Many landowners believe they have no alternative but to accept the location proposed by the Company. If, however, there are reasonable grounds for opposing the location in Alberta, an objection may be made to the Energy Resources Conservation Board. If the matter is not resolved, the Energy Resources Conservation Board may hold a hearing to decide the issue (as long as the objection is not frivolous). Usually, the Board staff will encourage the parties to meet informally before the hearing in the hope that they will resolve the dispute voluntarily. The Board also has a mediation process it may employ to attempt to resolve the dispute without a hearing.
It is important to raise valid objections to location before entering into negotiations regarding the amount of compensation. Otherwise, the very fact that the landowner is discussing compensation will indicate that the location is acceptable.
If a pipeline comes under federal jurisdiction, objections to routing are not filed with the National Energy Board until after the permit for the overall project has been issued. The NEB will then hold a "detailed routing" hearing. The detailed routing hearing deals with methods of construction as well as routing.
The numbers are then added for a total offer. The land agents suggest that this is indeed required by Section 25(1) of the Alberta Surface Rights Act, which reads as follows:
"The Board, in determining the amount of compensation payable may consider
I have long argued that the Act requires numerous factors to be considered. Many of these factors, such as "nuisance", "general disturbance" or "adverse effect" are difficult to assess; therefore, the best one can do is to consider all the relevant factors and arrive at an all-inclusive or "global" assessment (see Carter, Compensation for Surface Rights in Alberta (1985) 23 Alberta Law Review 435).
My experience has also shown that the best way to determine the proper level of compensation is to look at agreements between landowners and operators in comparable situations. The case of Siebens Oil & Gas Ltd. vs. Livingston (1978) 15 L.C.R. 32 is the classic authority for the proposition (page 37): "no matter how expert outsiders are, the oil companies and landowner have the better judgment as to what compensation should be paid in their own interests."
Comparable agreements provide evidence of the value of surface rights taking into account all the factors specifically listed in section 25 of the Act as well as those not listed.
There were many cases in the 1980's, especially in the Grande Prairie area, which relied upon comparable agreements as evidence of the value of the owner's surface rights considering all the factors together, e.g:
Perhaps because of these Grande Prairie cases, the use of comparable agreements has also been called the global approach but these are two different concepts (see the Carter article at page 448 and also Barton, Controversy in Surface Rights Compensation (1985) 24 Alberta Law Review 34 at page 36).
It is important not to concentrate on individual heads, e.g. the land, because you may overlook the real issue, of what the taking is for. A wellsite is not the same as a pipeline, a powerline or a strip mine - all of which are covered by the Surface Rights Act.
As Madam Justice Trussler stated in Jones vs. Bankeno Resources Ltd. (1978) L.C.R. 221 at page 225:
"It would be easy to suggest the legislation needs to be amended but, in fact, s. 25 requires the flexibility it now has, as opposed to rigid certainty, because of the various types of takings where it is used to ascertain compensation. Different factors must be taken into account and there should be a different result depending if the entry is, for example, for a wellsite or a pipeline or a transmission line. The impact on the owner of each of these uses is markedly different."
It is sometimes suggested that you have to have a pattern to look at other agreements but as Mr. Justice MacLean stated in Lomond Grazing Association vs. PanCanadian (1985) Lethbridge Q.B. #8406-01492 at page 24:
"It isn't; however, necessary to establish a pattern in order to have the evidence admissible. The pattern relates only to the weight to be given the evidence."
and at page 27
" I am satisfied that in this case two equal competing parties met on an equal open basis and freely and voluntarily entered into a settlement unaffected by the power of compulsion and expropriation and unaffected by any other extraneous factors determined only to reach settlement on the basis of an amount that represented a fair value for the rights that the operator wished to take from the owner." It is very important however to show that comparable agreements have been freely negotiated before they are relied upon. In Canadian Natural Resources Ltd. v. Bennett 2008 ABQB 19, Justice Langston referred to “the need for the agreements within the pattern of dealings to rest upon an unfettered negotiation process” (para. 69).
Once an agreement on location and compensation is reached with the operator, I advise my clients that a Right-of-Entry Order issued by the Surface Rights Board protects their rights better than signing a Surface Lease or Easement form prepared by the Company.
Some of the reasons for giving this advice are as follows:
J. Darryl Carter, Q.C.