THE GREAT COLUMBIA RIVER FOUL-UP

Bruce Hutchison June 3 1961

THE GREAT COLUMBIA RIVER FOUL-UP

Bruce Hutchison June 3 1961

THE GREAT COLUMBIA RIVER FOUL-UP

Bruce Hutchison

The story so far: Canada and the U. S. have signed a treaty to harness the Columbia. But at the last minute, B. C. has vetoed the deal. The industrial future of Western Canada (and Ottawa’s face in Washington) hangs in the balance. What hold does B. C. have over the federal government? Can the treaty be saved? Read on

THE GOVERNMENTS of Canada and British Columbia were expected to start damming the Columbia River next autumn. Instead, they have been damning each other with so much enthusiasm that North America’s greatest international hydro-power scheme is stalled indefinitely.

At its beginning this quarrel concerned only some technical questions of finance, engineering design and electrical prices. But lately it has broadened out to involve one of the nation’s fundamental policies, the control of an invaluable public resource and the future of western Canada’s economy.

Until a many-sided dispute is settled the Columbia treaty between Canada and the United States, which was proudly acclaimed as the latest symbol of their ancient friendship, remains at the mercy of Premier W. A. C. Bennett’s unilateral veto. On the other hand. Bennett’s plans, stretching all the way from Alaska to California, can (and in at least some respects will) be vetoed by the federal government.

THREE POWERS HAGGLED OVER POWER

Whether the pieces of a. vast jigsaw puzzle can be put together in time to satisfy the impatient Americans and save the treaty no one yet knows. At this writing Bennett is jubilant, the federal government fit to be tied, and the United States utterly baffled by the family rowr in the house next door.

The Columbia story, as published in confusing fragments over a period of some three years, is quite incomprehensible. Taken as a whole it has elements of melodrama, tragedy and farce — a political whodunit of improbable plot and unknown ending.

Its opening can be roughly dated as the year 1944 when Canada began to consider seriously the exploitation of the Columbia, north of the international boundary, in partnership with the United States, where most of the river system lies. Last autumn the long negotiations between Ottawa and Washington produced a treaty approved by the Canadian, British Columbia and American governments. This triple agreement was essential because the Canadian government controls the flow of Canadian rivers across the boundary, the British Columbia government must approve any Canadian dams on the Columbia, and the United States must feel the downstream effects of such works.

Canada agreed to dam the Columbia system at three points: the Arrow Lakes, a swelling in the main stream near the border; Mica Creek, on the Big Bend north of Revelstoke, and Duncan Lake, on a tributary in the West Kootenay valley. Since these dams would tame one of America’s wildest rivers, creating a gigantic reservoir on the Arrow Lakes and a second on the Big Bend, uncontrolled water now wasted at freshet times

could be fed evenly throughout the year into American turbines south of the border. As a result, their output of electricity would he greatly increased. at Canada's expense.

After a decade of haggling, the United States reluctantly agreed to share these "downstream benefits” with Canada on a fifty-fifty basis for the sixty-year life of the treaty. This cheap electricity, about 1.250.000 kilowatts, available about five years hence from the Arrow Lakes reservoir, would be wheeled back across the border for use mainly in the metropolitan area of Vancouver.

It would supply British Columbia's needs for a few years to come. By the time it was all in use the high master dam at Mica Creek would be complete, about a decade hence, and could provide on-site power for Canadian consumers equal in volume to the downstream benefits.

The United States won a major point in the bargain by gaining the right to build its long-sought Libby dam on the Kootenai (where the Kootenay River loops through U. S. territory and takes on a different spelling) and to flood 17.600 acres of land in British Columbia southeast of Cranbrook. Conversely, the Canadian dams would prevent flooding in the United States, which would pay Canada $64,400,000 for this benefit — a tidy sum in the total Canadian cost of nearly half a billion dollars.

That was a deal consummating more than a dozen years of international wrangling and it represented the largest power project in Canadian history. Understandably gratified by his government’s diplomatic success. Prime Minister Diefenbaker hurried to Washington and there, last January, he and President Eisenhower signed the Columbia treaty amid torrents of commendation all over the continent. As usual, the two friendly nations of America had settled their arguments by sensible compromise. The editorial writers all agreed that Canada and the United States had set another example of good-neighborliness in a demented world.

OTTAWA PUT ITS NECK IN A NOOSE

Everything seemed to be in hand, but unfortunately the two eminent signatories in Washington misjudged the wizard of provincial politics in Victoria. Premier Bennett had approved the treaty in every respect. His experts had sat in with the federal government’s negotiating team and, at the last moment, had insisted on changing the whole engineering design drastically to meet British Columbia’s wishes. Against its own, the federal government agreed to flood the valley of the Arrow Lakes instead of the Kootenay valley to the eastward and thereby assured itself of serious political difficulty later on.

CONTINUED ON PAGE 60

The great Columbia River foul-up

continued from page 15

When Fulton came from Ottawa to clear up details, Premier Bennett was conveniently not to be found

Diefenbaker thus had no reason to expect trouble from Bennett, without whose provincial water license the scheme could not go ahead. To be sure, in the haste to sign the treaty one point had been left unsettled — how were the federal and provincial governments to share the construction costs? This small detail, it was assumed, could easily be ironed out at leisure. But Diefenbaker did not know his Bennett.

It must have been with popeyed incredulity that the prime minister and his treaty negotiators, Davie Fulton and Howard Green, read an innocuous-looking dispatch from Victoria. The provincial premier had suddenly acquired grave doubts about the whole deal. Though he had-already approved the treaty, he now referred it to his provincial Energy Board for prolonged investigation. The board would not report until summer and might report adversely. Meanwhile Bennett would issue no water license on the Columbia.

To increase the federal government’s mortification, the United States Congress — ignorant of Canada’s intramural bickering and its constitution — promptly ratified the treaty and expected the Canadian Parliament to do the same without delay. The Canadian government could push the treaty through Parliament, but it was powerless to lay a yard of concrete until Bennett announced his one-man ratification. A provincial premier calmly undertook to hold up the high policies of two national governments until he was good and ready to proceed. And, unknown to Ottawa, he was meditating a still larger démarche.

If Ottawa had read more carefully the fine print of Bennett’s speeches, if it had noted his apparently casual remarks at press conferences, it would not have been caught so fiatfooted by his second thoughts.

He had approved the treaty but he had never liked it much, had finally persuaded himself that it was a poor bargain as it stood, and had long been convinced that the Diefenbaker government was totally incompetent anyway. Now he pounced on an indiscretion from the usually discreet lips of Davie Fulton.

When the chief Canadian negotiator said that the downstream Columbia power could be delivered in Vancouver at the bargain-basement price of 3.77 mills, Bennett demanded proof of this figure. How had Ottawa calculated it? Did the federal government really know the probable cost of power? Had it even surveyed the Columbia adequately before making a contract with the United States?

Bennett was doubtful about all those questions, and had something else in mind. From the start he intended to harness the Peace, a river entirely under his control, through a syndicate headed by the Swedish financier Axel Wenner-Gren. The Columbia and Peace schemes, he said, must proceed simultaneously. The federal government, seeing no market for this double supply of power, regarded Bennett’s plan as uneconomic, if not idiotic, and hoped he would forget it before he complicated and perhaps frustrated the Columbia project.

The news of delay in Victoria was shattering in Ottawa and confirmed the federal government’s belief that Bennett’s private priorities ranked the Peace far in

advance of the Columbia—a suspicion he passionately denied. He was only trying, he said, to make the best bargain and get the lowest possible po ver rates for his people on either, or both, of the two rivers.

Following a period of numbed silence, the federal government sent Fulton to Victoria on a scouting expedition. The minister of justice, regretting his off-thecuff remark about power at 3.77 mills, explained that it was merely an estimate, that no exact figure could be fixed in such a huge project and he was prepared to negotiate with the sovereign government of British Columbia as he had negotiated successfully with the sovereign government of the United States.

Fulton’s diplomacy had been more than adequate in Washington. He couldn’t get past the outer door in Victoria. When he called at the legislative buildings Bennett was conveniently out and didn’t re-

turn until the distinguished visitor had left in quiet anger. To the injury of holding up the Columbia scheme the premier had added a calculated insult to the federal government’s official ambassador.

Ottawa’s plans were now in disarray but Bennett’s were advancing on schedule. As anticipated, his Energy Board had filed an interim report urging that the treaty should not be ratified until the board could complete its studies late in the summer. The federal government had been taught a lesson in bad manners. And Bennett’s darling, the Peace River scheme, which seemed to be languishing, had been revived by another surprising manœuvre.

Up to this point the federal government had assumed that Canadian consumers alone would use all the power developed on the Columbia as soon as they needed it, that the national policy prohibiting long-term power exports would not be altered. This policy was introduced by the Mackenzie King government in the Twenties because the United States refused on the contract date to release power temporarily imported from Ontario, even though Canadian consumers badly needed it. Unable to recover its power, Canada, said King, would never enter such an ex-

port contract again, and all succeeding governments have upheld this prohibition.

In national policy, power is regarded as a capital asset, the fuel of future Canadian industry and, unlike ordinary goods or individual industries, is not for sale to foreigners who may agree to return it at a certain date but may again fail to honor the contract. Bennett and powerful British Columbia business interests consider these fears quite groundless. By inviolable treaty, they say, Canada can unquestionably recover its power at a specified time.

Up to this point also, Ottawa had assumed that it was engaged only in a routine, passing disagreement with Bennett, who flourishes on controversy and indignation. Now it discovered that in the case of the Columbia he had undertaken to smash the nation’s no-export policy.

Ottawa was ready to let the United States have part of Canada’s half of the downstream benefits until all the power was needed by Canadian consumers a few years hence but it had never contemplated the long-term foreign sale of power made in Canada, at Mica Creek or anywhere else.

Victoria argued that all power not immediately usable in Canada should be sold for a fixed period of years, the American dollars thus earned being used to pay part of the cost of the Canadian dams and to keep the price of Canadian electricity at a minimum.

The clash between the two governments on the old issue of power exports was finally clarified but that cloud on the horizon looked only as big as a man’s hand when Bennett invited Fleming to Victoria. The premier was not going as a supplicant to Ottawa; the federal government could come to him.

Fleming came and hopefully entered the office that had been barred to Fulton. Two days later a grim minister of finance emerged with tightly buttoned lips and a double-barreled ultimatum in his pocket.

The federal government, said Bennett, could finance and build the whole Columbia scheme alone. Or, alternatively, the provincial government would build it, but only under far-reaching guarantees.

After posing for a ritual photograph with his host before a map of the Columbia— both men wreathed in transparent newspaper smiles — Fleming returned to Ottawa in silence. It was soon clear, as Bennett doubtless knew in advance, that his ultimatum could not be accepted by the federal government.

Ottawa is not prepared to build the Columbia scheme alone, first because it thinks British Columbia should pay at least half the capital cost; second, because it is not sure of selling the power thus produced to the only available customers, the private B.C. Electric utility empire and the provincial B.C. Power Commission, both of them effectively controlled by Bennett.

What if the nation spent half a billion to tap the Columbia, and then found that the two customers refused to buy power at an economic price? Ottawa didn’t intend to get out on that limb at the risk of being sawed off by Bennett.

The alternative of a purely provincial scheme was perhaps even more objectionable to Ottawa on Bennett’s terms, since Ottawa was asked to guarantee “by appropriate financial measures” that Columbia electricity would be delivered in Vancouver at a maximum cost of 4.25 mills.

Bennett had been generous, as he thought, in raising Fulton’s earlier figure, but Ottawa, unable to foresee the cost of borrowed money and hence the cost of construction, was not prepared to make the required guarantee at the risk of heavy financial losses. Moreover, the pro-

vincial offer was based on the assumption that Canadian-made Columbia power, in large volume, would be sold for a long period to the United States as forbidden by national policy.

The stalemate between the two governments was now frozen solid. The federal government, growing desperate behind a stolid parliamentary mask, feared that any further delay might be fatal to the Columbia treaty. Fulton told the House of Commons that the entire power project could be lost forever if the United States, disgusted by Canada’s inaction and hungry for electricity, turned away from the Columbia and decided to make its own power in thermal plants at home.

As Ottawa wondered whether it should even submit the treaty to Parliament this year and tried to unravel Bennett’s real motives, they were suddenly revealed in the least expected place with explosive impact.

Ray Williston, British Columbia’s minister of lands and forests, chose to unveil his government’s master plan at a meeting of the Pacific Northwest Trade Association in Portland, Oregon. He proposed that the power production of the entire Pacific drainage basin, from Alaska to California, be turned into an international pool from which Canada and the United States would take what they needed, when they needed it. Power, in fact, would be internationalized.

Not only the Columbia but also the Peace and the Liard (both of which drain into the Mackenzie River system and flow into the Arctic) and the Yukon and presumably all other available rivers would be dammed by stages to supply this enormous grid. Canada would not merely export some Columbia power on a temporary basis to earn ready cash but would embark on permanent, wholesale, unlimited exports from every possible source. Power would become a large item of Canadian foreign trade.

The news of a frontal attack on nation-

al policy, delivered to foreigners, appalled the federal government. After the first shock, however, it suspected that Bennett had overplayed his hand. If minor, temporary exports had substantial support in western politics as an easy way of making a fast American buck, the prospect of committing British Columbia's major industrial resource, the future fuel of its economy, to an international agency was calculated to alarm the whole nation, or so the federal government hoped.

As Ottawa sees it, Bennett’s plan simply means a sellout of Canada’s capital—not its goods but the means of making them, not its production but its estate.

The assumption that Canada can recover such power exports whenever they are required for Canadian use. can turn off the switch at its own convenience, is regarded by the federal government as naïve and ridiculous. Once the growing communities of Washington, Oregon and California became dependent on Canadian power they could not abandon it even if they wanted to. Such a contract couldn’t be enforced between friendly nations. The switch couldn’t be turned off. The power would be lost to Canada forever.

That being Ottawa’s view (quite childish in Bennett’s eyes) it would rather postpone the Columbia scheme indefinitely than build it at the price of alienating the nation’s heritage. If massive exports from any river are Bennett’s price for a Columbia deal, Ottawa is not ready to pay it.

Now that the issue is starkly in the open. Ottawa trusts that the Canadian public at last will understand what Bennett is driving at. For his part the B.C. premier welcomes this clarification because he believes in exports, and they alone can provide a market for his cherished Peace River scheme. Besides, he is confident that his provincial voters will back his export drive and a quarrel with Ottawa will be handy for his Social Credit party in the next federal election.

There is still a way out of this impasse. The federal government could lift the Columbia scheme from provincial jurisdiction, declare it a work of national concern and go ahead on its own—provided, of course, that it could first make sure of selling its power in British Columbia at an economic price. It must have firm contracts from the B.C. Electric and the B.C. Power Commission, or both, before it spends a dollar on construction.

Whatever the federal government decides to do. whether it ultimately surrenders to Bennett, builds the Columbia scheme alone or postpones it, the intended timetable is out of joint. Even if the treaty is ratified by Parliament at its present session, which is increasingly doubtful, it will be difficult if not impossible to get construction under way in the autumn as planned and create thousands of jobs next winter.

The only conceivable beneficiaries of this extraordinary mess are the people living along the Arrow Lakes. Under the treaty’s engineering design their little towns and farms would be submerged by the High Arrow dam. About 40,000 acres of land, at least half of it arable, the homes of some 1,600 inhabitants and even the low-lying parts of Revelstoke, far to the north, would be flooded forever.

The federal government, preferring a reservoir in the East Kootenay valley far to the east, opposed the High Arrow dam from the start and accepted it only because the Bennett government insisted that it was the quickest and most economic way to acquire cheap downstream power. Ottawa’s rage becomes almost incoherent when the federal government is blamed for the impending Arrow Lake flood.

The local residents, who have long struggled to make a livelihood in a beautiful but isolated valley and have entertained hopes of building a tourist industry around a lake as fine as any in Switzerland. will mount a stubborn campaign against ratification of the Columbia treaty.

Parliament will be told by the Arrow Lakes’ member, H. W. Herridge, that Canada can develop all the on-site power it needs, and get reduced but ample downstream benefits as well, by a low, harmless dam north of the border, the high

dam at Mica Creek and small dams on the Columbia’s tributaries.

Apart from the ruin of a scenic paradise. Herridge and his people say, the planned Arrow Lakes flood, rising and falling almost eighty feet every year, is bad business. It must destroy a farm and tourist industry worth far more than any possible income from electricity.

Until Ottawa and Victoria collided not merely on some technical or financial question but on the nation's historic power policy, the case of the Arrow Lakes people looked hopeless. The treaty and

all its physical results apparently were a fait accompli and unalterable. Since treaty, policy and Columbia scheme have all been thrown into complete doubt together, the flood just possibly could be averted under a changed engineering plan, if the United States would agree.

But at the moment Ottawa and Washington have more to worry about than the threatened local tragedy of the Arrow Lakes. The question they are pondering today is whether a provincial Canadian government can successfully veto the high policies of two sovereign states,