Canada: Water Use In BC: BC Tables Long-Awaited Water Sustainability Act

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.

Groundwater

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.

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