Decision Date: March 8, 2016

Panel: David H. Searle, C.M., Q.C.

Keywords: Water Act – ss. 16, 20, 23, 33; storage; irrigation; apportionment; licence; conveyance; disposition of land; beneficial use; joint use of works

Bridge Creek Estate Ltd. appealed two decisions of the Assistant Regional Water Manager (the “Water Manager”), Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”). The appealed decisions involved the apportionment of water rights between the Appellant and Emcee Holdings (1995) Ltd. (“Emcee”). As part of the apportionment decisions, the Water Manager issued four new water licences in substitution for two existing licences (the “original licences”).

The original licences were issued in 1986 to Bridge Creek Estate, Ltd. (the “Original Ranch”), which operated a ranch on nearly 10,000 acres of land near 100 Mile House, BC. One of the original licences authorized water storage from October 1 to June 15 in a reservoir behind a dam, and the other authorized water diversion from three points downstream of the reservoir from April 1 to September 30 for irrigation purposes.

In 1995, the assets of the Original Ranch were divided between Emcee and the Appellant. The lands of the Original Ranch were subdivided, with the Appellant receiving approximately 7,700 acres including the land where the reservoir and one point of diversion is located, and Emcee receiving approximately 2,700 acres including the land where two points of diversion are located. The Ministry was not notified of the subdivision.

Emcee’s ranch mainly produces high quality hay, and it also boards some cattle. The Appellant’s ranch focuses on cattle grazing, but it also produces some hay. Both operations rely on irrigation to produce more than one hay crop. Until 2014, both operations had sufficient water. The Appellant relied on water under the original licences to irrigate its lands, whereas Emcee relied on treated effluent from the regional district to irrigate its lands and did not use water under the original licences. The Appellant also managed the storage and use of water in the reservoir to create meadows, which were left after the stored water receded, for grazing cattle and growing hay.

Meanwhile, the Ministry became aware of the subdivision of the Original Ranch lands. In 2006, the Ministry notified the Appellant and Emcee that it proposed to apportion 71% of the water rights under the original licences to the Appellant and 29% to Emcee, based on orthophoto evidence of each party’s share of the irrigable land. In response, the Appellant wrote to the Ministry in 2006 and 2012, objecting to the proposed apportionment.

In 2014, the Water Manager decided to apportion the water rights 71/29 based on his consideration of the facts, the Appellant’s objections, and the Ministry’s policies on apportionment. The Water Manager issued the four new licences in substitution for the two original licences. Two new licences (one for storage and one for irrigation) were issued to each of the Appellant and Emcee, with a 71/29 water allocation. The terms and conditions in the new licences regarding the water source, the periods of water storage and irrigation, and the points of diversion were unchanged from the original licences. In addition, the Water Manager urged the parties to develop a joint works agreement for the dam and associated water works.

The Appellant appealed the Water Manager’s decisions on the basis that the Appellant acquired the original licences when the Original Ranch lands were subdivided, the Appellant had sole use and control of the licensed water for 20 years, and the Water Manager’s decisions were based on erroneous information. The Appellant also argued that having to store water until September 30 for Emcee’s use adversely affected the viability of the Appellant’s ranch, because the Appellant no longer had the use of the meadows that had formed when the Appellant solely controlled the storage and use of water.

Emcee was also unsatisfied with the situation. In 2015, the regional district ceased supplying treated effluent to Emcee. Consequently, Emcee irrigated its hay with water under its new water licences. However, the Appellant did not allow Emcee access to the dam, and Emcee had to go through a process of requesting that the Appellant release water from the reservoir every time it wanted to irrigate. Also, Emcee asserted that the amount of water reaching its points of diversion was less than the licensed amount. Emcee had proposed a joint works agreement, but the Appellant refused to sign it pending the outcome of the appeals.

The Board found that, although the Water Manager based his decision, in part, on erroneous information regarding each party’s share of the irrigable land, the error was actually to the Appellant’s benefit. New evidence presented to the Board indicated that Emcee had a much greater share, and the Appellant had a much lower share, of the irrigable land. Given the implications to the Appellant and Emcee of a significant change in the 71/29 apportionment, the Panel decided to refer that matter back to the Water Manager for further investigation, to determine whether the licences should be corrected to reflect each party’s actual share of the irrigable land. In addition, the Board directed the Water Manager to order joint use of the dam and associated water works, if the parties were unable to negotiate an agreement by April 31, 2016.

The Board also decided a number of other issues. The Board found that the legal documents which had divided the assets of the Original Ranch did not mention the water licences, and in any event those private agreements were not binding on the Water Manager. In addition, the Board found that the Appellant’s sole use of water under the original licences for 20 years did not justify excluding Emcee from the apportionment, and the issue of whether Emcee had access to other water sources was irrelevant to the apportionment. Regarding the Appellant’s claim that the apportionment adversely affected the viability of its ranch, the Board found that there was no evidence of any financial loss, and the new licences did not change the quantity or duration of water storage that was authorized in the original licences. Although the Appellant had, for 20 years, stored and released water from the reservoir in such a way as to create meadows for grazing, this way of operation was inconsistent with the terms of the original licences. Any injurious effect on the Appellant’s operations from having to store water until September 30, which was a condition of both the original licences and the new licences, was not a result of the Water Manager’s apportionment decisions.

Accordingly, the appeals were dismissed.