. 7 0 The issue i n a l l the following cases: Canadian 71 P a c i f i c Railways Company v. Burnett , The Rural Municipality of Cornwallis v. Canadian P a c i f i c Railway 72 7 3 Company , North Cypress v. C.F.R. and the Manitoba 7 4 Reference 1958 , was whether the Province of Manitoba, 75 through i t s municipalities could tax the in t e r e s t of the Canadian P a c i f i c Railway, i n the lands the federal govern-ment intended to grant them for the construction of a railway. A l l the cases i n one form or another challenged the federal government's authority to exempt from p r o v i n c i a l taxation lands that i f they had been within the o r i g i n a l boundaries of the province would have been subject to taxation. P l a i n l y stated: could the federal government 75 l i m i t the l e g i s l a t i v e authority of the Manitoba Legislature i n t h i s manner. The p a r t i c u l a r p r o h i b i t i o n on the taxation by Manitoba of C.P.R. lands, dealt with by these cases, touches both types of l e g i s l a t i v e j u r i s d i c t i o n mentioned e a r l i e r , but r e a l l y amount to a di r e c t r e s t r a i n t on the province's l e g i s l a t i v e j u r i s d i c t i o n . The province could c e r t a i n l y have taxed in t e r e s t s i n lands within i t s boundaries. Under section 92(2) of the B.N.A. Act, 1867, provinces have the power of "Direct Taxation within the Province..." The o r i g i n a l c o n s t i t u t i o n of the province, the Manitoba Act, 1870, did not vary t h i s power and incorporated i t as a term of entry placing i t within the exclusive l e g i s l a t i v e j u r i s d i c t i o n of Manitoba. In a l l these cases there was no question that the C.P.R. lands were within the Province of Manitoba. Since they were not "ungranted lands" reserved under s. 21 of the Manitoba Act, 1870. Therefore the federal government, i n asking Manitoba 76 to consent to having i t s ; taxing power restrained over the C.P.R. lands, was asking the Province to consent to a l i m i t a t i o n of i t s l e g i s l a t i v e j u r i s d i c t i o n as a condition to the federal government trans f e r r i n g additional lands to the Province. In Canadian P a c i f i c Railway Company v. Burnett, an agreement for sale by the C.P.R., on default, preserved the exemption afforded C.P.R. lands under section 16. Mr. Justice Killam, r e f e r r i n g to clause 16 and the statutes extending the l i m i t s of the province, (approved by the Supreme Court of Canada) said: The provisions making the added t e r r i t o r y subject to the enactments of Parliament respecting the Canadian P a c i f i c Railway, and the lands to be granted i n aid thereof, appear to me to be clear l i m i t a t i o n s upon the  l e g i s l a t i v e authority of the Legislature of  Manitoba and not merely s t i p u l a t i o n s i n a contract or treaty which might be broken by that Legislature. 76 (emphasis added) Mr. Justice Bain, i n thi s same case, held, a f t e r r e f e r r i n g to the B.N.A. Act, 1871: The Legislature having agreed upon the terms and conditions, and the Parliament of Canada having increased the l i m i t s subject to these terms and conditions, i t seems to follow at once, that the terms and conditions s p e c i f i e d become, as i t were, part of the constitu t i o n of the added t e r r i t o r y , subject to which the Pr o v i n c i a l Legislature alone can exercise j u r i s d i c t i o n , and which i t cannot a l t e r or vary without the consent of the Imperial 77 or Dominion Parliaments, any more than i t could any of the provisions of the Manitoba Act. .. 77 The next case, The Rural Municipality of  Cornwallis v. The Canadian P a c i f i c Railway Company, was not a d i r e c t attack on the federal government to r e s t r i c t the province's taxing powers, but rather questioned the manner by which the r e s t r i c t i o n was imple-mented. The Province argued that the exemption was not ef f e c t i v e since the guarantees given the C.P.R. were contained i n a contract between the Company and the federal government and were not part of a l e g i s l a t i v e enactment, contemplated by section 2 of the Manitoba Act, 1881. While the court rejected Manitoba's p o s i t i o n a very important point was raised i n the course of counsel's argument though not commented upon by the court. The report of the case i n d i -cates that The Honourable Joseph Martin, Attorney-General of the Province ;of Manitoba, i n the course of his arguments i n support of the a b i l i t y of the municipality to tax, stated: The powers of Manitoba were derived from the Manitoba Act. Imperial Act of 1871, c.28. No power was given to the Province of Manitoba to agree to the exemptions. When the t e r r i t o r y was added, i t became f u l l y subject to the authority. 78 78 I t was now in e v i t a b l e , that the issue of the federal government's authority to impose the conditions on t e r r i t o r y added to a province which derogated from the province 1s o r i g i n a l constitution, would be squarely raised., before the courts. In The Rural Municipality of North Cypress et a l . v. Canadian P a c i f i c Railway Company, the p l a i n t i f f municipal taxing authority argued: By the Manitoba Act, 33 V i c , c.3 (D.1870), s.2 i t i s provided that the provisions of the B.N.A. Act s h a l l be applicable to Manitoba, except where varied by the former. By B.N.A. Act, s.92, s-ss. 2 and 8, Pr o v i n c i a l Legislatures are given power to make laws on d i r e c t taxation within the Province i n order to the r a i s i n g of a revenue for P r o v i n c i a l purposes; and Municipal i n s t i t u t i o n s i n the Province. These are unchangeable. By 34 and 35 V i c t . , C.28, s.3, (Imp.) the Parliament of Canada may, with the consent of the Legislature of any Province, a l t e r the l i m i t s of a Province upon such terms and conditions as may be agreed to by the Legislature. The words "terms and conditions" must mean subject to the B.N.A. Act and the Manitoba Act. Section 6 l i m i t s the powers of the Dominion Parliament. The condition l i m i t i n g the power of l e g i s l a t i o n as the C.P.R. lands was beyong the power of the Dominion Parliament, and of course beyond the power of the Local Legislature. 79 Mr. Justice Killam, now Chief J u s t i c e , held i n the Court of King's Bench for Manitoba that the decision of 8 0 the Supreme Court of Canada i n Cornwallis s e t t l e d any question on the e f f e c t of the Manitoba Boundaries Act, 1881, i n l i m i t i n g the powers of the province. The Chief Justice stated: ...The terms and conditions upon which the extension of the boundaries of Manitoba was made by the Dominion and accepted by the Province imposed c o n s t i t u t i o n a l l i m i t a t i o n s 79 upon the authority of the P r o v i n c i a l Legislature with respect to the added t e r r i t o r y , d i f f e r e n t from those e x i s t i n g  with respect to the o r i g i n a l Province. ...The r e s t r i c t i o n i n the 6th section of the B r i t i s h North America Act, 1871 upon the power of the Parliament of Canada to a l t e r the Act establishing the Province of Manitoba, was subject to an exception of the provisions i n the 3rd section r e l a t i n g to the a l t e r a t i o n of P r o v i n c i a l boundaries. The expression "terms and conditions" i n the l a t t e r section was apt to include l i m i t a t i o n s of P r o v i n c i a l powers, and was accepted by both the Dominion Parliament and the P r o v i n c i a l Legislatures as appropriate for the purpose. 81 (emphasis added) The Supreme Court of Canada on appeal of the decision i n North Cypress, upheld the contention that the terms and conditions were c o n s t i t u t i o n a l l i m i t a t i o n s of the powers of the Legislature of Manitoba i n respect of the added t e r r i t o r y . In his judgment i n the Supreme Court, Mr. Justice Davies stated: As regards the l i m i t a t i o n s placed upon the l e g i s l a t i v e powers of Manitoba with respect to the t e r r i t o r y added to that province by the l e g i s l a t i o n of 1881, I have ho doubt that the terms and conditions on which i t was provided i n the 3rd section of the B.N.A. Act of 1871, that the Parliament of Canada might with the consent of the l e g i s l a t u r e of any province agree for the increase or a l t e r a t i o n of the l i m i t s of such province were not to be confined to small matters f i n a n c i a l or otherwise as between the province and the Dominion but' were broad enough to cover any e x i s t i n g l e g i s l a t i o n  already applicable to the t e r r i t o r y to be  added to the province and were, as used i n the l e g i s l a t i o n adding that t e r r i t o r y to Manitoba, intended to embrace and did embrace the Dominion l e g i s l a t i o n r e l a t i n g 80 to the Canadian P a c i f i c Railway and the lands granted i n and of i t s construction. I f u l l y  agree With the Chief Justice of the court  below that i t was a co n s t i t u t i o n a l l i m i t a t i o n  upon the powers of the p r o v i n c i a l l e g i s l a t u r e  quoad t h i s added t e r r i t o r y . The extent of  such l i m i t a t i o n i s of course to be determined  by i t s language. 82 (emphasis added) The decisions very c l e a r l y indicate that a province can agree to a r e s t r i c t i o n on the l e g i s l a t i v e powers i t w i l l . exercise over t e r r i t o r y added to the o r i g i n a l pro-v i n c i a l boundaries. The references by the courts to section 6 of the B.N.A. Act, 1871, c l e a r l y regard the conditions as determining the constitu t i o n for the added t e r r i t o r y . The courts have therefore accorded to the federal parliament i n setting the conditions on which a province w i l l administer t e r r i t o r y added to i t s boundaries the same powers the federal Parliament can exercise i n determining the o r i g i n a l con-s t i t u t i o n of a province. This power was described by Mr. Justice Newcombe i n the 1927 Reference as follows: ...'the Parliament of Canada had plenary powers of l e g i s l a t i o n as large and of the same nature as those of the Parliament of the United Kingdom i t s e l f ; and, thus construed, so long as there was no repugnancy to an Imperial Statute, there was no l i m i t , operating within the T e r r i t o r i e s , to the l e g i s l a t i v e power which the Dominion might exercise for t h e i r administration, peace, order and good government, while they continued to be T e r r i t o r i e s , or, at the time of the establishment of hew provinces therein, for the constitu t i o n and administration of any 81 such province, and for the passing of laws for the peace, order and good government thereof, and for i t s representation i n the Parliament of Canada. 83 (emphasis added) This statement was s p e c i f i c a l l y approved by the 84 Supreme Court of Canada i n the 1958 Manitoba Reference , which also confirmed Burnett, Cornwall i s and North Cypress. Mr. Justice Rand Ijeld i n the 1958 Manitoba Reference, (Cartwright, J. concurring): I t has already been held by the J u d i c i a l Committee i n Attorney-General of Saskatchewan v. Can. Pacif. Rlwy, Co. (1953) A.C. 594, approving Reference re Constitutional V a l i d i t y of section 17 of the Alberta Act (1927) S.C.R. 364 that i n the constitu t i o n of Saskatchewan, which i n t h i s respect i s i d e n t i c a l with that of Alberta, a reservation to that e f f e c t was v a l i d ; both are provinces set up under the powers conferred upon Parliament by s. 2 of the B r i t i s h North America Act, 1871. That section provides for vesting i n new provinces power to pass laws for t h e i r "peace, order and good government:, s. 3 enables the a l t e r a t i o n of p r o v i n c i a l l i m i t s oh "such terms and conditions as may  be agreed to" '. That these conditions embrace the preservation of one of the terms of f u l f i l l i n g such a v i t a l c o n s t i t u t i o n a l obligation as that being carried out i n 1881 seems to me to be too clear for a debate. The reservation i n the case of the new provinces was a d i r e c t l i m i t a t i o n of taxing  power; and I am unable to di s t i n g u i s h that  e f f e c t when confined to a portion of a  province from i t s a p p l i c a b i l i t y to the whole. 85 (emphasis added) This statement c l e a r l y extends the a b i l i t y to a f f e c t the pr o v i n c i a l constitution to t e r r i t o r i e s added to the 82 Province pursuant to section 3 of the B.N.A. Act, 1871. Mr. Justice Locke, held i n t h i s same case: ...Sections 2 and 3 of the B r i t i s h North America Act of 1871, i n my opinion, empower Parliament to impose the r e s t r i c t i o n on the powers of taxation of the province of Manitoba as i t s l i m i t s were defined by the l e g i s l a t i o n of 1881 and the l a t t e r section empowered the l e g i s l a t u r e to agree to t h i s as one of the terms upon which the addition to i t s boundaries were made and to pass the pr o v i n c i a l l e g i s l a t i o n that year. 86 Mr. Justice Locke could not have better described the sit u a t i o n e x i s t i n g today regarding a possible boundary extension to add offshore t e r r i t o r y to B r i t i s h Columbia. The next section w i l l attempt to summarize the conclusions that the various courts made i n the Preceeding cases. Section 2.3 - summary of l e g i s l a t i v e variations The courts have c l e a r l y decided that the B.N.A. Act, 1871 should be afforded as l i b e r a l an inter p r e t a t i o n as possible. The fact that many of the terms, either i n the o r i g i n a l c onstitution as imposed on a transfer of t e r r i t o r y may have r e f l e c t e d the circumstances of the day should not be taken as a l i m i t i n g f a c t o r . While education or the building of a railway may have motivated the conditions i n e a r l i e r times,, the si t u a t i o n today over offshore resources 83 j u s t i f i e s comparable conditions when considering the terms on which t e r r i t o r y should be added to a.province. The Supreme Court described t h i s s i t u a t i o n i n the Offshore Minerals Reference as follows: ...The mineral resources of the lands underlying the t e r r i t o r i a l sea are of concern to Canada as a whole and go beyond l o c a l or p r o v i n c i a l concern or i n t e r e s t s . 87 The same was said about the special tax status afforded the C.P.R. when viewed i n the context of the government's undertaking to bui l d a r a i l r o a d across Canada. One f i n a l case, the decision of the Privy Council the Saskatchewan C.P.R. Reference (1953) should be referred to before attempting a summary of the extent of variations permitted under section 3. While the case f a l l s into the f i r s t group of cases mentioned on varia t i o n s , since i t concerns a v a r i a t i o n of the terms of entry, i t arises out of the same fact s i t u a t i o n of the second group of cases, the r e s t r i c t i o n on p r o v i n c i a l taxing powers over C.P.R. lands within the province of Saskatchewan. In 1881, when the r e s t r i c t i o n was imposed on the t e r r i t o r y added to Manitoba, the future Province of Saskatchewan was s t i l l part of the North-western T e r r i t o r y . When Saskatchewan sought admission i n 1905 as a Province a term of entry was a r e s t r i c t i o n on the taxing power of the new province on C.P.R. lands. This 84 r e s t r i c t i o n i s substantially the same as section 2 of the Manitoba Boundaries Act, 18 81, and appears as section 24 of the Saskatchewan Act, 1905. Since the courts i n the various cases discussed i n the previous section c l e a r l y do not d i s t i n g u i s h between conditions imposed on entry and conditions imposed on additions, t h i s case offers clear j u d i c i a l summary of the powers inherent i n both sections 3 and 6 of the B.N.A. Act, 1871. The scope of powers residing i n the federal govern-ment under the 1871 Act were described i n thi s case by Viscount Haldane, i n the Privy council decision as follows: ...The words "peace, order and good government" (s.2 of 1871 B.N.A. Act) are words of very wide impact, and a l e g i s l a t u r e empowered to pass laws for such purposes has a very wide di s c r e t i o n . But Mr. L e s l i e (for Attorney-General for Saskatchewan) and Lord Hailsham (for Attorney-General for Manitoba) emphasized the d i s t i n c t i o n between section 4 of the Act of 1871, which enabled the Parliament of Canada to provide from time to time for peace, order and good government i n . t e r r i t o r i e s not included i n a province, and section 2, which only enabled them to provide for the passing of laws for the peace, order and good government of a province at the time when i t was established. Section 2, they argued, enabled the Canadian Parliament to define the machinery for the passing of laws, but not to prescribe  what laws might be passed to the province. The pr e s c r i p t i o n , they contended, had been done for good and a l l by section 92 of the Act of 1867. 85 But t h e i r Lordships would observe that i f t h i s argument was well founded the words i n section 2 of the Act of 1871 "for the passing of laws for the peace, order and good govern-ment" would be superfluous. The power to make provision for the "constitution" of the new province would be s u f f i c i e n t to enable the #>arliament of Canada to provide a r e s t r i c t i o n on the normal range of taxing power exercised by the p r o v i n c i a l l e g i s l a t u r e . The words under discussion being words of general impact, t h e i r Lordships do not f e e l j u s t i f i e d i n placing on them the narrow meaning for which the appellant and Lord Hailsham contend. 8 8 (emphasis added) If the words "for the passing of laws for the peace, order and good government" were held not to be superfluous then the introduction to section 6 which confirms the i n v i o l a b i l i t y of a p r o v i n c i a l c o n s t i t u t i o n declared under section 2, are also not superfluous. These introductory words of course are: "Except as provided by the t h i r d section of t h i s Act (B.N.A. Act, 1871) ". Section 3 of the B.N.A. Act, 1871,then re-opens the federal powers to define a provinces constitution i n cases where t e r r i t o r y i s added to a province, a power which i n the words of Viscount Simon would include the power to prescribe what laws might be passed to the province. 86 In summary therefore the federal government can impose terms and conditions on p r o v i n c i a l l e g i s l a t i v e j u r i s d i c t i o n when adding t e r r i t o r y to a province that: (1) l i m i t the l e g i s l a t i v e j u r i s d i c t i o n to the p a r t i c u l a r land transferred to the province within the extended boundaries: The 1930 Saskatchewan Natural Resources case confirmed the a b i l i t y of the federal government to transfer less t e r r i t o r y to a new province than was transferred to the o r i g i n a l four provinces. This case also confirmed that the federal government retained the powers i t had p r i o r to the transfer over land i t reserves to i t s e l f i n the transfer. The federal government could then extend the boundaries of the Province of B r i t i s h Columbia under section 3 (B.N.A. Act, 1871) to include a l l of the federal government's t e r r i t o r y over offshore resources. As a term of the transfer i t could reserve to i t s e l f a l l property other than o i l and gas, within t h i s t e r r i t o r y as well as the exclusive r i g h t to l e g i s l a t e with respect to the reserved property. 87 (2) under the a b i l i t y of the federal govern-ment to prescribe what laws are to be passed to the province (Saskatchewan C.P.R. Reference  1953), the federal government could r e s t r i c t the laws which the P r o v i n c i a l l e g i s l a t u r e may pass; The imposition of t h i s term i s e s s e n t i a l to the a b i l i t y of the federal government to re-serve to i t s e l f the r i g h t to pass laws respecting o f f shore resources i n furtherance of international agreements. The federal a b i l i t y to impose conditions expressed as prescribing what laws the province and not the federal government can pass. However, since property other than o i l and gas, would remain under federal j u r i s d i c t i o n , l e g i s l a t i o n implementing international agreements con-cerning offshore areas would be i n furtherance of the federal t e r r i t o r y s p e c i f i c a l l y reserved. Under the power described i n t h i s part the federal government could r e s t r a i n the Province from l e g i s l a t i n g contrary to international agreements. (3) set a new constitution for the added t e r r i t o r y (1927 Reference) 88 A confirmation of the federal government's a b i l i t y to enact federal l e g i s l a t i o n imple-menting international agreements which could a f f e c t the offshore o i l and gas transferred to the Province could be j u s t i f i e d as an exercise of the federal power to redefine the constitution of the Province as regards the added t e r r i t o r y . Though the background and necessity of t h i s term w i l l be discussed i n the next chapter, for now i t i s s u f f i c i e n t to accept that the federal government cannot implement international agreements concerning property within the Province, unless i t could be j u s t i f i e d under a s p e c i f i c federal power. The 1927 Reference held that so long as not repugnant to the 1867 constitution, there i s no l i m i t to the plenary powers of the federal parliament with respect to the establishment for the constitution of a Province. There exists no repugnant Imperial statute rather as w i l l be explained l a t e r s.132 Of the B.N.A. Act, 1867 leaves a void i n tfcfte area of treaty implementation. Furthermore the term would only continue present federal powers 89 over offshore o i l and gas since there i s no attempt to augment federal authority i n t h i s f i e l d . Furthermore continuation of the federal a b i l i t y to exercise treaty imple-mentation powers generally over offshore areas i s no more a change than was made to the education provisions of the B.N.A. Act, 18 67, i n c e r t a i n of the p r o v i n c i a l c o n s t i -tutions . A discussion of the terms and conditions of transfer presupposes some background knowledge on the necessity of the terms and conditions to a transfer of offshore o i l and gas to B r i t i s h Columbia. I t i s intended that any questions concerning the nature of the v a r i a t i o n and the type of condition necessary to implement i t , w i l l be c l a r i f i e d i n the next chapter. CHAPTER I FOOTNOTES The B r i t i s h North America Act, 1871 (Imp.), 34 & 35 V i c t o r i a , c.28, reproduced i n R.S.C. 1970, Appendix No. 11. LaForest, Natural Resources and Public Property, (1969) 168. Vancouver Sun, June 17, 1980, p.1. G. Swan, The Newfoundland Offshore Claims: Interface of  Constitutional Federalism and International Law (1976), 22 McGill L.J. 541. In the Matter of a Reference by the Governor General i n Council Concerning theOwnership of and J u r i s d i c t i o n Over Offshore Mineral Rights as set out i n Order i n Council P.C. 1965-750 dated A p r i l 26, 1965, [1967] S.C.R. 795.. Id., at 800. [1945] S.C.R. 385, also see Reference re V a l i d i t y of  The Wartime Leasehold Regulations, [1950] S.C.R. 124, 12 Id., at 403. Canada Parliament, Sessional Papers (House of Commons) 1871, No.20, 2nd. return, p . l , "Correspondence between the Imperial and Canadian Governments r e l a t i v e to the Manitoba Act". Gerin-Lajoie, Constitutional Amendment i n Canada (1950) 54, see also O l l i v e r , B r i t i s h North America Acts and  Selected Statutes 1867-1962 (1962) 109, footnote (1). Canadian House of Commons Journals, 1871, p.148. Canadian House of Commons Debates, 1871, p.607. S.C. 1869, c.3, reproduced i n R.S.C. 1970, Appendix No. 7. S.C. 1870, c.3, reproduced i n R.S.C. 1970, Appendix No. 8. 91 15. Canadian House of Commons Debates, 1871, p.603, see Gerin-LaJoie, op.c i t . , supra, n.10 at 50, footnote 2. 16. See The Manitoba Act, 1870, op.cit. , supra, n.14, 536; also J. K. Johnson, The Canadian Directory of  Parliament, 1867-1967 (1968) Appendix III - 4th Session of the f i r s t Parliament - February 15, 1871 to A p r i l 14, 1871, t h i r d session prorogued May 12, 1970 -the Temporary Government of Rupert's Land Act, 1869 remained i n force u n t i l A p r i l 14, 1871. 17. Canadian House of Commons Debates, 1871, p.604. 18. Order of Her Majesty i n Council Admitting Rupert's Land and the North-Western T e r r i t o r y into the Union, June 23, 1870 (Imp.) Schedule (A), R.S.C. 1970, Appendix No. 9. 19. Rupert's Land Act, 1868 (Imp.) 31 & 32 V i c t o r i a , c.105, the author has r e l i e d extensively on the h i s t o r i c a l account of Gerin-Lajoie op.c i t . , supra, n.8, pp.50-58, and on the o r i g i n a l material referred to i n his work. 20. The preamble to the Rupert's Land Act, 1868 reads as follows: "And whereas for the Purposes of carrying into e f f e c t the Provisions of the said B r i t i s h North America Act, 1867, and of admitting Rupert's Land into the said Dominion as aforesaid upon such Terms as-. Her Majesty thinks f i t to approve, i t i s expedient that the said Lands, T e r r i t o r i e s , Rights, P r i v i l e g e s , L i b e r t i e s , Franchises, Powers, and Authorities so far as the same have been lawfully granted to the said Company, should be surrendered to Her Majesty, Her Heirs and Successors, upon such Terms and Conditions as may be agreed upon by and between Her Majesty and the said Governor and Company as hereinafter mentioned..." 21. Addresses of the House of Commons and Senate, op . c i t . , supra, n.14, Schedule (A). 22. Imperial Order i n Council, June 23, 1870, op. c i t . , supra, n.14. 23. Canadian House of Commons Debates, 1871, p.604. 24. Canadian House of Commons Debates, 1871, p.6 04T^, 25. See The B r i t i s h North America Act, 1867, Part V Pro v i n c i a l Constitutions, and section 92, reproduced i n R.S.C. 1970, Appendix No. 5. 92 26. Order of Her Majesty i n Council Admitting B r i t i s h Columbia into the Union, May 16, 1971, reproduced i n R.S.C. 1970, Appendix No. 10; Order of Her Majesty in Council Admitting Prince Edward Island into the Union, June 26, 1873; The T r i t i s h North America Act, 1949 (Imp.) 12 & 13 Geo. 6, c.22 (admitting Newfoundland). 21. Op. c i t . , supra, n.9, p. 2-3. 28. Ibid. 29. Op.cit., supra, n.10. 30. Canadian Sessional Papers, No.20, 1871, 2nd Return "Correspondence from the Governor General of Canada to the Secretary of State for the Colonies". 31. Op.cit., supra, n.10. 32. Op.cit., supra, n.10 at 57, also see Great B r i t a i n , Parliament, Parliamentary Debates (Commons), 3rd.series, Vol.206, p.1171: "The Act of Confederation of the North American Provinces gave power to the Parliament of Canada to e s t a b l i s h Provinces i n the t e r r i t o r i e s admitted into the Dominion of Canada, and to provide for the representation of such Provinces i n Parliament; but an Order i n Council was necessary, and p r i o r to the issue of such an Order i n July l a s t the Canadian Parliament passed two Acts... The Law O f f i c e r s of the Crown were of opinion that these: were v a l i d , as not being beyond the powers of the Canadian Parliament; but doubts having been expressed the Canadian Parliament had addressed the Crown for an Act i n the Imperial Parliament confirming t h e i r v a l i d i t y . The B i l l would give the Canadian Parliament power to e s t a b l i s h new Provinces and provide for the constitution, , thereof much in the same way as the United States  Government dealt with t e r r i t o r i e s ; i t gave power to a l t e r the l i m i t s of constituted Provinces and enabled the Canadian Parliament to l e g i s l a t e for any t e r r i t o r y not for.the time being included i n any Province." (emphasis added) 33. Canadian Sessional Papers, 1871, No.20, 2nd. Return, p.4. -34. The l e g i s l a t i o n establishing Alberta and Saskatchewan has been referred to as the "Autonomy Acts". 35. S.C. 1905, c.2, reproduced i n R.S.C. 1970, Appendix No. 19. 93 36. S.C. 1905, c.45, reproduced i n R.S.C. 1970, Appendix No. 20. 37. Op. C i t . supra, n.10 at 53. 38. Variation refers to a va r i a t i o n from the f u l l exercise of powers given the o r i g i n a l provinces under section 9 2 of the B.N.A. Act, 1867. 39. [1895] A.C. 202. 40. Id., at 209. 41. Id., at 213, 216, 222. The court discussed the reasons behind the va r i a t i o n as being the absences i n Manitoba, at the time of union, of any public system of education, and therefore the wording of section 93(3) would not have been appropriate. I t i s unlikely that t h i s comment r e s t r i c t s the court's decision i n view of the broad reasons for judgment. 42. See Lefroy, Canadian Federal System (1913) 654, and Clements, The Canadian Constitution (1916) , 789 • 43. (1923), 1 W.W.R. 1. 44. Id., at 11. 45. Id., at 13. 46. Id., at 9. 47. Ibid. 48. See B r i t i s h North America Act, 19 30, George 5, c. 26. (Imp), 20 & 21 49. [1927] S.C.R. 364, 365, 366. 50. Canadian House of Commons Debates, 1927, p. 371, also see p. 360 statement of the Minister of Justice . 51. Canadian House of Commons Debates, 1927, p. 360-370. 52. Canadian House of Commons Debates, 1929, p. 25. 53. Canadian House of Commons Debates, 1929, p. 25. 54. Now section 55(5) of the Supreme Court Act, R.S.C. 1970, c.S-19. 55. [1927] S.C.R. 364, 369-370. 94 56. Id., 373. 57. Ibid. 58. [1928] A.C. 475. 59. [1888]8 A.C. 767. 60. Id., at 486. 61. Id., at 487. 62. [1931] S.C.R. 263. 63. Id., 269. 64. Attorney General for Canada y. Attorney General for  Ontario et. a l . L1898J A.C. 700. Op. c i t . supra, n. 61 at 275. 68. S.C. 1881, C.14, assented to March 21, 1881. Note that t h i s Act i s not reproduced i n by O l l i v i e r , B r i t i s h  North America Acts and Selected Statutes 1867-1962 (1962) p. 337 "Boundaries", referred to p. 196 footnote(2). S.M. 1881-1883, c . l , c.6 (3rd). S.C. 1881, c.14 s.2(b) S.C. 18 81, ; c . l , assented to February 13, 1881. Id., Schedule. (1889), 5 Man R. 395. (1890-91), 7 M.L.R. (Man.Q.B.) affirmed by the Supreme Court of Canada (1892), 19 S.C.R. 702. (1905), 4 M.L.R. 382, affirmed by the Supreme Court of Canada (1905), S.C.R. 500. (1958),S.C.R. 745. The Rural Municipality of North Cypress v. Canadian  Railway (1905), 14 M.L.R. 382, 402. 76. (1889), 5 Man. R. 395, 415; approved of by the Supreme Court of Canada i n Manitoba Reference oh Questions  A r i s i n g with Respect to Clause 16 (C.P.R. Lands) ["1958] S.C.R. 744, 761. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 95 77. Id., at 430. 78. (1890-91), 7 M.L.R. 1,5. 79. (1905),14 M.L.R. 382, 385. 80. (1892), 19 S.C.R. 702, note referred to i n Manitoba  Reference [1958] S.C.R. 744, 764. 81. (1905), 14 M.L.R. 382, 402. 82. (1905), S.C.R. 550, 565. 83. [1927] S.C.R. 364, 372. 84. [1958] S.C.R. 744, 784. 85. Id., 748. 86. Id., 771. 87. [1967] S.C.R. 792, 817. 88. [1953] A.C. 594, 616, 614. CHAPTER II ASSESSMENT OF THE ABILITY OF THE FIRST PROCEDURE  TO ACCOMMODATE FEDERAL/PROVINCIAL CONTENTIONS  RELATING TO CONTROL OVER OFFSHORE OIL AND GAS INTRODUCTION Each procedure for tra n s f e r r i n g offshore o i l and gas to B r i t i s h Columbia consists of two parts; the instrument of transfer, and the change of j u r i s d i c t i o n a l status. The f i r s t chapter examined an issue r e l a t i n g to the former, that i s whether section 3 of the B.N.A. Act, 1871 could be used to e f f e c t a transfer of limited l e g i s l a t i v e j u r i s d i c t i o n over offshore o i l and gas to-the Province. The mere fact that t h i s f i r s t procedure could authorize a transfer of limited, as opposed to complete l e g i s l a t i v e j u r i s d i c t i o n to the Province does not mean that the procedure could be used to successfully negotiate a d i v i s i o n of federal and provin-c i a l j u r i s d i c t i o n over offshore resource development. To date there has been no public statement by either the Province or the federal government as to either's p o s i t i o n on the s p e c i f i c terms of a transfer of offshore o i l and gas, but there i s evidence from the discussions to date that a complete transfer of l e g i s l a t i v e control to the Province would not be considered by the federal government.^ 97 This chapter examines the second part of the f i r s t procedure - the change of the j u r i s d i c t i o n a l status of the area involved as a r e s u l t of a transfer of limited l e g i s l a t i v e j u r i s d i c t i o n from the federal government to the Province of B r i t i s h Columbia. The area i s d i f f i c u l t to discuss since the li m i t a t i o n s on the l e g i s l a t i v e j u r i s d i c t i o n w i l l determine the j u r i s d i c t i o n a l d i v i s i o n s between the Province and the federal government, and one cannot discuss the change of j u r i s d i c t i o n status without r e f e r r i n g to the terms and conditions which delimit federal and p r o v i n c i a l j u r i s d i c t i o n . The following discussion then assumes certa i n terms and conditions which would accommodate federal and p r o v i n c i a l positions on offshore resource development, i n an attempt to f a c i l i t a t e an agreeable federal - p r o v i n c i a l s p l i t of j u r i s d i c t i o n over offshore o i l and gas. The situations which w i l l require the f o r -mulation of terms and conditions can be categorized as follows: 1. boundary delimitation problems; 2. preservation of the federal presence i n offshore areas i n international r e l a t i o n s ; 3. affirmation of exclusive federal powers; 4. establishment of P r o v i n c i a l c i v i l j u r i s d i c t i o n generally and s p e c i f i c a l l y over o i l and gas development. 98 I t i s intended that an examination of the foregoing w i l l produce terms and conditions that w i l l set the groundwork i n reaching a compromise between federal and p r o v i n c i a l positions concerning the j u r i s d i c t i o n each would have respecting offshore o i l and gas development. Unlike the other procedures to be examined i n the following chapters, t h i s f i r s t procedure provides a method for passing control and a method for determining the j u r i s d i c t i o n a l r e l a t i o n -ship between the federal government and a province. In the other two procedures, the method also determines the j u r i s d i c t i o n a l r e l a t i o n s h i p . For example, the delegation of l e g i s l a t i v e authority i s a means of passing a degree of control, but the method determines the r e l a t i o n s h i p between the giving and receiving p a r t i e s , i . e . that of delegator and delegatee, with a l l the incidents that follow from t h i s r e l a t i o n s h i p . I t w i l l be necessary, however, before proceeding to a discussion of the four categories and related terms and conditions, to put aside c e r t a i n nagging doubts that s t i l l have not been broached. These r e l a t e to the present j u r i s d i c t i o n a l status of the areas offshore of B r i t i s h Columbia. This issue w i l l be examined i n the next section. The concluding section i n t h i s chapter w i l l compare 99 the j u r i s d i c t i o n that B r i t i s h Columbia would obtain on a transfer of offshore o i l and gas under the f i r s t procedure to the j u r i s d i c t i o n over offshore o i l and gas transferred coastal states i n the United States by t h e i r federal government. Section 1: Description of the Federal Government's  j u r i s d i c t i o n i n the T e r r i t o r i a l Sea '-rid-,Continental  Shelf - the Offshore Areas  There i s no suggestion from either the h i s t o r i c a l material on the B.N.A. Act, 1871, nor from the various j u d i c i a l opinions on t h i s Act, that the federal government could transfer an exclusively federal power to a province. The general c o n s t i t u t i o n a l p r o h i b i t i o n against transfers from the provinces or the federal government of the exclusive j u r i s i d i c t i o n of the other would no doubt apply. This p r o h i b i t i o n w i l l be discussed i n greater d e t a i l i n Chapter III i n the context of the t h i r d procedure. A transfer of the federal government's j u r i s d i c t i o n over o f f -shore minerals would not be possible under the f i r s t pro-cedure i f i t came within a category of exclusive federal l e g i s l a t i v e j u r i s d i c t i o n . The federal j u r i s d i c t i o n over property though i s a b i t of an anomaly when considered 100 in the context of the general p r o h i b i t i o n against the transfer of l e g i s l a t i v e j u r i s d i c t i o n between the federal government and p r o v i n c i a l l e g i s l a t u r e s . The federal government, of course, has exclusive j u r i s d i c t i o n over "The Public Debt and Property", pursuant to section 1A of the B.N.A. Act, 1867. But while there i s no impediment to the federal government tr a n s f e r r i n g i t s property to a province ( i f the property i s within the province's 2 l e g i s l a t i v e j u r i s d i c t i o n ), the federal government could not transfer the federal government's l e g i s l a t i v e authority, 3 as opposed to property, to a province. That i s , i t could not transfer to a province the ri g h t to l e g i s l a t e over federal property. The f i r s t procedure would transfer l e g i s l a t i v e j u r i s d i c t i o n over offshore o i l and gas to the Province by f i r s t extending the boundaries of the Province to include these resources and then, secondly through the terms of transfer, the federal government would pass i t s inter e s t i n the offshore o i l and gas to the Province, subject to such other conditions as the federal and p r o v i n c i a l governments negotiate. This procedure, i t i s argued, involves a transfer of property, not of l e g i s -l a t i v e j u r i s d i c t i o n . However, the Supreme Court of Canada i n the Offshore Minerals Reference, cast some doubt as to the roots of the federal j u r i s d i c t i o n over i t s property i n offshore minerals. The Court stated as regards the 101 federal government's j u r i s d i c t i o n over offshore resources i n (1) the t e r r i t o r i a l sea: Le g i s l a t i v e j u r i s d i c t i o n with respect to such land must, therefore, belong exclusively to Canada, for the subject matter i s one not coming within the classes of subjects assigned exclusively to the l e g i s l a t u r e s of the provinces... the mineral resources of the lands underlying the t e r r i t o r i a l sea are of concern to Canada as a whole and go beyond l o c a l or p r o v i n c i a l concerns or i n t e r e s t s . . . Moreover the righ t s i n the t e r r i t o r i a l sea  ar i s e by international law and depend upon  recognition by other sovereign states. 3~~ (emphasis added) and (2), the continental shelf: Canada i s the sovereign state which w i l l be recognized by international law as having the r i g h t s stated i n the Convention of 1958, [Geneva Convention on the Continental Shelf] and i t i s Canada, not the Province of B r i t i s h Columbia, that w i l l have to answer the claims of other members of the international community for breach of the obligations and r e s p o n s i b i l i t i e s imposed by the Convention. 5 The Supreme Court here i s suggesting that the federal government's r i g h t to the offshore minerals comes within exclusively federal powers since the powers over offshore resources were not s p e c i f i c a l l y d i s t r i b u t e d to either the provinces nor federal government under the o r i g i n a l c o n s t i t u t i o n , the B.N.A. Act, 1867. Furthermore, they suggest that these r i g h t s could not accrue to the nation -that i s , Canada - unless they were held by the federal 102 government. If these statements r e f l e c t Canada's in t e r e s t i n offshore o i l and gas, the B.N.A. Act, 1871 may not be able to be used to pass l e g i s l a t i v e authority to B r i t i s h Columbia, since the transfer would purport to transfer exclusively federal powers to the Province. Though sub-sequent discussion of the federal government's i n t e r e s t i n offshore resources i n the Reference 6 d i l u t e s the e f f e c t of the statement quoted above, i t i s important to examine the reasons why the Court may have considered i t necessary for i t to take t h i s p o s i t i o n - a po s i t i o n they no doubt f e l t necessary to ensure that Canada as a nation could 7 r e t a i n an i n t e r e s t i n offshore resources. The examination of the federal government's j u r i s -d i c t i o n has two components: f i r s t , the i n t e r e s t recognized by international law, and second, the in t e r e s t recognized by the domestic j u r i s d i c t i o n - that i s , the i n t e r e s t which the federal government perceives i t has i n offshore resources. While the Supreme Court of Canada, i n the Offshore Minerals Reference, had the opportunity to examine the f i r s t component, the second component was not r e a l l y raised before the Court. These two components w i l l now be examined. 103 Section 1.1: inte r e s t of the coastal state recognized under international law. ; : . . •. • The Supreme Court of Canada was asked to decide in the Offshore Minerals Reference whether the federal government or the Province of B r i t i s h Columbia had the r i g h t to explore and l e g i s l a t i v e j u r i s d i c t i o n over the lands, including the mineral and other natural resources of the seabed and subsoil within the following two areas: 1. seaward from the ordinary low watermark on thercoast of the mainland and islands of B r i t i s h Columbia, to the outer l i m i t s of that t e r r i t o r i a l sea of Canada, hereafter referred to as the " t e r r i t o r i a l sea"; and 2. beyond that part of the t e r r i t o r i a l sea of Canada to a depth of 200 meters or beyond that l i m i t , to where the depth of the superjacent waters admits of the exploitation of the mineral and other natural resources, hereafter referred to as the "continental shelf". The Supreme Court was asked to determine whether the federal government had property i n the lands, including mineral resources, of the seabed and subsoil within the t e r r i t o r i a l sea. I t was not asked to determine whether the federal government had property i n the minerals within 104 the continental shelf. This writer maintains that the f a i l u r e to request the Court to determine t h i s question tended to mislead the Court on the issues to be determined. The Court was forced into c i r c u l a r reasoning, for i f i t determined that the resources of the continental shelf were beyond the boundaries of the Province of B r i t i s h Columbia, i t was asked not to declare that the federal government had property i n the resources of the seabed, but that i t had l e g i s l a t i v e j u r i s d i c t i o n over the resources i n the seabed. Since the Court was asked to declare the federal government's i n t e r e s t i n the continental shelf as a l e g i s l a t i v e , rather than a property i n t e r e s t , the Court may have f e l t that t h i s was an expression of the federal government's position on the extent of i t s i n t e r e s t . Furthermore, i f the federal government's i n t e r e s t was a mere l e g i s l a t i v e r i g h t , t h i s r i g h t would appear to have i t s basis on international convention rather than co n s t i t u t i o n a l law, since the f e d e r a l / p r o v i n c i a l l e g i s l a t i v e d i s t r i b u t i o n s of power have t h e i r roots i n property delineation. As w i l l be demonstrated below, had the ques-tion of property r i g h t s i n the continental shelf been argued before the Court, there may not have been the need for the Court to r e l y on the "international recognition" of rights i n the continental shelf while coming to the same conclusion. 105 The Supreme Court of Canada referred to two Conventions i n the Reference: 1. the 1958 Geneva Convention on the T e r r i t o r i a l Sea and the Contiguous Zone; and g 2. the 1958 Geneva Convention on the Continental Shelf. These two Conventions recognized a coastal nation's r i g h t to the resources respectively i n the t e r r i t o r i a l sea 9 and continental shelf. The e f f e c t of these Conventions i n determining federal j u r i s d i c t i o n over each of the two areas described w i l l now be examined. Section 1.1(a): the t e r r i t o r i a l sea - r e l a t i n g federal j u r i s d i c t i o n to international convention.  The rig h t s of a nation over i t s t e r r i t o r i a l sea are not dependent on international law. For example, A r t i c l e 12 of the Convention on the T e r r i t o r i a l Sea and Contiguous Zone states that: ...the t e r r i t o r i a l sea i s not to extend beyond the median l i n e , every point of which i s equidistant from the nearest point on the baselines from which the breadth of the t e r r i t o r i a l sea o f f each of the two states i s measured... It i s arguable that the t e r r i t o r i a l sea i s not to extend beyond twelve m i l e s . ^ However, a number of nations have declared a t e r r i t o r i a l sea beyond twelve m i l e s . ^ Though Canada has not r a t i f i e d the Convention, t h i s would not a f f e c t the exercise of rights sanctioned by the Convention 106 within the twelve-mile t e r r i t o r i a l sea declared by Canada."1^ This premise has been confirmed by the Supreme Court 13 of Canada i n S.S. May v. The King. In t h i s case, a f i s h i n g vessel registered i n the United States was condemned as f o r f e i t e d to His Majesty on the ground that i t was a foreign f i s h i n g vessel within the meaning of the Customs and Fisheries Protection Act, R.S.C. 1952, c.43, and that at the time of i t s seizure i t was within three marine miles of the coast of Canada o f f B r i t i s h Columbia, having entered 14 B r i t i s h waters for a purpose not permitted by treaty or convention or by any law of Great B r i t a i n or Canada, i n v i o l a t i o n of the Act. Though the case i s mainly concerned with the defences raised by the shipowners to j u s t i f y being i n " B r i t i s h waters", Mr. J u s t i c e Lamont very c l e a r l y stated the extent of Canadian j u r i s d i c t i o n over the t e r r i t o r i a l sea when he said: . . . I t i s a well recognized p r i n c i p l e , both i n t h i s country and i n the United States, that the j u r i s d i c t i o n of a nation i s exclusive and absolute within i t s own t e r r i t o r y , of which i t s t e r r i t o r i a l waters within three marine miles from shore are as c l e a r l y a part as the land. 15 (emphasis added) By equating federal j u r i s d i c t i o n over the t e r r i t o r i a l sea with federal j u r i s d i c t i o n over land, i t i s clear that 107 the federal government's in t e r e s t i n the seabed resources of the t e r r i t o r i a l sea i s an i n t e r e s t i n property. The Supreme Court of Canada i n the Reference did, i n f a c t , reach t h i s conclusion, but for some reason f e l t compelled to a t t r i b u t e t h i s i n t e r e s t to international convention. The Supreme Court of Canada, i n the Offshore Minerals  Reference, did not r e f e r to t h i s case, but rather, r e l i e d 16 on a l a t e r decision of the Privy Council, Croft v. Dunphy, concerning federal j u r i s d i c t i o n over the t e r r i t o r i a l sea and beyond. This case did not discuss S.S. May v. The King, but t h i s i s not surprising since the main issue i n Croft v. Dunphy was whether the federal government had the r i g h t to l e g i s l a t e beyond i t s declared t e r r i t o r i a l sea. At the time Croft v. Dunphy was before the Privy Council, the t e r r i t o r i a l sea of Canada was three miles. The issue before the Court was whether a Canadian registered vessel could be bound by federal l e g i s l a t i o n purporting to apply to Canadian vessels to a distance of twelve miles beyond the three mile t e r r i t o r i a l sea. The Privy Council held that the federal government had the r i g h t to l e g i s l a t e beyond the three mile l i m i t pursuant to the powers i t obtained under the B.N.A. Act, 1867. The Privy Council s p e c i f i c a l l y held that no question of international law 17 was involved, mainly because the l e g i s l a t i o n was 108 recognized as legitimate by international law. In t h i s author's opinion, the Court also l a i d to res t any argument that the Court would enforce international law over domestic law, when i t stated: L e g i s l a t i o n of the Imperial Parliament, even i n contravention of generally acknowledged p r i n c i p l e s of international law, i s binding upon and must be enforced by the Courts of th i s country, for i n these Courts the l e g i s l a t i o n of the Imperial Parliament cannot be challenged as u l t r a v i r e s : . . . I t may be that l e g i s l a t i o n of the Dominion Parliament may be challenged as u l t r a v i r e s on the ground that i t i s contrary to the p r i n c i p l e s of international law, but that must be because i t i s assumed that the B r i t i s h North America Act has not conferred power on the Dominion Parliament to l e g i s l a t e contrary to these p r i n c i p l e s . 17 The Privy Council had said e a r l i e r i n t h i s case that the powers conferred on the federal Parliament under the B.N.A. Act, 18 67 were as plenary as those passed by the Imperial 18 Parliament, and since there was no reference i n the Offshore Minerals Reference to a lack of power to l e g i s l a t e contrary to international law, i t must be assumed that federal l e g i s l a t i o n i n the t e r r i t o r i a l sea would be upheld by Canadian courts, regardless of international law. The reasons given by the Supreme Court i n the Reference are therefore confusing. The Court's reference to Croft v. Dunphy somehow suggests that l e g i s l a t i o n respecting the t e r r i t o r i a l sea i s e x t r a - t e r r i t o r i a l and 109 i t connects t h i s federal a b i l i t y , to Canada's sovereign a b i l i t y , for as the Court stated: There can be no doubt now that Canada has become a sovereign state. Its sovereignty was acquired i n the period between i t s separate signature of the Treaty of V e r s a i l l e s i n 1919 and the Statute of Westminster, 1931, 22 Geo. V. C.4. Section 3 of the Statute of Westminster provides i n an absolutely clear manner and without any r e s t r i c t i o n s that the Parliament of a Dominion has f u l l power to make laws having e x t r a - t e r r i t o r i a l operation. 19 If the Court was suggesting that the a b i l i t y of the federal government to declare i t s t e r r i t o r i a l sea was i n e f f e c t an exercise of e x t r a - t e r r i t o r i a l j u r i s d i c t i o n , the e f f e c t i s a contradiction i n terms, since the declaration of a t e r r i t o r i a l sea brings the area within t e r r i t o r i a l j u r i s d i c t i o n . In e f f e c t , such declaration i s an assertion of t e r r i t o r i a l j u r i s d i c t i o n . One matter which has as yet not been referred to i s the e f f e c t of section 3 of the 20 Statute of Westminster, which provides: S.3. It i s hereby declared and enacted that the Parliament of a Dominion has f u l l power to make laws having extra-t e r r i t o r i a l operation. This l e g i s l a t i o n of the Imperial Parliament confirmed the federal Parliament's authority to pass laws that would apply beyond declared Canadian t e r r i t o r y - to, i n ef f e c t , l e g i s l a t e e x t r a - t e r r i t o r i a l l y . This power had to a certain extent already been upheld by the Privy 110 Council i n Croft v. Dunphy. However more important than confirming t h i s r i g h t was c l a r i f i c a t i o n i n the Statute that the a b i l i t y to pass laws having e x t r a - t e r r i t o r i a l application was an exclusively federal a b i l i t y . The pro-vinces were not given the r i g h t to pass laws applying 21 beyond t h e i r t e r r i t o r i a l j u r i s d i c t i o n . Therefore, i f the Supreme Court i n the Reference f e l t that the federal government's i n t e r e s t i n the t e r r i t o r i a l sea was as a r e s u l t of the exercise of i t s e x t r a - t e r r i t o r i a l j u r i s d i c t i o n , in no way could the Province of B r i t i s h Columbia obtain an i n t e r e s t i n t h i s area. Relating t h i s to the proposed f i r s t procedure, the fact that the federal government has the r i g h t to acquire new t e r r i t o r y does not mean that once acquired, i t l e g i s l a t e s as i f the acquired t e r r i t o r y was not federal t e r r i t o r y . The Supreme Court did, i n f a c t , acknowledge that the t e r r i t o r i a l sea was a part of the t e r r i t o r y of 22 Canada. As regards the f i r s t procedure, a d i s t i n c t i o n can then be drawn as to the federal government's a b i l i t y to acquire t e r r i t o r y , an a b i l i t y not u n i l a t e r a l l y afforded to the provinces, and the federal government's a b i l i t y to deal with the property once acquired. The ac q u i s i t i o n i s an exercise of the federal government's exclusive power to extend i t s boundaries, a power which w i l l be I l l discussed i n greater d e t a i l i n the next section. However, once acquired, there i s no convention of inte r n a t i o n a l law or co n s t i t u t i o n a l r e s t r i c t i o n that would .impede the federal government from including i t s property i n t e r e s t i n the mineral resources of the t e r r i t o r i a l sea i n a grant to the province. International law recognizes the exclusive i n t e r e s t of the nation i n i t s t e r r i t o r i a l sea, and c o n s t i t u t i o n a l law recognizes the a b i l i t y of the federal government under section 3 of the B.N.A. Act, 1871, to l e g i s l a t e over i t s t e r r i t o r y and, i f i t desires, to extend p r o v i n c i a l boundaries to include federal t e r r i t o r y . The Supreme Court of Canada described the federal government's a b i l i t y to conclude international agreements respecting offshore minerals, but did not deal with the issue of implementing as opposed to entering into international agreements. When the federal government obtained the a b i l i t y to negotiate international agreements i n i t s own r i g h t , i t l o s t the a b i l i t y to implement these agreements except by federal l e g i s l a t i o n within the j u r i s d i c t i o n of section 91 of the B.N.A. Act, 1867. As w i l l be discussed i n l a t e r sections, the i n a b i l i t y of the federal government to enforce international t r e a t i e s which re l a t e to exclusively p r o v i n c i a l matters i s not an international law problem, but a co n s t i t u t i o n a l law 112 problem. While the Supreme Court recognized that i f the province had the property i n the mineral resources of the t e r r i t o r i a l sea, the federal government could not implement international agreements concerning t h i s property without p r o v i n c i a l concurrence, i t cannot have held t h i s as an impediment to the province obtaining the property i f sanctioned by the Constitution. Therefore, the j u r i s d i c t i o n which the federal government exercises over the mineral resources of the seabed within the t e r r i t o r i a l sea, are not dependent on i t s a b i l i t y to l e g i s l a t e e x t r a - t e r r i t o r i a l l y , or upon recognition by the international community. Rather, i t s j u r i s d i c t i o n i s an exercise of i t s powers over land within i t s t e r r i t o r i a l j u r i s d i c t i o n . An examination of the federal l e g i s l a t i o n over mineral resources of the t e r r i t o r i a l sea and continental shelf w i l l confirm that t h i s i s the s i t u a t i o n . The next section w i l l examine the nature of the federal government's j u r i s d i c t i o n over the continental shelf. Section 1.1(b): the continental shelf - federal j u r i s d i c t i o n over the continental shelf and i t s reliance on international convention  The claims by coastal states to j u r i s d i c t i o n over the continental shelf beyond t h e i r t e r r i t o r i a l sea i s h i s t o r -23 i c a l l y a r e l a t i v e l y recent occurrence. The issue was, i n 113 f a c t , forced by the u n i l a t e r a l declaration by the United States of sovereignty over the continental shelf. In 1945, President Truman issued the following proclamation: ...the Government of the United States regards the natural resources of the subsoil and seabed of the continental shelf beneath the high seas but contiguous to the coasts of the United States as appertaining to the United States  [and] subject to i t s j u r i s d i c t i o n and control. 24 (emphasis added) This proclamation forced the international community to reach some consensus on the continental shelf. The current consensus i s r e f l e c t e d i n the 1958 Geneva Convention on the Continental Shelf. A r t i c l e 2 of the 1958 Convention on the Continental Shelf states (paragraphs 1 to 3): 1. The coastal State exercises over the continental shelf sovereign r i g h t s for the purpose of exploring i t and exploiting i t s natural resources. 2. The righ t s referred to i n paragraph 1 of t h i s a r t i c l e are exclusive i n the sense that i f the coastal State does not explore the continental shelf or exploit i t s natural resources, no one may undertake these a c t i v i t i e s , or make a claim to the continental shelf, without the express consent of the coastal State. 3. The rights of the coastal State over the continental shelf do not depend on occupation, e f f e c t i v e or notional, or on any express proclamation. The Supreme Court held that B r i t i s h Columbia lacked j u r i s d i c t i o n over offshore minerals because i t i s the federal 114 government that would be recognized by the international community as having the r i g h t s stated i n the 1958 Convention 25 on the Continental Shelf. The Court also suggested that i t s reasons for holding that the t e r r i t o r i a l sea was within federal j u r i s d i c t i o n applied equally to the continental 2 6 shelf. Therefore, the Court was suggesting that the r i g h t s were somehow dependent on recognition by the international community. However, A r t i c l e 12 i n no way suggests t h i s interpretation. The j u r i s d i c t i o n of a province or the federal government over offshore minerals i s to be determined by the domestic j u r i s d i c t i o n , by reference to i t s c o n s t i t u t i o n . The interpretation to be placed on the exercise by a state of rights recognized under international law has been described by one writer as follows: If the function of international law i s to secure general recognition of the exercise of authority by sovereign States, one must look to c o n s t i t u t i o n a l law and not to international law to determine the extent and degree of that authority. 27 The Supreme Court c e r t a i n l y could not have meant that the coastal state acquires rights i n the continental shelf by international recognition, for the Convention i t s e l f confirms that the r i g h t s a r i s e without proclamation. However, as mentioned e a r l i e r , the one question which the Court was not asked to answer provides a complete description of i t s j u r i s d i c t i o n over the mineral resources of the continental 115 shelf. The question i s , of course, does the federal govern-ment have property i n the mineral resources of the continental shelf. In order for the federal government to be able to transfer j u r i s d i c t i o n over offshore o i l and gas to the Province, i t s i n t e r e s t must be i n the nature of a property i n t e r e s t , not a mere l e g i s l a t i v e j u r i s d i c t i o n . If the federal j u r i s d i c t i o n i s merely l e g i s l a t i v e , i t would not be susceptible to a boundary extension, as i s contemplated by section 3 of the B.N.A. Act, 1871. When the Court was not asked to decide the question, a void was created. If the question was put to court today, however, there i s every reason to believe that i t would hold that the federal government's in t e r e s t i n the continental shelf i s i t s property, for i t would now have the benefit of j u d i c i a l i nterpretation of A r t i c l e 2. In interpreting t h i s A r t i c l e , the International Court of Justice has said: ...the r i g h t s of the coastal State i n respect of the area of continental shelf that constitutes a natural prolongation of i t s t e r r i t o r y into and under the sea ex i s t ipso facto and ab i n i t i o , by v i r t u e of i t s sovereignty over the land, and as an  extension of i t i n an exercise of sovereign rig h t s for the purpose of exploring and exploiting i t s natural resources. 28 (emphasis added) Therefore, as the federal government's j u r i s d i c t i o n over land i s a j u r i s d i c t i o n over property, i t s r i g h t s i n 116 the continental shelf are a property, i n t e r e s t . This interpretation i s further confirmed by reference to A r t i c l e 2, paragraph 2, which provides that no one may explore or exploit the natural resources of the continental shelf without the consent of the coastal state. The implication, of course, i s that the coastal state's r i g h t s are assignable. If the r i g h t s were merely l e g i s l a t i v e t h i s could not be the case, since international law would be presupposing that the domestic law permitted assignment of l e g i s l a t i v e power. This p a r t i c u l a r paragraph i s permissive, not p r o h i b i t i v e , and i s not susceptible to such a r i g i d i nterpretation. There i s one f i n a l issue that must be discussed r e l a t i n g to the nature of the federal government's j u r i s d i c t i o n over the continental shelf. At the time that the Reference was heard, the federal government had not r a t i f i e d the 1958 Convention on the Continental Shelf. The Court was l e f t with no i n d i c a t i o n as to how the federal government perceived i t s j u r i s d i c t i o n , notwithstanding the provisions of the Convention. The Court referred i n i t s judgment to the l e g i s l a t i o n of various coastal states which r a t i f i e d the Convention. In p a r t i c u l a r , i t mentioned 29 the Outer Continental Shelf Lands Act of the United States, 30 and the Continental Shelf Act, 1964 of the United Kingdom. 117 The Outer Continental Shelf Lands Act follows the Truman Proclamation, which p r i n c i p l e s are embodied i n the Convention on the Continental Shelf, and l e g i s l a t e s over the continental shelf as t e r r i t o r y of the United States. One author has, in f a c t , described t h i s statute as asserting "...American 31 t e r r i t o r i a l ownership". On the other hand, the Continental Shelf Act, 1964, of the United Kingdom provides that Her Majesty i s vested with "...any r i g h t s exercisable by the United Kingdom outside t e r r i t o r i a l waters with respect to the sea bed and subsoil and natural resources, except 32 insofar as they are exercisable i n r e l a t i o n to c o a l . . . " The B r i t i s h l e g i s l a t i o n does not assert t e r r i t o r i a l jurisdic-r t ion i n the c o n s t i t u t i o n a l law sense, over the continental shelf. While the United States has extended i t s t e r r i t o r i a l j u r i s d i c t i o n i n order to exercise i t s sovereign r i g h t s , the United Kingdom has chosen to exercise i t s r i g h t s by l e g i s l a t i n g e x t r a t e r r i t o r i a l l y . The issues t h i s l a t t e r method r a i s e are described by Johnathan Kitchen i n his study of labour law and offshore o i l a c t i v i t i e s , as follows: The problem of the application of laws to the Continental Shelf i s that the B r i t i s h sector i s c l e a r l y e x t r a t e r r i t o r i a l insofar as i t i s , by d e f i n i t i o n , beyond the l i m i t s of t e r r i t o r i a l waters. Nevertheless, the U.K. continental shelf i s an area i n which the j u r i s d i c t i o n of the United Kingdom over offshore i n s t a l l a t i o n s has been acknowledged by international 118 convention. I t might therefore be aptly described as a sort of l e g a l "no man's land" for which the Coastal State has been given authority to make certa i n limited l e g a l provisions. 33 The issues raised by the Court i n the Offshore Minerals  Reference concerning the a b i l i t y of the federal government and i n a b i l i t y of the provinces to l e g i s l a t e e x t r a - t e r r i t o r -i a l l y , i s more relevant to establishing the nature of the federal j u r i s d i c t i o n i n the continental shelf than i t i s to the t e r r i t o r i a l sea. As mentioned above, when the Reference was heard, the federal government had not speci-f i c a l l y l e g i s l a t e d over the continental shelf. The Court could not be sure how the federal government would choose to exercise i t s j u r i s d i c t i o n . If the federal government exercised i t s j u r i s d i c t i o n over the continental shelf through l e g i s l a t i o n that was e x t r a - t e r r i t o r i a l , the Court quite r i g h t l y would perceive t h i s as an impediment to any p r o v i n c i a l control. This doubt i s today academic, for the federal Parliament's exercise over the mineral resources has been an assertion of a t e r r i t o r i a l j u r i s d i c t i o n . The federal government obliquely implemented the 1958 Convention on the Continental Shelf through an amendment to the O i l 34 and Gas Production Conservation Act. O r i g i n a l l y t h i s 119 Act only applied to federal lands i n the Yukon and North-35 west T e r r i t o r i e s . However, on February 6, 1970 Canada r a t i f i e d the 1958 Convention on the Continental Shelf. An amendment to the O i l and Gas Production Conservation Act had been introduced p r i o r to t h i s date, to extend the application of t h i s Act to cover: ...those submarine areas adjacent to the coast of Canada to a water depth of 200 meters or beyond that l i m i t to where the depth of the superjacent waters admits of the exploitation of the natural resources of the seabed and subsoil thereof. 36 On second reading of the Amendment B i l l on February 13, 1970, the House of Commons was advised that the wording was derived from the Geneva Convention: ...which instrument of international law confirms Canada's sovereign r i g h t s to explore and exploit the resources of our submerged continental margin. 37 The Amendment also extended the Act to cover: any lands that belong to Her Majesty i n r i g h t of Canada or i n respect of which Her Majesty i n ri g h t of Canada has the r i g h t to dispose of or exploit the minerals therein 38 The purpose of t h i s section was to t i e the Act into the acts which provide for "land d i s p o s i t i o n matters i n the 39 t e r r i t o r i e s and the offshore" respectively being the 40 41 T e r r i t o r i a l Lands Act and the Public Lands Grants Act, so that there "could be no doubt on the part of the 120 international community as to the extent of Canada's claims to mineral resources i n these regions".^ 2 The O i l and Gas Production Conservation Act i s c l e a r l y an assertion of Canadian t e r r i t o r i a l r i g h t s , even though i t i t s e l f does not control d i s p o s i t i o n of the resources. The d e f i n i t i o n used i n section 3 of the Act, combined with the provisions of the Public Lands Grants Act, places the areas defined within Canadian t e r r i t o r y . Conservation l e g i s l a t i o n usually follows the d i s p o s i t i o n of the resource and i s a control on the development of the resource. What i s unusual about t h i s Act i s that the dis p o s i t i o n of the resource i s made by subordinate l e g i s l a t i o n , that i s , by regulations made pursuant to the Public Lands Grants Act (offshore public lands) and under the T e r r i t o r i a l Lands Act (for northern on and offshore public lands); while the conservation l e g i s l a t i o n i s enabling, that i s , by 43 statute. One purpose of the O i l and Gas Act ( B i l l C-20) i s to correct t h i s s i t u a t i o n . The proposed O i l and Gas Act would consolidate the d i s p o s i t i o n and conservation regimes. The l e g i s l a t i o n i n the proposed B i l l i s an assertion of Canadian t e r r i t o r y , t e r r i t o r y which i s susceptible of being included within p r o v i n c i a l boundaries. 121 Section 2: Determination of FederaT/Provincla1  Boundaries under a Boundary Extension Pursuant  to Section 3 of the: B.N.A. Act, 187T" This section w i l l examine issues that must be considered when determining the extension of the boundary of the Province of B r i t i s h Columbia pursuant to section 3 of the B.N.A. Act, 1871. The determination of B r i t i s h Columbia's new boundary - extended to include the o i l and gas resources within the t e r r i t o r i a l sea dnd continental shelf - require the setting of a new domestic boundary and a new international boundary. The new domestic boundary w i l l be the western l i m i t of. new p r o v i n c i a l j u r i s d i c t i o n , while the new international boundary w i l l be the northern and southern l i m i t of p r o v i n c i a l j u r i s d i c t i o n , which w i l l coincide with the outer l i m i t s of the boundaries of the State of Alaska to the north (and west) and the State of Washington to the south. To accommodate problems associated with both the domestic and international boundary delineation, the federal and p r o v i n c i a l governments w i l l have to reach an understanding on how the boundary i s to be determined. This understanding w i l l have to be r e f l e c t e d i n the terms and conditions of transfer. Both aspects of boundary determination are discussed below, together with suggested terms and conditions. Section 2.1; domestic boundaries The determination of domestic boundaries i s an issue, 122 since i t w i l l be necessary to determine conclusively the d i v i s i o n between exclusively p r o v i n c i a l j u r i s d i c t i o n and p r o v i n c i a l j u r i s d i c t i o n over the added t e r r i t o r y . The 44 Supreme Court of Canada, in the Offshore Minerals Reference, held that the t e r r i t o r y of B r i t i s h Columbia 45 stops at the low water mark. This description of boundary created c e r t a i n problems since i t i s d i f f i c u l t to ascertain 46 what i s a harbour or bay for the purposes of international or domestic law at the time most of the provinces entered Confederation, and the l i n e s of low tide are s h i f t i n g and uncertain and sea coasts are characterized by deep indentations, s t r a i t s , innumerable islands and i n l e t s of 47 various configurations. A d e f i n i t i v e description of f e d e r a l / p r o v i n c i a l boundaries i s only important when the province i s not transferred complete l e g i s l a t i v e control over offshore mineral resources. However, any l i m i t a t i o n s on l e g i s l a t i v e control or reservation of property to the federal government must d i s t i n g u i s h between the Province's e x i s t i n g exclusive j u r i s d i c t i o n over onshore and offshore 48 . . . minerals and i t s j u r i s d i c t i o n over offshore mineral resources. Some procedure must be used to d i s t i n g u i s h between the two types of property. Since under the Constitution the federal and p r o v i n c i a l governments cannot delegate to each other l e g i s l a t i v e powers, the exclusive j u r i s d i c t i o n to be exercised by the Province within i t s boundaries must be c e r t a i n . 123 The B.N.A. Act, 1871 could be u s e d 4 3 not only to declare the j u r i s d i c t i o n a l l i m i t s of each l e v e l of government for the purposes of offshore o i l and gas development, but also to c l a r i f y the e x i s t i n g p r o v i n c i a l boundary of B r i t i s h Columbia. A solution proposed by the federal government i n 1963"^ was to draw a r b i t r a r y boundaries, c a l l e d "mineral resources administration l i n e s " based on the geodetic gr i d system. The l i n e s would be within known federal j u r i s d i c t i o n i n the t e r r i t o r i a l sea beyond the inland waters of the provinces. These l i n e s were suggested as a basis of revenue-sharing and administrat of federal offshore mineral resources, though the le g a l basis for e f f e c t i n g the delineation and subsequent administration of lands and revenues were not dealt with. The B.N.A. Act, 1871 could be used to define the boundaries and j u r i s d i c t i o n s for such domestic purposes. The problem of defining borders by using the "mineral resources l i n e " i n t h i s case, however, i s that they were intended to pass exclusive rig h t s to a l l resources and waters on the p r o v i n c i a l side, enabling the province to pass l e g i s l a t i o n respecting them under i t s c o n s t i t u t i o n . The question i s then raised as to whether t h i s d i v i s i o n would i n t e r f e r e with' exclusively federal f i e l d s such as 51 navigation, shipping, settlement of Indian claims, sea coast and inland f i s h e r i e s and public harbours. There 124 i s no authority to suggest that the B.N.A. Act, 1871 could pass s p e c i f i c federal powers to a province. The problem arises i n a t h e o r e t i c a l sense. For the f i r s t time i n Canada's c o n s t i t u t i o n a l history a Province's boundaries w i l l include areas of the t e r r i t o r i a l sea and waters beyond that overlying the o i l and gas resources of the continental shelf. This i s a d i f f e r e n t s i t u a t i o n than navigable waters within a province which are under federal j u r i s d i c t i o n . The federal government's in t e r e s t in the t e r r i t o r i a l sea and, to a certain extent, beyond, i s not merely l e g i s l a t i v e j u r i s d i c t i o n , but i s a sovereign i n t e r e s t . The rig h t s i n t h i s area have been described as follows: F u l l sovereignty of both water and seabed extends from the shoreline (or baseline) to the outer l i m i t of the t e r r i t o r i a l sea. Seaward from t h i s l i m i t the water f a l l s into the region of the high seas, of free access to a l l states. But with respect to the seabed and i t s resources cer t a i n sovereign rig h t s exclusive to the coastal state e x i s t , thus bringing the t h i r d dimension into play. In short, beyond the outer l i m i t of the t e r r i t o r i a l sea any distant state may navigate f r e e l y on the surface of the water, may engage in f i s h i n g (assuming there are no other r e s t r i c t i o n s by d e f i n i t i o n or agreement), but may not exploit minerals and cer t a i n other natural resources from the seabed of the continental shelf. 52 Sovereignty c a r r i e s with i t the following incidents: 1. authority to rule over the t e r r i t o r y and the persons and objects within i t ; 125 2. exercise of l e g i s l a t i v e power; 3. dispensation of j u s t i c e ; 4. administration of a c t i v i t i e s of state within the t e r r i t o r y ; 5. control access to the t e r r i t o r y ; 6. oppose the exercise of the authority of foreign states subject to international law; 7. protection of the t e r r i t o r y of states and the. i n t e r e s t s - ... ... . 53 of i t s c i t i z e n s . Though, the- provincial, property r i g h t s are always subject to v a l i d federal j u r i s d i c t i o n , w i l l the mere fact of including these p a r t i c u l a r Canadian waters within p r o v i n c i a l t e r r i t o r y a l t e r the c o n s t i t u t i o n a l r e l a t i o n s h i p previously enjoyed by the federal government? In a sense, w i l l adding these waters to a province produce a p r o v i n c i a l mutant hitherto unknown? I t i s nearly impossible to predict the extent to which the Province could assert j u r i s d i c t i o n over these p a r t i c u l a r waters once within i t s borders. Could i t , for example, maintain that portions of the waters were not navigable? Since the primary te s t for n a v i g a b i l i t y i s commerciality, t h i s claim i s possible. If i t could, would t h i s then c u r t a i l further federal j u r i s d i c t i o n over these waters? What of the federal government's a b i l i t y to exercise Customs l e g i s l a t i o n i n these waters? The question could arise as to where the Canadian border begins. These waters, i t must be remembered, function as both a national and a p r o v i n c i a l 126 boundary. Those problems only r e f l e c t the need to c l e a r l y define federal and p r o v i n c i a l j u r i s d i c t i o n s over these 54 waters. In any case, the condition of transfer could reinforce the a p p l i c a b i l i t y of federal l e g i s l a t i o n . This i s the case of the coastal states i n the United States under 55 the Submerged Lands Act, which w i l l be discussed below. However, since i t i s intended to transfer to the Province j u r i s i d i c t i o n beyond the t e r r i t o r i a l sea, i t may be advisable to have a l l offshore o i l and gas development regulated under a common regime, and set the p r o v i n c i a l boundaries on land, though the Province could lose i t s claim to other offshore minerals which may be within p r o v i n c i a l boundaries. The 57 following Condition could be considered: Condition 1: (1) The boundaries of the Province of B r i t i s h Columbia are as described i n the attached schedule and beyond those boundaries, the Province s h a l l have the exclusive r i g h t to exploit o i l and gas i n the t e r r i t o r i a l sea and continental shelf to the extent recognized from time to time by international law, provided that such area not included within the boundaries described i n the attached schedule are added to the Province pursuant to (4). (2) Canada and B r i t i s h Columbia agree that the description of boundaries contained i n the schedule are conclusive for a l l purposes, the t e r r i t o r y added to the Province herein referred to as the "added t e r r i t o r y " . (3) The term "recognized by international law" means the l a t e s t International Con-vention respecting the e x p l o i t a b i l i t y of o i l and gas i n the continental shelf or i n waters beyond the t e r r i t o r i a l sea, r a t i f i e d by Canada. 127 (4) Canada agrees that l e g i s l a t i o n implementing any international treaty or convention which i t has r a t i f i e d that would increase the l i m i t s of exploitable o i l and gas as defined i n t h i s transfer, s h a l l be l a i d before Parliament at the next session following r a t i f i c a t i o n , and subject to the consent of the Province the l i m i t s of exploitable o i l and gas s h a l l be transferred to the Province under the conditions of t h i s transfer, and s h a l l also be referred to as added t e r r i t o r y . Section 2.2: international boundaries The determination of Canada's international boundaries with foreign states i s an issue, since t h e i r determination could a f f e c t the extent of the rights transferred to the 58 Province. On the west coast, certain international boundaries between Canada and the United States are s t i l l i n dispute. The Province of B r i t i s h Columbia has found po s i t i o n taken by the federal government i n respect of some of the maritime boundaries o f f the coast of B r i t i s h Columbia unacceptable, and has submitted counter-proposals. The Province's submission with regard to mineral and petroleum resource boundaries would have to be se t t l e d before a transfer of offshore o i l and gas, since i n some cases, the Province would claim more extensive rig h t s than Canada. For example, Canada has proposed an equidistance l i n e i n the Juan de Fuca area which the 128 Province maintains would ignore the Juan de Fuca Canyon as a boundary area. The federal, government argues that the Canyon i s the submarine extension of the S t r a i t s of Juan de Fuca, and i s the geomorphic and physiographic boundary between that shelf and the shelf extending from the coast of the United States on the Olympic Peninsula, south of Cape F l a t t e r y . The geological structure of the shelf and slope, B r i t i s h Columbia maintains, show potential for substantial o i l and gas reserves. Prior to the Offshore  Minerals Reference, the Province granted permits for petroleum exploration out to the edge of the Juan de Fuca Canyon (which were made subject to settlement of the boundary).. As regards the boundary on the continental shelf 6 0 o f f Dixon Entrance, the Province maintains that i t should be drawn i n a manner that recognizes that the Alaska Panhandle i s a "special circumstance". I t maintains that the e f f e c t of the Panhandle i s to deprive Canada of a substantial area of continental shelf that would otherwise be regarded as the "natural prolongation" of Canada. The Province also has problems with the establishment 61 of f i s h e r i e s boundaries. I t maintains that there i s no applicable convention r e l a t i n g to the drawing of l a t e r a l boundaries in f i s h i n g zones, and refers by analogy to the determination of boundaries of a nation's t e r r i t o r i a l sea under the Convention on the T e r r i t o r i a l Sea and 129 Contiguous Zone ( 1 9 5 8 ) w h i c h was not r a t i f i e d by Canada. D J Under A r t i c l e 12 of t h i s Convention, the equidistance l i n e may be displaced as' a boundary i n case of h i s t o r i c t i t l e or other special circumstances. In the case of Juan de Fuca and Dixon Entrance, the Province wants the f i s h e r i e s and mineral resource boundaries to coincide. The conditions of transfer must therefore account for settlement of international boundaries acceptable to the Province as regards the Canadian claim to offshore mineral resources. Though i t i s not intended that j u r i s d i c t i o n over f i s h e r i e s would pass to the Province, the non-resolution of the issue could r e s u l t in a stalemate i n the negotiations on the conditions of transfer of offshore o i l and gas. Condition 2: The Province of B r i t i s h Columbia, i n consultation with Canada, s h a l l be represented and e n t i t l e d to make submissions, in negotiations with the United States concerning the settlement of international boundaries between Canada and the United States, i n the S t r a i t s of Juan de Fuca and Dixon Entrance. This condition would at lea s t ensure B r i t i s h Columbia that a boundary decision would not be made without accounting for the Province's views. It would be u n r e a l i s t i c to assume that the federal government would agree to be bound to B r i t i s h Columbia's submission, since i t i s p a r t i c u l a r l y s e n s i t i v e to any precedent that could be established regarding boundary disputes on the east coast. 130 This condition would at least force a compromise, for i f the Province i s ensured p a r t i c i p a t i o n during the negotia-tions, the federal government w i l l want i n t e r n a l differences s e t t l e d before formal negotiations with the United States commence. Section 3: Determination of Federal J u r i d i c t i o n i n the  Te r r i t o r y and~~Waters of the T e r r i t o r i a l Sea and Beyond This section w i l l review the two types of j u r i s d i c -t i o n which the federal government exercises over the t e r r i -t o r i a l sea and over the waters and t e r r i t o r y beyond the t e r r i t o r i a l sea. The f i r s t type of j u r i s d i c t i o n r e l a t e s to powers reserved exclusively to the federal government. An example of the exercise of t h i s j u r i s d i c t i o n i s the a b i l i t y of the federal government to declare u n i l a t e r a l l y i t s t e r r i -t o r i a l j u r i s d i c t i o n (assuming that the j u r i s d i c t i o n does not 64 i n f r i n g e on p r o v i n c i a l boundaries). The second type of j u r i s d i c t i o n i s the j u r i s d i c t i o n the federal government exercises, by default of the offshore t e r r i t o r y not being within a province. For example, the federal government can now enact l e g i s l a t i o n implementing international obligations i t has undertaken. If the t e r r i t o r y was within a province, the federal government would have to j u s t i f y such l e g i s l a t i o n as being pursuant to an exclusively federal power. I t would not be r e a l i s t i c to assume that the federal government would re l i n q u i s h more of t h i s second category of j u r i s d i c t i o n than i s necessary to permit the Province to develop 131 e f f e c t i v e l y offshore o i l and gas. Both types of j u r i s d i c t i o n however, become intermeshed when implemented i n the offshore areas, since federal l e g i s l a t i o n i n the offshore areas need not be categorized under s p e c i f i c exclusive federal powers. The best way to demonstrate the federal exercise of j u r i s d i c t i o n i s by describing f i r s t l y , i t s a b i l i t y to determine t e r r i t o r i a l j u r i s d i c t i o n - that i s , determine the area within which i t claims to exercise i t s exclusive j u r i s d i c t i o n v i s - a - v i s other nations and, secondly, i t s a b i l i t y to determine the j u r i s d i c t i o n i t w i l l exercise beyond i t s t e r r i t o r i a l j u r i s d i c t i o n . Section 3.1: federal j u r i s d i c t i o n which enables the u n i l a t e r a l setting of the t e r r i t o r i a l l i m i t s of the exercise of j u r i s d i c t i o n  65 The federal government enacted amendments i n 1970 to the T e r r i t o r i a l Sea and Fishing Zones Act, which u n i l a t e r a l l y increased i t s t e r r i t o r i a l sea from three miles to twelve miles and extended j u r i s d i c t i o n over f i s h e r i e s beyond t h i s area through declaring f i s h i n g closing l i n e s . This action enabled the federal government to estab l i s h functional con-t r o l over f i s h e r i e s management beyond i t s t e r r i t o r i a l sea as part of the management of the marine environment as a whole. This u n i l a t e r a l measure taken by the federal government has been described as r e f l e c t i n g : ...a heightened concern with the t e r r i t o r i a l i n t e g r i t y and, even more s i g n i f i c a n t l y , a new willingness to take measures to protect that i n -t e g r i t y , even at the r i s k of appearing to d i s -regard international l e g a l precedents and procedures. 67 132 The federal government's a b i l i t y , to respond to threats to i t s t e r r i t o r y by extending "functional" control beyond the sovereign l i m i t s recognized by international 6 8 law, must be preserved i n the conditions of transfer. The federal government must continue to have the a b i l i t y to enact l e g i s l a t i o n which consolidates i t s control over the resources of Canadian waters - waters to which i t claims exclusive sovereignty. A transfer to the Province under the f i r s t procedure extends p r o v i n c i a l boundaries so that Canadian waters are included within p r o v i n c i a l boundaries and as well, those waters beyond Canadian t e r r i t o r y , i . e . beyond the t e r r i t o r i a l sea, would come within p r o v i n c i a l boundaries. Since the provinces cannot u n i l a t e r a l l y extend t h e i r t e r r i t o r i a l j u r i s d i c t i o n , the r i g h t of the federal government to extend i t s t e r r i t o r i a l j u r i s d i c t i o n must be preserved. In a sense there are two boundaries aft e r the transfer -a domestic and an international boundary. The domestic boundary w i l l be the fe d e r a l / p r o v i n c i a l boundary which w i l l extend beyond the t e r r i t o r i a l sea to the resources of the continental shelf to the extent recognized by international law. The international boundary w i l l be the l i m i t s established by the federal government as i t s t e r r i t o r i a l sea. By establishing t h i s l i m i t , i t claims c e r t a i n exclusive r i g h t s accorded to nations by international convention. While there was no c o n s t i t u t i o n a l impediment to the federal government 133 u n i l a t e r a l l y declaring i t s boundary extension, the s i t u a t i o n may be d i f f e r e n t i f the extended t e r r i t o r i a l sea was within established p r o v i n c i a l boundaries. While the federal government could never give the Province more j u r i s d i c t i o n than i t has once i t obtains the j u r i s d i c t i o n , the Province may be able to be transferred any extension of j u r i s d i c t i o n recognized under international law. If the federal govern-ment extended i t s t e r r i t o r i a l j u r i s d i c t i o n and the extended t e r r i t o r y came within p r o v i n c i a l boundaries, the provinces could argue that a merger takes place and that the new federal t e r r i t o r y comes within the provinces. This writer assumes that the federal government w i l l want to preserve i t s r i g h t to extend i t s t e r r i t o r i a l boundaries for purposes not associated with offshore o i l and gas development, such as i t did for f i s h e r i e s . The problem i s one of p o l i c y and not law, though the l e g a l implications may a f f e c t the policy p o s ition. Assuming that both parties are agreeable that the boundary extension i s to transfer only offshore o i l and gas, the following condition would probably assure that present federal j u r i s d i c t i o n would continue within the extended p r o v i n c i a l boundary. Condition 3: For greater certainty, except as regards the o i l and gas transferred to the Province under Condition 1, a l l Crown lands, mines and minerals and r o y a l i t e s incident thereto, and the waters, and a l l resources, plant and animal within such waters, superjacent to such lands, 134 mines and minerals or under or over the added t e r r i t o r y , s h a l l continue to be vested in the Crown and admin-istered by the Government of Canada, for the purposes of Canada, subject to the provisions of any Act of the Parliament of Canada. 69 Section 3.2: federal j u r i s d i c t i o n which w i l l enable i t to exercise j u r i s d i c t i o n beyond t e r r i t o r i a l j u r i s d i c t i o n The a b i l i t y of Canada to u n i l a t e r a l l y declare i t s t e r r i t o r i a l j u r i s d i c t i o n for domestic purposes, has enabled i t to pass l e g i s l a t i o n to control a c t i v i t i e s beyond i t s t e r r i t o r y which may a f f e c t i t s t e r r i t o r y , that i s , to extend i t s domestic control over resources t r a d i t i o n a l l y beyond i t s t e r r i t o r y . This a b i l i t y i s ess e n t i a l to enable i t to control the development of offshore o i l and gas. A province under section 92 of the B.N.A. Act, 1867, i s . 70 limited to the exercise of powers given to i t under the Constitution within i t s borders. Constitutional amendment would be necessary to change t h i s s i t u a t i o n . 71 On October 27, 1969 the government of Canada introduced the A r c t i c Waters P o l l u t i o n Prevention Act, which extended Canadian j u r i s d i c t i o n outside the t e r r i t o r i a l sea by providing preventative measures against o i l s p i l l s i n an area up to 100 miles from Canada's A r c t i c coast. Though j u s t i f i e d as not being an assertion of sovereignty by Canada over A r c t i c waters, but merely an exercise of 72 Canadian desire to keep the A r c t i c free of p o l l u t i o n , 135 the l e g i s l a t i o n gave Canada e f f e c t i v e functional control over passage through A r c t i c waters. The l e g i s l a t i o n had the i n c i d e n t a l e f f e c t of emphasizing Canada's j u r i s d i c t i o n a l . 7 3 interests i n terms of environmental security. Since the provinces do not have the a b i l i t y to pass laws which have e f f e c t beyond the t e r r i t o r i a l l i m i t s of a province, or to pass laws extending functional control over a c t i v i t i e s 74 outside i t s t e r r i t o r y , i t i s e s s e n t i a l that the power of the federal government to make and enforce laws r e l a t i n g 75 to s p e c i f i c maritime functions and a c t i v i t i e s o f f Canada's coasts be preserved i n any transfer to the Province. Since the Province does not have the c o n s t i t u t i o n a l a b i l i t y to exercise the j u r i s d i c t i o n s referred to i n t h i s section, i t may seem i r r e l e v a n t to the Province's offshore a c t i v i t i e s . However, the Province's offshore a c t i v i t i e s can take place beyond t e r r i t o r i a l j u r i s d i c t i o n , and the federal government's a b i l i t y to control these a c t i v i t i e s must be recognized. Domestically t h i s becomes an implementation problem. The following condition would c l a r i f y continuation of the federal government's j u r i s d i c t i o n i n offshore waters. Condition 4: For greater certainty, nothing i n t h i s transfer r e s t r i c t s the r i g h t s of the Parliament of Canada to l e g i s l a t e beyond Canadian waters. 136 Section 3.3: federal j u r i s d i c t i o n within a province The previous two sections demonstrated that the federal government's j u r i s d i c t i o n i n the offshore i s unique. It can determine boundaries and thus t e r r i t o r i a l and international r e l a t i o n s . The provinces are obviously hamstrung i n these areas. However, there are two p a r t i c u l a r types of federal j u r i s d i c t i o n that they could frustrate i f the boundaries are extended without s p e c i f i c reservations to preserve the federal power. The f i r s t i s the treaty implementation power of the federal government, and the second i s the j u r i s d i c t i o n of the federal government over lands reserved for Indians. Section 3.3(a): treaty implementation The Supreme Court of Canada i n the Offshore Minerals Reference, r e i t e r a t e d that the federal government was the sovereign state which would be recognized by international 7 6 law. It expressed the (..concern that i f the t e r r i t o r y was p r o v i n c i a l , the federal government could not honour i t s international obligations. Certainly i f a treaty related to a matter within the exclusive p r o v i n c i a l j u r i s d i c t i o n , the federal government could not l e g i s l a t e to implement 77 the terms of the treaty. The following condition would preserve federal treaty implementation powers. Condition 5: Notwithstanding anything i n t h i s transfer, the added t e r r i t o r y s h a l l be subject to a l l provisions as may have been or s h a l l hereafter be.-enacted by the 137 Parliament of Canada, i n order to implement any international treaty.and convention. 7 8 Since federal l e g i s l a t i o n implementing t r e a t i e s could a f f e c t either the Province's rights i n offshore o i l and gas or ...those of holders of an inte r e s t from the Crown, the following condition i s necessary. Condition 6: In the event that any rig h t s of the Province hereby granted become the subject of an enactment by the Parliament of Canada, the Province or holders of an i n t e r e s t from the Province s h a l l be compensated for such interference as follows: (compensation scheme). Section 3.3(b): federal j u r i s d i c t i o n over lands reserved for Indians and Indian claims to offshore resources At the time that Prime Minister Joseph Clark was proposing that the offshore mineral resources be transferred to B r i t i s h Columbia, the Union of B r i t i s h Columbia Indian Chiefs (UBCIC), i n evidence before a National Energy Board 79 Inquiry, submitted t h e i r position that the Indian people are owners of offshore mineral resources, based on 8 0 unextinguished aboriginal r i g h t s . A resolution f i l e d before the Inquiry, referred to an undertaking between the Prime Minister and the Premier of B r i t i s h Columbia, not to s e t t l e a transfer of offshore resources to the Province 81 u n t i l the Indian i n t e r e s t had been s e t t l e d . Any i n t e r e s t of the native people i n the offshore must be accounted for i n a transfer to the Province. Either the claims w i l l have to be se t t l e d by the courts or through mutual agreement 138 or the transfer w i l l have to be made subject to any claims. If the transfer does go ahead reserving the r i g h t to future claims, the industry may be leary of entering into any development that could be defeated i n the future, and the Indians may f e e l that any resources which they may be e n t i t l e d to would be dissipated before settlement i s reached, or worse, that irreparable damage to other resources may occur as a r e s u l t of development. The author strongly suggests that no transfer be proposed u n t i l the affected Bands approve the terms under the referendum procedures 8 2 set out i n the Indian Act. This s i t u a t i o n i s not unique to Canada. The Submerged Lands Act (U.S.A.) provides i n section 1311(b): There i s excepted from the operation of section 3 of t h i s Act [transfer to coastal s t a t e ] , ...such lands beneath navigable waters, held, or any i n t e r e s t i n which i s held by the United States for the benefit of any t r i b e , band, or group of Indians or for i n d i v i d u a l Indians... There are examples of federal l e g i s l a t i o n i n Canada reserving future claims by Indian bands as a condition of d i s p o s i t i o n or a power of d i s p o s i t i o n . The Northern 8 3 Pipeline Act, authorizing construction of a pipeline through the Yukon and Northwest T e r r i t o r i e s , an area over which the resident Indians have l a i d claim, provides: 23.1 Notwithstanding t h i s Act, any native claim, r i g h t , t i t l e or i n t e r e s t that the native people of Canada may have had p r i o r to the coming into force of t h i s Act i n and to the land on which the pipeline w i l l be 139 situated, continues to ex i s t u n t i l a settlement i n respect of any such claim, r i g h t , t i t l e or i n t e r e s t i s effected. o 4 The Indian O i l and Gas Act contains a s i m i l a r provision introduced at the committee stage of the B i l l . Its inclusion i s unusual since the Indian O i l and Gas Act deals only with s e t t l e d lands and i s subject to the surrender pro-visions of the Indian Act. Section 7(2) of t h i s Act reads: Notwithstanding anything herein contained, nothing i n t h i s Act s h a l l be deemed to abrogate the rig h t s of Indian people or preclude them from negotiating for o i l and gas benefits i n those areas i n which land claims have not been s e t t l e d . The following condition i s suggested for inc l u s i o n as a condition of transfer. Condition 7: The Province and Canada have consulted with the following Indian bands of the Province i n the preparation of t h i s tranfer: ( l i s t bands), but notwithstanding anything herein con-tained, any native claim, r i g h t , t i t l e or int e r e s t that the native people of Canada may have had p r i o r to the coming into force of t h i s transfer and i n and to the t e r r i t o r y transferred to the Province, continues to ex i s t u n t i l a settlement i n respect of any such claim, r i g h t , t i t l e or i n t e r e s t i s effected, 85 and any d i s p o s i t i o n of o i l and gas s h a l l be made subject to such claim. Section 4: P r o v i n c i a l J u r i s d i c t i o n Within the Extended  Pr o v i n c i a l Boundaries that Include Offshore Oil:and Gas The f i r s t procedure suggests a method by which limited j u r i s d i c t i o n over offshore o i l and gas could be 140 passed to the Province. The l i m i t a t i o n s r e f l e c t the federal position, which b a s i c a l l y i s that i t would r e t a i n the power i t presently exercises over the waters and natural resources other than o i l and gas, i n the offshore areas. The procedure of extending the boundaries i s meaningless without an expression of the powers which the Province would exercise within the extended t e r r i t o r y . The primary reason why the f i r s t procedure i s so suited to a transfer of l e g i s l a t i v e j u r i s d i c t i o n to B r i t i s h Columbia i s that the offshore t e r r i t o r y i s brought within the d i s t r i b u t i o n of powers under the B.N.A. Act, 1867. This procedure can assure each l e v e l of government the exclusive j u r i s d i c t i o n they agree i s necessary to the r e a l i z a t i o n of t h e i r respective objectives i n the development of offshore resources. The most d i f f i c u l t task i n t h i s procedure w i l l be reaching a compromise on these objectives. Any compromise on the extent of p r o v i n c i a l j u r i s d i c t i o n w i l l be the primary negotiation concern. This section w i l l review the l e g i s l a t i v e authority that the Province would probably require over offshore o i l and gas. In assessing whether the requirements are r e a l i s t i c , a review w i l l be made of the degree of control held by the coastal states i n the United States over natural resources transferred to them by the central government of that country. 141 Section 4.1: p r o v i n c i a l l e g i s l a t i v e requirements over offshore o i l and gas: development ; : : :  The Province at minimum would require the same l e g i s l a t i v e authority over offshore o i l and gas as i t has regarding onshore development of similar resources. For example, as regards the expl o i t a t i o n of o i l and gas within the existing boundaries of B r i t i s h Columbia, p r o v i n c i a l l e g i s l a t i o n covers the following areas: 1. terms respecting exploration and d i s p o s i t i o n and development, including conservation of petroleum and natural gas (86) "surface" entry would be federal since the federal government would continue to exercise control over the waters above the transferred resources; 2. transportation of petroleum and natural gas products; (87) the federal government would have to continue to exercise some control over the laying of pipelines under navigable waters or waters beyond the t e r r i t o r i a l sea; pursuant to the federal undertaking of navigation, shipping and f i s h e r i e s , and implementation of international conventions; 3. taxation of mineral i n t e r e s t and transportation f a c i l i t i e s ; (88) the province should have the a b i l i t y to tax the resource and operators, since a transfer pursuant to section 3, B.N.A. Act, 1871, extends p r o v i n c i a l boundaries over the transferred resources; 4. storage of production naturally occurring underground c a v i t i e s (89) - s u f f i c i e n t i n t e r e s t i n these underground formations should pass to the province to enable i t to allow such storage, since t h i s r i g h t i s d i r e c t l y related to conservation of the resource; 5. labour r e l a t i o n s and c i v i l law within the province; (9.0) the courts have held that offshore exploration within a province can be subject to p r o v i n c i a l labour l e g i s l a t i o n (91) - as i n the case of taxation of the 142 resource, the resources after a transfer are within the p r o v i n c i a l boundaries and should be accorded the same status as other resources within the province; 6. management and generation of energy from offshore o i l and gas; (92) subject to the federal government's exercise of i t s residual power and implementation of international convention, these powers should be exercised by the province; 7. p o l l u t i o n i n waters r e s u l t i n g from offshore o i l and gas operations; (9.3) as discussed above, the province should have the a b i l i t y to control p o l l u t i o n through resource s p e c i f i c l e g i s l a t i o n - however, the federal government should have the r i g h t to implement international conventions (94) on p o l l u t i o n , as well as enforcing general p o l l u t i o n l e g i s l a t i o n pursuant to the federal undertaking of navigation, shipping and f i s h e r i e s . This l i s t appears very extensive and perhaps too cumbersome i n i t s breadth to accommodate the l i m i t a t i o n s which w i l l be proposed by the federal government. However, the l e g i s l a t i v e regime being proposed o f f Canada's west coast by the f i r s t procedure i s already operative i n the t e r r i t o r i a l sea of the United States. The major difference i s that the coastal states are given exclusive j u r i s d i c t i o n over a l l resources within the t e r r i t o r i a l sea. Though th i s difference may create an administrative problem i n the Canadian scheme where only o i l and gas come within p r o v i n c i a l j u r i s d i c t i o n , there i s no reason to suggest that the scheme i n the United States depends on exclusive j u r i s d i c t i o n over a l l resources being transferred. 143 Section 4.2: the control of coastal states over offshore resources • ; : An examination of present and possible future developments i n the United States i n the f i e l d of offshore management of resources w i l l be helpful i n considering conditions to be attached to a transfer of offshore o i l 95 and gas to B r i t i s h Columbia. The Submerged Lands Act, and Outer Continental Shelf Lands Act of the United States w i l l be examined i n t h i s section. The coastal state has near exclusive j u r i s d i c t i o n over natural resources i n the t e r r i t o r i a l sea (secured from the i r coasts to a distance of three geographic miles and up to three marine leagues i n the Gulf of Mexico). Within t h i s zone, the states are free to lease or s e l l t r a c t s , but the federal government retains j u r i s d i c t i o n and ownership 9 6 of the water column and a i r space over the seabeds. Under the Submerged Lands Act, the United States retains control of the land and water of t h i s belt for purposes of commerce, navigation, national defence and international 97 a f f a i r s . Under the Act the r i g h t s of the federal govern-ment under the Constitution are paramount to the state's 9 8 proprietary r i g h t s , but the Act does not preclude the a b i l i t y of the state to exercise those r i g h t s . Therefore, the Act acknowledges paramountcy without declaring exclusive j u r i s d i c t i o n i n the federal government. This type of j u r i s d i c t i o n i s recognized i n Canada i n regard to f i s h e r i e s 144 within a province, or exploitation i n navigable waters of p r o v i n c i a l minerals, and could be applied to the develop-ment of Canadian offshore o i l and gas. Certain reservations of r i g h t s to the federal government were j u s t i f i e d on the basis that the t e r r i t o r i a l sea i s a major channel of int e r s t a t e commerce, with defence implications. However i t was pointed out that the federal powers would not reduce the state's t i t l e beyond that "inherent i n the supremacy 99 clause of the Constitution". This Act has been described as: ...a congressional expression of a desire to allow coastal states control over the submerged lands off t h e i r coast within the t e r r i t o r i a l sea. Such control i s subject to the overriding federal concerns of commerce and defence. 10 0 The Submerged Lands Act allows the coastal states to control resources within t h i s zone. As one writer noted: Ownership of a p a r t i c u l a r coastal region confers the power to determine whether or not to develop resources located i n the area. As owners of the sea bottom of the t e r r i t o r i a l sea, for instance, the states are responsible for deciding whether to begin offshore mineral explorations i n that area or to leave the sea bottom undeveloped. 101 The s i t u a t i o n i n the state's zone of control over the t e r r i t o r i a l sea must be contrasted to the federal government's control over the outer continental shelf, pursuant to the Outer Continental Shelf Lands Act. Where the t e r r i t o r i a l sea zone i s an example of federal/state cooperation, the j u r i s d i c t i o n regime i n the outer 145 continental shelf exposes the problems of l i m i t a t i o n s on federal development of offshore resources, even where the federal proprietary r i g h t s are exclusive. While the state does not have a proprietary i n t e r e s t i n the outer continental shelf, i t can exercise l i m i t e d control over outer continental shelf development by the fact that development i n t h i s area w i l l frequently require extensive use of state lands for transportation or processing 102 f a c i l i t i e s . As noted above, two areas where the Province would seek j u r i s d i c t i o n over offshore o i l and gas would be the law of general application i n the Province and p o l l u t i o n control. Both these areas have been recognized in the outer continental shelf as requiring state p a r t i c i p a t i o n . 103 The c i v i l and criminal law applicable to the outer continental shelf i s state law, though mineral leases are s p e c i f i c a l l y governed under the Outer Continental Shelf Lands Act. The transfer should declare the c i v i l and criminal law of the Province applicable to offshore o i l and gas exploitation, though a very clear d e f i n i t i o n of what i s included i n o i l and gas operations must be developed. In Canada, the offshore area i s a l e g a l no-man's land. The Federal Court of Canada, in Dome Petroleum Limited v. 104 N. Bunker Hunt et a l , held that i n the absence of a breach of federal law, the Court had no j u r i s d i c t i o n 146 notwithstanding that the a c t i v i t i e s of the company were within the t e r r i t o r i a l l i m i t s of Canada. The case was an action for debt between an American and a Canadian, the p l a i n t i f f requesting an injunction to protect that debt. The property was situate outside the t e r r i t o r i a l l i m i t s of the Northwest T e r r i t o r i e s , but within Canadian t e r r i t o r y . After the Federal Court declined j u r i s d i c t i o n , the p l a i n t i f f was l e f t with no recourse, since the T e r r i t o r i a l Court could c e r t a i n l y not issue an injunction to be enforced beyond i t s t e r r i t o r i a l l i m i t s . P o l l u t i o n control of offshore mineral development i s a two-edged problem. There i s the problem of the environmental e f f e c t s on onshore development to support offshore mineral recovery, and the p o t e n t i a l for p o l l u t i o n of the coastal areas from offshore a c t i v i t i e s . These two occurrences can be summed up as follows: E c o l o g i c a l l y f r a g i l e and abound with inhabitants, the nation's coastlines are a scarce and highly useful source of recreation and esthetic enjoyment. Refineries and t h e i r adjoining tank farms require considerable amounts of land that would otherwise be used for diving or open space. They also cause serious a i r , water and v i s u a l p o l l u t i o n problems. F i n a l l y , offshore development suffers the unhappy prospects of massive o i l p o l l u t i o n of the nation's beaches and coastal waters. Even the Federal Government [U.S.] admits that sooner or l a t e r a major s p i l l w i l l occur. 105 147 In the United States two federal statutes have had a s i g n i f i c a n t impact on outer continental shelf a c t i v i t i e s : 106 the National Environmental Policy Act (NEPA, )and the 107 Coastal Zone Management Act. At present there are no comparable federal laws i n Canada to control environmental e f f e c t s of offshore mineral development. The federal Cabinet has created a process for reviewing environmental effects of projects under federal j u r i s d i c t i o n , the Environmental Assessment Review Process (EARP), but to date the process has no l e g i s l a t i v e sanction. Without l e g i s l a t i v e sanction the process w i l l only succeed to the extent that a l l parties compromise t h e i r positions, a s i t u a t i o n not conducive to e f f e c t i v e environmental management and contro l . The main c r i t i c i s m of NEPA i s that though the delays which l e g i s l a t i o n can cause under the Act i s a strong weapon of the opponents of o i l d r i l l i n g , "...NEPA i n general i s concerned with procedures that are necessary prerequisites 108 to action and i s not a substantive impediment to d r i l l i n g " . The Coastal Zone Management Act was passed when Congress i d e n t i f i e d "a national i n t e r e s t i n the e f f e c t i v e management, b e n e f i c i a l use, protection and development of the coastal 109 zone1'. The Act encourages the creation of statewide programs of coastal management by providing grants to any coastal state for the development^''"^ and administration''""'"''" of a management program for the land and water resources 148 of the coastal zones. Once a coastal plan has been approved, the statute requires the federal government to conform i t s a c t i v i t i e s and those of i t s lessees or permittees to the 112 state's coastal plan. Likewise, section 307 (d). provides that no federal agency may grant assistance under other federal programs to proposed state or l o c a l government a c t i v i t i e s that " a f f e c t " the state coastal zone and are not consistent with a state plan. Though i t does not require c e r t i f i c a t i o n , but rather only conformity with a state plan to the maximum extent practicable, section 307(c) (.1) applies to a c t i v i t i e s conducted or supported by federal agencies which "affect" the state coastal zone. Interpretation of the geographic scope of these provisions, p a r t i c u l a r l y the cooperation requirements for lessees under section 307(c)(3), w i l l be c r u c i a l to the e f f e c t of the Act on outer continental shelf policymaking. The shortcomings of t h i s Act are that i t does not provide a balance between environmental protection and energy 113 development. As well, there i s a lack of p r i o r consultation with coastal states before leasing i s i n i t i a t e d by the federal government. The necessity of the coastal state having t o t a l control over the environmental e f f e c t s of offshore mineral development i s evident from a review of the inadequacies of the Coastal Zone Management Act i n the 114 United States. There i s a movement to encourage the states 149 to d i r e c t l y p a r t i c i p a t e i n outer continental shelf development - an area where they have no proprietary i n t e r e s t . A stronger case can be made to give a province control over environmental l e g i s l a t i o n related to the development of offshore o i l and gas under i t s l e g i s l a t i v e j u r i s d i c t i o n . Section 4.3: pr o v i n c i a l j u r i s d i c t i o n -the terms and conditions The following condition i s a suggested format for expressing the j u r i s d i c t i o n which the Province would be able to exercise over offshore o i l and gas. Condition 8:. For greater certainty, the c i v i l and criminal laws heretofore or hereafter i n force i n the Province, to the extent they are not inconsistent with the terms of t h i s transfer and the exercise of any power reserved to the Parliament of Canada,.are declared to be the law applicable to the ex p l o i t a t i o n , development, and, transportation by underwater pi p e l i n e , of o i l and gas herein transferred to the Province, (.115) and for greater certainty, but not to r e s t r i c t the generality of the foregoing, the Province, subject to the foregoing l i m i t a t i o n s , may pass l e g i s l a t i o n with respect to: (a) taxation of the o i l and gas resource and i t s transportation by underwater pipeline; (b) the terms and conditions of explo i t a t i o n , development, transportation by underwater pipeline of o i l and gas, conservation, p o l l u t i o n prevention, including any compensation scheme related to o i l and gas; (c) labour r e l a t i o n s and conditions of work related to the ex p l o i t a t i o n , development and transportation by underwater pipeline of o i l and gas; 150 (d) storage of o i l and gas i n any naturally occurring underground cavity: within the transferred area. Condition 9: The foregoing provisions of t h i s agreement may be varied by agreement confirmed by concurrent statutes of the Parliament of Canada and the Legislature of the Province. This condition would extend the c i v i l law of the Province to the offshore o i l and gas development so as not to leave the enforcement of contracts beyond the reach of the p r o v i n c i a l courts. This condition also extends the federal criminal law a c t i v i t i e s associated with o i l and gas development, though i t would probably be more appropriate for the federal government to l e g i s l a t e so as to include the geographic area as opposed to incorporating p r o v i n c i a l o i l and gas a c t i v i t i e s within federal criminal j u r i s d i c t i o n . The reference to criminal law i s included mainly to indicate that federal criminal l e g i s l a t i o n such as the Narcotics Control Act, may not apply to c e r t a i n offshore areas. Section 5: Transfer of L e g i s l a t i v e J u r i s d i c t i o n Over  Offshore Resources From a Central to a Local Government - Recognition of International Convention: the American  Proposal The proposition of extending the j u r i s d i c t i o n to exploit offshore natural resources to the extent recognized by international law i s currently being considered i n the negotiations for the admission of Puerto Rico as a state. 151 Studies of the mineral p o t e n t i a l X X D underlying the t e r r i t o r i a l sea and continental shelf o f f Puerto: Rico, i t has been said " w i l l create p o l i t i c a l pressures for Puerto Rico to demand exclusive rights to exploit i t s surrounding seabed i n an 117 area from 9 to 200 miles into the sea". The i n c l u s i o n of such a provision i n Puerto Rico's compact of admission could be p o l i t i c a l l y necessary and p r a c t i c a l l y e s s e n t i a l . The "compact of admission" ref e r s to the terms upon which new states are admitted into the union under the /American 118 Constitution. In Brophy v. The Attorney-General of 119 Manitoba, the Privy Council used si m i l a r terminology i n describing The Manitoba Act, 1870 confirmed by the B.N.A. Act, 1871, when i t stated: ...the Manitoba Act of 1870, which was i n truth a Parliamentary compact..." (emphasis added) In the United States, i t i s necessary to consider whether the equal footing doctrine would p r o h i b i t Congress from granting rights to an incoming state that exceed those 12 0 granted to any existing state at i t s admission. This doctrine that new states must be admitted on an equal footing with the old ones has made i t unclear as to whether there i s a congressional bar to a grant of disproportionate seabed righ t s to an incoming state, i . e . rights beyond the t e r r i t o r i a l sea. The Supreme Court of the United States held i n United 121 States v. Texas, that seabed rights were vested i n the 122 federal government under the equal footing doctrine. 152 The "equal footing" phrase has been included i n each 123 state's act of admission since 1796, though i t "...does not rest on any express provision of the const i t u t i o n . . . but on what i s considered... to be the general character and purpose of the union of the states... - a union of 124 p o l i t i c a l equals". In an h i s t o r i c a l analysis of t h i s doctrine, Bartley explains that the: ..."equal footing" phrase antedates the constitution and had i t s ori g i n s i n the quarrels which arose over the various states' claims to western lands... i n 1^80, Congress passed a resolution asking the various states to cede t h e i r western lands to the Congress, on condition that other states would be created from them with the "same rights of sovereignty, freedom, and independence as the other states". 125 It i s clear from the previous examination of the B.N.A. Act, 1871, that there i s no co n s t i t u t i o n a l impediment i n Canada to admitting new provinces on conditions which varied t h e i r constitutions from that of the four o r i g i n a l provinces (under the B.N.A. Act, 1867), and s i m i l a r l y on conditions that varied p r o v i n c i a l constitutions as regards t e r r i t o r y - ^  - , . . . . 126 added to existing provinces. A very convincing case i s made, notwithstanding the equal footing doctrine, for the inclusion i n the compact for the admission of Puerto Rico; the grant of the ri g h t to explore and exploit the natural resources of the seabed 153 to the extent recognized by the international community. The following considerations (which are relevant to a transfer to the Province) would flow from such a grant 1. the grants of seabed righ t s w i l l have to be s u f f i c i e n t l y s p e c i f i c to avoid problems related to establishment of baselines from which to measure state control, s h i f t i n g coastlines, and p o l l u t i o n and environmental controls; 129 2. the grant would have to account for the implementation of international obligations which may change the r i g h t s granted from time to time; 3. the grant would affi r m the "imperium r i g h t s " of the United States; 4. confirmation of the federal government's ri g h t to exercise control over national defence, foreign a f f a i r s , world commerce and navigation i n offshore waters; and i n order for the federal government to carry out the c o n s t i t u t i o n a l power by the enactment of laws regulating the seabed and submerged lands the i n c l u s i o n of a provision for a compensation scheme i n the event of and "taking" ( i . e . expropriation) of the state's i n t e r e s t . Based on the foregoing discussion of the capacity of the federal government to l e g i s l a t e i n the offshore, a review of s p e c i f i c federal l e g i s l a t i o n and comparable p r o v i n c i a l l e g i s l a t i o n respecting the control of o i l and gas development and f i n a l l y , the s i t u a t i o n which i s developing i n the United States regarding offshore mineral resource development, the proceeding conditions should be considered i n a transfer of l e g i s l a t i v e j u r i s d i c t i o n over offshore o i l and gas to B r i t i s h Columbia. 154 CHAPTER IT FOOTNOTES 1. Letter to Premier Brian Peckford of Newfoundland from former Conservative Prime Minister Joseph Clark dated September 14, 1979, where the Prime Minister stated, at pages 3-4: "As I am sure you and your o f f i c i a l s r e a d i l y appreciate, the protection of the environment and governmental supervision and regulation of offshore mineral resource a c t i v i t i e s are i n e x t r i c a b l y related. Before the commencement of actual f i e l d operations, proposed offshore programs must be c a r e f u l l y studied, with t h e i r authorization being dependent upon a number of factors, not the l e a s t of which are those r e l a t i n g to p o l l u t i o n prevention and safety. Once such a c t i v i t i e s are underway, inadequate action with respect to d i r e c t supervision and regulation can have the most serious consequences, as has been demonstrated i n the case of each of the major offshore o i l w e l l blowouts i n the world to date. Moreover, the information derived from offshore a c t i v i t i e s i s not only e s s e n t i a l to ensure safe opertions but i s also es s e n t i a l to the national hydrocarbon inventory program, given the continuing federal need-to-know requirement for the forumulation and implementation of national energy strategy. Obviously these considerations w i l l f i n d t h e i r place within the framework of the arrangements for implementation that r e s u l t from our continuing discussions on offshore mineral resources. Another concern of fundamental si g n i f i c a n c e w i l l be to ensure the f u l l maintenance of and respect for Canada's international r e s p o n s i b i l i t i e s and obligations with regard to the offshore, as well as the c o n s t i t u t i o n a l rights and r e s p o n s i b i l i t i e s of the Federal Government in t h i s context." Annexed to the l e t t e r and described as "Basic P r i n c i p l e s Concerning Offshore Mineral Resources" contained the following descriptions of l i m i t a t i o n s on a transfer of offshore mineral resources: "The Province of Newfoundland should own the mineral resources of the continental margin o f f i t s coast insofar as Canada i s e n t i t l e d to exercise sovereign rig h t s over these resources i n accordance with international law. Such ownership should be, to the extent possible, of the same nature as i f these resources were located within the boundaries of the Province. The l e g i s l a t i v e j u r i s d i c t i o n of the Province should, to the extent possible, be the same as for those resources within the boundaries of the Province. Such ownership of.and l e g i s l a t i v e j u r i s d i c t i o n over offshore resources by Newfoundland w i l l be consistent with and subject to the d i v i s i o n of l e g i s l a t i v e 155 competence as between Parliament and p r o v i n c i a l l e g i s l a t u r e s under the Constitution of Canada." Copies of t h i s correspondence were sent to the Premier of B r i t i s h Columbia as r e f l e c t i n g the federal government's general position on offshore minerals transfer to other provinces. 2. This issue w i l l be examined i n Procedure I I . 3. See CP.R. v. Notre Dame de Bonsecours [1899] A.C. 367, where Lord Watson stated: "The Dominion cannot give j u r i s d i c t i o n , or leave j u r i s d i c t i o n , with the province... If they have i t , either one or the other of them, they have i t by virtue of the Act of 1867. I think we must get r i d of the idea that either one or the other can enlarge the j u r i s d i c t i o n of the other or surrender j u r i s d i c t i o n . " This statement does not appear i n the reported case, but i n the verbatim report as c i t e d by Lefroy, Canadas  Federal System (1913) 70, footnote 10a. 4. [1967] S.C.R. 792,819. 5. Id., at 822. The continental shelf has been described by Zacher and Johnson, International Law (19 77) 1, as follows: "The seabed i t s e l f can be divided into two d i s t i n c t geolo-g i c a l regions: the continental margin and deep ocean f l o o r . The margin i s that area of submerged land geologically associated with the continental mass, and i t consists of three regions: the shelf, which averages forty miles i n width and which i s marked by a shallow i n c l i n a t i o n towards greater depths; the slope, which plunges at much steeper i n c l i n a -tions to great depth; and the r i s e , an accumulation of sediment at the base of the slope which tapers o f f at a shallow i n c l i n a t i o n u n t i l i t merges with the deep ocean f l o o r (see F i g . 1)." 6. The Court i n the following excerpt referred to section 3 of the B.N.A. Act, 1871 as a means available to the federal government to extend the boundaries of B r i t i s h Columbia . which had not been used: "There has never been any a l t e r a t -ion of the l i m i t s of the Province of B r i t i s h Columbia pur-suant to t h i s section [s.3, B.N.A. Act, 1871] and there i s no provision for extending the l i m i t s i n any other way." 7. Id., at 798. 8. Convention on the T e r r i t o r i a l Sea and the Contiguous zone, UN A/CONF.13/L.52, adopted A p r i l 27, 1958; Con-vention on the Continental Shelf, UN Doc. A/CONF. 13/L55, adopted A p r i l 26, 1958. 156 9. K. Beauchamp, M. Crommelin and A.R. Thompson, J u r i s - d i c t i o n a l Problems i n Canada's: Offshore (1973) Alberta Law Review 431, 432. 10. Op. c i t . supra, n. 9, at p. 432. 11. Id., at p. 432 footnote 10, also see Limits and 'Statu s of the T e r r i t o r i a l Sea, Exclusive Fishing Zones, Fishery  Conservation Zones and the Continental Shelf (1971) , 10 International Legal Materials 1225, 1258-1270. 12. T e r r i t o r i a l Sea and Fishing Zones Act Amendment, R.S.C. 1970, c.45, s . l . (1st Sup.) 13. [1931] S.C.R. 374. 14. See Offshore Minerals' Reference [1967] S.C.R. 792, 817. "The rights i n the t e r r i t o r i a l sea formerly asserted by the B r i t i s h Crown i n respect of the Colony of B r i t i s h Columbia were a f t e r 1871 asserted by the B r i t i s h Crown i n respect of the Dominion of Canada..." 15. Op. c i t . supra, n. 13 at 380. 16. [1933] A.C. 156, see Offshore Minerals Reference [1967 ] S.C.R. 792, 817. 17. Id., at 164. 18. Ibid. 19. [1967] S.C.R. 792, 818, also see D.P.0'Connell, International Law (1965). "The d e f i n i t i o n of Acquired Rights" 4 36. 20. The Statute of Westminster, 1931 (Imp.) 22 Geo.5. c.4, reproduced i n R.S.C. 1970, Appendix No. 26. 21. Section 7(2) of the Statute of Westminster extended section 2 of the Act to the provinces but nothing was said of section 3, which by i t s e x p l i c i t language only referred to the Dominion Parliament, also see D.P. O'Connell, International Law (1965) 538. 22. [1967] S.C.R. 792, 818. 23. B. Johnson, and M. Zacher, Canadian Foreign P o l i c y and the Law of the Sea (1977) 9. 157 24. Proclamation 2667, September 28, 1945, reproduced i n United States B u l l e t i n , also see R. Krueger, The  Development and Administration of Outer Continental Shelf Lands of the United States (1968) , 14 Rocky Mountain Mineral Law Review 643, 652. 25. Op. c i t . supra, n. 5. 26. Ibid. 27. D.P. O'Connell, The J u r i d i c a l Nature of the T e r r i t o r i a l Sea (1971), The B r i t i s h Yearbook of International Law 381. 28. North Sea Continental Shelf Cases, I.C.J., February 20, 1969, reproduced i n (1969) 8 International Legal Materials 340, 363 para 39. The l a t e s t informal composite negotiat-ing text supported by Canada regarding the continental shelf would not change the status of the continental shelf being ab i n i t i o t e r r i t o r y of the l i t t o r a l state. A r t i c l e 76, paragraph 1 of t h i s text defines the c o n t i -nental shelf as follows: The continental shelf of a coastal State comprises the sea-bed and subsoil of the submarine area that extend beyond i t s t e r r i t o r i a l sea throughout the natural prolongation of i t s land t e r r i t o r y to the outer edge of the continental margin, or to a distance of 20 0 nautical miles from the baselines from which the breadth of the t e r r i t o r i a l sea i s measured where the outer edge of the continental margin does not extend up to that distance. The continental shelf, therefore, i s measured horizon-t a l l y instead of v e r t i c a l l y as under A r t i c l e 12 of the 1958 Convention, that i s , to a depth of 200m. A r t i c l e 27 of the negotiating text i s otherwise i d e n t i c a l to A r t i c l e 2 of the Geneva Convention on the Continental Shelf (1958). I t i s t h i s l a t t e r A r t i c l e which the court ruled on i n the North Sea Cases. 29. T i t l e 43 U.S.C.S. s.1331. 30. 13 E l i z . , c. 29. 31. R. Breeden, Federalism and the Development of Outer Con-t i n e n t a l Shelf Mineral Resources (1977) 14 Public Land and Resource Law Digest 32,72. 158 32. Op. c i t . supra, n. 30, s. (1)(1). 33. Kitchen, Labour Law and Off-Shore O i l (1977) 5 5. 34. R.S.C. 1970 C.0-4 (as amended by R.S.C. 1970,(1st Supp.) c. 30, S.C. 1976 - 77c. 55 (note. ss. 28-36 not i n forc e ) . 35. Op. c i t . supra n. 23 at 20. 36. Canadian House Of Commons Debates February 13, 19 70, p. 3577 carr i e d into law by R.S.C. 1970 (1st Supp.) 'c. 30 s. 3, amended to change "meters" to "metres" by S.C. 1976-77 c. 55. 37. Ibid. 38. Ibid, also see R.S.C. 1970,(1st Supp) c. 55 s. 3(c). 39. Ibid. 40. See Canada O i l and Gas Land Regulations C.R.C. 19 78 c. 1518 - the Regulations are passed simultaneously under both statutes. 41. Ibid. 42. Op. c i t . supra, n. 36. 43. B i l l c-20 (1977) F i r s t reading December 20, 1977, not passed before parliament prorogued. This l e g i s l a t i o n would also provide a p o l l u t i o n control regime for offshore development which i s presently lacking i n both the east and west coast. 44. [1967] S.C.R. 795, 823. 45. K. Beauchamp, M. Crommelin, A. Thompson, J u r i s d i c t i o n a l  Problems i n Canada's Offshore (1973), 11 A.L.R. 431,450. 46. LaForest, Natural Resources and. Public Property Under The Canadian Constitution (1969) 65. 47. Statement of Prime Minister Trudeau on Offshore Mineral Rights i n the House of Commons Monday, December 2, 196 8, reproduced i n Lewis and Thompson on O i l and Gas, Volume I, s. 29B. 159 48. Re: S t r a i t of Georgia (1976), 1 B.C.L.R. 98, (B.C.C.A.) the court held that the lands including the mineral and other natural resources of the seabed and subsoil, covered by the waters of the S t r a i t of Juan de Fuca, the S t r a i t of Georgia (Gulf of Georgia) and the Queen Charlotte S t r a i t (bounded on the south by the interna-t i o n a l boundary between Canada and the United States) are the property of the Province of B r i t i s h Columbia; the case has been appealed but not as yet argued before the Supreme Court of Canada. Also see Regulations of the Province of B r i t i s h Columbia purporting to regulate offshore mineral resources B.C.O.C. 3570 - B.C. Regulat-ion 105, 106 - Constituting a Crown Reserve on lands forming part of the continental shelf. 49. The settlement of the 1891 Manitoba Ontario boundary dispute by c o n s t i t u t i o n a l amendment raises the question whether the B.N.A. Act can be used where boundaries are not s e t t l e d . The argument i s that section 3 only applies to the a l t e r a t i o n of established boundaries. I t i s doubt-f u l whether there i s a problem, because every province has a l i m i t to t h e i r j u r i s d i c t i o n though subject to de-termination by the courts. Since s.3 allows both for increases and diminution of boundaries, i t should not be necessary for the federal government or the Province to know the exact boundaries as long as both parties consent to the change, acknowledging that i t w i l l either increase or diminish t h e i r t e r r i t o r y . 50. Op. c i t . supra, n. 47. 51. Section 3 of t h i s Chapter w i l l discuss Indian claims. 52. Sovereignty of the Sea - Geographic B u l l e t i n No. 3 A p r i l 1965 v.s. Department of State Part V - Double Con-ti n e n t a l Shelf p. 8. 53. I. Head, Canadian Claims to T e r r i t o r i a l Sovereignty i n  the A r c t i c Regions (1963), McGill L.J. 200, 224. 54. The fact that Lake E r i e i s within the province of Ontario does not predude the exercise of federal j u r i s d i c t i o n respecting p r o v i n c i a l offshore mineral development. See Underwater Gas Developers Ltd. v. Ontario Labour Relations  Board (1960), 21 DLR (rd) 345, 240 L.R. (rd)63 55. T i t l e 43 U.S.C.S. 1301. 56. Op. c i t . Supra, n. 48. 160 57. The B.N.A. Act, 1871 requires a Province to consent to an a l t e r a t i o n of i t s t e r r i t o r y . I f the implementation of an international treaty or convention would reduce or increase the Province's i n t e r e s t i n o i l and gas they would have to consent to such an a l t e r a t i o n . The r i s k i n t h i s s i t u a t i o n i s whether the Province can agree i n advance to a future change i n i t s t e r r i t o r y . Therefore additions w i l l be dealt with on an ad hoc basis. I f international convention extends the l i m i t s the choice i s l e f t to the Province to consent. Unfortunately since no term could bind a future Parliament the best under-taking that the federal government can make i s to i n t r o -duce the necessary l e g i s l a t i o n . No special provision has to be made to decrease the t e r r i t o r y since the only sit u a t i o n where th i s would aris e would be i n the imple-mentation of t r e a t i e s - a power which w i l l be reserved to the federal government. 58. Op. c i t . supra, n. 45, also see C.B. Bourne, D.M. McRae, Maritime J u r i s d i c t i o n i n the Dixon Entrance: The Alaska  Re-Examined (19 76), the Canadian Yearbook of International Law 75. 59. Submission of the Province of B r i t i s h Columbia on West Coast Maritime Boundaries between Canada and the United States (1977). 60. See Bourne, McRae, loc. c i t . supra, n. 58. 61. P r o v i n c i a l submission op.c i t . supra, n. 45, item 4. 62. Convention on the T e r r i t o r i a l Sea and the Contiguous Zone U.V. Doc. A/CONF. 13 L.52 adopted A p r i l 27, 1958. 63. Op. c i t . supra, n. 45 at 432. 64. Jacomy-Millette, Treaty Law i n Canada (1975) 211 para. 64 footnote 155. 65. T e r r i t o r i a l Seas and Fishing Zones Act, R.S.C. 1970, 'c.T-7 (as amended by R.S.C. 1970, c. 45 (1st Supp)). \ 66. A. Gotlieb, 0. Dalfen , National J u r i s d i c t i o n and Inter- national RespohsibiTity: New Canadian Approaches to International Law (1973) 67 The American Journal of International Law 229, 250; also see A.E. Gotlieb, The Canadian Contribution of a Fishing Zone i n Inter- n a t i o n a l Law (196 4) The Canadian Yearbook of Internation-a l Law 55. 161 67. Id., at 245. 6 8. Op. c i t . supra, n. 64 at 93. 69. See s. 21 of the 1905 Alberta and Saskatchewan Acts -t h i s section was used i n drafting t h i s condition since i t has been j u d i c i a l l y upheld as reserving property and l e g i s l a t i v e power to the federal government i n the f i e l d s s p e c i f i e d . 70. See s. 92(13) B.N.A. Act, 1867, "Property and C i v i l Rights i n the 'Province" (emphasis added) and s. 92(16) , "Generally a l l Matters of a merely l o c a l or private Nature i n the Province" (emphasis added); also see The Statute of Westminister 1931, (Imp) 22 Geo. c.5 s.3. 71. Canadian House of Commons Debates, October 24> 1969, p. 3a, on A r c t i c Waters P o l l u t i o n Prevention,,Act, R.S.C. 1920, c. 21 (1st Supp.). 72. Johnson and Zacher, op. c i t . supra, n.23at 121 footnote 46. 73. Id., 170. 74. Hogg, Constitutional Law Of Canada (1977) 207-212, Laskin, Laskih's Canadian Constitutional Law (1973) 408-409; Interpretations Act R.S.C, 1970 C.IT'23 ss. 8(3) (as amended). 75. Op. c i t . supra, n. 23 at 129. 76. (1967) S.C.R. 795. 77. Hogg,.op. c i t . supra, n. 74 at 192. Jocomy-Millette, op. c i t . supra, n. 64 at 245, para 112 describes the problem of federal treaty implementation as follows: "The treaty question thus e s s e n t i a l l y has two aspects, creation of the international instrument, which i s exclusively a matter for the executive, and i t s implementation at the domestic l e v e l , which depends on the respec-t i v e powers of the federal parliament and the pr o v i n c i a l l e g i s l a t u r e s , i n accordance with the c o n s t i t u t i o n a l rules on d i s t r i b u t i o n of l e g i s l a t i v e power. This second stage i s therefore concerned with a fragmented power. According to the decisions of the courts, section 132 of the B.N.A. Act, which applied i n the case of imperial t r e a t i e s , can no 162 longer be of assistance. I t should be r e c a l l e d however, that subsequent decisions have held that the power of the federal Parliament to amend l e g i s l a t i o n implement-ing imperial t r e a t i e s made under section 132 continues, provided of course that such tre a t i e s have not been denounced." Also see Sikyea v. The Queen, (1964), S.C.R. 642, Atty.Gen.Can, v. Atty.Gen.Ont. (Labour Conventions* case), [1937] A.C. 326, 347, see UN Doc. ST/LEG/ Ser. B/3 at 24, Law and Practices concerning the Conclusion of Treaties, Memorandum of July 21, 1952, from Government of Canada, Cohen, Relation of Consti-t u t i o n a l Law to International Law. A p r i l 23, 1954, (1952-1954) American Society of International Law 128, 159-160. 78. See paragraph 11(b) of 1881 Manitoba Boundary extension which refers to C.P.R. lands discussed i n section 3 t h i s section i s used as a precedent since i t has been held to reserve s p e c i f i e d federal l e g i s l a t i v e power -this condition does not c o n f l i c t with s. 132 of the B.N.A. Act as being tantamount to an amendment to that section permitting the federal government to implement international t r e a t i e s and conventions within provinces, since the federal government i s reserving a power i n the case of the offshore areas not extending a prohibited power - the implementation refers s p e c i f i c a l l y to o i l and gas since other "property" remains vested i n Canada. 79. October 25, 1969. In the matter of Application made by Trans Mountain Pipe Line Company Ltd. for C e r t i f i c a t e of Public Convenience and Necessity under Part III of the National Energy Board Act, f i l e d under F i l e No. 1755-T4-115. Intervention of the Union of B.C. Indian Chiefs. 80. Id., 11th General Assembly, October 1979, attached as Appendix "A". 81. Ibid. 82. Indian Act R.S.C. 1970, c.I-6, s.37 s.40. 83. S.C. 1977-78, c.20. 84. S.C. 1974-75-76, c.15. 65. I f the Indian people agree by the referendum procedure to the transfer reserving t h e i r claim they may re-quire a continuous r e g i s t r a t i o n clause - under t h i s clause the companies who obtain a d i s p o s i t i o n bear the 163 burden, to make the o i l and gas marketable i t may be necessary for Canada and the Province to agree on a compensation scheme i n the event that the native claim i s sustained. 86. See Petroleum and Natural Gas Act, R.S.B.C. 1979, c. 323 arid Regulations made pursuant thereto. 87. The Pipelines Act, R.S.B.C. 1979, c. 328 and Regulations made pursuant thereto - see the control exercised by the federal government over pipelines i n navigable waters within a province: Imperial O i l s Ltd. v. The  Queen (1973) , 4 L.C.R. 66; also see provisions of O i l and Gas Production Conservation Act. 88. Mineral Resources Tax Act, R.S.B.C. 1979, c. 263, and Regulations made pursuant thereto; B.C. Regulation 335/73; and Coloured Gasoline Tax Act, R.S.B.C. 1979, c. 151. 89. Petroleum Underground Storage Act, R.S.B.C, 1979 , c. 325. 90. Employment Standards Act, R.S.B.C. 1979, c. 107 Part 8, Minimum Wage Order 10 (197 2) Geophysical Exploration and O i l Well Dwelling and Service Industry, B.C. Regulation 275/72 also see Labour code, R.S.B.C. 1979, c. 213, Workmen's Compensation Acts R.S.B.C. 1979, c. 431 i n pa r t i c u l a r I n d u s t r i a l Health and Safety Regulations, Factory Act, R.S.B.C. 19 79, c. 118 and Indu s t r i a l Operation Compensation Act, R.S.B.C, 19 79, c. 19 5. 91. Under Water Developers Ltd. v. Ontario Labour Relations  Board (1960), 21 D.L.R. (2d) 345 affirmed 24 DLR (2d) 673, also see T i t l e 43 U.S.C.S. s.133(2). 92. Energy Act, S.B.C. 1979, c. 108 (as amended). 93. P o l l u t i o n Control Act, R.S.B.C. 1979, c. 332, and Petroleum and Natural Gas Act, s. 123, 124; see R.S.B.C. 1960, c. 33 as consolidated by R.S.B.C. 1979, c. 323. 94. See A. Samuels, O i l P o l l u t i o n , (1971) 40 B r i t i s h Yr. Bk. of International Law 385 - discussion of International Conventions for the Prevention of P o l l u t i o n of the Sea. 95. The Submerged Lands Act i s not r e s t r i c t e d to mineral development. The coastal state i s declared to have ownership i n the lands and nature of resources within i t s boundaries ( T i t l e 43 U.S.C.S. s. 1311) and the seaward boundaries extend to three (3) geographic miles 164 from i t s coast (43 USCS s. 1312). Natural resources are defined ( T i t l e 43 U.S.C.S. s. 1301(c) as including o i l , gas, and a l l minerals, and f i s h , shrimp, oysters, clams, crabs, lobsters, sponges, kelp, and other marine animal and plant l i f e but does not include water power, or the use of water for the production of power. The United States (federal government) retains control over navigation, national defence and national a f f a i r s within the transferred t e r r i t o r y ( T i t l e 43 U.S.C.S. s. 1314). Submerged Lands Act, T i t l e 43 U.S.C.S. s. 1301, Outer  Continental Shelf Lands Act, T i t l e 43 U.S.C.S. s. 1331. 96. R. Breeden, Federalism and the Development of Outer  Continental Shelf Mineral Resources (19 77), 14 Public Land and Resource Law Digest 33, 38", the writer has r e l i e d extensively on Dr. Breeden's excellent a r t i c l e i n the development of t h i s section. 97. J. M i l l , R.R. Woodson, Energy Pol i c y : A Test for Fe- deralism (1976), 18 Arizona Law Review 403, 418. 9 8. Submerged Lands Act, 19 5 3 held c o n s t i t u t i o n a l i n Alabama v. Texas 347 U.S. 272 (1954) - control beyond the marginal shelf i s retained by the federal government; The Outer  Continental Shelf Lands Act 195 3, declared that the subsoil and seabed of the Outer Continental Shelf are subjiect to federal j u r i s d i c t i o n , control and administration -th i s declaration was affirmed i n U.S. v. Maine 420 U.S. 515 (1975). 99. M i l l and Woodson, op. c i t . supra, n. 97 at 418. 100. M i l l and Woodson, op. c i t . supra, n. 97 at 418 footnote 80. 101. Breeden, op. c i t . supra, n. 96 at 41. 102. Ibid. 103. T i t l e 43, U.S.C.S. s. 1333. 104. [1978] 1 F.C.R. 11, i n the United States, see Guess v. Read 290 F. (2d) 622 (U.S.). I t i s only for that partion of the subsoil and seabed of the outer continental shelf, and a r t i f i c i a l islands and fixed structures erected thereon that state law applies. This does not include the sea above the subsoil and seabed does not include the a i r above the sea. Also see Regina v. Tootalik E4-321 (1969),, 71 W.W.R. 435 ( T e r r i t o r i a l Court) affirmed (1970), 74 W.W.R. 740. 165 105. Breeden, op. c i t . supra, n. 96 at 34. 106. National Environmental P o l i c y Act (NEPA). T i t l e 42 U.S.C.S. 4321-47 (1970). 107. Coastal Zone Management Act, T i t l e 16 U.S.C.S. 1451-64 Suppl. 1974. 108. Breeden, op. c i t . supra, n. 96 at 56. 109. Coastal Zone Management Act, T i t l e 16 U.S.C.S. 31451(a) of Public Law 92-583, s. 302(a). 110. Id., s. 305. 111. Id., s. 306. 112. The federal outer continental shelf i s covered by the Coastal Zone Management Act, see op. c i t . supra n. 96 at 60. Breeden states: section 30 7(c) (3) of the Act the section most relevant to offshore d r i l l i n g requires state c e r t i f i c a t i o n before a federal agency may issue any licence or permit to conduct an a c t i v i t y a f f e c t i n g land or water uses i n the coastal zone of a state. Like-wise, section 307(d) provides that no federal agency may grant assistance under other federal programs to proposed state or l o c a l government a c t i v i t i e s that a f f e c t the state coastal zone and are not consistent with a state plan. Though i t does not require c e r t i f i c a t i o n , but rather only conformity with a state plan to the maximum extent practicable, section 307(c) (1) applies to a c t i v i -t i e s conducted or supported by federal agencies which af f e c t the state coastal zone. Interpretation of the geographic scope of these provisions p a r t i c u l a r l y the c e r t i f i c a t i o n requirements, for lessees under s. 307 (c) (3), w i l l be c r u c i a l to the e f f e c t of the Act on Outer Continental Shelf policymaking. 113. Breeden, op. c i t . supra, n. 96 at 78, 81. 114. Id., at 63-64, see amendments to Outer Continental Shelf  Act discussed at p. 82. 115. See s. 1333 Outer Continental Shelf Lands Act, T i t l e 43 U.S.C.S. 1331". Note that the following l i s t i s only an example of the powers which may be included i n a l i s t of p r o v i n c i a l authority; transportation of o i l or gas by ship would come within federal j u r i s d i c t i o n - federal j u r i s d i c t i o n would s t i l l apply to p i p e l i n e s underlying navigable waters. 166 116. See Statehood and the Equal Footing Doctrine: The Case for Puerto Rican Seabed Rights - Notes - (19 79), 88 Yale Law Journal 825, footnote 3 - the author has r e l i e d exclusively on t h i s a r t i c l e i n describing the Puerto Rican proposal. 117. Id., 826. 118. T r e s o l i n i , R., The American Constitutional Law (2nd Ed.) (1965) 130-131. Also see 33 Temp. L.Q. 403, 405. 119. [1895] A.C. 203, 228. 120. Notes: op. c i t . supra, n. 253 at 829, 835. 121. 339 U.S. 707 (1950). 122. Notes: op. c i t . supra, n. 116, see footnote 7 p. 828; also see United States v. Louisiana, 339 U.S. 699 (1950) ; United States v. C a l i f o r n i a , 332 U.S. 19 (1947) , generally The Tidelands O i l Controversy - A Legal and H i s t o r i c a l  Analysis (19531 - also see subsequent cases: Alabama -v. Texas 347 UlS. 272 (1954) and United States v. MaineT 420 U.S. 515, 519, 524 (1975) . 123. Notes: op. c i t . supra, n. 116. 124. Notes: op. c i t . supra, n. 116 at 835, footnote 52, Toftus, 39F, 730 , 732 ( C C D . 1889). 125. Bartley, op. c i t . supra, n. 122 at 43. 126. See Chapter II section 3.1 i n f r a . 127. Notes; op. c i t . supra, n. 116 at 844-849. 128. Id., also see footnote 123 p. 845, excluded from discussion since the transfer to B r i t i s h Columbia would not include minerals other than o i l and gas. 129. See Suggested Condition 1 - section 3.1. 167 CHAPTER III PROCEDURE II - THE TRANSFER OF OWNERSHIP OVER OFFSHORE OIL AND GAS TO BRITISH COLUMBIA Section 1: Transfer of Ownership of Land Between  the Federal and P r o v i n c i a l Government The issues raised by a transfer of ownership of offshore o i l and gas, which for a l l purposes i s land, without a transfer of l e g i s l a t i v e j u r i s d i c t i o n must be examined i n order to f u l l y appreciate the importance of the f i r s t Procedure. The Procedure for trans f e r r i n g control over offshore o i l and gas to B r i t i s h Columbia which w i l l be examined i n t h i s chapter, i s the p o s s i b i l i t y of tran s f e r r i n g the owner-ship of the offshore o i l and gas from the federal government to B r i t i s h Columbia. There are two mechanisms by which the federal government can dispose of federal property. F i r s t l y , i n the absence of s p e c i f i c statutory d i r e c t i o n or authority the federal government may dispose of i t s property by executive order, that i s by order i n council pursuant to the prerogative of the Crown at common law."*" However, where s p e c i f i c statutory d i r e c t i o n or authority exists the implication i s that the federal government must follow the 2 procedure set out i n the statute. Both of the foregoing mechanisms w i l l be examined i n d e t a i l below i n examining 168 the issues that a r i s e where, as i s proposed i n t h i s second Procedure, the federal government desires to transfer ownership of offshore o i l and gas to B r i t i s h Columbia. This second procedure i s r e s t r i c t e d to a transfer of ownership, without a transfer of l e g i s l a t i v e authority, which would remain i n the federal government control. It i s assumed that the Province as owner, could e f f e c t i v e l y control the development of offshore resources through the exercise of the usual rights associated with ownership, i n the same manner as a private owner controls his land, that i s , through the 3 terms of d i s p o s i t i o n . It i s necessary that t h i s Procedure r e s t r i c t the transfer to a transfer of ownership, since the transfer of federal l e g i s l a t i v e j u r i s d i c t i o n over offshore o i l and gas to the Province would be unconstitutional. The transfer examined in t h i s Chapter i s only possible i f the Province can assume the same position as an i n d i v i d u a l who would be ^ transferred a fee simple inte r e s t i n the offshore o i l and gas. The federal government in tr a n s f e r r i n g control over offshore o i l and gas to the Province, under t h i s second Procedure must ensure that the transfer i s not tantamount to a transfer of l e g i s l a t i v e j u r i s d i c t i o n . As was pointed out i n the f i r s t Chapter the federal Parliament cannot transfer federal l e g i s l a t i v e power to a P r o v i n c i a l Legislature. 169 Once again, any scheme for sharing control of the exclusively federal f i e l d of offshore o i l and gas must follow the admonition of Lord Watson i n C.P.R. v. 4 Notre Dame de Bon Secours: The Dominion cannot give j u r i s d i c t i o n , or leave j u r i s d i c t i o n , with the province. The p r o v i n c i a l parliament cannot give l e g i s l a -t i v e j u r i s d i c t i o n to the Dominion Parliament. If they have i t , either one or the other of them, they have i t by vi r t u e of the Act of 1867. I think we must get r i d of the idea that either one or the other can enlarge the j u r i s d i c t i o n of the other or surrender j u r i s d i c t i o n . As w i l l become evident below the apparent statutory authority for transferring offshore o i l and gas to the Province raises doubts as to the a b i l i t y of the federal government to transfer, and the p r o v i n c i a l government to exercise the righ t s of ownership over these resources, since the resources are beyond the geographic boundaries of the Province of B r i t i s h Columbia. Two mechanisms for transf e r r i n g the federal government's ownership of land have been i d e n t i f i e d above. Since these two mechanisms are equally applicable to the Province they must be available to i t i n order for the Province to e f f e c t i v e l y deal with the resources proposed to be transferred. The order for discussion of the issues raised by the Procedure being discussed i n t h i s Chapter, w i l l consider; f i r s t l y , the statutory authority of the federal government to transfer offshore o i l and gas to the Province and secondly, 170 the a b i l i t y of the Province to deal with these resources following a transfer. The l a s t section i n t h i s Chapter w i l l examine an alternative method of t r a n s f e r r i n g offshore o i l and gas to B r i t i s h Columbia, which proposes that the federal government transfer ownership over offshore o i l and gas to a corporation controlled by the Province. Section 1.1: statutory provisions for t r a n s f e r r i n g land from the federal government to B r i t i s h Columbia  There i s no apparent necessity to consider using the prerogatives of the federal government as a mechanism for transferring offshore o i l and gas to the B r i t i s h Columbia, since t h i s procedure available to the Crown at common law has been c o d i f i e d . The Public Lands Grants Act which i s the present authority for disposing of federal offshore 7 o i l and gas , provides i n subsection 4(2): The Governor i n Council may by order transfer to Her Majesty i n any r i g h t other than Canada the administration and control of the entire or any lesser i n t e r e s t of Her Majesty i n r i g h t of Canada i n public lands not required for public purposes, either forever or for any lesser term, and subject to any conditions, r e s t r i c t i o n s or l i m i t a t i o n s that the Governor i n Council considers advisable. (emphasis added) , It i s pursuant to t h i s statutory authority that the federal government i s directed to transfer i t s ownership over public lands to provinces. To t h i s point i n the discussion the term "ownership" has been used very loosely. 171 In his excellent a r t i c l e on the leg a l nature of executive governments, Professor Mundell, i n describing the unique c o n s t i t u t i o n a l d i v i s i o n of federal and p r o v i n c i a l powers over public lands, i n fact provides a good d e f i n i t i o n of the incidents of ownership by federal and p r o v i n c i a l govern-ments. He states: ...lands held by the federal and p r o v i n c i a l governments are both vested i n Her Majesty but...the administration of the lands i s carried out on her behalf through d i f f e r e n t representatives. . . . t i t l e remains throughout i n Her Majesty. A l l that need be transferred i s the authority and duty to administer the lands on behalf of Her Majesty. (9) (emphasis added) The Province of B r i t i s h Columbia, i t would appear, could obtain administration and control of offshore o i l and gas following a transfer under subsection 4(2) of the Public Lands Grants Act. There i s no requirement i n t h i s Act for the Province to accept or acknowledge the transfer by some act, l e g i s l a t i v e or otherwise, i n order to complete the transfer of administration and control. However, reference i n another federal statute to a province being transferred less than "administration and control" over offshore o i l and gas, raises some doubts as to whether a transfer under the Public Lands Grants Act, can be used outside of p r o v i n c i a l t e r r i t o r y . E a r l i e r i n t h i s paper reference was made to the O i l and Gas Production and Conservation Act."^ Section 3, of t h i s Act excepts from 172 the application of the Act any area: ...within the geographical l i m i t s of, or i f the administration of the o i l and  gas resources i n the area has been trans- ferred by law to, any of the ten provinces of Canada. (11) (emphasis added) The reference i n t h i s Act to the transfer of administration of o i l and gas to any of the ten provinces applies only to 12 east and west coast offshore o i l and gas. As was pointed out i n the second Chapter t h i s section was added to the O i l and Gas Production and Conservation Act i n 197 0 in order to f a c i l i t a t e the possible transfer of management of offshore resources to B r i t i s h Columbia and the Maritime Provinces. However the term used i n t h i s Act i s "administration" not "management". It i s possible that provision was being made for a transfer of greater than management r e s p o n s i b i l i t y but less than l e g i s l a t i v e j u r i s d i c t i o n . Is i t possible then that doubt was cast, at the time t h i s Act was amended, on the a b i l i t y of the federal government to transfer admin-i s t r a t i o n and control under the Public Lands Grants Act to provinces over offshore areas? The only other instance, of which the writer i s f a m i l i a r , where federal statute law l i m i t s the transfer of federal public property to a transfer of "administration" 13 appears i n i d e n t i c a l sections of the Yukon Act and 14 Northwest T e r r i t o r i e s Act , which read: 173 The following properties, namely, (b) public lands, the administration of which has before, on or afte r the 1st day of A p r i l , 1955 been transferred by the Governor i n Council to the Commissioner, are and remain vested i n Her Majesty i n righ t of Canada, but the r i g h t to the b e n e f i c i a l use or to the proceeds thereof i s hereby appropriated to the Commissioner and i s subject to the control of the Commissioner i n Council; and any such lands, ...may be held by and i n the name of the Commissioner for the b e n e f i c i a l use of the Te r r i t o r y [Territories] It i s clear that both the Yukon T e r r i t o r y and Northwest T e r r i t o r i e s have l e g i s l a t i v e control through the Commissioner i n Council over the land, the administration of which has been transferred to them. If the term "control" i s omitted from section 3 of the O i l and Gas Production and Conservation Act does t h i s mean that i t i s the transfer of "administration" not "administration and control" that i s necessary to transfer less than a l e g i s l a t i v e j u r i s d i c t i o n over offshore o i l and gas to the Province? If so, then i s a transfer pursuant to subsection 4(2) of the Public Lands Grants Act r e s t r i c t e d to transfers of public lands to provinces where the lands are susceptible of being made subject to the l e g i s l a t i v e control of the province, i . e . i s the Public Lands Grants Act lim i t e d to transfers of federal public lands within p r o v i n c i a l t e r r i t o r y by author-i z i n g transfers of administration and control of public lands? It should be noted that section 3 of the O i l and Gas Production 174 and Conservation Act i s not authority i n i t s e l f for the transfer of "administration" to the province of offshore resources but rather the section a n i t i c i p a t e s a transfer of administration authorized by law. The reference could not be to subsection 4(2) of the Public Lands Grants Act since t h i s subsection authorizes a transfer of both admin-i s t r a t i o n and control. However, the reference i n the O i l 15 and Gas Production and Conservation Act i s not necessarily conclusive that the Public Lands Grants Act cannot be used to authorize the transfer of federal public lands beyond pr o v i n c i a l t e r r i t o r y to a province. Section 3, may have been purposely drafted broadly to cover future arrangements on shared federal and p r o v i n c i a l r e s p o n s i b i l i t y over offshore o i l and gas resources, and perhaps should not then be considered as a comment on the authority of section 4(2) of the Public Lands Grants Act to transfer federal public property, wherever situate, to a province. The next section w i l l consider the a b i l i t y or capacity of the Province of B r i t i s h Columbia to deal with the o i l and gas transferred 1 c to i t under subsection 4(2) of the Public Lands Grants Act. Section 1.2: capacity of the Province of B r i t i s h Columbia to deal with public lands, the administration and control of which have been transferred to i t when the public lands are beyond p r o v i n c i a l t e r r i t o r y  Assuming that the federal government has the authority to transfer the administration and control of offshore o i l and gas to B r i t i s h Columbia, so that the Province e s s e n t i a l l y 175 becomes the "owner" of these resources, i t now becomes necessary to determine how the Province could deal with these lands. Certainly the Province could not pass l e g i s l a t i o n to control the development of these resources for such l e g i s l a t i o n would be e x t r a - t e r r i t o r i a l , and as was discussed i n Chapter II, the Province lacks the a b i l i t y to pass e x t r a - t e r r i t o r i a l l e g i s l a t i o n . The writer i s not aware of any court decision which considers the capacity of a p r o v i n c i a l government to administer and control public lands outside of p r o v i n c i a l t e r r i t o r y . The problem of the capacity of the Province to deal with offshore o i l and gas under i t s administration and control i s not a problem v i s a v i s the federal government. If only the federal and p r o v i n c i a l governments were involved in a co-operative scheme to transfer e f f e c t i v e management to the Province by a transfer of administration and control, the l e g a l i t y or capacity of either government to enter into such a transaction i s not a p r a c t i c a l problem. The only parties who may complain would be the taxpayers who would see potential federal monies diverted into the p r o v i n c i a l c o f f e r s . But, as w i l l be discussed i n Section 2 below, there are few r e s t r a i n t s on the federal spending power. The main problem necessitating an examination of the authority or capacity of the Province to deal with the transferred resources i s the fact that the transfer could be challenged 17 6 by a t h i r d party. The federal government could not force i t s p r i o r grantees of interests i n offshore o i l and gas to surrender t h e i r interests to the Province, and i t would be d i f f i c u l t to j u s t i f y expropriation of any interests 18 which require a public purpose to be i d e n t i f i e d , when under the Public Lands Grants Act public lands can only be transferred when not required for public purposes. Furthermore, the Province would have no r i g h t of expro-p r i a t i o n , since i t cannot l e g i s l a t e beyond p r o v i n c i a l t e r r i t o r y . Any exis t i n g dispositions which the Province may have made i n the context of contesting federal ownership of offshore resources could not be surrendered by p r o v i n c i a l inter e s t holders with any certainty of obtaining a better interest} but the Province could not continue to challenge federal l e g i s l a t i v e j u r i s d i c t i o n over offshore o i l and gas and, at the same time, accept administration and control of offshore o i l and gas. I t i s therefore very important for the Province to i d e n t i f y i t s capacity or authority to deal with the offshore resources, since i t s a b i l i t y to demonstrate i t s authority w i l l be necessary i n order for i t to win the confidence of future i n t e r e s t s , and to e f f e c t binding compromises i n the case of ex i s t i n g i n t e r e s t s . Of the three functions of the p r o v i n c i a l government: l e g i s l a t i v e , j u d i c i a l and executive, only the p r o v i n c i a l executive has any p o s s i b i l i t y of functioning to the extent 177 necessary to accept and hold as owner, offshore o i l and gas. The discussion of the issues involved i n assessing the capacity or authority of the Province to deal with the trans-ferred offshore o i l and gas then involves a review of what can be described as the most wicked provision of the Canadian constitution - the provisions r e l a t i n g to executive authority. The introduction to t h i s chapter discussed two mechanisms whereby the Crown, p r o v i n c i a l or federal, can deal with land, being either pursuant to the authority of a statute or, i n the absence of statutory authority, pursuant to the Crown's prerogative. The following section w i l l now consider t h i s second mechanism. It i s extremely d i f f i c u l t to present a chronological 19 and h i s t o r i c a l discussion of "Executive Authority", .. a fact pointed out by Professor Mundell i n his a r t i c l e , referred to e a r l i e r i n t h i s Chapter. In an attempt to place the discussion i n a l o g i c a l sequence the order of consideration of the issues w i l l be as follows: (1) the source and nature of executive authority, and (2) the rela t i o n s h i p of the executive authority to the fe d e r a l - p r o v i n c i a l d i s t r i b u t i o n of property under the constitution; and an examination of whether t h i s r e l a t i o n s h i p a f f e c t s the capacity of the Province to deal with offshore o i l and gas following a transfer of administration and control. 178 Section 1.3: the source and nature of;executive authority Executive authority i s part of the Canadian c o n s t i -tution. Section 9, of the B.N.A. Act, 1867 provides: The Executive Government and Authority of and Over Canada i s hereby declared to continue and be vested i n the Queen. Professor Mundell a f t e r a thorough examination of a l l the authorities which have considered the nature of "Executive Authority", concludes that: ...The expression "Executive Government and Authority" i n t h i s section [Section 9] covers the whole range of Her Majesty's l e g a l a c t i v i t i e s at common law... E a r l i e r Professor Mundell said, Unless Section 9 i s treated as disposing  of a l l Her Majesty's capacities and special attributes not expressly dealt with else-where the provisions of the Act are not exhaustive. (20) (emphasis added) While these statements do not describe executive authority they conclude that executive authority exhausts the range of possible governmental authority. Therefore once i t has been determined that the Province does not have l e g i s l a t i v e authority over offshore o i l and gas, the Province must be able to estab l i s h that i t can deal with the offshore resources under i t s executive capacity. While section 9 of the B.N.A. Act, 1867 refer s to Canada, there i s no doubt that the Province has executive authority. In Bonanza Creek Gold Mining Company, Limited 21 v. The King , the question before the Board was whether 179 the p r o v i n c i a l executive i . e . the Lieutenant-Governor of Ontario, could incorporate a company with capacity to exercise rights outside the province. Viscount Haldane held that executive authority did reside i n the provinces and has as i t s source the c o n s t i t u t i o n . He stated: ... It i s to be observed that the B r i t i s h North America Act has made a d i s t r i b u t i o n between the Dominion and the provinces which extends not only to l e g i s l a t i v e but to executive authority. 22 (emphasis added) In p a r t i c u l a r , the Constitution of B r i t i s h Columbia provides, in section 8: S.8 Executive power continues, so far as i t i s unaltered by t h i s Act [Constitution Act for B r i t i s h Columbia], as i t existed on February 14, 1871, subject to sections 58, 59, 60, 61, 62, 6 6 and 67 of the B r i t i s h North America Act, 1867, and to any other part of that Act a f f e c t i n g 2 3 i t and to the order of Her late Majesty i n Council. The foregoing has i d e n t i f i e d the source of executive authority. The following discussion w i l l now consider the nature of executive authority, and i n p a r t i c u l a r i d e n t i f y what powers the Crown has over land that have as t h e i r source executive authority. In the case of Attorney-General for Canada v. 24 Higbie , which w i l l be discussed i n greater d e t a i l below, Mr. Justice Sloan, i n the B.C. Court of Appeal, pointed out in his dissenting judgment (the case being reversed by the 25 Supreme Court of Canada) that: Land vested i n the Crown, that i s to say, i n the King i n his p o l i t i c capacity, may, i n the absence of r e s t r i c t i v e statutory provisions binding the Crown, be alienated by the King by v i r t u e of the  Royal prerogative and, according to conventional c o n s t i t u t i o n a l custom, through his delegate, 180 and upon the advice of his Ministers. (emphasis added) The executive therefore has the r i g h t i n the absence of statute to alienate land by v i r t u e of i t s executive powers 27 which i s merely the modern expression for prerogative. The above was a statement of the law p r i o r to the admission of B r i t i s h Columbia as a province, but the courts have held that the prerogative r i g h t s of the Crown i n r i g h t of the provinces, and i n p a r t i c u l a r B r i t i s h Columbia, have not 2 8 been c u r t a i l e d by the B.N.A. Act of 18 67. Therefore i n the absence of statutory authority, the prerogative exists to permit the Province to alienate land. The exercise of t h i s prerogative resides i n the Lieutenant Governor who 29 i s the representative of Her Majesty. However, i n practise, the exercise of the prerogative respecting the a l i e n a t i o n of land i s ca r r i e d out, by the Lieutenant Governor i n Council, as Mr. Justice Sloan indicated i n the above passage,"according 30 to conventional c o n s t i t u t i o n a l custom'.1. The next section w i l l consider the r e l a t i o n s h i p of the executive authority to the federal and p r o v i n c i a l d i s t r i b u t i o n of property under the co n s t i t u t i o n . Section 1.4: executive authority and the d i s t r i b u t i o n of property under the co n s t i t u t i o n  This section examines whether the exercise of executive authority with respect to land i s r e s t r i c t e d to land within the Province i . e . within p r o v i n c i a l boundaries. If the 181 exercise of the ali e n a t i o n i s so r e s t r i c t e d then the Province 31 would not have the capacity to alienate offshore o i l and gas, the administration and control of which i s intended to be transferred to i t by the federal government. While the courts have acknowledged that executive authority resides in the province as well as federal government, doubt exists as to whether the executive has powers of ali e n a t i o n beyond the t e r r i t o r i a l l i m i t s of a province. As Professor Mundell points out i n t h i s a r t i c l e , "executive authorities of Her Majesty follow l e g i s l a t i v e 32 authority". This does not necessarily mean that the executive authority would be r e s t r i c t e d to the extent of the l e g i s l a t i v e authority, such that i f the province i s r e s t r i c t e d to l e g i s l a t i n g with respect to lands within the province i t i s also r e s t r i c t e d i n i t s executive capacity to a l i e n a t i n g lands within the province. In his a r t i c l e , Professor Mundell refers to the following passage from Bonanza Creek i n support of t h i s proposition. Lord Haldane in t h i s case states: It i s to be observed that the B r i t i s h North America Act has made a d i s t r i b u t i o n between the Dominion and the provinces which extends not only to l e g i s -l a t i v e but to executive authority. The executive government and authority over Canada are primarily vested i n the Sovereign...Section 65 [s i c , of the B.N.A. Act, 1867] on the other hand, provides that a l l such powers, au t h o r i t i e s , and functions s h a l l , as far as the same are capable of being exercised aft e r the Union i n r e l a t i o n to the government of Ontario and Quebec respectively, be vested i n and exercisable by the Lieutenant-Governors of Ontario and Quebec respectively. [ s i c . the same applies 182 to B r i t i s h Columbia - see section 8 of the Constitution Act quoted above] The e f f e c t of these sections of the B r i t i s h North America Act i s that, subject to ce r t a i n express provisions i n that Act and to the supreme authority of the Sovereign, who dele-gates to the Governor-General and through his instrumentality to the Lieutenant-Governors the exercise of the prerogative on terms defined i n t h e i r commissions, the d i s t r i b u t i o n  under the new grant of executive authority i n  substance follows the d i s t r i b u t i o n under the  new grant of l e g i s l a t i v e powers. (33) (emphasis added) An argument could be made therefore that any r e s t r a i n t s on the l e g i s l a t i v e authority of the province under the c o n s t i -tution apply equally to the exercise by the province of i t s executive authority. The Supreme Court of Canada has also suggested that the prerogative r i g h t s , or as expressed i n 34 modern terms, "executive power" of the Crown under the Canadian federal structure may be l o c a l i n nature. Mr. 3 5 Justice Strong said i n Reg, v. Bank of N.S. (S.C.C.), ...the prerogative rights of the Crown were by the statute apportioned between the provinces and the dominion, but t h i s apportionment i n no sense implies the extinguishment of any of them, and they therefor continue to subsist i n t h e i r i n t e g r i t y , however t h e i r l o c a l i t y might be altered by the d i v i s i o n of powers contained i n the new con s t i t u t i o n a l law. (36) (emphasis added) This statement could mean that the prerogative rights are r e s t r i c t e d to p r o v i n c i a l t e r r i t o r y as determined by the constitution; that i s t e r r i t o r y within p r o v i n c i a l boundaries. 183 The Higbie case, referred to b r i e f l y above provides further comment on the t e r r i t o r i a l application of the p r o v i n c i a l prerogative. This case involved an action by the Attorney General of Canada against the defendants, Western Higbie and Albion Investments Ltd., for possession of certa i n of the foreshore 37 of Vancouver Harbour. The adjoining upland was o r i g i n a l l y granted i n 1858 by the Pr o v i n c i a l Crown as part of a l o t of an o f f i c i a l survey. In subsequent conveyances to predecessors of Western Higbie and Albion Investments Ltd. the boundary was s p e c i f i c a l l y described as the high water mark. The grant as well as the l a t e r instruments ca r r i e d a l l appurtenances. In 1924 by mutual federal and p r o v i n c i a l orders i n council made i n the absence of either federal or p r o v i n c i a l statutory authority, the Province of B r i t i s h Columbia acknowledged that the foreshore of certa i n harbours, were public harbours within the meaning of Schedule III of the B.N.A. Act, 1867, thus 3 8 becoming the property of the federal government. The foreshore to the property claimed by the defendants was included i n t h i s order i n council. As a defence to the action by the federal government for possession of the foreshore, the defendants denied the t i t l e of the federal government, on the basis that the p r o v i n c i a l government could not i n the absence of statutory authority pass the foreshore to the federal government. The Court of Appeal of B r i t i s h Columbia 184 reversing the t r i a l judge, held that the P r o v i n c i a l order in council was of no e f f e c t and that the lands i n question could only be disposed of by the l e g i s l a t u r e of B r i t i s h Columbia. While t h i s case concerns a transfer between the federal and p r o v i n c i a l governments of administration and control, the comments which the courts made concerning the exercise of the executive authority or prerogative by the province to transfer land i n the absence of statutory authority i s relevant to a discussion of the Province's a b i l i t y to exercise i t s executive authority. The court had to hold that the P r o v i n c i a l executive had the capacity to "transfer" administration and control to the Dominion for the federal government to maintain i t s action for possession. The Supreme Court of Canada, affirming the decision of the t r i a l judge and reversing the decision of the Court of Appeal of B r i t i s h Columbia, held that the Province had the authority 39 to pass the order i n council. In upholding the authority of the order i n council the Court placed emphasis on the fact that the land which was subject to the transfer was within p r o v i n c i a l t e r r i t o r y . Chief Justice Rinfret, i n the Supreme Court decision held that the orders i n council: ...were e f f e c t i v e to transfer both the property and the j u r i s d i c t i o n to the Dominion of Canada. (40) Is there an implication here that a transfer of administration and control purports a transfer of both property and j u r i s -d i c t i o n , or that a transfer must be susceptible to t r a n s f e r r i n g 185 both property and j u r i s d i c t i o n ? However, the question being considered now i s does the Province have the capacity to alienate public lands under i t s executive authority. In deciding that the Province had such capacity i n the Higbie case, Chief Justice Rinfret went on to state: . . . I t was stated i n the judgment of the majority of the Court of Appeal that under the B r i t i s h North America Act, 34 V i c t o r i a , cap. 28, s.3, the Parliament of Canada could from time to time, with the consent of the l e g i s l a t u r e of any Province of the said Dominion, increase, diminish, or other-wise a l t e r the l i m i t s of such Province; and i t was deduced from that, that the l e g i s l a t u r e alone could transfer the lands covered by water, now i n question. But, of course, we do not agree that the orders i n council constituted a transfer. In our view, they constituted only a change of administrative control. Besides that, they contained admissions that the transfer had r e a l l y been made automatically by force of the B r i t i s h North American Act of 1871, as form-ing part of a public harbour at the time when B r i t i s h Columbia came into the Confederation. Moreover, a transfer such as t h i s does not a f f e c t p r o v i n c i a l  l i m i t s ; and i t i s s u f f i c i e n t to think of a case where certa i n land i s used by the Dominion Government to b u i l d a courthouse, or a post o f f i c e , or such other things, to indicate that the transfer i n question does not a l t e r the l i m i t s of the province within the meaning of section 3 of chap. 28 of the statute 34-35 V i c t o r i a , being the B r i t i s h North America Act of 1871. The lands remained with the  pr o v i n c i a l t e r r i t o r i a l l i m i t s . (41) (emphasis added) There i s a strong implication i n t h i s statement that the order i n council was v a l i d since i t did not purport to a l t e r the l i m i t s of the Province and purported only to deal with p r o v i n c i a l t e r r i t o r y , i . e . t e r r i t o r y within the geographic boundaries of the Province. The analogies to a transfer to the federal government for the purposes of constructing federal buildings such as courthouses and 186 post o f f i c e s emphasizes t h i s interpretation, since the works to be constructed on public lands would c l e a r l y be within the geographic boundaries of the Province. By r e f e r r i n g to the l i m i t s "within the meaning of section 3, of the B.N.A. Act of 1871" the court i s suggesting that the p r o v i n c i a l order i n council i n t h i s case was v a l i d since the lands i n question remained within p r o v i n c i a l t e r r i t o r y . If the Province then purported to alienate offshore o i l and gas sol e l y under i t s executive authority i s i t i n d i r e c t l y extending p r o v i n c i a l t e r r i t o r y contrary to section 3 of the B.N.A. Act, 1871, since the l i m i t s of p r o v i n c i a l t e r r i t o r y can only be extended under the 1871 Act through mutual statutory authority. It i s important to note that i n reaching his decision the Chief Justice referred to the Province having the power to deal with i t s property as i t i s described i n section 109 of the B.N.A. Act, 1867, without l e g i s l a t i v e enactment since the words "subject to the control of i t s l e g i s l a t u r e " do not appear i n section 109, and as used by the courts when r e f e r r i n g to the di s p o s i t i o n of public lands, these words are, ...simply a statement of the law that the provin-c i a l l e g i s l a t u r e may l e g i s l a t e with respect to such lands. (42) There i s an assumption therefore that the Court had no problem with the ali e n a t i o n by the Province since there was no r e s t r i c -t i o n on ali e n a t i o n by the prerogative, i n the absence of a sp e c i f i c statute c o n t r o l l i n g a d i s p o s i t i o n of lands described i n section 109 of the B.N.A. Act, 1867. 187 This section reads: 109. A l l lands,...belonging to the several Provinces of Canada, Nova Scotia and New Brunswick at the Union [ s i c . B r i t i s h Columbia was placed i n the same position as the o r i g i n a l provinces by i t s terms of admission and the B.N.A. Act, 1930], s h a l l belong to the several Provinces of Ontario, Quebec, Nova Scotia, and New Brunswick i n which the same are situate  or a r i s e . . . (emphasis added) The Court must then have been taken to have placed weight on the fact that the lands which the Province transferred to the federal government i n t h i s case were situate i n the Province of B r i t i s h Columbia. The question then has been l e f t open as to whether the executive of B r i t i s h Columbia has the capacity to alienate lands not situate i n the Province. It must also be pointed out that Chief Justice Rinfret referred to the statement referred to above of 43 Mr. Justice Strong i n The Queen v. The Bank of Nova Scotia i n determing the nature of the Province's executive authority. Some doubt therefore i s cast on the a b i l i t y of the Province to alienate lands by v i r t u e of i t s executive power beyond i t s p r o v i n c i a l t e r r i t o r y , that i s , beyond i t s boundaries 44 as determined by the 18 67 Constitution. The next section w i l l examine another method by which the Province could obtain the "ownership" of federal offshore o i l and gas. Section 2: Transfer to a P r o v i n c i a l Corporation Generally i f a province holds property and more s p e c i f i c a l l y land outside of i t s p r o v i n c i a l boundaries, i t holds i t s inte r e s t through a p r o v i n c i a l l y controlled 188 corporate e n t i t y . For example the Ontario Energy Corporation holds a 5% equity i n t e r e s t i n the Alberta Syncrude project for the Government of Ontario, or SOQUIP, a statutory state petroleum corporation which i s wholly owned by Quebec holds extensive land holdings outside Quebec. Another example i s Alberta Gas Trunk Line Co. Ltd. a statutory corporation created by the Alberta l e g i s l a t u r e which c a r r i e s on extensive a c t i v i t i e s , and i s p a r t i c u l a r l y authorized so to do, outside 45 of the Province of Alberta. Usually the a c t i v i t i e s which these corporations carry out are commercial i n nature and are an exercise of the Province's spending authority. As Professor Hogg, points out i n his book on the Canadian c o n s t i t u t i o n : There i s no compelling reason to confine spending or lending power (of a province) because i n those functions the government i s not purporting to exercise any p e c u l i a r l y governmental authority over i t s subject...46 Intergovernmental dealings i n land i n these cases are insulated by the corporate status and unrestricted revenue spending a b i l i t y . This brings us to consideration of the second part of t h i s Procedure being the transfer of ownership i n offshore o i l and gas to a l e g a l e n t i t y created by the Province. The f i r s t two questions which must be answered are: can the Province create a l e g a l entity, i . e . a corporation, to carry on business outside the Province; and secondly, could the Province appropriate funds for the operation of such a cor-poration? 189 Section 2.1: a b i l i t y to create a corporation to carry on business outside the Province Under section 92(1) of the B.N.A. Act, the Province can only incorporate companies with p r o v i n c i a l objects. However, the Privy Council held, i n the Bonanza Creek case, ; that: ...The l i m i t a t i o n s of the l e g i s l a t i v e powers of a province expressed i n s. 92, and i n p a r t i c u l a r the l i m i t a t i o n of the power of l e g i s l a t i o n to such as relates to the incor-poration of companies with p r o v i n c i a l objects, confine the character of the actual powers and rights which the p r o v i n c i a l government can bestow, either by l e g i s l a t i o n or through the Executive, to powers and righ t s exercisable within the province. But actual powers and right s are one thing and capacity to accept extra-provincial powers and rights i s quite another. In the case of a company created by charter the doctrine of u l t r a v i r e s has no r e a l application i n the absence of statutory r e s t r i c t i o n added to what i s written i n the charter. Such a company has the capacity of a natural person to acquire powers and righ t s . . . I t follows, as the Ontario Legislature has not thought f i t to r e s t r i c t the exercise by the Lieutenant-Governor of the prerogative power to incorporate by l e t t e r s patent with the r e s u l t of conferring a capacity analogous to that of a natural person, that the appellant company could accept powers and rights conferred  on i t by outside authority (47) (emphasis added) The court had e a r l i e r stated that r i g h t s outside the province would have to be derived from authorities out-side the province. 190 The Supreme Court of Canada subsequently held i n Honsberger v. The Weyburn Townsite Company, that: ...The words "with p r o v i n c i a l objects" are merely declaratory of the necessary l i m i t s upon the operation of p r o v i n c i a l l e g i s l a t i o n on the subject mentioned which i n the absence of them (provincial objects) would have been the consequence of the l e g a l p r i n c i p l e that corporate status and capacity, i n l i k e manner as r i g h t s , cannot, i n j u r i s d i c t i o n s beyond the boundaries of the province be l e g a l l y operative ex proprio vigore but only by v i r t u e of recognition, express or implied, accorded by some other p o l i t i c a l authority or system of law. (49) Owing to the doctrine of parliamentary sovereignty, a l e g i s l a t i v e body may give a corporation as many powers and p r i v i l e g e s , and submit i t to as many special rules as the Legislature sees f i t . 5 0 Through the corporate entity, a l e g i s l a t i v e body i s able to operate as a natural person. In the case of the offshore o i l and gas, a statutory corporate body could assume ownership of these resources without a t t r a c t i n g the problems associated with transfers of administration and control between fed-e r a l and p r o v i n c i a l governments or requirements that the p r o v i n c i a l government have executive authority to dispose of offshore o i l and gas. The Governor i n Council (the federal cabinet) has the authority pursuant to section 4(1)(a) of the Public Lands Grants Act to authorize the sale, lease or other d i s p o s i t i o n of public lands not required for public purposes and for which there i s no other provision i n law. The Governor i n Council under 191 t h i s same section likewise can, and has made, regulations authorizing the Minister of Energy, Mines and Natural Resources to s e l l , lease or otherwise dispose of offshore o i l and gas subject to the conditions prescribed i n 51 the Canada O i l and Gas Land Regulations. Since a pro-v i n c i a l l y controlled corporation can carry on a c t i v i t i e s outside the province, there i s no j u r i s d i c t i o n a l impediment to the Minister disposing of o i l and gas to t h i s corporation under the Regulations i n the same way as dispositions are made to any other company. Furthermore there i s no impedi-ment to the Governor i n Council revoking the Minister's authority under the Regulations and authorizing a d i s p o s i t i o n to a p r o v i n c i a l corporation under paragraph 4(1)(a). The p r o v i n c i a l corporation then obtains the offshore o i l and gas on whatever conditions may be agreed to, subject to federal law. ..The applicable law however can likewise be 52 the subject of negotiations. As LaForest indicates: The a c t i v i t i e s of a p r o v i n c i a l Crown cor-poration are not limited to the confines of the provinces, and i t may even enter f i e l d s normally within federal j u r i s d i c t i o n (for example, airways), though i n such f i e l d s i t s operations would be subject to federal regulatory control. Section 2.2: obtaining appropriation for the corporation Having decided that B r i t i s h Columbia could, by statute, create a corporation to develop offshore o i l and 192 gas, the following questions must be considered: 1. Could B r i t i s h Columbia spend public funds on the a c t i v i t i e s of a company whose a c t i v i t i e s are to take place outside the t e r r i t o r i a l l i m i t s of the Province? 2. Can the federal government transfer ownership to a p r o v i n c i a l l y incorporated company, and how would the transfer be effected? 3. What laws would apply to the p r o v i n c i a l corporation? The spending power of a province i s d i r e c t l y related to i t s taxing power. A province under section 92(2) of the B.N.A. Act, 1867, i s limited to d i r e c t taxation within the province for the r a i s i n g of revenue for p r o v i n c i a l purposes, but, as Chief Justice Duff pointed out i n Reference re 53 Employment and Social Insurance Act:" ...The words "for p r o v i n c i a l purposes" mean neither more nor less than t h i s : the taxing power of the l e g i s l a t u r e i s given to them for r a i s i n g money for-the exclusive d i s p o s i -t i o n of the l e g i s l a t u r e . The Province could, therefore, appropriate funds for the corporation. Is there an impediment to the federal government transf e r r i n g i t s property i n offshore o i l and gas to a p r o v i n c i a l corporation? As discussed above, the federal 193 government has the same rights respecting i t s property as any other owner. 5 4 I t could, therefore, transfer offshore o i l and gas to a p r o v i n c i a l corporation and provide funds for i t to carry out a mandate of develop-ing offshore resources. Section 2.3: .methods of t r a n s f e r r i n g ownership There are two ways i n which the federal government could transfer i t s property: 1. Disposition by the federal government of offshore o i l and gas i s presently subject to the Canada O i l and  Gas Land Regulations made pursuant to the Public Lands  Grants Act. The p r o v i n c i a l corporation could obtain the offshore o i l and gas: a. by a grant pursuant to the Canada O i l and Gas  Land Regulations; b. through an amendment to these Regulations, on other terms and conditions prescribed by the Governor i n Council;- The amendment could provide for a new regime for offshore o i l and gas trans-ferred to the corporation - Documentation of the grant, s a t i s f a c t o r y to B r i t i s h Columbia, could est a b l i s h the terms of exploitation, r o y a l i t e s , rent, etc.; or 194 c. through a sale of the offshore o i l and gas ;to the corporation and a new l e g i s l a t i v e regime, acceptable to the Province, to contro 1 the development (accounting for conservation and environmental matters) could be put into place by the federal government. 2. The O i l and Gas Act ( B i l l C-20) could be amended to provide f o r : a. preference d i s p o s i t i o n of offshore o i l and gas to the p r o v i n c i a l corporation i n substitution of Petro-Canada's p r e f e r e n t i a l r i g h t s ; or b. an e n t i r e l y new regime regarding the d i s p o s i t i o n , matters of conservation and environmental concerns could be established under the proposed B i l l , which would also pass property i n offshore o i l and gas to the p r o v i n c i a l corporation. Under the l a t t e r procedure (section 2.2(b) - item 2b above), the p r o v i n c i a l corporation would have the widest f l e x i b i l i t y . I t would own the offshore o i l and gas to the l i m i t s recognized from time to time under international law, and dispose of the resource as owner, subject to federal conservation and environmental l e g i s l a t i o n . The t e r r i t o r y remains federal and general federal l e g i s l a t i o n , i . e . to implement international t r e a t i e s , would apply. I t 195 i s obvious that the i n t e r e s t held by the corporation and l e g i s l a t i o n applicable to i t must be s a t i s f a c t o r y to the Province. The p r o v i n c i a l corporation would control the development of the resources by contracts, further assigning i t s i n t e r e s t , and the p r o v i n c i a l government could i n t h i s regard control the corporation through the incorporating statute. A rather unique s i t u a t i o n develops regarding the e x t r a - t e r r i t o r i a l l i c e n c i n g of the p r o v i n c i a l corporation, in that there i s no l e g i s l a t i v e regime respecting extra-p r o v i n c i a l l i c e n c i n g of "foreign" companies i n the offshore areas. But t h i s has not impeded other p r o v i n c i a l petroleum corporations. The type of l e g i s l a t i o n which could be considered for the p r o v i n c i a l corporation i s a p r o v i n c i a l act similar 5 5 to SOQUIP, the Quebec state-owned petroleum corporation. According to i t s 1977-78 annual report, t h i s company has holdings outside Quebec in the Maritimes, Alberta, the Yukon, Northwest T e r r i t o r i e s and Labrador Sea. The 1977-78 annual report disclosed that SOQUIP held 1,398,543 hectares under federal permits o f f the east coast. 196 Section 3: Conclusions on Transfer of the Ownership of  B r i t i s h Columbia Considering the lack of clear authority for the Province to dispose of lands beyond i t s borders i t may be advisable to use the alternate method suggested i n section 2; that i s to transfer ownership of the offshore o i l and gas to a corporation controlled by the Province. Though using a corporate e n t i t y to achieve what may be impossible to achieve by a d i r e c t transfer of administration and control to the Province, would probably be more cumbersome adminis-t r a t i v e l y , i t can accomplish the same ends. Use of the corporate guise may be challenged by some as doing i n d i r e c t l y what can be done d i r e c t l y , but as Professor Elmer Driedger, perhaps the most knowledgeable writer on f e d e r a l - p r o v i n c i a l co-operative devices, has said: The application of the maxim "you cannot do that i n d i r e c t l y which you are prohibited from doing d i r e c t l y " . . . i s not law. I t i s only a statement i n summary form of a r e s u l t arrived at by the application of p r i n c i p l e s other than the maxim. (56) But as i n the case where the courts have held that the federal and p r o v i n c i a l governments cannot delegate l e g i s l a t i v e authority, one to the other, they did not hold as object-ionable, what could be regarded as accomplishing the same ends i n d i r e c t l y , the delegation by Parliament or the l e g i s l a t u r e of l e g i s l a t i v e authority to a non-legislative e n t i t y of the Province or federal government, as the case , 57 may be. 197 There being no substantive l e g a l impediment to the province exercising control over offshore o i l and gas through a p r o v i n c i a l petroleum corporation, a l l that i s l e f t i s to obtain agreement on the terms of co-operation. 198 CHAPTER III FOOTNOTES A.G. Can, v. Higbie, [1945] S.C.R. 385, 402, 403, 407, 427, the process of inter-governmental trans-fers described i n t h i s case i s equally applicable to the federal government, see LaForest, Natural  Resources and Public Property under the Canadian  Constitution (1969), 143. Ibid. LaForest, Natural Resources and Public Property  under the Canadian Constitution (1969) 167, also see P.W. Hogg, Constitutional Law of Canada (1977) 392. See i n f r a footnote 3 ; Chapter II (1899) A.C.367, In. thejverbatim judgment of Lord Watson not repro-duced i n the report of the case. Op. c i t . supra, n. 1. 1970, R.S.C. c. P-29. Canada O i l and Gas Land Regulations, C.R.C. 1978 c. 1518 See i n f r a . Introduction to t h i s Paper at page 15. D.W. Mundell, Legal Nature of Federal and P r o v i n c i a l  Governments: Some Comments on Transactions Between  Them (1960)f2 Osgoode Hall L.J. 56, 71-72. R.S.C. 1970, c. 0-4, as amended Id., section 3, as amended by R.S.C. 1970 (1st Supp.) c. 30, and S.C. 1976-77, c. 55 s.5(2) The Yukon T e r r i t o r y and Northwest T e r r i t o r i e s are excluded by the s p e c i f i c reference i n the section to ten provinces and since the word "or" i s used the two exceptions must be taken to be mutually exclusive. Yukon, Act, S.C. 1974, c.5 s.7 Northwest T e r r i t o r i e s Act, S.C. 1974,c.5 s.16 ( c l e r i c a l error i n Act, reference i n s.16 should read s.45). For a description of the t o t a l con-t r o l of the t e r r i t o r i e s see reference to reversing of a transfer^contained i n subsection 37(1) of the Northern Pipeline Act, S.C. 1977-78,c.20. Federal B i l l C-20, 3rd session, 30th Parliament 25 E l i z . I I , 1977, the proposed O i l and Gas Act, referred to i n Chapter II of t h i s paper adopts the portions of section 3 of the O i l and Gas  Production and Conservation Act quoted i n the preceding text i n i t s d e f i n i t i o n of "Canada lands", i . e . Canada lands would not include lands the administration of which has been transferred to the provinces. As may be re c a l l e d t h i s B i l l was proposed as the new authority for disposing of offshore o i l and gas. The Supreme Court of Canada i n the Reference  re: Offshore Mineral Resources , [1967] S.C.R. 792., was not asked to declare that the federal govern-ment had property i n the o i l and gas beyond the t e r r i t o r i a l sea. Since the Public Lands Grants  Act only applies to a transfer of public lands and not l e g i s l a t i v e j u r i s d i c t i o n over public lands an argument could be made that the federal i n t e r e s t i s purely l e g i s l a t i v e and could not be transferred to the provinces. However, as was pointed out i n Chapter II, the North Sea cases decided by the International Court of Justice subsequent to the Offshore Minerals Reference described the natural resources of the continental shelf as the property of the coastal state. op. c i t . supra, n . l at 436, Mr. Justice Rand expressed these concerns i n connection with a transfer of administration and control between the Province of B r i t i s h Columbia and the federal government intended to s e t t l e "ownership" of the foreshore of certa i n public harbours. Expropriation Act, R.S.C. 1970, (1st Supp) c.16 as amended, s.3. op. c i t . supra, n . l at 410 op. c i t . supra, n.9 at 68-70, see p.69 for state-ment that executive authority follows l e g i s l a t i v e authority based on Bonanza Creek. 200 [1916] 1 A.C. 566, also see Liquidators of the  Maritime Bank of Canada v. The Receiver General  of New Brunswick, [1892] A.C. 437, which applied "Executive Authority" equally to the federal government and the provinces. Id., at 579, also see section 14, Order of Her Majesty i n Council Admitting B r i t i s h Columbia into the Union dated May 16, 1871 and section 8 of the Constitution Act, R.S.B.C. 1979, c.62. Constitution Act, R.S.B.C. 197 9, c.62 s.8, la t t e r reference to order i n council i s no doubt a reference to the Imperial Order i n Council ad-mitting B r i t i s h Columbia as a province; see op. c i t . supra, n.22 [1945] S.C.R. 385. [1945] S.C.R. 385 Ibid. [1944] 1 W.W.R. 615, 627 [1945] S.C.R. 385, 410 See Higbie, [1945] S.C.R. 385 at 410, r e f e r r i n g to the statement of Lord Watson i n Maritime Bank  of Canada (Liquidators) v. N.B. Receiver-General, [1892] A.C. 437 at 441 where he stated: Their Lordships do not think i t necessary to examine, i n minute d e t a i l , the pro-visions of the Act of 1867, which nowhere profess to c u r t a i l i n any respect the rights and p r i v i l e g e s of the Crown, or to disturb the re l a t i o n s then subsisting between the Sovereign and the provinces. op. c i t . supra, n.21 at 443, Liquidators of the  Maritime Bank of Canada/'/also see Higbie, [1945] S.C.R. 385 at page 410, where Chief Justice Rinfret stated: We do not agree...that the Royal prero-gative i s vested i n the l e g i s l a t u r e and we think i t vested i n the Executive. Crown lands are vested i n His Majesty the King; and there i s no difference i n quali t y between the Crown acting under i t s prerogative, or under a modern statute. 201 In further support of t h i s contention I r e f e r to the judgment of Mr. Justice Kerwin i n the Supreme Court decision i n the Higbie case where he interprets the intent of the following state-ment of Lord Watson i n St. Catherine's M i l l i n g  and Lumber Company v. The Queen (1899), 14A.C. .46, 56; • these expressions ["belonging to" or "the property of", a province] merely impart that the r i g h t to i t s (public lands) b e n e f i c i a l use, or to i t s pro-ceeds, has been appropriated to the Dominion or the Province, as the case may be, and i s subject to the control of i t s l e g i s l a t u r e , the land i t s e l f being vested i n the Crown. Mr. Justice Kerwin makes the following comment on t h i s passage which at f i r s t reading would appear to require that p r o v i n c i a l a l i e n a t i o n of lands be authorized by statute. If the words "and i s subject to the control of the l e g i s l a t u r e " are more than obiter d i c t a they might be taken as r e f e r r i n g merely to that control which a p r o v i n c i a l l e g i s l a t u r e may undoubtedly exercise and not that i t i s the sole branch of a P r o v i n c i a l Government to act under a l l circum-stances. Indeed i n Ontario Mining  Co. v. Seybold ,J1903] A.C. 73, Lord Davey, afte r setting out, at page 79, an extract from Lord Watson's judge-ment including that copied above, continues: -Their Lordships think that i t should be added that the r i g h t of disposing of the land can only be exercised by the Crown under the advice of the Ministers of the Dominion or province, as the case may be, to which the bene-f i c i a l use of the land or i t s proceeds has been appropriated, and by an instrument under the seal of the Dominion or the province. 202 These words i n themselves might be taken as expressing the opposite view but Lord Davey may have intended only to emphasize that the Sovereign's representative could not act except upon the advice of his c o n s t i t u t i o n a l advisers. [1945] S.C.R. 385, 425. 31. In the Higbie case, [1945] S.C.R. 385, 423, Mr. Justice Kerwin i d e n t i f i e d the capacity of the province to pass an order i n council t r a n s f e r r i n g administration and control to the federal government as a fundamental issue, as follows: The question immediately arises as to the power of the executive authority of B r i t i s h Columbia to pass the Pr o v i n c i a l order i n council. 32. op. c i t . supra, n. 9 at 69. 33. [1916] 1 A.C. 566, 579. 34. see Higbie [1945] S.C.R. 385, 410. 35. (1885) 11 S.C.R. 1. 36. Id., at 18-19. 37. see statement of facts of t h i s case by Mr. Justice Rand, [1945] S.C.R. 385, 429. 38. for the r e c i t a l s of the order i n council see [1945] S.C.R. 385, 435. 39. [1945] S.C.R. 385 per Chief Justice Rinfret, per Mr. Justice Tashereau concurring at p. 410 (S.C.C.), per Mr. Justice Kerwin, Mr. Justice Hudson concurring, p. 423 and p. 426 (S.C.C.), and per Mr. Justice Rand p. 436 (S.C.C.) - the decision of the Supreme Court of Canada i n the Offshore Minerals Reference which held that the boundaries of the Province of B r i t i s h Columbia were the o r d i n a r i l y low water mark, would c o n f l i c t with the reasoning of Mr. Justice Rand. Furthermore "public harbours" under the B.N.A. Act must be considered to come within p r o v i n c i a l t e r r i -tory or else there would not have been the necessity to deal with them under section 108 of the B.N.A. Act, 1867. 203 I t i s the writer's opinion that the decision of Mr. Justice Rand that the orders i n council were, "an agreement or acknowledgement of boundary at high water mark a r i s i n g from the fact of actual user of foreshore within the l e g a l requirements for public harbours under schedule 3", [1945] S.C.R. 385, 436 (emphasis added) i s of doubtful authority. As was also pointed out i n Chapter II that the determination of boundaries i s subject to the constitution and in p a r t i c u l a r the B.N.A. Act, 1871. The writer i s of the opinion that Mr. Justice Rand was concerned with the j u r i s d i c t i o n changes that occur after a transfer between the province and the federal government. He states, at page 434 (S.C.C.), But i t i s clear that Lord Davey was there dealing only with the question of the p a r t i c u l a r executive by whose action an a l i e n a t i o n to a subject could be made; [s i c . the reference here i s to decision of Lord Davey i n Seybold quoted i n the text above] there i s no reference, nor i n that case could occasion for i t have arisen, to the actual authority of the executive in any case to make a grant and much less the question of authority of the executive to make a j u r i s d i c t i o n a l transfer. In the Higbie case a l l the members of the Court except Justice Rand assumed no change i n p r o v i n c i a l t e r r i t o r y . For the reasons indicated above con-cerning the establishment of p r o v i n c i a l boundaries Mr. Justice Rand's reasons are not c l e a r . In t h i s regard see LaForest, Natural Resources and Public  Property under the Canadian Constitution (1969)22. The reasons of the other members of the Court seem more r e l i a b l e . 40. [1945] S.C.R. 385, 404 41. Id at 410-411. 42. Id at 405 43. Id at 407 204 In Re; A n t i - I n f l a t i o n Act, [1976] 2.S.C.R. 373, the issue before the Supreme Court of Canada was whether the Lieutenant-Governor i n Council i n the absence of p r o v i n c i a l l e g i s l a t i o n could enter, as was being questioned by the Court, into an agree-ment with the federal government by which the federal A n t i - I n f l a t i o n Act and guidelines would be applicable in the province. The A n t i - I n f l a t i o n Act provided that the federal Minister may with the approval of the Governor i n Council enter into such an agreement with the government of a province. The Court held that there was no question as to the propriety of the execution and of the binding e f f e c t of the agreement so far as the Government of Canada was concerned. However, as the Court pointed out while the Executive or a Minister authorized by i t may be the proper signatory to an agreement to which the Government of Ontario i s a party, t h i s i s merely a formality of execution; and even i f the agreement i s binding upon the Government of Ontario i t may be without domestic force. The Court pointed out that while the Lieutenant-Governor i n Council may have a common law power and capacity to enter into agree-ments i n the absence of statutory r e s t r i c t i o n s t h i s fact does not answer the question of authority to e f f e c t changes i n Ontario law through such agreements. It i s submitted that the same could be said of doubts cast on the a b i l i t y of the Province of B r i t i s h Columbia to alienate lands under the Crown prerogative i f such alienation in substance e f f e c t s a change i n the d i s t r i b u t i o n of executive.powers under the Constitution. The Supreme Court held i n t h i s Reference, at p. 433 [S.C.R.], that there i s no p r i n c i p l e [ s i c . of law] i n Canada whereby the Crown may l e g i s l a t e by proclamation or order i n council to bind c i t i z e n s without the support of a statute of the Legislature. This case, of course, does not s p e c i f i c a l l y support or deny any a b i l i t y of the Province of B r i t i s h Columbia to alienate lands beyond i t s t e r r i t o r i a l borders, for use of the prerogative to alienate lands i n no way purports to use the prerogative to l e g i s l a t e outside of the t e r r i t o r i a l boundaries of the Province. In support of the proposition that the Province can hold and deal with lands beyond i t s t e r r i -t o r i a l boundaries, the writer was referred to 205 the i n t e r e s t held by the Province of B r i t i s h Columbia i n property commonly known as B.C. House, located i n London, England. This pro-perty can best be described as a building from which the Province provides t o u r i s t information for B.C. v i s i t o r s . The Provinces of Ontario, Quebec, Alberta, Saskatchewan and Nova Scotia a l l have similar o f f i c e s i n London. B.C. House i s run by an agent-general appointed and funded by the province. Though B.C. House has been described as "the property of the Province" [see Province, p.5, March 26, 1955, "B.C.'s Out-post i n London's Heart"] the property i n f a c t was "acquired" from the B r i t i s h Crown on a 99 year lease running from July 5, 1913 (confirmed in a telex from W. R. Smart, Acting Agent General, B.C. House, October 17, 1980; also see B.C.O.C. 289, A p r i l 5, 1946, B.C.O.C. 1351, September 24, 1943). As was mentioned i n t h i s chapter i n t e r -governmental transfers, as i n the case here between the B r i t i s h Crown and Her Majesty i n r i g h t of a Province pose no p r a c t i c a l problems. The arrange-ment could i n e f f e c t be c l a s s i f i e d as an exercise of the Province's spending powers. The Province's holding i n B.C. House does not involve a consider-ation of the Province's a b i l i t y to alienate lands by virt u e of i t s prerogative outside of p r o v i n c i a l t e r r i t o r y . 45. For example Alberta Gas Trunk Line Ltd., holds a 50% inte r e s t i n F o o t h i l l s Pipeline (South Yukon) Ltd., the company which has received approval to construct the Alaska Highway pipeline which w i l l extend from Alaska, through the Yukon and on through B r i t i s h Columbia and Alberta; through A.G.T.L.'s take-over of Husky O i l i t acquired extensive heavy o i l rights i n Alberta and Saskatchewan - i t s o r i g i n a l l e g i s l a t i v e mandate which r e s t r i c t e d i t s a c t i v i t i e s to be ca r r i e d out within the Province of Alberta has been extended by statutory amend-ment to permit the company to carry out a c t i v i t i e s outside p r o v i n c i a l boundaries; see Alberta Gas Trunk Line Act, S.A. 1954, c.37 s.14 (as amended by S.A. 1974, c.7 s . l l ) ; also see 1978 and 1979 Annual Reports of A.G.T.L., now known as NOVA, AN ALBERTA CORPORATION; change of name made by Alberta Order i n Council 749/80 of August 6, 1980. 46. P.W. Hogg, op c i t . supra., n. 3 at 71. 47. [1916] 1 A.C. 566, 583, 584-85. 48. Id. at 528. 206 (1919) 59 S.C.R. 281, 295 Mr. Justice Duff; also see Ashbury Co. v. Riche L.R. 7 H.L. 653 - statutory corporations would not have the powers and capacity of a natural person conferred upon i t by the statute. N. Friedman, J.F. Garner, Government Enterprise -A Comparative Study (1970) 5. See Canada O i l and Gas Land Regulations 1978 C.R.C., c. 1518. op. c i t . supra., n. 3 at 169. [1936] S.C.R. 427, 434; affirmed [1937] A.C. 355. op. c i t . supra., n. 3 at 143, though subject to statutory r e s t r i c t i o n s - also see Procedure I and NOTE - Puerto Rican Seabed Rights (1979), 83 Yale L.J. 825 at 841 - "the r i g h t to exploit the seabed, under both American and International law, i s alienable". Statutes of Quebec, 1971 c. 36. Any federal l e g i s -l a t i o n would probably have to state that i t binds the Province to account for the p o s s i b i l i t y that the corporation i n t h i s case i s a Crown agent - i n any case t h i s i s the case i n the O i l and Gas Act, B i l l C-20. E. A. Driedger, The Interaction of Federal and Pro- v i n c i a l Laws (1976),54 Canadian Bar Review 695, 701. P.E.I. Potato Marketing Board v. H.B. W i l l i s , [1952] S.C.R. 392. 207 CHAPTER IV  PROCEDURE III - THE TRANSFER  OF ADMINISTRATIVE CONTROL  OVER OFFSHORE OIL AND GAS  TO BRITISH COLUMBIA INTRODUCTION The f i n a l procedure to be examined i s the poss-i b i l i t y of delegating administration of offshore o i l and gas to the Province or to a leg a l entity of the Province. There are two possible ways which may be considered i n trans f e r r i n g administrative r e s p o n s i b i l i t y to the Province; f i r s t , by delegating l e g i s l a t i v e authority to a leg a l entity created or designated by the Province, and second, by assigning the federal i n t e r e s t as lessor to the Province or to a l e g a l e n t i t y created or designated by the Province. The strength of t h i s Procedure i s that since there i s no change of l e g i s l a t i v e j u r i s d i c t i o n , the federal government may be more receptive to negotiating a transfer of administrative control to the Province. The weakness, i s that the P r o v i n c i a l control can always be revoked at the option of the federal government - possibly an untenable si t u a t i o n for the r e a l i z a t i o n of P r o v i n c i a l objectives over offshore o i l and gas development. In fac t r e f e r r i n g to 208 t h i s Procedure as a "transfer" i s to a c e r t a i n extent, a misnomer, since a transfer without q u a l i f i c a t i o n implies an absolute relinquishment of an i n t e r e s t . In t h i s pro-cedure the federal government does not r e l i n q u i s h i t s in t e r e s t , i t merely passes the administration of offshore o i l and gas to the Province. The degree of administrative control that can be transferred to the Province i s e n t i r e l y l e f t to the d i s c r e t i o n of the federal government. As w i l l be discussed below, the Province can be transferred anything from the r i g h t to merely carry out the terms of federal l e g i s l a t i o n to the a b i l i t y to pass l e g i s l a t i o n , which could be delegated to a l e g a l e n t i t y controlled by the Province. The following sections w i l l deal with the options available to the federal government. Section 1.1: transferring l e g i s l a t i v e authority to a le g a l e n t i t y of the Province  An attempt was made to transfer the management of offshore minerals to the Maritime provinces (except New-foundland) . The mechanism proposed to carry out the transfer of east coast offshore resources from the federal government i s outlined i n a document dated February, 1977, e n t i t l e d a "Memorandum of Understanding i n Respect of the Administration and Management of Mineral Resources Offshore of the Maritime Provinces", between the federal government and the provinces of Nova Scotia, New Brunswick and Prince 2 09 Edward Island. The technique used i n the Maritime Agree-ment i s the establishment of a Maritime Offshore Resources Board that: . . . w i l l have delegated to i t the administration of federal l e g i s l a t i o n d i r e c t l y by the Federal Parliament and the administration of the same l e g i s l a t i o n qua p r o v i n c i a l l e g i s l a t i o n by the respective p r o v i n c i a l l e g i s l a t u r e s . 2 The technique used i n the Maritime Agreement and also i n agreements between the Commonwealth of A u s t r a l i a and state 3 governments, involve- respectively, the adoption or passing by one l e v e l of government of exactly the same l e g i s l a t i o n r e l a t i n g to the exploitation off offshore o i l and gas to ensure that i f the law of one l e v e l of government was challenged, the law of the other l e v e l of government would be upheld. Under the Canadian scheme set out i n the Maritime Agreement, offshore mineral resources would be managed by 4 the Maritime Offshore Resources Board. The Board i t s e l f , however, would not be a law-making body. The Board would be established by i d e n t i c a l f e d e r a l - p r o v i n c i a l l e g i s l a t i o n , each of which would empower the Board to carry out i t s r e s p o n s i b i l i t e s . The l e g i s l a t i o n applicable to the exploi-t a t i o n of the offshore mineral resources would be passed by the federal government. The p r o v i n c i a l l e g i s l a t i o n implementing the Maritime Agreement: 210; . . . w i l l incorporate designated federal l e g i s l a t i o n and regulations made thereunder, as amended from time to time, as the law and regulations of the province for the purposes of exer-^ c i s i n g p r o v i n c i a l j u r i s d i c t i o n over the offshore area. 5 The Australian scheme d i f f e r s from the above i n that the Commonwealth of A u s t r a l i a and each of the seven coastal states pass l e g i s l a t i o n i d e n t i c a l i n every d e t a i l a much more cumbersome scheme.6 The.scheme envisaged by the Maritime Agreement would not i n i t s e n t i r e t y be applicable to west coast offshore o i l and gas, since one of the underlying feature of the scheme i s the settlement of j u r i s d i c t i o n a l dispute 7 As Professor Harrison explains: ...The underlying concept of the Canadian Memorandum of Understanding i s that the problem of uncertain j u r i s d i c t i o n can be accommodated, not by seeking to c l a r i f y the uncertainty, but rather by d i s -couraging - hopefully preventing - any challenge to the agreedpolicy and the l e g i s l a t i v e scheme to implement i t . Since the federal government of Canada has exclusive j u r i s d i c t i o n over west coast offshore o i l and gas, that part of the Maritime Agreement directed toward a s e t t l e -ment of j u r i s d i c t i o n between the federal and p r o v i n c i a l 211 governments need not be incorporated i n a similar scheme concerning west coast resources. For the purposes of discussing the transfer of administrative j u r i s d i c t i o n to the Province of B r i t i s h Columbia under thi s Procedure, i t must be assumed that the decision of the Supreme Court of Canada i n the Offshore Minerals  Reference has conclusively determined p r o v i n c i a l and federal j u r i s d i c t i o n s over the offshore o i l and gas, otherwise the scheme of the Maritime Agreement would have to be t o t a l l y adopted. The r i s k involved i n applying t h i s assumption can be assessed by examining whether a t h i r d party would be hesitant to develop o f f -shore o i l and gas under a scheme that acknowledges exclusive federal j u r i s d i c t i o n or on the other hand to assess whether there i s any reason for the Supreme Court of Canada to reverse i t s p o s i t i o n . While a great deal of e f f o r t was spent i n the argument before the Supreme Court i n ascertaining what, rights B r i t i s h Columb exercised over t e r r i t o r i a l waters these considerations become ir r e l e v a n t i n view of the Courts finding that "the t e r r i t o r i a l sea lay outside the l i m i t s of the g Colony of B r i t i s h Columbia". The Court made a finding 212 of fact that the t e r r i t o r i a l sea was outside the boundary of B r i t i s h Columbia. There i s no suggestion in the argument i n t h i s case that i f B r i t a i n exercised j u r i s d i c t i o n over the t e r r i t o r i a l sea t h i s necessarily had to pass to B r i t i s h Columbia when i t was a colony, though the actions of the parties may have affected the Court's determination of f a c t . The determination of boundaries on water have d i f f e r e n t i n d i c i a than those on land, but once the facts have been s e t t l e d the boundary i s usually determined. Certainly i f B r i t a i n exercised j u r i s d i c t i o n over the t e r r i t o r i a l sea i t could have reserved t h i s j u r i s d i c t i o n to i t s e l f by excluding the t e r r i t o r i a l sea from the t e r r i t o r y of the Colony when i t was established. In the case of B r i t i s h Columbia the Privy Council had confirmed the common law ownership of the Province 9 of the foreshore i . e . to the ordinary low water mark. The Court could have dealt with the case just as e a s i l y by holding that the l e g a l description of the t e r r i t o r y of the o r i g i n a l Colony, in d i c a t i n g that i t was "bounded... to the West by the P a c i f i c Ocean""^ meant that the boundary stopped at the low water mark, merely by 213 interpreting the words "bounded by". The purpose of t h i s discussion i s not to rework the Offshore Minerals  Reference but rather to indicate that while the reasons of the decision may be questioned the decision could s t i l l be well founded.^ The Offshore Minerals Reference has been approached as the exercise of the r i g h t s determining the boundary, rather than the boundary determining the r i g h t s . In any case t h i s Procedure assumes that the Supreme Court has conclusively determined fe d e r a l - p r o v i n c i a l j u r i s d i c t i o n over o f f -shore o i l and gas. In order to ascertain whether a delegation of r e s p o n s i b i l i t y for the management of offshore o i l and gas to an entity created by B r i t i s h Columbia i s possible, close examination of the concepts underly-ing such a delegation i s necessary. The scheme would require federal l e g i s l a t i o n delegating administration of federal o i l and gas l e g i s l a t i o n to a l e g a l entity created by p r o v i n c i a l l e g i s l a t i o n . Since i t i s clear that the Province does not have the j u r i s d i c t i o n to l e g i s l a t e respecting offshore mineral resources, there i s no necessity (or authority) for the Province to 12 pass l e g i s l a t i o n for the exploitation of offshore resources 13 or to incorporate by reference federal o i l and gas 214 l e g i s l a t i o n . The question i n respect to offshore minerals i s : can B r i t i s h Columbia pass p r o v i n c i a l l e g i s l a t i o n creating a Board that would be delegated the management of federal l e g i s l a t i o n that applies outside of the t e r r i t o r i a l l i m i t s of the Province? The power of inter-governmental delegation 14 has been described by Professor Driedger as follows: ...Parliament can choose any person or bodies i t wishes to carry out i t s laws and confer on them capacity and power to do so... This description c e r t a i n l y does not admit of any t e r r i t o r i a l l i m i t a t i o n . Delegation has been defined and described as follows: Delegation may be defined as the entrusting by a person or body of persons, of the exercise of a power residing i n that person or body of persons, with complete power of revocation or amendment"remaining i n the grantor (or delegator)... Delegation often involves the granting of discretionary authority to another, but such authority i s purely derivative the ultimate power always remains i n the delegator, and has therefore not been renounced. 15 The only l i m i t a t i o n which the courts have placed on delegation i s that the r e c i p i e n t cannot be the p r o v i n c i a l 16 or federal l e g i s l a t u r e . The issue of whether a board established by B r i t i s h Columbia would lack capacity since the l e g i s l a t i o n they would administer would be outside the t e r r i t o r i a l j u r i s d i c -t i o n of the Province, i s dealt with i n the P.E.I. Marketing 215 Board Case where Mr. Justice Rinfret stated that: "... (t) he ingenious argument... . that the p r o v i n c i a l Board had no capacity to receive the delegation of powers from the Federal Government has f a i l e d to convince me. As stated above, Parliament could choose i t s own executive o f f i c e r s for the carrying out of t h i s l e g i s l a t i o n , and when so chosen the P r o v i n c i a l Board became the agent authorized by the Governor i n Council with a l l or any powers l i k e the powers exercisable by such Board or agent i n r e l a t i o n to the marketing of such a g r i c u l t u r a l product l o c a l l y within the province. That, of course, must be understood mutatis mutandis. The Board did not need the enabling capacity provided for i n s.7 of the Prince Edward Island Act. I t became a body, or an e n t i t y , and i t was not necessary for the Province to give i t the power to "perform any function or duty and exercise any power imposed or conferred upon i t by or pursuant to the Dominion Act, with reference to the marketing of a natural product"; or, i n the words of the enactment of 1950, to "accept and exercise a l l and any powers or authority granted by the Governor-in-Council pursuant to the Dominion Act"... In the present case, the p r o v i n c i a l Board received i t s powers d i r e c t l y from the Federal Government. 17 The argument before the court was that since the P.E.I. Marketing Board was not, under i t s enabling l e g i s l a t i o n , a corporation, the Board would only have capacity i n r e l a t i o n to l o c a l law, and that the grant of authority from the Dominion was inoperative. Mr. Justice Estey commented on t h i s argument as follows: I t i s conceded that the Governor-General i n Council might appoint the f i v e i n d i v i d u a l members of the Potato Board and vest them with the same powers set out i n P.C. 5159 (Provincial O.C.). When, however, i t i s appreciated that t h i s Potato Board i s an unincorporated l e g a l e n t i t y with the capacity of a natural person, there appears to be nothing i n p r i n c i p l e or authority to prevent 216 the Governor-General i n Council designating and authorizing i t to discharge such duties and r e s p o n s i b i l i t i e s as may be deemed desirable within the l e g i s l a t i v e competency of  the Parliament of Canada. 18 (emphasis added) The question of capacity i s i r r e l e v a n t since when the federal government delegated i t s powers, the entity became the delegatee of the federal government as i f constituted by 19 the federal government. Furthermore, the federal government may confer upon a p r o v i n c i a l l y constituted board power to regulate a matter "within the exclusive j u r i s d i c t i o n of 20 Parliament". The Province could then create a board ostensibly to be available to exercise management of p r o v i n c i a l o i l and gas. Cle a r l y , the p r o v i n c i a l l e g i s l a t i o n could not give the board powers over offshore o i l and gas. The l e g i s l a t i o n could be permissive, that i s , i t would not be necessary that the board actually be given the management of p r o v i n c i a l o i l and gas. In a sense, the board would be analogous to a "holding company". The federal government then would amend i t s exi s t i n g l e g i s l a t i o n , i . e . the Public  Lands Grants Act, section 4(1), and the Canada O i l and Gas  Land Regulations, so as to delegate the present powers exercised by the Minister of Energy, Mines and Resources over offshore o i l and gas to the Board. But p r a c t i c a l l y , why should the Province go through the trouble of creating a board whose sole purpose f o r existence would be to receive powers from the federal government? In the case of the 217 Maritime Agreements, the technique was i n r e a l i t y p r o v i n c i a l incorporation by reference of federal laws, and delegation of the administration of p r o v i n c i a l laws to the Maritime Offshore Resources Board and federal delegation of the administration of federal laws to the Maritime Offshore Resources Board. The procedure was suggested to ensure that both the p r o v i n c i a l or federal law could withstand a j u r i s d i c t i o n a l challenge. The net r e s u l t , however, i s a delegation of management by whichever government i n fact has l e g i s l a t i v e authority to the Maritime Offshore Resources Board. I f , for example, a court held that the Maritimes had exclusive l e g i s l a t i v e j u r i s d i c t i o n over the offshore resources, the net r e s u l t would be that the provinces had delegated t h e i r l e g i s l a t i v e authority to the p r o v i n c i a l Board, though t h i s l e g i s l a t i o n would be the same as the federal l e g i s l a t i o n . If i t was j u d i c i a l l y determined that the exclusive j u r i s d i c t i o n over offshore mineral resources was within any of the Maritime provinces, i t i s highly u n l i k e l y that the signatories of the Maritime Agreement would choose to incorporate federal l e g i s l a t i o n to control the develop-ment of offshore minerals. Why, then, should t h i s scheme be imposed on B r i t i s h Columbia? While the Maritime Agree-ment could be adapted to the west coast, other forms of delegation which would give the Province more control over offshore development should be explored. 218 The Maritime Agreement and the Australian Common Code r e f l e c t two sit u a t i o n s : F i r s t , the scheme i s used where there i s a need for fed e r a l - p r o v i n c i a l cooperation i n a f i e l d of shared j u r i s d i c t i o n under the 1867 B.N.A. Act, such as i n agriculture marketing; Delegation of authority allows one body (and l e v e l of government) to e f f e c t i v e l y administer and completely occupy the f i e l d ; and secondly, where j u r i s d i c t i o n a l doubts exi s t , delegation can be used to overcome the r i s k of l e g i s l a t i o n being challenged as unconstitutional, by using the delegation technique as a coordinating mechanism. Neither of these situations e x i s t on the west coast at lea s t as far as the Supreme Court i s concerned, and alternative methods of delegation should be examined. 1.2 Introduction - delegation of federal l e g i s l a t i v e powers to a designated entity of the province - to a pr o v i n c i a l o f f i c e r  Instead of requiring the Province to create a legal e n t i t y , why not have the federal government delegate the powers i t s executive o f f i c e r s have to control the development and dispensation of offshore o i l and gas, to executive o f f i c e r s of the p r o v i n c i a l government? A further consider-ation would be for the federal government to create a new l e g i s l a t i v e regime for offshore o i l and gas and delegate to a p r o v i n c i a l minister the power to make regulations respecting the exploitation, development and conservation of offshore o i l and gas. These regulations, of course 219 would i n fact be federal regulations and subject to compliance with the provisions of the Statutory 21 Instruments Act. While the l a t t e r proposition appears s t a r t l i n g i n i t s consequences, and there has not been any decisive determination on the extent to which regulatory authority may be delegated, i t i s well within the realm of p o s s i b i l i t y . 22 The case of Hodge v. The Queen affirms the proposition that l e g i s l a t u r e s are i n no sense delegators of or acting under any mandate from the Imperial Parliament. The authority conferred on a province or the federal Parliament i s plenary, and they may confide to a body of t h e i r creation "the authority to make by-laws or resolutions as to subjects s p e c i f i e d i n the enactment, and with the object of carrying 23 the enactment into operation and e f f e c t " . The l e g i s l a t i v e body delegating l e g i s l a t i v e power to a subordinate body never r e a l l y loses control, for i t can always "destroy the agency i t has created and set up another, or take the 24 matter d i r e c t l y into i t s own hands". As to the extent of the power that can be delegated, the court i n Hodge said: ...How far i t s h a l l seek the aid of subordinate agencies, and how long i t s h a l l continue them, are matters for each l e g i s l a t u r e , and not for the courts of law, to decide. 25 The Supreme Court of Canada has approved the following 220 2 6 description of a delegation of powers: It i s improper for an authority with d i s c r e -tionary powers to delegate to another authority over which i t i s incapable of exercising d i r e c t control, unless i t i s  expressly empowered so to delegate... (emphasis added) Two questions remain: Who could be delegated the power to dispose of federal interests? And, could the federal government delegate i t s r i g h t to l e g i s l a t e i n the area? 1.2(a): method of delegation of power to dispose of offshore o i l and gas to a p r o v i n c i a l o f f i c e r  The federal i n t e r e s t i n offshore o i l and gas are presently disposed of under the Canada O i l and Gas Land 27 Regulations, passed pursuant to the Public Lands Grants 2 8 Act. The administration of these Regulations has been 29 transferred to the Minister of Energy, Mines and Resources. There i s no c o n s t i t u t i o n a l requirement that federal property can only be disposed of by a Minister of the Crown. For 30 example, the Indian O i l and Gas Regulations, give the Manager of Indian Minerals the power to issue leases. However, section 4(1)(b) of the Public Lands Grants Act states: 4. (1) The Governor-in-Council may (b) make regulations authorizing the Minister having the control, management and administration of any public lands to s e l l , lease or otherwise dispose of them, subject to such l i m i t a t i o n s and conditions as the Governor-in-Council may prescribe... (emphasis added) The Regulations authorizing the disposal of offshore minerals cannot, . therefore, permit anyone other than the 22-1 Minister to dispose of the property. Unlike the Public 31 Lands Grants. Act,, the Indian O i l and Gas Act which enables the Indian O i l and Gas Regulations states, i n section 4: s .4 The Governor-in-Council may make Regulations, (a) respecting the granting of leases, permits and licences for the exploitation of o i l and gas i n Indian lands and the terms and conditions thereof. An amendment to the Public Lands Grants Act would be necessary to authorize Regulations giving a p r o v i n c i a l o f f i c e r the r i g h t to dispose of offshore o i l and gas. The O i l and Gas Act ( B i l l C-20) would create a new l e g i s l a t i v e regime for offshore o i l and gas development i n substitution of the authority exercised over offshore o i l and gas under the Public Lands Grants Act. Unlike the regime under the Public Lands Grants Act, the d i s p o s i t i o n and management of o i l and gas resources i s contained i n the body of the proposed Act and i s not ca r r i e d out through Regulations. However, the proposed O i l and Gas Act does not l i m i t administration i n a l l cases to the Minister. The B i l l often refers to the "Minister or a person designated 32 by the Minister". Where t h i s phrase i s used, there would be no problem i n the Minister designatinga p r o v i n c i a l o f f i c e r to carry out the Minister's r e s p o n s i b i l i t i e s as his designee. However, s p e c i f i c l e g i s l a t i v e authority would be necessary to delegate other functions to a p r o v i n c i a l o f f i c i a l . The position that the duties imposed on a Minister or powers 222 given to a Minister can be exercised under the authority of the Minister by responsible o f f i c i a l s of the department would not permit the r e s p o n s i b i l i t i e s of the Minister under the proposed O i l and Gas Act to be carr i e d out by a pr o v i n c i a l o f f i c i a l . S.A. de Smith describes t h i s r e l a t i o n -ship between Ministers and department o f f i c i a l s as follows: ...The o f f i c i a l i s the a l t e r ego of the Minister of the department, and since he i s subject to the f u l l e s t control by his superior, he i s not usually spoken of as a delegate. 33 The difference between departmental o f f i c e r s exercising powers of Ministers and persons acting under delegated power, l i e s i n the d i s t i n c t i o n between agency and delegation. While there are s i m i l a r i t i e s , the main d i s -t i n c t i o n l i e s i n the delegation of l e g i s l a t i v e powers. Where an agent acts on behalf of his p r i n c i p a l and i n the pr i n c i p a l ' s name, the acts done by the agent within the scope of his authority are attri b u t a b l e to the p r i n c i p a l . However, "where l e g i s l a t i v e powers are delegated by Parliament or v a l i d l y subdelegated by Parliament's delegate, the delegate or sub-delegate exercises his powers i n his 34 own name". The powers which are proposed to be transferred to the Province would be of a l e g i s l a t i v e character, for example, the exercise of d i s c r e t i o n on d i s p o s i t i o n of o i l and gas. 223 1.2(b): delegation of l e g i s l a t i v e authority to a p r o v i n c i a l o f f i c e r Another alternative method of t r a n s f e r r i n g admini-s t r a t i o n of offshore o i l and gas to the Province i s through delegation of l e g i s l a t i v e authority over offshore o i l and gas to a p r o v i n c i a l o f f i c i a l . Two steps would be necessary: f i r s t , revocation of the e x i s t i n g federal l e g i s l a t i o n over offshore o i l and gas, and secondly, delegation to the p r o v i n c i a l o f f i c i a l by federal l e g i s l a -t i o n of broad regulation making powers, similar to those contained i n Section 4 of the Indian O i l and Gas Act. The a b i l i t y to pass regulations respecting p o l l u t i o n and conservation should also be dealt with i n the l e g i s l a t i o n authorizing the delegation. These steps would ensure that the d i s p o s i t i o n of offshore o i l and gas could be controlled by the Province. The Hodge case i s authority for the proposition that l e g i s l a t i v e authority may be delegated. The case of Re 35 Clark et a l and the Attorney-General of Canada has acknowledged that a federal board can be empowered to make regulations. What, however, i s the l i m i t to the l e g i s l a t i v e authority which can be transferred? 2.24 In the Attorney-General of Nova Scotia v. The Attorney-3 6 General of Canada , the Supreme Court was asked to decide the c o n s t i t u t i o n a l i t y of an Act of the Nova Scotia l e g i s l a t u r e e n t i t l e d , "An Act respecting the delegation of j u r i s d i c t i o n from the Parliament of Canada to the Legislature of Nova Scotia and vice versa". The Act provided for the delegation to the Parliament of Canada and the Province of Nova Scotia the authority to make cer t a i n laws within the exclusive j u r i s d i c t i o n of the other under sections 91 or 92 of the B.N.A. Act, 1867. The Supreme Court held the l e g i s l a t i o n c o nstitu-t i o n a l l y i n v a l i d . Professor Lederman, commenting on t h i s case, stated that i n his view the decision i s correct: ...and that d i r e c t l e g i s l a t i v e trading or transfer of primary l e g i s l a t i v e  powers between the federal Parliament  and a p r o v i n c i a l l e g i s l a t u r e should  not be permitted. 37 The Fulton-Faureau B i l l proposed i n 1965 provided, i n Part I I , procedures for d i r e c t inter-governmental delegation. The objection Professor Lederman had to such 225 a proposal was that: . . . I t would be a l l too easy to engage frequently i n such delegation under strong but temporary p o l i t i c a l pressure of the moment, thus creating a,patchwork pattern of v a r i a t i o n s , Province by Province i n the r e l a t i v e powers and r e s p o n s i b i l i t i e s of the federal Parlia--ment and the p r o v i n c i a l l e g i s l a t u r e s . This would seriously confuse the basic p o l i t i c a l r e s p o n s i b i l i t y and account-a b i l i t y of members of the federal Parliament and the federal Cabinet, and too much of t h i s could destroy these federal i n s t i t u t i o n s . 38 Professor Lederman no doubt bases his concern on the judgement of the court i n the Nova Scotia case, where Mr. Justice Rand pointed out that the p o s s i b i l i t i e s of revocation by the "delegating" body are severely limited as follows: The p r a c t i c a l consequences of the proposed measure, amatter which the Courts may take into account, e n t a i l the danger, through continued exercise of delegated power, of p r e s c r i p t i v e claims based on conditions and r e l a t i o n s established i n reliance on the delegation. Possession here as elsewhere would be nine points law and disruptive controversy might e a s i l y r e s u l t . The power of revocation might i n fact become no more fea s i b l e , p r a c t i c a l l y , than amendment of the Act of 1867 of i t s own v o l i t i o n by the B r i t i s h Parliament. 39 While the foregoing concerns may influence the p o l i c y decision on the extent of l e g i s l a t i v e power passed to the Province, the courts have not, as yet, limited the extent of l e g i s l a t i v e power that can be passed to i t s delegate. 2 2 6 Furthermore, the dubious maxim that one cannot do i n d i r e c t l y what cannot be done d i r e c t l y has no j u d i c i a l 40 support. The cases of Coughlm v. Ontario Highway 41 42 Transport Board, and R. v. Smith, decided that the federal Parliament need not enact even the skeleton of a regulatory scheme, but can remit the entire matter to the d i s c r e t i o n of the p r o v i n c i a l l e g i s l a t u r e . There would be no impediment to l e g i s l a t i o n author-i z i n g the federal Minister of Energy, Mines and Resources to enact Regulations respecting the d i s p o s i t i o n , exploitation and conservation of offshore o i l and gas. Acknowledging that the Minister could undertake t h i s task, so also could a delegate of the federal Crown, i . e . a p r o v i n c i a l Minister. It must be remembered however that a p r o v i n c i a l o f f i c e r who would be delegated l e g i s l a t i v e authority would exercise t h i s power subject to federal l e g i s l a t i o n , and i n p a r t i c u l a r as mentioned above, the Regulations would be subject to 43 the Statutory Instruments Act. Section 2: Assignment of Federal Government's Interest as  Lessor, i n Dispositions of Offshore O i l and Gas to the  Province or a Legal E n t i t y Created by the Province  The l a s t part of t h i s t h i r d procedure i s an examination of the p o s s i b i l i t i e s of assigning Canada's in t e r e s t as lessor to the Province or to a l e g a l e n t i t y created by the Province. 227 Since t h i s procedure would take e f f e c t a f t e r d i s p o s i t i o n , only l i m i t e d control would be given to the Province -that of a "landlord". The Province's control could be augmented i f i t was involved i n the i n i t i a l negotiation of the contract p r i o r to d i s p o s i t i o n , and i f i t had input into the terms of disposal. One r e s t r a i n t though on the Province's control i s that the d i s p o s i t i o n and possibly even the terms of disposal are subject to federal l e g i s -l a t i o n which could l i m i t f l e x i b i l i t y i n the terms of disposal and subsequent control over the management of the resources. However, since l e g i s l a t i v e j u r i s d i c t i o n remains i n Canada, under t h i s alternative the federal Crown's in t e r e s t could not be transferred to the Province for the same reason that ownership could not be transferred to a Province in the second procedure. But the federal government, can by i t s prerogative or, i f s p e c i f i c a l l y authorized, by l e g i s -l a t i o n , dispose of i t s entire i n t e r e s t i n offshore o i l and gas to a corporation and therefore i t c e r t a i n l y would seem possible for the federal government to dispose of i t s residual i n t e r e s t to such an e n t i t y . The f i r s t question i s why would i t want to use t h i s procedure, and secondly, how could:.it e f f e c t a transfer? 228 If the federal government disposes only of i t s in t e r e s t as lessor i n offshore o i l and gas, i t has retained control not only of the terms of d i s p o s i t i o n , but also of i t s a b i l i t y to l e g i s l a t e (and expropriate) with regard to offshore o i l and gas. A p r o v i n c i a l entity would be e n t i t l e d to c o l l e c t revenues from the di s p o s i t i o n and would have the management of any contract. The main problem i n t h i s procedure i s e f f e c t i n g the transfer. Furthermore, public money must, .under the 44 F i n a n c i a l Administration Act, be paid into the Consolidated Revenue Fund and statutory authority would be required to forego t h i s revenue owing to the federal Crown. The Fina n c i a l Adminstration Act provides as follows: s.2 "public money" means a l l money belonging to Canada received or co l l e c t e d by the Receiver General or any other public o f f i c e r i n his o f f i c i a l capacity or any person authorized to receive or c o l l e c t such money..." s . l l ( l ) Subject to t h i s Part, a l l public money s h a l l be deposited to the c r e d i t of the Receiver General... s.36 No money s h a l l be borrowed or security issued by or on behalf of Her Majesty without the authority of Parliament. 229 The need for statutory authority to forego revenue from offshore o i l and gas i s a minor problem compared to the impossible task of separating the l e g i s l a t i v e and purely contractual aspects of the dispositions of offshore o i l and gas. Under the present l e g i s l a t i v e regime for offshore o i l and gas, not only i s there no provision for the federal Crown to assign i t s i n t e r e s t as lessor, but i t would be impossible for i t to e f f e c t such a transfer without t r a n s f e r r i n g l e g i s l a t i v e r e s p o n s i b i l i t y . The federal in t e r e s t , in disposed lands i s not held by a simple contractual arrangement between the lessor and lessee. The contract r e l a t i n g to the d i s p o s i t i o n can best be described as a "statutory contract". The rights of the Crown are contained, not only i n the lease document, but i n the Regulations which can be amended so as to a f f e c t the contractual arrangement. This a l t e r -native i s therefore not practicably f e a s i b l e . Section 3 - Conclusions The alternative methods for trans f e r r i n g adminis-t r a t i v e control to the Province or to a body i t controls demonstrates the wide range of possible co-operative schemes available to achieve a shared r e s p o n s i b i l i t y over offshore resource development. The major drawback i s the 230 administrative machinery necessary before such schemes can be put i n place. The instruments of transfer f a l l into a l l categories of l e g i s l a t i o n requiring a specialized bureaucracy to administer. The strongest disadvantage of any method suggested i n t h i s procedure i s that there i s no change of j u r i s d i c t i o n a l status. The federal government retains i t s exclusive j u r i s d i c t i o n only sharing i t s r e s p o n s i b i l i t y with an option to terminate without notice. It would be d i f f i c u l t to envisage the Province being s a t i s f i e d with any scheme proposed i n t h i s Procedure. The examination of t h i s alternative i s perhaps most important for assessing the advantages of the other two Procedures proposed i n t h i s paper. 231 CHAPTER IV  FOOTNOTES 1. Federal-Provincial Memorandum of Understanding i n Respect of the Administration and Management of Mineral Resources Offshore of the Maritime Provinces dated February 1, 1977 entered into between Canada, Prine Edward Island, New Brunswick and Nova Scotia. 2. R.J. Harrison, The Offshore Mineral Resources  Agreement i n the Maritime Provinces (1978), 4 Dalhousie L.J. 245, 252. 3. Id. at 260-261. 4. R.J. Harrison and J . Godsoe, unpublished paper e n t i t l e d , J u r i s d i c t i o n s and Administrative Arrange- ments between Canada and the Maritime Provinces for the Development of Offshore Mineral Resources" 5. op. c i t . supra, n.2. 6. op. c i t . supra, n. 2 also see A. Thompson, Australia's  Off-Shore Petroleum Common Code (1968) 3 U.B.C.L.R. 1. 7. op. c i t . supra, n. 2 at 259. 8. See discussion i n introduction to t h i s paper on binding e f f e c t of declaratory judgements; (1967)) S.C.R. 795, 817. Also see p. 801. 9. A.G.B.C. v. C.P.R. (1906) A.C. 204, 208, Esquimalt  Nanaimo Ry. v. Treat (1919) 3 W.W.R. 356. Also see Mellor v. Walmesley, (1905) 2 Ch.D. 164, 177; also A.G. Can, v. Higbie" (1945) S.C.R. 385, 395. 10. R.S.B.C. 1911 c. 83; p. 266 s. 3; c. 67, p. 266 s. 4. 11. See for example: Beauchamp and others, J u r i s d i c t i o n a l  Problems i n Canada's Offshore (1973), 11 Alberta L.R. 431; I. Head, The Canadian Offshore Minerals Reference; the application of international law to a Federal  Constitution, (1968), 18 U. Toronto L.J. 131; C. Martin, Newfoundland's case on offshore minerals; a b r i e f (1975) 7 Ottawa L.R. 34; G. Swan, The Newfoundland offshore  Claims (1976), 22 McGill L.J. 541. 12. as i n the case of A u s t r a l i a . 13. as i n the case of the Maritime Agreement. 14. See E.A. Driedger, The Interaction of Federal and Pro- v i n c i a l Laws, (1976), 54 Canadian Bar Review 695, 699 also see R. Tuck, Delegation A Wrung Over the Constitu-t i o n a l Hurdle (1945) ,23 C.B.R. 79, 92; 232 "...the l e g i s l a t u r e should be unlimited i n i t s choice of persons or bodies to whom i t wishes to entrust such authority" Tuck at 92 " i f , therefore, the Pr o v i n c i a l l e g i s l a t i o n or the Dominion Parliament has "the same authority as the Imperial Parliament" [see Hodge v. R. (1883), 9 AC 117.] within i t s sphere of operation set by the B r t i s h North America Act, i t follows that a Pr o v i n c i a l l e g i s l a t u r e should be able by delegation, to entrust to the Dominion or any other agent of i t s choosing, the exercise of a power i n the Province by the B r i t i s h North America Act, and vic e  versa." 15. Id. Tuck at 86. 16. See A.G. for Nova Scotia v. A.G. of Canada, (1951) SCR 31, P.E.I. Potato Marketing Board V.H.B. W i l l i s Inc. (1952) 4 D.L.R. 146; obiter of hand Haldane: Re; the I n i t i a t i v e s  Referendum Act, (1919) A.C. 935 @ 945, also see Re; Clark et a l and Attorney General of Canada (1978), 81 D.L.R. (3rd) 33. 17. (1952) 4 D.L.R. 146 @ 154, also see judgement of Mr. Justice Rand at p. 166. 18. Id. p. 178-179; also see Hogg Constitutional Law of Canada (1977) 121-123, 127. 19. Lederman, Some Forms and Limitations of Co-Operative  Federalism (1967), 45, Canadian Bar Review 409. 20. Coughlin v. The Ontario Highway Transport Board, (1968) SCR 569, 575 per Mr. Justice Cartwright. 21. S.C. 1970-71-72 c. 38 as amended. 22. (1883) A.C. 117, 132. 23. Id. 24. Id. 25. Id. 233 26. Re; Clark et a l and the- A.G.: of Canada, (1978), 81 D.L.R. (3rd) 33 @ 49. 27. See Procedure I f o r a f u l l d escription of l e g i s l a t i v e authority, C.R.C. 1978 c. 1518., 28. R.S.C. 1970, c. P.-29. 29. SOR/66-9 pursuant to Public Service Rearrangement  and Transfer of Duties Act 1966. 30. C.R.C. 1978 c. 963, s.7. 31. S.C. 1974-75-76 c. 15. 32. See B i l l 20 i n f r a s. 11(1) - production licences - also t r a n s i t i o n a l provisions refer to designee. 33. de Smith, J u d i c i a l Review of Administrative Action (1973) 271^ as to the delegation of l e g i s l a t i v e power de Smith writes at 265. " i t i s doubtful whether implied authority to sub-delegate l e g i s l a t i v e powers would ever be conceded by the English courts save i n time of grave emergency. For when Parliament has s p e c i f i c a l l y appointed an authority to discharge a l e g i s l a t i v e function, a function normally exercised by Parliament i t s e l f , i t cannot r e a d i l y be presumed to have intended t h a t i i t s delegate should be . free to empower another person or body to act i n i t s place." also see (1957), 1 Melbourne U.L. Rev. 105. 34. Id. at 266. 35. (1978), 81 D.L.R. (3d) 33, 49. 36. op. c i t . supra, n. 16. 37. op. c i t . supra, n. 19 at 426. 38. Id. 39. (1950), 4 D.L.R. 369, 387. Also see-LaForest G., Delegation of L e g i s l a t i v e Power i n Canada (1975), 21 McGill L.J. 129. 234 40. Driedger, op. c i t . supra, n. 14 at 695. 41. (1968) S.C.R. 569. 42. (1972) S.C.R. 359, also see Hogg,<~ Canadian Constitutional  Law (1977) 227.. 43. S.C. 1970-71-72 c. 38 (as amended) s. 2(1) (b) (c) and (d) . 44. RSC 1970, e. F^IO, s. 60. 235 CHAPTER V CONCLUSION Disputes between the federal and p r o v i n c i a l govern-ments over the control of resources, within or beyond pr o v i n c i a l borders, should not be resolved by c o n s t i t u t i o n a l amendment, u n t i l a l l other l e g a l alternatives to resolving the disputes within the exis t i n g c o n s t i t u t i o n a l structure have been surveyed. Everytime that the constitu t i o n i s amended, the society which i s governed by i t w i l l be d i r e c t l y affected. A c o n s t i t u t i o n a l amendment i s not a restatement of the objectives contemplated by the o r i g i n a l c o n s t i t u t i o n , but rather i s a r e d e f i n i t i o n of those objectives. The seriousness of t h i s step must be weighted against the a b i l i t y of the present consti t u t i o n which the c i t i z e n s of t h i s country have adopted as t h e i r system of government. It i s therefore important to thoroughly understand the s p i r i t of a l l c o n s t i t u t i o n a l acts before deciding that they be changed. E f f o r t s should f i r s t be directed at resolving problems within the co n s t i t u t i o n a l framework, rather than defining new relationships through c o n s t i t u t i o n a l amendment, even though i t i s often easier to resolve current problems by looking ahead instead of back. As the distinguished American writer, Robert Penn Warren points out: 236 -There's an appalling ignorance and contempt for history. It i s considered a dead subject. People are not i n t e r -ested i n the p a s t t o d a y people are interested only i n now and tomorrow. 1 Pro v i n c i a l claims to p a r t i c i p a t i o n i n natural resources beyond t h e i r borders i s not a new problem. At about the time that the p r a i r i e provinces began to demand control over t h e i r natural resources the Maritime provinces saw how vulnerable t h e i r economy was i f i t could not be sustained by a s o l i d resource base. In 1912, S i r Robert Borden made the following comments on the anticipated transfer of natural resources to the p r a i r i e provinces: "...when t h i s question does come to be considered (transfer of natural resources to the provinces) some regard w i l l have to be given to the claims of some other provinces of Canada, and espe c i a l l y the three Maritime provinces, whose boundaries have not been increased, whose boundaries cannot very well be increased on account of t h e i r natural s i t u a t i o n . 2 Prior to the transfer of natural resources to the p r a i r i e provinces, the federal government had convened the Royal Commission on Maritime Claims - The Duncan Commission, as a r e s u l t of representations, by the Maritime provinces; complaining that t h e i r interests had suffered under the economic p o l i c i e s adopted by successive federal governments. 237 The position of the Maritime provinces was best described i n Nova Scotia's b r i e f to the Commission requesting compensation when the control of natural resources was se t t l e d on the p r a i r i e provinces. Paragraph 2 of t h i s b r i e f read: 2. A c r e d i t against the Dominion government of such an amount as w i l l f a i r l y represent, on a per capita basis of c a l c u l a t i o n , Nova Scotia's proprietary  in t e r e s t i n the public lands of Manitoba, Saskatchewan and Alberta, i f and when the said lands are transferred to the govern-ment of these provinces. 4 (emphasis added) Control over natural resources and the revenues they a t t r a c t , has always been considered v i t a l to the development of provinces within the Canadian c o n s t i t u t i o n a l system. What must be examined i s the ro l e of the federal government over these resources. Mr. Cabot Martin captures the pro-v i n c i a l dilemmaover offshore resources i n the following excerpt from his a r t i c l e supporting Newfoundland's claim to offshore resources: ...a new "federal" i n t e r e s t has been created - that of guaranteeing raw materials at "reasonable prices" to feed the i n d u s t r i a l juggernauts of central Canada. This i n t e r e s t , paradoxically runs diameteria-lly opposite to another professed federal int e r e s t - that of eradicating regional d i s p a r i t y . 5 What must be evaluated i s the extent to which the s p i r i t 238 of the Canadian constit u t i o n encouraged and recognized the need for economic s e l f - s u f f i c i e n c y by the province. If i t does, then the answer to achieving t h i s balance must be found i n the c o n s t i t u t i o n . This paper has demon-strated three alternatives for achieving the goals of economic balance. Perhaps i t w i l l be hardest for the federal government to see the resolution of resource management within the context of the e x i s t i n g c o n s t i t u t i o n . In his a r t i c l e which examines the concept of federalism and the outer continental shelf i n the United States, Dr. Breeden points out: I t i s often said that the national government represents the whole people, acts as an a r b i t r a t o r among the States, and promotes national development by checking the parochial behaviour of state governments. This view f a i l s to take account of the federal government as land manager with parochial interests of i t s ;own. 6 There w i l l be no s a t i s f a c t o r y resolution to federal and p r o v i n c i a l resource d i s t r i b u t i o n u n t i l both governments openly admit to t h e i r " t e r r i t o r i a l " objectives and from there work at compromising t h e i r positions to the benefit of society and Canada as a whole. I t i s about time that we recognize that the constitution r e f l e c t s a statement of co-operation to which a l l levels of government and people must be committed. When working within the c o n s t i -tution does not seem to be the easiest solution perhaps the 239 solution i n i t s e l f i s inappropriate. The following statement by the Tremblay Royal Commission of Inquiry into c o n s t i t u -t i o n a l problems should be borne i n mind by those who would propose to a l t e r the c o n s t i t u t i o n a l structure of t h i s country: What then, after a l l , i s federalism? We have said i t i s the system of association as opposed to the system of singleness; i t obstrudes i t s e l f each time we desire neither unity, destructive of i n d i v i d u a l i t e s , nor independence, destructive of unity. It i s thus a general formula, e f f e c t i v e not only between states but i n a l l f i e l d s of s o c i a l l i f e ? Thus considered, i t appears as a system which, i n simultan-eous reaction against unitarianism and individualism, proclaims association between individuals and s o c i a l groups as a central organizing p r i n c i p l e of society. 7 Federal and p r o v i n c i a l goals i n the development of offshore o i l and gas can be resolved within the e x i s t i n g c o n s t i t u t i o n a l framework. It i s not the lack of alterna-t i v e s within the c o n s t i t u t i o n that has hampered the resolution of j u r i s d i c t i o n a l disputes over offshore o i l and gas development but rather i t i s the lack of a commitment by the federal and p r o v i n c i a l governments to co-operate, and compromise t h e i r positions. The f i n a l statement to t h i s paper then i s that co-operation and compromise should be c a r r i e d out within the e x i s t i n g present c o n s t i t u t i o n a l structure. 240 CHAPTER V FOOTNOTES 1. A conversation with Robert Penn Warren "Can Democracy  Survive i n A World of Technology",: U.S. News and World Report, August 18, 1980 p. 6T~. 2. Canadian House' of Commons Debates, February 27, 1912, Volume II c o l . 3896, referred to i n Canadian House of  Commons Debates, February 18, 1929 at p. 99. 3. Duncan Commission, Royal Commission on Maritime Claims, Ottawa (1926) at p. 7. 4. Canadian House of Commons Debates, February 18, 1929 at p. 199. 5. Cabot Martin, Newfoundland "Case on Offshore Minerals" (1975), Ottawa L.R. 34, 51. 6. R. Breeden, Federalism and the Development of the Outer  Continental Shelf Mineral Resources (1977), 14 Public Land and Resource Law Digest 33. 7. Kwavnick, The Tremblay Report, Report of the Royal Commission of Inquiry on Constitutional Problems (197 3) p. 87. 241 BIBLIOGRAPHY BOOKS Amador, The Exploitation and Conservation of the  Resources of the Sea (1963~7"I Bartley, The Tidalands O i l Controversy - A Legal and  H i s t o r i c a l Analysis (1953). Bloomfield and Fi t z g e r a l d , Boundary Waters Problems  of Canada and the United States (1958). Brown, Bidding for Offshore O i l (1969). Button, The Shetland Way of O i l (1978). Cheffins and Tucker, The Constitutional Process i n  Canada (1975). Clements, The Canadian Constitution (1916). De Smith, Ju d i c a l Review of Administrative Action (1973). Dubner, The Law of T e r r i t o r i a l Waters of Mid-Ocean  Archipelagos and Archipelago States (1976). Friedman and Garner, Government Enterprise - A Comparative  Study (1970). Ford Foundation Energy Pol i c y Project, Exploring Energy  Choices, A Preliminary Report (1974). 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May, Federalism and F i s c a l Adjustment (1969). O l l i v e r , B r i t i s h North America Acts and Selected Statutes 1867-1962 (1962). Phrand, The Law of the Sea of the Arctic (1973). Port of B r i t i s h Columbia; Development and Trading  Patterns, B.C. Geographical Series, Number 2 (1966). Quick and Garran, The Annotated Constitution of the  Australian Commonwealth (1901). Robinson and Cutt, Public Finance i n Canada (1968). Robinson and Morgan, North Sea O i l and The B r i t i s h  Economy 1977-1985 (19777". Smiley, Conditional Grants and Canadian Federalism Canadian Tax Papers #32 (1963). Smiley, The Rowell-Sirois Report/Book I (1963) (Appednix No. 81 Sovereignty of the Sea - Geographic B u l l e t i n No. 3 A p r i l 1965 U.S. Department of State. 243 T r e s o l i n i , The American Constitutional Law (2nd. Ed.) (1965). Yates and Young, Limits to National J u r i s d i c t i o n  over the Sea (1974T. 244 JOURNALS Beauchamp, Crommelin and Thompson, Jurisdictiona1  Problems i n Canada's Offshore (1973), Alberta Law Review 431. Beesley, The Law of the Sea Conference: factors behind  Canada's stance, (1972) International Perspective s.29. Breeden, Federalism: and the Development of Outer  Continental Shelf Mineral Resources (1977), 14 Public Land and Resource Law Digest 32. Bourne and McRae, Maritime J u r i s d i c t i o n i n the Dixon  Entrance: The Alaska Boundary Re-examined (1976), The Canadian Yearbook of International Law 75. Cohen, Relation of Constitutional Law to International  Law (1952-54), American Society of International Law 128, 159-160. Daniel, Sovereignty and Ownership i n the Marginal Sea (1950-51), 3 Baylor Law Review 241. Driedger, The Interaction of Federal and P r o v i n c i a l  Laws (1976~, 54 Canadian Bar Review 695. Gotlieb, The Canadian Contribution of a Fishing Zone  in International Law (1964), The Canadian Yearbook of International Law 55. Gotlieb and Dalfen, National J u r i s d i c t i o n and Inter- national Responsibility: New Canadian Approaches to  International Law (1973), 67 The American Journal of International Law 229. Harrison, The Offshore Mineral Resources Agreement i n  the Maritime Provinces (1978), 4 Dalhousie L.J. 245. Hawkins, The Pressing Implications of Canada as a  Seabed Power (1972), International Perspectives 35. Head, Canadian Claims to T e r r i t o r i a l Sovereignty i n the  A r c t i c Regions (1963), 9 McGill L.J. 200. Head, The Canadian Offshore Minerals Reference; the  application of international law to a Federal Constitu-t i o n (1968), 18 U. Toronto L.J. 131. 245 Hounshell and Kemp, The Continental Shelf: A Study  i n National Interest and International Law (19 56), 3 Journal of Public Law 343. Jackson, Rational Development of Outer Continental  Shelf O i l and Gas (1976), 54 Oregon Law Review 567. Krueger, The Development and Administration of Outer  Continental Shelf Lands of the United States (1968), 4 Rocky Mountain Mineral Law Review 643. LaForest, Delegation of L e g i s l a t i v e Power i n Canada (1975) , 21 McGill L.J. 129. Lederman, Some Forms and Limitations of Co-Operative  Federalism (1967), 45 Canadian Bar Review 409. Limits and Status of the T e r r i t o r i a l Sea, Exclusive  Fishing Zones, Fishery Conservation Zones and the  Continental Shelf (1971), 10 International Legal Materials 1225. Martin, Newfoundland's case on offshore minerals; a  b r i e f (1975), 7 Ottawa L.R. 34. Mayo and Jones, Legal Policy decision process (1964), 33 Geo. Wash. Law Rev. 341. M i l l and Woodson, Energy Policy; A Test for Federalism (1976) , 18 Arizona Law Review 403. Mundell, Legal Nature of Federal and P r o v i n c i a l  Executive Governments; Some Comments on Transactions  Between Them (1960-63), 2 Osgoode H a l l L.J. 56. O'Connell, The J u r i d i c a l Nature of the T e r r i t o r i a l  Sea (1971), The B r i t i s h Yearbook of International Law 381. Rubin, The Role of the Coastal Zone Management Act of  1972 i n the Development of O i l and Gas from the Outer  Continental Shelf (1975), Natural Resource Lawyer 399. Samuels, O i l P o l l u t i o n (1971), 40 B r i t i s h Yearbook of International Law 385. Statehood and the Equal Footing Doctrine: The Case for Puerto Rican SeaBed Rights - Notes - (1979), 88 Yale Law Journal 825. 2'4 6 Swan, The Newfoundland Offshore Claims; Interface of  Constitutional Federalism and International Law (1976), 22 McGill L.J. 541. Tuck, Delegation a Wrung Over the Constitutional Hurdle (1945), 23 Canadian Bar Review 92. 247 CASES Alabama v. Texas-, 347 U.S. 272 (1954). Ashbury Co. v. Riche (1875), L.R. 7 H.L. 653. A.G. B.C. v. C.P.R., [1906] A.C. 204. A.G. Can, v. A.G. Ont., (Labour Conventions Case), [1937] A.C. 326. A.G. Can, v. Higbie, [1945] S.C.R. 385. A.G. Nova Scotia v. A.G. of Canada, [1951] S.C.R. 31. (Note: see for c r i t i q u e of case, Ballem, (1951), 29 Can. Bar. Rev. 79). Bonanza Creek Gold Mining Co. Ltd. v. The King, [1916] 1 A.C. 566. Brophy v. A.G. Manitoba, [1895] A.C. 202. Case v. Toftus, 39 F. 730 (C C D . , 1889). Coughlin v. Ontario Highway Transport Board, [1968] S.C.R. 569. C.P.R. v. Notre Dame de Bonsecours, [1899] A.C. 367. Croft v. Dunphy, [1933] A.C 156. Dome Petroleum v. Hunt et a l , [1978] 1 F.C.R. 11. Esquimalt Nanaimo Ry. v. Treat,[1919] 3 W.W.R. 356. Guess v. Read 290 F. (2d) 622. Hodge v. The Queen (1833), 9 A.C. 117. Honsberger v. Weyburn Township Co. (1919), 59 S.C.R. 281. Imperial O i l s Ltd. v. The Queen, [1974] S.C.R. 623. Liquidators of the Maritime Bank of Canada v. Receiver  General of New Brunswick, [1892] A.C 437. May v. The King, [1931] S.C.R. 374. 248 Mellor v. Walmesley, [1905] 2 Ch.D. 164, Ontario Mining Company v. Seybold, [1903] A.C. 73. P.E.T. Potato Marketing Board v. H.B. W i l l i s Inc.,, [1952] 4 D.L.R. 146. North Sea Continental Shelf Cases, I.C.J., February 20, 1969, reproduced i n (1969), 8 International Legal Materials 340. Reference re Ownership of and J u r i s d i c t i o n Over Offshore Mineral Rights as set out i n Order i n Council P.C. 1965-750 dated A p r i l 26, 1965, [1967] S.C.R. 792. Reference re V a l i d i t y of The Wartime Leasehold Regulation [1950] S.C.R. 124. Reference re Clark et a l and Att". Gen. (1978) , 81 D.L.R. (3d) 33. Reference re Constitutional V a l i d i t y of S.17 of the AIM berta Act, [1927] S.C.R. 364. Reference re P a c i f i c Western A i r l i n e s Ltd.; The Queen in Right of Alberta v. Canadian Transport Commission (1977), 2 A.L.R. (2nd) 72. (S.C.C.) Reference re Saskatchewan Natural Resources Transfer, [1931] S.C.R. 263, af f ' d [1932] A.C. 40. Reference re S t r a i t of Georgia (1967), 1 B.C.L.R. 98 (B.CCA.) . Reference re The Employment and So c i a l Insurance Act, [1936] S.C.R. 427; [1937] A.C. 355. Reference re The I n i t i a t i v e s Referendum Act, [1919] A.C. 935. Regina v. Tootalik E4-321, (1969)71 W.W.R. 435, ( T e r r i t o r i a l Court), affirmed (1970) 74 W.W.R. 740. Rex v. Ulmefl (1923), 1 W.W.R. St. Catherine's M i l l i n g & Lbr. Co. v. R. (1889), 14 A.C. 46. Theodore v. Duncan, [1919] A.C. 696. 249 Underwater Gas- Developers Ltd. v. Ontario Labour  Relations Board (I960)> 21 D.L.R. (2d) 345, af f ' d 24 D.L.R. (2d) 673. United States v. C a l i f o r n i a , 332 U.S. 19 (1947). United States v. Louisiana, 339 U.S. 699 United States v. Maine, 420 U.S. 515 (1975). 250 STATUTES AND REGULATIONS STATUTES An Act to provide for the boundaries of the Province of Manitoba, S.C. 1881 c. 14, S.M. 1881, c . l - 2nd sess. (not assented t o ) , c. 1 - t h i r d sess. assented to March 4, 1881. A r c t i c Waters P o l l u t i o n Prevention Act, R.C.S. 1970, c. 1st Supp.), c.21 B i l l C-20, proposed Canada O i l and Gas Act, 3rd session 30th Parliament 25 E l i z . 11, 1977. Charter of the Quebec Petroleum Operations Company, Statutes of Quebec, 1969, c. 36. Coastal Zone Management A c t , T i t l e , 16 U.S.C.S. 1451-S.1451-6, supp. 1944, or Public Law 92-583. Commonwealth of A u s t r a l i a Constitution, 1900 (Imp.), 63 & 64, V i c t o r i a c. 12, s. 123. Continental Shelf Act, 1964, 13 E l i z . 2, c. 29. Employment Standard Act, R.S.B.C. 1979, c. 107, Part 8. Energy Act, R.S.B.C. 1979, c. 108. Factor Act, R.S.B.C. 1979, c. 118. Financial Administration Act, R.S.C. 1970, c. F-10. Gasoline Tax Act, R.S.B.C. 1979, c. 152. Indian.Act, R.S.C. 1970 c. 1-6. Indian O i l and Gas Act, S.C. 1974-75-76, c. 15. Indian Reserve Mineral Resource Act, 1979, R.S.B.C, c. 192. Industrial OperationiCompensation Act, R.S.B.C. 1979, c. 195. Labour Code, R.S.B.C. 1979, c. 212. Labour Regulation Act, 1979, R.S.B.C, c. 213. Mineral Resource Tax Act, R.S.B.C. 1979, c. 263. 251 National Environmental Policy Act (NEPA), t i t l e 42 U.S.C.S. 4321-47 C1970). Northern Pipeline Act, S.C. 1977-78, c. 20. O i l and Gas Production Conservation Act, R.S.C. 1970, c. 0-4, as amended by R.S.C. 1970 (1st supp) c. 30; S.C. 1976-77 c.55 (note ss. 28-36 not i n force) . Outer Continental Shelf Lands Act T i t l e 43 U.S.C.S. s. 13. Petroleum and Natural Gas Act, R.S.B.C. 1979, c. 323. Petroleum Underground Storage Act, 1979 R.S.B.C. c. 325. Pipeline Act, R.S.B.C. 1979, c. 328. Po l l u t i o n Control Act, R.S.B.C. 1979, c. 332. Public Lands Grants Act, R.S.C. 1970, c. P-29. Rupert's Land Act, 1868 (Imp.) 31 & 32 V i c t o r i a , c. 105. Statutory Instruments Act, S.C. 1970-71-72, c. 38, as am. s. 2(1) (b) (e) and (d). Submerged Lands Act T i t l e , 43 U.S.C.S., s. 1301, Supreme Court Act, R.S.C. 1970, c. S-19. Temporary Government of Rupert's Lands Act, 1869, S.C. 1869, c. 3, reproduced i n R.S.C. 1970 Appehdix No. 7. T e r r i t o r i a l Sea alnd Fishing Zones Act, R.S.C. 1970, c. T-7, as am. R.S.C. 1970 (1st supp.), c. 45; R.S.C. 1970 (2ndlsupp.) c. 14, S.C. 1978-79, c. 13. Alberta Act, S.C. 1905, c. 3, reproduced i n R.S.C. 1970, Appendix No. 19. The B r i t i s h North America Act, 1867 (Imp.), 30 & 31, V i c t o r i a , c. 3 reproduced i n R.S.C. 1970, Appendix No.5. The B r i t i s h North America,Act, 1930 (Imp.), 20-21 Geo. V., c. 26, reproduced i n R.S.C. 1970, Appendix No. 25. 2 52 The B r i t i s h North America Act, 1949 (Imp.).* 12 & 13 Geo. 6, c. 22 reproduced i n R.S.C. 197 0, Appendix No. 30. The Manitoba Act, 1810, S.C. 1870, c. 3, reproduced i n R.S.C. 1970, Appendix No. 8. The Saskatchewan Act, S.C. 1905, c. 42, reproduced i n 'R.S.C. 1970, Appendix No. 20. The Statute of Westminster, 1931 (Imp.), 22 Geo. 5, c. 4, reproduced i n R.S.C. 1970, Appendix No. 26. Worker 1s Compensation Act, R.S.B.C. 1979, c. 431. REGULATIONS Canada O i l and Gas D r i l l i n g and Production Regulations, C.R.C. 1979. Canada O i l and Gas Land Regulations, C.R.C. 1978, c. 1518. Indian O i l and Gas Regulations, C.R.C. 1978, c. 963. O i l and Gas D r i l l i n g Regulations, SOR/7.9^82. Order of Her Majesty i n Council Admitting B r i t i s h Columbia into the Union, May 16, 1971, reproduced i n R.S.C. 1970, Appendix No. 10. Order i n Council dated June 26, 1873, reproduced i n R.S.C. 1970, Appendix No. 12. Order of Her Majesty i n Council Admitting Rupert's Land and the North-Western T e r r i t o r y into the Union, June 23, 1870 (Imp.) Schedule (A), R.S.C. 1970, Appendix No. 9. Pipeline Regulations, B.C. Regulations, 335/73, Public Service Rearrangement and Transfer of Duties Act 1966, transfer, SOR 66-9. Minimum Wage Order 10 (1972), Geophysical Exploration and O i l Well D r i l l i n g and Service Industry, B.C. Regu-l a t i o n 275/72. 253 Regulations Constituting a Crown Reserve on Lands Forming Part of. the Continental Shelf, B r i t i s h Columbia Order i n Council 3578, Regulations 1968/105, 106. 2 54 OTHER MATERIAL Applications made by Trans Mountain Pipe Line Company Ltd. for C e r t i f i c a t e of Public Convenience and Necessity under Part III of the National Energy Board Act, f i l e d under F i l e No. 1755-T4-115. Intervention of the Union of B.C. Indian Chiefs, October 25, 1979. Canadian House of Commons Debates, 1871, p.148; 604. Canadian House of Commons Debates, 1927, p. 360--371. Canadian House of Commons Debates, 1929, p. 25. Canadian House of Commons Debates, February 18, 1929, p. 192. Canadian Sessional Papers, 1871, No. 20, 2nd. Return, Canada Parliament, Sessional Papers (House of Commons) 1871, No. 20, 2nd. return, p. 1,Correspondence between the Imperial and Canadian Governments r e l a t i v e to the Manitoba Act. Canadian Sessional Papers, No. 20, 1871, 2nd Return "Correspondence from the Governor General of Canada to the Secretary of State for the Colonies". Canadian House of Commons Debates, October 24, 1969. Canadian House of Commons Debates, February 13, 1970, p. 3577 Convention on the T e r r i t o r i a l Sea and the Contiquous Zone, U.N. Document A/Conf. 13/L.52, adopted A p r i l 27, 1958; Convention on the Continental Shelf, U.N. Docu-ment A/Conf. 13/L.55, adopted A p r i l 26, 1958. Correspondence between Prime Minister Joseph Clark and Premier Brian Peckford of Newfoundland, dated September 14, 1979, Premier John Buchanan of Nova Scotia, dated September 20, 1979 and Premier William Bennett of B r i t i s h Columbia, dated September 24, 1979. Duncan Commission, Royal Commission on Maritime Claims, Ottawa (1926) . Federal-Provincial Memorandum of Understanding i n 255 Respect of the Administration and Management of Mineral Resources Offshore of the Maritime Provinces dated February 1, 1977 entered into between Canada, Prince Edward Island, New Brunswick and Nova Scotia. Great B r i t a i n , Pariiamentary Debates (Commons), 3rd series, Vol. 206, p. 1171. Harrison, R.J. and Godsoe J . , unpublished paper e n t i t l e d , J u r i s d i c t i o n s and Administrative Arrangements between Canada and the Maritime Provinces for the Development of Offshore Mineral Resources. Rogers, N., The Compact Theory of Confederation (1931) Canadian P o l i t i c a l Science Association Paper. Statement of Prime Minister Trudeau concerning offshore minerals made on December 2, 1968, reproduced i n Lewis and Thompson on O i l and Gas, Volume I, s. 29B. Submission of the Province of B r i t i s h Columbia on West Coast Maritime Boundaries between Canada and the United States (1977). Vancouver Sun, June 17, 1980, p. 1. Vaneouver Sun, July 16, 1980, p. A8. 

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