Over the past year, many landowners have come to the Farmers' Advocate Office (FAO) with questions around the Surface Rights Board's (SRB) decisions relating to PetroGlobe under section 36 of the Surface Rights Act (SRA). This article serves to provide clarification on the SRB's decisions.
Section 36 of the Surface Rights Act (SRA) enables landowners who have not received their annual rental to apply to the SRB for a recovery of rentals. The SRB must make an order and terminate a company's rights to a site prior to directing payment from General Revenue.
In Petroglobe vs. Lemke 2014 ABSRB 401, the federal Bankruptcy Insolvency Act precluded the SRB from proceeding with the section 36 application. Section 69 (1) (1) of the Bankruptcy Insolvency Act, which states that "no creditor has any remedy against the insolvent person or insolvent person's property, or shall commence or continue any action..."
In Lemke, the SRB was not able to take the action of terminating the rights to the site based on the unpaid rentals that had accrued before the assignment into bankruptcy as the issuing of an order against the operator by the SRB is a form of action.
Payment of rentals from General Revenue was approved in two later decisions relating to PetroGlobe (Portas v. PetroGlobe Inc. 2015 ABSRB 807 and Rodin vs. PetroGlobe 2015 ABSRB 737). Several facts distinguish the cases from each other, and the following clarification was offered by the SRB:
- In Portas, the SRB decided that it had the authority to proceed with claims for unpaid rentals that became due and payable after the assignment into bankruptcy. The SRB was able to terminate the operator's rights to the site based on the unpaid rentals.
- In Rodin, the landowner made a section 36 application for rentals that accrued before and after the company's assignment into bankruptcy. The SRB was able to terminate the company's rights to the site as a result of the unpaid 2014 rentals, which accrued after the assignment into bankruptcy. Since the rights were terminated, they were able to direct payment for the 2013 rentals in addition to the 2014 rentals.
The FAO recommends that landowners consider making applications under section 36 as soon as an operator is in arrears in making payments. For more information, you may contact the SRB through their toll-free number 310-0000 and then 780-427-2444.
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