surface leases

[farmers_son]

Cowman’s advice is on the mark for the most part. Surface Rights Groups are able to move the oil industry forward on issues such as rentals and even one hole per payment while an individual would be hard pressed to achieve the same results alone.

Farmers do try and negotiate with the landman on their own. Many believe it is found money and ignore the very real long term problems associated with that well or pipeline. And lets face it, money is scarce right now on farms throughout the province and most are in no position to argue. A sad comment really when the provinces two major primary industries are at such opposite ends of the economic spectrum.

I do not think Cowman would be successful going before the Surface Rights Board looking for an order that would see him build the fence and get paid for upkeep. Ditto for controlling the vegetation and weed control. We have a neighbour who custom fences for the oil industry and the last two wells on his place were fenced and he got paid to do the job. But that was achieved through negotiation. The Surface Rights Board would only hear matters regarding compensation and although their order does include a few restrictions on the company but I have never known the Board to alter those conditions on a lease by lease basis. The SRB would never put itself in a position of telling a company how to operate its wells and who its contractors had to be.

There are a handful of land agents who do work for the farmer. The Farmers Advocate may be able to give a name. And some farmers have had enough wells on their property that they are knowledgeable regarding surface rights themselves. But I would say that it is impossible to get up to speed on all one needs to know about wells and pipelines if it is the first time you have been approached by the oil industry. Assistance from a Surface Rights Group or a competent lawyer would be very useful and result in the farmer being more content with the deal struck than if they attempted it on their own.

Regarding the word arbitration. Farmers should know that the Surface Lease they sign probably contains an arbitration clause. That should not be confused for the Surface Rights Board. The Surface Lease or easement arbitration clause refers to a dispute settlement procedure that involves the company picking a person, the farmer picking a person and those two picking a person and the three of them settle the dispute out of court. While in theory this can be a useful way to settle disputes the farmer needs to be aware that if the company wants to play rough they can. The company could hire a very high priced lawyer to be their representative in the arbitration process and no matter who the farmer has as his representative the company lawyer would insist on the third person being a retired judge. The company could make the arbitration process as expensive as possible with a possible outcome that the farmer may have to stand the cost of the arbitration. What the arbitration clause does achieve is ensure that disputes stay out of public court but it also means the farmer does not have the ability to use Small Claims court to get money owed. Bottom line the arbitration clause only works if the two parties want it to and if there is that much good will between the farmer and the company they could probably settle their dispute on their own. Otherwise arbitration can be more expensive than court with no option to appeal.

The only way to have the Surface Rights Board settle future disputes is not sign a lease or easement rather insist on the company acquiring what is known as a Consent Compensation Order from the Surface Rights Board. In these cases the farmer and company agree on the compensation and the Surface Rights Board issues a Right of Entry Order and a Compensation Order without a hearing. The farmer never has to sign anything.

[farmers_son]

Linda, many tax assessors will tell you that a power line, hog barn etc. will NOT devalue farm land but the kicker is what it does to the value of the house and three acre site where you reside.
My son has a seven acre parcel and house worth in the neighbourhood of $450,000 and the power line is scheduled to go on the property immediately west of his acreage, which will be in full view of his windows where at this point he has a beautiful mountain view. He will only be affected by the one proposed route. His comments to the people that contacted him was to put the line out in crown land so as not to adversly affect any residential land.
I do know that the Surface Rights Board is expecting to hold numerous hearings on the propsed power line, and that is going to be a challenge since they are so backlogged at this point in time that it takes around six to eight months to get in front of a hearing panel. Apparently they are in a reorganization mode at this time and have just hired a new chairman.

[silverback]

I know these guys will argue high and low that there is no devaluation, but they never want to talk about future development or subdivision potential. It sure looks like they are trying to ram as much in as fast as possible to get ahead of the development. What are the setback distances from these lines?? How close could you build a house? Surely that affects the value of the land.

[cakadu]

As far as I know silverback, the setback they are asking for in the case of this new Genesse to Lochend line is a 60 meter right of way. It is a 500 kV line so that must be the reason for the greater setback. I believe you've hit the nail on the head - there is no devaluing so long as the current owner holds the title to the land. Try and sell it or have it developed in the future and that is where the problems arise.

For us, a 60 meter setback, with nothing higher than 3.5 meters underneath of it, will ruin the natural area that we have on the east end of our quarter. It is one of, if not the only, wildlife corrirdor between two rivers in this area and it is a conduit for all 160 miles of drainage ditch that is dug out here every year. We have the added worry that with all this water run off that has been occuring since 1912, that we are in dire need of water and recharge out here, the flooding of 2005 notwithstanding.

Other major concerns are storm water management, erosion potential and the value of natural capital.

Emrald, others have suggested it go out further east - so it can tie into Sheerness etc. and have it impact far less people and development. The big thing is that they know that no matter where they put it, there will be opposition.

A point of clarification f_s, quite often arbitrators are lawyers and/or retired judges but not all are. Anyone can take training to be an aribitrator or mediator/negotiator through various Alternative Dispute Resolution training facilities. Here in Alberta it is the Alberta Arbitration and Mediation Society. You are quite right about going the arbitration route. You have to be willing to abide by the ruling given by the arbitrating panel - that decision is final and binding with no recourse.

[silverback]

I know these guys will argue high and low that there is no devaluation, but they never want to talk about future development or subdivision potential. It sure looks like they are trying to ram as much in as fast as possible to get ahead of the development. What are the setback distances from these lines?? How close could you build a house? Surely that affects the value of the land.

[farmers_son]

Cakadu: exactly so with the arbitration. I see the arbitration word being used to describe the EUB and SRB process but once you sign a lease arbitration becomes something else altogether.

You can argue decreased land values and you would be right. However the reality is that the landowners along the line will determine the value of the right of way because most will sign, in effect creating a market value for right of ways.

The land agents the power line companies use are particularly skilled and will use a combination of incentives, threats, coercion, unkept promises as well as the old standby: sign for what we are offering and if someone else gets more we will pay you the difference without the hassle of fighting our offer.

The real cost of having a powerline across your property is never determined. The landowners themselves decide what the line is worth and I would expect that 100% of the time they sign for less than they should.

[farmers_son]

If the proposed line were planned to cross my property I would be getting an current 'market' assessment of my home and three acre site, then ask the assessor to factor in what that assessment would decrease with the power line adjacent.
Linda if there area wildlife corridors in jeopardy, that may be the catalyst for changing the location. You have raised many valid points, and certainly if you have a group of people advocating to have the line moved it may carry weight.
Many years ago a dam was proposed on the Pembina River and people in the community caused such an uproar that the dam was never built. Same for the Glacier Power proposal near Peace River. The town of Peace River made enough pionts at the joint EUB/NRCB hearings that the project was denied. If groups opposed to the power line all band together and have valid reasons for their opposition it will get some attention.

[cakadu]

IF we could all band together with common concerns that would be great emrald. From what I have seen and heard thus far (bearing in mind the spin the media puts on things) many in opposition to the line are standing up and just saying no they don't want it in my backyard. That is playing right into the power companies hands and opens the door for the type of tactics that f_s refers to. Divide and conquer is generally the rule of the big guys, so sticking together with valid and logical points is the best way to approach this, from my own perspective.

I very much want proof that our land values will not be adversely affected by this development happening.

What would be very interesting emrald is to see if there were any benchmarks in terms of wildlife disruption etc. done when the line originally went through for the *****on Dam. I would be willing to be that 20 odd years ago when the dam was built, things like that were not taken too much into consideration. Still, if there were some proof to show how much the wildlife and natural capital was affected, it might be something that could be used to bolster the opposition's case.

Something to look into to be sure. I'm sure organizations like the Federation of Alberta Naturalists would have some information because they were around when the dam was originally built. Come to think of it, some of that history may just come in handy when they want to start developing around the reservoir, also known as Glennifer Lake.

[cowman]

I have no doubt in my mind I will get these conditions I want. I guess I've been around the block enough that I know how the system works?
You know there's the "way the law says it is" and then there is the real world? I've been paid more money($300 acre more) on a pipeline than anyone else got. It wasn't reflected in the "land price" but as an extra "consulting fee"! The landman isn't stupid, he knows how litigation can slow things down and if he has to give you a few extra bucks and you can give him a creative solution, he'll be happy to oblige? I also got a $500 "advance" to let them survey this particular lease....if they drill the hole the money comes off the surface lease, if they don't I keep the $500...not at all a requirement by law, but simple if they don't want to get a court order, delivered by a mountie before they enter the land?
I would actually prefer not to have any more coalbed wells so have no problem making it tough on this company. In fact I hear rumors that this particular company is about to skip town, as they screwed the company they were subleasing from! Tuck their tails between their legs and run back to the USA? Good riddance...and I'll enjoy their $500!

[cowman]

Linda, the Three Sisters Project in Canmore is a prime example of how wildlife corridors are protected.
The Nature Conservancy of Canada may be of some help with wildlife issues.
It is unfortunate that folks don't form a group as more voices certainly will get more attention particularly if they are all singing from the same songsheet.
Cowman, the compensation you have received is certainly great in your pocket and hats off to you, however, it points out how companies will take advantage of those who are new to or uninformed as to how they can use the system to their advantage. I think there should be transparency and level playing fields for all who receive surface lease compensation. It certainly does not bode well for a good neighbour policy of any company that will pay more to landowners because they can match wits with the landmen !!!