Dam Flooding – Compensation?

The construction of a hydro electric dam has the potential to adversely impact properties adjacent to the contained water body thereby created.  Where the dam is constructed in accordance with regulatory requirements, do adjacent landowners have the right to be compensated for resulting losses?

In a recent decision of the Ontario Superior Court, the court has certified a class proceeding brought on behalf of 450 individual landowners claiming trespass and damages resulting from the construction of a hydro electric dam in 1913.  The dam was originally constructed under a Licence of Occupation issued by the Ministry of Natural Resources authorizing the operator to raise and maintain the water level of the lake and surrounding flooded lands at an elevation of 107.5 feet.  While the dam is now operated under a Water Management Plan which received regulatory approval in 2004, it continues to be subject to the same maximum water level authorization.  The court provided the following summary of the plaintiff’s claim:

“The plaintiffs claim that the Licence of Occupation should be interpreted such that it created a fixed property line between public and private lands, based on the theoretical shoreline created if the water level in [the lake] was raised to 107.5 feet in 1917.  They submit that erosion has occurred over time since 1917, due do water, wind and ice action, etc., such that when the water level is raised to 107.5 feet (or even at lower levels) it now covers part of the lands which are owned by proposed class members.  The plaintiffs therefore argue that the water which now covers part of their lands constitutes a continuing trespass over their lands.”

In concluding that the plaintiffs should be permitted to continue to pursue this claim on behalf of the proposed class of adjacent landowners, the court considered that, although there were other relevant factors, the dam was a significant contributing factor to the erosion of the newly created shoreline which would not have occurred but for the construction of the dam.  Referencing common law which entitles adjacent landowners to the natural flow of water without increase or alteration, the court concluded:

“The main issue underlying the plaintiffs’ claim is a determination of whether the licensing agreement, which permitted the predecessor of [the utility] to raise the level of [the lake] to 107.5 feet, created a property line between public and private lands in 1917.  The plaintiffs submit that even if [the utility] and its predecessors never raised the level of [the lake] above the 107.5 feet level, its actions by operating the damn and maintaining the level of the lake at or below the 107.5 feet level have caused a trespass to occur.  The plaintiffs submit that [the utility’s] actions have caused the erosion to occur, which has allowed water to encroach on their lands, beyond the initial alleged contour line or property line established by the permitted flood level in 1917 of 107.5 feet.

The evidence is uncontested that on at least 17 occasions since records have been kept and three times in the last seven years, the water level in [the lake] rose above the 107.5 feet elevation … I agree with the plaintiffs’ submission … that if [the utility’s] actions caused the level of [the lake] to rise above the 107.5 feet elevation and thereby caused water to flood unto property owners lands that this could be considered a trespass or nuisance.

I am satisfied that the plaintiffs have disclosed some basis in fact to support a cause of action in trespass …”

Landowners who suffer damage arising from the encroachment of dammed waters onto their properties may have a right to compensation where the operating authority has exceeded water levels permitted by regulation and possibly, even without excess water levels, where resulting erosion causes flooding beyond authorized regulatory limits.