Canada: B.C.'S Environmental Appeal Board Rescinds Water Licence Used In Fracking

On Sept. 3, 2015, the British Columbia Appeal Board ("EAB") rescinded Nexen's water licence (the "Licence") in Northeast B.C. The Licence was issued in May 2012; since then, the licensed water has supported Nexen's fracking operations. Shortly after the Licence was issued, the Fort Nelson First Nation ("FNFN") appealed on technical and Aboriginal consultation grounds. 

The decision comes after two preliminary rulings and a long de novo hearing, involving numerous highly technical reports and many expert and lay witnesses, which concluded in early 2014. The highly detailed decision has far-reaching implications and will likely inform the growing body of fracking litigation in Canada (at the time of writing, Sept. 29, 2015, neither Nexen nor the Crown have announced whether they will seek judicial review of the EAB decision).

The Flawed Technical Methodology

Prior to receiving its Licence in early 2012, Nexen withdrew substantial volumes of water from the Tsea watershed to service its nearby fracking operations under two consecutive one-year "approvals" issued pursuant to section 8 of the Water Act. Rather than continue to rely on consecutive one-year approvals, Nexen sought a longer (5‑year) term licence.

Nexen's Licence and its supporting Water Development Management Plan were designed to address the data-sparse nature of the shallow Tsea watershed.  Unlike other water licences and approvals, the Licence regime used "adaptive management" which, for example, prescribed water withdrawals attuned to hourly water variations, required ongoing studies of possible effects on habitat, and called for annual reviews to revisit and adapt withdrawal parameters. 

The EAB described the Licence regime as "novel" and stated that "Nexen's section 8 approvals imposed far less onerous requirements than the Licence" (para. 180). This general endorsement, however, was not sufficient to overcome two fatal methodological problems:  misuse of hydrometric models and inadequate environmental impact assessments (paras. 337 and 338). These problems, the EAB concluded, created undue risk. Notably, however, the EAB did not cite any instance of actual environmental harm attributable to the licensed withdrawals (even after having reviewed two years of the Licence administration, including a two month period when Nexen allegedly withdrew water exceeding prescribed limits). 

The Flawed Aboriginal Consultations

The Crown's review of the Licence application and associated consultations took some 3 years. The EAB found that the Crown in 2009-2011 was "genuinely willing" to consult with the FNFN, albeit in a way that was "not perfect" (para. 464). The EAB stated, for example, that the Crown should have as a preliminary matter consulted with the FNFN to "discuss the process itself" (para. 141). Moreover, once the review process unfolded, it lacked transparency over the respective roles of the Crown, Nexen and the FNFN (para. 448). The Crown was further criticized for untimely updates and "mixed messages" (para. 446).

These pre-2012 concerns were mitigated by the fact that the FNFN had failed to avail itself of opportunities to disclose its concerns to the Crown (paras. 465-467). This failure, the EAB stated, compromised the Crown's ability to consult over the proposed licence. It can be reasonably inferred from the decision that the consultations to the end of 2011 would have been deemed adequate to that time.

In early 2012, shortly before the Licence was issued, the Crown's conduct appeared to change to one "lacking in good faith".  The EAB's criticism was blunt:

[484] The Panel finds that the Crown failed to consult with the First Nation in good faith. Based on the internal Ministry correspondence and the Manager's rationale, the Panel finds that by April 2012, the Manager intended to issue the Licence regardless of the promised meetings, and had no intention to substantially address any further concerns or information that may have been provided by the First Nation.  The Panel finds that this conduct was inconsistent with the honour of the Crown and the overall objective of reconciliation. [emphasis added]

Ancillary Findings

The EAB made numerous findings that arguably did not necessarily affect the outcome of the appeal. These ancillary findings, however, have considerable practical relevance for informing future Crown, Aboriginal and industry strategies. For example:

  • Delegating Consultation to a Proponent. Not unlike other project reviews, both Nexen and the Crown contemplated that the former should engage regularly with the FNFN and that these discussions would constitute delegated consultation. The Crown's heavy reliance on Nexen/FNFN discussions was, however, criticized by the EAB, stating that "[f]rom the First Nation's perspective, Nexen may have been involved in consultation simply in furtherance of Nexen's interests, rather than because Nexen was a delegate of the Crown." (para. 447).  The EAB went on to say that "[a]lthough a consultation agreement is not a prerequisite for consultation, such an agreement would have helped each party to understand the other parties' needs and expectations" (para. 442).
  • Cumulative Effects.  The FNFN argued that the Crown's consultation should go beyond the proposed withdrawals and consider how the myriad of existing and proposed oil and gas activities in Northeast B.C. cumulatively affect treaty rights to hunt, fish, and trap. The EAB agreed with Crown and Nexen arguments that the Water Act did not authorize such a broad scope of impact assessment (paras. 168 and 170).
  • The "Precautionary Principle."  The FNFN argued that the scientifically sound application of the Water Act should comply with the "precautionary principle." Essentially, the precautionary principle would put the legal onus on Nexen and the Crown to demonstrate that the proposed withdrawals would not be harmful. In other words, the onus would shift from the appellant FNFN (to prove a serious concern) to the respondents Nexen and the Crown to disprove potential harm. The EAB rejected the FNFN argument (para. 179).
  • Scoping Treaty Rights. The EAB acknowledged that the Crown was "generally aware" that the First Nation holds treaty rights in the Tsea area, but failed to identify "... exactly where, when or how the First Nation's members exercise treaty rights ..." (para. 450). The EAB further held that the Crown should have considered "which species of fish, animals or plant are used" by the FNFN. In short, the EAB expected the Crown, at an early stage, to undertake a comprehensive research project, the findings of which would be used to scope relevant treaty rights and consultations. This high onus was apparently not diminished by the EAB's finding that the FNFN had failed to provide the Crown with information in its possession (para. 452). The EAB's expectation of a comprehensive data base prepared early in the process is arguably unique.  In other cases, a lesser onus – implying a "preliminary" level of documentation – seems sufficient for scoping potentially affected rights and related consultations (for example, see Louis v. B.C.  2011 BCSC 1070, aff'd 2013 BCCA 412 which endorsed the use of a "preliminary" assessment of strength of claim). It remains to be seen whether the B.C. Crown will in future cases undertake the comprehensive site-specific approach required by the EAB.
  • Environmental Assessment. A central issue in the hearing concerned the degree of scrutiny that should be applied to review potential environmental impacts. The EAB agreed with the FNFN that a much deeper form of impact assessment should have been conducted prior to the issuance of the Licence. Indeed, the EAB set out a long list of environmental base line and impact assessment studies that should have been required by the Crown and completed prior to the issuance of the Licence (paras. 322, 327 and 332). The Crown and Nexen argued that such studies should be required only if the project was "reviewable" under the B.C. Environmental Assessment Act, which was not the case here. These arguments were not addressed directly by the EAB. Rather, the EAB's reasoning was based on section 10(1)(c) of the Water Act – this provision, which enables the Crown to require "information" from applicants, was interpreted liberally to mean that it could require the above-noted studies. The EAB's reasoning may leave future licence applicants uncertain as to whether, after filing an application, they face a lengthy and costly requirement to conduct a an environmental assessment not otherwise required under the Environmental Assessment Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions