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April 16, 2008 Maude Barlow, national chairperson of the Council of Canadians, is warning Albertans that the government “could be forced to shell out hundreds of millions of dollars in compensation to foreign-owned oilsands companies under NAFTA if a drought forced the province to ration water,” according to an article in the Edmonton Journal. A study by University of Toronto professors Joseph Cumming and Robert Froehlich paints a disturbing picture of what could happen if Alberta were to suddenly suffer a severe drought. They suggest that American companies currently operating in the water-intensive tar sands could sue the Alberta government if it tried to restrict their intake for the sake of conserving water. "In the case of an oilsands operation that is shut down as a result of a loss of its water licence, one can conceive that compensation from a successful ... claim could be exceptionally high,” claims the report, referring to NAFTA’s Chapter 11, which allows American firms to sue for compensation if they feel their investment has been unfairly restricted or the government has effectively expropriated their current or future earnings. According to the article, the University of Toronto professors note: “Canada set that precedent paying Californian company Sunbelt Water an out-of-court settlement when it was sued for $468 million after the British Columbia government imposed a moratorium on bulk water exports in 1991. The company had just signed a deal with a B.C. company called Snowcap Waters to export water by supertanker from B.C. to California.” "We have a scenario where Alberta is destroying its water heritage to produce oil that profits American companies and goes to the U.S.," said Barlow in the article, adding that Alberta needs to stop new tar sands development while a full assessment is done of the implication of the planned expansion of production. Under the SPP, Canada is working towards quintupling current oil exports from the tar sands to the U.S. Barlow also says the Canadian government should enter into discussions with Mexico and the U.S. around reopening NAFTA to remove the Chapter 11 investor-state clause that currently threatens any meaningful environmental or trade policy affecting water use.
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Is the tar sands’ water supply protected by NAFTA?
