Project Law Blog

Water Use in BC: Water Pricing Debate Generates Widely Differing Views

Posted in Environmental, Oil & Gas Law, Project Development, Regulatory

The Province’s discussion paper Pricing B.C.’s Water has garnered a wide range of opinions since being released in March.  As part of the public consultation effort regarding the new Water Sustainability Act (now at 2nd reading in the legislature), the public was given until April 8 to provide its views on water pricing and the Province’s water pricing principles.

Although broad in scope, the water-pricing consultation excluded fees and rentals for hydroelectric purposes, by far the biggest source of water fees and rentals for the Province (although as part of its 10-Year Rate Plan for BC Hydro the Province has said it will eliminate the highest level of water rentals in 2019 in regard to annual energy output in excess of 3000 GWh).   Also excluded, by implication, are water utility rates under the Water Utility Act.

The pricing principles in the Province’s discussion paper are:

1. simplicity

2.  fairness and equity

3.  implications for water users – costs distributed in a reasonable manner

4.  impact on water resources – e.g. consumptive uses to be assessed higher than non-consumptive uses

5. cost recovery, where cost refers to the Province’s cost of regulating water resources, including “a fair return to the Crown”

6. efficiency

7. food security and public health

Like the better-known utility rate design principles of James Bonbright, some of the Province’s water pricing principles are in tension with each other (efficiency vs. implications for water users, for example), and internally (fairness in this context meaning non-discriminatory, and equity referring to the value of the particular water use).  These and other issues were picked up on by various commentators on the discussion paper.  Here are some quotes selected to reflect the wide range of views expressed:

As an economist, I suggest that the BC government auction water extraction permits every year to agricultural, industrial and municipal (utility) users.  Every one of these users will have a reason why they should not pay.  That’s not relevant, given their desire for the same resources.”   And from the same commentator:  “Businesses ALL need to pay the same price [for water extraction].  Some businesses will NOT be competitive at these prices.  The solution is NOT to sell them water more cheaply.

From Mister and Missus home owner:  “A fair return to the crown:  Mister and Missus home owner should not be burdened by a further tax increase which may happen with this proposal….  Will this bill see the individuals paying more than their fair share while the business sector laughs all the way to the bank?

One commentator provided a detailed proposal for an independent agency to monitor water and groundwater use, and make the associated data available to the public:  not a bad idea in principle thinks this blogger but why a new government agency would be required to perform this function given the existence of existing agencies whose mandate could be expanded is unclear (e.g. Water Comptroller, BC Utilities Commission, Environmental Assessment Office).

The substantive and process challenges for the Province in its development of a new water pricing regime will be daunting.  The consultation principles and stakeholder feedback are all very high-level, yet will need to meaningfully reflected in a new schedule of fees and rentals under the Water Sustainability Act that will be as detailed and complex as the current scheme set out in Schedule A to the Water Regulation.  It seems quite likely that some time will pass before we will see new enactments regarding water pricing in BC.

The Province’s water pricing principles and stakeholder commentary can be found at:

Water Use in BC: BC tables long-awaited Water Sustainability Act

Posted in Environmental, Oil & Gas Law, Project Development, Regulatory

On March 11, 2014 the BC government introduced a first reading of the Water Sustainability Act, Bill 18, the culmination of a 4-year initiative to modernize the 100-year old Water Act.  Followers of this blog or BC water issues will know that the government released a comprehensive “proposal” regarding the new statute in the fall of 2013 (see our previous blog post here).   The Water Sustainability Act is no less comprehensive – more than 150 pages long, with 15 pages of definitions alone.  Given its knee-buckling scope, this blog focusses on the new statute in comparison to the fall 2013 legislative proposal, with a more fulsome comparison to the current Water Act to follow when the Water Sustainability Act becomes law.

In general, the Water Sustainability Act repeals most of the 1909 Water Act;  re-enacts the Water Act’s regulatory scheme for the diversion and use of stream water;  extends that regulatory scheme to groundwater; authorizes the establishment of “water objectives” and their consideration in water-use decision-making;  requires the consideration of “environmental flow needs” of streams in issuing licenses; moves certain Fish Protection Act provisions to the new statute; establishes new powers to modify existing precedence of water use to protect streams, aquifers and essential domestic uses of water; and establishes an administrative penalty scheme.


As indicated in the 2013 legislative proposal, the new statute fully addresses the enormous gap in the existing regulatory regime by extending most of the current surface water provisions to groundwater.  For example, groundwater uses will be generally prioritized on the “first in time, first in right” (FITFIR) basis, consistent with surface water use prioritization, subject to certain exceptions including a super-priority for “essential household uses” that is also applicable to surface water use.  “Essential household use” refers to the use of up to 250 litres per day by the occupants of a single private dwelling for human drinking water, food preparation, and sanitation purposes, as well as for animal and pet purposes.

Protection of Water Resources

Consistent with the 2013 proposal, a significant component of the new regime is the protection of water resources.  Water objectives may be set by regulation in regard to watersheds, streams, or aquifers for the purposes of sustaining water quantity, quality and aquatic ecosystems – and can be required to be taken into account by decision makers as well as being the basis of terms and conditions in licenses and other approvals.  Certain rivers in the Province are exempted from the possibility of being dammed, including the Fraser, Adams, Taku and Tatshenshini Rivers.   A division of the new statute deals solely with the regulation of “wells”, which are broadly defined, but exclude wells to which the Geothermal Resources Act and the Oil and Gas Activities Act apply.  Importantly, in deciding applications in relation to streams and hydraulically-connected aquifers, decision makers must consider the “environmental flow needs” of the stream, being the “volume and timing of water flow required for the proper functioning of the aquatic ecosystem of the stream”.  Division 4 of the new statute provides for the establishment of “water sustainability plans”, which would seem to enshrine in law the basic principles of the Province’s 1998 Water Use Plan Guidelines.

30-Year Review of License Terms

As anticipated, the new regime mandates a default review of water licenses at least every 30 years, with three discrete exceptions.  The exceptions are licenses issued for power and power storage purposes; licenses issued under the Industrial Development Act (regarding the establishment or expansion of the aluminum industry in BC); and licenses issued or confirmed in consequence of a review under the 1998 Water Use Plan Guidelines.  Licenses for power and power storage purposes may be issued for up to 10 years during project development and for as long as 40 years from the commencement of operations.

Administrative Penalties

The new statute provides for administrative penalties to be imposed by the Comptroller of Water Rights on persons who have contravened the new statute; failed to comply with an order issued under it; or failed to comply with a license or other authorization.  Administrative penalties are fines that are meant to be civil rather than criminal in nature, although the distinction might well be lost on those subject to significant penalties under the new regime. Maximum penalty amounts are yet to be prescribed by regulation, but can be as high as $1,000,000 per day under the Utilities Commission Act. Parties potentially subject to administrative penalties under the new statute may take some comfort from the fact that they will be entitled to a hearing.

Water Pricing

Under the Water Sustainability Act, non-domestic users of groundwater would be required to pay an application fee and an annual rental, in the same way that surface water users do today.  In other words, the new statute would impose the same pricing structure and rates on groundwater as are currently imposed on surface water.

In a further initiative, the Province is also considering changes to the current rate structure, set out in the Water Regulation.  Today fees and rental rates depend on the purpose of the water use and the amount of water used.  Changes to the rate structure might serve to advance specific objectives including total cost recovery, allocation of costs on a cost-causation basis, and administrative simplicity.  Regardless of rate structure objectives, the Province has already indicated that costs for surface and groundwater users will be increasing in a discussion paper.  Comments on water pricing and rate structures can be made here until April 8, 2014.


Supreme Court of Canada Refuses to Hear Alberta Métis Rights Case

Posted in Aboriginal, Consultation

On January 24, 2014, the Supreme Court of Canada dismissed a leave to appeal application in a Métis rights case from Alberta.  As a result, the Alberta Court of Appeal’s decision, which upheld a finding that the existence of a rights-bearing Métis community in southern Alberta had not been established on the facts, remains the binding authority in Alberta.


The case arose out of efforts by the Métis Nation of Alberta to seek recognition of the existence of Métis communities in Alberta with constitutionally protected Aboriginal rights.  When efforts to reach a negotiated agreement with the Government of Alberta failed, the Métis Nation of Alberta decided to mount a test case to have those rights recognized by the courts.  Garry Hirsekorn, an Alberta Métis, shot a mule deer on the western edge of the Cypress Hills, in southeastern Alberta, in the fall of 2007.  Mr Hirsekorn was duly charged with hunting deer outside of open season without a permit, in violation of the Alberta Wildlife Act.  As a defence to the charge, he asserted that his Métis ancestry gave him the constitutional right to hunt for food across the plains of southern and central Alberta, and that the Wildlife Act unjustifiably infringed that right.  In order to establish that right, he had to demonstrate that a Métis community existed in southern Alberta and that he was part of that Métis community.  Mr. Hirsekorn was unsuccessful at trial, on appeal to the Alberta Court of Queen’s Bench and on further appeal to the Alberta Court of Appeal.  With the Supreme Court refusing to hear the appeal, the Court of Appeal’s decision remains the current state of the law on Métis communities and rights in Alberta.

Court of Appeal Judgment

The Court of Appeal judgment focused on four elements of the test articulated in the Supreme Court of Canada’s landmark decision R v PowleyPowley laid out a set of criteria to not only define what constitutes a Métis right under section 35(2) of the Constitution Act, 1982, but also who is entitled to those rights.  The Powley elements discussed in the Court of Appeal judgment included:

a) the proper characterization of the hunting right claimed by the appellant;

b) the definition of the historical Métis community in Alberta;

c) the relevant time frame for the establishment of effective European control in the area; and

d) the appropriate analysis to assess whether the right asserted here was integral to the distinctive culture of the Métis people prior to European control.


The Court of Appeal’s decision turned on the last element.  On this point, the Court found that there was no real Métis presence in the Cypress Hills area prior to the establishment of effective European control in 1870, and that southern Alberta was not, at the time, part of the traditional territory of the Métis.  However, the Court took a slightly different approach to the Powley analysis in coming to this conclusion.  The Court looked at whether the historic Métis community included the disputed area within its ancestral lands or traditional hunting territory, noting that this threshold better captured the territorial nature of the practices and traditions of a nomadic people than the concept of a “consistent and frequent pattern of usage” on a specific piece of land.  Despite using this more progressive approach to the Powley analysis, the Court found that the evidence fell short of establishing the existence of a Métis community, and by extension a Métis aboriginal right to hunt, in the Cypress Hills area.

The Court of Appeal decision and the Supreme Court’s dismissal of the leave application are important in at least two senses.  First, the situation remains that no Métis communities have been legally recognized in Alberta to date, and as a result no constitutionally protected Métis Aboriginal rights have been legally recognized.  However, it should be noted that the case focussed on Métis in southern Alberta, and its conclusions may not be applicable in northern parts of the Province where Métis communities have been established for longer periods.  Second, the decision has not clarified whether a Crown duty to consult Métis exists in Alberta.  While constitutionally protected Métis rights have not to date been recognized by the courts or by government in Alberta, the duty to consult can be triggered by assertions of rights even if not legally recognized.  Métis groups, particularly in northern Alberta, continue to assert that they have constitutionally protected rights and therefore must be consulted by government about decisions affecting their rights.  The Hirsekorn case does not, unfortunately, provide guidance on this point.

Cold Lake First Nations v. Alberta (Tourism, Parks and Recreation)

Posted in Aboriginal, Consultation

On December 20, 2013, the Court of Appeal of Alberta released its decision in Cold Lake First Nations v. Alberta (Tourism, Parks and Recreation), [2013] ABCA 443, determining that the Alberta government had met its duty to consult the Cold Lake First Nations in the context of upgrading and expanding a provincial recreation area.  CLFN filed an application for leave to appeal this decision to the Supreme Court of Canada.  Should the Court grant leave to appeal, we will follow with interest the future ruling in this case.


The English Bay Provincial Recreation Area is located on the western shore of Cold Lake, Alberta. Although the recreation area is not on Cold Lake First Nation (“CLFN”) reserve land, it is very close and contains an area known as Blueberry Point, which CLFN historically and currently uses for fishing, trapping, smoking and eating fish, picking berries and medical plants, and harvesting birch bark.

In March 2006, the Government of Alberta (Ministry of Tourism, Parks and Recreation) (“Parks”) closed the recreation area for an upgrading and expansion project (the “Expansion Project”).  In June 2006, Parks began clearing the land.  In July 2006, Parks learned that the Expansion Project would affect CLFN archeological sites and ceased construction. While CLFN was not initially notified or consulted with respect to the Expansion Project, Parks and CLFN subsequently began consultation.

From September 2006 to December 2009, Parks and CLFN met eight times. In December 2009, Parks received clearance under the Historical Resources Act to proceed with the Expansion Project.  In February 2010, a 60-day comment period commenced and Parks encouraged CLFN to provide input on the project during this period. On March 11, 2010 Parks held an open house and invited CLFN members to attend.  A number of CLFN members attended and objected to the Expansion Project.  Correspondence was exchanged and the parties agreed to schedule an open house specifically for CLFN members but the open house did not occur.

On June 28, 2010, CLFN wrote Parks contending that the consultation process had been inadequate and that Parks failed to provide an open house for the CLFN members. On the same date, Parks wrote CLFN indicating that they could submit written comments on the Expansion Project until June 30, 2010.  This deadline was subsequently extended to July 11, 2010.  However, CLFN did not provide any other further written comments. 

On July 21, 2010, Parks informed CLFN that the consultation on the Expansion Project was complete.  On November 8, 2010, Parks advised CLFN that construction would commence.

Issue on Appeal

CLFN sought judicial review of Parks’ decision to end consultation and the decision to commence construction. The issue on appeal was whether Parks fulfilled its duty to consult CLFN.

The Crown’s Duty to Consult

The Court of Appeal articulated the legal framework applicable to the Crown’s duty to consult First Nations. When determining whether the Crown discharged its duty to consult First Nations, the Court is required to address and answer three questions:

  1. Is a duty to consult triggered?
  2. If a duty is triggered, what is the scope and content of the duty?
  3. Did the consultation process followed by the Crown adequately discharge the duty?

Did the Crown Discharge its Duty in the Circumstances?

On the first question, Parks conceded that the circumstances triggered the duty to consult.  For the issue on appeal was whether Parks fulfilled its duty to consult CLFN.

Turning to the scope of the duty to consult, Parks argued that the duty fell at the lower end of the spectrum while CLFN argued that the duty to consult was at the higher end of the spectrum.  The Court opined that the scope of the duty to consult was further up the spectrum than the scope found in Mikisew Cree First Nation v. Canada (“Mikisew Cree”), where the scope of duty was at the lower end.  The Court reached this conclusion because the expansion would cause varied impacts on both the treaty and traditional rights asserted by CLFN, which required some mitigation of the adverse effects.

In determining the scope, the Court noted that while CLFN’s rights were strongly asserted and although the campground Expansion Project would have an adverse effect on both the right to fish and other traditional uses, the campground had been in the recreational area for over 50 years, the expansion would effect a small area and the CLFN has 50,000 acres of reserve land in the area.  Parks was therefore required to give notice, provide information, meet with CLFN members, and to adjust its plans to mitigate and address some of CLFN’s concerns.

Turning to the third and final consideration, the Court ruled that the consultation process followed by Parks adequately discharged the duty to consult for the following reasons:

  • the consultation period had been a long one (approximately 4 years);
  • there was numerous correspondence between the parties;
  • there were multiple impact reports; open houses were conducted;
  • CLFN actively engaged in the process throughout the consultation period and Parks had responded to numerous concerns raised by CLFN.

In the end, the Court upheld Parks’ decisions that consultation was complete and that construction would proceed.


As one of the first duty to consult cases in Alberta since Mikisew Cree, this decision is helpful because it clearly articulates the legal framework the Court will apply in considering whether the Crown has discharged its duty to consult First Nations.



February 2014 Deadline for Requests to Review DFO Authorizations Approaching

Posted in Environmental, Regulatory, Regulatory Compliance

On November 25, 2013, significant amendments to the fish protection provisions in the federal Fisheries Act came into force.  For more information, please see our earlier blog post here.

Authorizations issued by Fisheries and Oceans Canada (DFO) prior to November 25, 2013 continue to be valid, but holders can apply for a review of their authorization to confirm whether it could be amended or cancelled given the amendments to the Act.  If certain terms or conditions of the authorization are no longer required because the project will not cause “serious harm” to fish, then the authorization could be cancelled or amended.  The deadline for requesting a review is February 24, 2014.  There will be no extensions available.

Holders of an authorization should be aware that seeking amendments or changes to their authorization could trigger a duty to consult with potentially affected Aboriginal groups.  In addition, if the terms and conditions of an authorization are linked to an environmental assessment certificate, then DFO may be precluded from amending or cancelling the authorization.

Water Use in BC: New Changes to Permitting Processes

Posted in Environmental, Oil & Gas Law, Project Development, Regulatory

The Province recently approved amendments to the Water Regulation to eliminate minor but inconvenient steps in the permitting process.

BC Regulation 234/2013 amends the Water Regulation to:

i) eliminate the requirement for duplicate signatures on water license applications;  and

ii) eliminate the requirement that applicants for certain non-contentious water licenses must provide hard-copy information to potentially affected landowners – such information may now be provided electronically.

The Province’s efforts to continue to improve the current water use regime in BC suggest that the imminent enactment of the new Water Sustainability Act – the subject of previous blogs – is not a foregone conclusion.  The next sitting of the legislature is only weeks away and we look forward to seeing whether the Water Sustainability Act sees the light of day.

Significant Amendments to Fisheries Act in Force on November 25, 2013

Posted in Environmental, Regulatory, Regulatory Compliance

On November 25, 2013, significant changes to the Fisheries Act come into force.  The most significant, and most controversial, change in the legislation is the shift away from “habitat” protection to “fisheries” protection.   Fisheries and Oceans Canada (“DFO”) has published a policy, the Fisheries Protection Policy Statement, 2013, and an operational approach, the Operational Approach, which provides guidance and insight with respect to DFO’s interpretation of the new prohibition and authorization process under section 35(2)(b).

In addition, the new Applications for Authorization under Paragraph 35(2)(b) of the Fisheries Act Regulations (the “Regulations”) will come into force on November 25, 2013.  The Regulations outline the requirements for all new authorizations and amendments to existing authorizations.


Before Bill C-38, section 35(2) of the Fisheries Act prohibited harmful alteration, disruption or destruction of fish habitat (“HADD”).  On November 25, 2013, the prohibition will change to a prohibition against causing “serious harm to fish that are part of a commercial, recreational or Aboriginal fishery, or to fish that support such a fishery” unless the work, undertaking or activity is prescribed or authorized.  Previously, HADDs were prohibited regardless of whether they were temporary in nature or whether the HADD would cause actual harm to fish.  Now, the prohibition is focused on protecting “commercial, recreational and Aboriginal fisheries” against “serious harm to fish”.  The definition of “serious harm to fish” limits the prohibition against alteration to, or destruction of, fish habitat to permanent alteration or destruction.  As before, it remains an offence to kill fish unless previously authorized.

The phrase “serious harm to fish” has been defined as the death of fish or any permanent alteration to, or destruction of, fish habitat.  While DFO’s Fisheries Protection Policy is not law, it has clarified the definition of “serious harm to fish” and provided an indication of DFO’s interpretation of the new prohibition.  In particular, DFO has indicated that permanent alterations to fish habitat which are of a “spatial scale, duration or intensity” that limit or diminish the ability of fish to use such habitats, directly or indirectly, for their life processes (spawning, nursery, rearing, food supply, and migration) are within the new section 35 prohibition.  Permanent destruction of fish habitat which results in fish no longer being able to rely upon such habitats, directly or indirectly, for those life processes is also prohibited by the new section 35 prohibition.

The phrase “commercial, recreational or Aboriginal fisheries” has also been defined in the amendments:

“Aboriginal,” in relation to a fishery, means that fish is harvested by an aboriginal organization or any of its members for the purpose of using the fish as food or for subsistence or for social or ceremonial purposes;

“commercial,” in relation to a fishery means that fish is harvested under the authority of a licence for the purpose of sale, trade or barter; and

“recreational,” in relation to a fishery, means that fish is harvested under the authority of a licence for personal use of the fish or for sport.

Fish which support a commercial, recreational, or Aboriginal fishery are also protected.  The Fisheries Protection Policy Statement, 2013 indicates that fish which support a protected fishery are those fish that “contribute to the productivity of a fishery (often, but not exclusively, as prey species)”.  Fish that support a protected fishery may reside in water bodies that contain the protected fishery, or in water bodies that are connected by a watercourse to such water bodies.

It remains to be seen whether this new prohibition, with its focus on “serious harm” to “commercial, recreational, and Aboriginal fisheries”, actually limits the application of the Fisheries Act and reduces the regulatory overlap which occurs when both the federal and provincial governments review projects for environmental effects.


HADD authorizations issued under the former Act will remain valid when the amendments come into force on November 25, 2013.

Beginning on November 25, 2013, holders of existing HADD authorizations can apply to the regional DFO office for a review of their authorization to confirm whether it could be amended or be cancelled.  An authorization can be amended if certain terms or conditions of the authorization are no longer required in order to comply with the new “serious harm to fish” prohibition.    If a project will not cause serious harm to fish, then the authorization could be cancelled after such a review.

Holders of authorizations who seek amendments or changes to their authorizations should be aware that such changes could trigger a duty to consult with potentially affected Aboriginal groups.  In addition, to the extent that any terms or conditions of an environmental assessment are included in the authorization, then DFO may be precluded from amending or cancelling the authorization.

The deadline for requesting a review is February 24, 2014.  DFO will review the authorization and inform the holder in writing whether it will remain unchanged, be amended, or is no longer required by June 23, 2014.


Proponents requiring an authorization after November 25, 2013, or project proponents who need an amendment to an existing authorization, must make their application in accordance with the new Regulations.  The new Regulations do not significantly impact the content of the application for an authorization, but the Regulations do codify the information requirements and documentation that must be submitted by an applicant, including:

Contact information;

Description of proposed work, undertaking or activity for all phases of the project, including a description of the purpose of the proposed project;

Project engineering specifications and drawings for proposed physical works in or around water;

Timeline for proposed project, including for particular phases of the project;

Information about the location of the proposed project;

Description of the fish and fish habitat found at the location of the proposed work;

Description of effects on fish and fish habitat;

Avoidance and mitigation measures and standards;

Quantitative description of anticipated serious harm to fish despite avoidance and mitigation measures; and

An offsetting plan.

Applicants will also be required to provide a letter of credit sufficient to cover the cost for implementing all elements of the offsetting plan, including monitoring measures.  Applicants should consider providing further information such as a summary of public engagement or consultation with potentially affected Aboriginal groups.

In addition, the new Regulations establish time limits for the processing of applications, subject to particular circumstances which “pause” the timelines including amendments to the application, the involvement of other regulatory agencies, or consultation with Aboriginal groups.   Under normal circumstances, the Minister has 60 calendar days to determine if the application is complete or incomplete.  From the date that the Minister notifies the applicant that the application is complete, the Minister has 90 calendar days to issue an authorization or notify the applicant that the authorization is denied.

Applications submitted in emergency circumstances will be processed in priority and pursuant to a different form of application.


DFO is developing guidance which it promises will assist external stakeholders with determining whether a project requires a review or authorization and how to avoid or mitigate impact to fish and fish habitat.  In particular, DFO is working on guidance identifying:

Marginal Waterbody types which are unlikely to support fish or fish habitat that are part of, or support, a commercial, recreational or Aboriginal fishery;

Sensitive Species and Habitats that are at greater risk of impact to the ongoing productivity of fisheries and which require a site-specific review by DFO; and

A Minor Impacts List identifying impact types and project types that are unlikely to result in effects to the ongoing productivity of commercial, recreational and Aboriginal fisheries where a site-specific review by DFO will not be required.

Further information from DFO on the new fisheries protection provisions can be found here.




Water Use in BC: Out With the Old, In With the New (Maybe)

Posted in Environmental, Oil & Gas Law, Regulatory, Regulatory Compliance

The public comment period on the Province’s proposed new Water Sustainability Act has now closed.  With well over 400 submissions, interest in the new (potential) water regime remains very high.  Issues of particular note that have been raised include:

  • the applicability of the new Act to oil and gas operations, including a possible exemption for deep saline groundwater;
  • pricing of water use, particularly by commercial and industrial users; and
  • trade law implications and associated sovereignty issues potentially arising from long-term water use licenses.

All submissions on the proposed new Act can be found here.

The legislature is expected to sit again in February, 2014.  Will the 100-year wait to modernize the Water Act finally come to an end?

A significant factor may be whether a change in the regulation of water use in BC is likely to impede or advance the Province’s efforts to develop an LNG-export sector in BC.

The Province’s determination to  create an LNG export sector cannot be overstated.  Premier Christy Clark is currently on a two-week trade mission to Asia, her fourth in two years, leading a 120 person delegation with a focus on LNG investors and market participants.  A key issue for all resource and infrastructure investors is regulatory certainty:  the more certainty, the more likely it is that development proceeds.  Will a new water use regime, one that for the first time regulates groundwater resources and puts environmental concerns four-square into the decision-making process, increase or decrease regulatory certainty for LNG development?  The answer probably depends on whether one believes a change in the regulatory framework is inevitable.  If it is, then a change that happens sooner than later increases regulatory certainty;  if change is not inevitable, then why not push it out another 5 years?  Or 10?  After 100 years of the Water Act, one could be forgiven for believing that a change to the water use regime in BC still may not happen anytime soon.

On the other hand, the existing water use framework is under continuing strain, and creates its own uncertainty.  The recent court challenge by environmental groups who seek to quash water use approvals issued to EnCana, and orders declaring the Oil and Gas Commission’s alleged practice of issuing multiple short-term approvals unlawful, is telling.   The Commission has the authority under section 8 of the Water Act to approve the use or diversion of surface water for periods of up to 24 months without a licence.  In a petition filed in BC Supreme Court on November 13, it is alleged that the Commission issues repeated section 8 approvals to the same company, for the same location and for the same purposes, inconsistent with the substantive requirements of section 8.   Regardless of the merits of the petition, the time to resolve the petition and the need for legal certainty on this key issue means a legislative solution might be seen as desirable, and would make it more likely that the Province will introduce the new statute in the next sitting of the legislature.

Changes to “Designated Projects” Triggers under the Canadian Environmental Assessment Act, 2012 (“CEAA 2012”) Are Now In Force

Posted in Environmental, Project Development

New regulations under CEAA 2012 came into force on October 24, 2013, changing the triggers for determining which projects are subject to federal environmental assessment.  The Regulations Amending the Regulations Designating Physical Activities replace the Schedule of physical activities that constitute designated projects under the existing Regulation, and change or add a number of definitions. The changes also clarify which triggers apply to new projects, and which apply to project expansions.  The amendments are intended to reflect a focus on projects that have the greatest potential for significant adverse environmental effects in areas of federal jurisdiction.  The new regulations also include transitional provisions.

If your project type has been added to the list, or if the threshold for your project type has been modified, or if your project is an expansion, we encourage you to seek legal advice on the extent to which this new regulation impacts your project.

Types of projects that have been added are:

  • diamond mines;
  • apatite mines;
  • railway yards;
  • international and interprovincial bridges and tunnels;
  • bridges that cross the St. Lawrence Seaway;
  • offshore exploratory wells in the first drilling program within areas set out in Exploration Licences issued under the Canada Petroleum Resources Act; and
  • expansions to oil sands mines.

Types of projects that have been removed are:

  • groundwater extraction facilities;
  • heavy oil and oil sands processing facilities (however, note that oil sands mines are still included in the Schedule);
  • pipelines (other than offshore pipelines) and electrical transmission lines that are not regulated by the NEB;
  • potash mines and other industrial mineral mines (salt, graphite, gypsum, magnesite, limestone, clay, asbestos); and
  • industrial facilities (pulp mills, pulp and paper mills, steel mills, metal smelters, leather tanneries, textile mills and facilities for the manufacture of chemicals, pharmaceuticals, pressure-treated wood, particle board, plywood, chemical explosives, lead-acid batteries and respirable mineral fibres).

Thresholds setting the size of project that constitutes a designated project have been modified for the following project types:

  • in-stream facilities for tidal power generating facilities;
  • liquefied natural gas storage facilities;
  • rare earth element mines;
  • mine expansions;
  • offshore mines;
  • stone quarries and sand and gravel pits;
  • expansions in general;
  • expansions of dams and dykes;
  • expansions of facilities for the treatment, incineration, disposal or recycling of hazardous waste;
  • National Defence expansions; and
  • NEB-regulated pipelines (other than offshore pipelines).

Other amendments include:

  • revision of the following definitions: marine terminal, water body;
  • addition of the following terms: area of mine operations, canal, drilling program, exploratory well, flowline; and
  • deletion of the following terms: abandonment, airport, Class IA nuclear facility, Class IB nuclear facility, decommissioning, paper product, pulp, pulp and paper mill, right of way, waste management system, wetland.

Finally, the transitional provisions provide that if a project was previously not listed and is now a designated project under the new regulations, the new regulations apply unless 1) permits have already been issued by a federal authority, or 2) the carrying out of the project has already started, or 3) an assessment is already underway under the process of another jurisdiction or under the CNSC or NEB regulatory processes.  If a project was subject to a “screening” type of assessment under the former CEAA, and as a result of CEAA 2012 coming into force the screening was not required to be continued and completed, then the new regulations do not apply to that project.

For information on CEAA 2012 and how it has changed federal environmental assessment, please see our previous blog posts: Introduction to the Canadian Environmental Assessment Act, 2012  and New Canadian Environmental Assessment Act in Force / Important Amendments to National Energy Board Act in Force.

The Regulations Amending the Regulations Designating Physical Activities  and Regulatory Impact Statement are posted on the CEA Agency website.

Supreme Court of Canada Affirms Expansive Interpretation of Environmental Legislation

Posted in Environmental

Castonguay Blasting Ltd. v. Ontario (Environment), 2013 SCC 52 is the latest Supreme Court of Canada decision to confirm the expansive approach courts may take to the interpretation of environmental protection legislation.

During the course Castonguay’s blasting operations for a highway-widening project, rock debris known as “fly-rock” was accidentally propelled into the air by an explosion, causing significant property damage to a nearby residence and vehicle. Despite the requirement in Ontario’s Environmental Protection Act to immediately notify the Ministry of Environment when a contaminant is discharged into the environment outside the normal course of events, Castonguay did not report the discharge to the Ministry of Environment (though it did report the discharge to the Ministries of Transportation and Labour). Castonguay was charged with failing to report the “discharge of a contaminant into the natural environment” contrary to the Environmental Protection Act.

The issue on appeal was the proper interpretation of the reporting requirement:

15. — (1) Every person who discharges a contaminant or causes or permits the discharge of a contaminant into the natural environment shall forthwith notify the Ministry if the discharge is out of the normal course of events, the discharge causes or is likely to cause an adverse effect and the person is not otherwise required to notify the Ministry under section 92.

While conceding that the discharge caused property damage, Castonguay argued that since the discharge did not impair the “natural environment” (defined as “air, land and water”), it was not required to report the incident. The Supreme Court of Canada disagreed, using a broad and remedial approach to interpret the reporting provision. The Court held that environmental protection is a complex subject matter and as a result, “environmental legislation embraces an expansive approach to ensure that it can respond ‘to a wide variety of environmentally harmful scenarios, including ones which might not have been foreseen by the drafters of the legislation’”. As the purpose of the Environmental Protection Act is, as the title suggests, environmental protection legislation, its intended reach is “wide and deep”. Also of note is the Court’s use of the precautionary principle, a principle of international law that recognizes since environmental impacts are difficult to predict with certainty, environmental policies must anticipate and prevent environmental degradation. The Court held that the reporting obligation in the Environmental Protection Act gives effect to that principle by ensuring that the Ministry of Environment is notified and has the ability to respond once there has been a discharge of a contaminant, without waiting for proof that the natural environment has in fact been impaired.

While Castonguay turns on the specific wording of the reporting provision in Ontario’s Environmental Protection Act, similar reporting obligations exist under environmental protection statutes across Canada. As a result, the Supreme Court of Canada’s broad interpretive approach to the reporting obligation in the Environmental Protection Act has potential relevance to all those engaged in activities potentially subject to environmental reporting obligations.