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Environmental Appeal Board Fourth Floor 747 Fort Street Victoria British Columbia Telephone: (250) 387-3464 Facsimile: (250) 356-9923 Mailing Address: PO Box 9425 Stn Prov Govt Victoria BC V8W 9V1 J:\EABFAC\PDF Decisions\2010\water\2005wat024c_25c_26c.docx DECISION NOS. 2005-WAT-024(c); 2005-WAT-025(c); 2005-WAT-026(c) In the matter of an appeal under section 92 of the Water Act, R.S.B.C. 1996, c. 483. BETWEEN: Barry Burgoon Marilyn Burgoon and Helen Elzinga APPELLANTS AND: Christopher & Birgit Chart APPELLANTS AND: Regional Water Manager RESPONDENT AND: McFayden Creek Water Users Community PARTICIPANT BEFORE: Lynne Huestis, Panel Chair J. Alex Wood, Member Stephen Willett, Member DATE: Conducted by way of an oral hearing on October 16-19, 2007; December 11-13, 2007; and October 20-24, 2008; as well as by way of written submissions concluding on July 16, 2009. PLACE: Nelson, BC APPEARING: For the Appellants: Barry Burgoon, Marilyn Burgoon and Helen Elzinga: David M. Aaron, Counsel For the Appellants: Christopher and Birgit Chart: Donald Scarlett For the Respondent: Christopher H. Jones, Counsel For the Participant: Herb Hammond

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Page 1: Environmental Victoria British Columbia Telephone: Appeal Board … · 2010. 6. 28. · Victoria British Columbia Telephone: (250) 387-3464 Facsimile: (250) 356-9923 Mailing Address:

Environmental Appeal Board

Fourth Floor 747 Fort Street Victoria British Columbia Telephone: (250) 387-3464 Facsimile: (250) 356-9923 Mailing Address: PO Box 9425 Stn Prov Govt Victoria BC V8W 9V1

J:\EABFAC\PDF Decisions\2010\water\2005wat024c_25c_26c.docx

DECISION NOS. 2005-WAT-024(c); 2005-WAT-025(c); 2005-WAT-026(c)

In the matter of an appeal under section 92 of the Water Act, R.S.B.C. 1996, c. 483.

BETWEEN: Barry Burgoon Marilyn Burgoon and Helen Elzinga

APPELLANTS

AND: Christopher & Birgit Chart APPELLANTS

AND: Regional Water Manager RESPONDENT

AND: McFayden Creek Water Users Community PARTICIPANT

BEFORE: Lynne Huestis, Panel Chair J. Alex Wood, Member Stephen Willett, Member

DATE: Conducted by way of an oral hearing on October 16-19, 2007; December 11-13, 2007; and October 20-24, 2008; as well as by way of written submissions concluding on July 16, 2009.

PLACE: Nelson, BC

APPEARING: For the Appellants: Barry Burgoon, Marilyn Burgoon and Helen Elzinga: David M. Aaron, Counsel

For the Appellants: Christopher and Birgit Chart: Donald Scarlett

For the Respondent: Christopher H. Jones, Counsel

For the Participant: Herb Hammond

Page 2: Environmental Victoria British Columbia Telephone: Appeal Board … · 2010. 6. 28. · Victoria British Columbia Telephone: (250) 387-3464 Facsimile: (250) 356-9923 Mailing Address:

DECISION NOS. 2005-WAT-024(c); 025(c); 026(c) Page 2

INDEX TO DECISION

I. APPEALS

II. BACKGROUND

General

The Authorized Works

The Applications & Ministry Review

The Report

Objections to the Licence Applications

The Respondent’s Decisions

The Grounds for Appeal

III. THE BURGOONS’ APPEAL

The Issues in the Burgoons' Appeals

Relevant Legislation

A summary of the Evidence and the Panel’s Rulings on Certain Evidence

Discussion and Analysis of the Issues

Conclusion on the Burgoons’ appeals

IV. THE CHARTS’ APPEAL

The Issues in the Charts’ Appeal

Discussion and Analysis of the Issues

Conclusion on the Charts’ appeal

V. THE MCWUC’S CONCERNS

Discussion and Analysis of MCWUC’s Issues

VI. APPLICATIONS FOR COSTS

The Chronology

The Board’s Policy

The Applications

Discussion and Analysis

VII. DECISIONS

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DECISION NOS. 2005-WAT-024(c); 025(c); 026(c) Page 3

I.

THE APPEALS

[1] On May 17, 2005, the Respondent, Andrew Whale, Regional Water Manager, Land and Water, Southern Service Region – Cranbrook Field Office, Land and Water Operations Division, Ministry of Environment (the “Ministry”), made three decisions that are the subject of these appeals:

1. He issued Conditional Water Licence 119440 to Christopher and Birgit Chart (the “Charts”), which allows the diversion and use of water from McFayden Creek for residential power purposes and imposes various conditions (the “Licence”);

2. He issued Permit 25260 to the Charts authorizing the occupation of Crown land (the “Permit”); and

3. He refused the Charts’ application for a licence on McFayden Creek for domestic water purposes.

[2] Barry and Marilyn Burgoon and Helen Elzinga (the “Burgoons”) are local residents with farms downslope of McFayden Creek. They appeal the issuance of the Licence (Appeal No. 2005-WAT-024). They also appeal the issuance of the Permit authorizing occupation of Crown land (Appeal No. 2005-WAT-025). They are concerned about the impact of these decisions on their respective properties.

[3] The Charts also filed an appeal. They appeal the Respondent’s refusal to issue them a water licence for domestic purposes. They also appeal some of the conditions attached to the Licence (Appeal No. 2005-WAT-026).

[4] Given the overlapping nature of the appeals by the Burgoons and the Charts, these appeals were heard together.

[5] The Environmental Appeal Board has the authority to hear these appeals under section 93 of the Environmental Management Act, and section 92 of the Water Act. Pursuant to section 92(8) of the Water Act the Board may:

On an appeal, the appeal board may

(a) send the matter back to the comptroller, regional water manager or engineer, with directions,

(b) confirm, reverse or vary the order being appealed, or

(c) make any order that the person whose order is appealed could have made and that the board considers appropriate in the circumstances.

[6] The Burgoons seek an order reversing the Respondent’s decisions to issue the Licence and the Permit. They also ask the Board to make an order of costs

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DECISION NOS. 2005-WAT-024(c); 025(c); 026(c) Page 4

against the Charts pursuant to section 95(2)(a) of the Environmental Management Act, which states that the Board may make an order “requiring a party to pay all or part of the costs of another party in connection with the appeal.”

[7] The Charts ask the Board to remove or vary conditions “k”, “l”, “m”, “n”, “q” and “r” of the Licence, and to issue them a licence for domestic water purposes. They also seek an order for costs; they ask the Board to order costs against the Burgoons.

[8] The Respondent asks the Board to confirm all three decisions and dismiss the appeals. He also asks the Board to order costs against the Burgoons.

[9] The McFayden Creek Water Users Community (the “MCWUC”) was also represented at the hearing of the appeals. It sought participant status in the appeals to present information and argument on the characteristics of McFayden Creek and the water quality in the creek. On July 20, 2005, the Board granted the MCWUC limited participant status in the appeals, allowing the MCWUC to make brief opening and closing submissions. The MCWUC supports the Burgoons’ appeals.

II.

BACKGROUND

General

[10] McFayden Creek is a southeast facing creek located at the south end of Perry Ridge, and is a small tributary of the Slocan River. The evidence before the Panel is that the McFayden Creek watershed has a drainage area of approximately 656 hectares and an average channel gradient of 24%. It ranges in elevation from 1780 to 500 metres above sea level. Its hydrograph is snowmelt dominated, with peak flows occurring in May or early June and low flows occurring in the fall and winter. Environment Canada’s hydrometric record for McFayden Creek extends from 1944 to 1994. During that period, the creek was monitored for a total of 18 years, although not continuously throughout the year. These records show that the daily maximum flow can be as high as 1 cubic metre per second (“m3/s”), and as low as 0.001 m3/s. Subsequent flow measurements from 1996 to 2002 obtained similar values for maximum and minimum flows.

[11] The Charts are the owners of Block 10, District Lot 8126, Plan 1533, Kootenay District. McFayden Creek flows through the northern portion of their property.

[12] The Charts purchased the property in 2004, initially intending to use it for seasonal recreational purposes, but retiring to the property at some point in the future. They claim that they purchased it on the understanding from a Ministry official that there would not be a problem obtaining a domestic water licence. This is one of the issues to be decided in the appeal.

[13] The Charts also determined that given the beauty of the rural surroundings, and their minimal needs for electricity, they would seek approval to use McFayden Creek to generate power.

Page 5: Environmental Victoria British Columbia Telephone: Appeal Board … · 2010. 6. 28. · Victoria British Columbia Telephone: (250) 387-3464 Facsimile: (250) 356-9923 Mailing Address:

DECISION NOS. 2005-WAT-024(c); 025(c); 026(c) Page 5

The Authorized Works

[14] The power generation proposal authorized by the Licence is generally referred to as the micro-hydro project, or the “MHP”. The authorized works consist of a diversion structure, penstock, powerhouse, tailrace and transmission line. It was described during the hearing as follows:1

The diversion structure would be a low head weir constructed of concrete and a prefabricated steel overflow section approximately 0.8 to 1 metre high. The concrete sidewalls (buttresses) would be dowelled into the bedrock. A prefabricated metal screened intake box would be mounted on the downstream face of the overflow weir. To collect and divert water into the penstock, the intake box would be fitted with a smooth-sloped wedge-wire screen with maximum opening size of 0.50 mm.

The penstock would be approximately 270 metres in length and 100 mm in diameter (4-inch inside diameter). A short section of penstock which is connected to the diversion weir box would be fabricated in steel until the penstock leaves the creek channel. At this point, the penstock would transition to 160 psi (pound-force per square inch) rated rated high density polyethylene pipe and follow an overland route along the south bank of McFayden Creek. An isolation valve and air vent would be installed downstream of the intake weir box.

The penstock would terminate at a small powerhouse box at an elevation approximately 75 metres below the diversion weir. The powerhouse box would contain a Pelton turbine runner driving a 3-phase induction motor as the generator. The powerhouse box could be located above or below ground.

A short length of penstock at the powerhouse would be steel, and the outlet from the steel enclosure containing the Pelton turbine runner would be either 150 mm or 200 mm diameter pipe, discharging into a tailrace stabilized with rock and/or precast concrete sections. The tailrace would discharge upstream of all existing licensed points of diversion.

The turbine would be able to produce a minimum of 5 kW of power, with the maximum permitted diversion flow of 0.50 cubic feet per second (“ft3/s”). The Charts’ engineer, Mr. Scarlett, anticipated that this would

1 The description of the MHP for purposes of the hearing, and this decision, is based on the brief description in the Licence and subsequent e-mails dated July 30, 2004 and September 30, 2004, submitted by Mr. Scarlett prior to the hearing, and design sketches prepared by Mr. Scarlett which were included in Appendix 7 of Dr. Salway’s final report dated March 23, 2007 (Exhibit No. 20). The description also includes any changes or enhancements that resulted from Mr. Scarlett’s testimony during the hearing and observed during the site inspection on October 23, 2008.

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DECISION NOS. 2005-WAT-024(c); 025(c); 026(c) Page 6

be possible approximately 5 to 5-1/2 months of the year. At lower flows, the Pelton runner could be fitted with smaller nozzles and produce power as low as 1-2 kW. The power from the turbine would be conveyed to the Charts’ dwelling unit by buried conductors.

[15] It is important to note that the alignment of the pipeline (penstock) and the location of the turbine components of the MHP were not finalized prior to the issuance of the Licence, and that the terms and conditions of the Licence contemplate finalizing the design of the MHP under professional scrutiny. For these reasons, the Panel was dealing with a proposed location, described in evidence and confirmed by way of a site visit.

The Applications & Ministry Review

[16] On April 13, 2004, the Charts submitted an application for a water licence on McFayden Creek to divert and use 500 gallons of water per day for domestic purposes, as well as a licence for power generation purposes.

[17] McFayden Creek already serves as a domestic and irrigation water supply for a number of households, all downstream of the proposed point of diversion in the Charts’ water licence application.

[18] The Charts’ applications for a domestic water licence and a power generation licence were reviewed by Lorraine Schmidt, a Land and Water Technical Officer with the Ministry. Ms. Schmidt was responsible for reviewing the Charts’ applications and making a recommendation to the Respondent.

[19] Ms. Schmidt described the process of review followed for the applications in her Affidavit evidence.2 She reviewed information about the creek to determine the potential impact of the proposed project on the creek and existing water users. In particular, she looked at the supply and demand information specifically related to McFayden Creek:

• Water Survey of Canada records on stream flow measurements;

• Ministry files for information gathered by previous water officers (for instance, spot flow measurements); and

• Ministry records for active water licences on McFayden Creek.

[20] In addition, Ms. Schmidt considered information provided by existing water users through the notification and objection process, and information provided by referral agencies through the referral process. Ms. Schmidt was also in possession of a geotechnical assessment of the Charts’ property prepared in 2000; the assessment was done by Woods Associates Engineering in the fall of 2000 (the

2 Exhibit 26 (Affidavit of Lorraine Schmidt, provided to Panel on March 18, 2009); see also Exhibit 1A, Tab 1, point 6.

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DECISION NOS. 2005-WAT-024(c); 025(c); 026(c) Page 7

“Woods Report”)3. [The Regional District of Central Kootenay required this as a prerequisite to the issuance of a building permit.] Ms. Schmidt conducted a site visit on April 4, 2005.

[21] Ms. Schmidt then prepared a “Report for Water Licence Applications”, dated April 13, 2005 (the “Report”). According to Ms. Schmidt, the Report is to provide the Respondent with sufficient information to make an informed decision on the applications being considered. The Respondent relies on technical staff to gather pertinent background information and to provide a recommendation based on that information.

The Report

[22] In reviewing the records for McFayden Creek, Ms. Schmidt found two notations in the Water Licencing Information System (“WLIS”). The first notation stated “RNW”, which stands for “Refuse, No Water”. This notation was entered in 1980. The second notation indicated a “Possible Water Shortage” in McFayden Creek; this was entered in 1994. Ms. Schmidt stated that these notations mean that the demand for water in the stream is approaching or has reached the level of supply. The purpose of these notations is to provide a “red flag”, to alert people that applications on this stream have been previously refused due to lack of supply.

[23] Ms. Schmidt also performed a water supply/demand balance for McFayden Creek to determine the amount of available water. She determined that the demand on McFayden Creek had already reached the limits of supply at certain times of the year. The water supply/demand balance is summarized in her Report.4

[24] To calculate the water balance, Ms. Schmidt relied on the 5 consecutive years of daily data collected during the months of April – October, by Water Survey of Canada from 1983-1987. Using these records, she calculated the mean flow over the 7 days of lowest flow in 5 years (August 27 – September 2, 1985) to be 0.004 m3/s (0.14 ft3/s). The data used was restricted to the Water Survey of Canada data as daily measurement is required for this calculation. While this water survey station, which is located immediately above the MCWUC water diversion, has been in operation on McFayden Creek for many years, it is no longer monitored by the Water Survey of Canada, nor is it monitored daily by the MCWUC.

[25] After calculating the low flow, her next step was to calculate existing demand which is based on existing licenses on McFayden Creek. She accesses the WLIS records in order to determine current demand on McFayden Creek. She explained that she broke down the demand information between domestic and irrigation

3 The “Woods Report” refers to a letter from Christopher Perdue, P. Geo., of Woods Associates Engineering, to Anne Hurley, dated October 16, 2000, and titled “Natural Hazard Assessment (Lot 10 of District Lot 8126, Plan 1533, Central Kootenay District)”, found at Tab 6 of Exhibit 5B, which is the Volume II of the Burgoons Book of Documents. 4 See Tab 1, point 6, Exhibit 1A. See also pages 5 – 7 of Ms. Schmidt’s Affidavit, Exhibit 26.

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demand in order to determine the total demand. Domestic demand is calculated separately from irrigation demand because domestic water use occurs year-round whereas, in the West Kootenays, it is assumed that licensees will irrigate 120 days out of the total 183 days of the irrigation period.

[26] Ms. Schmidt calculated demand as 8,750 Imperial gallons per day, which equals 0.016 ft3/s. She calculated irrigation demand as approximately 0.129 ft3/s. The domestic and irrigation figures added together gave a current total demand of 0.145 ft3/s.

[27] Ms. Schmidt then compared supply and demand figures to determine whether there was water available for consumptive use. Ms. Schmidt determined that, in this case, there was no water available for further consumptive licenses.

[28] Accordingly, Ms. Schmidt recommended that the Charts’ water licence application for domestic purposes be refused due to lack of available water for consumptive purposes. Ms. Schmidt states in the Report that:

Consumptive demand is already above available flows during low flow periods, therefore it is recommended that any consumptive uses be refused.

[29] Ms. Schmidt also recommended that a new stream notation be added to the WLIS indicating that McFayden Creek is “Fully Recorded”.

[30] Regarding the licence for residential power purposes, Ms. Schmidt recommended that it be approved, with restrictions. Her rationale was that this licence is “non-consumptive”; the water would be returned to the stream above all existing points of diversion. However, she recommended that there be a limit placed on the quantity of water diverted to retain a base flow in the stream.

Objections to the Licence Applications

Objections to the Charts’ applications were received from the MCWUC, the Perry Ridge Water Users’ Association, Stephen Brocklebank, and Judith Ceroli. Their concerns, and Ms. Schmidt’s response to their concerns, were set out in the Report and are summarized below.

• McFayden Creek is fully licensed and has a history of water shortages.

Ms. Schmidt recommends that the application for consumptive use of water for domestic purposes be refused as there is no water available. However, the application for a water licence for domestic power generation could be allowed on the condition that all water is returned to the creek above the existing point of diversion for the MCWUC.

• Approval of the Charts’ proposed point of diversion, if located above the point of diversion for MCWUC, would give the Charts’ “first rights to water”.

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DECISION NOS. 2005-WAT-024(c); 025(c); 026(c) Page 9

Ms. Schmidt states that there is a difference between “first access” and “first rights”. While the Charts’ proposed point of diversion would give them “first access” to the water, the rights of the downstream users are protected by their earlier priority dates. Regarding the authorized MHP, she states that it is non-consumptive in nature, and all water must be returned to the stream above the MCWUC’s point of diversion.

• If the power generation application is approved, the quality of the water getting to the MCWUC intake would be degraded, and there is potential for a malfunction of the power generation facility.

Ms. Schmidt responds as follows:

The main impacts to water quality by hydro electric projects are due to impoundment of significant quantities of water and possibly the design of the tailrace (see discussion below). The proposed micro hydro project is described as a “run of the stream” project with minimal storage. No evidence could be located that would indicate that this type of project has a detrimental effect on drinking water quality, nor was any evidence provided by the objectors.

To support aquatic ecosystem values of the stream, the licensee will be required to allow water to bypass their intake in a sufficient quantity to meet or exceed the guidelines outlined in the “Instream Flow thresholds for Fish and Fish Habitat as Guidelines for Reviewing Proposed Water Uses.” These flow thresholds have been developed as a minimum threshold to preserve fish and fish habitat. Application of the guidelines for fishless streams to McFayden Creek results in a minimum threshold of 0.247cfs, rounded to 0.025 cfs. This is the medium monthly flow in the low flow month for the period of record (1944–2002), which in the case of McFayden Creek is equivalent to the medium flow in September and October.

The nature of the design of the power system is such that, should the system fail, the water will continue to flow in McFayden Creek. Assurances of this have been provided by the applicant’s engineer, Donald Scarlett (see letter on file dated July, 23, 2004). (p. 4)

• If the power generation application is approved, it would violate a restrictive covenant in place on appurtenant land.

Ms. Schmidt states that the Respondent does not have jurisdiction over the Charts’ use of their private land, and the issue of the restrictive covenant is a matter to be dealt with by the Charts and the holders of the covenant.

• If the power generation application is approved, it would result in the potential for significantly increased risk of waterborne disease to MCWUC

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as a result of turbidity created by the design of the tailrace from the powerhouse.

Ms. Schmidt responds to this concern at page 5 of the Report as follows:

The issue of increased turbidity at the point where the tailrace enters the stream is a matter of design. ‘Water quality at the point of diversion for the McFayden Creek Water Users Community should not be negatively impacted as the tailrace for the proposed power project releases any water diverted back to the stream above the intake for the consumptive users, at a speed no higher than the natural flow of the stream.’ (per Applicant’s engineer, Donald Scarlett, July 30 submission).

• If the power generation application is approved, there would be a lack of efficient flushing and cleansing activity in McFayden Creek over the distance of 540 feet in the dewatered channel, and the lack of surface water, as it relates to groundwater replenishment, has not been assessed.

Ms. Schmidt states that water will be retained in the stream by designing works to allow water to bypass the applicant’s intake.

• If the power generation application is approved, there will be disruption of soil and organic layering that will result from increased foot traffic beside the creek to the diversion weir, and there has been a lack of assessment of these impacts.

Ms. Schmidt responds as follows:

A water licence authorizes the diversion of water and is issued under the authority of the Water Act. We do not have jurisdiction over land use of the applicant’s private land and issues related to that use (e.g. foot traffic, installation of improvements) unless the works are within the stream or stream channel. There are no restrictions under the Land Act and no known restrictions established under any other provincial act with respect to access to crown lands including riparian areas.

It must be noted that a pattern of frequent, on-going foot traffic to the creek has already been established by persons who take flow measurements on a regular basis (at least 10 times per month over the past 7 years), and undoubtedly the MCWUC has been accessing their works for maintenance since the works were established. (p. 5)

• Storage of batteries in a consumptive use watershed to hold electrical capacity should not be permitted.

Ms. Schmidt confirmed that the authorized works do not include storage batteries.

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The Respondent’s Decisions

[31] The Respondent refused to issue a licence to the Charts for 500 gallons of water per day for domestic use. In his May 17, 2005 letter, the Respondent simply states that no consumptive use licences are being issued for McFayden Creek.

[32] However, the Respondent granted their licence application for residential power purposes. He states in his May 17, 2005 letter as follows:

The power generation application is considered to be non-consumptive as the water must be returned to the stream above all existing points of diversion and can therefore be allowed, with restrictions, including limiting quantity diverted to retain a base flow in the stream of 0.25 cubic feet per second.

[33] He went on to explain his decision and the terms of the Licence in his letter, and attached the Licence.

[34] The Licence describes the authorized works for the MHP as a diversion structure, penstock, powerhouse, tailrace and transmission line. The maximum quantity of water authorized to be diverted is .0142 m3/s [0.50 ft3/s or 187 Imperial gallons per minute] to be used to generate power for residential use on the Charts’ property. There are various terms and conditions attached to the Licence, many of which are relevant to the appeals. Therefore, the full text of the Licence is provided below. For convenience, the specific conditions that the Charts are appealing have been underlined. The Burgoons seek to have the entire Licence rescinded. The bold in the text is in the original.

[35] The Licence states:

The owners of the land to which this licence is appurtenant are hereby authorized to divert and use water as follows:

(a) The source on which the rights are granted is McFayden Creek.

(b) The point of diversion is located as shown on the attached plan.

(c) The date from which this licence shall have precedence is 13 April, 2004, with a term of 40 years to expire on April 13th, 2044 (in accordance with Section 12.2(2) of the Water Act).

(d) The purpose for which this licence is issued is power (residential).

(e) The maximum quantity of water which may be diverted is 0.5 cubic feet per second.

(f) The maximum rate of diversion is 187 gallons per minute.

(g) The period of the year during which the water may be used is the whole year.

(h) The land upon which water is to be used is Block 10 of District Lot 8126, Kootenay District, Plan 1533 on which a powerhouse is situated, and the land to which the licence is appurtenant is the said land.

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DECISION NOS. 2005-WAT-024(c); 025(c); 026(c) Page 12

(i) The authorized works are diversion structure, penstock, powerhouse, tailrace and transmission line, which shall be located approximately as shown on the attached plan.

(j) The construction of the said works shall be completed and the water shall be beneficially used prior to the 31 day of December 2008. Thereafter, the licensee shall continue to make regular beneficial use of the water in the manner authorized herein.

(k) Construction of works including the diversion structure must occur within the low water period of the year (August – October).

(l) The diversion structure must be designed to allow, and the licensee shall release, 0.25 cubic feet per second (93.5 gallons per minute), or other such quantity as specified in writing by the Regional Water Manager, to bypass the intake to the penstock.

(m) The water used in the generation of power shall be returned to the stream above any downstream points of diversion and the existing water survey station.

(n) Works shall be installed to meter and record the rate of flow and quantity of water diverted and returned to the stream under this licence. Flow meter records shall be retained by the licensee and be available upon request for inspection by the Regional Water Manager.

(o) Works must be designed by and construction of works supervised by a Professional Engineer as defined in the Water Regulation. A copy of an “as-built” plan must be submitted to the Regional Water Manager within 6 months of completion of construction of the works.

(p) The works authorized under clause (i) hereof shall be maintained to the satisfaction of an Engineer under the Water Act.

(q) Construction of the works must include a temporary bypass so that work within the creek channel is done in the dry and the creek flow to downstream users is maintained. A silt fence must be installed downstream of the construction site to prevent deleterious material from entering into the stream.

(r) Prior to construction of the works, all downstream users must be notified as outlined in the Water Regulation. This may include supplying water to downstream users during the construction period if they so desire.

(s) Construction of the works must be completed in accordance with all applicable sections of the Water Act and Regulation and all other applicable acts and regulations.

(t) This licence is issued pursuant to the provisions of the Water Act to ensure compliance with that statute, which makes it an offence to

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divert or use water from a stream in British Columbia without proper authorization. It is the responsibility of the licensee to ensure that all activities conducted under this authorization are carried out with regard to the rights of third parties, and comply with other applicable legislation that may be in force.

(u) The power generated is for use in one dwelling located approximately as shown on the attached plan.

[Emphasis added to highlight conditions under appeal]

[36] The Respondent also issued the Permit which simply authorizes the Charts to occupy Crown land, specifically “the unsurveyed portion of District Lot 7161”, by constructing, maintaining and operating thereon the works authorized” under the Licence. The MHP’s intake structure and a portion of the penstock (pipeline) are the works to be located on Crown land. The amount of Crown land to be occupied is described as: 540 feet (164.6 metres) in length by 16.4 feet (5.0 metres) in width, for a total area of 0.203 acres (0.0823 hectare). The balance of the MHP is proposed for the Chart’s property.

The Grounds for Appeal

The Burgoons

[37] As stated earlier, the Burgoons’ appeal both the Licence and the Permit. However, during the hearing and in their closing arguments, their sole focus was the Licence.

[38] The grounds for appeal found in the Burgoons’ Notice of Appeal, are summarized as follows:

• The Respondent either ignored the scientific reports on the geological hazards of Perry Ridge and the risks to development of land adjacent to McFayden Creek, or he failed to study them and adhere to the warnings and recommendations within these reports;

• The Respondent erred in relying on a submission by the Charts’ engineer, Mr. Scarlett, because he is not an expert in hydrology and is in a conflict of interest;

• The Respondent did not have the complete Woods Report so he did not have all of the information regarding a restricted building zone; and

• The Respondent erred by accepting the potential risks of landslides and debris flows to downstream homeowners.

After retaining counsel, the Burgoons added additional grounds for appeal. They argue:

• The Licensed works provide a risk to their water quantity and quality in contravention of section 15 of the Water Act;

• The Respondent failed to give priority to domestic use licensees;

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• The Respondent failed to consider the impact of the project on property values;

• The Licence relates to a body of water covered by a water reserve under the Water Act;

• The Charts should use a readily available “risk-free” source of power rather than constructing the MHP;

• The Respondent failed to give weight to the existence of a restrictive covenant; and

• The Licence conditions are insufficient and unenforceable.

[39] In final argument, the Burgoons raised an additional ground for appeal. They argued that the Respondent failed to consider the Columbia Basin Management Plan prior to issuing the Licence, contrary to section 12(2) of the Water Act.

[40] It should also be noted that the Burgoons’ provided notice under the Constitutional Question Act that they would be arguing that the Licence creates a risk to their right to life and security of the person contrary to section 7 of the Canadian Charter of Rights and Freedoms. However, this ground was withdrawn in their closing argument. They also claimed that the Respondent failed to engage in First Nations referrals and failed in his duty to consult the Sinixt Nation. The Panel held that the Burgoons did not have standing to argue this issue at the hearing.

The Charts

[41] The Charts appeal the refusal of their application for a domestic water licence on the grounds that Ms. Schmidt had previously advised Mrs. Chart that she “could not see a problem with a consumptive domestic water licence”. On that assurance, the Charts proceeded to purchase the property. They say that Ms. Schmidt appears to have changed her mind on the availability of water after receiving protest letters from the Charts’ neighbours.

[42] The Charts also appeal conditions “k”, “l”, “m”, “n”, “q” and “r” of the Licence. They seek to have certain conditions rescinded, and others varied. Specifically, they ask the Panel to make the following orders:

• Vary condition “k” to allow works located more than 5 metres from the creek to be constructed any time of year (not restricted to the low water period of August to October).

• Rescind condition “l” on the grounds that the release of 0.25 ft3/s is based on the Ministry’s guidelines for “Instream Flow Thresholds for Fish and Fish Habitat”, but this is a fishless Creek and there is no invertebrate and other aquatic life to the mouth of the creek. Further, the Licence is non-consumptive.

• Rescind condition “m” which requires water used in the generation of power to be returned above the existing water survey station. This would require them to build a tailrace in a hazardous and impractical location.

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• Vary condition “n” by removing the reference to a “flow meter” as these are technically and economically impractical, and allow them to measure the water diverted and returned to the stream by a conventional notched weir in the tailrace.

• Vary condition “q” by removing the requirement for a silt fence to be installed downstream of the construction site.

• Vary condition “r” by removing the words “if they [downstream users] so desire” as this may be interpreted to require the Charts to supply an unlimited amount of bottled water to 21 domestic and 10 irrigation licensees for the entire period of construction if any of these licensees “desire it.”

A Summary of the Evidence and Panel’s Rulings on Certain Evidence

[43] The types of evidence adduced in these appeals runs the gambit from expert to lay witnesses, documents on file with the Respondent, as well as primary and secondary sources. The disciplines of engineering, hydrology, geology, and biology all make their appearance in these proceedings, some more extensively than others.

Lay Witnesses

[44] There are no credibility issues with respect to any of the lay witnesses. The Panel particularly appreciated the candor with which the witnesses testified.

[45] The Panel also acknowledges the genuine concern expressed by the Burgoons’ lay witnesses, all of whom are McFayden Creek water users and live in a flood zone or flat area. Their evidence is that flooding occurs when water exceeds the permeability of the lower reaches of McFayden Creek; that is, Reaches 1, 2 and 3. This is not uncommon during the freshet.

[46] The evidence before the Panel also confirms that McFayden Creek, as well as other creeks on Perry Ridge, can be characterized as having a high debris flow hazard which can develop in the upper and middle reaches of the watershed. While the evidence, discussed later in this decision, also indicates that the risk or frequency of such an event is very low, it is clear that the very possibility of such an occurrence causes the residents anxiety. If there was rancor by any witness at times towards another party’s position, the Panel chose to view that as an expression of anxiety and concern over the issues under discussion.

[47] The Panel also appreciated the professionalism and sincerity of:

• Ms. Marilyn Burgoon, who explained the concerns held by the MCWUC about the authorized works;

• Mr. Scarlett, the Charts’ representative, who gave evidence on behalf of the Charts on the design of the MHP; and

• Ms. Lorraine Schmidt, who gave evidence about the application process in relation to the MHP and the application for a domestic water licence.

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[48] By contrast, however, each party attacked the credibility and reliability of several of the expert witnesses. We summarize below some of the relevant background and criticisms of each of the four expert witnesses.

Expert Witnesses

Dr. Peter Todd Hatfield, Ph.D., R.P. Bio.

[49] Dr. Hatfield holds a Ph.D. in Zoology, a Masters of Science degree in Biology, and is a member of the Association of Professional Biologists of British Columbia. He is a specialist in the fields of water management and aquatic science, and has extensive experience in ecology, statistics, environmental impact assessment and conservation biology. He has taught and published extensively. Dr. Hatfield’s consulting practice focuses on developing and applying scientific methods and decision-making techniques to the resolution of natural resource management issues and environmental conflicts.

[50] Dr. Hatfield was tendered as an expert witness for the Respondent to give opinion evidence on the level of invertebrate and nutrient contribution from a fishless stream that flows into fish bearing streams. His opinion is contained in a written report dated August 20, 2007 (the “Hatfield Report”).5 No objections were raised as to Dr. Hatfield’s qualifications or the admissibility of his expert opinion report. The Panel qualified him as an expert in the area of biology (water management and aquatic science).

[51] Dr. Hatfield opined that, in order to protect local and downstream ecological values, the full diversion of streams should not be permitted, even on fishless streams. He also opined that there is value in retaining flow in the system even when that system has a potential to be dewatered in the downstream reach.

[52] Dr. Hatfield’s evidence provided a useful background to the Ministry of Environment’s guidelines for instream flows that is relied on by Ministry officials when reviewing proposed water uses. Dr. Hatfield admits that his evidence reflects a general knowledge of stream ecology and supporting literature, but was not based on specific knowledge of McFayden Creek or the Slocan River.

Dr. Anthony A. Salway, P. Geo.

[53] Dr. Salway was called as a witness by the Charts. He is a professional geoscientist and a member of the Association of Professional Engineers and Geoscientists of British Columbia. He is a consultant whose work over the last thirty years has specialized in slope stability and flood/erosion hazard and risk assessment. He has a Ph.D. in Interdisciplinary Studies – Hydrology, and a Masters of Science degree in Applied Geophysics. He has taught environmental engineering technology at the college level.

5 The “Hatfield Report” refers to a letter from Dr. Todd Hatfield, of Solander Ecological Research, to Christopher Jones, counsel for the Respondent, dated August 20, 2007, and accepted into evidence as Exhibit 10.

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[54] The Charts tendered a draft expert opinion report titled “Environmental Impact Assessment of a Proposed Micro-hydro System on McFayden Creek, Vallican, B.C.” by Dr. Salway and dated February 18, 2007 (the “Salway Report Draft #1). A subsequent bound version of the report, dated March 1, 2007, was provided to the Board (the “Salway Report Draft #2”); it has a signature page but was unsigned. It was nevertheless tendered as an expert report, and eventually entered into evidence as Exhibit 7.

[55] The Chart’s sought to have Dr. Salway qualified as an expert in hydrology and geology. The admissibility of Dr. Salway’s expert opinion report was challenged by the Burgoons and the Respondent. The Burgoons argued that those aspects of Dr. Salway’s report that purported to offer an opinion on micro hydro projects, and on this project in particular, were inadmissible due to Dr. Salway’s lack of expertise in this area. The Respondent challenged portions of the report that dealt with fisheries management issues, including opinions on the value in retaining flow in a fishless stream.

[56] On cross-examination, Dr. Salway admitted that he did not have expertise with micro hydro projects and was relying on Mr. Scarlett for information about the project.

[57] The Panel qualified Dr. Salway in the area of hydrology, but upheld these objections and admitted only those portions of the Salway Report Draft #2 dealing with matters within his expertise.6 It should be noted, however, that the Panel did rely throughout the hearing on the project description provided by Mr. Scarlett and set out in Dr. Salway’s report, a description which Mr. Scarlett himself confirmed in his testimony.

[58] Dr. Salway testified and was cross-examined by the parties during a portion of the hearing that took place in the fall of 2007. Dr. Salway contributed first hand knowledge of the area, including photographs taken during his 3 on-site visits. He assessed the terrain and stability with reference to the proposed location of the diversion intake (weir), pipeline or penstock, and tailrace for the authorized MHP. His evidence, which he reiterated on cross-examination, was that the rock where the diversion structure or weir is to be located is competent, and that there is also competent bedrock to approximately 90 meters downstream. Dr. Salway also opined that drilling into the bedrock, where there are currently no fractures, would be unlikely to cause fractures and would have little or no effect upon the integrity of the bedrock.

[59] At the continuation of the hearing in December 2007, the Charts requested that the Salway Report Draft #2 entered into evidence as Exhibit 7 be replaced with a subsequent version. Dr. Salway indicated that the replacement version, dated March 23, 2007, now had his seal on it. The Panel allowed this replacement version to be entered into evidence as Exhibit 20 (the Salway Report Draft #3).

6 See Exhibit 7.

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[60] A year later, by letter dated October 8, 2008, the Burgoon’s asked the Panel to revisit the admissibility of all of Dr. Salway’s reports, and his credibility as an expert witness. The Burgoons argued that, at material times during the course of the hearing, Dr. Salway was the subject of professional discipline (peer review requirements) which he contravened by tendering “a March 2007 unreviewed expert witness report before this tribunal.” The Burgoons went on to argue that, not only did Dr. Salway fail to disclose these professional disciplinary proceedings during his earlier testimony, but he also attempted to substitute the unreviewed expert report, entered in evidence as Exhibit 7, with “a replacement draft which had been reviewed by one Ian Blown and fraudulently back-dated in an attempt to cure the March 2007 publication and tendering of the initial unreviewed version”. The Burgoons’ reference to “a replacement draft” is a reference to the final report (the Salway Report Draft #3) dated March 23, 2007, and entered as Exhibit 20.

[61] The Burgoons sought the Panel’s agreement to allow the parties further cross-examination of Dr. Salway on the matters related to the professional disciplinary proceedings, and an opportunity to cross examine Ian Blown, P.Eng. who, at some time, endorsed Dr. Salway’s report by way of a peer review.

[62] The Charts opposed the Burgoons’ request for further cross-examination of Dr. Salway and Mr. Blown. The Charts strongly objected to what they referred to as the continued attempts of the Burgoons’ counsel to impugn the Charts’ integrity and create further hearing delays. The Charts also provided copies of documentation to counter the Burgoons’ suggestion that Dr. Salway’s March 23, 2007 report had not been peer reviewed.

[63] The Panel denied the Burgoons’ application to cross-examine Mr. Blown and further cross-examine Dr. Salway. The Panel found that the content of the Salway Report Draft #3, which had been peer reviewed by Mr. Blown, and was signed by Dr. Salway, was identical to the version that was previously admitted into evidence, and which had been the subject of extensive cross-examination by the Burgoons. Further, issues of Dr. Salway’s professional credibility, in light of the professional disciplinary proceedings, could be addressed in final argument. The Panel rejected the argument that the entire Salway Report Draft #3 was rendered inadmissible.

[64] Any further references to the report prepared by Dr. Salway in this decision are a reference to the Salway Report Draft #3, unless otherwise indicated.

Mr. J. Allen Isaacson

[65] The Burgoons asked to have Mr. Isaacson qualified to give expert evidence in the areas of hydrology and geology and provided a report prepared by Mr. Isaacson dated April 24, 2006 (the “original Isaacson Report”).7 Mr. Isaacson holds a Bachelor of Science Degree in Forest Management and a Bachelor of Science

7 The original Isaacson Report refers to a letter from J. Allen Isaacson to David Aaron, counsel for the Burgoons, dated April 24, 2006, found attached to the Revised Statement of Points submitted by the Burgoons on September 17, 2007.

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Degree in Business Management. While he apparently has completed some course work towards a post-graduate degree in aquatic ecology and hydrology, he does not have a completed set of academic credentials in these areas.

[66] In terms of practical experience, Mr. Isaacson has over 44 years of experience in areas of hydrology, 20 years of which was spent with the U.S. Forest Service. Since 1986, Mr. Isaacson has been a full-time faculty member at Spokane Community College, where he teaches college level courses in geology, hydrology, water quality, weather and climate, fisheries and water law. As a consultant, he has worked on soil and water projects in the western United States, Alberta, and British Columbia. In particular, he has work experience in fluvial hydrology, which is the study of how moving surface water works to erode and carry sediment and pollutants.

[67] The Respondent challenged the expertise of Mr. Isaacson in the areas of engineering and geology, and expressed concerns about portions of the original Isaacson Report where he purports to comment on the engineering aspects of the project, and where he provides an opinion requiring geological expertise. Regarding the latter, Mr. Isaacson comments on the Woods Report, prepared by a group of professional geo-scientists. Also questioned, was Mr. Isaacson’s ability to render an opinion on the impact of the project on property values, and other legal matters.

[68] In cross-examination, Mr. Isaacson admitted that he was not qualified as a professional geologist or licenced to practice engineering in British Columbia. Counsel for the Burgoons argued that Mr. Isaacson should not be precluded from rendering an opinion on the geological integrity of McFayden Creek by virtue only of not being a geo-science engineer, pointing out that questions of geological integrity have a hydrological aspect to them.

[69] The Panel was satisfied that Mr. Isaacson had sufficient expertise to provide a reliable opinion on issues related to hydrology, and agreed that his hydrology expertise overlaps into geological fields of work. However, the Panel was not able to qualify Mr. Isaacson to give an opinion on matters related to engineering, to property valuation, or to fisheries and water law. The Panel decided that those portions of his report that dealt with these matters were inadmissible as expert opinion evidence.

[70] However, as indicated above, both the Respondent and the Charts had additional criticisms of the original Isaacson Report. It is standard practice for an expert to set out the assumptions and facts upon which the opinion is based. If there are limitations or qualifications to a technical opinion, and/or margins of error, the expert should set them out clearly in the report. The Respondent and the Charts pointed out that these things were absent in the original Isaacson Report.

[71] During Mr. Isaacson’s direct examination, the Respondent made repeated objections to Mr. Isaacson’s reliance on undefined sources, his lack of referencing and unsupported conclusions. The Respondent and the Charts also challenged Mr. Isaacson’s objectivity, pointing to several instances in the report where Mr.

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Isaacson was clearly advocating a particular position or view, rather than expressing an objective and unbiased expert opinion (sometimes demonstrated by the use of exclamation points in the text of the report). Most of the criticisms were justified. Indeed, Mr. Isaacson admitted to the Panel that his report did not meet the usual standards of an expert opinion report, but was rather a more informal response to questions posed by the Burgoons.

[72] The primary role of the expert is to assist the Panel. The original Isaacson Report did not serve that purpose; moreover it raised fairness issues for the other parties. For reasons discussed later in this decision, the Panel allowed the Burgoons to re-submit Mr. Isaacson’s expert opinion report. The new report, dated February 22, 2008, was received in evidence in the fall of 2008 (the “resubmitted Isaacson Report”).8

[73] In terms of evidence, Mr. Isaacson contributed first hand knowledge of McFayden Creek, having conducted site visits of the area. He described the characteristics of McFayden Creek, including the flooding that takes place in its lower reaches.

[74] Mr. Isaacson provided opinions in the resubmitted Isaacson Report on a number of issues, including: the accuracy of flow data used in support of the licencing decision; the length of the stream flow period of record and hydrologic methods used to support the licencing decision; the flow data analysis required to design the weir and intake structure of the MHP; the effects of the weir and intake structure on the potential debris flow hazard of McFayden Creek; the effects of the pipeline on the debris flow hazard; the potential for destabilization of the stream channel due to reduced flows; the adequacy of site-specific data to support the figure of 0.25 cfs to be left within the stream, including any potential for the water to seep underground; use of cement in construction; and changes in water chemistry due to pressure.

[75] While the Panel found that some aspects of the resubmitted Isaacson Report and Mr. Isaacson’s testimony were helpful, Mr. Isaacson strayed outside of his field of expertise when he made statements in his resubmitted report concerning applicable laws (p. 17), when he offered an opinion on whether the authorized MHP falls within the definition of a “non-consumptive water use”; and when he opined on matters related to the engineering of the proposed diversion structure.

[76] He also drew a number of conclusions without fully explaining the basis for the opinion. For instance, at page 10 of his resubmitted report, Mr. Isaacson opines that:

The Charts proposal for putting in a dam, diverting the flow out of the channel or essentially dewatering the channel, and then having water

8 The resubmitted Isaacson Report refers to a report prepared by J. Allen Isaacson, titled “Hydrology and Water Quality Impacts from Proposed Micro-Hydro on McFayden Creek”, dated February 22, 2008, and entered into evidence as Exhibit 21.

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flow back into the channel during periods of high flows will destabilize the stream channel below their diversion works.

[77] The previous page of the report is a discussion concerning the lower reaches (1, 2 and 3) or fan of McFayden Creek, whereas the evidence before the Panel on this point is that the point of diversion or weir, the pipeline or penstock and the tailrace of the authorized MHP are all located in higher reaches (4 and 5) of the creek. This evidence seems to contradict some of the assumptions around the location of the authorized works found in Mr. Isaacson’s discussion on the previous page – the McFayden Creek fan does not, in fact, make up the area “from the bedrock outcropping where the Charts plan their diversion”. It is possible that Mr. Isaacson was not aware of the proposed location of the diversion structure for the MHP when his report was rendered. That might explain some of these factual discrepancies, and the resulting difficulties with some portions of his expert evidence.

[78] The objectivity of Mr. Isaacson’s resubmitted report was also questioned due to the very obvious support that Mr. Isaacson was providing to the MCWUC in their endeavour to re-locate the MCWUC’s water intake to bedrock in a higher reach of McFayden Creek, possibly the very location where the Charts propose to locate their diversion structure. Because Mr. Isaacson advocates this as a viable option for the MCWUC, it does tend to undermine the reliability of his evidence concerning the hazards associated with the proposed location of the Charts’ diversion structure.

[79] Any further references to the report prepared by Mr. Isaacson in this decision are a reference to the resubmitted Isaacson Report, unless otherwise indicated.

Dwaine Boyer, P. Eng.

[80] Mr. Boyer is a professional engineer and is a member of the Professional Engineers and Geoscientists of British Columbia. He has a Masters degree in water resources engineering and a Bachelors degree in civil engineering. He has over 30 years of experience, with the last two decades as engineering section head in the Ministry of Water, Land and Air Protection, which is now the Ministry of Environment. In this capacity, he has extensive experience reviewing hydrology and other engineering reports in support of proposals for instream projects, including Water Act approval and licence applications. As well, he has published a number of papers.

[81] The Respondent provided the expert opinion report of Mr. Boyer in reply to the resubmitted Isaacson Report (the “Boyer Report”).9 His qualifications and areas of expertise were attached as Appendix 1 to his report. The Burgoons later questioned whether the Panel had properly qualified Mr. Boyer as an expert. This came about as a result of a series of events.

9 The Boyer Report refers to a report prepared by Dwaine Boyer titled Mr. Boyer’s “McFayden Creek EAB Report”, submitted to the Panel on September 5, 2008, and entered into evidence as Exhibit 24.

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[82] Although it was anticipated that Mr. Boyer would testify during the week of October 20-24, 2008, there was insufficient hearing time for Mr. Boyer’s evidence during that week for reasons that will be discussed in more detail in the applications for costs.

[83] The Panel reconvened the hearing by way of conference call on February 4, 2009. Mr. Boyer’s report was discussed at that time and the Panel qualified Mr. Boyer as an expert in the area of hydrology and geosciences engineering. In a follow-up letter of the same date, the Panel confirmed the outcome of the conference call. Acceptance of the Boyer Report was apparent as the Panel specifically directed that cross-examination on Mr. Boyer’s report would be by way of written questions, and set out the dates for submission of these questions.

[84] No objections were made by any party to the conference call, or immediately thereafter, regarding the admissibility of the Boyer Report. The reference to “immediately thereafter” is important, given that the Burgoons were not represented for the entire February 4th conference call; their counsel, Mr. Aaron, departed from the conference call before the Panel had adjourned the telephone discussion on how the hearing process would be concluded. However, they were in immediate receipt of a faxed copy of the Panel’s February 4, 2009 letter, which referenced the Panel’s acceptance of the Boyer Report.

[85] The Burgoons waited 6 weeks from the February 4, 2009 teleconference call and the Panel’s confirming letter to challenge Mr. Boyer’s expertise, providing a letter on March 18, 2009, which was also the same day that they were scheduled to provide their questions on the Boyer Report. The Burgoons argued that the Boyer Report contained inadmissible statements of opinion, and that Mr. Boyer had not been properly qualified as an expert. The Burgoons insisted on being allowed to cross-examine Mr. Boyer, and to make further submissions with respect to his qualifications as an expert. The Burgoons’ preliminary position was that Mr. Boyer, as an employee of the Ministry, is a “biased observer” and that his objectivity and independence are undermined by his full-time employment relationship with the Respondent.

[86] By way of a lengthy letter to the parties dated March 24, 2009, the Panel advised that Mr. Boyer had sufficient expertise to provide a reliable opinion, and affirmed its February 4, 2009 decision to qualify Mr. Boyer as an expert in the area of hydrology and geosciences engineering.

[87] The Boyer Report was primarily designed to review and provide comment on the resubmitted Isaacson Report. However, it also provided site specific evidence on the characteristics of McFayden Creek, based on Mr. Boyer’s site visits of June 5, and August 25, 2008.

[88] The Panel will now turn to consider the appeals.

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III.

THE BURGOONS’ APPEALS

Jurisdiction of the Board

[89] Section 102(2) of the Environmental Management Act gives the Panel the authority to conduct an appeal “by way of a new hearing”. Section 93(2)(d) of the Environmental Management Act states that a party may make submissions as to “…facts, law and jurisdiction”. Together, these two sections provide the Panel with the jurisdiction to consider new evidence; that is, evidence that was not before the Respondent when he made his decision under the Water Act.

[90] Although many of the issues raised by the Burgoons were framed as errors made by the Respondent, the Panel has had the benefit of the evidence that was before the Respondent as well as new evidence. Accordingly, the Panel is not simply reviewing the Respondent’s decision to determine if there was an error in his decision-making process. Rather, based on all the evidence, it will determine whether the decision to approve the Licence should be confirmed, reversed or varied.

The Issues in the Burgoons’ Appeals

[91] The grounds for appeal raised by the Burgoons have been addressed under the following issues:

1. Is the water in McFayden Creek subject to a “reserve” under the Water Act?

2. What is the relevance of the Columbia Basin Management Plan and should it have been considered prior to issuing the Licence?

3. What is the relevance of the Woods Report and the “building restriction zone” to the subject matter of the Licence.

4. How should “risk of adverse impacts” be assessed in the context of an application for a water licence? In particular, does the precautionary principle apply to protect the rights of prior licensees and is an evaluation of adverse impacts required?

5. Whether the MHP, as authorized in the Licence, poses a risk of pipeline failure, debris flows, sloughing or landslides such that the Licence should be rescinded.

6. Whether evidence of geological hazards associated with Perry Ridge should be considered in this case and, if so, how does this evidence affect the Panel’s conclusions in Issue #5.

7. Whether the Licence will negatively impact the quantity of water available to other licensees on McFayden Creek, contrary to section 15 of the Water Act.

8. Whether the Licence will have a negative impact on water quality.

9. Whether the Respondent gave too much deference to the Charts’ engineer prior to the issuance of the Licence, and whether there are now too many

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details left to the discretion of an engineer in the construction phase, making the impact of the Licence unknowable.

10. Whether the availability of an alternative source of power supply is a relevant consideration and, if so, is the availability of a risk-free alternative source of power a ground to rescind the Licence.

11. Whether the Licence conditions are sufficient and enforceable.

No specific issues were raised, nor evidence tendered, in relation to their appeal of the Permit authorizing occupation of Crown land.

Relevant Legislation

[92] The following provisions of the Water Act are relevant to the Burgoons’ appeal of the Licence generally. Additional sections will be referenced in the text of the decision as necessary.

Definitions

1. In this Act:

“changes in and about a stream” means

(a) any modification to the nature of a stream including the land, vegetation, natural environment or flow of water within a stream, or

(b) any activity or construction within the stream channel that has or may have an impact on a stream;

“power purpose” means the use of water in the production of electricity or other power;

“right” includes power, authority, benefit, privilege and remedy;

Rights acquired under licences

5. A licence entitles its holder to do the following in a manner provided in the licence:

(a) divert and use beneficially, for the purpose and during or within the time stipulated, the quantity of water specified in the licence;

(b) store water;

(c) construct, maintain and operate the works authorized under the licence and necessary for the proper diversion, storage, carriage, distribution and use of the water or the power produced from it;

(d) alter or improve a stream or channel for any purpose;

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(e) construct fences, screens and fish or game guards across streams for the purpose of conserving fish or wildlife.

Rights subject to Act

6. The exercise of every right held under a licence is always subject to this Act and the regulations, the terms of the licence, the orders of the comptroller and the engineer and the rights of all licensees whose rights have precedence.

Powers of comptroller or regional water manager respecting applications

12. (1) With respect to an application, whether objections to it are filed or not, the comptroller or the regional water manager may

(a) refuse the application,

(b) amend the application in any respect,

(c) grant all or part of the application,

(d) require additional plans or other information,

(e) require the applicant to give security for the purposes and in the amount and form the comptroller or the regional water manager considers in the public interest, and

(f) issue to the applicant one or more conditional or final licences on the terms the comptroller or the regional water manager considers proper.

(1.1) An applicant must comply with any order made under subsection (1) (d) or (e) within the time specified by the comptroller or the regional water manager.

(1.2) Without limiting subsection (1), the comptroller or the regional water manager may refuse an application or reject an application without consideration if

(a) the applicant fails to comply with any directions or requirements under subsection (1) (d) or (e) or section 10 (1), or fails to comply within the required time,

(b) the application is incomplete, or

(c) the application fails to meet the requirements of an approved plan.

(2) In considering an application under subsection (1) that relates to the region as defined by the Columbia Basin Trust Act, the comptroller or the

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regional water manager must consider the current long term Columbia Basin Management Plan adopted for the Columbia Basin Trust under section 15 of that Act.

(3) With respect to an application for a licence, the comptroller or regional manager must determine, in accordance with section 13, the precedence and appurtenance of any licence to be issued under the application.

Precedence of licences on same stream

15. (1) Except as otherwise provided in subsections (2) and (3), the respective rights exercisable under 2 licences authorizing the diversion of water from the same stream have precedence in law according to the respective priorities of the dates from which the licences take precedence as set out in them.

(2) The respective rights exercisable under 2 licences taking precedence from the same date have precedence in law according to the ranking of the respective purposes for which water is authorized to be used under the licences respectively, and the ranking of the several purposes for which water may be used under licences are, from highest rank to lowest rank: domestic, waterworks, mineral trading, irrigation, mining, industrial, power, hydraulicking, storage, conservation, conveying and land improvement purposes.

(3) The rights exercisable under 2 licences taking precedence from the same date and authorizing the diversion of water from the same stream for the same purpose have equal precedence in law.

Discussion and Analysis

1. Is the water in McFayden Creek subject to a “reserve” under the Water Act?

[93] The first argument made by the Burgoons is that the Licence for the MHP should be rescinded because the water in McFayden Creek is subject to a “reserve” under the Water Act. The substance of their argument is as follows.

[94] McFayden Creek is a tributary of the Kootenay River via the Slocan River. Order in Council 334/27 (the “OIC”), created a water reserve for the Kootenay River on April 6, 1927. The OIC states:

THAT pursuant to the provisions of Section 290 of the Water Act, being Chapter 271 of the Revised Statutes of British Columbia, and amendments thereto the unrecorded waters of the Kootenay River between the City of Nelson and its junction with the Columbia River in the Nelson Water District be reserved for the use of the Crown.

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THAT a licence for the use of the water so reserved may with the consent of the Minister of Lands, notwithstanding this reservation, be acquired under Part 2 of the Water Act.

[95] Although the OIC only refers to the Kootenay River, the Burgoons submit that it was intended to cover not just the Kootenay River, but all tributaries of that river. Consequently, no water licence can be issued for McFayden Creek without the consent of the Minister of Lands or without the licence complying with the terms of section 44 of the present Water Act which governs water reservations. In particular, subsections 44(7) and (8) of the Water Act state:

(7) Licences may be issued authorizing the diversion and use of water for domestic purpose or land improvement purpose from a stream to which a reservation applies.

(8) An approval under section 8 [approval for short term use – not exceeding 12 months] may be issued authorizing the use of water for any purpose from a stream to which a reservation applies.

[96] The Burgoons submit that the Minister of Lands has not consented to the subject licence, nor is it for domestic purposes, land improvement purposes or for short term use. Therefore, they submit that the Respondent had no authority to issue the Licence.

[97] In support of their position that the OIC covers more than the Kootenay River, the Burgoons rely on an email to counsel for the Burgoons dated March 28, 2007, from Jim Gilliland with the Ministry of Environment. Mr. Gilliland states: “Further to our phone conversation, I can confirm that McFayden Creek is covered by the attached Water Reserve” [Emphasis added]. Mr. Gilliland attached a “Reserve Report” that was provided to him by another Ministry employee, printed on March 27, 2007, which states:

SOURCE: Kootenay River (Lower)

KOOTENAY RIVER & TRIBUTARIES (LOWER LIMIT)

– OIC 334/27 27/04/06

BETWEEN THE CITY OF NELSON AND ITS JUNCTION WITH THE COLUMBIA RIVER POWER PURPOSE

[Emphasis added]

[98] The Burgoons also refer to the evidence of the Respondent’s expert, Dr. Todd Hatfield, who testified that McFayden Creek provides an aquatic benefit to the Kootenay River. They submit that “the prohibition against diversion under the Water Reserve would be rendered useless if the waters which constitute the Reserve Body could otherwise be diverted at the point of its tributaries.” They note that the maps in evidence demonstrate that the Slocan River is the largest single tributary to the Kootenay River, and if the waters of the Kootenay River are to be

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protected under the terms of the reserve, “it makes no sense to exclude those waters from protection at a point upstream from the Reserve Body.”

[99] The original reason for creating the reserve is unknown. Although the Burgoons attempted to obtain documents from the Ministry, none were located. Similarly, the Burgoons attempted to obtain Ministry documents and/or information that would support the conclusion that the tributaries to the Kootenay River were intended to be included in the OIC. However, no relevant documents were located by the Ministry. Prior to the start of the hearing, the Burgoons also applied for an order from the Board to compel production of any and all documents or information in relation to this reserve, including the documents that Mr. Gilliland reviewed prior to reaching the conclusion expressed in his email. The Board denied this request. The Board’s Chair stated in his decision as follows:

The Regional Water Manager submits that Ministry of Environment staff searched for documents in the Ministry’s possession pertaining to the Lieutenant Governor in Council’s intention in creating the OIC, and made inquiries to the BC Archives, but no documents relevant to determining whether the OIC pertains to McFayden Creek were discovered. He submits that the Applicants’ application is worded broadly enough that it may include documents that refer to the OIC or the water reserve, but were created after the OIC. He maintains that such documents would have little or no relevance, since they would only reflect the author’s opinion of the meaning of the OIC.

The Regional Water Manager notes that Mr. Gilliland has provided the Applicants with a copy of a Reserves Report which indicates that McFayden Creek is included in the reserve in question. However, he submits that the Reserve Report was generated sometime after the enactment of the OIC, and it is not known what documents were referenced in creating the Reserve Report. The Regional Water Manager takes the view that the Reserve Report is incorrect, and that the intention of the OIC is reflected in its language, which refers only to the Kootenay River and not any of its tributaries or their tributaries. He submits that the information provided by the Reserve Report is incorrect, and does not amount to an admission in these appeal proceedings.

In support of those submissions, the Regional Water Manager cites the following comments by Parrett J. in Windset Greenhouses (Ladner) Ltd. v. Delta (Corp.), 2003 BCSC 570:

With the greatest respect to those Ministry officials responsible for administering legislation once it is passed, it is not their opinion of what the legislation means that forms the proper basis for statutory interpretation but the intention of the legislature at the time it adopted the legislation…

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The Board agrees with the Regional Water Manager that the Applicants’ request is overly broad, and that the Ministry of Environment has already made reasonable attempts to find documents that would be relevant to the Applicants’ request.

In any case, the Board finds that the proper approach in determining the intention of the OIC is, first and foremost, to consider the plain and ordinary meaning of the words it contains, in their legislative context. Only if the statutory language is vague should secondary sources be considered in ascertaining the Lieutenant Governor in Council’s intention.

[100] As stated in his submissions regarding the application for documents, the Respondent submits that the OIC does not pertain to McFayden Creek. The Respondent argues that if the Lieutenant Governor in Council’s intention was to cover any or all tributaries to the Kootenay River, it would have said so in accordance with its usual practice. The Respondent provided three water reservations created by Orders in Councils in and around 1927, which pertain to different Water Districts in the province. All of those Orders in Council identify the river and the tributaries to be covered by the reserve. The relevant portions of these Orders in Council are provided below:

1. Order in Council 79, dated January 28, 1926

THAT pursuant to the provisions of Section 290 of the Water Act, being Chapter 271 … the unrecorded waters of the following described streams in the Fernie Water District be reserved in order to make provision for a water supply for a power project:

Fording River and tributaries down to a point approximately 4 miles from its junction with Elk River -

Grave Lake and Line Creek, a tributary of Fording River -

Bull River and its tributaries down to a point approximately 3 miles North of Aberfeldie, situated, situated on Bull River

THAT the water so reserved may, with the consent of the Minister of Lands, notwithstanding this reservation be acquired under Part 2 ….

2. Order in Council 1325, dated December 15, 1926

THAT pursuant to the provisions of Section 290 of the Water Act, being Chapter 271 … the unrecorded waters of Chilco River and tributaries thereof including Chilco Lake, and Whitewater River and tributaries thereof including Whitewater Lake, in the Lillooet Water District, and the unrecorded waters of Homathko and Southgate Rivers including the tributaries thereof be reserved for the use of the Crown.

THAT the water so reserved may, with the consent of the Minister of Lands, notwithstanding this reservation, be acquired under Part 2 ….

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3. Order in Council 514, dated May 25, 1928

THAT pursuant to the provisions of Section 290 of the Water Act, being Chapter 271 … the unrecorded waters of Morice River and tributaries in the Hazelton Water District be reserved for the use of the Crown.

THAT a licence for the use of the water so reserved may, with the consent of the Minister of Lands, notwithstanding this reservation, be acquired under Part 2 ….

[Emphasis added]

[101] While the Burgoons have argued that the province has “confirmed” that the water reserve covers McFayden Creek, relying on Mr. Gilliland’s email statements (described above), the Respondent further submits that this conclusion has not been admitted in these proceedings, and indeed does not reflect the position of the Respondent.

The Panel’s Findings

[102] Had it not been for the statements made by Ministry employees that the OIC covers McFayden Creek, the Panel is of the view that this issue would not have arisen. The wording of the OIC is clear; there is no ambiguity on its face. It identifies the water body and the boundary of the reserve.

[103] In this case, the absence of the words “and tributaries” does not render the meaning of the document unclear or ambiguous. To the contrary, given the example of other Orders in Council provided from 1926 and 1928, there is every indication that the absence of those words was intentional.

[104] An Order in Council is a type of enactment; it is a regulation under the Interpretation Act, R.S.B.C. 1996, c. 238. As such, the usual principles of statutory interpretation apply. These principles used to draft such documents include the “presumption of consistent expression” as described by Ruth Sullivan in Driedger on the Construction of Statutes, 3rd ed. (Vancouver: Butterworth’s 1994). At page 163, she states that the governing principle is that the legislature “uses language carefully and consistently so that within a statute or other legislative instrument the same words have the same meaning and different words have different meanings.” This presumption not only applies within statutes, but across statutes as well, “especially statutes or provisions dealing with the same subject” (p. 165). Sullivan later states:

One of the most striking features of legislative drafting is its avoidance of stylistic variation. As much as possible, drafters strive for uniform and consistent expression. Once a pattern of words has been devised to express a particular purpose or meaning, the pattern is used for this purpose or meaning each time the occasion arises. (p. 170)

[105] Sullivan also notes that, as a presumption, it may be rebutted. She states:

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The presumption of consistent expression varies in strength depending on a range of factors. These include the proximity of the words to one another, the similarity of their contexts, how often they recur in the legislation, the extent to which the constitute a distinctive pattern of expression, their place in the legislative scheme, whether the legislation appears to have been carefully drafted, and how often it has been amended.” (p. 166) [Emphasis added]

[106] It can also depend on whether legislation is lengthy and complicated – where there is not always time for careful editing.

[107] A similar presumption relates to consistency between legislation on the same subject, legislation “in pari materia”. The governing principle is that “Statutes enacted by a legislature that deal with the same subject are presumed to be drafted with one another in mind, so as to offer a coherent and consistent treatment of the subject” (page 285).

[108] Considering the three Orders in Council provided by the Respondent, it is apparent that there is a consistent pattern of words used to create reserves in the Orders in Council before the Panel. The wording clearly indicates whether the reserve includes the tributaries to the main water body. There is a consistent pattern of expression in all of the Orders in Council before the Panel, even though they are created on different dates and relate to waters in different Water Districts. Moreover, the OIC is not such a lengthy or complicated piece of legislation that a critical word, such as “tributary”, might have been forgotten. This is even more unlikely given that the members of the Executive Council, who were present to approve the OIC at issue, included many of the same people named on the Orders in Council provided by the Respondent.

[109] The Burgoons’ reliance on the employees’ statements is, in essence, a reliance on what is known as an “administrative interpretation”. While administrative interpretations are sometimes accepted by the courts as an extrinsic aid to interpreting statutes, in this case, the Panel finds that the statement of the Ministry employees contained in the email, and in the Reserve Report, are not a credible or reliable indicator of the proper meaning to be given to the OIC. The usual style of drafting such reserves is a more persuasive indicator of legislative intent than the interpretations provided in an administrative document (i.e., the Reserve Report), created some time after the enactment of the OIC.

[110] Although the Appellants continued to raise their concerns about document disclosure regarding the reserve throughout the hearing, the Panel does not believe that the absence of extrinsic evidence was detrimental to the Panel’s ability to ascertain the legislative intent of the OIC at issue.

[111] Based on all of the considerations above, the Panel concludes that the reserve created by the OIC does not cover McFayden Creek. This ground of appeal fails.

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2. What is the relevance of the Columbia Basin Management Plan and should it have been considered prior to issuing the Licence?

[112] The Burgoons argue that the Respondent failed to consider the current long term Columbia Basin Management Plan, as he was required to do by section 12(2) of the Water Act. Section 12(2) states:

In considering an application under section (1) [powers of the comptroller or regional water manager respecting applications] and that relates to the region as defined by the Columbia Basin Trust Act, the comptroller or the Respondent must consider the current long term Columbia Basin Management Plan for the Columbia Basin Trust under section 15 of that Act.

[113] The Burgoons argue:

It is clear that the Licence relates to the regions defined in the Columbia Basin Trust Act as that region includes the Regional District of Central Kootenay. McFayden Creek is within the geographic scope of the Regional District of Central Kootenay.

Although there is no direct evidence from the Respondent as to whether or not he considered the Plan, the Burgoons submit that the Respondent did not refer to the Plan in his decision and, therefore, the Panel can draw an adverse inference in that regard.

The Respondent objects to this argument on the grounds that the Burgoons raised it for the first time in their closing argument. The Respondent further submits that, while the Panel is entitled to hear new evidence, the Burgoons did not provide the Panel with the Columbia Basin Management Plan, nor did they make submissions as to its import with respect to the issuance of the Licence. The Respondent argues that the Panel has no basis to decide what relevance the Plan would have, if any, to its determination with respect to the issuance of the subject Licence.

In response, the Burgoons say that it is not the contents of the Plan at issue for them, it is the very fact that the Respondent did not comply with his statutory responsibilities that is the problem. They submit that nothing turns on their failure to provide a copy of the Plan. In their view, the Respondent’s failure to consider the Plan amounts to a contravention of the Act and the Panel has no jurisdiction to excuse him from complying with the Act.

The Panel’s Findings

[114] Given the lengthy nature of these proceedings, the Burgoons had a reasonable opportunity to give advance notice of this argument, obtain a copy of the Plan, enter it into evidence and to make submissions on this issue. They did not do so. Nor did they ask the Respondent or his witnesses whether the Plan was in fact considered and, if not, why not. This is not a situation in which to draw an adverse inference.

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[115] Since there is no evidence that the Respondent failed to consider the Plan, nor is there any evidence or argument relating to the practical implications of the Columbia Basin Management Plan on the issuance of the Licence in question, this ground of appeal fails.

3. What is the relevance of the Woods Report and the “building restriction zone” to the subject matter of the Licence.

[116] The Woods Report is an October 16, 2000 “Natural Hazard Assessment” by Christopher Perdue of Woods Associates Engineering.10 The Burgoons argue that the Charts propose to divert water from McFayden Creek through a pipeline that will be installed,

over several hundred feet, navigated around a plethora of tilting, aging trees, and along a steep slope within the region identified by Woods Associates Engineering as a building restriction zone.

[117] The Burgoons contend that, although the Woods Report was provided to the Respondent by Mr. Scarlett in July of 2004, the report was incomplete since it did not contain Figure 2, which identifies the location of the “building restriction zone”. The Burgoons submit that the Respondent erred in relying on an incomplete copy of the Woods Report.

[118] The Respondent states that the text of the Woods Report is entirely clear. The report recommends the adoption of a building construction exclusion zone, 20 metres back from the crest of the steep slope break (p. 2). The Respondent argues that no additional map is required to explain the plain meaning of this text in the report.

[119] The Respondent further argues that the Woods Report was commissioned for the purpose of identifying “residential building restrictions”. It does not purport to restrict the construction of works such as the MHP; just residential buildings.

The Panel’s Findings

[120] The Panel finds that the Woods Report is self-explanatory and that the missing Figure 2 was merely illustrative of the setback recommended in the report. The Panel concludes that the Respondent did not err in relying on the version of the Woods Report submitted by Mr. Scarlett in July of 2004. Further, the Panel has reviewed the missing figure and the report generally, and finds that it is not relevant to, and has no impact on, the subject matter of the Licence. Based on these considerations, the Panel concludes that this ground of appeal fails.

4. How should “risk of adverse impacts” be assessed in the context of an application for a water licence? In particular, does the

10 See: Woods Report, Exhibit 5B, Tab 6.

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precautionary principle apply to protect the rights of prior licensees and is an evaluation of adverse impacts required?

[121] The Burgoons submit that the Respondent, before issuing a licence, and the Board on appeal, must consider the rights of prior licensees and evaluate whether adverse impacts associated with the proposed licence are reasonable or unreasonable. They contend that both the precautionary principle and procedural fairness requires the Respondent, and now the Panel, to take the water users’ rights into account in deciding whether the Licence should be issued. They argue that this requires an appropriate assessment of the “potential risk” to the rights of water users in accordance with the precautionary principle.

[122] The Burgoons argue that the precautionary principle requires a “proactive orientation to environmental protection” and that it is not only “proven impacts” but “potential impacts” which must be considered. They cite a decision of the BC Supreme Court in Wier v. British Columbia (Environmental Appeal Board), [2003] B.C.J. No. 2221 [Wier], in support. They maintain that the MHP is “fraught with uncertainties”, including “undefined plans to run a pipeline along an unstable slope populated by tilting trees, with the risk that a leak in the pipe would result in slope failure”. They submit that the “plans for mitigating the risk of adverse impact are, at best, nebulous”.

[123] The Burgoons conclude by stating that, on the evidence, the Respondent and the Panel “could not be satisfied that the construction, installation and ultimate use of the system would be free from unreasonable adverse impacts.”

[124] The Respondent argues that the decision to issue a water licence under section 12 of the Water Act is an exercise of discretion, and that the discretion must be exercised in a manner that is consistent with the purposes and objectives of the legislation that empowers the decision-maker. Within the context of the Water Act, the Respondent agrees that it is appropriate to consider the potential effects of a proposed project. Section 12 of the Water Act reads as follows:

12(1) With respect to an application, whether objections to it are filed or not, the comptroller or regional water manager may

(a) refuse the application;

(b) amend the application in any respect;

(c) grant all or part of the application;

(d) require additional plans or other information;

(e) require the applicant to give security for the purposes and in the amount and form the comptroller or regional water manager considers in the public interest;

(f) issue to the applicant one or more conditional or final licences on the terms the comptroller or the regional manager deems to be appropriate.

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[125] On the facts of this case, the Respondent contends that the issue of potential risks was appropriately considered in accordance with this broad discretion in section 12. Further, he submits that approving the Licence, while ensuring that the works will be designed and built under the supervision of a professional engineer, was entirely appropriate in light of the small scale of the MHP.

The Panel’s Findings

a) Application of the Precautionary Principle

[126] The Burgoons rely on the Wier case in support of their argument that the precautionary principle should be applied. However, the issue raised in the Wier case was whether the Supreme Court of Canada’s decision in 114957 Canada Ltee (Spraytech, Societe d’arrosage) v. Hudson (Town), [2001] S.C.J. (42) [Spraytech], affected the two-step test in appeals of pesticide use permits; that is, whether Spraytech required the Board to apply the “precautionary principle” in deciding whether a proposed pesticide use will cause an “unreasonable adverse effect”.

[127] The Pesticide Control Act differs from the Water Act in that it expressly requires an assessment of whether a proposed pesticide use will cause an “unreasonable adverse effect”, whereas the Water Act is silent on the question of whether reasonableness is a factor in making decisions under section 12 of the Water Act.

[128] The majority decision in Spraytech held that the precautionary principle, as a principle of customary international law, provides guidance in interpreting Canadian environmental statutes, including those that regulate pesticide use. The Wier decision upheld the application of the precautionary principle to the pesticide permit appeal in question, indicating that the principle helps inform the process of statutory interpretation and judicial review. In the circumstances of the Wier case, the Court stated at paragraph 38: “…the application of the precautionary principle would favour an interpretation that permitted the Board to consider evidence of toxicity beyond that limited to site specific and application specific concerns.” Based on this, the Board was directed by the Court to take into consideration evidence relating to general toxicity in its re-consideration of the appeal.

[129] The Panel is not persuaded that the precautionary principle helps inform the process of statutory interpretation relevant to this appeal; that is, the factors that must be taken into account in determining whether a water licence should be approved pursuant to section 12 of the Water Act. There is no evidence before the Panel that the precautionary principle routinely applies to decisions made under section 12 of the Water Act, nor is there evidence that there is “sufficient state practice” (a term referred to in Spraytech) to suggest that a regional water manager, or the Panel on appeal, must consider evidence of matters beyond that limited to site specific and application specific concerns.

[130] Even if the Panel is wrong on this point, a related issue is what is meant by the “precautionary principle”. In Spraytech, the Court adopted the definition of

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precautionary principle found at page 7 of the Bergen Ministerial Declaration on Sustainable Development (1990) (the “Bergen Declaration”), as follows:

In order to achieve sustainable development, policies must be based on the precautionary principle. Environmental measures must anticipate, prevent and attack the causes of environmental degradation. Where there are threats of serious or irreversible damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation. [Emphasis added]

[131] However, the Court in Spraytech also notes that the principle has been codified in several statutes, including the federal Canadian Environmental Protection Act, 1999, S.C. 1999, c. 33 (“CEPA”), where the preamble states:

… the Government of Canada is committed to implementing the precautionary principle that, where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost effective measures to prevent environmental degradation. [Emphasis added]

[132] The Panel notes that the Bergen Declaration and CEPA use a similar definition of the precautionary principle, except that the latter uses the words “cost effective” to qualify the types of measures that may be used to prevent environmental degradation. Based on these two sources, there appears to be more than one possible meaning of the “precautionary principle” or “precautionary approach”. Some sources expressly contemplate cost effective precautionary measures when full scientific proof is lacking, while others are silent on the role of economic considerations. Consequently, even if one accepts that the precautionary principle should be applied in this appeal, it is uncertain what version of the principle would apply for the purpose of interpreting the Water Act. In the absence of clear statutory direction regarding the applicability and meaning of the precautionary principle, it is difficult to determine how this principle should be applied to the appeal in question.

[133] The second question for the Panel to consider is whether such a principle is aimed at the prevention of environmental degradation or the prevention of risks to people’s legal “rights”. This question arises because the Burgoons’ argument is that the precautionary principle requires an appropriate assessment of the potential risk to the “rights of water users”. The Burgoons also seek to apply the precautionary principle to bolster their argument that a “no-risk” approach should be applied to the protection of water user “rights”. With respect, the Panel does not agree with this submission.

[134] Assuming that the precautionary principle even applies to decision-making under the Water Act, and the Panel is not convinced that it does, the precautionary principle would require an assessment of the potential adverse “environmental” effects or risks posed by the MHP. It is clearly aimed at the prevention of “environmental” degradation in the face of scientific uncertainty, and used as the

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rationale for considering all relevant information and imposing preventative measures in light of these uncertainties.

[135] The Panel’s view is that, even if the precautionary principle can be said to apply to the approval of water licence applications under the Water Act, as will be evident from the Panel’s findings below, the Licence does not violate the goals or objectives of the principle. It is consistent with the above-noted quote from the Bergen Declaration; in particular, “Environmental measures must anticipate, prevent and attack the causes of environmental degradation.” [Emphasis added]

b) The assessment of risk in the context of water licence applications

[136] The legal test applied by the Panel in this appeal is derived from an interpretation of the provisions of the Water Act and its regulations. The Water Act is primarily legislation to allocate, protect, preserve and manage water as a resource. However, there are indications that the Act also seeks to address broader stream health issues by protection of riparian habitat values. One of those indicators is that the Act specifically defines a “conservation purpose” as that relating to conservation of fisheries and wildlife. Under section 1, “conservation purpose” means the use and storage of water or the conservation of works in or about streams for the purpose of conserving fish or wildlife. For these reasons, the Panel agrees with the Board’s previous findings in 0707814 BC Ltd.v. Assistant Regional Water Manager (Decision Nos. 2006-WAT-007(b) & 2007-WAT-001(b), January 10, 2008), where the Board found that the Water Act is also environmental legislation.

[137] The Panel agrees that when considering an application to, among other things, make changes “in or about a stream” under the Water Act, a regional water manager must weigh the applicant’s stated purpose for the changes to the stream against the impacts to the water resources and the environmental values of the affected area. Section 43 of the Water Regulation also provides protection for other persons lawfully using or diverting water. A person making a change “in or about a stream” must ensure that these other water users are “not adversely affected”.

[138] These statutory provisions confirm the broad discretion exercised by a regional water manager in dealing with water licence applications. In exercising that discretion, the Panel agrees with the Respondent that it is appropriate to consider the potential adverse impacts of a proposed project, including the potential impacts to other water users and their rights. In fact, this is contemplated under the Act by requiring notification and consideration of objections.

[139] However, unlike the Pesticide Control Act legislation, the Water Act does not expressly require a regional water manager to assess the reasonableness of the risks identified in relation to authorized works. Despite the absence of this requirement, awareness of a predictable and proximate risk, irrespective of whether the risk was to the water resource, to the environmental values of the area, or to the lawful use by downstream water users, would be a significant concern if it could not be mitigated or managed through project design, and good construction and monitoring. Such a consideration would undoubtedly strongly influence a regional

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water manager in his decision making, if for no other reason than to avoid an allegation of negligence in the exercise of his discretion if downstream users were subsequently adversely affected. The Panel on this appeal also takes evidence of such risks seriously.

[140] The Panel now turns to consider the evidence and arguments on the risks associated with the Licence.

5. Whether the MHP, as authorized in the Licence, poses a risk of pipeline failure, debris flows, sloughing or landslides such that the Licence should be rescinded.

The Burgoons’ evidence and argument

[141] The Burgoons argue that the project should be cancelled and the Licence rescinded on the grounds that it poses unacceptable or unreasonable risks to landowners and the environment. The Burgoons argue that the authorized works will contribute to flooding, deposition of material, and avulsions downstream. This may occur as a result of the pipeline and its placement.

[142] As indicated earlier, the MHP requires the installation of approximately 270 metres of 100 mm diameter pipeline along the south bank of McFayden Creek. The Burgoons are concerned that the pipeline or penstock may leak or break. They submit that the Panel may take judicial notice of the fact that pipelines leak, and suggest that it is “public knowledge” that, on March 30, 2009, a cracked pipe belonging to Teck Cominco resulted in a spill of 370,000 liters into the ground in Trail, BC.

[143] The Burgoons further submit that the Charts have not been consistent with respect to the material they propose to use in the penstock or pipeline, and that they failed to provide evidence concerning the durability or “toughness” of the proposed high density polyethylene pipe being recommended.

[144] If the pipeline should leak or break, the Burgoons rely on the evidence of Mr. Isaacson, who said that pipe leakage may lead to debris flows and/or instability of local creek banks and water quality issues. They argue that these concerns are exacerbated by the lack of certainty regarding the ultimate route of the pipeline. Mr. Isaacson states in his expert report as follows:

The pipeline location from the diversion to the powerhouse location is not known and was not presented. The route as close as can be assumed will cross some unstable slopes and could cause problems downstream if there is a breach in the pipe, a likely occurrence in this type of system. [Emphasis added]

[145] The Burgoons submit that the works will increase the risk of an in-channel debris flow. This may result if there is a leak in the pipeline leading to a slough or landslide which blocks the channel and then breaches rapidly.

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[146] During the hearing, lay witness testimony and photographic evidence was presented by the Burgoons concerning flooding and mud flows on the fan below the MCWUC intakes (i.e., Reaches 1, 2, and part of 3).

[147] The Burgoons submit that, regardless of the Licence terms and conditions, the risk to people and property cannot be alleviated given Mr. Chart’s testimony that the system will operate unsupervised for periods of time when he is away from the property. This is of concern because “a small leak in the pipe on the unstable slope where the Chart’s propose to place it can have catastrophic results.”

[148] In further support of the legitimacy of their concerns, the Burgoons cite the Boyer Report, where Mr. Boyer states, “t[h]e placement of a water filled pipe on or above a slope can increase the risk of a landslide on that slope.”11 They also reference Dr. Salway’s evidence to the effect that a leaking pipe on a slope is accompanied by the risk of slope saturation and slope failure.

[149] Finally, the Burgoons also express concern about the location of the proposed diversion or intake structure of the MHP. They challenged the integrity of the bedrock channel at the point of diversion for the MHP, introducing a sample of bedrock12 allegedly taken from the proposed drilling location of the diversion structure (weir) as evidence of its poor integrity.

The Charts’ evidence and argument

[150] The Charts submit that the risk of leakage from the pipeline is low. The Panel heard evidence from Mr. Scarlett about the strength of the pipe that he recommends for use. Mr. Scarlett noted that the original water licence application showed PVC pipe, but that he is not recommending that it be used; rather, he recommends that high density polyethylene pipe be used because, in his experience, it is relatively quick to install and because it is tougher than PVC pipe. In his testimony, Mr. Scarlett spoke of the durability of other micro hydro projects where high density polyethylene pipe had been used. Although he claimed to have conducted “experiments” proving such durability, when pressed in cross-examination, Mr. Scarlett did not provide any corroborating material to support his claim to have conducted experiments.

[151] Regarding debris flows, the Charts submit that the testimony of various local residents concerning flooding and a minor avulsion incident on the McFayden Creek floodplain, failed to establish any connection with the authorized MHP. They argue that the evidence presented by the Burgoons in this regard was anecdotal, not site specific, and not in any way connected to their MHP.

11 Excerpt from Section 5, “McFayden Creek EAB Report” (“Boyer Report”) attached to letter from Christopher Jones to Panel dated September 5, 2008, and admitted into evidence as Exhibit 24. 12 Exhibit 14.

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[152] The Charts further argue that there was no evidence that the proposed project is likely to cause an avulsion (slough) in McFayden Creek. The Charts point out that the portion of McFayden Creek below the MCWUC intake is a patchwork of avulsion channels. The Charts submit that diverting 0.014 m3/s (0.5 cfs) at the proposed intake site for the MHP, and returning the flow 267 metres downstream (above the MCWUC intake), could not increase the possibility of such an avulsion.

The Respondent’s evidence and argument

[153] The Respondent argues that the Panel cannot take judicial notice of the fact that pipelines leak, and argues that the Burgoons’ concerns can be fully dealt with by way of good construction practices and supervision by a professional engineer.

[154] Regarding debris flows, the Respondent contends that the authorized works are small enough that the risk of major debris flows and events caused by said works is minimal.

[155] In response to the Burgoons’ reference to the Boyer Report in relation to the risk associated with the placement of the pipeline, the Respondent submits that the Burgoons fail to correctly set out Mr. Boyer’s opinion. While the Burgoons quote portions of the Boyer Report that outlined the risks of pipeline construction, they failed to set out Mr. Boyer’s conclusions. The Respondent points to page 4 of the Boyer Report, where Mr. Boyer states:

With the utilization of good construction and monitoring practice, the proposed pipeline can be constructed without measurably increasing the risk of a slough or landslide sufficient in size to block the channel. Even if a side wall slough or landslide was to occur and block the channel, the risk of it propagating into an in-channel debris flow is low.

Consequently there will be a low risk of debris flow initiation or sediment delivery associated with the construction of the pipeline. [Emphasis added]

[156] The Respondent submits that Mr. Boyer’s opinion is uncontradicted on this point.

[157] The Respondent also contends that, based on Mr. Boyer’s evidence, the works will be constructed to withstand a force behind it. Even if the diversion structure was dislodged by a debris flow, given the small size of the weir and, therefore, the small amount of material that would accumulate behind the diversion structure, the authorized works would not exacerbate any downstream effects.

The Panel’s Findings

[158] One of the foundations for the Burgoons’ concerns is that the pipeline will leak or break. Mr. Isaacson states in his report that a breach in the pipe is a “likely occurrence”, but did not provide any explanation for this opinion. The Burgoons have also suggested that the Panel take judicial notice of the fact that pipelines leak, and referenced the Cominco incident as an example of “public knowledge” of such an occurrence.

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[159] Of course there is always a theoretical possibility of a pipeline failing. However, the questions before the Panel are whether this pipeline will, or is reasonably likely to leak or break, and, if so, what are the potential consequences. The likelihood of the pipeline leaking or breaking depends on a variety of factors. In this regard, the Panel finds the Burgoons’ reference to the Cominco incident of little probative value; they provided no evidence of the nature or construction of the pipeline involved, or the cause of that pipeline failure.

[160] In this case, the proposal is for high density polyethylene to be used for the pipeline. There is no evidence before the Panel that would support a finding that, if high density polyethylene material is used for the penstock or pipeline of this MHP, there is any particular risk of failure. Such materials appear to be commonly used in the construction of MHP’s, according to the uncontradicted evidence of Mr. Scarlett. Based upon the evidence, high density polyethylene pipe appears to be ideal material for this type of project, provided the pipe is fused properly and in accordance with manufacturer’s directions. In this respect, good construction practices and supervision by a professional engineer would normally manage any residual or inherent risk of pipeline leakage. This will be further discussed below.

[161] The Burgoons also argued that there is an increased risk of a landslide, sloughing and/or a debris flow due the placement of the pipe on or above a slope.

[162] On cross-examination, Dr. Salway agreed with the general proposition that, where there is a leaking pipe on a slope, there is an accompanying risk of a slope failure. However, Dr. Salway’s expert opinion report did not address pipeline construction and possible leaks. He only stated that the pipe would be high density polyethylene pipe.

[163] The best study of the debris flow hazard is contained in a March 1999 report titled “Perry Ridge Stream Channels Survey”, prepared by SW. Chatwin Geoscience Ltd. (the “Chatwin Report”). 13 Although the authors of the Chatwin Report did not testify, all three experts - Dr. Salway, Mr. Isaacson and Mr. Boyer - refer to and rely on the Chatwin Report in their respective reports.

[164] While McFayden Creek is described by Chatwin as having a “very high debris flow hazard”, the Panel notes that this is only a general characterization of McFayden Creek. In fact, each of the reaches on McFayden Creek is characterized by Chatwin in a different fashion. Based on their study, McFayden Creek has a high debris flow initiation hazard associated with the upper and middle watershed; i.e., in Reaches 6, 7, 8 and 9. For example, Reaches 7 and 9 are described as having a “high debris flow initiation hazard” and a “high debris transport hazard” (p. 51).

[165] However, Reach 5, which is the location of the diversion structure of the authorized MHP, is described at page 51 of the Chatwin Report as follows:

Reach 5 870 - 1070 meters

13 Excerpts of the Chatwin Report at Tab 6, Exhibit 5A.

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Channel flows through bedrock shelf waterfalls up to 3 meters. The landslide hazard of sidewalls is low and there is little source of available bedload. All hazards are low, but the debris flow transport capacity is high. [Emphasis added]

[166] Reach 4, which is adjacent to the proposed pipeline route, is described by the Chatwin Report as having a low debris flow initiation hazard, and a moderate debris flow transport capacity (p. 51).

Equally important, the Chatwin Report also concludes at page 6 that the overall risk of a debris flow on McFayden Creek is low: “Frequency is low, but magnitude is very high.”

[167] To summarize, the evidence before the Panel is that, in the upper steep reaches of McFayden Creek, that is Reach 7 and 9, the debris flow initiation hazard is high and debris flow transport capacity is high. For Reach 8, the gradient is only 21% compared to 30% for Reach 7, and 37% for Reach 9. For Reach 8, the debris flow initiation hazard is low, and debris flow transport hazard is high.

[168] As noted above, the proposed intake for the MHP is in the middle of Reach 5, and Reach 4 is located adjacent to most of the lower pipeline. Reach 3 starts approximately where the MCWUC intake is located. Based on their consideration of the Chatwin Report and the authorized works under the Licence, both Dr. Salway and Mr. Boyer state that, in Reach 5, the debris flow initiation hazard is low, the landslide hazard of the sidewall is low, and debris flow transport capacity is high. In Reach 4, debris flow initiation hazard is low and debris flows transport capacity is moderate.

[169] Mr. Isaacson’s report and testimony does not contradict this evidence. In cross-examination by the Respondent, Mr. Isaacson agreed with the Chatwin Report’s description of the reaches that make up McFayden Creek, and the Report’s assessment of the debris flow hazards in these reaches. Evidence given by Mr. Isaacson is that debris flows generally originate from mid-to-high level slope range, and the authorized works are of such a size that they would contribute little to the impact of a major debris flow if one were to occur.

[170] The Panel acknowledges the anxiety of the Burgoons’ lay witnesses respecting the risk of a major debris flow. This was evident in the anecdotal evidence of slope failures and their concerns with the general instability of McFayden Creek and Perry Ridge. They are concerned about potential property damage and public safety should a major debris flow occur. The Panel sympathizes with the Burgoons and other water users of McFayden Creek since there is no question that there is a risk of a debris flow being initiated in the upper reaches of McFayden Creek. Moreover, the evidence confirms that the debris hazard area, should a major debris flow take place, is well below the authorized works and the MCWUC intake box, and could affect some of the properties. While the frequency or risk of this type of event taking place is said to be “low”, that is hardly comfort to the Burgoons and the other water users of McFayden Creek who may be affected by

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a naturally occurring major debris flow that starts in the upper reaches of the creek, should one occur.

[171] However, the issue for the Panel is whether the MHP, as authorized in the Licence, poses a risk of causing these events to occur such that the Licence should be rescinded. Given the existing threats, the more appropriate question may be whether the authorized works increase the existing or naturally occurring risk of hazards, such as debris flow initiation, debris flow transport or debris flow flooding, landslides and/or sloughing in those portions of McFayden Creek affected by the Licensed works; in particular, placement of pipeline. While the final location of the authorized works is intended to be fixed in accordance with the terms of the Licence, the approximate location of both the diversion structure, the pipeline or penstock, and the powerhouse was discussed during the hearing and observed during the site visit.

[172] The Panel concludes that the best evidence on the likelihood of sloughing, landslides and debris flows caused by the authorized works, is from Mr. Boyer. Mr. Boyer is the only expert that clearly outlined the risks associated with constructing the pipeline and then discussed the proposed pipe location relative to the potential risks (paragraphs 3, 4, and 5).14 His evidence is thorough and was uncontradicted. He states in Section 5, pages 3-4, of his report as follows:

Isaacson has expressed a concern about the effects of the pipeline on potential debris flow hazards. The placement of a water filled pipe on or above a slope can increase the risk of a landslide on that slope. A potentially unstable slope is one that is prone to sloughing or landslides due to the steepness, length of the slope and the type of soil. The construction activities associated with the placement of a pipe can alter the landslide hazard. Operating machines on or above a potentially unstable slope can alter the natural drainage patterns and direct or concentrate runoff onto a particular area and a cause a slough or landslide. In addition, if excavation work is required, the inappropriate placement of excavated material can overload a portion of the slope and cause a slough or landslide.

Water discharged onto a slope from a leaking or broken pipe can cause a slough or landslide on a potentially unstable slope.

A slough or landslide from a gulley slope or sidewall into a creek channel can cause a blockage of the channel. Water and bedload material can accumulate behind the blockage. In channels with steep gradients there is an increased risk of the initiation of an in-channel debris flow if the blockage should breach rapidly. A rapid breach or failure of the blockage can release a flood wave of water, soil, and timber debris which can run down the creek channel and damage downstream infrastructure and property.

14 Reference to Section 5, pages 3 – 4, Exhibit 24.

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For the most part, the pipeline from the Charts’ intake to the powerhouse can be routed over terrain where there is no direct slope connectivity to McFayden Creek. Except for a few areas, there is the opportunity to place the pipeline several meters back from the crest of the creek gulley sidewall and/or over terrain where there is a bench or intermediary gully between the slope where the pipeline will run and the McFayden Creek gulley. In the event that water from a pipeline leak or break were to cause a slough or landslide, the slough or landslide would run out onto the terrace or into the intermediary gulley and not into McFayden Creek. There are a few short sections where the pipeline will have to be placed on a slope with a direct connection to the creek. However, in the event of a slough or landslide in these areas, there is a very low likelihood that the event would result in the initiation of an in-channel debris flow.

Reach 5 is described above. Reach 5 starts at the apex of the debris flow fan and continues upstream past the proposed intake site. Between the apex and the proposed intake site the channel flows over bedrock. The landslide hazard of sidewalls is rated as low (5). The presence of bedrock and shallow soil layer combined with short sidewall slope length indicates that the risk of sediment delivery from the construction activity and/or a pipe break is low.

Downstream from the apex of the debris flow fan, the pipeline will be routed adjacent to Chatwin’s Reach 4 and partially into Reach 3 (5). As noted by Chatwin (5) and Apex (4), Reaches 4 and 3 are located in a deposition zone where the primary hazard is associated with debris deposition not initiation. The channel is incised running through the fan over a boulder substrate. The channel gradient is 20% in Reach 4 and drops to 17% in Reach 3 (5). The area is mapped as the start of the high debris flow depositional zone (4). The channel sidewalls are in the glaciofluvial terraces. The glaciofluvial material and short sidewall slope distances above the creek result in the debris flow initiation hazard being low through this reach. With the utilization of good construction practices and supervision by a professional engineer, the proposed pipeline can be constructed without measurably increasing the risk of a slough or landslide sufficient in size to block the channel. Even if a sidewall slough or landslide was to occur and block the channel, the risk of it propogating into an in-channel debris flow is low.

Consequently, there will be a low risk of debris flow initiation or sediment delivery associated with the construction of the pipeline.

[Emphasis added]

[173] Finally, the Burgoons specifically raised concerns with the proposed diversion or intake structure of the MHP, challenging the location through the introduction of a sample of bedrock which they said was taken from the proposed drilling location of the diversion structure (weir). This sample rock was described by Dr. Salway in cross-examination as “not particularly competent”.

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[174] The Panel finds this physical evidence to have little probative value. The Burgoons were unable to establish the exact location of where the bedrock sample submitted into evidence was taken and, in particular, were unable to establish that the rock was taken from the proposed drilling location of the diversion structure. This was confirmed during the site visit, attended by all parties on October 23, 2008. It was also confirmed at the site visit that the MHP’s diversion structure would be located in a portion of McFayden Creek with a predominately bedrock channel.

[175] It is also noteworthy that the MCWUC filed an Application for a Change of Works on a Water Licence15 on August 8, 2008, seeking approval to permanently relocate its water intake upstream of the authorized MHP intake. The Application is signed by, among others, Helen Elzinga and Marilyn and Barry Burgoon. This proposal tends to undermine the Burgoons’ position that the MHP’s diversion structure upstream in the predominately bedrock channel would unreasonably contribute to flooding, deposition of material, and avulsions downstream, given they propose a similar location for their water intake.

[176] The Panel also notes that a letter from Mr. Isaacson accompanies the MCWUC’s application, in which Mr. Isaacson states that relocation of the MCWUC intake from its present location would move the

… intake from an unstable location to a stable location and one where more of the flow stays on the surface. The water stays on the surface due to a natural channel that is close to or on bedrock and not made of unstable deposited material that is the case with the present location. [Emphasis added]

[177] In the event that the diversion structure was dislodged by a debris flow, the Panel further accepts the evidence of Mr. Boyer regarding the risk of damage downstream, as the most persuasive. Relying on the Charts’ evidence regarding the design of the MHP, and Mr. Boyer’s assessment of the risks posed by the authorized works, Mr. Boyer states at page 2 of his report:

The installation of a small concrete and steel intake structure in the steep, bedrock controlled channel, as proposed on McFayden Creek, will not increase the flood hazard to downstream values (water supply or property damage) …. The Charts’ intake structure is designed to be overtopped and subjected to high velocities and flow depths without failing. Even if the structure was to fail there would be little or no downstream consequences.16 [Emphasis added]

[178] This opinion was based on the following observations: the small size of the intake structure; the fact that there would be very little ponding/hydraulic loading; the method of construction (concrete and re-bar anchored to bedrock); and the fact

15 Document C. 16 Reference to Section 3, page 2 of the Boyer Report, Exh. 24.

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that the installation was to be designed and constructed under the supervision of a professional engineer.

[179] There is no evidence before the Panel that suggests that any of these observations were inaccurate or inappropriate in the circumstances. Based on this evidence, the Panel finds that the authorized works pose a low risk of debris flow initiation, and that the risk of the Licence exacerbating any downstream effects of a debris flow, landslide or sloughing, which is initiated in the higher reaches of McFayden Creek, is also low.

Conclusion on this Issue

[180] The Panel has carefully considered the evidence and argument before it with respect to the risk of pipeline failure, and the associated concerns relating to initiating debris flows and sediment delivery. Based on this evidence, the Panel agrees that there is a low risk of debris flow initiation or sediment delivery associated with the location of the pipeline; that with the utilization of good construction practices, including supervision during construction, the proposed pipeline can be constructed and operated without measurably increasing the risk of a slough or landslide sufficient in size to block the channel of McFayden Creek; and that the risk of such a slough or landslide propagating into an in-channel debris flow appears to be low. Conditions “n”, “p”, “s” and “t” of the proposed Licence all address the requirements for monitoring during the planning and construction phase. Moreover, the Charts advise that that they will turn off their system when they are not in residence.

[181] This ground of appeal fails.

[182] Notwithstanding these conclusions, the Panel is of the opinion that even a marginal risk of downstream consequences can be addressed through the final project design. Mindful of the high water flows during the freshet, the Panel is of the view that an additional term should be added to the Licence, one that is designed to ensure that peak flows do not follow the route of the pipeline trench in Reach 4:

Pipeline connection to the dam, including the beginning of the pipeline trench, must have a positive cut off to prevent peak flood flows from following the route of the pipeline.

[183] This condition will ensure that the MHP does not exacerbate the ever present natural risk posed by peak flows running through Reaches 4 and 5.

6. Whether evidence of geological hazards associated with Perry Ridge should be considered in this case and, if so, how does this evidence affect the Panel’s conclusions in Issue #5.

[184] The Burgoons submit that McFayden Creek is situated on Perry Ridge which has “an extensive history of catastrophic geological instability, much of which is set out in Exhibit 5A and is also documented in the Reasons for Judgment of Hon.

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Justice Parrett at Tab 1 of the Exhibit 6.” They go on to state that there have been “various significant geological events on Perry Ridge, each having profound hydrological impact” and that the “unstable geological and hydrological conditions which surround McFayden Creek and Perry Ridge are rendered all the more unpredictable by the onset of climate change, which Mr. Isaacson spoke about in his evidence.”

[185] As an example of the geological hazards associated with Perry Ridge, the Burgoons refer to the March 2007 Vallican landslide which was described in the oral and photographic evidence presented by Marilyn James.17 The Burgoons conclude by stating that:

Given the inherent instability and complexity of the hydrology of Perry Ridge and the associated risks to residents, property and transportation routes on the valley bottom, the Licence should not issue for the reason that it is not possible, on the evidence before this panel, for the RWM or the Board to be satisfied that the construction, installation and ultimate use of the system would be free from unreasonable adverse effects.

[186] The Respondent responds to this argument by stating:

… the so-called Vallican slide, …, is not relevant, except for the obvious point that the debris depicted was well in excess of what would be lodged behind the authorized works. In any event, the slide was not with respect to McFayden Creek, and the slide was not caused by the effects of a micro-hydro facility.

[187] The Respondent also argues that vague references to the “geological hazards” of Perry Ridge are not relevant given that the “geological hazards” of McFayden Creek have been fully dealt with through the evidence of Mr. Boyer.

The Panel’s Findings

[188] The Panel finds that general evidence on the occurrence and impact of major debris flows that have taken place on Perry Ridge (other than McFayden Creek) is not particularly relevant or helpful to the issues raised in this appeal. The Panel heard extensive and uncontradicted expert evidence on the geological hazards associated with McFayden Creek, as well as extensive new evidence on the potential adverse impacts of the authorized MHP, all of which negate the need for general evidence of geological events on Perry Ridge.

[189] Moreover, the Panel has concluded that, based on the evidence and analysis discussed earlier in this decision, there is a low risk of debris flow initiation in Reach 4 and 5 as a result of the proposed diversion structure and pipeline, and that such risks can be managed through good construction practices and supervision by a professional engineer in accordance with the modified terms of the Licence. The

17 Series of Photos, Exhibit 13.

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evidence concerning major flow events on Perry Ridge does not alter the expert evidence before the Panel concerning the “frequency” of major debris flows on McFayden Creek. As indicated earlier, the expert testimony provided by Mr. Isaacson, Dr. Salway and Mr. Boyer, all rely on the Chatwin Report, which concluded that the “frequency” of the debris flow hazard on McFayden Creek is low. While the Chatwin Report identifies at least three major debris flow events since deglaciation, which have resulted in deposits of roughly 60,000 cubic meters in the valley bottom, the last major debris flow appears to have been 300 hundred years ago.18 Non-site specific evidence, that is evidence concerning recent debris flow events in other areas of Perry Ridge, adds nothing useful to the evaluation of the frequency of the debris flow hazard on McFayden Creek.

[190] Based on these considerations, this ground of appeal fails.

7. Whether the Licence will negatively impact the quantity of water available to other licensees on McFayden Creek, contrary to section 15 of the Water Act.

[191] The Burgoons submit that the Respondent issued the Licence contrary to section 15 of the Water Act, by failing to give domestic use priority over power use as contemplated by the Act. They submit that, in issuing the Licence, the Respondent failed to evaluate the evidence of adverse impacts to the water rights of prior licensees.

[192] The Burgoons’ primary concern appears to be that, while the pre-existing water rights on McFayden Creek are “entrenched in law by operation of the Water Act”, the ability of these licensees (15 families) to realize their existing water rights is already tenuous because the water flow in the creek is “inconsistent”. They point out that one of the reasons the MCWUC filed its 2008 application to relocate its water intake upstream was to secure a more reliable flow of water. They rely on Mr. Isaacson’s letter in support of the application, in which he describes the watercourse as a highly erratic stream with steep slopes and a shifting stream channel that threatens to go subsurface with a resulting loss of water to prior users.19

[193] The Burgoons submit that the risk to other users should not be increased, especially when it is for power generation. They argue, “[f]rom a public policy perspective, the use of water for power purposes is a subordinate value to the use of water for domestic and irrigation purposes”, and that this is reflected in the Water Act. They also refer to the “passionate” testimony of Helen Elzinga, the

18 Tab 6, Exhibit 5A, page 18. 19 Document C, August 8, 2008 Application for Change of Works on a Water Licence, and attached letter from Mr. Isaacson, dated May 6, 2008.

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senior member of the MCWUC, that McFayden Creek is regarded as a “sacrosanct source of drinking water”.

[194] The Burgoons further argue that the threat of reduced water associated with the authorized MHP cannot be dismissed on the basis of the notion that the proposed power use is “non-consumptive”. They submit that there is a risk that water will not be returned to the stream due to pipeline leaks, and that such an event would compromise the MCWUC’s water supply.

[195] The Respondent submits that the Burgoons have not interpreted section 15 of the Water Act correctly. Section 15 of the Act simply establishes that the priority of licences is determined by date of precedence. It does not speak to the requirement to consider impacts on other users of the water. Similarly, section 15 does not state that domestic water uses are to have precedence over power uses. This would only be the case if the dates of the respective licences on the same stream are the same (section 15(2)).

[196] However, the Respondent does agree that, when deciding whether or not to grant a licence, it is relevant to consider the potential impact that the new licence would have on other licensees. In the subject case, the Respondent relies on the affidavit of Lorraine Schmidt to argue that the interests of other water users were, in fact, carefully considered in her supply/demand analysis. Further, in order to ensure the rights of water users were protected, condition “m” of the Licence has been added. It requires water to be returned above any downstream points of diversion.

The Panel’s Findings

[197] The evidence before the Panel is that McFayden Creek suffers from seasonal low water flows, with the associated risk of water shortages. This is a natural and seasonal cycle. The evidence of the Burgoons’ expert witness, Mr. Isaacson, appears to be that, at the present location of the MCWUC intake, much of the flow of McFayden Creek has already taken a subsurface course with the result that water availability is compromised, particularly during low flow periods.

[198] This particular evidence was provided to the Respondent in support of the “Application for Change of Works on a Water Licence” submitted by the MCWUC in August of 2008.20 MCWUC’s objective was to secure approval to move their intake structure further upstream to bedrock. Ironically, and as the Panel pointed out earlier, this Application tends to undermine the Burgoons’ concern about the stability of the proposed location of the diversion structure of the MHP. And it may be that a similar location to the authorized works would also be beneficial to the MCWUC in terms of securing a more reliable flow of water. However, the merits of the MCWUC Application are not before the Panel in this appeal.

20 Document C.

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[199] On the question of whether the Licence will impact existing licensees, the Panel agrees with the Respondent that while section 15 of the Water Act establishes that the priority of licenses is determined by date of precedence, it does not give domestic use a priority or precedence over power use, unless the situation in section 15(2) arises. Section 15(2) does not apply in this case.

[200] Nevertheless, there is no doubt that the amount of water allocated to prior licensees is an important consideration when a new application for a water licence is being considered. On the facts of this case, it is clear that Ms. Schmidt performed a supply/demand analysis of water on McFayden Creek and that the Respondent accepted this analysis. It is the reason that the Charts’ application for a domestic licence was refused.

[201] On the question of whether the Licence should be considered “non-consumptive”, the Panel finds that it should. The Licence conditions require the Charts’ to return the water to the creek, which suggests that the Licence will not impact the other licensees in terms of reducing the seasonally available flow entering the MCWUC point of diversion. Further, there is no evidence before the Panel that the amount of water will evaporate while in the pipeline or be lost in the normal course of events.

[202] Regarding the risk of a pipeline failure that diverts water from the MCWUC’s intake, the Panel has already found no evidence that this is likely to occur, and that good construction and monitoring should alleviate these concerns.

[203] Finally, there is no evidence before the Panel to suggest that the construction of the MHP would lead to water flowing sub-surface, thus by-passing the existing MCWUC intake. In fact, on cross-examination, Mr. Isaacson confirmed that he had not undertaken any testing to determine if the bedrock, at the location of the diversion structure of the MHP, is in such a state that it would lead to water flowing underground and by-passing the MCWUC intake.

[204] Based on these considerations, the Panel is unable to conclude that the Licence will negatively impact the quantity of water available to other licensees on McFayden Creek. It is unfortunate that the relationship between the parties is so compromised. In light of the MCWUC’s Application, the situation on the creek may be amendable to a mutually beneficial engineered solution.

[205] This ground of appeal fails.

8. Whether the Licence will have a negative impact on water quality.

[206] The Burgoons are concerned that the Licence will negatively impact the quality of water arriving at the MCWUC intake. This impact may result from two sources: construction of the MHP and/or sloughing or landslides caused by the licensed project.

[207] The Burgoons argue that construction of the MHP could have an adverse impact on the ability of pre-existing licensees to realize their water rights, which

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they describe as continued access to “pristine water quality”. They flatly object to drinking water that is sourced downstream from the authorized works.

[208] Further, should they wish to sell their property, they don’t want the property to be “encumbered by the discovery by potential purchasers that there will be people messing around in their drinking water upstream, drilling a diversion into the streambed, exposing the streambed to fracture and introducing foreign agents into the water supply”. To put it colloquially, the Burgoons adopt Mr. Isaacson’s statement that: “I wouldn’t want someone mucking around in my drinking water.” They also argue that the construction of the works during the dry season does not guarantee against drinking water contamination.

[209] The Burgoons further contend that the risk of a slough or landslide is acknowledged in the Boyer Report, and that, regardless of whether the slough or landslide is big enough to block the channel, it would nevertheless introduce a significant amount of sediment and debris into the stream flow which would undermine the quality of water used for domestic purposes by the downstream users, including the Burgoons.

[210] The Charts argue that there is no evidence to support allegations that the construction and operation of the MHP will pose a risk of contamination of McFayden Creek or impact the quality of the MCWUC’s water supply. Moreover, they have personally observed human and domestic animal use on trails alongside McFayden Creek, upstream of the MCWUC intake, as well as evidence of wild animals in the area. The presence of people and animals indicate that the creek, and its surrounding area, is not currently “pristine”; there are various sources of contaminants that may already impact the water quality in McFayden Creek.

[211] The Respondent submits that while the Burgoons initially raised a number of water quality issues during the course of the hearing - the potential for giardia to be placed in the stream during construction; the potential for sedimentation to occur as a result of construction activities; the introduction of chemicals into the water during construction; the solution of carbon dioxide in the water; the use of cement in construction; and the potential increased turbidity caused by the operation of the works – they did not raise these issues in their closing argument. The Burgoons advise, however, that they have not abandoned any of these arguments, and that each of these factors remain a consideration in the “…appropriate environmental regulation of McFayden Creek.”

[212] The Respondent also takes the position that, with respect to water quality, there is a lack of expert evidence before the Panel to support assertions of water quality degradation. The Respondent relies on the Boyer Report, which states that the location of the intake is where the creek flows on bedrock. He submits that there is no evidence that drilling into the bedrock would lead to an escape of water from the creek. Further, Mr. Boyer concludes that the placement of the intake works cannot cause an increase in water turbidity or bedrock movement to the MCWUC intake (Section 6 at page 5 of the Boyer Report).

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[213] The Respondent also asserts that Mr. Isaacson confirmed in cross-examination that he had not undertaken any testing to determine if the bedrock is in such a state that it would lead to water flowing underground and by-passing the MCWUC intake. Dr. Salway testified that: “…whether causing a few new fractures in that vicinity would have any effect on the stream is another matter. In my opinion, it wouldn’t ….”

[214] The Respondent also asserts that discharging water back into McFayden Creek at the tailrace will not cause an increase in turbidity. In support, he refers to the evidence of both Mr. Isaacson and Mr. Boyer who acknowledge this is the case as the water would be spilling onto bedrock. The Respondent further notes that water flowing back into the stream will be slowed by the generator and by rocks placed in the creek to dissipate the water speed.

[215] The Respondent relies on the statement in the Boyer Report that: “the stability of a steep, bedrock and boulder-lined mountain stream channel, like the McFayden Creek channel, is not affected by reduced flows or even complete de-watering.” Mr. Boyer also concludes that: “Raising and lowering water levels for the turbine operation will have no measurable effects on bank stability and any effects will most certainly be in keeping with those imposed by natural flow variations.” (Section 7, page 5)

[216] In MCWUC’s closing remarks, their major concern was water quality associated with the construction and operation of the MHP. Much of their concerns were based on a report by Jennifer Yeow, owner of Passmore Laboratory Ltd. The Respondent argues that this should not be relied upon because many of the matters raised in the MCWUC’s argument require evidence, in many cases expert evidence.

The Panel’s Findings

[217] The Panel has carefully considered the evidence and argument before it with respect to water quality and turbidity. The Panel is cognizant of the honestly expressed concerns about the impact the Licence will have on water quality, expressed by the water users, including the MCWUC.

[218] Regarding construction of the MHP impacting downstream water quality, the Panel is satisfied on the evidence that there should be no such negative impact. The construction is to occur when the creek bed is dry. Although the Burgoons’ maintain that this does not “guarantee” that water quality will not be impacted, this is not the test. Further, there is no credible evidence to suggest that construction in a dry creek bed will, or is reasonably likely to, impact water quality. In fact, the evidence is to the contrary: this is the accepted construction practice.

[219] On the question of increased turbidity, the Panel notes that most of the pipeline will be isolated from the creek. Mr. Isaacson expressed a concern that the “pipeline trench and clearing will be a sediment producer and a place for runoff water to accumulate and flow to the stream on steep side slopes carrying introduced sediment.” In contrast, there is Mr. Boyer’s evidence. At Section 5 of his report he states:

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For the most part, the pipeline from the Charts’ intake to the powerhouse can be routed over terrain where there is no direct slope connectivity to McFayden Creek. Except for a few areas, there is the opportunity to place the pipeline several meters back from the crest of the creek gulley sidewall and/or over terrain where there is a bench or intermediary gully between the slope where the pipeline will run and the McFayden Creek gulley. In the event that water from a pipeline leak or break were to cause a slough or landslide, the slough or landslide would run out onto the terrace or into the intermediary gulley and not into McFayden Creek. [Emphasis added]-

[220] Mr. Boyer also goes on to indicate that, while there are a few short sections where the pipeline will have to be placed on a slope with a direct connection to the creek, “… in the event of a slough or landslide in these areas, there is a very low likelihood that the event would result in the initiation of an in-channel debris flow.” Admittedly, if material enters the creek there may be a temporary decrease in water quality. However, the Panel is of the view that there is a low risk of an undetected pipeline leak or failure while the system is in operation, and therefore a low risk of turbidity in relation to the operation of the pipeline portion of the MHP.

[221] Mr. Isaacson also expressed concern in his February 22, 2008 report that the return flow from the tailrace will cause erosion to the stream bed, which will, in turn, increase the likelihood of more turbid water and bedrock material reaching the MCWUC intake. The Panel is of the view that the risk of turbidity arising as a result of the return flow from the tailrace is low. With good project design, the energy from the tailrace can be dissipated over rip rap or rock fragments or a comparable project design. Indeed, the evidence is that most of the energy is dissipated across the Pelton wheel (i.e., turbine). At page 5 of his report, Mr. Boyer addresses this concern by stating:

After going through the turbine the water will be returned to the creek through a pipe (tailrace). The concern has been raised [referring to the February 22, 2008 report of Mr. Isaacson] that this return flow will cause erosion of the stream bed which will in turn increase the likelihood of more turbid water and bedrock material reaching the MCWUC intake. The risk of this occurring is very low because the water flowing from the pipe will be discharged into a channel which will be lined with rock fragments [referring to the project description provided by Dr. Salway in his March 2007 report]. The rock fragments will be sized to resist displacement by the flows from the turbine. The rocks will dissipate flow velocities prior to discharge to the natural stream bed. This will ensure that the diverted waters do not mobilize sediment that would result in increased water turbidity and/or bedrock materials to the MCWUC water supply intake.

[222] The Panel finds the evidence of Mr. Boyer on the risks posed by the proposed design project design to be persuasive on this issue. The Panel finds Mr. Boyer’s report and explanation more thorough, and his expertise greater in this area. The Panel is satisfied that the turbidity concerns may be adequately addressed through

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the utilization of good construction practices and supervision by a professional engineer, and that the terms of the Licence ensure that this will take place.

[223] Regarding the issue of “pristine” water quality, the Panel accepts the evidence that the area in and around the creek is accessible to both humans and animals. In this respect, it is not “pristine”. The Burgoons also raised the possibility of grease getting into the water being discharged downstream. This could come from the bearing housing of the turbine wheel (if equipped) or the generator bearing housing. The final project design will undoubtedly include consideration of the type of generator that is used, with a view to selecting a system that does not allow drips of grease or oil to enter the water stream if bearings or seals on the generator start to wear. As well, project design can ensure that any drips of grease from the bearing house or the generator can be isolated from the tailrace water with good design. The conditions imposed on the Licence are designed to ensure good construction practices and supervision of a professional engineer in terms of the final project design. The Panel views the Licence conditions as adequate to deal with these concerns, given the small size of the turbine and the fact that any drips of grease or oil would also be very small.

[224] Regarding the information from Jennifer Yeow, the Panel agrees that her report was not properly admitted into evidence and no weight has been placed on it. Ms. Yeow did not testify at the hearing, her report was not tendered as an expert report, and the report was, accordingly, not subject to the usual scrutiny that comes from cross-examination.

[225] This ground for appeal fails.

9. Whether the Respondent gave too much deference to the Charts’ engineer prior to the issuance of the Licence, and whether there are now too many details left to the discretion of an engineer in the construction phase, making the impact of the Licence unknowable?

[226] The Burgoons submit that the Respondent improperly deferred to the Charts’ engineer, Mr. Scarlett. They argue that:

This kind of deference to a private, interested party is inconsistent with the requirement that the RWM, in issuing the Licence, and/or the Board, in affirming the Licence on a de novo basis, must consider the rights of prior licensees and evaluate whether the adverse impacts associated with the [proposal] are reasonable or unreasonable.

Government is the party required to exercise regulatory oversight over environmentally questionable practices. It is not appropriate for the RWM to abrogate its role in evaluating risk, by contracting that function out to a private, interested party hired by the proponent. The evidence of adverse impact is for the RWM to consider and evaluate. The RWM has erred in excluding such matters from his consideration and leaving such matters to the prospective consideration of an engineer.

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The Burgoons cite the case of Planedin v. British Columbia (Ministry of Environment), [2007] B.C.E.A. No. 20 (Q.L.) [Planedin], as support for the proposition that the Board has the authority to vary a hydroelectric licence on the basis that the licence had been issued without full consideration of the “potential for stream bank erosion”. The Burgoons argue that, in Planedin, the alignment of the tailrace had not been finalized prior to the issuance of the licence as more information was required before finalizing the design, and that, as that information came in, the potential for erosion of the stream bank became apparent. The Burgoons quote the Board in Planedin as saying:

The Panel notes the Respondent’s submission that to the extent that physical impacts such as erosion and backwater effect from the tailrace become an issue, they can be properly addressed at the detailed design phase of the authorized works, which is yet to be done. The Panel is of the view that leaving this to be remembered and dealt with at a later date leaves too much room for uncertainty, …. [Emphasis added]

[227] In the present case, the Burgoons argue that the Respondent erroneously declined to evaluate certain risks on the assumption that the engineer provides an assurance of safety. They further submit that “common sense faith in an engineer is not good enough when the engineer need not be independent and where so much is at stake with respect to the project’s potential adverse impacts.”

[228] In closing argument, the Respondent agrees with the proposition that it is appropriate for the Respondent to consider “the potential effects of a proposed project”. However, the Respondent also submits that he did consider the issue of potential risks appropriately in the circumstances and in accordance with the broad discretion set out in section 12 of the Water Act. He argues that approving the Licence, while ensuring that the works will be designed and built under the supervision of a professional engineer, was entirely appropriate in light of the small scale of the project.

[229] The Respondent argues that the Panel has heard a great deal of evidence in this case and that there is more than sufficient information available to the Panel to weigh the potential risks posed by the Licence. In this regard, the Respondent particularly relies on the evidence of Mr. Boyer, which addresses the substantive concerns raised by the Burgoons, and which he argues is not, in substance, contradicted by the evidence of Mr. Isaacson.

[230] The Respondent further submits that the Planedin case is not helpful to the Burgoons. That case involved a far larger project – a 25 megawatt run-of-the-river hydroelectric project. He also points out that the Burgoons’ quotation from Planedin is taken out of context, and points out that the Board in Planedin went on to state at page 15:

The Panel notes the Respondent’s submission that to the extent that physical impacts such as erosion and backwater effect from the tailrace become an issue, they can be properly addressed at the

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detailed design phase of the authorized works, which is yet to be done. The Panel is of the view that leaving this to be remembered and dealt with at a later date leaves too much room for uncertainty, and it is prudent to address this as an added condition to the Licence. Accordingly, the Panel will add a condition at the conclusion of this decision. [Emphasis added]

[231] The Board left the licence in the Planedin case intact, and only added to the licence a condition that “[t]he Licensee will ensure that the necessary fieldwork will be done to ensure that the final design of the tailrace will mitigate potential negative impacts on the water flows and the sandy cut-bank” (pp. 20-21). The Respondent argues that the Board’s point in Planedin was that the issue of erosion should be made an explicit part of the licence so it would not be forgotten. It was therefore required that work be done to ensure that the final design of the tailrace would mitigate impacts.

[232] The Respondent further submits that the approach in Planedin is entirely consistent with the requirement set out in the Licence that is the subject of this appeal; that is, to have the works designed by and constructed under the supervision of a professional engineer.

[233] However, in final argument, the Respondent agreed with the Burgoons about the importance of the authorized works being constructed and operated in a safe manner. While he points out that a number of Licence conditions, specifically conditions “o”, “p” and “q”, are designed to address concerns around the safe construction and operation of the MHP, the Respondent also proposed to the Burgoons and Charts, in 2006, that additional conditions be added to the Licence in order to provide additional assurance that the authorized works would be constructed in a safe manner.21 They are:

• The Assistant Regional Water Manager be provided with the opportunity to inspect the site, with detailed drawings, and with the authorized works laid out on the slope with ribbons.

• The Assistant Regional Water Manager be given advance notice of the dates on which works are to be constructed so as to have the opportunity to inspect the construction in progress.

The Panel’s Findings

[234] The Panel has heard sufficient evidence in this case to weigh the potential risks posed by the MHP. Section 5 of the Boyer Report, which has not been contradicted by the evidence of Mr. Isaacson, describes the risk of debris flow initiation or sediment delivery associated with the construction and operation of the pipeline. And while the Panel agrees that it has the authority to vary a licence on

21 Letter from Christopher Jones to David Aaron and Donald Scarlett dated May 9, 2006, Tab 12, Respondent’s Book of Documents.

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the basis that the licence was issued without full consideration of potential risks, the Panel finds that the Planedin case does not assist the Burgoons’ argument that the Respondent erred in issuing the Licence with the condition that the works be designed by and constructed under the supervision of a professional engineer.

[235] The evidence before the Panel is that the Respondent did assess the risks posed by the authorized works, and that the small scale of the MHP, as well as the low risk of debris flow initiation or sediment, supported issuance of the Licence with conditions designed to ensure good construction of the authorized works under the direction of a qualified professional engineer.

[236] Further, the Panel has the detailed and uncontradicted evidence of Mr. Boyer, which supports the Respondent’s initial assessment of risk posed by the authorized works. There is no evidence before the Panel to suggest that this assessment is incorrect.

[237] As well, the Burgoons have not satisfied the Panel through their evidence or argument that reliance on a professional engineer, even one retained by the proponent and familiar with MHPs, is inappropriate in these circumstances.

[238] The Panel is sympathetic to the concerns voiced by the Burgoons and the MCWUC that the precise location of the pipeline (penstock) and turbine components of the MHP have yet to be finally determined. The Panel also agrees with the evidence of Mr. Boyer and wishes to emphasize, as he did in his testimony, the importance of professionally designed and supervised construction practices in terms of managing the identified risks of the authorized works.

[239] To this end, the Panel finds that the additional conditions proposed by the Respondent should be added to the Licence. These will provide additional assurance that the MHP will be constructed in a safe manner. The Panel has, however, modified the language proposed by the Respondent to increase the level of certainty with respect to the final engineered design of the MHP, and added some additional conditions that should ensure proper oversight by the staff of the Regional Water Manager during the construction phase of the MHP. The new Licence conditions are:

The Regional Water Manager be provided with the opportunity to inspect the site, with detailed drawings, and with the pipeline route and tailrace and the location of the turbine clearly marked with stakes in the filed and surveyor flagging attached; and

The Regional Water Manager be given advance notice of the dates on which works are to be constructed so as to have the opportunity to inspect the construction in progress.

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10. Whether the availability of an alternative source of power supply is a relevant consideration and, if so, is the availability of risk-free alternative source of power a ground to rescind the Licence.

[240] The Burgoons argue that the Respondent, and this Board, should consider whether the Charts have an alternative power supply available to them, and weigh this fact against the possibility of adverse risks from the Project. They submit that there is no impediment to the Charts obtaining power by way of conventional public utility supply, other than the Charts’ professed view that power lines “are ugly”.

[241] The Respondent submits that the Water Act does not require a consideration of alternative sources of power prior to deciding whether to issue a water licence for power purposes. Neither section 10 of the Water Act or section 2 of the Water Regulation make any reference to an evaluation of alternate sources of power as a piece of information that an applicant must provide. The Respondent also asserts that federal and provincial legislation is normally explicit where it requires a decision maker to examine alternatives to a given project, and points to section 16(1)(f) of the Canadian Environmental Assessment Act, and section 6.1(2) of the Ontario Environmental Assessment Act, as examples.22

[242] By way of background, the Respondent states that applications under the Water Act are evaluated on a case-by-case basis. An applicant must provide information with respect to the proposed source of water supply in accordance with section 2 of the Water Act. If successful, the applicant obtains the right to (depending on the nature of the application) use or store the water, and the right to construct works necessary for the use of the water or the power produced from it (see section 5). He notes that licences are issued with respect of water from a specific source of water supply and that the rights of the licensee are subject to any prior rights of licensees on the same body of water (section 15).

[243] Based on the above, there is no legal requirement to consider alternative means or methods of obtaining the water applied for. Further, in the case of a power purpose application, the Respondent argues that the Water Act does not require a comparison of the proposed project with alternatives to that project that would achieve the same end. Rather, the Water Act contemplates the consideration of the application for the use of water having regard for “… inter alia, the specific source of supply, and the potential impacts of the proposed project.”

The Panel’s Findings

[244] The Burgoons argue that the Respondent’s assessment of reasonableness of the risks posed by the MHP should have included what amounts to a risk-benefit analysis of the authorized works, and should have included consideration of such matters as whether there are alternatives available to the Charts for the supply of power to their property.

22 Respondent’s Book of Authorities, Vol. 1, Tabs 8 and 9.

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[245] Section 12 of the Water Act, while granting broad discretion to the Regional Water Manager in his consideration of water licence applications, does not expressly require an assessment of alternatives. In this regard, and as pointed out earlier, the statutory requirements of the Water Act are markedly different than those of other enactments. It is also different from the test set out by the courts for consideration of pesticide permits, where a consideration of alternatives was required by the courts as part of the analysis for the statutory test of “unreasonable adverse effect” (Pesticide Control Act, now the Integrated Pest Management Act). The Panel finds that the Water Act does not require the consideration of alternative sources of power available to the Charts. The Respondent did not act in error in failing to consider the alternatives available to the Charts for the supply of power to their property.

[246] The Respondent also argued that, even if a consideration of alternatives was required by the Water Act, there was no evidence before the Regional Water Manager, or before this Panel, as to the alternative sources of power available to the Charts, or the potential costs and impacts of those alternatives. The Panel agrees.

[247] This ground of appeal fails.

11. Whether the Licence conditions are sufficient and enforceable.

[248] The Burgoons submit that the conditions imposed by the Licence are insufficient to address concerns regarding the potential adverse impacts of the authorized MHP. They also suggest that the Licence conditions are not capable of being enforced, and allude to the Charts “resistance to implementing the preventative measures prescribed by the RWM.”

[249] The Respondent simply replies by saying that he does not understand the Burgoons’ assertions on this issue, and states that the Licence conditions are enforceable in the normal course under the Water Act.

The Panel Findings

[250] There is no evidence to support any of the allegations or arguments made by the Burgoons in relation to this issue. The fact that the Charts have appealed a number of the conditions attached to the Licence is not evidence of their “resistance” to the conditions imposed by the Respondent: they have a right of appeal which they have chosen to exercise, as have the Burgoons. The comment also serves to illustrate the unfortunate level of animosity between some of the parties that characterized most of these proceedings.

Conclusion on the Burgoons’ appeals

[251] Although there are three conditions added by the Panel, the Panel finds that the Licence was properly issued. The appeal against the issuance of the Licence is dismissed.

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[252] The appeal against the Permit authorizing occupation of Crown land, of which little was said, is also dismissed.

IV.

THE CHARTS’ APPEAL

The Issues in the Charts’ Appeal

[253] The Charts’ position can be summarized as the following issues, to be considered separately:

1. Whether the Charts should be granted a water licence for domestic purposes.

2. Whether condition “l” of the Licence requiring a residual flow is reasonable.

3. Whether condition “m” of the Licence, specifying where water is to be returned in the stream, is reasonable.

4. Whether condition “n” of the Licence requiring the Charts to install a “meter” is reasonable.

5. Whether Licence conditions “k”, “q” and “r” are reasonable.

Discussion and Analysis of the Issues

1. Whether the Charts should be granted a water licence for domestic purposes.

The Charts’ first ground of appeal is that the Respondent erred in refusing to issue the water licence for domestic purposes. “Domestic purpose” is defined in section 1 of the Water Act as follows:

“domestic purpose” means the use of water for household requirements, sanitation and fire prevention, the watering of domestic animals and poultry and the irrigation of a garden not exceeding 1 012 m2 adjoining and occupied with a dwelling house;

The Charts agree that McFayden Creek is fully subscribed, but argue that:

(a) they purchased the property on the representation by the Ministry that a licence for domestic consumption could be granted; and

(b) it should still be possible to withdraw water from McFayden Creek for consumptive use during the freshet.

[254] Regarding (a), the Charts argue that Ms. Schmidt provided inaccurate information to them, information which they relied upon when deciding to purchase the property. They refer to a telephone conversation between Birgit Chart and Ms. Schmidt on December 3, 2003. They contend that Birgit Chart was told that that there would be no problem issuing a domestic water licence on McFayden Creek.

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[255] In support of their claim that a misrepresentation was made by the Ministry, the Charts refer to the Report by Ms. Schmidt23, which shows that the notation for McFayden Creek was “Possible Water Shortage”, rather than “fully recorded”. They point out that the “fully recorded” notation was not added until after 2005, thus making it more likely that Ms. Schmidt made this statement.

[256] Regarding (b), the Charts submit that it is open to the Panel to provide a partial remedy for this misrepresentation/misunderstanding by allowing the Charts to access McFayden Creek water at appropriate times of the year, such as during freshet.

[257] The Burgoons and the MCWUC vigorously oppose the issuance of any consumptive use licence to the Charts on the grounds that there are already water shortages on McFayden Creek. Their concerns with water shortages were set out in Part III of this decision under the issue relating to water quantity.

[258] The Respondent submits that the denial of the Charts’ application for a domestic purpose water licence was based on an appropriate application of the Water Act. He argues that the Charts have not provided any evidence that would indicate that the refusal to grant a water licence for domestic purposes was incorrect. In fact, he points out that the Charts have acknowledged that McFayden Creek is “fully recorded”. The Respondent submits that this is a sufficient basis for refusal of the domestic water licence.

[259] Regarding the alleged misrepresentation, the Respondent denies there was any misunderstanding arising out of the conversation between Birgit Chart and Ms. Schmidt: Ms. Schmidt did not tell Birgit Chart that she could not see a problem with issuing a domestic water licence. The Respondent asserts that the staff of the Ministry carefully reviewed the water supply balance in McFayden Creek and correctly concluded that there was insufficient water to provide an additional licence.

[260] The Respondent also submits that it would be inappropriate for the Panel to issue a domestic water licence on the terms now requested. This is not what the Charts’ application was originally for, and therefore, it is not the subject of the refusal now under appeal.

The Panel’s Findings

[261] Birgit Chart did not provide any testimony at the hearing, with the result that the parties did not have an opportunity to hear her direct evidence and cross-examine her recollection of the conversation with Ms. Schmidt. Although Ms. Schmidt recalls having a conversation with Mrs. Chart, she could not recall the date and denies having said that she could not see a problem with a consumptive domestic water licence.

23 Exhibit 1A, Tab 1.

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[262] The Panel finds there is no credible evidence that Ms. Schmidt made the representations alleged. However, even if Ms. Schmidt misinformed Mrs. Chart, this does not justify the granting of a licence in this case. There is no dispute that the creek is fully recorded. To grant the requested licence to the Charts would allow them to take water from the creek, when that water is not available for licencing. The Panel cannot knowingly prejudice the water rights of other licensees by granting a consumptive licence to the Charts. Although the Charts have modified their request such that the water would only be taken during freshet, the Panel does not have sufficient evidence before it that this is either reasonable or feasible. If the Charts wish to pursue this option, they may submit a formal application to the Regional Water Manager for a formal review and decision.

[263] The fact that McFayden Creek is fully recorded is, indeed, a sufficient basis for refusal of the application for a domestic water licence, as that application was originally submitted. As the Panel has pointed out, the Charts may submit a new licence application seeking access to water during the freshet. However, the Panel is unable to consider this request.

[264] Based on these considerations, this ground of appeal fails.

2. Whether condition “l” of the Licence requiring a residual flow is reasonable.

[265] Condition “l” of the Licence requires that a certain amount of water, .25 ft3/s (93.5 gallons per minute), be retained in McFayden Creek to support biological values. To understand why this condition was added, the Panel will begin with the Respondent’s evidence.

[266] The Respondent submits that the amount in condition “l” was calculated appropriately, using the best information available, and that the figure for the amount of water to be retained in the stream should be .25 ft3/s.

[267] To calculate this amount, the Respondent states that his staff carefully considered the calculation for the amount of water to be retained within the stream by applying the “Instream Low Thresholds for Fish and Fish Habitat as Guidelines for Reviewing Proposed Water Uses: Synopsis”.24 These guidelines are helpful when evidence of specific sensitivity is absent and where a stream is fishless (which is the case here).

[268] The Respondent submits that it has been clearly established, through the expert evidence of Dr. Hatfield, that there is benefit to maintaining a constant flow within McFayden Creek. Dr. Hatfield provided the opinion that there is environmental value in maintaining minimum flows in fishless streams where such streams are tributary to fish-bearing streams. He also testified that, even where there is no surface water, “the under bed area is usually very rich in nutrients and

24 Reference to Tab 8, Exhibit 1A.

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in invertebrates” and nutrients “would be connected through the food web to other areas” even though they would not be moving through the system as fast as a suspended particle in moving water.25

[269] Dr. Hatfield also opined that there is value in maintaining creek flows even where there is a potential for dewatering of a creek in a downstream reach. He states:

However, if only one reach is wetted, riparian and wildlife benefits would nevertheless accrue in that section, and some instream material processing would occur in the wetted reach with potential for downstream transport at some point in the future when flows return to the channel.26

[270] The Charts submit that .25 ft3/s is a minimum flow requirement that may be appropriate for other creeks, but is neither appropriate nor applicable to McFayden Creek. Based upon the new site specific information that is before the Panel, they ask the Panel to remove condition “l”.

[271] The Charts argue that it is neither logical nor reasonable to require water to be left to flow in a reach of McFayden Creek (where the diversion point is proposed for the MHP), upstream of another reach that is dry on the surface for most of the year and cut off from the Slocan River by a suspended culvert. They refer to photographs showing the dry lower section of McFayden Creek, taken in October 200727. The Charts also rely on data from the McFayden Creek Hydrograph28 to establish the duration of this dry period; the data indicates that water flows in the creek are very low from August through April. Based on this evidence, they calculate that the lower reaches of McFayden Creek generally remain dry for about 9 months of the year.

[272] Regarding Dr. Hatfield’s evidence, the Charts argue that it does not justify a residual flow requirement on an annually isolated stream reach. They assert that Dr. Hatfield’s evidence does not take into account the fact that, during most of the year, the creek does not carry sufficient water in either reach to meet minimum flow requirements, with the result that the benefit of maintaining a residual flow in the upstream reach is reduced. The Charts point to Dr. Hatfield’s conclusions in his report in support of their argument. On page 3, Dr. Hatfield deals with several scenarios, stating that: “ecological benefits would accrue from flow in a reach regardless of whether flow existed in other reaches” and the “greatest benefits would occur when flows are present in both reaches at or above the minimum flow thresholds”. However, the Charts note that Dr. Hatfield avoids giving an opinion on what would happen if both reaches are dewatered. Because Dr. Hatfield does not

25 Transcript, October 18, 2007, page 26. 26 Page 3 of Hatfield Report, Exhibit 10. 27 Tab 12, Charts Book of Documents, Exhibit 22. 28 Attachment 1, MCWUC objection, dated June 30, 2004.

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deal with this situation, the Charts conclude that McFayden Creek would, at best, provide marginal ecological benefits since, during most of the year, the creek does not carry sufficient water to meet the minimum flow requirement in either reach.

[273] Further, the Charts argue that Dr. Hatfield failed to take into account the timing of the restored surface flow in the lower reaches of McFayden Creek, which they point out normally occurs only during the freshet or during other high water events. They state that, during the freshet (May to July), which is the only period that McFayden Creek may be expected to flush invertebrates into the Slocan River, the contribution of McFayden Creek to the Slocan River is minimal. They suggest it is in the order of one-eighth of one percent. They also suggest that it might be less given Dr. Hatfield’s suggestion that the invertebrate productivity of McFayden Creek is compromised when portions of the creek fail to reach the recommended minimum flow standard, and that the creek flows are very low for up to 9 months of the year.

[274] The Charts also take issue with the application of a minimum flow requirement to McFayden Creek to ensure “connectivity”. In cross-examination, Ms. Schmidt stated: “We assume that the minimum flow will provide sufficient connectivity to maintain local invertebrate production and export of draft and detritus.” The Charts assert that Ms. Schmidt did not take into account that McFayden Creek goes underground for most of the year below the MCWUC intake, and that MCWUC’s water consumption is sufficient to leave the creek dry at certain times of the year.

[275] The Charts also note that Ms. Schmidt admitted that she used formulae and generic methods to make her recommendations relating to minimum flow requirements. They argue that, while Ms. Schmidt states that each stream is evaluated on its own attributes, this is precisely what Ms. Schmidt did not do in this regard.

[276] The Charts further argue that the Respondent was unable to establish any precedent for the application of minimum flow requirements in this type of creek. They rely here on the answers provided by Mr. Boyer in cross-examination that, while he recalls working on about 10 other water licences that contained clauses similar to condition “l”, none of these licences involved a creek where the intake was upstream of a reach that contains no surface water for several months of the year.29 Nor were any of these licences located upstream from the intake of other water licensees who were bound by no such residual flow requirement.30 They also point out that Ms. Schmidt appears to have had no precedent for her recommendation in this case.

29 Answer to Question 14, provided by Mr. Boyer in writing on April 22, 2009. 30 Answer to Question 16, provided by Mr. Boyer in writing on April 22, 2009.

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[277] Finally, the Charts note Ms. Schmidt’s evidence that she imposed the residual flow requirement partly on the basis of concerns expressed by the MCWUC. They refer here to the following statement by Ms. Schmidt:

In response to questions A – D, the minimum flow requirement would ensure that natural flow during low flow periods in the fall will be maintained. To the extent that there was a concern about flushing contaminants during the low flow period, the minimum flow requirement would address that issue. For the concern relating to organic and other soil contaminants, see document entitled report by Jennifer Yeow attached to the MCWUC objection dated June 30, 2004.31

[278] The Charts argue that Jennifer Yeow’s information is speculative and undocumented, and should not have been relied on by Ms. Schmidt as a justification for imposing the residual flow requirement.

[279] The Burgoons have not adduced evidence or argument on this point.

The Panel’s Findings

[280] The Panel is not satisfied that there is sufficient evidence to justify imposing a residual flow requirement in an annually isolated stream reach. While Dr. Hatfield’s evidence is above reproach, he does not address the specific characteristics of McFayden Creek. This was confirmed at page 1 of his report, where he states:

The questions are general in nature, as are my answers. My responses are based on a general knowledge of stream ecology and supporting literature, and are not based on site specific information ….

I have been told the stream in question is McFayden Creek, a small tributary to the Slocan River. I have been told to assume that the stream contains no fish. I have been told to assume the questions relate to potential diversion of flows for the purpose of electricity production, that the diversion reach is approximately 276 m in length and that the diversion could have the effect of reducing flows in the creek to below the threshold set out in MOE guidelines for instream flows. I have also been told to assume that downstream of the proposed tailrace is a diversion point for other users, which has the potential to dewater the stream below this point.

[281] It is clear from these disclaimers that Dr. Hatfield did not consider the site specific aspects of McFayden Creek in rendering his opinions. For instance, although he states that, even where a downstream reach is dewatered for a period, there is an ecological benefit in maintaining stream flows in upper reaches, he does not put this information into the context of the general characteristics of McFayden Creek, specifically Reach 5 (the bottom of Reach 5 is the proposed location of the diversion structure for the MHP), Reach 4 (which is the general location of the

31 Answer number 11, provided in writing by Ms. Schmidt on April 22, 2009.

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pipeline), Reach 3 (the border between Reaches 3 and 4 is the existing MCWUC intake) and Reaches 1, 2, and part of 3 (the fan below the MCWUC intake).

[282] The key issue for the Panel is whether there is downstream transport of nutrients from McFayden Creek to the Slocan River. The evidence before the Panel is that the creek goes underground for most of the year in the general vicinity of the MCWUC intake. Water flow is occasionally not available at the MCWUC point of intake at the top of Reach 3, and Reaches 1, 2 and parts of 3 (below the MCWUC point of intake) are seasonally dry for long periods each year. However, there is no evidence that this sub-surface water actually enters the Slocan River, nor whether, if it does, it carries a nutrient load useful to fish and other wildlife in the Slocan River.

[283] The Respondent concedes that Ms. Schmidt’s recommendations for instream flow are based on the application of generic guidelines. The Respondent also conceded at paragraph 18 of the final argument that: “Given the evidence of site sensitivity, and evidence that the creek is fishless, this was entirely appropriate. Whether or not there was precedent for Ms. Schmidt’s recommendation is immaterial; the Panel is at liberty to decide whether to uphold this condition.”

[284] The Panel is mindful that the Ministry of Environment’s guidelines for instream flows are important to the work of the Respondent. However, these guidelines are just that, “guidelines”: they are designed to assist the Respondent in the exercise of his discretion to approve or refuse water licence applications and to determine appropriate conditions. Guidelines are not regulations requiring routine application without consideration of site specific factors.

[285] The Panel has the power to rescind or vary the condition attached to the Licence under appeal. Based on these considerations, the Panel orders that condition “l” of the Licence be removed.

[286] This ground of appeal is allowed.

3. Whether condition “m” of the Licence, specifying where water is to be returned in the stream, is reasonable.

[287] Condition “m” states:

The water used in the generation of power shall be returned to the stream above any downstream points of diversion and the existing water survey station.

[288] The implication of this condition is that the tailrace must be located above the existing water survey station. The Charts submit that the Respondent erred in adding this condition as it will force them to place the tailrace in a location that is unsuitable because of stream steepness and lack of clearance from the stream channel. They appeal this condition in order to “achieve a powerhouse/tailrace location which meets appropriate environmental and engineering standards.”

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[289] The Charts submit that this condition is somewhat unusual, referring to Ms. Schmidt’s statement in cross-examination that there is a common requirement that tailraces be located above existing points of diversion. The Charts point out that the measuring weir is not a point of diversion.

[290] The Respondent, the Burgoons and the MCWUC all argue that it is important to return water above the existing water survey station, as this provides an unusual opportunity to preserve the continuity of water measurement on McFayden Creek. Ms. Schmidt explained why the water should be returned above the survey station. She states at paragraph 31 of her affidavit:

This provides an opportunity to preserve the continuity of water measurements on the creek, by continuing flow measurements in the same manner, at the same water survey station. This opportunity is rare in the Kootenays where the flow records taken over an extended period of time on a small stream are scarce.

[291] In a letter from Mr. Scarlett to the Board dated June 29, 2005,32 the Charts propose to install a notched weir in their tailrace to add to the water measured from the existing water survey station to yield the total flow. However, the Respondent’s preference is for the water to be returned above the existing water survey station. He lists a number of reasons for this preference, including: (1) it has not yet been decided who would be taking measurements in the proposed tailrace notched weir (per Mr. Scarlett); (2) it would not be reasonable to expect the Charts to perform a daily measurement33, and (3) Mr. Scarlett agreed that having two measurements rather then one measurement could be less accurate.34

[292] Despite these objections, the Respondent also acknowledges the Charts’ concerns regarding the potential for the tailrace, if it is located in a position above the existing water survey station, to increase the risk of stream bank erosion. In closing arguments, the Respondent recommends that condition “m” be modified such that the tailrace be located above the existing water survey station only if this can be accomplished without increasing the risk of slope subsidence. This, in turn, should be determined by the engineer, who, as required by the Licence, will produce the final project design and construct the MHP.

The Panel’s Findings

[293] The Panel accepts that the long-standing stream flow measuring program is made possible by the existing water survey station. It also accepts the evidence that it is desirable to maintain this program, notwithstanding the fact that the data collection is now done on a voluntary and volunteer basis by the MCWUC, rather than by Environment Canada. However, the water survey station is not a pre-

32 Exhibit 5B, Tab 17. 33 Reference to Transcript, October 19, 2007, at pages 16- 17. 34 Reference to Transcript, October 19, 2007, at page 21.

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existing licenced use that is protected by section 15 of the Water Act. For this reason, retention of the water survey station, which is not a licenced use, is not a valid ground for refusing to issue the Licence.

[294] Further, while continuity of data is desirable, of greater importance is ensuring that the authorized works do not increase the risk of slope subsidence. Although the Burgoons and the MCWUC focus on the importance of the water survey station and the data collected, their opposition to the Charts’ request loses some of its force because the water survey station would be rendered redundant if the MCWUC were to succeed in its application to relocate its water intake to a higher reach on McFayden Creek.

[295] Based on the evidence, the Panel accepts the recommendations of the Respondent, and orders that condition “m” be varied to read as follows:

The water used in the generation of power shall be returned to the stream above any downstream points of diversion and, where feasible from an engineering and environmental perspective, above the existing water survey station.

[296] This amended condition “m”, together with the other conditions that the Panel proposes be attached to the Licence will ensure oversight of the proposed location of the tailrace by the Respondent prior to actual construction of the MHP.

[297] This ground of appeal is allowed.

4. Whether condition “n” of the Licence requiring the Charts to install a “meter” is reasonable.

[298] Condition “n” states:

Works shall be installed to meter and record the rate of flow and quantity of water diverted and returned to the stream under this licence. Flow meter records shall be retained by the licensee and be available upon request for inspection by the Regional Water Manager.

[299] The Charts object to the requirement to install a “meter” and to retain “flow meter records” on the basis that they are technically and economically impractical. They assert that a conventional mechanical water meter capable of measuring the flow of a micro hydro project would be extremely expensive and would interfere with the production of power. They argue that a conventional notched weir will suffice to measure a rate of flow and quantity of water diverted and returned to the stream.

[300] The Charts argue that the drafter of the Licence may not have understood the technical difference between a flow meter and a flow measuring device when including this condition. They ask the Board to vary condition “n” by using the

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following language which they note is commonly used in other licenses35: “a flow measuring device suitable to an engineer under the Water Act.”

[301] The Charts also suggest that it may be appropriate to defer a requirement to install a measuring device, citing another example provided by Ms. Schmidt in cross-examination where this approach was taken. However, they also point out that they have repeatedly offered and proposed to install a notched measuring weir in the tailrace of the MHP. They argue that this device will provide instantaneous flow measurements, and given that the water flow through the penstock or pipeline is constant, dictated by the size of the turbine nozzle, the quantity passed over a period of time can be accurately calculated from the instantaneous flow.

[302] The Respondent submits that requiring measurement of water flow is an important means of ensuring that the Charts are diverting only that amount of water that they are allowed under their Licence. The Respondent also submits that there is ample authority under sections 22, 23 and 88 of the Water Act for the imposition of a requirement to maintain records relating to the amount of water diverted.

[303] However, the Respondent also admits that he views the difference between the words “meter”, on the one hand, and “measuring” or “measuring device” on the other, as merely a matter of semantics.

The Panel’s Findings

[304] The Panel agrees that the Water Act provides the authority to require records be kept of the amount of water to be diverted. However, the Panel also finds that, on a technical level, there is a difference between the words “flow meter” and “measuring device”. For the sake of clarity and flexibility, the Panel is of the view that condition “n” should be varied to read as follows:

Works shall be installed to measure and record the rate of flow and quantity of water diverted and returned to the stream under this licence. Measurements obtained from the measuring device shall be retained by the licensee and be available upon request for inspection by the Regional Water Manager.

[305] This ground of appeal is allowed.

5. Whether Licence conditions “k”, “q” and “r” are reasonable.

[306] The Charts also appeal conditions “k”, “q” and “r” of the Licence, although they did not specifically address these conditions in their final argument. Because the Charts are not represented by legal counsel, the Panel is inclined to give the benefit of the doubt to the Charts, and assumes that their appeal of these

35 Answers to question 4 provided by Ms. Schmidt in writing on May 14, 2009.

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conditions have not been abandoned. The Respondent appears to make this same assumption as he addresses these conditions in his final argument.

Condition “k”

[307] Condition “k” states:

Construction of works including the diversion structure must occur within the low water period of the year (August – October).

[308] The Charts are seeking to vary condition “k”, asking that they be allowed to construct all works located more than 5 meters from the creek whenever they desire. They submit that, with the exception of the diversion structure and the powerhouse tailrace, all components of the authorized works are physically distant from the creek and well clear of land which slopes towards the creek.

[309] The Respondent does not oppose this proposal. The Burgoons make no submissions on this point.

[310] The Panel agrees that the proposed amendment is a reasonable one. Accordingly, the Panel varies condition “k” as follows:

Construction of works including the diversion structure must occur within the low water period of the year (August – October), unless the works are located more than 5 meters back from the top of the creek embankment.

Condition “q”

[311] Condition “q” states:

Construction of the works must include a temporary bypass so that work within the creek channel is done in the dry and the creek flow to downstream users is maintained. A silt fence must be installed downstream of the construction site to prevent deleterious material from entering into the stream.

[312] The Charts seek to remove the second sentence of condition “q”. They acknowledge that the Regional Water Manager has the authority to require that construction of the authorized works be done in such a manner that deleterious substances are prevented from entering the stream. However, they question whether the installation of a silt fence is absolutely necessary, and submit that this decision (to install a silt fence) should be left to the judgment of the professional engineer who will be supervising the final project design and construction of the MHP.

[313] The Respondent does not oppose this request, given the requirement in the Licence that the MHP be designed by, and constructed under the supervision of, a professional engineer. The Respondent explains:

The requirement that the works be designed by and constructed under the supervision of a professional engineer … provides assurance that the works will be constructed in a professional manner, having care for the potential risks to the environment, and downstream water users. At the same time,

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that engineer is given some discretion in the precise manner in which the works are to be constructed, in keeping with the particular conditions present at that time. For example, that is why the Respondent has decided, as set out above, to recommend to the EAB that the engineer supervising construction be able to determine if conditions would favour the use of a silt fence during construction, or not, rather than imposing this as a condition of the Licence. In other words there may be other approaches to protecting water quality during construction.

[314] Based on these considerations, the Panel orders that Licence condition “q” be varied as follows:

Construction of the works must include a temporary bypass so that work within the creek channel is done in the dry and the creek flow to downstream users is maintained.

Condition “r”:

[315] Condition “r” states:

Prior to construction of the works, all downstream users must be notified as outlined in the Water Regulation. This may include supplying water to downstream users during the construction period if they so desire.

[316] The Charts take issue with the reference to the “desire” of downstream water users, suggesting that downstream water users might take unfair or unreasonable advantage of this requirement. The Charts submit that it is unreasonable to require them to supply water to downstream users during the construction period “if they so desire” and suggest that they only be required to supply water “if it is proved that a loss of water quality is caused by the construction of the micro-hydro project.”

[317] The Respondent points out that section 43 of the Water Regulation provides that a person proposing to make a change in or about a stream must notify those persons using water prior to making the change, and must provide an adequate supply of water to those persons “if required” by them. The Respondent suggests that, given the requirement in the Regulation, the word “desired” in condition “r” could be changed to read “required”.

[318] Section 43(1) of the Water Regulation requires a person making a change in or about a stream to ensure that other persons lawfully diverting water or using water under the Water Act will not be “adversely affected”. Section 43(2) requires the person making the change in or about the stream to provide 3 days notice to those downstream users prior to commencing the work, and “must provide an adequate supply of water to those persons, if required by those persons.” The Panel finds that the Charts’ suggested language for condition “r” is not consistent with the wording of the Water Regulation. However, the Panel agrees that the wording of condition “r” can be changed to ensure consistency with the requirements of section 43 of the Water Regulation on the following basis.

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[319] The Panel notes that what is “adequate” may well depend on the rate of water flow immediately prior to the commencement of construction of the proposed in-stream works during the “dry period”. The Water Regulation does not support an interpretation that downstream users may make unreasonable demands on the Charts in this regard, only that they seek assistance if there is a disruption to the water flow present at that time of the year, or a construction incident that diminishes water quality. Condition “r” should make it clear that this requirement is only applicable to the construction period of “in or about” McFayden Creek, which is the proposed instream works (the diversion structure and the powerhouse tailrace).

[320] Accordingly, the Panel orders Licence condition “r” to be varied as follows:

Prior to construction of the works, all downstream users must be notified as outlined in the Water Regulation. This may include providing a seasonally appropriate supply of water to downstream users during the construction period of in-stream works in accordance with the Water Regulation. An appropriate supply of water refers to the water flow that would otherwise be available to downstream users during the construction period of in-stream works.

[321] Accordingly, these grounds for appeal are also allowed.

Conclusion on the Charts’ appeal

[322] Based on all of the evidence presented, the Panel agrees with the Regional Water Manager’s decision to refuse the issuance of a water licence for domestic water purposes.

[323] On their appeal of certain conditions attached to the Licence for power purpose, the Panel has allowed the appeal, in part, by deleting condition “l” and varying conditions “k”, “m”, “n”, “q” and “r”. Their appeal is allowed, in part.

V.

THE MCWUC’s CONCERNS

[324] The MCWUC have been active participants in the application review process around this Licence. As far back as June of 2004, Herb Hammond, writing on behalf of the MCWUC to Lorraine Schmidt, outlined a number of concerns with the Charts’ licence applications:

• Insufficient quantity of flow in McFayden Creek to meet the needs of the Chart’s application for both domestic water and diversion for power purposes,

• Violation of the Restrictive Covenant on Block 10, District Lot 8126, Kootenay District Plan 1533 by the Chart’s application for diversion of water for power generation, and

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• Significantly increased risk of waterborne disease to the MCWUC as a result of the Chart’s applications for domestic water use and power generation.36

[325] However, the MCWUC also continue to raise a number of concerns around the decision to issue the Licence. Although their concerns overlap with those of the Burgoons’, and the Panel has made findings on some of the issues in the context of the Burgoons’ appeals, the Panel has decided to address the MCWUC’s concerns separately.

1. Whether there are sufficient water flows in McFayden Creek.

[326] The concerns respecting the sufficiency of water flows are likely alleviated by the Panel’s decision to uphold the decision of the Respondent to not approve the Charts’ application for a licence for domestic water purposes. However, the MCWUC also contend that there is insufficient water for the power purpose Licence. The MCWUC contends that:

… the McFayden Creek hydrograph demonstrates that, not only is there insufficient water flow in McFayden Creek for an additional domestic water licence, but also that, for substantial periods from later summer through early spring each year, there is either just barely enough water for the proposed power generation or insufficient water to meet proposed power generation needs …. … [t]here would be substantial periods of time when the entire flow of McFayden Creek would be diverted for use in proposed power generation. As explained earlier, during substantial portions of this period there would not even be sufficient flow for the planned power generation.37

[327] The MCWUC express concern about a complete loss of water occurring through a malfunction of the Charts’ MHP. They submit that, due to the extreme low flows of McFayden Creek for up to 7 months of the year, there is insufficient water for the Charts’ MHP and for diversion of water for power generation.

[328] Ms. Schmidt states that she considered whether there would be sufficient water remaining to allow the facility to operate during lower flow months. She wrote to the Charts on November 26, 2004, warning them that there would be little benefit to them in the way of power production, particularly given the proposed requirement to retain a residual water flow within the creek. Mr. Scarlett replied by letter dated December 21, 2004, asserting that even during the low flow periods the facility may be capable of generating some power. In that letter, he also acknowledged that the requirement to retain a residual water flow in the creek

36 Exhibit 5B, Tab 10, Letter dated June 30, 2004 from MCWUC to Ms. Lorraine Schmidt, at page 2. 37 Exhibit 5B, Tab 10, Letter dated June 30, 2004 from MCWUC to Ms. Lorraine Schmidt, at page 2.

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would eliminate the benefit for at least a portion of a typical year. This may explain the motivation behind the Charts’ appeal of this requirement, which the Panel addressed earlier in this decision.

The Panel’s Findings

[329] There is no dispute that McFayden Creek suffers from low flows for up to 7 months of the year. However, the Panel is satisfied, based on the evidence, that the Charts will be able to make use of the water authorized by the Licence periodically throughout each year. The fact that there may be parts of each year where such use is not possible due to low flows is not a basis for rejecting the application and refusing to issue the Licence. It is for the Charts to determine the feasibility of relying on the MHP for power during those low flow periods when they are in residence.

2. Whether the MHP will cause adverse impacts on water quality.

[330] The MCWUC also contend that the design of the MHP will increase the amount of particles in the water, creating a higher rate of turbidity and degrading McFayden Creek water quality. By letter dated June 30, 2004 to Lorraine Schmidt38, Herb Hammond, writing on behalf of the MCWUC, explained that:

Water returned to the McFayden Creek channel from the power house is likely to cause increased turbidity and a higher risk of waterborne disease to the McFayden Creek Water Users Community. This will occur because, particularly during the low flow periods when all or most of the creek’s flow is being diverted for proposed power generation, the water will be put back into the creek from the power house in a semi-dry creek bed with some under-pressure resulting in disturbance of organic matter and higher levels of turbidity that are associated with increased risk of waterborne disease …. After a low flow period when all or nearly all of the water has been diverted for power, and when creek flows rise above that required for the proposed power generation, water will initially be flushing a stream bed that has been without water for as long as 6 or 7 months. This situation will also result in high turbidity in McFayden Creek water used by McFayden Creek Water Users Community with an attendant higher risk of waterborne disease.39

[331] In closing argument, the MCWUC relies on both the McFayden Creek hydrological data and the statements of Jennifer Yeow, both of which were attached to the 2004 letter to Lorraine Schmidt. They claim that Ms. Schmidt misunderstood their concerns about turbidity by focusing on the tailrace and not on the “6 other ways the hydro design itself will increase turbidity”, pointing to Mr. Scarlett’s

38 Exhibit 5B, Tab 10. 39 Exhibit 5B, Tab 10, Letter dated June 30, 2004 from MCWUC to Ms. Lorraine Schmidt, at page 3.

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proposed hydro screen with a .5 ml screen, which they contend will break particles down into smaller pieces, and a 4-inch round intake pipe, which they contend will act as an underwater vacuum sucking in all the particles rather than allowing them to settle slowly in the creek pools and be absorbed on the creek rocks as the water makes its way naturally down the creek. They contend that sucking water and particles into the penstock does not allow for the natural cleaning of the water that occurs if it is left in the creek.

[332] They also contend that, when this water is forced through the spear nozzle at over 100 psi, it breaks up the particles even more. The water then hits the spoons of the Pelton wheel, further mixing up the particles; then the water hits the side of the Pelton structure which mixes the water even more before it runs out to the tailrace. They contend that each mixing action increases the turbidity of the water.

[333] The MCWUC argues that Ms. Schmidt erred in relying on Mr. Scarlett’s information on turbidity to address the MCWUC’s concerns. They contend that Mr. Scarlett (the Chart’s engineer) does not have the expertise to address hydrology concerns, and that his July 30, 2004 letter to Lorraine Schmidt, points 3 and 4, have been refuted by expert hydrologist statements. They maintain that the turbidity rates of the water re-entering the stream will be higher than the water flowing naturally in the creek, and that this increased turbidity will degrade the water quality.

[334] The Respondent argues that many of the assertions made by the MCWUC require the support of expert evidence that is not properly before the Board. The Respondent reiterates his position that issues related to water quality can be handled through appropriate construction and operation practices.

[335] The Respondent submits that, with respect to the issue of turbidity, water flowing over the weir will not cause an increase in turbidity as the weir will be constructed in an area of bedrock. They contend that Mr. Isaacson acknowledged that water flowing over the weir would be striking bedrock, which is more resistant than sand, for example. Mr. Boyer noted that turbidity would not increase because water would be spilling from the tailrace onto bedrock. The Respondent also points out that water flowing back into the stream would be slowed by the generator, and any remaining speed will be dissipated through the placement of rocks in the creek. In cross-examination, Mr. Isaacson acknowledged that it would be possible for the engineer designing the works to design them such that speed of re-entry could be mitigated.

[336] The Respondent contends that the reduction of flows in the stream below the weir will not increase erosion or turbidity and relies on the evidence of Mr. Boyer, where he states at page 5 of his report:

The stability of a steep, bedrock and boulder lined mountain stream channel, like the McFayden Creek channel, is not affected by reduced flows or even complete dewatering.

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[337] In cross-examination, Mr. Isaacson took no issue with the description of McFayden Creek reaches in the report prepared by Chatwin Geoscience, referenced in the Boyer Report.

[338] As well, the Respondent contends that fluctuations in flow caused by the operation of the works will not increase water turbidity, again relying on Mr. Boyer’s report at page 5:

Raising and lowering water levels for the turbine operation will have no measurable effects on bank stability and any effects will most certainly be in keeping with those imposed by natural stream flow variation.

The Panel’s Findings

[339] Before turning to the argument made by the MCWUC regarding water quality, the Panel agrees with the Respondent’s contention that some of the matters raised by the MCWUC require evidence to support the arguments made. The MCWUC was not granted full party status in this appeal, with the result that they could not introduce evidence; in particular, Ms. Jennifer Yeow was not qualified as an expert witness, rendering her “opinions” which are attached to the 2004 letter from the MCWUC of limited value. Nor did the Burgoons, who have full party status, choose to qualify Ms. Yeow as an expert witness for the purposes of this appeal. This limitation was noted earlier in arguments related to the assessment of impacts on water quality.

[340] Turning to the evidence that is properly before the Panel, the Panel finds that the MHP intake will be located on bedrock and that the water diverted will be spilling from the tailrace onto bedrock. The Panel finds, based on this evidence, that the project design is not likely to increase turbidity. There is no other evidence in front of the Panel to support the MCWUC’s contention that other design aspects of the MHP will increase the turbidity of the water entering the MHP intake, or otherwise negatively affect water quality.

3. Whether the restrictive covenant precludes issuance of the Licence.

[341] The MCWUC submits that any water licence to divert water from McFayden Creek for the purpose of power generation is in contravention of a restricted covenant registered against title to the Charts’ property.40 In particular, paragraph 4 of the restrictive covenant provides that: “… no development shall take place which will degrade the water supply of McFayden Creek or significantly alter the natural landscape of either Block 10 or 11.”

[342] The Respondent submits that the existence of a restrictive covenant, between private parties, to which the Crown is not a party, cannot fetter the

40 Exhibit 5B, Tab 10, Attachment 2 to Letter dated June 30, 2004.

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exercise of discretion by the Regional Water Manager, or the Board, to issue a water licence to allow the use of the Crown’s water resources. The Panel agrees.

4. Whether the application to move the MCWUC’s point of diversion has precedence over the Charts’ application for a power generation licence.

[343] As mentioned earlier, the Panel does not have the jurisdiction to revoke the 2005 Licence based on a subsequent 2008 Application for Change of Works on a Water Licence, filed by the MCWUC. Indeed, the merits of the 2008 application are not before the Panel on this appeal.

VI.

APPLICATIONS FOR COSTS

[344] As stated earlier in this decision, the Panel received three applications for costs pursuant to section 95(2) of the Environmental Management Act. The Burgoons ask for an order of costs to be made against the Charts. The Charts ask for an order of costs to be made against the Burgoons. The Respondent asks for an order of costs to be made against the Burgoons. Each applicant points to the conduct of the other party during the appeal proceedings as justification for an award of costs against that other party. To understand the requests, it will be helpful to first review the many applications, rulings and issues that occurred prior to and during the hearing process. In doing so, it is important to note that not every letter, ruling or issue has been included. The Panel has tried to limit its review to the ones directly relevant to the applications, as well as those that set the context within which these applications, and the Panel’s decisions on them, are made.

The Chronology

i) Pre hearing

[345] Both appeals were filed towards the end of June, 2005. The Burgoons appealed the Licence issued to the Charts. The Burgoons were not represented by counsel at that time.

[346] The Charts appealed the refusal of a domestic licence, as well as certain conditions in the Licence. Mr. Scarlett was the spokesperson for the Charts from the beginning.

[347] Three months later, in September of 2005, the Board scheduled a 3-day hearing to commence on May 30, 2006 in Nelson, BC. At that time, the Board advised the parties of the schedule for the exchange of Statement of Points, and of the Board’s policy regarding notification of expert evidence. Specifically, that notice of an expert opinion was to be provided 30 days in advance of the hearing.

[348] In April of 2006, the Board was notified that the Burgoons had obtained counsel to represent them in the proceedings.

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[349] Twenty days before the hearing was to begin, the Respondent asked for a postponement on the grounds that the Charts’ Statement of Points was deficient in a number of respects, leaving the Respondent unable to properly prepare for the hearing. He also pointed out that, if the Charts intended to produce expert evidence at the hearing, they had missed the 30 day notice period.

[350] The Chair of the Board asked the Charts if they intended to file an expert report, and reduced the amount of notice required should they wish to do so. In response, the Charts advised that they wanted to tender an expert report by Dr. Salway, but that his report was not ready. They also asked the Board for a postponement. The Charts estimated that their expert would need “at least” 2 weeks.

[351] Before the Board ruled on the postponement applications by the Respondent and the Charts, the Burgoons provided notice under the Constitutional Question Act that they would be arguing that the Licence for power purpose creates a risk to their right to life and security of the person contrary to section 7 of the Canadian Charter of Rights and Freedoms. In a separate letter, they objected to a postponement. They noted that the Charts had 8 months to prepare for the appeal hearing and that the Board had already granted them leeway by allowing them to file their expert report less than 2 weeks before hearing. The Burgoons pointed out that they had managed to arrange for an expert report by Mr. Isaacson within the usual time frame. The Burgoons advised the Board that they would seek an order for costs against the Charts should the postponement be granted.

[352] In reply, the Respondent suggested that the Burgoons’ own actions justified a postponement in that they had added another ground for appeal in their Statement of Points without any particulars, and recently added a Constitutional argument.

[353] In a ruling dated May 19, 2006, the Board’s Chair granted the postponement. He concluded by stating:

The Board notes the Respondent’s request that a new hearing be scheduled no earlier than 30 days from receipt of the [Chart’s] expert report and any new documents. The Board further notes that the Charts have advised that their expert report will be available by the end of May. Accordingly, the Board requests that the parties and participant provide the Board with their available dates for the joint hearing of these matters during July and August 2006. Available dates should be provided to the Board by June 10, 2006.

[354] Dr. Salway’s report was not produced at the end of May as expected. The Salway Report Draft #1 was provided to the parties and the Board on February 18, 2007, nine months after the Charts said that it would be ready. On March 1, 2007, another unsigned report (the Salway Report Draft #2) was provided to replace the February draft, and was subsequently entered into evidence. A further signed and sealed “final” report, dated March 23, 2007, was tendered by Dr. Salway in December 2007 as a replacement for the previous report already entered into evidence.

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[355] In April 2007, the Board proposed dates in September and October of 2007 for the hearing.

[356] On May 1, 2007, the Burgoons advised the Board that they would be arguing that the Licence relates to a body of water covered by a reservation established by OIC. Further, since filing their Statement of Points,

there have been various significant geological events on Perry Ridge, each having a profound hydrological impact. Accordingly, … we intend to advance facts relating to these ongoing events as further evidence of the inherent instability and complexity of the hydrology of Perry Ridge and the associated risks to residents, property and transportation routes on the valley bottom.

[357] They estimated that more than 3 days would be required for the hearing because there were two appeals and “given the mounting factual and legal complexity of the case”. On May 14, 2007, the Board advised the parties that it was scheduling the hearing for 4 days “out of an abundance of caution”, commencing October 16, 2007 in Nelson.

[358] Prior to the hearing, issues relating to document disclosure arose. While these matters are usually resolved relatively quickly in Board appeals, document disclosure became an issue that consumed far more time in these appeals than could ever have been anticipated, and lead to significant frustration for all parties. It began with the Burgoons requesting documents from the other parties in or around May of 2007. From the Respondent, they sought the voluntary disclosure of documents pertaining to the 1927 establishment of the water reservation by OIC. From the Charts, they requested the voluntary disclosure of all documents pertaining to the financial arrangement between them and Mr. Scarlett prior to July 30, 2004; in particular, documents pertaining to the financial terms of the relationship between Mr. Scarlett and the Charts. The Burgoons wanted to determine whether, prior to the Licence being issued, Mr. Scarlett had a personal and financial interest in the authorized works because, at that time, he indicated to the Respondent that he was a dispassionate party with a technical interest in the Charts’ project, and they say that the Respondent relied upon Mr. Scarlett’s letter when he granted the Licence.

[359] The Respondent replied to this request stating that no documents pertaining to the OIC reservation were located during a review of the Ministry of Environment files, and that the meaning of the OIC was clear from the words used (i.e., extrinsic evidence was not necessary to determine legislative intent). The Charts did not reply to the Burgoons’ request for documents.

[360] In August, 2007, the Burgoons also requested from the Charts the voluntary disclosure of all drafts of Dr. Salway’s reports, and all communications between Dr. Salway, the Charts and Mr. Scarlett. The Burgoons were concerned about the unexplained delay between when the Charts said Dr. Salway’s report would be ready (May of 2006), and when it was finally produced (March 2007). They were of the view that the report’s contents may have been the subject of negotiations and

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re-drafting between the Charts, Mr. Scarlett, and Dr. Salway, thus impacting its evidentiary value.

[361] The Charts did not reply to this request.

[362] Given that the requests for voluntary disclosure did not produce any documents, the Burgoons applied to the Board for an order requiring the Charts and the Respondent to produce the requested documents. They also asked the Board to issue a summons requiring Andrew Whale, the writer of decisions under appeal, to attend the hearing. The Burgoons provided lengthy reasons in support of their requests. The Respondent provided a detailed response objecting to the request for the summons and advising of his position on the request for documents.

[363] The Charts declined to provide any further documents regarding Dr. Salway’s report. They advised that they provided the first draft of Dr. Salway’s report and that the Burgoons could compare it with the final version themselves.

[364] On September 17, 2007, the Chair of the Board issued his reasons for decision on the applications (see Burgoon v. British Columbia (Ministry of Environment), [2007] B.C.E.A. No. 19 (Q.L.)). He denied the application vis-à-vis the Respondent, as well as the request for a summons. The application for documents from the Charts was allowed in part. The Board ordered the Charts to produce any documents that addressed any “re-drafting of Dr. Salway’s report”, or that related to any negotiations which may have occurred between the Charts, Mr. Scarlett, and Dr. Salway regarding re-drafting of his report. He also ordered disclosure of documents up to July 30, 2004, pertaining to the financial terms of the relationship between Mr. Scarlett and the Charts and/or remuneration of Mr. Scarlett by the Charts”. An Order for Production of Documents (the “Order”) was attached to his reasons.

[365] Unfortunately, an inconsistency was later identified in the wording of the Board’s reasons and the wording of the Order in relation to Dr. Salway’s reports. The decision was arguably worded more broadly than the Order. The reasons for decision stated, “such documents are relevant to the credibility of Dr. Salway’s report if those documents address any re-drafting of Dr. Salway’s report that may have occurred, including previous drafts of his report, or relate to any negotiations that may have occurred between the Charts, Mr. Scarlett, and Dr. Salway regarding re-drafting his report” [Emphasis added].

[366] In response to the Order, Mr. Scarlett outlined the reasons why the “accusations” made by counsel for the Burgoons in support of the request for documents were unacceptable, and described counsel’s behaviour as unprofessional and unethical. Mr. Scarlett then advised that there were no documents that met the terms of the Order.

[367] One month before the hearing, the Burgoons submitted a revised Statement of Points which included their Charter argument, their argument regarding the water reservation, as well as a new argument that the Respondent failed to engage in First Nations referrals and failed in his duty to consult the Sinixt Nation.

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[368] The Respondent provided his documents and authorities in late September and his Statement of Points on October 1, 2007. In his Statement of Points, the Respondent challenged the Burgoons’ standing to argue a failure to consult on behalf of the Sinixt Nation, and asked for this to be addressed as a preliminary matter. Two days later, the Burgoons applied for a postponement of the hearing scheduled to begin 2 weeks later. Their grounds for the postponement were:

1) The Charts refused to comply with the Order, and the Burgoons required time to enforce compliance with the Order. They said that the Charts sent “a disingenuous email” on September 28 which led them to believe documents were being delivered, but later received, by registered mail, the letter saying that no documents met the terms of the Order.

2) The Charts’ Statement of Points from 2006 does not comply with the Board’s policy manual. In particular, they had not identified their witnesses. They say that the Charts are the authors of the circumstances leading up to this application and the Burgoons should not be prejudiced by it.

(3) It would be more efficient to address the Respondent’s challenge to their standing by way of written submissions in advance of the hearing. They say that the reason they did not add this ground until recently was because it only came to light after receiving the Respondent’s documents submitted in early October.

[369] The Respondent did not oppose the postponement generally, but did oppose the postponement if it was for the purpose of allowing the Burgoons to add evidence and new arguments.

[370] The Charts opposed the postponement. They clarified that their arguments on the appeal had not changed since their Notice of Appeal and advised of their witnesses.

[371] The Chair of the Board denied the postponement application on October 9. The Chair found that the Charts’ Statement of Points was a sufficient basis upon which to proceed and their witnesses had now been identified. Further, the Chair was not satisfied that there would be any new documents found if the Burgoons were given time to enforce the Order. Regarding the standing issue (to argue First Nation’s rights), the Chair decided that it would be dealt with by the hearing Panel on the first day of hearing.

ii) The Hearing Proper

[372] The hearing commenced on October 16, 2007 in Nelson, but was not completed in the 4 days allotted. The first day was taken up with the standing issue. The Panel issued its decision orally, finding that Ms. Burgoon did not have standing in her personal capacity to advance the arguments on behalf of the Sinixt Nation.

[373] Except for the evidence of the Respondent’s expert, Dr. Hatfield, who was allowed to testify out of the usual order, the remainder of the hearing was taken up

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with the presentation of the Charts’ evidence. Mr. Chart testified, as did Mr. Scarlett and Dr. Salway.

[374] Various objections were made and issues arose that slowed down the progress of the hearing. One of those issues related to document disclosure. During the cross-examination of Mr. Scarlett by counsel for the Burgoons, it became evident that there were some emails that had not been produced in accordance with the Order. Once this was addressed, it also became apparent that there was at least one other draft of Dr. Salway’s report that had not been disclosed. In relation to the latter, the Panel acknowledged that there may have been some confusion between the reasoning in the Board’s decision and the wording of the Order itself. However, it was also evident from Mr. Scarlett’s explanations that he had given the wording of the Order the narrowest of interpretations. It was apparent from his letters, and his submissions at the hearing, that Mr. Scarlett was offended by the Burgoons’ request for these documents and did not want to give it any more thought or effort than, in his view, it deserved. The time it took to address these matters interrupted the flow of the evidence and caused delays, albeit relatively minor ones. Of more significance, the document disclosure issue exacerbated the distrust and acrimony between the two appellants.

[375] Although the cross-examination of Dr. Salway was completed, as a result of a ruling by the Panel on a line of questioning regarding a large rock piece produced by counsel for the Burgoons, the Panel also left the door open for Dr. Salway to be recalled.

[376] After consultation with the parties, the Board scheduled 3 more days to complete the hearing. The hearing was to reconvene in Nelson on December 11-13, 2007.

[377] Four days before the hearing reconvened, the Panel received a lengthy letter from Mr. Scarlett raising a number of concerns about the first 4 days of hearing. His concerns ranged from the rulings made by the Panel to issues of courtesy and respect.

[378] The second leg of the hearing commenced on December 11, 2007. In the Panel’s opening comments, it responded to Mr. Scarlett’s letter in detail. The remainder of the 3 days was taken up with unsuccessful settlement discussions between the parties (1/2 day), and then the Burgoons’ evidence. The hearing was still not completed by the end of these 3 days. In fact, it would take much longer just to complete the Burgoons’ case.

[379] The Burgoons began by calling various neighbours to testify. Next they called their expert, Allan Isaacson. Qualifying Mr. Isaacson as an expert took all of one afternoon. In the end, although the Panel was prepared to recognize his expertise, there was a serious issue raised as to whether Mr. Isaacson’s April 24, 2006 report, was properly an expert report. As noted earlier in this decision, even Mr. Isaacson acknowledged that his report was not in the format one would normally expect for an expert opinion report. Ultimately, the Panel concluded that

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Mr. Isaacson’s report lacked the proper background and foundation for the opinions expressed within it, and, therefore, it was not to be viewed as an expert opinion report.

[380] The direct examination of Mr. Isaacson did not get very far. There were many objections to the questions he was being asked on the grounds that they went beyond the opinion evidence and background provided in his report. The other parties argued that they would be put at a disadvantage if he was allowed to give this “surprise” evidence, particularly because it would be used in support of the Burgoons’ Charter argument. The Panel upheld the objections. The atmosphere in the hearing after that can only be described as “toxic”. Counsel for the Burgoons was extremely frustrated and his conduct reflected this.

[381] Ultimately, aware that the parties were at an impasse on the scope of Mr. Isaacson’s testimony and that the end of the scheduled time for the hearing was near, the Panel proposed to adjourn the hearing early. The Panel also offered the Burgoons the option of submitting a new version of Mr. Isaacson’s expert opinion report during the adjournment, one designed to provide a proper foundation for the opinions being expressed by Mr. Isaacson.

[382] The Charts objected to allowing the Burgoons this latitude on the basis that the Burgoons had plenty of time to prepare a proper report. The Respondent agreed that there had been plenty of time to submit a proper report. The Panel adjourned the hearing, and directed the Burgoons to submit the new expert opinion report within 60 days. The Panel granted this option to the Burgoons, mindful that it was an unusual procedural step, but equally mindful that Mr. Isaacson was the only expert for the Burgoons, and that his opinion evidence was critical to the Burgoons’ appeal, and of interest to the Panel. Because the hearing was being adjourned in December of 2007, the Panel was also of the view that there would be little prejudice to the Charts as construction of the works could only take place in August or September of the following year, at the earliest, and there was every reason to believe that the hearing could be concluded early in 2008.

[383] The Charts and the Respondent reserved the right to provide a reply to this report. Both the Respondent and the Charts advised that they would be seeking costs as a result. Mr. Scarlett also asked the Panel to order counsel for the Burgoons to apologize to him for suggesting that he was lying about his financial connection to the Charts. The Panel declined to make this order.

[384] In a follow-up letter from the Panel on December 24, 2007, the Panel proposed to set aside a further 5 days in order to complete the hearing. Dates in May and June 2008 were proposed, and the proposed venue was Vancouver. Due to objections, the continuation of the hearing venue was not changed from Nelson.

[385] In a letter dated December 28, 2007, the Burgoons asked for the Panel Chair to recuse herself from participating on the panel on the grounds that her employment with the Federal Treaty Negotiation Office, and that office’s position with respect to the Sinixt First Nation, created a reasonable apprehension of bias. Submissions were sought from the other parties on this matter.

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[386] On January 8, 2008, Dr. Salway issued his “final version” of the report that was entered into evidence (exhibit #7), and dated March 1, 2007. This final version was dated March 23, 2007. The only changes were said to be the removal of the word “draft” on the title page and the signature page.

[387] On February 22, 2008, the Burgoons’ re-submitted Mr. Isaacson’s expert report. The Charts provided a joint reply report by Mr. Scarlett and Dr. Salway.

[388] After receiving submissions from the parties on the bias application, the Panel Chair issued her decision on February 29, 2008, denying there was a disqualifying bias (see Burgoon v. British Columbia (Ministry of Environment), [2008] B.C.E.A. No. 4 (Q.L.)). Following this decision, the Board scheduled the hearing to reconvene on May 26-30, 2008.

[389] In a letter dated May 8, 2008, the Respondent applied to postpone the May 26 hearing in order to arrange for a reply to Mr. Isaacson’s new expert opinion report, as well as the Charts’ rebuttal report. He asked for a postponement to October of 2008 because the Ministry would be involved with spring freshet issues prior to that time. Neither the Burgoons nor the Charts opposed the application. The Panel granted the postponement application. New dates were scheduled for October 20-24, 2008.

[390] On September 5, 2008, the Respondent tendered an expert reply report by Dwaine Boyer.

[391] Prior to the hearing, another issue arose with respect to Dr. Salway’s evidence. On October 7, 2008, the Burgoons advised that they had recently discovered information that put into question the credibility of Dr. Salway and the weight to be given to his report. In lengthy submissions, the Burgoons sought the opportunity to revisit Dr. Salway’s report through cross-examination at the hearing. They also sought an opportunity to call a new witness in relation to this matter, the peer reviewer of Dr. Salway’s report. They asked for a further postponement of the hearing because the new witness was not available during the week of October 20.

[392] The Respondent took no position on the application to postpone. The Charts vehemently opposed the application. Mr. Scarlett characterized the basis for the request as another “character assassination”. He provided documents in relation to the peer review of Dr. Salway’s report and asked that the postponement application be denied. He also pointed out that there would be no need for the new witness as Dr. Salway would be willing to answer questions should the Burgoons wish to apply to recall him.

[393] The Panel denied the Burgoons’ application on October 10, 2008, on the grounds that the content of Dr. Salway’s final version of his report was identical to one that was already in evidence and which had already been the subject of extensive cross-examination. Further, issues of credibility could be addressed in final argument. The Panel agreed that the Burgoons could apply to recall Dr. Salway after Mr. Isaacson testified on his new report. The Panel concluded that the prejudice caused by a further postponement outweighed the benefits.

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[394] Following this decision, the Burgoons made a further request for documents from the Charts; specifically, any communications between Dr. Salway and the peer reviewer, and between Mr. Scarlett and the peer reviewer. Mr. Scarlett refused to provide documents unless and until a “valid reason” for the request was given.

[395] The hearing reconvened on October 20. Although 5 days were scheduled, once again, the evidence of the two Appellants (the Charts and the Burgoons) was not completed. The Panel still had not heard the evidence of the Respondent, with the exception of Dr. Hatfield who testified during the very first week of hearing. The first morning was taken up with several applications, and then Mr. Isaacson testified. After that, Mr. Scarlett and Dr. Salway were called by the Charts to give evidence in relation to their rebuttal report. An application was made by counsel for the Burgoons to call rebuttal evidence to rebut the Charts’ rebuttal of expert opinion. This application was deferred to be argued after that week of hearing.

[396] The final morning was taken up with a site visit; the cross-examination of Mr. Scarlett and Dr. Salway was to be completed that afternoon. Although counsel for the Burgoons estimated that his cross-examination of these two witnesses would take 2 hours, his cross-examination of Mr. Scarlett alone exceeded 2 hours in spite of the Panel’s encouragement to focus his questions on matters relevant to the appeals. The cross-examination of Mr. Scarlett concluded, but not without new requests for documents arising. There was not enough time to complete the cross-examination of Dr. Salway so the hearing was adjourned. The Panel advised that a teleconference would be set up to discuss next steps, including how the remainder of the evidence would be heard given the extraordinary length of time consumed in the oral hearing to date. The Respondent indicated that, given the length of the proceedings, he was contemplating the scope of his continued participation in the appeals.

[397] A number of letters were exchanged between the Panel and the parties to determine a date when all would be available for a case management teleconference. In its initial letter seeking available dates, the Panel advised that 2 hours may be required for the teleconference and it asked the Respondent to be prepared to outline “the scope of their continued participation in the hearing.” Due to conflicts between the parties’ schedules, the earliest available date was February 4, 2009. This date was confirmed in a letter from the Panel dated December 8, 2008.

[398] When the teleconference took placed on February 4th, counsel for the Burgoons advised that he was out of country and was having technical difficulties with the phone. During the teleconference, the Respondent asked that the remainder of the hearing be conducted in writing. Counsel for the Burgoons asked for an adjournment to get instructions from his client. The Panel denied this request on the basis that all parties were supposed to be prepared to address these issues during the teleconference. Shortly thereafter, counsel for the Burgoons’ telephone connection was “lost” and was not reconnected. The conference continued in his absence. The Panel decided to complete the hearing in writing,

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including the remaining evidence and cross-examination. It also established a schedule for the production of affidavit evidence as well as the written cross-examination questions, among other things.

[399] Immediately following the case management teleconference, a letter from the Board, dated February 4, 2009, was provided to the Parties confirming the decision of the Panel and the schedule for completing the hearing in writing.

[400] On the date the Burgoons were to provide their written questions, February 18, 2009, the Burgoons wrote to the Panel objecting to the decisions made by the Panel during the teleconference when their counsel was absent. The Respondent provided a reply.

[401] The Panel issued a lengthy letter in response, going through the history of the proceeding and denying the Burgoons’ objection.

[402] During this written portion of the hearing, the Panel dealt with further applications and objections. The Burgoons objected to the Respondent’s expert report, they also repeated their application for documents in relation to the water reserve and added a request for production of other documents from the Respondent. Further, the Burgoons sought an opportunity to cross-examine the Respondent’s witness by way of a viva voce hearing in respect to certain written answers she had provided during this written part of the hearing. The Panel also received applications from the Charts seeking to ask certain witnesses follow-up questions. The Charts also expressed concern with the written question and answer procedure. The Respondent objected to many of the specific questions. The Panel ruled on these objections. A particular passage from a May 20, 2009 letter from the Panel dealing with some of these applications, is referred to by the parties in support of their applications for costs against the Burgoons. The Panel stated in relation to the Burgoons’ request for an extension of time:

In requesting the extension of time to provide further submissions, Mr. Aaron states that he was unable to provide substantive response to the Board’s letter on a “mere four (4) days notice”, because he was immersed in another litigation matter the week in question.

Mr. Jones objects to the requested extension, pointing out that Mr. Aaron did not communicate with the Respondent or the Board in advance of the May 1, 2009 deadline for providing submissions with respect to follow-up questions. The Panel also notes that Mr. Aaron did not communicate his request for an extension of time to the Appellant Charts who, despite the pressure to provide their submissions by May 1, 2009, managed to meet this deadline.

Ordinarily, the Panel is more than willing to grant extensions of time, if the parties consent, or if appropriate reasons are given. However, Mr. Aaron made no effort to seek the consent of the other parties. Mr. Jones points out, and the Panel agrees, that Mr. Aaron’s failure to request the extension before the deadline in question illustrates an on-

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going pattern of delay on his part in an already overly prolonged proceeding.

[403] The evidence and final arguments were completed on July 16, 2009. Of note, in the Burgoons’ final argument on their appeal dated June 10, 2009, they abandoned their Charter argument. Also of note, the final arguments contained the applications for, and submissions on, costs.

The Board’s Policy

[404] The Board’s general policy on awarding costs is set out at page 45 of its Procedure Manual. The policy states as follows:

Party-and-Party Costs

Subsection 95(2)(a) [of the Environmental Management Act] authorizes the Board, subject to the regulations, to require a party to pay all or part of the costs of another party in connection with the appeal. A party seeking costs under this section may make a submission to the panel hearing the appeal with respect to an award of costs at the conclusion of the hearing.

The panel will not make an order for costs unless a party requests that it be awarded costs. However, the panel may, on its own initiative, ask a party whether it seeks costs.

The Board has not adopted a policy that follows the civil court practice of “loser pays the winner’s costs.” The objectives of the Board’s costs policy are to encourage responsible conduct throughout the appeal process and to discourage unreasonable and/or abusive conduct. Thus, the Board’s policy is to award costs in special circumstances. Those circumstances include:

(a) where, having regard to all of the circumstances, an appeal is brought for improper reasons or is frivolous or vexatious in nature;

(b) where the action of a party, or the failure of a party to act in a timely manner, results in prejudice to any of the other parties;

(c) where a party, without prior notice to the Board, fails to attend a hearing or to send a representative to a hearing when properly served with a “notice of hearing”;

(d) where a party unreasonably delays the proceeding;

(e) where a party’s failure to comply with an order or direction of the Board, or a panel, has resulted in prejudice to another party; and

(f) where a party has continued to deal with issues which the Board has advised are irrelevant.

A panel of the Board is not bound to order costs when one of the above-mentioned examples occurs, nor does the panel have to find that one of the examples must have occurred to order costs.

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The panel will not order a party to pay costs unless it has first given that party an opportunity to make submissions on this issue. If the panel orders that all or part of a parties costs be paid, the panel may ask for submissions with respect to the amount of costs incurred.

The costs payable to a party under subsection 95(2)(a) will be determined on the basis of Rule 57(1) and Appendix B of the B.C. Supreme Court Rules, which lists items for which costs can be awarded, as well as the corresponding number of units for each item.

The panel will decide the scale under which costs are to be assessed. The scale chosen depends on the difficulty of the matter being appealed and provides increasing dollar values for matters of greater difficulty.

The Applications

1. The Burgoons’ application for costs against the Charts

[405] The Burgoons note that the hearing was postponed or adjourned several times at the request of the Charts and the Respondent but not once at their request. They seek an order for costs against the Charts on the grounds that the first postponement in May 2006 delayed the hearing of their appeal.

The Charts’ response

[406] The Charts submit that this application should be denied. The Charts submit that the postponement was granted to allow Dr. Salway time to produce his report and that it did not significantly increase the costs to the parties. Further, the Charts argue that it is unreasonable for the Burgoons to claim costs from the Charts when any delay in the proceedings caused by Dr. Salway was attributable to the Burgoons’ actions. The Charts say that it was the submission of Mr. Isaacson’s initial report that compelled the Charts to engage Dr. Salway in the first place. They also state:

From the outset of the hearing process, Burgoon/Elzinga proceeded to use every device and pretext imaginable (to a layperson, at least) to attack the Charts and their micro-hydro proposal. There was no hint at any time during this hearing process that the Burgoon/Elzinga team was concerned about costs to the Environmental Appeal Board, to the Ministry of Attorney General, or to the Charts. In the latter case, some of the demands for information from the Charts appeared to be intended more to vex and intimidate, than to add useful information to the Panel’s deliberation. This pattern is borne out by large, time-consuming segments of this hearing that have led nowhere – eventually being determined irrelevant or beyond the Panel’s jurisdiction. … We hope that this pattern of behaviour will be kept in mind when the Panel considers any award of costs to Burgoon/Elzinga for their participation in this proceeding.

2. The Charts’ application for costs against the Burgoons

[407] The Charts emphasize that this case arose because they applied for a water licence so that they could enjoy their private property. They maintain that the

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appeal hearing was far longer than it should have been given the issues involved; specifically, a small micro-hydroelectric project designed to serve a single residence and located on private property. In their view, the hearing was prolonged as part of a deliberate strategy by the Burgoons. They submit that this resulted in an additional financial burden for the Charts.

[408] The Charts submit that, from the outset, they have tried to keep their expenses to a minimum by foregoing legal counsel and from ordering transcripts during the lengthy hearing. They had a budget of $19,000 for the micro-hydro project and did not believe that spending a lot of additional money for legal assistance and transcripts was justified for such a small project. Initially, they did not plan for an expert geological/hydrological report, but after the Burgoons submitted Mr. Isaacson’s first report, they felt that they needed to counter with their own expert. Thus, they had Dr. Salway prepare a report.

[409] In addition, the Charts submit that they should receive their costs because of the conduct of the Burgoons, including “unfounded attacks (including libel), as well as unexpected and highly intimidating (for a layperson) threats of legal action and fines associated with demands for documents”. As the hearing kept adjourning and additional days were added, they had to take additional time off of work. They ask to be compensated for the $28,262.61 that they say this hearing has cost them.

[410] The Charts further say that the Burgoons tendered an “expert report” that was not really an expert report early in the proceedings. This put the Charts in a position of having to respond with their own expert report as well as dealing with lengthy expert testimony. This added great expense to the project.

[411] Finally, the Charts say that, from the outset of the hearing, and particularly when open-ended demands for documents were associated with threats of fines and potential jail terms, the Charts felt that intimidation and financial burden were being used by the Burgoons in lieu of a credible case and to try to force the Charts to give up on their appeal.

3. The Respondent’s application for costs against the Burgoons

[412] The Respondent seeks an order for costs against the Burgoons for the following reasons.

1. unnecessary and unreasonable delay

[413] In support of this claim, the Respondent points to the Burgoons’ failure to prepare a proper expert report. He suggests that this could have been avoided as Mr. Isaacson himself acknowledges at page 1 of his re-submitted report that his initial report was not intended to be an expert report, but was only in response to an email message from counsel for the Burgoons. The Respondent states:

The Burgoons knowing failure to produce a proper expert report in the first instance, and their request for an adjournment for this purpose, has unnecessarily lengthened this proceeding, and caused the Respondent an expense that it would not have incurred had the Burgoons produced an

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appropriate expert report in the first place. They should be required to pay costs commensurate with this expense.

[414] The Respondent also agrees with the Charts that the Burgoons lengthened the proceedings through various delay tactics. As an example, the Respondent refers to his submissions to the Panel on March 19, 2009. In it, the Respondent states:

In light of his clear expertise, the Burgoons late challenge to Mr. Boyer as an expert is frankly baseless, and can only be seen as yet another attempt by them to delay and add cost to this process. The Board indicated its acceptance of Mr. Boyer’s report on February 4. The Burgoons have waited 6 weeks from that letter, and 6 months after the report was served, to challenge his expertise on the very day on which they were to send us questions on his report. The Burgoons’ ongoing approach to this proceeding, in which they repeatedly lie in the weeds and wait until the last minute to raise an objection or bring a motion, is not conducive to an orderly process.

2. Multiple requests and failure to abide by Board rulings

[415] The Respondent points out that the Burgoons requested documents pertaining to the water reserve 3 times, and that the Panel itself commented on this in its letter of May 20, 2009 when it states, “the lack of deference shown by Mr. Aaron to the previous rulings of the Board in this hearing … reinforces the perception of a deliberate strategy of procedural delay on the part of Mr. Aaron.”

[416] In a similar vein, the Respondent submits that the Burgoons continued to assert a First Nation’s consultation claim despite the Panel’s finding that they did not have standing to do so. The Respondent says the Burgoons’ persistence in making this claim caused additional time and expense for the Respondent, and that the Burgoons should be liable to the Respondent for costs as a result.

3. Failure to withdraw grounds for appeal in a timely fashion

[417] The Burgoons challenged the Respondent’s decision on the grounds that it violated section 7 of the Charter in its Statement of Points, provided just prior to the first scheduled hearing, and provided further particulars when pressed by the Respondent in its revised Statement of Points. The Respondent submits that he expended considerable time and effort to prepare a response to that argument, which was not formally abandoned until the Burgoons’ closing argument. Even then, it was only done within the Burgoons’ application for costs against the Charts. The Burgoons said simply, “With a view to the consideration of costs, the Burgoons will not be proceeding with their Charter argument.”

[418] The Respondent maintains that this argument was never thought through and this is the reason it was abandoned. The Respondent submits that the Burgoons should pay the Respondent’s costs in this regard.

4. Unnecessary application

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[419] Finally, the Respondent submits that Burgoons’ application to remove the Panel Chair on the grounds of a reasonable apprehension of bias, without providing any evidence in support of its application, should attract an order of costs.

The Burgoons’ response

[420] The Burgoons submit that there are no proper grounds under the Board’s policy to award costs against them as the Board’s test for awarding costs is “special circumstances” pertaining to abusive and/or unreasonable conduct. They argue that a costs award is used as a punitive measure: to punish a party for their unreasonable or abusive conduct; they are not to be used to address the performance of a party’s lawyer or witnesses. Applying these considerations, the Burgoons submit that their conduct should not attract a costs award.

[421] Turning to the parties’ submissions, the Burgoons say that it is incorrect to attribute a pattern of delay to their conduct given that none of their adjournment requests have been granted, and all of their submissions have been filed on time. Further, the Burgoons deny that their counsel has pursued a “strategy of procedural delay”. However, even if there was, they submit that it is not grounds for costs unless there was actual delay resulting from the strategy.

[422] Regarding the various applications made, the Burgoons submit that it would be inappropriate to punish them for taking positions in favour of natural justice and procedural fairness, all of which they maintain have been valid positions. For example, the Burgoons took issue with the conversion of the proceeding from an oral hearing into a written proceeding and sought to cross-examine the Respondent. Those objections did not result in actual delay. Their other procedural objections are a matter of record and, they submit, none of them resulted in any actual delay in these proceedings, nor can the Burgoons be said to have acted abusively or unreasonably in advancing them.

[423] Regarding their repeated requests for water reserve documents, they submit that these requests cannot be considered to have been abusive or unreasonable because the disclosure of those documents related to a live issue of law before the Panel, and the requests did not cause any “particular delay” or expense to the parties. Moreover, they had evidence to suggest that the Respondent’s document search was not as comprehensive as it was claimed to be and that, had they been allowed to cross-examine the Respondent’s witnesses, that evidence would have come out.

[424] Regarding Mr. Isaacson’s report, the Burgoons provided a lengthy response. They say that the original report was not improper. It was formally solicited by Mr. Aaron’s letter on April 21, 2006, and was prepared at a time when the Burgoons knew very little about the proposed project and when the Charts had not retained Dr. Salway. By the commencement of the hearing, they state:

…it became apparent that the Charts’ proposal had evolved significantly to the extent that different materials were being proposed from that originally set out in the water licence application. By the time Mr. Isaacson took the

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stand, he had reviewed Dr. Salway’s report and had sat through extensive testimony from Dr. Salway and Mr. Scarlett. The result was that his opinion had developed beyond the contents of his initial report, which was prepared in a context that was relatively abstract compared to what he had learned about the project in the course of the hearing. Counsel’s attempt to solicit Mr. Isaacson’s opinion with respect to his updated understanding of the project were frustrated by the Board’s imposition of a strict evidentiary rule restricting Mr. Isaacson’s testimony to that which had been set out in his report. The situation was untenable, given that his initial report was prepared prior to his discovery of the true particulars of the project. As a solution, the Panel asked Mr. Isaacson to prepare a revised report.

If the Burgoons were at fault at all with respect to Mr. Isaacson’s initial report, their conduct certainly does not amount to abusive or unreasonable conduct. The Burgoons did their best to make a case against the authorized works in circumstances where their expert report was filed on a timely basis, but the Charts’ expert report was filed almost a year later, with the benefit of an open end adjournment granted to the Charts so as to enable them to hire an expert.

[425] The Burgoons also submit that the Respondent adduced expert evidence very late in the proceeding, with the benefit of hindsight with respect to each party’s presentation of their respective cases. The Burgoons however, were the only party to adduce their expert report within the prescribed time period so as to meet the applicable notice requirements. They submit that they should not be penalized for adducing a report in relation to the facts that were available at the time. Further, they should not have been restricted to that which was explicitly set out in his report. However, since they were so restricted, they should not now be penalized with costs due to the exigency of filing a revised report.

[426] Regarding their aboriginal consultation argument, the Burgoons disagree that they did not have standing to advance this matter and maintain that they should not be required to pay costs because they believe that the Board erred in its ruling.

[427] Regarding their application for recusal of the Panel Chair, they submit that it was reasonable in the circumstances.

[428] Finally, regarding the Charter argument, they submit that it was only once all of the evidence was in that the Burgoons determined that the evidence before the Panel did not justify proceeding with the Charter argument. While this may have resulted in additional time and expense for the Respondent, it falls short of conduct that is unreasonable or abusive. Rather, they submit that it would have been unreasonable for them to proceed with the argument after having determined that it was unsupported by the facts.

The Panel’s Findings

[429] These appeal proceedings have been very unusual in a number of respects. The obvious starting point is the length of the proceeding. The licences at issue

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would serve one single family residence. The first licence at issue is a domestic water licence; the second is for a small micro-hydro project, considered “non-consumptive” by the Ministry. At the time the hearing was originally scheduled, and based upon experience, 3 days were allotted.

[430] Ultimately, there have been 12 days of oral hearing, one teleconference, 4 months of written evidence and 2 months of closing argument over the course of 4 years. The amount of hearing time used for these two appeals far exceeds the amount of time used for any other Water Act hearing in the Board’s 25 year history, even where appeals were combined. In fact, it rivals the amount of hearing time required for far more complex appeals such as appeals involving contaminated sites and appeals involving claims of aboriginal rights and title.

[431] The hearing was also unusual in terms of the number of applications and objections made, and the number of evidentiary issues that arose. The Panel has been perplexed by the sheer number of issues that continually reared themselves right from the first day of the hearing. In these circumstances, it is not surprising that all parties are looking to each other for some financial compensation for the time spent, and expense incurred, in relation to these proceedings.

[432] The Panel now turns to consider the applications.

1. The Burgoons’ application for costs against the Charts

[433] The Burgoons seek an order for costs against the Charts on the ground that the May 2006 postponement delayed the hearing of their appeal. There is no question that the May 2006 postponement to accommodate Dr. Salway’s’ report created one of the longest unexplained delays.

[434] Having said that, as is evident from the chronology above, the actions of all parties have, at one time or another, resulted in either postponements (before the hearing began) or an adjournment (during the hearing proper) or inevitable delays. The Burgoons maintain that they were not granted any adjournments, but this is misleading given the manner in which the Burgoons approached the presentation of evidence and argument at the hearing. For instance, while the start of the hearing in October of 2007 was not formally postponed to allow the Board to deal with the issue of standing that had been introduced in the Burgoons’ amended Statement of Points, which was provided one month before the hearing was to start, the first day of the hearing was taken up dealing with this issue, thus delaying the formal commencement of the oral hearing.

[435] As well, the Burgoons adversarial strategy throughout the hearing, combined with poor preparation of their expert evidence, also delayed the hearing of the appeal. Much of the difficulty with Mr. Isaacson’s original report was brought on by the fact that, not only was the report inadequate as an expert report, but that the Burgoons’ counsel attempted to solicit, in direct testimony, new evidence from Mr. Isaacson; that is, evidence that was not set out in the original report. The Respondent repeatedly objected to the admissibility of any new expert opinion evidence being admitted on direct examination, arguing that this expert testimony

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was being presented without prior notice to the Respondent and without a chance to properly prepare for the hearing. This was of concern to the Respondent primarily because the Burgoons had given notice that they intended to argue a breach of section 7 of the Charter of Rights and Freedoms. The Panel agreed with the Respondent, repeatedly ruling that questions posed by the Burgoons’ counsel, and answers provided by Mr. Isaacson, were inadmissible: they fell outside the scope of the original expert report. For these reasons, the hearing was adjourned during Mr. Isaacson’s testimony since it was apparent to the Panel that the parties were at an impasse on the admissibility of Mr. Isaacson’s original evidence during that leg of the hearing.

[436] Allowing the Burgoons to take advantage of the adjournment to re-submit their expert evidence delayed the recommencement of the hearing, since time was also required to allow for rebuttal evidence to be submitted. How much delay is difficult to determine, since the scheduling of each leg of the hearing was a challenge in itself with so many parties involved.

[437] Thus, while the Charts’ May 2006 postponement was much longer than it was supposed to be, the Panel finds that there are a number of factors that mitigate against an award of costs against the Charts:

• The delay occurred before the hearing began and was requested in sufficient time to avoid many of the last minute preparation costs that the parties would normally incur during the week before a hearing.

• The Charts did not exercise their rights under the Licence, so the Burgoons were not prejudiced in that regard.

• It was the Board who joined the appeals for the purposes of a hearing and who denied the application to hear the Burgoons’ appeal separately; it was not at the request of the Charts.

• There is no indication that the Burgoons were placed at a disadvantage because of the delay.

• The Charts explanation for not hiring Dr. Salway to produce a report earlier is reasonable. They were not represented by counsel, the Licence was for a small project, and the Panel accepts that they did not anticipate the need for expert evidence until Mr. Isaacson’s report was produced.

• The Burgoons are, themselves, not without blame in terms of actions taken before and during the hearing that led to delays in completing the hearing in a timely manner.

• The party who has suffered the most from any delay to having the appeals completed is the Licensee, the Charts.

[438] The Panel finds that the May 2006 postponement is not grounds for an award of costs against the Charts.

[439] The Burgoons’ application for costs is denied.

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2. The Charts’ application for costs against the Burgoons.

[440] As noted above, the party that has been most seriously impacted by the length of time it has taken to complete these appeals is the Charts. They have chosen not to construct their micro-hydro project because of the uncertainty created by the Burgoons’ appeal, as well as their own concerns with certain conditions imposed in the Licence. Their own appeal against the refusal of a domestic water licence has been outstanding for over 4 years, although at least 9 months of that delay is attributable to their request for a postponement in 2006.

[441] The Charts make three main arguments in support of their application for $28,262.61 in costs from the Burgoons. The first relates to the Burgoons’ retaining of an expert. They maintain that once Mr. Isaacson was retained, the Charts felt they also had to retain an expert, Dr. Salway, thereby incurring additional cost and creating further delay. Second, the Charts point to the Burgoons conduct during the appeals, particularly in relation to the request for documents. Third, they submit that Mr. Isaacson’s initial report was inadequate and resulted in unnecessary costs and delay.

[442] Regarding the Charts’ argument that the Burgoons’ decision to hire an expert added additional cost and delay, the Panel agrees that the Charts incurred additional expense by submitting an expert report in reply. Also, because they needed additional time for the expert report, this resulted in delay. However, the Burgoons cannot be criticized or punished by a costs award for retaining an expert. All parties must consider what evidence will be required to support their claims in an appeal, whether that evidence is from lay people or experts. To ensure the other parties have a reasonable opportunity to understand the case to be met, the Board has established time lines for the disclosure of this evidence. The Burgoons complied with that procedure.

[443] Further, the evidence from the Charts’ expert, Dr. Salway, was helpful to the Panel. Although his evidence became the subject of controversy and gave rise to further legal issues during the hearing, it was also very beneficial to the Charts’ case, particularly their defence of the Licence.

[444] Regarding the Burgoons’ conduct during the hearing, specifically the “unfounded attacks (including libel), and unexpected and intimidating threats of fines and potential jail terms in relation to the demands for documents”, the Panel finds as follows.

[445] As noted earlier, it was clear from the Charts’ various responses to the demand for documents, that they, and particularly Mr. Scarlett, took these demands very personally. The Panel attempted to address this situation in its opening remarks to the December 2007 leg of the hearing. The Panel had received a letter on behalf of the Charts outlining their position that the Burgoons’ demands for documents were an attack on the integrity and reputations of Mr. Scarlett and Dr. Salway in an attempt to intimidate. At that time, the Panel advised as follows:

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While Mr. Scarlett clearly feels that his integrity has been under attack with these orders for production, I must remind the parties that one important aspect of any hearing is the ability of each party to challenge the expert opinion of the other party’s expert witness. This applies to the content of their reports, as well as matters that go to the credibility and amount of weight that should be given to an expert, or any witness for that matter.

[446] The Panel also advised, “…it would be wrong to confuse what are legitimate challenges on cross-examination to the reliability of evidence of another party’s witness with a general lack of courtesy and respect.”

[447] Despite these explanations, it is apparent that the Charts believed, and continue to believe, that the demands for documents were being used for improper purposes and that their expert’s credibility should not be exposed to this sort of examination. This is so despite the fact that they, and in particular their representative Mr. Scarlett, criticized Mr. Isaacson’s report and questioned his professionalism without restraint. This was most apparent in the joint Scarlett/Salway reply to Mr. Isaacson’s re-submitted report when they state under the heading “conclusions”: “There is very little in Isaacson’s second report that can be considered reliable or useful in the context of this hearing, and nothing that is professional.” Regardless of whether these comments are correct or incorrect, the point is that the credibility of a witness is always something that is relevant, in fact necessary to assess, and the Charts certainly did not shy away from putting the other witnesses’ credibility to the test.

[448] The Charts’ third argument relates to the delay and additional expense caused by the Burgoons’ tendering of the first Isaacson report as an expert report. The Respondent also raises this as a justification for costs against the Burgoons so the Panel will deal with both of their arguments at this time.

[449] Both the Charts and the Respondent submit that Mr. Isaacson’s first expert report was completely inadequate and that the Burgoons’ tendering of this as an “expert report” resulted in unreasonable and unnecessary expense and delay. The Panel agrees on this point. In evidence, Mr. Isaacson admits that his initial report was not intended to be an expert opinion report, but was only in response to an email message from counsel for the Burgoons. The Respondent argued that the Burgoons were represented by counsel who should have been familiar with the nature of an expert report.

[450] In their defence the Burgoons submit that, at the time they filed Mr. Isaacson’s original report, Dr. Salway hadn’t been retained and they knew little about the proposed project. This explanation is of little assistance. As Appellants, the Burgoons have the burden of proof in their appeal. It is no excuse for them to say that they didn’t know much about the case. Presumably that is why they hired an expert. Further, the inadequacy of the expert report cannot be attributed to the absence of Dr. Salway, since the Charts retained Dr. Salway only because of Mr. Isaacson’s report.

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[451] The Panel also finds that there was plenty of advance warning that there were potential problems with Mr. Isaacson’s initial report. For instance, the Respondent raised questions about the original report in his Statement of Points submitted prior to the commencement of the hearing. The Respondent’s concerns were reiterated during his opening statement on October 18, 2007:

Moreover, as further detailed in our Statement of Points, in the respectful submission of the Respondent, Mr. Isaacson’s report is simply not helpful to the Board in making your decision on this matter.

In fact, it is difficult to call it an expert report. This is because Mr. Isaacson has simply speculated on a number of things that might take place as a result of the construction of the works. For example, just to take one example, he poses the potential for construction workers to place giardia in the creek. With respect, this is pure speculation which we do not find helpful and, in our respectful submission, is not helpful to the Board in rendering its decision in this matter. Thus, this kind of speculation is simply of no assistance.

And, again, there is nothing in Mr. Isaacson’s report which specifically states, and he provides no opinion that the construction of the works will result in injury or will result in certain things taking place which could put downstream water users at risk.

[Emphasis added]

[452] The Burgoons argue, however, that the Charts’ proposal changed significantly once Mr. Scarlett got involved; the original proposal evolved to the extent that different materials were being proposed from that originally set out in the Licence.

[453] The Panel agrees that the plans for the project changed once Mr. Scarlett was involved. However, the problems with the original Isaacson Report were not solely because of Mr. Scarlett’s changes. It was simply inadequate as an expert report. The Panel also finds that even if the original report needed to be revised to address Mr. Scarlett’s changes, both Mr. Scarlett and Dr. Salway testified 2 months before Mr. Isaacson; the Burgoons could easily have advised of their need for a revised report at that time. Mr. Isaacson was the Burgoons’ main witness on the technical merits of the micro-hydro project. The Burgoons were clearly putting a great deal of effort into their case on all other fronts, and it is inconceivable that they would be so inattentive to the evidence of this witness, especially when they were quick to point out the flaws in the expert evidence of others.

[454] When Mr. Isaacson was called to testify in December of 2007, the Panel allowed the Respondent’s objections to much of his evidence as being beyond the scope of his report, just as it had upheld many of the Burgoons’ objections to the testimony of Dr. Salway.

[455] With the proceedings at an impasse over Mr. Isaacson’s evidence and scheduled hearing time drawing to a close, prior to adjourning the proceedings, the

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Panel gave the Burgoons the option of resubmitting their expert opinion report. To ensure fairness, the Panel gave the other parties an opportunity to provide expert reports in reply.

[456] Unlike the situation created by the Charts’ 2006 postponement, the Panel agrees that this delay lengthened the proceedings, and caused additional expense for the parties.

[457] The Panel agrees that expenses to produce additional rebuttal expert evidence would not have been incurred by the Charts had the Burgoons produced an appropriate expert report in the first place. If his opinion needed to be modified as a result of Mr. Scarlett’s changes alone, that is another matter; but that is not what occurred here.

[458] However, the Panel also acknowledges that the hearing would not have been completed by December 13, 2007, even if Mr. Isaacson’s report had been flawless. Further, while resubmitting a new report may have added additional time to the hearing and delayed its conclusion, the Panel also acknowledges some of the responsibility for the overall delay in concluding the hearing has to be assigned to the Charts.

[459] The rebuttal report, prepared by Dr. Salway and Mr. Scarlett, was also flawed. It contained argument rather than new opinion evidence, and stated opinions without providing sufficient background. Mindful of the fact that the Charts were not represented by legal counsel, the Panel allowed them to redact portions of the rebuttal report, hoping that it would make the hearing move more quickly. Notwithstanding this attempt to move the proceedings along, the Panel entertained and upheld many of the Burgoons’ objections to this evidence. The entire process of admitting this rebuttal report into evidence was painfully slow during the third leg of the hearing.

[460] Moreover, the reluctance that Mr. Scarlett displayed in responding to document demands, and the confusion caused by providing an unsigned copy of Dr. Salway’s report and then seeking to replace it with a signed and sealed version at a later date, also contributed to delays in the proceedings.

[461] Regarding the Respondent, the Panel notes that, while the Respondent was put to the extra expense of preparing the Boyer Report as rebuttal evidence, that evidence was very valuable to the Panel in terms of dealing with many of the issues before the Panel. Without this evidence, there may have been aspects of the Respondent’s argument that were not as persuasive as they otherwise became.

[462] For these reasons, and despite the fact that the Panel does not condone the Burgoons failure to produced an appropriate expert report in the first instance, the Panel is unable to grant an award of costs to the Charts or the Respondent in relation to the inadequate Isaacson report.

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3. The Respondent’s application for costs against the Burgoons

[463] Considering the proceedings as a whole, the Panel has the greatest sympathy for the Respondent in this matter. Both the Charts and the Burgoons contributed, in their own ways, to increasing both the length and complexity of the proceedings. The Respondent has generally “been caught in the middle”, although at least one of the adjournments was granted at his request. However, this was minor in comparison to the delays caused, and issues created by, the two Appellants.

[464] Aside from the costs associated with Mr. Isaacson’s original report, the Respondent also asks for an award of costs against the Burgoons on the grounds of delay, multiple requests and failure to abide by Board rulings, failure to withdraw grounds for appeal in a timely fashion and an unnecessary application to recuse the Panel Chair.

[465] With respect to the application for recusal, the Panel finds that this is not a reason to award costs in this case. The application was made reasonably early and is not a matter that should be the subject of punishment in this proceeding. Similarly, while the Burgoons withdrew their Charter argument at the last possible moment, this is not uncommon in Board hearings and this situation is not such a gross injustice as to warrant costs in this proceeding, in spite of the expense the Respondent incurred in order to prepare its response.

[466] The Respondent’s next grounds relate to general delay as well as the Burgoons’ conduct during the hearing. The Burgoons submit that they did not cause delay because they have not requested any adjournments and all of their submissions have been filed on time. The Panel notes that adjournments and late submissions are not the only ways to delay a process. In this case, the Burgoons have delayed the process by tendering an “expert report” that was not an expert report, with the result that the hearing ended up at an impasse over the admissibility of the expert evidence tendered by the Burgoons, an impasse that was unavoidable given the Burgoons stated intent to argue a breach of the Charter of Rights and Freedoms, and the procedural correctness required of the Panel in such cases. The result was a delay in recommencing the next leg of the hearing to have a proper report prepared and submitted to the Panel, as well as rebuttal evidence prepared and submitted to ensure fairness to all parties. The fact that the Burgoons later abandoned the Charter of Rights and Freedoms argument in their final submissions did not assist the Panel in dealing with these procedural demands, and the inevitable delays in concluding the evidentiary portion of the hearing.

[467] The Panel agrees with the Respondent that the Burgoons’ counsel also ignored repeated requests by the Panel to move along in his questions, ignored the Panel’s ruling on matters and reargued certain issues. The Panel expressed its concerns with conduct of counsel for the Burgoons, at length, in its letters dated February 25, 2009 and May 20, 2009.

[468] However, the Panel agrees with the Burgoons that it would be inappropriate to punish litigants for making objections and taking positions in favour of natural justice and procedural fairness. Having said that, in the Panel’s view, counsel’s

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objections and behaviour during the latter part of the hearing neither advanced his client’s interests, nor did it advance fairness or natural justice. It appeared to be undertaken in contempt of the proceeding knowing full well, as a lawyer, that the appropriate response to an unfavourable ruling is judicial review.

[469] The Board’s policy on costs is essentially punitive in nature. It is awarded on the basis of unreasonable or bad behaviour. It is a form of punishment. In considering whether to grant the Respondent’s application for costs against the Burgoons on the grounds of delay and conduct of counsel, the Panel has really struggled. There is no question that additional time was expended by all parties, and the Board, in order to address the many applications, objections and issues that arose out of the Burgoons’ adversarial civil litigation-style strategy. They chose to attack the issuance of the Licence aggressively, using all available legal tools. This is unusual in appeals to the Board and certainly contributed to the numerous issues that arose, in part, because one significant party to the appeals was not represented by legal counsel.

[470] Nevertheless, these efforts did not result in success on their appeal. The ultimate decision of the Board is not in their favour. It appears from the testimony that the Burgoons took such an approach because they are truly concerned about their watershed and the water source. The Panel, however, has concluded that there is no evidence that their concerns cannot be adequately addressed through professionally designed and supervised construction practices.

[471] At the end of the day, the Panel is of the view that any further orders of costs against the Burgoons, as requested by the Respondent, is more punishment than is justified in the circumstances. This is particularly so because many of the issues can be directly attributed to the conduct of counsel, as opposed to the Burgoons’. If the Board had jurisdiction to award special costs, the result may be different. However, given that all parties added some expense and delay to the proceedings at various times, the Panel finds that it would be unfair to make the Burgoons pay costs to the other parties for the additional time and expense incurred as a result of their counsel’s actions.

VII.

DECISIONS

[472] The Panel has considered all the submissions and arguments made whether or not they have been specifically referenced herein.

[473] Section 15(7) of the Water Act allows the Board to confirm, reverse or vary the decision being appealed, or make any decision that the person whose decision is appealed could have made, and that the board considers appropriate in the circumstances.

[474] For the reasons provided above, the Panel finds as follows:

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[475] The Burgoons’ appeals of the Licence (Appeal No. 2005-WAT-024) and their appeal of the accompanying Permit to Occupy Crown land (Appeal No. 2005-WAT-025), are dismissed.

[476] The Charts’ appeal (Appeal No. 2005-WAT-026) is allowed, in part. The Regional Water Manager’s decision to refuse the issuance of a water licence for domestic water purposes is confirmed, but the Panel has varied certain conditions attached to the Licence for power purpose, as follows:

Condition “k”: Construction of works including the diversion structure must occur within the low water period of the year (August – October), unless the works are located more than 5 meters back from the top of the creek embankment.

Condition “l”: Deleted.

Condition “m”: The water used in the generation of power shall be returned to the stream above any downstream points of diversion and, where feasible from an engineering and environmental perspective, above the existing water survey station.

Condition “n”: Works shall be installed to measure and record the rate of flow and quantity of water diverted and returned to the stream under this licence. Measurements obtained from the measuring device shall be retained by the licensee and be available upon request for inspection by the Regional Water Manager.

Condition “q”: Construction of the works must include a temporary bypass so that work within the creek channel is done in the dry and the creek flow to downstream users is maintained.

Condition “r”: Prior to construction of the works, all downstream users must be notified as outlined in the Water Regulation. This may include providing a seasonally appropriate supply of water to downstream users during the construction period of in-stream works in accordance with the Water Regulation. An appropriate supply of water refers to the water flow that would otherwise be available to downstream users during the construction period of in-stream works.

New-Condition “v”: Pipeline connection to the dam, including the beginning of the pipeline trench, must have a positive cut off to prevent peak flood flows from following the route of the pipeline.

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New-Condition “w”: The Regional Water Manager be provided with the opportunity to inspect the site, with detailed drawings, and with the pipeline route and tailrace and the location of the turbine clearly marked with stakes in the field and surveyor flagging attached.

New-Condition “x”: The Regional Water Manager be given advance notice of the dates on which works are to be constructed so as to have the opportunity to inspect the construction in progress.

[477] In addition, since condition “j” of the Licence set a deadline for completion of the works which has now passed, the Panel varies that condition as follows:

Condition “j”: The construction of the said works shall be completed and the water shall be beneficially used prior to the 31 day of December 2013. Thereafter, the licensee shall continue to make beneficial use of the water in the manner authorized herein.

[478] The Panel also considered three applications for costs. All applications for costs are denied.

“Lynne Huestis”

Lynne Huestis, Panel Chair Environmental Appeal Board

“J. Alex Wood”

J. Alex Wood, Member Environmental Appeal Board

“Stephen Willett”

Stephen Willett, Member Environmental Appeal Board

June 28, 2010