Alberta Auditor General looks at managing Alberta’s water supply – compliance, wetland policy under scrutiny

Last week, when local media were distracted with cell phone driving proposals, the Auditor General of Alberta released a comprehensive review of Alberta Environment’s management of the province’s water supply.

The Alberta Auditor General recognized that Alberta Environment engages in water management at a number of different levels, from policy and research to inspection and enforcement.  In November 2009, Alberta Environment released the Water For Life Action Plan intended to implement the goals of the 2008 version of the Water For Life policy.   Among the items in the Action Plan were:

• Finalize Alberta’s wetland policy
• Set Water Conservation Objectives in all major basins
• Complete the Water Allocation Review
• Develop watershed management plans for a number of major basins

Among other items, the Auditor General concluded in the April 2010 report that one of Alberta Environment’s weaknesses is compliance.  It was noted that although there are many known cases of non-compliance with Water Act authorizations, these are not acted upon by approval authorities.  The report also noted that without adequate monitoring of activities in the field, Environment cannot assess the level of non-compliance with Water Act authorizations.

Interestingly, the Auditor General’s report was released the same week as the end of the comment period on the Eastern Irrigation District’s application to change the purpose of its water licence from irrigation-only to a number of other purposes.  This application was intended to facilitate water transfers between the Irrigation District and other water users for things like golf courses, recreation camps and feedlots.  However, the Irrigation District’s application revealed that it has already been providing water to other users in apparent contravention of its own licence as well as various sections of the Water Act and the Irrigation Districts Act.  The proposed licence amendment would legalize some of these non-irrigation purposes, but the Irrigation District would still be in contravention of both Acts if it did not apply for a water transfer.  The Environmental Law Centre has written to the Director of Alberta Environment opposing the Irrigation District’s application as incompatible with existing legislation.  It is astonishing that Irrigation Districts could be re-allocating water to other users without a transfer authorization, and without a Water Licence that authorizes them to do so.

Such a situation means inadequate Alberta Environment oversight for water transfers.  As the Auditor General noted in its report, “Non-compliance also jeopardizes initiatives such as water allocation transfers because Environment cannot transfer a licence until its non-compliance issues are rectified.” It appears from this case that the Auditor General’s conclusions about enforcement are timely.

Banff Wetland (Courtesy: Dave Bezaire & Susi Havens via creative commons)

In the April 2010 report, Alberta’s Auditor General also noted that although Alberta’s interim wetlands policy requires compensation for destroyed wetlands, Alberta Environment had no agreements in place with Alberta’s wetland restoration agency: Ducks Unlimited Canada.  The Auditor General noted that there was no one at Environment who was responsible for monitoring whether restoration work completed by Ducks Unlimited Canada met Alberta Environment’s wetland standards.

This would come as no surprise since in the same week the Sierra Club – Prairie Chapter obtained a leaked copy of Alberta’s proposed wetlands policy (2009).  The proposed policy would eliminate the “no-net loss” requirement – that destroyed wetlands must be replaced with an artificial wetland three times the size of the original – and therefore make the existing restoration program obsolete.  The policy would only require substantial compensation for the functions of “exceptional” wetlands, leaving others exposed to destruction without adequate compensation.

The identification of “exceptional” or important wetlands is notoriously difficult and inevitably a narrow exercise.  At best, it should only be done using independent scientific assessments and applied to enhance baseline protections in place for all wetlands.

In other jurisdictions this has often boiled down to the protection of large, interconnected, well-vegetated wetlands (many already in protected floodplains or river valleys) and the declassification of others.  In Ontario, where wetlands are evaluated for significance, the provincial policy maintains that no site development or alteration is permitted in significant wetlands unless there is no negative impact.  In contrast the proposed Alberta wetland policy only requires slightly more compensation for exceptional wetlands and does not protect them from irreversible damage or destruction.

All wetlands serve important ecological and hydrological functions and should be protected equally to some basic standard by and under the law.  A wetland policy that intrinsically accepts the gradual irreversible degradation of Alberta’s wetlands is unacceptable.  Using a prioritization-based scheme will discourage the enhancement and restoration of degraded habitats, such as those that have been polluted or drained.  Destruction of wetlands could also potentially lead to breaches of federal fisheries and migratory bird legislation, which do not recognize different levels of habitat quality, but instead protect all habitats.

Alberta needs to move ahead with a plan for aquatic habitat that first and foremost protects aquatic ecosystems from degradation.  Prioritization of aquatic systems, allowing some classes of wetland to be destroyed with minor compensation and permitting irreversible damage to all classes of wetland, flies in the face of an ecosystem approach to environmental management.

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The scales of just-fish: are letters of advice crappie ways to minnow-mize harm? The case of Cassiar Watch

The scales of just-fish: are letters of advice crappie ways to minnow-mize harm?  The case of Cassiar Watch

The federal Fisheries Act R.S.C. 1985, c. F-14 is one of Canada’s oldest and most important environmental laws.  Sections 35 and 36 of the Act are directed at the protection of fish and fish habitat from practices that might harmfully alter and destroy fish habitat, and practices that may pollute water respectively.  These two sections are arguably the most important environmental provisions relating to water quality and riparian land management.

Section 35(1) of the Fisheries Act provides a general prohibition on the “harmful alteration, disruption or destruction” of fish habitat, often referred to as “HADD.” This means that any activity by any person in Canada, in or around fish habitat that results in HADD is illegal. The only relief from this general prohibition is when an authorization is provided by the federal Department of Fisheries and Oceans (DFO) under s. 35(2) of the Fisheries Act.

Authorizations under s. 35 are also “triggers” for an environmental assessment under the Canadian Environmental Assessment Act S.C. 1992, c. 37 (CEAA).  This means that if anyone wants to undertake a project that will destroy fish habitat, they must apply for a s. 35(2) authorization, and before they can get one, they must provide an environmental assessment of the project to DFO.  This assessment can be approved only if the project as a whole will not likely result in any significant adverse environmental effects or the effects are likely but can be “justified in the circumstances.”  In this way, projects that will disrupt fish habitat are fully assessed for the range of potential impacts on the environment in a transparent manner.

The combination of authorization and environmental assessment has resulted in the key importance of s.35 of the Fisheries Act to environmental law in Canada.  It ensures that any project that interferes with fish-bearing waterways is done with a view to sustainable development and is subject to public scrutiny.

However a number of driving forces at the federal level have resulted in a diminishment of the utility of the Fisheries Act for environmental protection.  Since approximately 1995 the federal Department of Fisheries and Oceans has utilized a device known as a “letter of advice.”  These letters are sent by DFO to project proponents and purport to assess the risk of HADD for a given project.  Environmentalists in Canada have been extremely concerned about the growing use of letters of advice over the last fifteen years because instead of a full assessment of the project and its potential impacts, DFO does a very limited summary evaluation of potential impacts.  If a letter of advice “advises” the proponent that destruction of fish habitat is “unlikely” then no section 35(2) authorization is sought.  For over a decade now, environmentalists have argued that the use of letters of advice was an unlawful way for DFO to avoid conducting environmental assessments and monitoring authorizations for the destruction of fish habitat.

Letters of advice have no specific legislative authority behind them in the Fisheries Act.  This administrative “risk management” approach taken by DFO is of great significance to environmental law and the rule of law in Canada.  At its core, the issue is whether administrative agencies, such as DFO, can circumvent the intention of the legislature (i.e. that fish habitat destruction be authorized and assessed) through administrative policies and devices.  On the ground, this question relates to whether the public, fishers and those who use waterways know about projects that may disturb or destroy fish habitat and are able to communicate with government officials about potential impacts on communities and the environment before irreversible decisions are made.

According to a 2008 affidavit sworn by Martha Kostuch: prior to the enactment of the CEAA, the number of authorizations annually by DFO under s.35(2) was in the range of the tens of thousands.  Subsequent to the adoption of the DFO risk management approach these numbers plummeted to less than a thousand annually.  This suggests that the risk management framework is aimed less at providing advice on whether projects require an authorization and more at providing a mechanism for avoiding DFO’s daunting environmental assessment responsibilities.

The occasions on which the letters of advice and operational “risk management” policy of DFO have been challenged by environmentalists in a variety of ways that are too numerous to list fully here.  One of the earlier legal commentaries on letters of advice was Friends of the West Country Association v. Canada (Minister of Fisheries and Oceans), [1997] F.C.J. No. 556 (Friends of the West Country).  That case dealt with a motion to produce a letter of advice relevant to that case.  In that instance the Federal Court did not mince words:

Apparently, it is the respondent’s submission that a policy which the DFO has developed internally without any explicit statutory foundation to do so will in some way relieve the Minister of statutory obligations or limit the obligations of the Minister vis a vis subsections 35(2) and 37(2) of the Fisheries Act and, in turn, paragraph 5(1)(d) of the CEAA. ….This is a transparent bureaucratic attempt at sheer evasion of binding statutory imperatives. It is neither cute nor smart, and this Court is not duped by it. By making “policy” not contemplated by the statutes, the DFO types simply cannot immunize the Minister and DFO from judicial review, nor circumvent the environment laws which they decline to obey.

The motion decision these comments are part of was about the production of the letters and so did not affect the validity of letters of advice. Yet one might have expected that DFO would revise its policy in light of the court’s very pointed and unequivocal comments.  DFO made no such changes.

Also of significance is the 2007 environmental petition by Albertan Martha Kostuch seeking justification for the policy from DFO.  The DFO response was that “the Department does not need Parliamentary approval to provide advice to proponents on how to avoid impacts to fish habitat.”  However, letters of advice are much more than simply advice about how to avoid fish habitat impacts, they are factual assessments of the likely impacts of projects that actively circumvent the requirements set out by Parliament in the CEAA for conducting those assessments of risk and mitigation of impacts. This is clear from another part of DFO’s response which states: “Letters of advice confirm that the proposed plan for a work or undertaking will avoid harmful alteration, disruption or destruction of fish habitat and hence comply with section 35(1) of the Fisheries Act.”

Through Martha Kostuch’s petition, it became apparent that DFO relied upon letters of advice to avoid applying environmental assessment requirements, and also that it had no clear process or accountability mechanism for ensuring that fish habitat was not actually damaged in projects that received letters of advice.  This was confirmed by a 2009 report of the Federal Commissioner of the Environment and Sustainable Development which commented:

We found that the Department does not have adequate quality assurance and … cannot demonstrate that projects that represent a risk to fish habitat have been adequately assessed … the Department rarely monitors whether project proponents actually comply with the Department’s conditions of approval or whether proponents’ actions effectively maintained the expected no net loss in habitat.

The status quo leaves thousands of projects that might have been assessed under the CEAA without the level of scrutiny that may have been contemplated by parliament.

This brings us to the context for the case of Cassiar Watch v. Canada (Minister of Fisheries and Oceans) 2010 FC 152, which challenges the issuing of letters of advice head-on.  In 2007 Shell Canada proposed two projects in Northern British Columbia.  Both proposals involved features located on a poorly maintained stretch of Ealue Lake Road that runs adjacent to and crosses the Klappan River in Northern British Columbia to allow access to coal bed methane tenures held by Shell.  Two crossings had washed out and Shell Canada proposed to repair them.  Crossings are typically understood to be a risk to fish habitat.

The significance of the assessment of this project and others like it in the region cannot be overstated.  The project was to be one of many large resource extraction projects proposed for a region of BC referred to as the “sacred headwaters”.  The area is an alpine basin that is the source of the Skeena, Nass and Stikine Rivers and the traditional territory of the Tahltan First Nation.  Coalbed methane extraction is a relatively new and expanding project type in Canada, which raises environmental impact issues including landscape alteration, water quality and quantity issues, as well as fish and forest habitat impacts. Shell’s northern BC coalbed methane project, like many others in the headwaters region also presented specific issues related to its location in woodland caribou and salmon habitat.  At stake in the Shell project is whether fish and caribou using communities could benefit from a full impact assessment.

In November 2007 DFO issued a letter of advice to Shell Canada that the two crossings of the Klappan River were not likely to result in HADD of fish habitat.  The result was that no s.35(2) authorization was required, and no federal environmental assessment would be conducted.  A local group called Cassiar Watch sought judicial review of the letter of advice itself.

The legal questions for determination before the court were: does the Minister have authority to issue a letter of advice; and is the letter of advice of November 2007 subject to judicial review? In February 2010 Justice Campbell of the Federal Court Trial Division dismissed Cassiar Watch’s application for judicial review.  Justice Campbell found that:

In my opinion, the LOA of November 9, 2007 is not amenable to judicial review because it is a non-binding opinion which has no legal effect.

Justice Campbell also found that Cassiar Watch did not reply to and therefore did not challenge the arguments advanced by DFO and Shell Canada regarding whether or not DFO had the authority to issue letters of advice.  The court accordingly appeared to accept the argument of Shell that DFO could rely on the “doctrine of jurisdiction by necessary implication” as well as the argument of DFO that it could rely on the Minister’s “general authority to manage the fishery” under section 4 of the Department of Fisheries and Oceans Act.

From an environmental perspective the benefit from the decision is limited to the clarity that a letter of advice can not have the effect of an exemption in law from the required authorization if harmful alteration, disruption or destruction of fish habitat ensues from the project.   However, Justice Campbell did not address the underlying significance of evading environmental assessment triggers through issuing a letter of advice.

The court also did not address the question of the utilization of letters of advice that may be based on incomplete or inaccurate information about both the project and the aquatic habitat in question.   Such inaccuracies are highly likely to result from failing to do an environmental assessment that would fully outline all of those factual issues for assessment and include public input.  It remains to be seen if letters of advice can be used as defences to prosecution where in fact there is harm to fish habitat without any authorization and the advice in the letter is unreasonable.

This is a truly disappointing outcome.  It demonstrates along with the recent Supreme Court of Canada case in MiningWatch that Canadian courts are failing to grasp the importance of fully assessing projects that involve disruption of fish habitat so that they will be completed in a sustainable manner and failing to uphold legislative intent to do so in the face of incompatible departmental policies.  This is the second such case of failure in the sacred headwaters region of British Columbia this year.

This case appears as well in the context of proposed amendments to the Fisheries Act previously tabled in 2006 and 2007 that are to be tabled again this session and would also result in legally eliminating environmental assessments for all s. 35(2) authorizations by removing that section from the Law List Regulations under the CEAA.  If these amendments are passed, we may well find that letters of advice are discarded and authorizations again become the norm.  If so, it will represent an astonishing period of time (over a decade) during which the legislative intention of CEAA to assess projects that would disrupt fish habitat was successfully circumvented by DFO officials without meaningful judicial oversight.

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