Key legal and regulatory developments driving and shaping M&A
Most non-domestic users of groundwater in British Columbia should apply for a water licence before March 1, 2019, in order to lawfully continue to use and divert water from an aquifer and to preserve their dates of precedence. After March 1, 2019, every unlicenced non-domestic use of groundwater will be an offence under the Water Sustainability Act (WSA) and may trigger fines of up to $200,000, administrative penalties (if enacted in the future), and orders to cease water use.
In our March 2016 “Water Sustainability Act – transition highlights” update, we reviewed British Columbia’s new WSA and its regulation of surface water and groundwater. The WSA provided for a three-year transition period for persons currently using groundwater without a licence under the WSA. This transition period ends on March 1, 2019.
The WSA defines “groundwater” as any water naturally occurring below the surface and “aquifer” as any geological formation capable of containing groundwater. A water licence contains information regarding the water source, the water use purpose, the works associated with the water use, where the water can be used, the times of year in which the water can be used, and the maximum quantity of water that may be used under the licence. Licencees are responsible for the safe operation and maintenance of any works constructed under their licences.
Well owners are exempt from the licensing requirement and from paying provincial water fees and rentals as long as they only use groundwater for domestic purposes (e.g., private household use, drinking water, watering private lawns, fire prevention and feeding domestic animals and livestock).
Existing groundwater users
Groundwater users who have been using and/or diverting groundwater since before February 29, 2016, must apply for an “Existing Use Groundwater Licence” in order to keep their date of precedence and avoid the one-time application fee and penalties under the WSA.
Under the old Water Act (which has now been replaced by the WSA), precedence for water use was set by the “First in Time, First in Right” rule. The precedence for water use determines a person’s water rights relative to other users in the event of a water shortage. Under the WSA, precedence is set by the date the licence has been granted. An exception is made for existing users of groundwater who apply for a licence before March 1, 2019, who are then eligible to have their date of first use of the groundwater as their date of precedence.
To establish their date of first use, existing users must provide information regarding the official name or location of the aquifer that is the source of the groundwater subject to the licence, the location of each well diverting the groundwater, the water use purposes for which the person diverts the groundwater, the land, mine or undertaking to which the groundwater is relevant, and the history of the use of that groundwater.
Evidence for the above information can include, but is not limited to, invoices and records relating to the construction of the well and related works, well maintenance records, environmental assessment certificates, photographs, and any other corroborating information that would be recognized as evidence of historic use. The full list of the necessary information and evidence needed to establish a date of first use is located in s. 15 of the Water Sustainability Regulation.
Existing groundwater users are still subject to annual licence fees and water rentals, which will start to accrue from February 29, 2016, regardless of when an application for a water licence is submitted.
Groundwater users who began using and/or diverting groundwater after February 29, 2016, or who miss the March 1, 2019, deadline to apply for a licence, must apply for a “New Water Use Groundwater Licence.” These groundwater users must pay a one-time application fee, which starts at $250. These new users are also subject to annual licence fees and water rental fees that start to accrue on the date their licences are issued.
The authors wish to thank articling student Aashish Kohli for his help in preparing this legal update.
 Other users, such as provincial or federal ministries, First Nations using water on reserve land, Nisga’a citizens or entities applying to use water from the Nisga’a Water Reservations, and applications processed by the BC Oil and Gas Commission are exempt from application fees and annual rentals, but may still be required to obtain water licences.
In this issue, we cover a broad spectrum of ‘hot button issues’ for boards and companies operating internationally.
© Norton Rose Fulbright LLP 2021