Water protection: A matter of vital public interest

A major court ruling was a reminder that British Columbians, and Canadians generally, have the environmental movement to thank for world-leading regulations that make the country a beacon of good practice.

"Is fracking safe?"

"Are tough enough laws in place to protect British Columbia water supplies while natural gas is extracted from the north-east's massive natural gas reserves?"

These are important questions as liquefied natural gas (LNG) projects on the BC coast continue with hopes to pin down long-term contracts for natural gas to be exported to markets across the Pacific.

Between them, according to one estimate I’ve heard from a reputable authority, BC and Alberta have enough exploitable natural gas reserves to serve all Canada’s homes for 8,100 years. Should the LNG business develop, multiple experts affirm there is plenty of excess supply for non-domestic demand.

In British Columbia alone, the gas industry handily leads a petroleum sector that spends up to $8 billion in the economy annually.

The majority of BC homes (56 per cent) are heated with natural gas of which about 60 per cent depends on fracking. This process historically has used a lot of water, but technology continues to improve that reduces the environmental impact – a key area of inquiry in a landmark court decision from 2014. With today's slow but seemingly steady progress of LNG activity, it's worth looking back on this ruling.

British Columbians, and Canadians generally, have the environmental movement to thank for continually testing laws resulting in world-leading regulations that make the country a beacon of good practice.

A consequential decision

The Western Canada Wilderness Committee and the Sierra Club filed a petition against the BC Oil and Gas Commission and energy company EnCana. The issue in question was the commission’s decision to grant repeat short-term water approvals to the company.

Before the judgment came down in the challenge, it was expected that it could have major consequences for the gas industry. And so it did – but not in the way hoped by Ecojustice, the environmental group that spearheaded the challenge.

Given the stated mission of Ecojustice (previously known as the Sierra Legal Defence Fund) to "ensure the long-term protection and health of our rich and diverse environment” mounting such a challenge seemed like a relevant type of activity.

To the surprise of some and the relief of others, Madame Justice Fitzpatrick delivered an overwhelming endorsement of the water protection practices in place.

It turns out that in British Columbia, just 0.006 per cent of water permits issued are for the oil-and-gas industry, and only a small portion of that water is actually withdrawn for use. (Ninety-eight per cent of water is for the hydro power industry.)

That's interesting enough. But wait for what made the ruling special.

Justice Fitzpatrick found no fault with the environmental protection laws in place, even though Ecojustice had accused the province of British Columbia of changing its water-protection legislation midway through the case in order to achieve a win, thus "allowing oil and gas companies to pollute and squander B.C.’s precious rivers and streams”.

The Supreme Court of BC judge found that water protection in the province was transparent and in the hands of science-based regulations which, the evidence showed, had done a creditable job in protecting the environment.

A major coup for those engaged in responsible resource development to meet the needs of society.

"Disappointing"

Ecojustice called the ruling “disappointing” and issued a news release critical of the court’s findings. Yet from the industry and government viewpoint, the ruling represented a broad and clear endorsement of the responsible practices in use that allow for the use of water supplies in the extraction of natural gas.

The judge ruled in favour of the integrity of water and oil-and-gas regulators in protecting water supplies.

It was in her opening praise for eco-values that the true meaning of the case came to light:

"Over the last few decades, the world has become increasingly aware that water is a precious resource. This heightened awareness has caused many persons, including public interest groups such as the petitioners, to question the management of our water resources, particularly as it relates to the use of publicly owned water by industry.”

Justice Fitzpatrick found that when it comes to the sound regulation of industry’s water management, British Columbia is in good shape with a "justifiable, transparent and intelligible framework for the regulation of short term water use.”

She wrapped up her analysis with further generous praise:

"This proceeding has raised an important issue concerning the use of a valuable public resource and it has gone beyond the immediate interests of the parties involved."

She cited another case that found that:

"...protection of waterways, fish habitats and other environmental values is a matter of vital public interest in British Columbia. The petitioners are non-profit societies that have taken on an important advocacy role on those issues. The issue they raised … is an important one that no one directly connected with the matter had any interest in raising.”

Canada’s courts have proved to be an effective tool in protecting the natural environment - especially when tempers flare and differences need to be settled by the calm rule of law.

At a moment when the search for economic and environmental balance seems to be at the heart of every public conversation, that is a reassuring thing.

Nine statements on water use in BC

The Ecojustice challenge was an exhaustively researched, meticulously detailed effort to see if there were any legal flaws in the system that allows resources companies to use water for their operations. You might expect that such a project would turn up some problem in the regulations. Instead, Justice Fitzpatrick found the transparency, practices, trust and common sense prevailed in the regulatory structures that govern hydraulic fracturing water use in British Columbia. This is why the ruling was so important for those wanting to be sure that the development of natural gas in BC, and with it LNG and other opportunities, is the responsible thing to do.

Once the ruling was issued, Ecojustice claimed victory. As a detailed analysis of the ruling's nine key points shows, there is no question that the court actually did rule in favour of regulated, responsible water access for industry.

1. Water license basic rules

Ecojustice challenge: "In a disappointing turn of events, the Supreme Court of British Columbia has ruled that the oil and gas industry — and other major industrial users — do not require a water licence for long term access to the province’s freshwater resources."

Actual legal finding: "[141] The difference between these two methods to obtain the use of water and the different rights obtained does not, however, lead to the conclusion or interpretation advanced by the Petitioners [Ecojustice]. “

2. Short-term water approvals

Ecojustice: "Earlier this year, environmental groups appeared before the Court to challenge the B.C. Oil and Gas Commission’s practice of repeatedly granting short-term water approvals to oil and gas companies."

Actual legal finding: "[144] There is nothing to indicate that previous holders of s. 8 approvals are somehow “grandfathered” or favoured in respect of any application for a new s. 8 approval.
"[144] ….While technically consecutive in timing, a recurrent approval is considered to be a new application and is subject to the same rigorous application process and requirements of either FLNRO or the Commission."

3. New legislation not “proof” of intent to undermine environmental lawyers

Ecojustice: “…B.C.’s new Water Sustainability Act, introduced just days before this case was heard, expressly legalizes the practice they were challenging in court.” … “The curious timing certainly seemed to signal an intent to undermine the case, which only legitimizes the concerns they raised.”

Actual legal finding: [150] In accordance with my reasons above, I conclude that the interpretation that successive or recurrent approvals may be granted is reasonable and, in any event, correct. The petition is dismissed.

[113] I am in substantial agreement with both the Commission and Encana that the proper interpretation of s. 8 of the Water Act is such that approvals for short term water use may be granted on a recurrent basis as is currently being done by FLNRO and the Commission.

4. Licenses versus permits

Ecojustice: "In effect, the Water Sustainability Act will ensure that oil and gas companies can continue to rely on short-term permits to withdraw large quantities of B.C.’s water for fracking and drilling operations instead of going through the more rigorous process of getting a water licence."

Actual legal finding: [89] … As an overarching point, I would emphasize that the two clear paths to obtaining rights to the use of water include both licences and short term approvals under s. 8.

[141] The difference between these two methods to obtain the use of water and the different rights obtained does not, however, lead to the conclusion or interpretation advanced by the Petitioners.
[144] ….While technically consecutive in timing, a recurrent approval is considered to be a new application and is subject to the same rigorous application process and requirements of either FLNRO or the Commission.
[24] Despite the concerns of the Petitioners, it appears that the number of approvals granted for fracking is substantially down from that granted in 2009.
[34] Section 8 approvals all have an expiry date and that date may not be extended or continued. If the approval has expired, the operator must re-apply for a new approval. It is the Commission’s policy, as confirmed by the applicable application manual, that any re-application is to be considered as a new or “fresh” application with updated field information and documentation being required from the applicant, consistent with what is outlined above.

5. Polluting and squandering precious water

Ecojustice: “…the Water Sustainability Act entrenches the practice of granting repeated short-term approvals in law, allowing oil and gas companies to pollute and squander B.C.’s precious rivers and streams.”

Actual legal finding: [106] There are many factors at play, including environmental, economic and social interests that must be considered. … I have no doubt that both bodies have considerable expertise in the performance of their broad mandates under either the Water Act or the Oil and Gas Activities Act.

[98]… the discretion exercised by the Commission is intended to serve a variety of interests arising from its regulation of oil and gas activities in the province. Specifically, that includes providing for an application process to ensure that applications are approved in the public interest: s. 4(b).

6. Does industry takes away water needed for other things?

Ecojustice: "The more water industrial users take, the less water there is to sustain ecosystems or for people to drink."

Actual legal finding: [33 b] the continuing use of the water under the approvals is subject to actual conditions. In the past, where there are drought conditions, the Commission has asked industry to monitor stream flows and if necessary, such as it was in the summer of 2010, it has used its statutory powers to suspend surface water withdrawals for a period of time;

7. System recognizes changeable water needs of industry

Ecojustice: "If companies want long-term access to the province’s freshwater resources then they need to apply for a full water licence, not rely on repeated short-term approvals, Ecojustice lawyers — representing Sierra Club BC and the Wilderness Committee — argued."

Actual legal finding: [31] … an operator’s requirements will vary from one year to the next, both with respect to volume and location, depending on such things as the development plans, the specific work being done or the availability of different water sources. In addition, an operator’s knowledge of the water requirements will change over time, again depending on the course of the development. …short-term approvals are entirely appropriate as opposed to a water licence which would be the likely result once the play had been developed and firmer plans were in place.

[37] All but one of the s. 8 approvals granted to Encana and identified in this proceeding were for the withdrawal of water from excavation pits, being water source dugouts (which is a borrow pit, containing naturally accumulated water from snowmelt, rainfall or groundwater inflow) or serving as storage sites to temporarily store fresh water acquired from a different source. They did not involve the direct diversion of water from natural lakes, rivers or streams.

8. Transparency in reporting

Ecojustice: "Though the Commission now requires companies to self-report on the amount of water they take, available reports do not capture all water use by the oil and gas industry."

Actual legal finding: [33 i] the Commission requires regular quarterly reporting by operators as to the actual amount of water withdrawn. The Commission monitors compliance and enforces the approval conditions as required.

[22] There is considerable transparency regarding the granting of short term approvals by the Commission. As of 2011, the Commission posts quarterly and annual reports on its website, which provides considerable detail on all short term approvals granted. In addition, information for ongoing approvals is uploaded overnight.

9. A precious resource under stress?

Ecojustice: “The bottom line is that these approvals essentially offer up the province’s water on a silver platter, at a time when climate change and other threats are already putting this precious resource under stress.”

Actual legal finding: [106] The fourth factor is the expertise of the tribunal. It goes without saying that the granting of approvals under the Water Act by either FLNRO or the Commission entails a significant amount of knowledge and experience in the management of this resource. There are many factors at play, including environmental, economic and social interests that must be considered. Needless to say, with respect to the Commission, this would include the concerns raised by the Petitioners generally about fracking. I have no doubt that both bodies have considerable expertise in the performance of their broad mandates under either the Water Act or the Oil and Gas Activities Act.

This chart based on Oil and Gas Commission data shows the small footprint of the oil and gas sector in overall water use:

Posted on February 25, 2016