The question of surface rights compensation for buried lines goes to court
For years, pipeline operators in Alberta and other provinces have had to address recurrent arguments made by landowners seeking annual compensation for surface rights, citing ongoing impacts of buried pipelines. Operators have argued against these awards on grounds that the losses suffered by landowners are only temporary
Where the operator and landowner do not agree on compensation, the board determines amounts in accordance with the Surface Rights Act. This act establishes a list of factors that may be considered by the board when determining compensation amounts, but does not bind the board to only these factors. The board will consider evidence regarding the compensation paid to other landowners in the area in similar circumstances. These comparable compensation amounts may establish a “pattern of dealings” in the area that can be used by the board when setting the compensation amount. Pipeline companies have disputed landowners’ suggestions that a pattern of dealings has been created by the Nova pipeline agreements that require annual compensation.
Recent board decisions granting annual compensation were based on facts similar to those upon which previous rulings refused annual compensation. The legal arguments for annual compensation, though successful, were not wholly novel. The board, not bound by its prior decisions, found that landowners do suffer ongoing losses for which annual compensation is appropriate.
If the courts uphold the recent board decisions, there are a number of new issues for pipeline companies to consider in future cases. The board gave notice that it will require evidence and argument on a number of new topics, including the magnitude of the ongoing loss and how best to compensate for ongoing or recurring losses. This means that pipeline companies will need to develop new compensation formulae to provide this evidence.
Pipeline companies will also need to consider new obligations relating to the periodic review of compensation amounts. The Surface Rights Act requires periodic reviews in cases where surface leases or compensation orders provide for annual or periodic compensation. Such a review might result in increased annual compensation amounts being paid to the landowner. However, the current language of the act would not require existing leases or orders that do not provide for annual payment to be reviewed. The act’s language creates inconsistent treatment amongst landowners depending on when a pipeline was constructed. This difference in treatment may attract pressure from landowners for legislative change to allow annual compensation in respect of existing pipelines.
In addition, under current Alberta law, annual payments under a surface rights agreement or compensation order are to be paid until the agreement is cancelled or the order terminated, both of which require that a reclamation certificate in respect of the land be issued by Alberta Environment.
Currently, while pipeline operators and landowners can agree to the removal of the pipeline as a term of an agreement, in the absence of such a term a pipeline operator is allowed to abandon the pipeline in place and conduct all the reclamation work required to receive a certificate. This creates a curious situation. During the term of the agreement or compensation order, annual compensation would be payable to the landowner for ongoing loss of land use and inconvenience created by the buried pipe.
But once the agreement was surrendered or the order terminated, the operator’s obligation to pay annual compensation would cease, even though the pipe remains buried and many of the previously compensable inconveniences remain. A change to the law that grants annual compensation may provide incentive to pipeline operators to conduct reclamation activities sooner, but unless the law is changed to require pipeline removal as a precondition to the receipt of a reclamation certificate, the nuisance will remain. Landowners may be motivated to seek such a change.
Dean Watt is staff council with the Environmental Law Centre. The ELC is a registered charitable organization established in 1982 to provide Albertans with an objective source of information about environmental and natural resources law and policy. Its vision is a clean, healthy and diverse environment protected through informed citizen participation and sound law and policy, effectively applied.
Pages: 1 2
Issue Contents
Entries