Document Information

Date: 1980-09-08
By: Secretariat of the Conference
Citation: Federal-Provincial Conference of First Ministers, Report of the Continuing Committee of Ministers on the Constitution of First Ministers, Resource Ownership and Interprovincial Trade, Doc 800-14 (Ottawa: 8-12 September 1980).
Other formats: Click here to view the original document (PDF).

DOCUMENT: 800-14/

CONFIDENTIAL

FEDERAL-PROVINCIAL CONFERENCE
OF
FIRST MINISTERS

Report of the Continuing Committee of Ministers.
on the Constitution to First Ministers

RESOURCE OWNERSHIP AND INTERPROVINCIAL TRADE

Ottawa
September 8-12, 1980

RESOURCE OWNERSHIP AND INTERPROVINCIAL TRADE

Issues for the First Ministers’ Consideration

(l) Should the proposed concurrent power with respect
to export of resources* from the province extend to
interprovincial trade only or should it extend to
international trade as well?

(2) Are the provisions on federal paramountcy found
in subsection (4) of the attached draft appropriate
or should federal jurisdiction be more limited in
the area of interprovincial trade and commerce?

(3) Are the non-discrimination provisions necessary if
section 121 (the economic union) is revised?

(4) Should the non-discrimination provisions in sub-
section (3.1) of the attached draft extend to
discrimination between the province of production
and other provinces?

(5) Should uranium and thorium be specifically iden~
tified in the schedule?

(6) Should the underlined portion in subsection (2)
beyretained?

Comment

The federal government advised the Ministers that the
1979 “best efforts” draft (see Appendix II) was no longer
acceptable. They proposed an alternative draft which

(a) confirmed provincial ownership of resources;

(b) incorporated a clause with respect to indirect
taxation; and

(c) incorporated a concurrent power with federal
paramountcy with respect to trade and commerce
as it affects the export to other provinces of
non-renewable natural resources, forestry products
and electricity.

The attached draft (Appendix I) represents the federal draft
as modified by discussions.

* As used in this paper resources means non-renewable
natural resources, forestry products, and electricity.

-2-

The Ministers’ discussion focussed on the following matters:

(1) Should provincial legislative powers over trade and
commerce in the area of non-renewable natural resources,
forestry and electricity be extended to include inter-
national trade as well as interprovincial trade?

While no agreement was reached the draft that is sub-
mitted to First Ministers (Appendix I) recognizes the
need for some role for provinces in the area of inter-
national trade and commerce. The federal government
has reserved its position on this question.

(2) The relationship between exclusive provincial powers
over resources, including provincial laws affecting
export from the province, and the federal government’s
powers over trade and commerce was the subject of
considerable debate. The federal government is prepared
to extend to provinces authority to make laws affecting
the export of resources from the provinces in the area
of interprovincial trade and commerce provided that no
such law is contrary to federal legislation. This is
a new concurrent legislative power similar to that for
agriculture. This is a departure from the 1979 “best
efforts” draft which had established a “compelling
national interest” test as the federal override clause.
Some provinces prefer the “compelling national interest”
test to federal paramountcy. Alberta believes that the
federal override should be confined to a strictly
defined “emergency” power.

(3) The Ministers agreed that there should be no discrim-
ination in price and supply on resources exported by
the province to other parts of Canada. In other words,
subject to transportation cost differences, other parts
of Canada should be treated equally with respect to
price and the supply of resources. There was no agree-
ment, however, whether the supplying province should be
able to make a distinction for its own residents in price
and supply, as opposed to those outside the province.

(4) Should the definition of natural resources include all
resources and not be limited to non-renewable, forestry,
and electricity?

(5) While the declaratory power was not one of the twelve
items identified by First Ministers for discussion,
the Ministers recognized the interrelationship between
that federal power and their discussion on natural
resources. They recommend that some attention be given
to this power when the First Ministers are considering
the subject matters of resources and a reformed Upper
House.

….3

-3-

(6) Two provinces remain concerned that the indirect
tax provisions for a province to levy indirect
taxes in the area of non-renewable natural resources
is too broad.

After discussion the draft attached as Appendix I a
majority of provinces indicated a preference for the 1979
“best efforts” draft which is attached as Appendix II.

APPENDIX I

RESOURCE OWNERSHIP AND INTERPROVINCIAL TRADE

(1) (present Section 92)

Resources

(2) In each province the legislature may
exclusively make laws in relation
to

a) exploration for non-renewable
natural resources in the
province;

b) development, conservation and
management of non-renewable
natural resources and forestry
resources in the province,
including laws in relation to
the rate of primary production
therefrom; and

c) development, conservation and
management of sites and
facilities in the province for
the generation and production
of electrical energy.

and such legislation shall not be
invalid merely because part of all
of the product may enter
interprovincial or international
trade.

Export from the Provinces of Resources

(3) In each province the legislature may
make laws

(a) in relation to the export from
the province to another part of
Canada of the primary production
from non-renewable resources
and forestry resources in the
province and the production
from facilities in the pro-
vince for the generation of
electrical energy; and

(b) in relation to the export of
such production from the pro-
vince to other countries byt
not including [to be determined].

(1) Carries forward existing
Section 92.

(2) The draft outlines exclusive
provincial legislative jurisdiction
over certain natural resources and
electric energy within the province.
These resources have been defined
as non-renewable (e.g.: crude oil,
copper, iron and nickel), forests
and electric energy. This section
pertains to legislative
jurisdiction and in no way impairs
established proprietary rights of
provinces over resources whether
these resources are renewable or
non-renewable.

British Columbia has concerns over
the definition of resources and
would prefer to see the term
“natural resources”.

This inclusion is designed to
safeguard otherwise valid provincial
laws from being declared ultra
vires for affecting trade and
commerce and would prevent
compulsion of export of resources
from provinces.

The Government of Canada (i) does
not find such a provision
acceptable and (ii) does not think
a section to prevent federal
legislation compelling exports
from the province to be necessary.

(3) All governments agree with
paragraph (a).

Subject to appropriate drafting, all
provinces agree that they should have
some jurisdiction in the area of in-
ternational trade beyond the authority
to enter into contracts but short of
full concurrency. The Government of
Canada reserves its position.

-2-

(3.1) No law authorized under sub-
section (3) may provide for
discrimination in prices or in
supplies exported to another
part of Canada.

Relationship to Certain Laws of
Parliament

(4) Nothing in subsection (3)
derogates from the authority of
Parliament to enact laws in
relation to the matters referred
to in that subsection, and
where such a law of Parliament
and a law of a province conflict,
the law of Parliament prevails
to the extent of the conflict.

Taxation of Resources

(5) In each province the legislature
may make laws in relation to the
raising of money by any mode or
system of taxation in respect
of

a) non-renewable natural
resources and forestry
resources in the province
and the primary production
therefrom; and

b) sites and facilities in the
province for the generation
of electrical energy and
the production therefrom,

whether or not such production
is exported in whole or in part
from the province but such laws
may not authorize or provide for
taxation that differentiates
between production exported to
another part of Canada and
production not exported from the
province.

Production from Resources

(6) The expression “primary
production” has the meaning
assigned by the Sixth Schedule.

Existing Powers

(7) Nothing in subsections (2) to (6)
derogates from any powers or
rights that a legislature or
government of a province had
immediately before the coming
into force of those subsections.

(3.1) This clause prohibits
discrimination on exports from
the province.

Ontario believes that this
prohibition should extend to
discrimination between the
province of production and
other provinces.

(4) The effect of this new provincial
legislative responsibility over
trade and commerce does not
eliminate the federal government’s
authority. In effect a concurrent
power similar to that for
agriculture is established. Thus,
a federal law will prevail over a
provincial law in the case of
conflict between the two.

(5) Provincial powers of taxation are
increased to include indirect
taxes over the resources outlined
in this section – whethere these
resources are destined in part
for export outside the province.
These taxes are to apply with
equal force both in the province
and across the rest of the
country.

Ontario and Prince Edward Island
have reservations concerning
the section on taxation,
believing it to be too broad.

-3-

THE SIXTH SCHEDULE

For the purposes of section 92,

a) production from a non-
renewable resource is
primary production
therefrom if

(i) it is in the form in
which it exists upon
its recovery or
severance from its
natural state, or

(ii) it is a product
resulting from
processing or refining
the resource, and is
not a manufactured
product or a product
resulting from
refining crude oil,
refining upgraded
heavy crude oil, refining
gases or liquids
derived from coal, or
refining a synthetic
equivalent of crude
oil; and

b) production from a forestry
resource is primary
production therefrom if it
consists of sawlogs, poles,
lumber, wood chips, sawdust
or any other primary wood
product, or wood pulp, and
is not a product
manufactured from wood.

c) “non-renewable natural
resources” includes uranium
and thorium.

In determining the scope of provincial
legislative powers over resources
exported from the province, it became
necessary to define the degree to which
the resource was processed. It is not
intended to extend provincial authority
to manufacturing but it is intended to
extend it to something beyond its
extraction from its natural state.
Given the varying resources covered by
this section, this definition is
thought to achieve the appropriate
delineation of powers.

This charge includes upgraded heavy
crdue oil and coal liquids and gases in
primary production.

This ensures uranium and thorium are
included in non-renewable resources.

The Government of Canada considers
this neither necessary nor acceptable.

APPENDIX II

1979 BEST EFFORTS DRAFT

RESOURCE OWNERSHIP AND INTERPROVINCIAL TRADE

(1) (present Section 92)

Resources

(2) In each province, the
legislature may exclusively
make laws in relation to

a) exploration for non-
renewable natural
resources in the
province;

b) development, exploit-
ation, extraction,
conservation and
management of non-
renewable natural,
resources in the
province, including
laws in relation to
the rate of primary
production therefrom;
and

c) development, exploit-
ation, conservation
and management of
forestry resources
in the province and
of sites and facilities
in the province for
the generation of
electrical energy,
including laws in
relation to the rate
of primary production
therefrom.

Export from the province of resource

(3) In each province, the (3)
legislature may make laws
in relation to the export
from the province of the
primary production from
non-renewable natural
resources and forestry

(1) Carries forward existing
Section 92

(2) The draft outlines exclusive
provincial legislative
jurisdiction over certain
natural resources and
electric energy within the
province. These resources
have been defined as non-
renewable (e.g. crude oil,
copper, iron and nickel),
forests and electric energy.
This section pertains to
legislative jurisdiction.and
in no way impairs established
proprietary rights of province
over resources whether these
resources are renewable or
non-renewable.

(3) Provincial governments are
given concurrent legislative
authority to pass laws
governing the export of the
resources referred to above
from the province. This
legislative capacity is in

-2-

resources in the province
and the production from
facilities in the province
for the generation of
electrical energy, but
such laws may not authorize
or provide for prices for
production sold for export
to another part of Canada
that are different from
prices authorized or
provided for production
not sold for export from
the province.

Relationship to certain laws of Parliament

(4)Any law enacted by the
legislature of a province
pursuant to the authority
conferred by subsection (3)
prevails over a law enacted
by Parliament in relation to
the regulation of trade and
commerce except to the
extent that the law so
enacted by Parliament,

a) in the case of a law in
relation to the regulation
of trade and commerce
within Canada, is necessary
to serve a compelling
national interest that is
not merely an aggregate
of local interests; or

b) is a law in relation to the
regulation of international
trade and commerce.

Taxation of resources

(5) In each province, the legis-
lature may make laws in
relation to the raising of
money by any mode or system
of taxation in respect of

a)non-renewable natural
resources and forestry
resources in the
province and the
primary production
therefrom; and

the sphere of both inter-
provincial and internal
trade and commerce. Provin~
cial governments are orohih;:-
from price discrimination
between resources consumed
in the province and those
destined for consumption in
other provinces. This new
provincial legislative
capacity applies to these
resources in their raw state
and to them in their processc
state but does not apply to
materials manufactured from
them.

(4) The effect of this new pro-
vincial legislative responsi-
bility over trade and commerce
diminishes the scope but does
not eliminate the federal
government’s exclusive autho-
rity over trade and commerce.
The exercise of the provincincial
power is subject to two limi-
tations. First, the federal
government may legislate for
interprovincial trade if there
is “compelling national
interest”. This trigger
mechanism may apply to circums-
tances other than an emergency
as established under the
peace, order and good govern-
ment power. Second, federal
laws governing international
trade prevail over provincial
laws in international trade,
in effect establishing a
concurrent power similar to
that for agriculture.

(5) Provincial powers of taxation
are increased to include
indirect taxes over the
resources outlined in this
section – whether these
resources are destined in
part for export outside the
province. These taxes are
to apply with equal force
both in the province and
across the rest of the
country.

-3-

b) sites and facilities in
the province for the
generation of electrical
energy and the primary
production therefrom,

whether or not such production
is exported in whole or in
part from the province but
such laws may not authorize
or provide for taxation that
differentiates between
production exported to
another part of Canada and
production not exported
from the province.

Production from resources

(6) For purposes of this section,

a) production from a non-
renewable resource is
primary production
therefrom if

i) it is in the form
in which it exists
upon its recovery
or severance from
its natural state,
or

ii) it is a product
resulting from
processing or
refining the
resource, and is
not a manufactured
product or a
product resulting
from refining crude
oil or refining a
synthetic equivalent
of crude oil; and

b) production from a forestry
resource is primary pro-
duction therefrom if it
consists of sawlogs, poles,
lumber, wood chips, sawdust
or any other primary wood
product, or wood pulp, and
is not a product manufact-
ured from wood.

Existing Powers

(7) Nothing in subsections (2) to
(6) derogates from any powers
or rights that a legislature
or government of a province
had immediately before the
coming into force of those
subsections.

(6) In determining the scope
of provincial legislative
powers over resources
exported from the province,
it became necessary to
define the degree to which
the resource was processed.
It is not intended to
extend provincial authority
to manufacturing but it is
intended to extend it to
something beyond its extract-
ion from its natural state.
Given the varying resources
covered by this section,
the wording of this sub-
section is thought to place
the appropriate limitations
on provincial powers.

(7)This clause ensures that any
existing provincial
legislative powers-found
in s.92 are not impaired
by the new section.