• City of Nanaimo v. Comptroller of Water Rights

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    Decision Date: June 30, 2015

    Panel: Alan Andison

    Keywords: Water Act – ss. 87, 88, 92(9); British Columbia Dam Safety Regulation – s. 7.1; order; dam; stay; preliminary decision; RJR-MacDonald Inc. v. Canada (Attorney General) (1994), 111 D.L.R. (4th) 385 (S.C.C.)

    The City of Nanaimo (the “City”) appealed an order issued by the Comptroller of Water Rights (the “Comptroller”), Ministry of Forests, Lands and Natural Resource Operations. The order was issued in response to the City’s alleged failure to meet the requirements of section 7.1 of the British Columbia Dam Safety Regulation (the “Regulation”). The order required the City to correct the potential safety hazard posed by two dams on the Chase River. The dams were built in 1910 to 1911 to supply water to coal mines. The reservoirs behind the dams are now part of a public park. The City holds the water licences that authorize the dams.

    Beginning in about 2002, the City became aware of concerns regarding the dams’ ability to withstand floods and earthquakes. After several years of studies, an engineering consultant determined that the threat level, in terms of consequences to people and property if the dams failed, was extreme. In 2012, the City applied to the Comptroller for authorization to remove the dams and restore the Chase River to its natural state. However, this led to strong public opposition.

    Consequently, in 2013, the City decided to pursue a strategy of mitigating the risk posed by the dams. The City asked an engineering consultant to investigate remedial options to address the dams’ safety, and to review the degree of hazard posed by the dams. In addition, the City asked the Comptroller to put its application to remove the dams “on hold.” The Comptroller agreed, but urged the City to adopt a plan quickly. In 2014, the City’s engineering consultant recommended that the dams’ hazard classification be reduced to “very high” for one dam and “high” for the other dam.

    By a letter dated January 23, 2015, the Comptroller accepted the lowered hazard classifications for the dams, but he advised the City that both dams still had serious deficiencies that required immediate attention. Pursuant to section 7.1 of the Regulation, the Comptroller required the City to prepare a revised plan identifying the steps required to correct the safety hazards, and providing a timeline for completing those steps, by February 27, 2015.

    In early February 2015, the engineering consultant presented City Council with a conceptual design to remediate one of the dams, but City Council voted against that option, and decided to continue investigating a revised plan. The City requested that the Comptroller extend the February 27, 2015 deadline for preparing a plan. The Comptroller provided a one-month extension. In March 2015, the City submitted plans to the Comptroller that did not involve remediation of the dams.

    On April 9, 2015, the Comptroller issued an order to the City, stating that the City was not in compliance with the Regulation, and requiring the City to select from two remediation options for one of the dams. However, in late April 2015, the City asked the Comptroller to amend the order to allow consideration of a third option.

    On April 29, 2015, the Comptroller revoked the April 9, 2015 order, and issued a new order. This order required the City to immediately take steps to increase the flood routing capacity of one of the dams, by selecting one of three remedial options and notifying the Comptroller by June 1, 2015 of the option selected. Regarding the second dam, the order required the City to: submit a revised plan by the end of 2015 that identifies the actions required to correct the safety hazard; establish a timeline to taking those actions; and, implement the revised plan by no later than the end of 2017.

    The City appealed the April 29, 2015 order, on the basis that the Comptroller erred in assessing the hazard posed by the dams and the urgency of remedial actions. The City asked that the Board reverse the order, or alternatively, vary the order to give the City more time to consider remedial options. In the further alternative, the City requested that the Board vary the order to respect City Council’s jurisdiction over decisions that fulfill municipal purposes. The City also requested a stay of the order, pending a decision from the Board on the merits of the appeal. The Comptroller opposed the stay application.

    In determining whether a stay ought to be granted, the Board applied the three-part test set out in RJR-MacDonald Inc. v. Canada (Attorney General). With respect to the first stage of the test, the Board found that the City’s appeal raised serious issues to be decided, which were not frivolous, vexatious or pure questions of law.

    Regarding the second part of the test, the Board found that denying a stay would not result in irreparable harm to the City. Although denying a stay would result in the City incurring expenses to comply with the order, such expenses would have to be incurred eventually, regardless of whether a stay was granted. The Board also found that the potential for political or public discontent, if the City had to comply with the order, did not constitute irreparable harm to the City.

    Turning to the third part of the test, the Board found that the balance of convenience favoured denying a stay of the order. The risks associated with granting a stay outweighed the potential harm to the City’s interests if a stay was denied. The Board found that significant and irreparable harm may result from granting a stay of the order, pending a decision on the merits of the appeal. Specifically, there was the potential for loss of life, damage to private and public property, and harm to the environment if the City did not comply with the order and the dams failed. These risks outweighed the City’s interest in protecting the park and recreational values associated with the dams.

    Accordingly, the application for a stay was denied.