While the Alberta Surface Rights Board previously acknowledged that the law did not prohibit the granting of annual compensation for pipelines, the agency repeatedly decided not to give it. But recent board decisions awarding annual compensation to landowners suggest that it is becoming more open to the idea that such compensation may be appropriate in pipeline cases. Pipeline operators have filed appeals of these board decisions in the law courts.

Under Alberta law, a company with a pipeline license has a statutory right to acquire an interest in the lands under which the line is to be located. The operator can acquire this interest by entering into an agreement with the landowner or by obtaining an order from the Alberta Surface Rights Board. Accordingly, compensation amounts are set either in the agreement or by board order.

Operators have traditionally compensated landowners for construction disturbance in the right of way and associated temporary work areas by paying them a lump sum prior to the pipeline’s installation. Pipeline surface rights agreements have not traditionally included annual compensation for landowners, though agreements entered into with respect to the Nova pipeline provided an exception. Further, the board has not traditionally awarded annual compensation. More recently, some landowners have attempted to negotiate agreements including a term that would require annual compensation if and when Alberta law directs annual payments be made. Operators have been reluctant to agree.

In contrast, landowners are entitled to up-front and annual compensation for wells and other surface facilities located on their lands. The basis for this distinction has been that, while the presence of surface facilities creates an ongoing loss of land use, underground pipelines result in only temporary loss of use. Farmers are still able to grow crops over the pipeline and the land productivity has been thought to return a few years after the pipeline is buried. However, landowners have continually asserted that they suffer ongoing losses attributable to the existence of underground pipelines. These losses relate to a range of impacts including reduced crop productivity above the pipeline, inability to grow trees or deep-seed crops and ongoing inconvenience and potential hazards presented by the use of machinery or vehicles in the vicinity of the pipeline.

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