Decision Date: November 6, 2012

Panel: Alan Andison

Keywords: Water Act – ss. 1 – definition of “owner”, 92(1)(b) and (c); preliminary decision; standing; licence; aboriginal treaty rights; riparian owner; possession; hydraulic fracturing; Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), [2005] 3 S.C.R. 388

Chief Kathi Dickie, in her own right and on behalf of the members of the Fort Nelson First Nation (the “First Nation”), appealed a decision of the Assistant Regional Water Manager (the “Water Manager”), Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”), to issue a water licence to Nexen Inc. (“Nexen”). The Licence authorizes Nexen to divert water from North Tsea Lake during April 1 and October 31 for five years, pipe it to storage dugouts, and use it throughout the year in the hydraulic fracturing or “fracking” process to obtain natural gas from underground. North Tsea Lake is located northeast of Fort Nelson, within the First Nation’s traditional territory. The First Nation is an adherent to Treaty 8, and its members have treaty rights to hunt, fish and trap within their traditional territory. The First Nation asserted that its members conduct traditional activities including hunting, fishing, and trapping in the vicinity of North Tsea Lake.

Since 2007, Nexen has been diverting water from North Tsea Lake and piping it to storage dugouts for use in the fracking process. Before the Licence was issued, Nexen was diverting and using water under short-term (one-year) water use approvals issued under the Water Act.

In April 2009, Nexen applied for the Licence. Over the next three years, various telephone conversations, exchanges of correspondence, and meetings occurred between representatives of the Ministry, the First Nation, and Nexen. Also, the Ministry referred Nexen’s proposed water management plan to an independent expert for review. By May 2012, the First Nation was still expressing concern about the proposed Licence and sought further consultation with the Ministry. However, the Water Manager decided that the First Nation had been given sufficient opportunity for consultation, and had failed to provide information about how its treaty rights may be affected by the Licence. The Water Manager decided that the Licence would have no impact on the First Nation’s treaty rights, and issued the Licence.

Under the Licence, Nexen may divert up to 60,000 cubic metres of water per day, to a maximum of 2,500,000 cubic metres per year, from North Tsea Lake, subject to certain conditions including a requirement that withdrawals cease when the flow of water from North Tsea Lake to the Tsea River falls below 0.351 cubic metres per second. The works authorized under the Licence were in use under the previous short-term approvals. However, the maximum amount of water that may be diverted under the Licence is greater than under the short-term approvals.

The First Nation appealed the Licence on the grounds that the Ministry failed to uphold the Crown’s duty to consult with the First Nation before the Licence was issued, and the Water Manager failed to adequately consider and assess the impacts that the Licence would have on the environment and the First Nation’s treaty rights.

After the appeal was filed, the Water Manager requested that the appeal be dismissed on the basis that the First Nation did not have standing under section 92(1) of the Water Act to appeal the Licence. Section 92(1) specifies the categories of persons who may appeal a decision to the Board.

The Board requested written submissions from all parties before deciding whether the First Nation had standing to appeal the Licence. The Water Manager submitted that the First Nation did not fall within any of the categories listed in section 92(1) of the Water Act. However, the First Nation argued that it fit within the categories listed in sections 92(1)(b) and (c) of the Water Act; namely, that it is an “owner whose land is or is likely to be physically affected” by the Licence within the meaning of section 92(1)(b), and it is a “riparian owner” within the meaning of section 92(1)(c). Nexen and the Participants took no position on the issue.

First, the Board considered whether the First Nation was an “owner whose land is or is likely to be physically affected” by the Licence within the meaning of section 92(1)(b). In deciding that issue, the Board considered the meaning of “owner”, which is defined in the Water Act as “a person entitled to possession of any land … and includes a person who has a substantial interest in the land ….” The Board found that “possession”, as used in the Water Act’s definition of “owner”, has a broad meaning. Possession can be synonymous with the physical occupation of land in a manner that has continuity. The Board also found that “owner”, as defined in the Water Act, is not limited to a person who is registered under the land title system as an owner of land or of a charge on land. The Board noted that, although the First Nation’s treaty rights are not registered under the land title system, they are legally recognized and constitutionally protected, and their exercise involves physically occupying the land. The Board also noted that, in Mikisew Cree First Nation v. Canada (Minister of Canadian Heritage), [2005] 3 S.C.R. 388, the Supreme Court of Canada held that Treaty 8 assures the aboriginal signatories “continuity in traditional patterns of economic activity”, and that “Continuity respects traditional patterns of activity and occupation.” The Board found that the First Nation’s occupation of its traditional hunting, fishing and trapping grounds is characterized by continuity over many generations. Consequently, the Board found that the First Nation’s members are “entitled to possession” of the lands where they exercise their treaty rights, are there is evidence that the First Nation exercises it treaty rights in and around North Tsea Lake.

Additionally, the Board found that the First Nation’s members have “a substantial interest in the land”, in that their treaty rights in relation to the Crown land in question are legally recognized, are of significant importance to the First Nation’s way of life, and there was no evidence that the Licence amounted to a “taking up” of the land by the Crown that would extinguish the treaty rights.

For all of those reasons, the Board concluded that he First Nation is an “owner” within the meaning of section 92(1)(b) of the land where it exercises its treaty rights, including the land in the vicinity if North Tsea Lake.

Next, the Board considered whether the land in the vicinity if North Tsea Lake “is or is likely to be physically affected by” the Licence, within the meaning of section 92(1)(b). the Board found that there were reasonable grounds to conclude, on a balance of probabilities, that the land is likely to be physically affected by the Licence. Specifically, although Nexen was previously withdrawing water under short-term approvals, the Board found that the Licence authorizes the withdrawal of significantly more water to be withdrawn than was allowed under the short-term approvals, and this could have a physical effect on the water level in North Tsea Lake, which could affect the land around the Lake.

Finally, the Board considered whether the First Nation was a “riparian owner” within the meaning of section 92(1)(c) of the Water Act. The Board held that the phrase “riparian owner” is not defined in the Water Act, and therefore, the common law meaning applies. At common law, “riparian owner” means a person who owns land through or past which a stream runs. The Board found that the First Nation is not a “riparian owner” because its reserve lands are not lands through or past which the Tsea River runs, and North Tsea Lake is not adjacent to, or within the boundaries of, the First Nation’s reserve lands. There is also no evidence that the First Nation holds aboriginal title to any of the lands adjacent to the Tsea River or North Tsea Lake. Consequently, the First Nation is not a “riparian owner” within the meaning of section 92(1)(c) of the Water Act.

In summary, the Board found that the First Nation had standing to appeal as an “owner whose land is or is likely to be physically affected” by the Licence within the meaning of section 92(1)(b) of the Water Act, and therefore, the Water Manager’s application to dismiss the appeal was denied.