April 9-16, 2007

User pay principle would apply to industry water use under new OWRA amendments

New legislation introduced by Ontario Environment Minister Laurel Broten and Natural Resources Minister David Ramsay would give legal force to an agreement between Ontario, Quebec and the eight Great Lakes states banning water diversions from the Great Lakes and would allow the province to charge commercial and industrial users for the water they take and use.

"If passed," Ramsay said, "the legislation would strengthen the ban on diversions, promote water conservation, reinforce basin-wide environmental standards, and improve science-based decision-making." Broten added, "For the first time in this province, we are proposing to charge the large commercial users of water. Today we're sending the message that businesses that benefit from our precious water resources must contribute their fair share toward the costs of managing them."

The proposed Safeguarding and Sustaining Ontario's Water Act, 2007 would amend the Ontario Water Resources Act (OWRA) to allow regulations to be made setting charges for water taken and used by commercial and industrial users. Consultation with commercial and industrial water users would lay the foundation for a regulation that would set these charges, beginning with highly consumptive users. Revenue would be used to cover a portion of the province's costs of managing water resources.

The primary purpose of the charge would be to recover a portion of the costs of programs required to manage water from commercial and industrial operations that benefit from those programs. Such charges are also seen as providing a financial incentive for companies to use water more efficiently.

The proposed charge would not apply to private domestic wells or water used for domestic and other non-commercial uses on municipal supplies. Also exempt from charges would be institutions such as schools and care facilities, environmental uses such as wetlands projects, and hydropower and agricultural uses.

The government has released a proposed detailed water conservation charge framework for public comment. Key elements of the framework are:

*Commercial and industrial water users (except hydropower and agriculture) would be charged, including those on municipal water systems.

*The charge would be phased in, starting with highly consumptive users, with other industrial and commercial users brought into the system later. Highly consumptive industrial and commercial users would pay $3.71 per cubic decametre (or one million litres).

*Different rates would apply to various sectors depending on how the water is being consumed. For example, companies that incorporate water directly into their products consume a greater portion of the water they use than a company that uses water strictly for industrial cooling purposes.

*The water charge rates would be fair across sectors and equitable within sectors, and are expected to have limited financial impacts on affected companies.

The Water Conservation Charges Proposal (Registry reference No 010-0162) and related documents may be viewed on the Environmental Registry, www.ebr.gov.on.ca. Comments are due by June 4, 2007.

Amendments to the OWRA under the draft Safeguarding and Sustaining Ontario's Water Act would also implement the Great Lakes-St Lawrence River Basin Sustainable Water Resources Agreement, signed by Ontario, Quebec and the eight Great Lakes states in December 2005. The province's existing ban on diversions of water out of the Great Lakes-St. Lawrence River, Nelson and Hudson Bay basins would be elevated to law under the act. Ontario already prohibits the diversion of water out of its three major water basins, with rare exceptions, such as water in containers of 20 litres or less, and historical diversions.

New or increased diversions of water (379,000 litres per day or greater) from one Great Lake watershed to another (intra-basin diversions) would also be prohibited, subject to strictly regulated exceptions. An exception standard sets out the stringent criteria that would have to be met by applicants before such proposals would be approved. Stricter rules would be imposed for larger proposals, such as requiring that water be returned to the source Great Lake watershed after use, and requiring regional review by the ten Great Lakes jurisdictions.

The amendments would also permit Quebec and the eight Great Lakes states to appeal to the Environmental Review Tribunal or seek judicial review of Ontario decisions on water withdrawals and diversions subject to the Agreement. This section would not come into force until the other Great Lakes jurisdictions reciprocate by giving Ontario the right to bring an application for judicial review in their courts.

The proposed act would create authority to pass regulations to further support the implementation of the Agreement, such as regulations that:

*Require measures to promote water conservation and water use efficiency;

*Introduce an environmental decision-making standard for the review of proposed water withdrawals and require prior notice and comment by other Great Lakes jurisdictions for large consumptive water uses; and

*Prescribe additional criteria to respond to periodic assessments of cumulative impacts, including criteria relating to climate change or other significant threats to the Great Lakes Basin.

Additional amendments expand and clarify the province's authority regarding Permits To Take Water (PTTW). They would, for example, enable the government to make a regulation requiring defined historical water takings (i.e. those that began on or before March 29, 1961) to obtain a PTTW. This authority would be phased in and subject to full consultation.

A PTTW would also be required for any water taking over 50,000 litres per day except: watering of livestock if the water taking is less than 379,000 litres per day; or water taking for domestic purposes, other than by a municipality or by a company or public utility, if the taking is less than 379,000 litres per day.

Finally, the amendments would clarify and update the types of conditions that can be imposed through PTTW, such as the authority of the province to impose conditions in a permit such as requiring water conservation and water use efficiency measures.

The proposed Safeguarding and Sustaining Ontario's Water Act, 2007 (Registry reference No 010-0163) may also be viewed on the Environmental Registry. Comments on the proposed act are due by May 3, 2007.

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