Under Public Law No. 401 of the 84th Congress, which was approved by the President on January 31, 1956, the United States Senate and House of Representatives requested that the Secretary of State arrange for the International Joint Commission to conduct a survey of the proposed Passamaquoddy tidal power project. Subsequently, in Note No. 212 of February 24, 1956,? the United States Ambassador asked for the Canadian Government's view on whether it wished to participate in the proposed survey and, if so, whether it would wish to share in the costs of the survey.

2. The terms of the reference as proposed in Public Law No. 401 are: to arrange for a final survey to be made to determine the cost of construction of the proposed Passamaquoddy tidal power project at Passamaquoddy Bay; to determine whether or not such cost would allow hydro-electric power to be produced at a price that is economically feasible; and to determine what contribution such a project would make to the national economy and to national defence. These terms appear to be satisfactory as far as Canada is concerned except that no mention is made of determining what effect the project would have upon the fishing industry. It is therefore considered that any references which is jointly made by our two countries would have to include a reference to a fisheries survey in the area.

3. It will be recalled that a similar approach to the Canadian Government was made by the United States Government in December 1952. The Canadian Government in its reply (March 1953) declined to join in a reference on the grounds that there was no evidence to indicate that power in the large quantities and at the relatively high costs to be expected in the tidal power scheme would find or attract markets in the New Brunswick area in the near future. The project was, therefore, considered uneconomic, since a tidal power scheme of this scale would necessitate very large initial capital expenditures, and a large market would be required immediately to bear the carrying charges on the whole initial capital outlay. Further, it was believed that the Passamaquoddy tidal power project might have a serious adverse effect upon the fishing industry.

4. In discussing the latest invitation of the United States Government, the Advisory Committee on Water Use Policy considered that the courses of action open to the Canadian Government were as follows:

(a) Refuse the invitation of the United States Government to join in the reference on the grounds that the scheme was impracticable; or

(b) Accept the invitation to join in the reference and share equally with the United States Government in the costs of the survey; or

(c) Accept the invitation to join in the reference but not share in any costs; or

(d) Accept the invitation to join in the reference and share only in the relatively small costs involved in the studies which will have to be made on the effect of the project on the fishing industry. (In the International Joint Commission Report of October 20, 1950, the cost of the fish survey was estimated at $300,000, to be spent over a three-year period.)

5. The Committee considered that to refuse to join the United States in the reference would lay the Canadian Government open to the charge of lack of cooperation, not only by United States interests but also by certain New Brunswick interests. A natural consequence of a Canadian refusal to participate would be for the United States Government to make a unilateral reference to the International Joint Commission, which is legally possible. There has never been a unilateral reference and one on the Passamaquoddy would establish an unfortunate precedent. Having regard, however, to the studies made previously by the Canadian Government on this matter and there being no evidence to show that the tidal project is any more practicable in 1956 than in 1953, the Committee was reluctant to suggest that Canada should participate in the survey at an approximate cost of $1,500,000. For this reason, the Committee considered that Canada should accept the invitation of the United States to join in the reference, but participate in the costs only to the extent of accepting a share of the expenditure involved in any studies connected with the fisheries (alternative (d) above). Canada would, of course, pay the expenditures incidental to the attendance at meetings of the Canadian members of any international boards established by the International Joint Commission, and to any Canadian investigation and studies, should such be required in Canada's interests for clarification of reports and findings of the United States agencies. In joining the reference under these conditions, the Canadian Government would agree to facilitate the extension into Canada of the required surveys by the United States Government agencies and entrance into Canadian territory of the appropriate United States officials on the understanding that all information obtained on the project by the United States agencies would be made currently available to Canada through the Canadian section of the International Joint Commission.

6. It is believed that the above plan would be acceptable to the United States Government since a similar scheme for Canadian participation was suggested by the United States in its note of December 1952. Moreover, section 5 of Public Law No. 401 reads as follows:

There is authorized to be appropriated not to exceed $3,000,000 to carry out this joint resolution, and any sum appropriated pursuant to this section shall be included in any determination of the proportionate share of the cost of construction of the Passamaquoddy tidal power project to be borne by the United States.

Recommendation:

The Secretary of State for External Affairs, with the concurrence of the Minister of Fisheries and the Minister of Northern Affairs and National Resources, recommends:

(a) that the Canadian Government accept the invitation of the United States Government to join in a reference to the International Joint Commission to arrange for a final survey to be made of the proposed Passamaquoddy tidal power project, on the understanding that in joining the reference, the Canadian Government makes no commitment for the eventual construction of the project;

(b) that the only contribution of the Canadian Government towards the costs of the survey will be for part of the fisheries investigation and for expenses incidental to the joint nature of this investigation, on the assumption that all the other costs of the survey will be borne by the United States Government, and that the expenditures of both governments for the survey will be included in their share of the cost of the construction of the project in the unlikely event that it is decided to proceed with it.¹⁷³

L.B. PEARSON