Harry v. British Columbia (Assistant Regional Water Manager) and Bear River Contracting Ltd., Decision Nos. 2011-WAT-005(c) and 2011-WAT-006(c), Environmental Appeal Board (Wickett), 7 February 2013

The Environmental Appeal Board allowed, in part, an appeal by the Xwemalhkwu (Homalco) First Nation to the issuance of a conditional water licence to a company seeking to establish a commercial water bottling operation. The Panel held that the Crown had a duty to consult on the water bottling project as a whole. The Water Manager did not satisfy the Crown’s duty to consult, in relation to the Homalco’s use of and right of access to reserve lands, because he did not make inquiries into the adequacy of a parallel consultation process being carried out by the Integrated Land Management Bureau (“ILMB”) relating to a dock and barge facility for the same project. The Water Manager satisfied his duty to consult in relation to the Homalco’s asserted claims to ownership of fresh water. The Panel gave directions to the Water Manager to satisfy himself, on behalf of the Crown, that the adequate consultation had taken place in regards to the project as a whole.

Chief Richard Harry, on his own behalf and on behalf of the Xwemalhkwu (Homalco) First Nation, appealed the issuance of two conditional water licences to Bear River Contracting Ltd. (“BRC”). The licences were issued in February 2011, and are appurtenant to property owned by BRC in Bute Inlet. The licences authorized the diversion and use of water from Bear River. One licence was issued for fire protection and residential lawn watering. The other licence was issued for commercial and industrial purposes, and permitted the bottling of water. The licences required BRC to make beneficial use of the water before December 31, 2014.

Homalco Indian Reserve No. 8 is adjacent to BRC’s property. These lands had not been occupied on a full time basis for many years, but have been used periodically as a base to catch and process fish.

BRC purchased the property in 2000 for the purpose of logging it. The lands were logged, and then replanted. In 2009, BRC pursued the opportunity of extracting the water from Bear River for commercial sale. It was contemplated that the water would be used for a microbrewery. BRC also made plans for a hunting or fishing camp on the property.

As part of these objectives, BRC applied for a land tenure under the Land Act to construct a docking facility, and concurrent applications for the conditional water licences.  The applications were received by FrontCounter BC, and then referred to interested parties including the Homalco. The Land Act tenure was handled by the ILMB.

The Homalco took the position that the water licences and docking facility had the potential to impact their Aboriginal rights and title, and common law rights to ingress and egress to its lands. The only deep water access to IR No. 8 was adjacent to the BRC property.

In 2009, the Water Stewardship Division sought more information from the Homalco about how the water licences could impact its Aboriginal rights. No response was provided within the requested timeline. Due to the lack of response from the Homalco, the research was undertaken by Rachael Eedy, a Water Stewardship Technician. In August 2010, Ms. Eady sent a letter to the Homalco setting out her preliminary assessment of the Homalco’s interests in the area and the potential impacts of the licences. The impacts were “considered to be low”. Ms. Eedy requested specific comments from the Homalco about the alleged infringement, but there was no response.

In February 2011, a technical report was completed by Ms. Eedy. The details in the report included that the in-stream works were small in size, and the pipeline would be located largely in previously disturbed areas. There was a low potential to infringe on the Homalco’s rights. There would be certain conditions to the licences such as fish screens. The Manager accepted the recommendations contained in the technical report, and issued the licences on February 16.

Appeal

The Homalco alleged that the Manager failed to consult with them concerning the potential infringement of their Aboriginal rights and title. They also alleged that the Manager failed to hold a hearing pursuant to section 11 of the Water Act prior to issuing the licences. During the hearing of the appeals, the Homalco abandoned their challenge to the domestic water licence. The focus was on the commercial licence. The Homalco sought an order that it be set aside, as well as a “non-binding ruling” from the Panel that any proposed decision on water licences should be referred to the treaty table.

Chief Richard Harry gave evidence about the limited resources of the Homalco to deal with referrals. Their position was that it is the Crown’s duty to fully present all information relating to the project.

Ms. Eedy testified at the hearing. She referred to a June 2010 letter to the ILMB about BRC’s application for a tenure under the Land Act relating to the docking facility. She had not seen this letter before the hearing. Previously, there had been no procedure in her office to share information between various branches of government. There have now been changes in the consultation process so that, on larger projects, government departments bundle and coordinate their process and share information. That was not the standard practice in 2010.

Ms. Eedy testified that the Homalco’s failure to engage in the process confirmed her independently-formed view that the licence would have no impact of their rights and title, and the issue of accommodation did not arise.

The Homalco identified various deficiencies in the consultation process. It submitted that the Manager failed to properly assess the impact of the licence, including in the context of past events and potential future cumulative effects. The issuance of a water licence deals with the resource “out the back door”, thereby undermining the treaty process. The Homalco submitted that the Manager failed to adequately share information, by not sharing its preliminary strength of claim assessment, and failing to share Ms. Eedy’s technical report. The Homalco also argued that the Manager failed to provide meaningful accommodation, and failed to provide a proper consultation record.

The Manager conceded that there was a duty to consult. Ms. Eedy concluded in her report that the Homalco’s assertion of rights was strong, but that the impact of the licence was extremely low. The level of consultation was at the low to mid-point of the spectrum. Further, the Homalco failed to meet its reciprocal duty in the consultation process.

BRC took the position that it was caught in a process for which it is not responsible. It pointed to its efforts to fund an archaeological study, but that no response was received from the Homalco.

The Panel determined that it is not the role of the Board to engage in a process of consultation with the First Nation; it may only evaluate the efforts of the Manager and his staff to consult with and accommodate the First Nation. The Board is an appellate tribunal.

Panel’s Findings on Duty to Consult

The Board reviewed the leading authorities on the duty to consult such as Haida and Rio Tinto. In regards to the Homalco’s strength of claim, the Board stated:

The [Homalco’s] rights to Aboriginal title, insofar as they relate to Indian Reserve No. 8, are unassailable. Indian Reserve No. 8 is reserve land, and the Homalco could have no higher claim to these lands.

The Panel held that there was also a strong, if not unassailable, right to access those lands.

The Homalco also asserted a claim that water resources in its traditional territories are vested in them. Such a claim had not been put forward during the consultation process. No evidence was led at the hearing to support this claim. The only evidence concerned title and access rights. The Panel stated:

There was, however, no evidence with respect to either the basis or strength of the [Homalco’s] claim to an Aboriginal right to ownership of fresh water, nor to the status of the treaty negotiations and, in particular, whether within the treaty negotiation context, the assertion of an Aboriginal right to the vesting of fresh water is considered weak or strong.

The Homalco had the burden of outlining its claims with clarity, and did not meet this burden with respect to the water ownership claim. There was virtually no evidence of their historic use of the water resources. The Panel therefore concluded that the Homalco had a strong claim relating to ownership, use, occupation and access to IR No. 8, but a weak claim based on ownership of fresh water resources.

The primary point of contention at the appeal was the seriousness of the potential impact of the commercial water licence. The Panel concluded that there was no evidence that water withdrawal would cause any harm to the asserted water ownership right. The potential impact of the licence on title to IR No. 8 and associated access rights, however, depends on whether the Manager was obliged to consider the “overall impact” of the water bottling project, or only the diversion of water and construction of the associated works. It was not disputed that the Manager only considered the latter “narrow” issue. The Homalco relied upon West Moberly for the proposition that the “full environmental, social and economic impact” of the water bottling operation had to be considered.

The Panel held that there is no statutory restriction in the Water Act to limit the Manager from engaging in consultation with respect to the potential impacts of the bottling project as a whole: section 12 (1). The Panel concluded:

… the Manager was obliged by the honour of the Crown … to at least consider the possibility of the impact of the water bottling project upon the [Homalco’s] Aboriginal rights and title. The [Homalco] was, and is, entitled to be consulted with respect to the impact of the water bottling project, as a whole, upon its asserted rights and title.

The Manager was obliged to consider the broad impact of the water bottling project on the Homalco’s rights and title. The Panel referred to the fact that the ILMB was assessing BRC’s application for a land tenure for the dock and barge facility. There was no evidence in this appeal of those consultations. Ms. Eedy had testified that Ministry policy at the time did not allow for information sharing with other branches of the Crown.

In regards to the nature and scope of the duty to consult, the Panel concluded that the level of consultation required in relation to the Homalco’s water ownership claim was at the low end of the spectrum. It was clear that the Manager fulfilled that duty. The conditions of the water licence were noted. The Panel also noted that the water resource is renewable and the Homalco “will not be permanently deprived of the benefit of the water resource if it is later able to prove an Aboriginal right to ownership of the water”.

The Homalco referred to the lack of financial resources to respond in the consultation process. The comments of Mr. Justice Vickers in the Tsilhqot’in Nation decision, concerning funding, were noted. The Panel determined, however, that the Homalco never asked for more time. A First Nation has a reciprocal obligation to express its interests and concerns, and obliged to make clear within a reasonable period of time that it needs additional time or money.

In regards to the issue of the dock and barge facility, the Homalco was far more responsive to the ILMB. The Panel concluded:

… the Manager, on behalf of the Crown, was obliged to consider, and consult with the [Homalco], with respect to the impact of the water bottling proposal on the [Homalco’s] Aboriginal rights and title. This meant that the Manager was, at the least, obliged to seek to obtain relevant information from the ILMB, to ensure the disclosure of that information to the FN, and to seek information about the [Homalco’s] position with respect to the water bottling proposal as a whole.

The Panel concluded that the Manager, on behalf of the Crown, failed to fulfil this duty. This failure was undoubtedly related to the then-existing policy that information should not be shared. The Panel stated that such a policy “cannot supersede the constitutionally mandated duty upon the Crown to consult with First Nations”. The Manager’s decision may have been different if he had known about the Homalco’s concerns relating to the barges and its right of access to IR No. 8.

Whether a Section 11 Hearing Should Have Been Held

The Panel rejected the Homalco’s argument that the Manager should have held a hearing pursuant to section 11(2) of the Water Act. In light of the Homalco’s failure to respond to inquiries, there was little basis for holding one.

Arguments Made By ELC

The Panel granted participant status to the Environmental Law Centre, a clinical program in partnership with the University of Victoria Law Faculty. The ELC initially sought to advance two issues: (1) whether the Ministry was under an obligation to consider the cumulative environmental effects of future commercialization; and (2) the role of Qualified Environmental Professionals in the oversight of the project. At the hearing, the ELC also made submissions on the reorganization of the Ministry of Environment in October 2010, midway during the licensing process. The Panel rejected all of these arguments.

Remedy

There was a “gap in the information” due to the Manager’s failure to inquire into the ILMB’s consultation process. If there were problems with the Crown’s consultations on the water bottling project as a whole, it is conceivable that changes may have been made to the water licence.

The Panel held that the appropriate remedy in this case was a requirement that a representative from the Crown determine “whether the consultation process regarding the water bottling project, in so far as it could impact the [Homalco’s] right of access to and use of Indian Reserve No. 8, was conducted in accordance with the law”.

The Panel directed that the Manager gather the appropriate information to satisfy himself, on behalf of the Crown, that the appropriate consultation had taken place in relation to the Homalco’s Aboriginal rights and title, in relation to the right of access to and use of IR No. 8. The Manager was directed to ascertain whether the ILMB or any other agency of the Crown gave the Homalco an adequate opportunity to consult on these issues.

The commercial water licence issued to BRC was suspended pending these directions. If the Manager is not satisfied that adequate consultation has taken place, then the licence will remain suspended until such time as the Crown has engaged in an adequate process of consultation. The Manager may either reinstate, amend or cancel the licence. If the licence is reinstated, he was required to amend the conditions so that the termination date would be extended from December 2014 to December 2016.

The Panel rejected the Homalco’s request for a “non-binding ruling” about whether water licence decisions should be referred to the Treaty Table. That would be a policy decision made by the government, not the Board.
http://www.eab.gov.bc.ca/water/2011wat005c_006c.pdf

Scott Kerwin, Partner
Aboriginal Law
BLG, Vancouver
604-604-4029
skerwin@blg.com

Author

Scott Kerwin 
SKerwin@blg.com
604.640.4029

Expertise

Aboriginal Law