Saturday, October 30, 2010

Québec water caselaw 15: Earthworks in a wetland without a valid municipal authorisation


In Rivière-Rouge (Ville de) v. Huguet (in French), the Defendant obtains a municipal authorisation to do earthworks on his property in the riparian area of a lake. The works starts on the same day, but a municipal inspector visiting the site realises that the filling is taking place in a wetland, something contrary to the municipal regulation. The municipality immediately informs the Defendant that the authorisation is cancelled and that the work must stop at once. Despite this, the Defendant goes ahead with the earthworks during the following days despite continued warnings from the municipality.

The defendant is charged with a penal infraction in strict liability for having done work without a valid authorisation a contravention to the municipal regulation. Although municipal authorities are not bound by an authorisation granted contrary to the municipal regulation, as is the case in this instance, the municipal inspector does not have the power to stop the works under the applicable municipal regulation. Moreover, the municipal regulation does not allow the municipal inspector to revoke the authorisation. Nevertheless, an illegal authorisation does not grant an acquired right, and the infraction the Defendant faces is to have conducted works without a valid permit. The Court finds that the Defendant has no defence of reasonable diligence, as he understood that municipality asked the works to stop but he rushed to complete the works to put the municipality before a fait accompli.

Friday, October 29, 2010

Water related risks from an insurance perspective


A report from MARSH Canada, A Review of Water-Related Opportunities and Threats, outlines insurance issues in the sector to ensure adequate coverage. The main types of coverage discussed relate to property and general liability, environmental insurance and D&O liability insurance (p.6-7). From an insured's perspective, one question can be how the considerations related to the various risks outlined in the report (operational, litigation, regulatory, financial) have an impact on the duty to disclose. For example:

«Organizations that are heavily dependent on water supply such as beverage, energy, and agricultural producers, as well as technology manufacturers may face significant business interruption losses due to the lack of adequate water supply. As such, it is important that organizations consider this possibility when evaluating their business interruption exposure. Business interruption coverage is available on a property policy as long as the event is
caused by an insured peril.
» (p.6)

This has a particular resonance in the context of sections 2408-2413 of the Civil Code of Québec. Sections 2408-2410 CCQ read as follows:

2408. The client, and the insured if the insurer requires it, is bound to represent all the facts known to him which are likely to materially influence an insurer in the setting of the premium, the appraisal of the risk or the decision to cover it, but he is not bound to represent facts known to the insurer or which from their notoriety he is presumed to know, except in answer to inquiries.

2409. The obligation respecting representations is deemed properly met if the representations are such as a normally provident insured would make, if they were made without material concealment and if the facts are substantially as represented.

2410. Subject to the provisions on statement of age and risk, any misrepresentation or concealment of relevant facts by either the client or the insured nullifies the contract at the instance of the insurer, even in respect of losses not connected with the risks so misrepresented or concealed.

From a more general perspective, the vast number of reports in various industry sectors that are currently published on diverse aspects of water and risks (see also previous blog about the CERES report on water risks in finance) illustrates the tension between inherent natural variability in hydrology and ecosystem dynamics on one hand, and increasing efforts to ensure constant and stable access to water and related natural resources as well as constant revenue streams from their exploitation on the other hand. As resources allocation and exploitation reach various peaks or thresholds, the possible impacts of related risks increase.

Monday, October 25, 2010

Financial risks in water utilities: Report from Ceres


A new report authored by Sharlene Leurig and titled «The Ripple Effect: Water Risk in the Municipal Bond Market» was published by Ceres last week.

The report studies water scarcity risks for public water and power utilities in the U.S.A and details the related financial risks. This is a very interesting read. Particularly refreshing is the section on why the model for assessing risks related to power utilities may be wrong (see p.41-42 and Annex C). You don't see such an admission often, but it is entierly consistent with the original intent: obtain the most accurate risk assessment possible rather than portray an abstract model as infallible.

Sunday, October 24, 2010

Québec water case law 14: Failure to obtain an authorisation to discharge waste water


In CRI Environnement inc. v. Coteau-du-Lac (Municipalité de) (in French), the Plaintiff builds an industrial waste water treatment plant that discharges treated water containing benzene and chloroform into municipal sewers. The plant is built in 2002 and operated since 2003. However, the Ministry for Sustainable development, Environment and Parks has never issued authorisations to the Plaintiff under sections 22 and 32 of the Environment Quality Act (EQA) because the Plaintiff's discharges in the municipal sewers would exceed the municipal treatment plant's authorised maximal capacity. An additional ground for refusing to authorise the Plaintiff's discharges is that the authorisation under which the municipal treatment operates only allows treatment of grey water.

Hence, the Plaintiff incurs additional costs to transport its treated water to another treatment facility. The Plaintiff alleges that the Defendant municipality committed a fault in 2002 by failing to inform that the municipal sewers could not collect the Plaintiff's treated industrial waste water discharges. However, the Court finds that the Plaintiff's operation was always conditional on preliminary authorisations from the Ministry. The municipality has committed no fault, there is no causality link between damages claimed and the municipality's actions, and proof of the damages is insufficiently established.

The judgement presents some rules governing extra-contractual liability for municipalities and contains comments on the discretionary power of the Ministry to authorise polluting activities under the EQA.

Saturday, October 23, 2010

Québec water case law 13: Defective septic tank


In Thériault c. Construction Lortie inc. (in French), the Plaintiff, owner of a house in a riparian area, claims damages resulting from defects affecting the house’s waste water installation against the general contractor for having failed to fulfill its obligations to deliver a house with an adequate and functioning waste water installation. In turn, the general contractor alleges that the specialised subcontractor who built the installation is responsible for the damages. The subcontractor counters that the general contractor has imposed the choice of an inadequate installation to lower the construction costs. Moreover, the subcontractor claims that the municipality approved the inadequate installation and pressured the subcontractor into building it. The Court concludes that the general contractor is liable towards the Plaintiff, that the subcontractor has no extra-contractual liability towards the Plaintiff, and that the municipality is jointly and severally (in solidum) responsible for having failed to act in good faith and with reasonable diligence when authorising the waste water installation under the Regulation respecting waste water disposal systems for isolated dwellings.

The judgment provides some interpretative guidance with respect to the concept of «existing dwelling» in the Regulation respecting waste water disposal systems for isolated dwellings.

Friday, October 22, 2010

Drought under global warming


A recent article from Aiguo Dai, «Drought under Global Warming: A Review», published in Wiley Interdisciplinary Reviews: Climate Change on 19 October 2010, reviews recent literature on drought of the last millennium, and provides an update on global aridity changes from 1950 to 2008. Projected future aridity is also presented based on recent studies and our analysis of model simulations.

The article provides a typology of droughts: meteorological drought; agricultural drought; and hydrological drought, which might be the more difficult to address because it occurs when river stream flow and water storages in aquifers, lakes, or reservoirs fall below long-term mean levels, thus probably requiring systemic adaptation in water allocation patterns and total consumption.

Interesting points from the article are as follows:

- «Successive "megadroughts", unprecedented in persistence (20–40 year) yet similar in severity and spatial distribution to the major droughts experienced in modern day’s North America, occurred during a 400-year-long period in the early to middle part of the second millennium AD over western North America. Compared with these multi-decadal droughts, the modern-day droughts in the 1930s and 1950s had similar intensity but shorter durations.» (p.4, references omitted)

- «One should not use total precipitation alone to measure changes in aridity or drought, as done in many studies. Increased heavy precipitation and reduced light to moderate rain can increase the runoff to precipitation ratio, and increases in surface air temperature and radiative heating can lead to higher atmospheric demand for moisture. These processes can result in drier soils even if the precipitation amount increases.» (p.13, references omitted)

- «Although natural variations (...) have played a large role in the recent drying, the rapid warming since the late 1970s has increased atmospheric demand for moisture and likely altered atmospheric circulation patterns (e.g., over Africa and East Asia), both contributing to the recent drying over land. Since a large part of the recent warming is attributed to human-induced GHG increases, it can be concluded that human activities have contributed significantly to the recent drying trend.» (p.15, reference omitted)

- «Coupled climate models used in the IPCC AR4 project increased aridity in the 21st century, with a striking pattern that suggests continued drying over most of Africa, southern Europe and the Middle East, most of Americas (except Alaska, northern Canada, Uruguay, and northeastern Argentina), Australia, and Southeast Asia.» (p.15)

Wednesday, October 20, 2010

Preannouncement: National Water Law Symposium 2011


The Dundee UNESCO IHP-HELP Centre has set the dates for the 2011 National Water Law Symposium. The symposium will take place on 20-24 June 2011.

The symposium will focus on water allocation, water quality controls and integrated frameworks for water resources management. Among the various issues discussed will also be the implementation of international agreements at national level, the application of access to water as a fundamental human right and the provision of water services.

Further details will be annouced here.

Conference: Water wars between Alabama, Georgia and Florida


On 27 October 2010, Professor Jake Peters from the USGS Georgia Water Science Centre will give a conference on inter-state tensions over the Apalachicola-Chattahoochee-Flint River Basin at the University of Dundee.

The conference, titled «Dukes of Water Hazard: Alabama, Georgia and Florida wage war over the waters of the Apalachicola-Chattahoochee-Flint river basin, but what about the fish, birds, bugs and bunnies?», is jointly organised by the University of Dundee’s UNESCO Centre for Water Law, Policy and its Centre for Environmental Change and Human Resilience.

Details for the conference can be found here.

Monday, October 18, 2010

Conference: Forum québécois sur l'eau


Just a quick heads-up: on 25-26 October 2010, the Forum québécois sur l'eau (programme here - in French) will aim at bringing into focus the various issues and challenges for water resources management in Québec. This is organised by Les Affaires, Le Devoir and 98,5FM.

This is a real who's who of water in Québec, so if you can attend...

Sunday, October 17, 2010

Environmental flows in Australia: Victorian perspective on farmer anger


As widely reported in the media, proposed water withdrawal reductions to protect the environment in the new draft plan for the Murray-Darling River Basin in Australia have angered Australian farmers (article here from Circle of Blue).

In this context, a new report from the Auditor-General of the State of Victoria titled «Restricting Environmental Flows during Water Shortages» evidences inadequate environmental flow protection (a portion of the Murray-Darling Basin lies within Victoria).

Under the Water Act 1989 (Victoria), when there is less water available, the Minister for Water can declare a water shortage and temporarily ‘qualify’ rights to water, including the environment’s rights. This means the minister can alter access to water by either restricting—reducing or suspending—or increasing them to meet a critical need. The Water Act 1989 also allows the minister to alter water rights under a ministerial direction. This restricts or increases rights in a similar way to a temporary qualification. Essentially, the law allows for the allocation of reserved environmental flows to human needs during dry periods.

The objective of the audit was to assess how effectively the Department of Sustainability and Environment (DSE), water corporations and catchment management authorities (CMA) managed temporary restrictions on surface water rights to meet critical needs, including steps to minimise river health damage. The report concludes that:

«DSE and two of the three water corporations examined did not effectively manage restrictions to environmental water rights. DSE’s justification requirements for water corporations wanting to temporarily restrict water rights are sound. However, the water corporations did not consistently follow these guidelines.

Slow action to address environmental risks by South Gippsland Water and a lack of action and limited accountability by Grampians Wimmera Mallee Water (GWMW) around environmental risks meant that it was not possible to demonstrate that the environment had not been unnecessarily put at risk for the Tarwin and Wimmera rivers.

Limited DSE oversight of how the environment’s water rights were restricted meant it could not judge whether the restrictions were effective. This meant it could not effectively identify improvements. DSE did not enforce its own requirements, effectively de-valuing the need to justify environmental water right restrictions.»

Sunday, October 10, 2010

Québec water case law 12: The «sleeping giant» v. hydroelectric development?


Uashaunnuat (Innus de Uashat et de Mani-Utenam) v. Québec (General Attorney) (in French) is an interlocutory judgement rejecting demands for third party intervention in an action by First Nation Communities against Hydro-Québec as well as the provincial and federal governments.

The interlocutory jugement is mostly irrelevant from a water management perspective. However, the merits of the case could shed an interesting light on the impact of natives rights, which have often been collectively described as the «sleeping giant» of Canadian water law, on a major river derivation project for hydropower generation (La Romaine River near Havre-Saint Pierre in Minganie).

Further to the authorisation of the hydropower development project, the Plaintiffs globally argue on the merits that they possess native titles and ancestral rights on the relevant territory, that the provincial and federal governments have failed to respect their fiduciary duties towards the First Nations, and that the various authorisations for the project under federal and provincial legislations for environment protection are null and void.

This is one to follow...

Tuesday, October 5, 2010

Shale Gas in Québec: Lessons from tar sands exploitation in Alberta?


Since the provincial prime minister has made a mockery of the mandate given to the BAPE (see previous post) by declaring that shale gas exploitation was inevitable, one of the central issues identified by Le Devoir and the CQDE that is yet to be discussed is the apportionment of benefits between private interests and the general public.

As revealed this summer by La Presse (one article here from Charles Côté - in French), Québec is the Canadian jurisdiction where the legal framework for mining is the most industry-friendly and taxes or royalties are the lowest. Instead of increasing royalties on the industry, the Minister for natural resources has declared that fees for day-care nurseries would be increased if shale gas exploitation does not go forward as planned (article here from Alexander Shields, Le Devoir).

In this context, an article by Bernard Roth, «NAFTA, Alberta Oil Sands Royalties, and Change: Yes We Can?» (2009) Vol.46 Alberta Law Review 333, would send a clear warning signal to a political class more attuned to the general interest. The problem with initially low royalties is that it might be impossible to increase them for one class of investors without serious difficulties. Roth's conclusion reads as follows:

«The Alberta government has announced an intention to follow suit by increasing royalties on all oil sands production, irrespective of its vintage. This is the first time since Canada entered into the NAFTA that a Canadian government has tried to capture additional value in an attempt to get what it believes to be its fair share of oil production. The NAFTA has arguably created a form of quasi-constitutional property protection for American and Mexican investors in Canada, which does not allow Canadian governments and legislators to expropriate without compensation. It may still be possible to impose this type of expropriation on Canadian investors, just not their American and Mexican counterparts. Alberta's oil sands leasing practices may have been effective when Alberta exercised more or less complete sovereignty over its resources. Before the NAFTA, ambiguities could be clarified through subsequent legislation and responsibility for compensation could be expressly disclaimed. It appears that Alberta did not adapt its Crown leasing practices to make it clear that the grants it makes are subject to an absolute and unfettered right to increase royalties without compensation in a post-NAFTA world. In the absence of a clear reservation to this effect, it may well be reasonable for oil sands investors to demand compensation. Under the NAFTA, a very good case can be made for compensation to recover the loss in value to oil sands investments that would result from increased royalties proposed by the Government of Alberta. The answer to the multi-billion dollar question posed by this article is: Yes we can! But, if we do, the Government of Canada may have to pay very large NAFTA awards to a lot of American oil companies.»

Friday, October 1, 2010

Shale Gas in Québec: Letter from the CQDE to Le Devoir


Just a quick post to point to a letter (in French) from Michel Bélanger of the CQDE to Le Devoir on the absence of legal protection against the environmental impacts of shale gas exploitation in Québec.