Decision Date: May 21, 2015

Panel: Robert Wickett, Daphne Stancil, Douglas VanDine

Keywords: Water Act – s. 88(1)(h); Land Act – s. 1 – definition of “natural boundary”; order; water licence; storage; diversion; dam; lake; riparian owner; procedural fairness; fisheries; flooding

Cowichan Lake is a large freshwater lake on southern Vancouver Island, BC. It is located in the Cowichan Valley Regional District, and is the source of the Cowichan River. Catalyst Paper Corporation (“Catalyst”) holds two conditional water licences that authorize the storage and diversion of water flowing from Cowichan Lake into the Cowichan River. Under those licences, Catalyst operates a dam, weir, and gates which regulate the flow of water from Cowichan Lake into the Cowichan River, and Catalyst diverts water for use in its Crofton Pulp Mill. The licensed water works were constructed in 1956, and upgraded in 1965.

The licences also require Catalyst to release water from the water works for the benefit of the public, as directed by the Comptroller of Water Rights (the “Comptroller”), Ministry of Forests, Lands and Natural Resource Operations (the “Ministry”). Over the years, the Comptroller has provided direction regarding the operation of the water works. Since about 1990, the operational regime for water storage was governed by a “rule curve”, which was developed by Catalyst, Fisheries and Oceans Canada, and the Provincial Ministry of Environment. The rule curve provided direction as to when the water works must be operated to regulate water flow. Typically, the gates were fully open from November to April, during the period of high water inflow to the lake, but the release of water was controlled during the summer to regulate water levels in Cowichan Lake and to protect minimum flows in the Cowichan River, which is a salmon-bearing stream. The 1990 rule curve specified that water would begin to be released on July 9, and a minimum water outflow of 7 m3/s would be maintained. It also specified target water levels for Cowichan Lake in July, August and September.

In 2007, the Cowichan Valley Regional District proposed changes to the 1990 rule curve, based on recommendations in a 2007 water management plan for the Cowichan Basin. The changes were intended to increase operational flexibility, meet human needs, and reduce the risks that low water levels pose to fish.

On November 30, 2012, the Cowichan Valley Regional District’s (“CVRD”) board of directors passed a resolution requesting that the Province implement changes to the 1990 rule curve. During late 2012 and early 2013, the CVRD, Catalyst, the Deputy Comptroller, Fisheries and Oceans Canada, and an engineering consultant developed two proposals to amend the 1990 rule curve. One proposal required an amendment to Catalyst’s water licences because it resulted in an increase in the maximum amount of water being stored. The second proposal did not result in an increase in the maximum amount of water being stored, but it delayed the date on which Catalyst could begin drawdown from the full water storage level, from July 9 to July 31.

In February and March 2013, the Deputy Comptroller created a Ministry website describing the two proposals, advertised the two proposals in two local newspapers, sent letters to all Cowichan Lake lakeshore property owners describing the proposals and requested their input, referred the proposals to six First Nations for comment, referred the proposals to several government agencies, and held a public meeting in Lake Cowichan about the proposals. Following the public meeting, the Deputy Comptroller received 14 letters objecting to the proposals. All of the letters were from lakeshore property owners, who expressed concern about the effects of the proposals on their properties. The Deputy Comptroller directed Ministry staff to visit 10 of the lakeshore properties to speak to the property owners, photograph the properties, and consider what might be done to mitigate their concerns. After considering that information, the Deputy Comptroller decided that the proposal to delay the drawdown to July 31 would not materially affect the rights of lakeshore property owners, and was in the public interest.

In May 2013, the Deputy Comptroller issued an order (the “Order”) to Catalyst under section 88(1)(h) of the Water Act. The Order revised the 1990 rule curve and the requirements for the operation of the water works. Among other things, the Order requires that the control of water outflow shall not commence before April 1, unless otherwise specified by the Comptroller or the Regional Water Manager, and a minimum outflow of 7.08 m3/s will be maintained. The Order also specifies maximum lake water levels for July 31, August 31, September 30, October 31, and November 5, but allows for a temporary increase of 0.1 m above the specified maximum levels in the event of abnormally high inflow to Cowichan Lake.

Six appeals were filed against the Order. All of the Appellants own lakeshore property on Cowichan Lake. The Appellants submitted that the Deputy Comptroller lacked the jurisdiction to make the Order because it increased the water storage volume beyond what is authorized in Catalyst’s water licences. They also argued that the process leading to the Order was unfair because the Deputy Comptroller did not give them a fair opportunity to be heard. Moreover, they argued that the Order was wrong on its merits, because it allows more water to be stored in the lake for a longer period of time, which will affect the Appellants’ property rights and result in a loss of property use and a physical loss of property due to flooding and/or erosion. They requested that the Order be reversed, or alternatively, sent back to the Deputy Comptroller with directions.

After the appeals were filed, the Cowichan Watershed Society (the “CWS”), formerly the Cowichan Watershed Board, applied for participant status in the appeals, which the Board granted (Decision Nos. 2013-WAT-013(a), 015(b), 016(a), 017(b), 018(b), 019(b), issued October 24, 2013). The CWS supported the Order. Also, the Board offered limited participant status to over 800 people that the Deputy Comptroller identified as being potentially affected by the Board’s decision on the appeals. Although 34 people accepted limited participant status, only one of them made a submission at the appeal hearing.

First, the Board considered whether the Deputy Comptroller had the jurisdiction to make the Order. The Board found that the Order does not authorize water storage in excess of the amount specified in Catalyst’s water licences. Rather, the Order allows for a temporary increase of 0.1 m above the target maximum lake levels, and requires Catalyst to release the water and return the lake to the target water level as soon as possible. This flexibility is intended to address abnormally high inflows into Cowichan Lake that are beyond Catalyst’s control. Given that the Order does not allow additional water storage, an amendment to Catalyst’s water licences was not required, and the Deputy Comptroller had the jurisdiction to make the Order.

Second, the Board considered whether the Deputy Comptroller did not provide the Appellants with a fair opportunity to be heard before making the Order. The Board considered several judicial decisions regarding the duty of procedural fairness owed by statutory decision-makers. The Board noted that the additional three weeks of water storage (from July 9 to July 31) at the maximum lake level occurs when the Appellants would be enjoying the use of their lakeshore properties, and as such, the Deputy Director was obligated by the principles of procedural fairness to provide the Appellants with notice of the proposed Order, and an opportunity to comment on it. However, the Board concluded that the Deputy Comptroller provided the Appellants with notice of the proposed changes, and a fair opportunity to comment on the potential effects of the proposed changes on their interests.

Finally, the Board considered whether the Order was flawed. Based on the evidence, the Board found that the Order provides substantial downstream benefits to fisheries, water licensees, and water well users, by improving the likelihood of maintaining minimum water flows in the Cowichan River. Regarding the Appellants’ concern that the Order may result in increased periods of flooding on their properties, the Board found that the natural boundary of a lake can vary over time due to natural processes such as flooding and erosion, and lakeshore properties are exposed to those natural processes. The Board found that the present natural boundary of Cowichan Lake is higher than the full storage level specified for July 31, and the Order maintains the November date, used in the 1990 rule curve, on which the gates must be fully open and Catalyst ceases to control the lake level. Consequently, the Board concluded that the Order will not cause a substantial increase in the extent or duration of flooding on the Appellants’ properties. The Board also found that there was no evidence that the Order will cause erosion of the Appellants’ properties above the natural boundary of the lake.

Accordingly, the appeals were dismissed.