Effective Negotiation
Exercise: Water, water everywhere! Government departments
There are three departments – environment, mining and the attorney general’s office – with a particular interest in this issue. A representative of each will be part of the government’s negotiating team. Each department has to sort out its own priorities then achieve an agreed position that they can put to the Premier for endorsement.
Your task is to develop your approach to the negotiation.
There has already been a fair bit of both public and private discussion on this issue and a number of options have been suggested.
You have raised these options with your department and taking their views into account, need to evaluate each one (giving them a nominal value in the range of plus 10 to minus 10). This will enable you to establish your negotiating priorities in anticipation of your meeting with the other departmental representatives.
The value attributed to an option from the department’s perspective will reflect the estimated impact of the option on the department’s (and the government’s) priorities – but it may also take account of reasonable political, community or risk factors. The impact of a proposal on the Government’s revenue must also be taken into account. You have no remit to enter into subsidy arrangements involving the public purse, but you do have a clear remit to settle the issue.
Your next move is to meet with the two other government representatives to develop a collective approach that you can put to the company. You have a meeting scheduled with the
Premier (don’t be late!) to outline your proposed approach and what you expect to achieve.
You need his endorsement.
Having secured a negotiating remit from the Premier you need to prepare for (and undertake) the negotiations with the company. They are likely to send a team of three – probably from
Cambridge University Press 1 © Ray Fells 2010

Effective Negotiation
Exercise: Water, water everywhere! Government departments finance, corporate, and inevitably a lawyer. Any agreement reached through these negotiations will need to secure the Premier’s endorsement.
As the negotiations progress, you may be required to report back to your department head.
If you reach an agreement with the company negotiators this will have to be presented to the
Premier for final approval before you can commit to it.
(The lecturer should take the role of the Premier, and of the Departmental Heads, if required.)
Good negotiating
Cambridge University Press 2 © Ray Fells 2010

Effective Negotiation
Exercise: Water, water everywhere! Government departments
Department of Environment
The Department of Environment is generally recognised as being the lobby group for the conservation group, and generally has the support of the peak indigenous groups. It is antiexploration and non-pro-mining, so its priorities are to prevent exploration and minimise new mining, put controls on any new projects, have implementation reviews and generally place obstacles (such as bureaucratic delays like reviews and committees) in the way of mining and mining development.
Earlier this year ago the department was found to have given provincial funds to support an overseas conference, which basically turned out to be a ‘smash global capitalism’ talk fest. So in the mind of the public the department now has ‘dirty hands’ for supporting extremists, so it has to tread a bit more carefully.
Your first task is to decide what position you will take to the pre-negotiation meeting with the two other departments (some options are provided below).
Also, your departmental head will expect you to brief her before your meeting with the other departments, so as part of your preparation is to outline your position and key points on a separate sheet to give to her. She has just been invited as the keynote speaker at a major
European conference and is therefore expecting a good environmental outcome from the negotiations. She can then use this as a case study in her speech, promoting the Province (plus the Premier and herself) to the world at large.
As the negotiations progress you may be required to report back to your departmental head.
Any agreement you reach with the company negotiators will first have to be approved by the
Premier.
Cambridge University Press 3 © Ray Fells 2010

Effective Negotiation
Exercise: Water, water everywhere! Government departments
Some options
These options suggest how the water restrictions issue might be resolved.
1. The Premier’s plan is introduced before the next election
This is the best possible outcome.
2.
The plan is introduced with a review
Value
+10
The plan is being introduced which is a positive, but the impact is dependent upon the option chosen.
2.1 The restrictions are enforced but may be reduced once the review is conducted +9
Once the restrictions are in place, any reduction is going to look politically weak. So you don’t really expect any longer term lessening of impost on companies who overuse the province’s resources.
2.2 Partial implementation of the plan (eg. 25% reduction pending the review) + 5
A 25% reduction in water extraction reduces current usage, so it is an improvement, and a precedent has been set.
2.3 No implementation until review complete, then a percentage to be set as determined by the review -5
This will result in a delay in implementing restrictions which might also be watered down and reduce the impact. It could even turn into a ’defer’ solution where nothing gets done. Lawyers love reviews and will use it to delay and dilute any proposals.
3. The plan is introduced but companies are allowed to maintain full or partial extraction rates on the condition they provide offsets
It would mean the company could proceed with the expansion plans and continue mining. At present, the condition of providing offsets has two benefits – it means other projects that conserve water or use it more efficiently get developed, but it also means the companies pay for them. In effect this raises the cost of extracting water for their own purposes.
Cambridge University Press 4 © Ray Fells 2010
1: - 6
2.1: -4
2.2: 0
2.3: +3
3.1: -2
3:2: -5
4: -1

Effective Negotiation
Exercise: Water, water everywhere! Government departments
A number of projects have been discussed, all of which would involve a significant capital outlay but this is a positive – the companies are contributing to the Province’s societal infrastructure.
3.1 Desalination plant at Hudson Bay area
3.2 Desalination plant in the south
3.3 Groundwater extraction project
+7
+7
+7
There are significant aquifers in Manitoba so there have been a number of proposals to extract more water from aquifers in the lakes area of the Province.
Capital cost of a 10 million litre project is $50 million. Annual operating cost is $1 million.
3.4 Canal/pipeline +7
There have been a number of proposals to transport water, eg. from Lake Winnipeg to the more densely populated area at the south of the Province.
3.5 Establish a water research centre +1
To have the company fund research is better than it not funding research, but this looks like a soft option with no real impact on the company’s activities.
4. The restrictions plan is introduced for new mines but existing mines are required to ‘offset’ their water usage.
This does look like it is condoning existing practices and overuse of resources. This option could only be regarded as a minimal victory for conservation and the environment. The research funding option looks even more like a ‘business as usual’ solution.
4.1 – 4.4 Any of the infrastructure projects listed above
4 5 Research centre
+1
-4
5. New water resources commission set up -5
On the one hand a commission would be able to oversee the practices of companies and be able to get research done and keep the issues in the public domain. But in terms of
‘on the ground’ improvement, it looks like a recipe for delay.
Cambridge University Press 5 © Ray Fells 2010

Effective Negotiation
Exercise: Water, water everywhere! Government departments
6. The Premier’s plan is an election policy issue to be implemented after being re-elected
-7
The Premier has to pursue his commitment. If he puts it on hold until the election the companies will mount a scare campaign. Even if the Premier is elected he is not likely to be able to claim such a strong mandate like he has now.
Cambridge University Press 6 © Ray Fells 2010

Effective Negotiation
Exercise: Water, water everywhere! Government departments
Department of Mines
The Department of Mines is widely recognised as being the lobby group for the mining companies and mining unions. Being pro-exploration and pro-mining, its priorities are to prevent any obstacles to the industry’s development and to minimise any costs that might be imposed (bureaucratic, financial, etc).
About a year ago the department was involved in an administrative bungle over licences which gave rise to a corruption investigation. It turned out to be a stuff up rather than a conspiracy, but in the mind of the public it just showed the department’s support for ‘big business’.
Your first task is to decide what position you will take to the pre-negotiation meeting with the two other departments (some options are provided below).
Also, your Departmental CEO will expect you to brief him before your meeting with the other departments. Part of your preparation is to outline your position and key points on a separate sheet to give to him. Given the tough economic times and the contribution of the mining industry to the province, he expects you to be able to find a solution which does not damage the industry’s interests.
Some options
These options suggest how the water restrictions issue might be resolved.
Value
1. The Premier’s plan is introduced before the next election
This is directly contrary to the interests of the mining industry and will have a
-8 significant impact on existing mining operations. It will cause companies to reconsider their future developments, all to the detriment of the province’s economy.
2. The plan is introduced with a review
The prospect of a review softens the impact, but the actual outcome will be dependent upon the option chosen.
2.1 The restrictions are enforced but may be reduced once the review is conducted -5
Cambridge University Press 7 © Ray Fells 2010
1: - 6
2.1: -4
2.2: 0
2.3: +3
3.1: -2
3:2: -5

Effective Negotiation
Exercise: Water, water everywhere! Government departments
This will have the same initial adverse impact and therefore create uncertainty in the industry, but the review should be able to alleviate some of the impact.
2.2 Partial implementation of the plan (eg. 25% reduction pending the review) -2
The reduced rate of impost is an improvement on the premier’s original plan and so it should be welcomed. Again, the review should be able to reduce this further.
2.3 No implementation until the review is completed, then set a percentage as determined by the review +2
Although this means the legislation will have been enacted (and so an unwelcome precedent has been set), no changes would actually occur – they would all be pending the review. This is an ideal ’defer’ solution leading to perpetual delay until the next election, while at the same time the department can be seen (within government) to pursue the Premier’s policy.
3. The plan is introduced but companies are allowed to maintain full or partial extraction rates on the condition they provide offsets.
This would apply to all companies but especially this company with its proposed development plans. A number of offset projects have been discussed that all involve significant capital costs – but they might also allow for a profitable operation.
Essentially there would be a tax on water extraction by the companies, but with the exception of a proposal that the companies fund research projects, provide infrastructure and jobs (such as construction). All of which benefits the province’s economy, and therefore benefits the mining industry too.
3.1 Desalination plant at Hudson Bay area
3.2 Desalination plant in the south (where demand for water is greatest)
3.3 Groundwater extraction project
+2
+2
+2
There are significant aquifers in Manitoba so there have been a number of proposals to extract more water from aquifers in the lakes area of the province. These projects tend to be small, around 10 million litres per annum.
Cambridge University Press 8 © Ray Fells 2010

Effective Negotiation
Exercise: Water, water everywhere! Government departments
3.4 Canal/pipeline +2
There have been a number of proposals to transport water (for example from Lake
Winnipeg to the more densely populated area at the south of the province)
3.5 Establish a water research centre -2
One suggestion is that the company establish or fund a research centre ($50 million was suggested). Apart from some ‘green’ public relations, this does not seem to benefit the mining industry at all.
4. The restrictions plan is introduced for new mines, but existing mines are required to
‘offset’ their water usage.
This proposal confines the impact to new mines (and it may be possible to define existing proposals as existing mines) and therefore it is preferable to the previous option.
+3 4.1 Desalination plant north
4.2 Desalination plant south
4.3 Groundwater projects (need six)
4.4 Canal/pipeline
4 5 Research centre
+3
+3
+3
-2
5. New water resources commission set up +4
This is a good ‘defer’ solution so it is better than implementation. The industry would have input to the commission and therefore be able to shape any recommendations.
6. The Premier’s plan is an election policy issue to be implemented after being re-elected
+6
This gives the industry and the general public the opportunity to debate the issues more fully, so the importance of the industry to the Province will become clear again.
Meanwhile the department’s position within government is to support the Premier’s policy.
Cambridge University Press 9 © Ray Fells 2010

Effective Negotiation
Exercise: Water, water everywhere! Government departments
Attorney General’s Department
This department is generally recognised as being non-political (though some people regard it as giving the Premier advice he wants to hear) but the Attorney General –deputy leader of the party – seems to give different (or watered down) advice if pubic opinion seems unfavourable.
The critical issue for the legal advice is simply whether a government can unilaterally change the terms of an agreement previously entered into, and if so, under what conditions. The legal advice from Counsel is that the government cannot change an agreement, but it might be able to legislate province-wide obligations under its ‘economic prosperity’ powers, and would therefore survive (at great expense) a constitutional challenge.
Outline your position and key points on a separate sheet to give to the Attorney General for approval, prior to meeting your negotiating colleagues.
Some options
These options suggest how the water restrictions issue might be resolved.
1. The Premier’s plan is introduced before the next election
Financial value
-10
The only chance of the plan being defensible against a legal challenge over its impact on existing government-company arrangements and contracts would be if the legislation were precisely drafted. Even so, it is still likely to be the subject of a constitutional challenge.
2. The plan is introduced with a review
It is the introduction of the plan which causes the legal problem. Making it subject to review may strengthen the government’s legal position – but not by much. The various types of ‘review’ that have been proposed don’t alter the fact that the legislation will be on the statute book
2.1 The restrictions are enforced but may be reduced once the review is conducted -8
2.2 Partial implementation of the plan (eg. 25% reduction pending the review) -8
Cambridge University Press 10 © Ray Fells 2010
1: - 6
2.1: -4
2.2: 0
2.3: +3
3.1: -2
3:2: -5
4: -1

Effective Negotiation
Exercise: Water, water everywhere! Government departments
2.3 No implementation until review completed, then as a percentage determined by the review
-8
3. The plan is introduced but companies are allowed to maintain full or partial extraction rates on the condition that they provide offsets . -8
As with the ‘review’ options, it is the introduction of the plan that causes the legal risk.
You understand that some of the offset projects being talked about include a desalination plant and a pipeline. Some legal gymnastics might be able to argue that the offset projects make a difference, but you can’t advocate that as a legal position.
4. The restrictions plan is introduced for new mines but existing mines are required to ‘offset’ their water usage.
-2
This variation on option 3 could put the government on stronger legal ground by confining the new provisions to new mines. The offset requirement on existing mines is a case of changing the rules in the middle of the game, which should not happen and could easily be challenged – but it is not without precedent!
5. New water resources commission set up +5
This would seem to be free of legal complications, provided the commission is not given the power to impose restrictions (why else would you set one up?).
6. The Premier’s plan is an election policy issue to be implemented after being re-elected
-10
If the Premier is re-elected and then introduces his plan, he may well have a mandate.
But the legal problem of the legislation unilaterally changing the existing agreements between government and the company still exists.
Cambridge University Press 11 © Ray Fells 2010