B.C. Supreme Court Upholds Recurring Short-Term Water Use Approvals

The B.C. Supreme Court has recently clarified the interpretation of section 8 of the B.C. Water Act. Section 8 relates to the power of the B.C. Oil and Gas Commission (OGC) to grant approvals to oil and gas companies for the short-term use of surface water bodies such as lakes, rivers, streams, and storage dugouts. Many oil and gas companies rely on section 8 approvals in various exploration and development activities.

In Western Canada Wilderness Committee v British Columbia (Oil and Gas Commission), 2014 BCSC 1919, Bennett Jones LLP acted on behalf of Encana Corporation and successfully opposed the argument advanced by litigant environmental groups that recurrent (or consecutive) use of section 8 approvals improperly permit companies to withdraw substantial volumes of surface water for fracking. In the result, the Court upheld the OGC short-term water use approvals on a recurrent basis. Importantly, the Court found the OGC's application of section 8 to be proper, whether assessed on a standard of review of reasonableness (affording more deference to the OGC) or on the stricter standard of correctness.

In reaching the decision, the Court emphasized the following reasons:

• the legislative history of section 8 and the larger scheme and purpose of the Water Act reflect a legislative intention to allow recurrent short-term water approvals;
• the OGC requires that successive section 8 applications for short-term water use approvals be considered as new or "fresh" applications with updated information and documentation;
• the OGC "fully" reviews applications and supporting material required for section 8 approvals; and
• the OGC considers numerous technical, environmental, economic, public interest and risk factors in granting short-term water use approvals, whether for original or recurring section 8 applications.

While the decision is of significant importance to the oil and gas industry in B.C., it should be noted that the Water Act is expected to be replaced by the Water Sustainability Act in 2015. Under the new legislation, section 10(3) specifically provides that the OGC may grant recurrent short-term water use approvals. Accordingly, the Court's decision and the forthcoming Water Sustainability Act conclusively determine that the OGC may grant successive short-term water use approvals to oil and gas operators, provided that the rigorous application requirements are met.

If you have any questions about the decision and how it may affect you or your business, please contact Mike Theroux, Wally Braul or Laura Gill.

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