Decision Date: June 28, 2010

Panel: Lynne Huestis, J. Alex Wood, Stephen Willett

Keywords:  Water Act – definitions of “changes in and about a stream”, “domestic purpose”, “power purpose”, “right”, ss. 5, 6, 12, 15; micro-hydro power project; water reserve; precautionary principle; relevant consideration; expert evidence; residual stream flow; water quality; costs

These appeals relate to licensing decisions on McFayden Creek, a tributary of the Kootenay River and located in the Nelson Water District.

Over the years, people have been issued licenses to draw water from McFayden Creek for both domestic and irrigation purposes. McFayden Creek is now subject to low water flows for up to seven months of the year.

In 2005, Christopher and Birgit Chart (the “Charts”) applied for two licences to divert water from McFayden Creek: one licence to draw water for domestic purposes, the other to draw water for residential power purposes (a micro-hydro project).

The Regional Water Manager refused the first application on the grounds that the Creek was fully recorded. However, he granted them a conditional water licence for the micro-hydro project, subject to a number of conditions (the “Licence”). He granted this Licence because it was considered “non-consumptive” – the water diverted for power generation would be returned to the Creek. Specifically, a weir would collect and divert water into a pipeline (i.e., penstock) which would transport water to a turbine in a powerhouse, with the water being discharged into a tailrace and returned to the Creek. The exact alignment of the pipeline and the location of the turbine were not finalized when the Licence was issued, but the Licence required the final design and construction of the works to be supervised by a professional engineer.

Barry and Marilyn Burgoon and Helen Elzinga (the “Burgoons”) appealed the issuance of the Licence on several grounds, including:

• The authorized works pose a risk to homes, properties and the lives of people downslope should there be a pipeline failure, or should the works result in debris flows, sloughing or landslides;
• McFayden Creek is covered by a “water reserve”, which prohibits licensing without the Minister’s approval;
• The Licence was issued without consideration of the Columbia Basin Management Plan;
• The Licence will impact the quantity and quality of the water in the Creek;
• The Regional Manager relied too heavily on the Chart’s engineer when he considered the Licence application, and should have applied the precautionary principle to reject it; and
• The Charts don’t need a micro-hydro project for power as there are other power sources available to them.   

The Burgoons also appealed the Regional Manager’s decision to issue to the Charts a permit allowing the licensed works to occupy Crown land.

The Charts appealed the Regional Manager’s refusal of their application for domestic water, and also appealed six of the conditions attached to the Licence. The appeals were heard together.

The oral hearing took 12 days, and there were several adjournments before and after the oral hearing commenced to address issues including pre-hearing disclosure, standing, jurisdiction and the admissibility of evidence. The hearing concluded in writing in 2009. At the conclusion of the hearing, the Board received three applications for costs: the Burgoons applied for costs against the Charts, the Charts applied for costs against the Burgoons and the Regional Manager also applied for costs against the Burgoons.

The Board dismissed the Burgoons’ appeal of the permit to occupy Crown land on the basis that the Burgoons did not pursue that matter during the hearing.

The Board also dismissed the Burgoons’ appeal of the Licence. Although the Board added three conditions to the Licence, the Board found that the Licence was properly issued. Specifically, the Board held that:

• McFayden Creek is not subject to a water reserve restricting the issuance of water licences. Based on the language in an order-in-council that declared the water reserve, the Board concluded that the reserve applied to the Kootenay River, but not its tributaries.
• There was no evidence that the Regional Manager failed to consider the Columbia Basin Management Plan, or that the Plan was relevant to the issuance of the Licence. 
• The precautionary principle does not apply to protect water user’s rights and it was unclear whether it would apply generally to licensing decisions under the Water Act or, if so, which version of the principle would apply. 

The Board found that it was appropriate for the Regional Manager, in exercising his broad discretion to issue licences, to consider the potential adverse impacts of the proposed micro-hydro project on other water users and environmental values. In that regard, the Board concluded that the micro-hydro project did not pose a risk of pipeline failure, nor did the placement of the pipeline increase the existing natural risk of debris flows, sloughing or landslides. Furthermore, the Board found that the Licence would not have a negative effect on the quantity of water available to other licensees, or on water quality in the Creek.

The Board held that the Regional Manager did not err in assessing the potential risks associated with the project, or in issuing the Licence with the condition that the works be designed and constructed under the supervision of a professional engineer, rather than specifying the precise location of the pipeline and turbine components.  Nor did he place undue reliance on the Chart’s engineer. However, the Board added two conditions to the Licence to provide additional assurance that the works will be constructed in a safe manner.

Finally, the Board concluded that the Water Act did not require the Regional Manager to consider whether other power sources were available to the Charts in the context of assessing their licence application.

Regarding the Chart’s appeal, the Board found that McFayden Creek was (and is) fully recorded, and the Regional Manager correctly refused their application for a domestic water licence. The Board then reviewed the six Licence conditions that the Charts had challenged.

The Board held that the condition imposing a residual stream flow requirement was unjustified and should be removed. In particular, the Board found that the residual flow requirement was based on general guidelines, whereas the site-specific evidence established that the Creek has no fish. Also, for much of the year, the surface flow in the Creek channel dries up before the point where the Creek joins a fish-bearing stream, and there was no evidence that any subsurface flows from the Creek carry nutrients to that stream.

The Charts also appealed the condition requiring water to be returned to the Creek above an existing water survey station and downstream points of diversion. The Board accepted the Regional Manager’s recommendation that downstream points of diversion should remain protected, but found that the condition should be varied to take into account engineering and environmental concerns.

The Charts appeal of the condition requiring them to install a “flow meter” was also allowed. The Board found that the condition should be varied to refer to a “measuring device” instead of a “flow meter”.

Finally, the Board varied three other conditions: to allow works located more than 5 metres from the top of the Creek bank to be constructed at any time of year; to allow the supervising professional engineer to determine whether a silt fence should be installed to prevent material from entering the Creek during construction of the works; and, to indicate that the Charts must supply downstream licensees with water during construction of the works, if required.

Regarding the applications for costs, the Board undertook a detailed analysis of each party’s conduct during the proceeding to assess whether costs should be ordered. The Board concluded that each party contributed to some delay and additional expense in the appeal process, albeit some more than others. The Board decided not to award costs to any of the parties.

In summary, the Burgoons’ appeals were dismissed; the Charts’ appeal was allowed, in part.

All three of the applications for costs were denied.