The foundation failure of a small earth dam, 4.1 m in height, has created a large breach through the overburden foundation, down to the bedrock, and has produced the complete loss of the Beloeil Lake reservoir. The geological nature of the dam foundation was complex; its resistance to internal erosion has changed with time due to seepage forces. The design of the dam foundation treatment was marginal. In this paper, the conditions of the dam prior to failure are given, the probable causes of the accident are presented, and the environmental consequences are reported. Such a case history of a dam failure illustrates the necessity to have a thorough knowledge of the foundation conditions of existing dams even for a very small water retaining structure. That accident demonstrates also the need for a continuous and effective surveillance program. Damages consist mainly in overburden erosion and sediment transportation through a remote area without any loss of human life. Key words: earth dam, foundation, failure, environment, rehabilitation, dam safety, surveillance.