Presumed innocent: navigation rights and risk-based activities in the Passamaquoddy Bay.

• Author: Craik, Neil

INTRODUCTION

The Passamaquoddy Bay is not the first place that comes to mind asa setting for international controversy. A fishing and tourist area, well-known for its scenic beauty, the Passamaquoddy Bay is also bisected by the Canada-United States border. (1) Located at the Western entrance to the larger Bay of Fundy and terminating at the mouth of the Saint Croix River (an international watercourse that defines the boundary between Maine and New Brunswick), the Passamaquoddy Bay is now also the site for two proposed liquefied natural gas (LNG) terminals on the Maine side of the Bay. (2) LNG terminals are controversial at the best of times, given the environmental and human safety risks posed by LNG terminals and the transport of LNG over water. (3) In the case of the Passamaquoddy Bay proposals, the controversy is compounded because the only shipping access to the proposed LNG terminal sites in the United States is through the Head Harbour Passage, a narrow channel of water located between Deer Island and Campobello Island in the Passamaquoddy Bay, both of which are Canadian. The Canadian government has maintained that the waters of the Head Harbour Passage are "sovereign Canadian waters" and, as a consequence, Cariada takes the position that it has the unilateral right to control navigation through the Head Harbour Passage. (4) The United States, on the other hand, takes the position that the Head Harbour Passage is a strait used for international navigation and subject to the right of non-suspendable innocent passage. (5)

To assert its position, the Canadian Ambassador to the United States, Michael Wilson, provided a letter on 14 February 2007, to the U.S. Federal Energy Regulatory Commission (FERC), the lead regulatory agency reviewing the LNG terminal proposals, advising the U.S. agency that Canada will not permit LNG tankers to pass through the Head Harbour Passage in the Passamaquoddy Bay. (6) The basis of the Canadian refusal is that the transport of LNG through the Head Harbour Passage presents unacceptable navigational, safety, and environmental risks. The FERC has indicated that it will continue to consider the applications notwithstanding the Canadian position. (7) As the situation currently stands, the United States regulator could potentially approve either proposal in the face of Canadian opposition. If either of the projects proceed, Canada will be left to enforce its claim of sovereignty over the Head Harbour Passage by having to take affirmative steps to prevent LNG tankers from transiting the passage.

The current controversy is a reprise of an earlier dispute from the 1970s, where the same issues regarding the transport of environmentally hazardous materials through the Head Harbour Passage were raised in relation to an oil refinery proposal in Eastport, Maine. (8) The re-emergence of this issue suggests that regardless of the outcome of the LNG proposals themselves, Canada and the United States need to come to some resolution of the underlying issues regarding passage through these waters.

The controversy concerns disagreement over two related legal issues. First, is the Head Harbour Passage an international strait subject to the right of innocent passage or is it, as the Canadian government claims, an area subject to unqualified Canadian sovereignty? Second, if the right of innocent passage exists, would the potential environmental and safety risks posed by transporting LNG render passage non-innocent? The focus of this paper is primarily on the second issue. In particular, my interest here is in examining the circumstances under which navigational activities that pose risks to the coastal state may be subject to coastal state control. The Passamaquoddy Bay controversy provides a provocative example of the limits of coastal state control over ships exercising the right of innocent passage, and raises important questions regarding the coherence of the international rules respecting innocent passage with the more preventative and precautionary stance of international environmental norms. At the heart of these questions is how activities involving probabilistic risk are treated within each of these areas of law.

In relation to risk-based activities, it is helpful to distinguish between environmental harms that are predicted to occur and those harms that are identified in a probabilistic fashion. The predicted air and water emissions from an industrial activity are an example of the former. In such cases, acceptable standards may be identified domestically or internationally, which, if exceeded, would render the activity illegal. The siting of a nuclear powered generating station may be an example of the latter. Here the concerns include the potential for catastrophic environmental harm, but the probability of such an event actually occurring may be quite low. (9) Activities involving probabilistic harm, therefore, require a determination of the probability of a harm occurring and of the acceptability of the potential harm if it were to occur. Risk itself is a calculation of the probability and the potential seriousness of the harm. (10) While conceding that risk-based activities, including LNG transport, may involve both predicted and probabilistic harm, this paper concentrates on the latter.

The unsurprising difficulty here is that states and the domestic actors involved in such controversies rarely agree on the risks associated with disputed activities. (11) To complicate matters, international law provides few standards against which risk-based activities can be assessed. The result, which the Passamaquoddy Bay LNG terminal controversy aptly illustrates, is that risk-based activities will often lead to intractable disputes, with no clear basis for resolution. In part, this difficulty arises because of the scientific and technical limits in calculating risks, but it also arises because individuals and groups, including states, may have genuine, value-based differences in risk tolerance. It is in this regard that the Passamaquoddy Bay LNG terminal controversy transcends the specific facts and is salient to the broader question of the nature of innocent passage and its relation to environmental and human safety risks.

The first part of this paper describes the LNG controversy with specific reference to how the controversy triggers the rules concerning innocent passage. This necessarily involves some discussion of the status of the Head Harbour Passage, but this issue is addressed summarily with the intent of demonstrating the legal context for discussion of the possible qualifications to free navigation in this area. In the second part, I outline the current approach to determining whether an activity will be considered non-innocent and how these rules respond to risk-based activities, such as LNG transport. The third and fourth parts describe the treatment of risk-based activities under the rules respecting transboundary environmental harms and compare that treatment with how such activities are addressed in relation to the exercise of the right of innocent passage.

My principal conclusion is that, notwithstanding the more precautionary posture of international environmental norms, international law as a whole has generally left the discretion to undertake risk-based activities in the hands of the states undertaking those activities. In short, risk-based activities are presumed innocent and the threshold for determining non-innocence remains high. That said, the procedural obligations of international environmental law provide an opportunity for a more cooperative and contextually sensitive approach to resolving disputes involving risk-based activities, such as the Passamaquoddy Bay controversy. In essence, the rules regarding innocent passage forsake contextual sensitivity in favour of legal certainty, while the rules in relation to transboundary environmental harm call for much greater consideration of the respective rights and interests of the parties. Taken together, the rules retain overall coherence by allowing source (flag) states to undertake unilateral activities, but only after satisfying onerous procedural obligations of risk evaluation and good faith consultation.

PART ONE: THE PASSAMAQUODDY LNG TERMINAL CONTROVERSY

1. LNG Transportation by Sea

   Increased demand for natural gas in North America (and elsewhere) has led to a consequent demand for natural gas to be shipped from foreign sources. In order to transport natural gas by sea efficiently, it has to be condensed through a process of liquefaction, which requires that the gas be condensed by cooling it to approximately minus 260 degrees Fahrenheit (minus 162 degrees Celsius). It is then transported by specially designed tankers, generally measuring 250 to 300 metres in length, to market countries where it is stored, regasified, and piped into existing natural gas distribution networks. In its liquid form, natural gas is generally considered stable. However, as liquefied natural gas heats up and becomes gaseous, it can be explosive at certain concentrations. (12)

   There is considerable public concern regarding the environmental and human safety hazards that LNG shipment and terminals present. (13) Broadly speaking, the hazards arise from an accidental or intentional release of LNG, which may result in harm due to physical contact with LNG at very low temperatures. Also where LNG changes its state from liquid to gas, combustion and thermal damage may occur where released LNG comes into contact with an ignition source. The severity of a potential incident relates to the size of the spill and decreases with distance from the spill source. A general description is contained in a recent report by the U.S. General Accounting Office:

   When LNG is spilled from a tanker, it forms a pool of liquid on the water. Individuals who come into contact with LNG could experience freeze burns. As the liquid warms and changes into...