“Landowners who have called the Farmers’ Advocate Office (FAO) have been receiving requests sent by oil and gas companies to either reduce their annual rental payment to the landowner or to stop paying the landowner their annual rental payment,” says Anna Kauffman, rural engagement specialist with the FAO.
“They are being informed of a unilateral rental reduction and that the annual compensation for their surface leases will decrease due to certain clauses. These clauses are related to the change of use, proposed reclamation or surrender of the well.”
She says that in these letters, companies are citing a number of reasons for the rental reductions. “They are claiming that they are under severe financial strains that are beyond their direct control. These reasons include market factors, rural municipal taxes, the high cost of operations and the cost of surface lease rentals.”
Kauffman wants to remind landowners that cashing a cheque with a reduced lease payment does not necessarily imply acceptance of the reduced payment. “We caution landowners to contact the FAO before signing any document. Landowners have recourse to obtain compensation for unpaid or reduced rentals through the Surface Rights Board under Section 36 of the Surface Rights Act.”
“It is important to note that landowners have the right to a 5 year review of the rate of compensation under Section 27 of the Surface Rights Act,” explains Kauffman. “This is an opportunity for landowners to negotiate with oil and gas operators in good faith, with honest and fair engagement of both parties.”
The annual compensation that a landowner receives is based on adverse effect and loss of use.
“Adverse effect relates to the cost to the landowner resultant of a change in business practices due to the well site - the time, stress, nuisance and inconvenience of having the well site on the property,” she adds. “Loss of use is the compensation pertaining to the economic benefit that could have been derived from the land but for the oil and gas lease site and/or access road.”
Companies are responsible for paying the annual rental on a surface lease until a reclamation certificate is issued under section 144 of the Environmental Protection and Enhancement Act.
Kauffman notes that operators must engage landowners and occupants throughout the consultation remediation and reclamation effort. “Operators are required to provide all landowners and occupants a copy of the reclamation certificate application. They should receive this package the same day the operator makes a reclamation application to the Alberta Energy Regulator.”
“If a landowner is unhappy with the reclamation, they can file a statement of concern with the Alberta Energy Regulator within 30 days of the application being filed,” she adds. “We encourage landowners to contact the Farmers’ Advocate Office to ensure that their rights are recognized, understood and protected as some actions may contradict the Surface Rights Act.”
To connect with the Farmers' Advocate Office (FAO):
Farmers' Advocate Office (FAO)
Suite 100, 7000 113 Street
Edmonton, Alberta T6H 5T6