Natural-resource development has played a major role in Canada's economy and

continues to be a focus of national concerns. While these concerns have centered on

ENERGY POLICY during the 1980s, water resource management along with forestry,
fisheries and environmental management are emerging as the issues of the 1990s. These
other resource sectors present difficult policy choices as Canadians face the issues of
conservation, environmental protection, unemployment and the maintaining of markets in
a competitive world.

Ownership of Resources
The right to develop resources (or to choose not to develop them) is, in the first instance,
a right of ownership. Under the common law of Canada, the basic rule is that the
ownership of land carries with it the right to harvest renewable resources such as crops,
trees, fish and wildlife, and also the right to extract nonrenewable resources such as coal,
minerals and oil. Originally, governments in Canada gave individuals ownership of this
type when crown land grants were made to settlers and developers, but new policies
emerged around the turn of the century whereby governments gave only restricted
ownership rights to resource developers. Mining leases and limited cutting rights began
to replace outright grants of mineral and forest lands.
In the case of agricultural lands, homesteaders of crown grants did not include rights to
minerals such as coal, oil and gas under their land. The government retained ownership of
minerals and gave only restricted development rights (by means of leases) to companies
conducting exploration for minerals such as petroleum and natural gas. In western
Canada today, provincial governments are by far the largest owners of undeveloped
natural-resource rights; as well, they are the landlords of the oil, mineral and forest
companies that enjoy exploration and development rights. In northern Canada and in the
offshore regions outside the provinces, the federal government enjoys such ownership.
Under the CONSTITUTION ACT, 1867, the original provinces of Confederation retained
ownership of crown lands and resources within their boundaries. When BC and PEI
joined Confederation in 1871 and 1873, they too retained ownership of natural resources.
But when the Prairie provinces were created (Manitoba in 1870, Alberta and
Saskatchewan in 1905) a new and controversial policy emerged. In these provinces,
ownership of natural resources was retained by the federal government to provide funds
for colonization and railway building. Not until 1930, after a sometimes bitter political
struggle, were natural-resource rights transferred by the federal government to the Prairie
provinces. By this time, most of the agricultural lands had been transferred into private
ownership; but because the federal government had reserved mineral rights when
disposing of land in the prairies and had granted restricted tenures, the provincial
governments inherited a rich treasure house of resource rights under the 1930 transfer. It
is as a consequence of these rights that Alberta grants oil and gas leases and receives oil
and gas royalties; that Manitoba can develop vast hydroelectric power resources to sell in
the US; and that Saskatchewan controls uranium and potash reserves of worldwide
significance.
Federal Ownership of Resources
The mineral and petroleum resources of northern Canada and the offshore regions of the
East and West coasts remain under the ownership and control of the federal government
and provide a huge potential for development. The federal government has also passed
legislation that provides for the issuing of exploration rights and production licences,
under which developers must meet expenditure commitments and pay royalties should
commercial production begin. The Canada Oil and Gas Act, 1980-81-82, established a
federal regime for petroleum resources that was intended to increase Canadian ownership
in petroleum companies and to ensure Canadian benefits in jobs and the procurement of
goods and services. With the change of government, in 1985 this statute was replaced by
the Canada Petroleum Resources Act, with less emphasis on these "Canadianization"
issues and greater certainty in the terms and conditions of exploration and development.

Legal Restrictions on Ownership of Resources

Ownership is not the only determinant of resource rights. Just as the owner of a business
is subject to federal, provincial and municipal legislation setting out how the business
must operate, so companies that acquire resource rights from the federal and provincial
governments are subject to legislated requirements (eg, laws to protect the environment,
laws providing for employee safety, or taxation laws). Obviously, resource rights
acquired by an owner often clash with these legislated requirements. In a BC case, the
court held that restrictions placed on operations in a provincial park were so severe as to
amount to expropriation of mining rights that had been granted before the park was
established. In result, the holder of the mining rights was entitled to compensation.
The classic Canadian example of conflict between resource ownership rights and
restrictive legislation occurred in the 1970s when federal legislation (the Petroleum
Administration Act) was perceived by the western provinces to be an unconstitutional
interference with provincial resource ownership rights. In particular, federal threats to
establish unilaterally the wellhead prices for petroleum and natural gas, and new federal
taxes levied on these resources, were seen as direct interference with the rights claimed
by these provinces to sell their resources on such terms as they saw fit and to receive
royalties at rates they would determine. These conflicts were temporarily resolved by
agreement between the federal and provincial governments during the constitutional
debates of 1981.
A new section of the CONSTITUTION ACT, 1982 purports to clarify the extent to which
provinces may manage their resources, giving them exclusive power to make laws
dealing with the development, conservation and management of nonrenewable resources
and forestry resources, and to regulate the rate of primary production from these
resources. Parliament has paramount jurisdiction to regulate interprovincial and export
trade in natural resources, and both levels of government are given full powers of
taxation.
There are other areas of conflict over the ownership and control of natural resources in
Canada. The conflict between the US and Canada over alleged discrimination against
foreign investors under Canada's National Energy Program (1980) has been eliminated by
the Canada Petroleum Resources Act. The claims by the US lumber industry that
Canadian lumber competes unfairly in US markets because of alleged subsidies given to
the Canadian industry by the federal and provincial governments have recently been
resolved for the time being, but with the potential to resurface (see SOFTWOOD
LUMBER DISPUTE). The FREE TRADE agreement (1988) between Canada and the
US expressly includes energy resources and may lead to more effective bilateral trade in
natural resource products generally; it may, however, also increase friction between
federal and provincial governments regarding energy. Boundary disputes between Canada
and the US affect fisheries and petroleum development in offshore waters on the East and
West coasts and in the projection seawards of the Alaska-Yukon boundary.
Within Canada, native people have land claims to natural resources resulting from both
treaties and from aboriginal LAND CLAIMS in nontreaty areas. Based on the findings of
the 1970 CALDER CASE that aboriginal land rights exist in Canada (though they may
have been extinguished in some cases), the federal government embarked on a policy of
negotiations with FIRST NATIONS in the northern territories to achieve comprehensive
land claim settlements. Successful negotiations in the cases of Nunavut, the Western
Arctic Region and parts of the Northwest Territories have resulted in what are referred to
as modern-day treaties. Pursuant to section 35 of the Constitution Act of 1982, these
modern treaties are affirmed so as to gain constitutional status. Reflecting the traditional
values of the First Nations, these modern treaties are preoccupied with land rights and
natural resource issues. See also ABORIGINAL RIGHTS and ABORIGINAL SELF-
GOVERNMENT.
In southern Canada where aboriginal land rights had in the main been surrendered by the
historic and traditional treaties, negotiations have centered on issues of treaty
interpretation and implementation. In BC, where few treaties had been made, the First
Nations and the governments of Canada and BC are engaged in a process of treaty
making assisted by a BC Treaty Commission established after an agreement among the 3
parties.
In the northern territories, claims to regional self-government are accompanied by claims
to ownership rights over northern natural resources. In the offshore regions, a long-
standing dispute between the federal government and the coastal provinces concerning
ownership and jurisdiction has been resolved in favour of the federal government in a
decision of the Supreme Court of Canada concerning conflicting Newfoundland and
federal claims to the Hibernia oil field (see HIBERNIA CASE).
Issues involving resource rights also surface from time to time in relation to such matters
as the regulation of fishing, the protection of the environment, the control of the air
waves and the management of watersheds. A recent report cites the need for an
interjurisdictional agreement covering the Mackenzie River drainage basin before
developments such as hydroelectric dams in Alberta and BC are allowed to proceed.
Canada is a large country with bountiful natural resources. Its size and its federal system
of government (see FEDERALISM) explain why natural resources play such an
important role in the Canadian economy and why government policies are so significant
and so likely to be contentious. In these circumstances, it is a continuing national
challenge to manage natural resources co-operatively and wisely.