Decision Date: November 13, 2013

Panel: David H. Seale, CM, QC; Robert G. Holtby; Douglas F. VanDine

Keywords: Water Act – ss. 12(1), 15(1); water licences; precedence; fully recorded

The District of Lake Country (the “DLC”) appealed the issuance of 14 water licences by the Assistant Regional Water Manager (the “Water Manager”), Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”), to the Third Parties.

Each of the Third Parties leases seasonal residential Crown lots that border on either Crooked Lake, Swalwell Lake or Oyama Lake, and they own recreational cabins on those leased lots. They applied for licences authorizing them to withdraw water for domestic purposes on the lake adjacent to their leased lot. In the past, they withdrew water for domestic purposes without licensed authorization.

The DLC objected to the Third Parties’ water licence applications. The DLC is an incorporated municipal district located in the central Okanagan Valley. The DLC holds various water licences on several water sources, for both the storage and diversion of water. As a part of its water storage system, the DLC operates a number of water reservoirs, including Crooked Lake, Swalwell Lake and Oyama Lake. The DLC’s water storage licences on those lakes date back to the 1930’s or earlier, when dams were built on those lakes. The water from the Crooked/Swalwell Lakes system flows into Upper Vernon Creek, and the water from Oyama Lake flows into Oyama Creek. Both Upper Vernon Creek and Oyama Creek have fisheries values, and eventually flow into Okanagan Lake.

Thirteen of the water licences authorize the licensee to draw 150 gallons of water per day from the lake adjacent to their leased lot for domestic purposes, from May 1 to October 31. One licence authorizes the Oyama Lake Resort to draw 650 gallons of water per day from Oyama Lake for enterprise purposes, from May 1 to October 31. All of the licences prohibit the diversion of water when the water level of the respective lake falls below 30% of live storage volume. The licences also require the licensee to install a flow metering device to record the volume of water diverted.

The DLC appealed the Third Parties’ licences on several grounds. Among other things, the DLC submitted that its water licences on Crooked, Oyama and Swalwell Lakes gave it all of the water rights available on those water bodies, and there is no unrecorded (i.e., unlicensed) water supply available to be issued to new licensees.

The Water Manager submitted that the issuance of the water licences did not injuriously affect DLC’s prior licensed water rights.

The Third Parties generally objected to the DLC’s appeals.

The Okanagan Indian Band was granted limited participant status at the appeal hearing. It expressed concern about the lack of notification to the Band regarding the water licence applications, the issuance of the licences, and the appeals.

With regard to the Okanagan Indian Band’s concern regarding notification, the Board recommended that the Water Manager review his policy regarding notification to First Nations of water licence applications, license decisions and appeals, with a view to providing timely notice to First Nations of all water licence applications, licence decisions and appeals in their traditional territory.

With regard to the DLC’s concern that no new licences should have been issued because the water sources were fully recorded, the Board found that, although the Ministry previously designated these water sources as being fully recorded, this designation is only an administrative notation that provides guidance in licensing decisions. Neither the

Water Act nor its regulations contain any statutory authority for designating a stream as fully recorded. Further, water held in storage remains the property of the Crown. Therefore, the Water Manager has the jurisdiction to issue additional water licences on streams that have been designated as fully recorded. Nevertheless, the DLC’s licences were issued before the Third Parties’ licences, and therefore, the DLC’s water rights have precedence and are entitled to protection under section 15 of the Water Act.

In regard to whether the water licences should have been issued in this case, the Board found that the Third Parties’ licences would have no measureable effects, in terms of water quantity or water quality, on the DLC’s licensed water rights or the Okanagan Indian Band. Many of the Third Parties have been withdrawing water for decades without licences, and the licences include conditions limiting the quantity of water that can be diverted, and the time period when water can be diverted.

However, the Board held that some of the conditions in the licences should be amended. In particular, the Board found that the domestic water use should be restricted to indoor use, to reflect the Water Manager’s intentions. In addition, the Board held that the condition prohibiting water use once the lake level reaches 30% of live storage is too low to be effective, given that higher water levels were observed in these lakes during a drought in 2003. The Board directed the Water Manager to increase this threshold.

In all other respects, the appeals were dismissed.