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GLIN==> CIELAP Report calls upon Attorney General to rule on Provincial government plans to transfer local water systems to the private sector

Posted on behalf of Christine Elwell christine@cielap.org

Action Alert! Ontario government going clause by clause thru two bills that
would permit the transfer of local water systems, including water
extraction, to the private sector, risking the public trust in water and
NAFTA trade and investor dispute impacts, See press release and link to
CIELAP submissions below. Bills could be law by Dec. 12th, All inquiries to
Minister Chris Stockwell welcome.....For more info contact Christine Elwell
4160923-3529 ext 25.....

CIELAP Report calls upon Attorney General to rule on Provincial government
plans to transfer local water systems to the private sector

Water Privatization contrary to Walkerton Recommendations and the Public

(Toronto, Nov. 27, 2002) The Canadian Institute for Environmental Law and
Policy has reviewed two Bills the Safe Drinking Water Act (Bill 195) and the
Sustainable Water and Sewage Act (Bill 175) currently before the Ontario
legislature. CIELAP finds a significant departure in approach from Justice
O'Connor's recommendations in the Walkerton Inquiry since all of them were
premised upon continual municipal ownership.

CIELAP finds that provincial legislative jurisdiction over water and related
services is likely subject to a "public trust" under both the 1867 Canadian
constitution and by virtue of the Ontario Environmental Bill of Rights. This
puts into doubt the lawful authority of the province to approve the transfer
the ownership and effective control of local water works and services,
including the extraction of water, to the private sector.

According to Anne Mitchell, CIELAP's Executive Director, "If the public
loses actual access to and the wise use of water resources because of the
combined effect of Bills 175 and 195, the enjoyment of the public trust will
be seriously diminished". According to current public trust doctrine, clear
legislative intent, in addition to a public mandate, would be required to
exhaust such a public trust. Recall that in July of 2002, the Ontario
Superior Court found that the government had no authority to proceed with
the $5.5-billion sale of Hydro One under the Electricity Act, forcing the
government to change its plans on privatization.

"Based upon the risks made clear by the Walkerton tragedy and ten years of
experience with NAFTA investor-state disputes, CIELAP's findings indicate
the need for more public accountability, not less", says Christine Elwell,
CIELAP's Senior Legal and Policy Analyst and author of the report. Justice O
'Connor found most municipalities are well within their borrowing limit to
publicly finance future capital costs and saw no need for the provincial
government to make specific changes to the municipal governance or municipal
ownership structure.

Bill 175 requires municipalities to file a "full cost report" and submit a
"cost-recovery plan" outlining how it intends to pay the full costs of water
and wastewater services to the public. Importantly, the Minister may require
joint reports or impose its own, providing power to require that a
municipality prepare a full cost report with a private sector regulated
entity, contrary to local preferences or public expectations. The Minister
may also delegate other powers, including the extraction of water supplies,
to the private sector.

Elwell argued that, "A sweeping delegation to the private sector is contrary
to the Walkerton recommendations concerning public accountability. There
were no public consultations regarding these Bills that revealed the extent
of the provincial government deregulation and privatization agenda. Rather
the claim has been that the government is faithfully implementing the
Walkerton Inquiry recommendations, which is clearly not the case".

Mitchell concluded, "The Canadian public expects that water and access to it
remain within the public sector. This was clearly demonstrated last week
when overwhelming public opposition caused the City of Toronto to scrap its
attempt to create a separate third party Water Board. Residents in Toronto
overwhelming endorsed public control of the water system as the best
guarantee of safety and accountability".

Both Bills define water services as water extraction, treatment and
distribution. Because Bill 175 allows the Minister to delegate authority
over water extraction to a private entity, privatizing a traditionally
public resource becomes possible. A public trust likely extends to not only
the actual water resource but also to the assets and operations necessary
for the public to actually access and wisely use it, both now and in the

In advance of the Bills becoming law, CIELAP calls upon the Attorney General
of Ontario as the guardian of the public trust and as the prime legal
advisor to the government, to produce a legal opinion on the constitutional
authority of the current government to transfer the ownership and operations
of local municipal water supplies and systems to the private section,
particularly regarding the actual extraction of water, and to identify the
trade and investor state dispute consequences under NAFTA and the General
Agreement on Trade in Services if Bills 195 and 175 become law.


Christine Elwell
Senior Legal and Policy Analyst
Canadian Institute for Environmental Law and Policy
130 Spadina Avenue, Suite 305
Toronto, Ontario, Canada, M5V 2L4
Tel: 416 923 3529 x 25
Fax: 416 923 5949
e-mail: christine@cielap.org

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