RNNR Committee Report

Constitutionally, the provinces have ownership and management responsibility over the natural resources within their territory. In the case of Alberta, mineral rights¹ were transferred by the Government of Canada to the provincial Crown by virtue of the Natural Resources Transfer Act of 1930. The Department of Alberta Energy reports that the Alberta Crown owns 97% of oil sands mineral rights; freehold owners hold the remaining 3%.²Alberta therefore has jurisdiction over the oil sands and manages this resource on behalf of its citizens. To encourage the development of this resource by private interests, the Government of Alberta generally leases to interested parties the right to develop and use oil sands resources. In exchange, the Government of Alberta receives lease payments, royalties and income taxes. According to the Canadian Association of Petroleum Producers, Alberta received about $4 billion in royalty and lease payments in 2006.³In addition to making such payments, oil sands developers, regardless of whether they are domestic or foreign-owned, must obey all applicable provincial and federal laws and regulations.

The Government of Canada’s role in the oil sands for the most part pertains to protection of the environment, the protection of waterways and fisheries, and Indian lands. Relevant laws that may be used by the federal government to exercise jurisdiction over certain aspects of oil sands projects include the Fisheries Act, the Canadian Environmental Protection Act, 1999, (CEPA, 1999) the Canadian Environmental Assessment Act, the Navigable Waters Protection Act and the Indian Act. For example, CEPA, 1999 gives the federal government powers to regulate harmful emissions. The Fisheries Act grants the Government of Canada the authority to impose restrictions on any activity that could harm fisheries.

The Canadian Environmental Assessment Act and the Fisheries Act often work in tandem. For example, a federal environmental assessment may be triggered in the case of an oil sands project which could have an impact on fish habitat.

Contributing to the complexity surrounding environmental protection is the fact that the environment, which has emerged as a key issue in the context of oil sands activities, is not specifically mentioned in the Constitution Act, 1867. In practice the environment is a matter of shared jurisdiction between the federal and provincial governments. Dealing with areas of shared jurisdiction is complex and requires close co‑operation between the relevant orders of government. As the Commissioner of the Environment and Sustainable Development noted in an earlier report, “both levels of government have constitutional powers over various matters that permit them to pass legislation to deal with environmental issues.”⁴

Environmental assessments of oil sands projects are primarily done pursuant to Alberta’s Environmental Protection and Enhancement Act, R.S.A. 2000. While it was argued that the Government of Canada has the authority to undertake broad environmental assessments of oil sands projects, in practice the federal government is generally very careful to respect Alberta’s jurisdiction. For example, the Committee received testimony from the Pembina Institute that the Government of Canada has not to date been involved in an environmental assessment process looking at all the impacts associated with oil sands projects, including, for example, transboundary air pollution and greenhouse gas emissions.⁵

Finally, it is also worth noting in the context of the oil sands that the federal government can enact laws concerning interprovincial and international trade and commerce, while the provinces have jurisdiction over property and civil rights as well as local works and undertakings. Generally speaking, the Government of Canada, mindful of the barriers to development that can sometimes result from unwieldy and uncoordinated laws and regulations, is working to improve the efficiency with which its laws and regulations are brought to bear on industrial activities.⁶

Besides passing and enforcing legislation that pertains to resource extraction projects, the federal government also has “important responsibilities in terms of the overall policy framework, including the macro-economic policy framework ensuring a stable place to invest” and has chosen to be involved in technology development in the oil sands and other energy-related areas through programs managed by Natural Resources Canada.⁷On the labour front, the federal government is responsible for developing policies and programs to help Canadians participate in economic activity. The federal government is also responsible for immigration policy. Canada continually seeks to admit immigrants, foreign students, visitors and temporary workers who enhance Canada’s social and economic growth.

Finally, the National Energy Board, a federal regulatory agency, notably regulates the construction and operation of interprovincial and international pipelines. The Board also regulates the export of oil and gas, monitoring the supply and demand of those commodities to ensure that quantities exported do not exceed the surplus remaining after Canadian requirements have been met.⁸

Respect for jurisdiction is a principle which today underlies the energy policy of federal and provincial governments.⁹ Ultimately it is up to the province of Alberta to decide how best to develop its oil sands deposits; as has been noted by a senior Government of Canada official, “Alberta is the owner of the resource and it’s really up to Alberta to decide whether it wishes to pursue that rapidly or not.”¹⁰That is not to say that the federal government has no role in how the oil sands are developed. The Government of Canada has at its disposal a number of regulatory and policy mechanisms to influence the scale and nature of oil sands activities. Some of these will be discussed in greater detail later in this report. It is however important to recognize that success in ensuring that oil sands activities benefit all Canadians while posing minimal environmental risks and social dislocation is more likely to come from continued inter‑governmental cooperation than from inter-governmental conflict over particular policies or laws affecting the oil sands.

With respect to the role of governments, the Committee recommends that the federal government, specifically the Department of Natural Resources, base all of its actions in the area of oil sands development on sustainable development and polluter-pays principles.

The Committee also recommends that the federal government recognize the jurisdiction of the provinces with respect to the pace of development in the oil sands, and that it reject any suggestions of nationalizing the oil sands.