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Dra 2, February 19, 2020
Polluter Polluter PayPay Federa onFedera on
Alberta Liabili es Disclosure Project Dra Proposal: Forma on of
the
aldpcoali on.com
As the sun sets on Alberta’s conven onal oil industry, it is me
to create a new economy and prosperity. This can be accomplished by
ensuring property owners, municipali es, and taxpayers are not
stuck with the bill racked up by industry, to clean up the mess.
ALDP Coalition members have proposals to deal with the problem. We
have undertaken to a empt to outline the main proposal to others
for their input or acceptance
Polluter Pay Steering Commi ee: Mark Dorin. Vern Bre n. Regan
Boychuk. Dwight Popowich. Tom Prilsky.
Reference Name
Presenters: Regan Boychuk and Mark Dorin
March 10, 2020. 7:00 PM. Warburg Alberta (to be televised on the
internet)
Hosted by the Warburg Pembina Surface Rights Group
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Executive Summary The principal that only the polluter pays,
entrenched in Alberta’s comprehensive energy laws, has been abused
and ignored in numerous ways for decades. The result is a financial
and environmental crisis or catastrophe of gargantuan proportions.
Threatened are the financial future of the province of Alberta and
the lives and livelihoods of its greatest asset – Alberta’s
citizens. Section 1 of this proposal outlines abuse and
circumvention of the polluter pays principle reflected by Alberta’s
integrated statutory scheme read harmoniously as a whole.
A viable solution, indeed perhaps the only solution in the minds
of those who seek for continued democracy based on the rule of law,
is set out in Section 2 of this proposal: A non-profit organization
(reference name the Polluter Pay Federation) will advocate for
property rights protection and work to belatedly strike a
sustainable balance between the rights of energy industry
participants and those who host energy activities on their land via
“notional takings” of some or almost all of their land rights.
The benefits of strict compliance with the polluter pay
principle are numerous and varied. Because the taxpayer will
ultimately bear the cost of massive, unfunded oil and gas
liabilities if industry fails to do so, or is not forced to do so
as required by provincial and federal law, the financial burden of
industry’s sins primarily if not completely falls to the taxpayer
(as opposed to the host landowner).
Various societies and the Alberta Surface Federation have been
established, and have come and gone, which have as their goal
observance of what are called “surface rights” in Alberta. Their
efforts have failed, particularly as to mounting a countervailing
lobby remotely equal to the powerful lobbies of the energy
industry. Property rights have been significantly eroded in reality
(as opposed to at law). The relentless attack on property rights
mounted by industry and industry-captured regulators worsens.
Alberta is in crisis. Anarchy prevails as irresponsible polluters
or potential polluters refuse to pay and law enforcement officials
look the other way.
Alberta surface rights groups lack the resources, particularly
funding, to combat the mounting problems they and their fellow
citizens face contrary to Alberta law. The existing Federation is
non-inclusive because its mandate is to serve only agricultural
groups. Section 2 of this proposal outlines a funding model whereby
a countervailing lobby can be established, at the ultimate cost of
industry, by relying on well-established expropriation compensation
principles. The Proposed Polluter Pay federation can and will
undertake a number of functions and provide services that have long
been missing – including those which the Alberta Energy Regulator
is to provide but is not providing. Human lives, property values,
and our economic future as a province depend on curbing the “dine
and dash” attitude of industry and complacent or industry-captured
regulatory officials.
The Alberta Liability Disclosure Project coalition is relatively
new, but has been hard and work and busy. A coalition was struck in
early 2019 to call for transparency related to the full extent of
unfunded upstream oil and gas activities. Some coalition member
realize that further action is immediately required. A temporary
Polluter Pay Federation steering committee has been struck as set
out in Section 3 of this proposal. Priorities have been listed and
a framework to move forward has been identified.
Before March 10, 2020, when Regan Boychuk and Mark Dorin will
outline the vision of ALDP Members related to formation of the
Polluter Pays Federation to the public in Warburg, Alberta, and by
internet broadcast, a formal steering committee shall be formed. As
soon as possible following this public launch event, a formal
meeting of members shall be held to elect a board of directors,
whereby the working Polluter Pay Federation, a non-profit
corporation serving its members and community, shall be born.
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ALDP members came to the Town of Calmar and showed us that there
are solu ons to the oil and gas problems limiting the growth and
economic development of our town. They gave us hope.
Economic Development Officer
Town of Calmar
History shows that democra c governments exist to give voice to
the people and to protect their basic human rights. To take away
that voice, to deny one’s basic rights, is to set in place a
totalitarian governmental system that benefits the state,
empowering its leaders to rule in as they alone see fit. Today
Canadians are seeing the struggle between democracy and
totalitarianism, playout in the form of energy development on our
lands. Whether one is an Alberta landowner, or a Wet’suwet’en land
defender, our struggles are in essence the same: Our right to be
heard is being denied by those who would seek to unjustly benefit
from the expropria on and occupa on of our lands. Our silence and
inaction are precisely what corporations want. Today’s blockades,
in support of the We’suwet’en hereditary Chiefs, are not about the
building of pipelines. They relate to seeking to have government
follow the cons tu on and property laws, and heeding those who have
been deprived of their property rights and voices. It’s time that
all Canadians come to realize that their individual democra c
property rights are under a ack. The choice of si ng on one’s hands
in silence, or raising one’s voice and hands in protest, becomes
the ques on. If you’re red of being silenced and having no respect
shown for your rights, I urge you to join the Alberta Liabili es
Disclosure Project (ALDP) in making a loud, strong, and peaceful
voice for Alberta property rights. ALDP members have iden fied
legal solu ons to most of our varied problems. We’re calling the
central solu on the Polluter Pays Federa on and we are reaching out
to all property owners and municipalities. Please join to be
heard!
Dwight Popowich Landowner (Two Hills)
Alberta Liabili es Disclosure Project From Our Supporters and
Valued Members
My sisters and I inherited land in southwest Edmonton, Riverview
Area, adjacent to Anthony Henday Drive and the North Saskatchewan
River. The lack of public safety law enforcement is scandalous and
appalling. Sour gas emissions have been an ongoing problem, and I
am currently concerned for the safety of workers on the
TransMountain Pipeline Expansion Project in the area. The CBC
interviewed me at the ALDP Workshop in Didsbury. Despite my
interview not making the news, ALDP members continue to work on
solving our problems. I strongly support the Polluter Pay Federa on
concept. Urban landowners are incredibly impacted by irresponsible
oil and gas opera ons and need a source of reliable informa on and
advocacy
Dale Braun Athabasca
Simply for exercising their rights, Alberta landowners are o en
ostracized in their communi es. Public educa on is needed in rela
on to serous problems associated with use of land for energy
purposes in our province. The Polluter Pay Federa on proposed by
ALDP members is the most comprehensive solution proposed to date.
My husband and I support the crea on of this non‐profit associa on
that will stand up for balanced rights and basic human rights and
dignity.
Bev Wieben Landowner
ALDP members are important, regular participants in our surface
rights meetings. They are an important source of information,
provide creative sugges ons, propose real solu ons to problems on
the ground, and ask the tough ques ons that provincial employees,
who give presenta ons to our group, should answer. Not all
presenters have reasonably answered the valid ques ons we have.
Anonymous Member Warburg Pembina
Surface Rights Group
ALDP provided us with an oppor‐tunity to tell our story for the
fist time since unsafe oil and gas activities commenced on our
urban residential lands in 1977. Other landowners need to know what
the actual ramifica ons of not being paid annual compensation can
be. THANK YOU!
Heman and Shirley Dorin Didsbury, Alberta
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Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
1
Contents
1. ABUSE OF THE POLLUTER PAYS PRINCIPLE
.................................................... 1a) The
Polluter Pay Principle is Entrenched in Alberta Law
............................................................ 1
b) Circumvention of the Polluter Pays Principle
............................................................................
3
c) Industry, the Orphan Well Association, and the Regulator are
Off the Rails and Will Crash ....... 4
d) Widespread Industry Insolvency and a Powerful Industry Lobby
are the Root Problems ........... 6
2. THE PROPOSED POLLUTER PAY FEDERATION
................................................ 8a) Funding Model
.........................................................................................................................
8
b) Benefits to Society
....................................................................................................................
9
c) Benefits to Landowners
..........................................................................................................
10
(i) Envisioned Services the Federation Could Provide to
Canadians ................................................ 11
d) Benefits to Taxpayers and Their Municipalities
.......................................................................
11
3. STEERING COMMITTEES, LAUNCH, AND FOUNDATION MEETINGS
.............. 12a) Priorities Identified by Temporary Steering
Committee
..............................................................
13
4. ALDP – TAKING ACTION ON THE UNFUNDED LIABILITY PROBLEM
............... 14
Table of Figures Figure 1: The Number of Wells Named Orphans by
the AER Continues to Rapidly Increase ................. 4
Figure 2: OWA Spending on Well Abandonment and Land Cleanup
..................................................... 5
Figure 3: Wells Not Named Orphans in Receivership Limbo
.................................................................
6
Figure 4: Surface Rights Board Section 36 Process with Added
Comments ........................................... 7
Figure 5: Possible Polluter Pay Federation Funding Model
.......................................................................
8
Figure 6: Action Triangle with Benefit Comments
......................................................................................
9
Figure 7: The Extent of Unfunded Oil & Gas Liabilities of
Many Varieties ..............................................
10
Alberta Liabilities Disclosure Project Temporary Steering
Committee
Polluter Pay Federation A Proposal
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Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
1
1. ABUSE OF THE POLLUTER PAYS PRINCIPLE Alberta’s energy and
surface rights legislation reflect the principle that only the
potential polluter should pay, in particular for use of land not
owned by energy activity developers. At present landowners,
municipal property tax ratepayers, provincial and federal
taxpayers, bankers and other industry members are actually paying
for the sins of irresponsible energy developers and those with the
responsibility by law to regulate them and enforce the polluter
pays principle embodied in federal and Alberta laws. Stakeholders
other than industry are paying for the sins of some industry
members in ways other than from their wallet or bank account.
Public safety issues are acute related to many types of upstream
oil and gas activities.
What are fundamentally being abused systemically are the rights
of (surface) landowners and the general public to be safe,
particularly on land that has not been “leased” by an energy
developer (or where rights to use land not owned by the energy
developer are acquired by order of the Surface Rights Board (the
“Board”.
The Board, more accurately its members who make quasi-judicial
decisions, is the primary enforcer of that aspect of the polluter
pays principle that involves monetary compensation. However,
pursuant to judicial guidance,1 Board members consistently find
that it is effectively or really those decision makers who work for
regulatory bodies that make the bulk of decisions, which Board
members are only rubber stamping (pursuant to the judicial rule or
doctrine against collateral attack).
a) The Polluter Pay Principle is Entrenched in Alberta Law
The integrated provisions of Alberta’s Environmental Protection
and Enhancement Act,2 (the “EPEA”) particularly Part 6 thereof, and
the Surface Rights Act,3 which is the Board’s home or enabling
statute, when read together harmoniously as a whole reflect
Alberta’s unique embrace on the polluter pays principle.
The Surface Rights Act in Sections 15(3) and 15(6) refers to
licenses, permits, or other approvals issued by the Alberta Energy
Regulator (the “AER” or the “Regulator”) and the Alberta Utilities
Commission (the “AUC” or the “Commission”). The AER and the AUC are
Alberta’s regulatory bodies that approve various energy activities
that may be conducted on land (surfaces) not owned by the energy
activity proponent. When a project proponent cannot acquire the
surface rights necessary by way of agreement with the titled
surface (rights) owner (and any occupant), the Board may issue an
order granting (allowing the proponent to effectively expropriate
by way of an AER or AUC decision) the necessary rights to use land
surfaces the project proponent does not own.
No agreement granting rights of entry may be surrendered, and no
order of the Board granting rights of entry may be terminated (some
exceptions apply), until a reclamation certificate has been issued
pursuant to the provisions of Section 144, of the EPEA as to
“specified land” as defined in Section 134 of the EPEA.
1 See for example the following cases: Togstad v. Alberta
(Surface Rights Board), 2015 ABCA 192 (CanLII) Windrift Ranches v.
Alberta (Surface Rights Board), 1986 ABCA 158 (CanLII), Encana
Corporation v. Campbell, 2008 ABQB 234 (CanLII), Mueller v. Montana
Alberta Tie Line, 2011 ABQB 738 (CanLII). 2 RSA 2000, c E-12. 3 RSA
2000, c S-24.
http://canlii.ca/t/52ddk#sec15http://canlii.ca/t/544f7#sec144https://www.canlii.org/en/ab/abca/doc/2015/2015abca192/2015abca192.html?autocompleteStr=Togstad%20v.%20Alberta&autocompletePos=1https://www.canlii.org/en/ab/abca/doc/1986/1986abca158/1986abca158.html?autocompleteStr=Windrift%20Ranches%20v.%20Alberta&autocompletePos=1https://www.canlii.org/en/ab/abqb/doc/2008/2008abqb234/2008abqb234.html?autocompleteStr=Encana%20Corporation%20v.%20Campbell&autocompletePos=1https://www.canlii.org/en/ab/abqb/doc/2011/2011abqb738/2011abqb738.html?autocompleteStr=2011%20ABQB&autocompletePos=1http://canlii.ca/t/544f7http://canlii.ca/t/52ddk
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Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
2
Even pursuant to a private agreement granting rights of entry,4
the factors that should be considered in determining compensation
for a “notional taking” or effective expropriation of certain (but
never all) surface rights are set out in Section 25(1) of the
Surface Rights Act. These factors are:
• all-inclusive for the first period or year, and include
potential damage to the land;5 however,
• the factors to be considered in agreeing to, or by way of the
Board ordering, compensation for, ongoing (annual or other
periodic) compensation are the following factors set out in Section
25(1) of the Surface Rights Act (see Section 27):
Subsection 25(1)(c), which reads as follows (commonly referred
to as “loss of use”):
(c) the loss of use by the owner or occupant of the area granted
to the operator,
Subsection 25(1)(d), which reads as follows (commonly referred
to as “adverse effect”):
(d) the adverse effect of the area granted to the operator on
the remaining land of the owner or occupant and the nuisance,
inconvenience and noise that might be caused by or arise from or in
connection with the operations of the operator,
The factor set out in subsection 25(1)(e) of the Surface Rights
Act is rarely considered when determining compensation for the
first year or period of operations because it is assumed that the
operator or the Orphan Well Association shall abandon
(decommission) wells and facilities and cause the land to be
remediated or conserved and reclaimed, and certified as reclaimed.
As discussed further below, in many, if not most, cases any such
assumptions are no longer reasonable. The subject Section 25(1)(e)
of the Surface Rights Act reads as follows, where subsection
25(1)(f) is also relevant and is quoted below:
(e) the damage to the land in the area granted to the operator
that might be caused by the operations of the operator, and
(f) any other factors that the Board considers proper under the
circumstances.
The combined provisions of Section 25(1) of the Surface Rights
Act quoted above, read together with the reconsideration and “cost”
provisions of such legislation and other laws,6 are designed to
ensure that the titled surface owner is compensated monetarily for
all conceivable, unmitigated damages and losses, including
intangible losses.
The Board, and therefore landowners engaged in negotiations, are
empowered to consider that the operator, the AER, the Orphan Well
Association or others, may not mitigate all losses in the future in
accordance with any assumptions made in a compensation
determination exercise.
Without question, the polluter must pay. However, as evidenced
by the provisions of Section 36 of the Surface Rights Act and
provincial loans made to the Orphan Well Association, in the event
the polluter cannot pay a rate of ongoing (annual or periodic)
compensation, the Board may order the Minister of Parks and
Environment to pay the landowner from provincial coffers until a
reclamation certificate is issued. As such, the taxpayer is
ultimately on the hook when polluters fail to pay the landowner. 4
Commonly referred to as “surface leases” in respect of possessory
rights acquired, and “rights-of-way” in respect of non-possessory
rights acquired to operate power transmission lines and buried
pipelines. Some agreements take the form of options to acquire land
use rights in the event an AER or AUC licence or permit is later
issued. 5 Subsection 25(1)(e) of the Surface Rights Act. 6 Section
29 of the Surface Rights Act and related reconsideration or review
provisions of activity licensing statutes.
http://canlii.ca/t/52ddk#sec25http://canlii.ca/t/52ddk#sec36
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Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
3
b) Circumvention of the Polluter Pays Principle
A hosts of ways have been invented to improperly circumvent the
principle that the polluter alone must pay. The primary facilitator
of this circumvention is the body that is charged by law with
enforcement of most of the laws that require upstream oil and gas
polluters to pay – the Regulator or the AER.
Some of the circumvention methods openly and most
inappropriately employed are listed below, in no particular
order:
1. By invention of the so-called Licensee Liability Rating
(“LLR”) and Licensee Management Rating (“LMR”) ratios calculated by
way of AER Directives 001, and 011. If an industry participant has
an LMR over a certain threshold, the company is not required to put
up security to cover end of life cleanup and public safety
obligations (the cost of such obligations to be covered by the
Orphan Well Fund or by remaining industry members).
2. By way of the AER failing to levy sufficient charges on
industry members as required by the law that created, and governs
maintenance of, the Orphan Well Fund.7
3. The province has lent significant funds to the Orphan Well
Association, which industry is obliged to repay. However, industry
is reluctant to repay these loans, lobbies for loan forgiveness,
and the Alberta government lobbies for federal funds to deal with
oil and gas well and facility end of life obligations.
4. The AER is not transferring well licenses to “entitled”8 and
“eligible”9 parties as required by law, whereby parties who are not
legally responsible for the cost of end of life obligations are
either effectively blocked from applying for or obtaining remedies
contemplated by law including being awarded related
compensation:
a) The Board is backlogged and overloaded with “Section 36”
applications for recovery of unpaid annual or other periodic
compensation (improperly referred to as “rent”), which at least
arguably constitutes obstruction of justice (a crime) by AER
employees. There should be far less backlog because:
(i) if well licenses are transferred to “working interest
participants” in the related minerals, or to the province as the
mineral owner as required by law, these responsible parties are
obliged to pay the landowner until a reclamation certificate is
issued (or the lease agreement expires).
b) A class of wells referred to by the AER and government as
“legacy wells” is inappropriately created. Inaccurately, officials
have found that there are “gaps” in the law whereby the obligations
of responsible parties can be ignored, putting the cost of
re-abandoning legacy wells, or cleaning up the sites used to drill
or produce legacy wells, on the titled surface owner contrary to
law.
Inappropriate interference by elected officials and industry
executive with how the AER conducts its day to day affairs, and as
to what the contents of AER Directives are, is obvious and contrary
to law.
7 Part 11, Section 73(2) of the Oil and Gas Conservation Act,
RSA 2000, c O-6. 8 Section 16(1) of the Oil and Gas Conservation
Act. 9 Section 20 of the Oil and Gas Conservation Act. See also
Section 23(2) of the Mines and Minerals Act.
http://canlii.ca/t/52zk1#sec73http://canlii.ca/t/52zk1#sec16http://canlii.ca/t/53pcm#sec23
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Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
4
c) Industry, the Orphan Well Association, and the Regulator are
Off the Rails and Will Crash
Perhaps Mr. Daryl Bennett, surface rights advocate, landowner,
landowner representative and director of Action Surface Rights
Association said it best in a radio interview: The current
situation “...is a train wreck and landowners are simply blowing
the whistle”.
The most important aspect of informed landowners blowing the
whistle is to educate and warn citizens and municipal ratepayers in
general that if laws requiring industry members alone to cover the
cost of end of life obligations continue to be circumvented,
taxpayers as opposed to landowners will ultimately carry the bulk
of the cost of government and industry irresponsibility.
As the number of wells being named “orphans” by the AER
skyrockets, the Orphan Well Association (the “OWA”) is planning to
reduce spending in tandem on decommissioning wells and facilities
and restoring land to its original capacity as required by law.
This is clear from presentations given across the province by the
Executive Director of the OWA (related PowerPoint Presentation
publicly available, portions of which are in Figure 1 and Figure 2
below). Not only is such a plan unworkable for landowner and
taxpayers, it is illegal. The good news, discussed in Section 2
below, is that there are various solutions contemplated by law.
Figure 1: The Number of Wells Named Orphans by the AER Continues
to Rapidly Increase
A return to the rule of law is the only reasonable means of
putting irresponsible industry, irresponsible government, the
irresponsible Regulator (or at least its management and hearing
commissioners), and the OWA back on the rails so to speak. There is
no time to waste. Unfunded oil and gas liabilities, estimated by at
least one AER manager at some $260 billion dollars, are rapidly
growing and have most likely been grossly underestimated [see
Figure 7].
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Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
5
Figure 2: OWA Spending on Well Abandonment and Land Cleanup
It is obvious that the number of wells named as orphans by the
AER increased while the OWA was spending over $100 million per year
in 2018 and 2019. Once the OWA’s top priority becomes repayment of
a provincial loan beginning in 2021, it is obvious that the efforts
of the OWA will become ineffective for the most part in terms of
actually dealing with the growing problem as illustrated in Figure
1.
Charging a sufficient levy to actually fund keeping in line with
problems caused by insolvency of industry members is governed by
the provisions of Section 73(2) of the Oil and Gas Conservation Act
quoted below:
(2) In prescribing the orphan fund levy for a fiscal year, the
Regulator shall provide for a total levy that will be sufficient to
cover
(a) the costs referred to in section 70(1) for the fiscal year,
as estimated by the Regulator,
(b) any deficiency arising out of the operations of the fund
from the previous fiscal year, and
(c) any surplus for emergency and non-budgeted expenditures that
the Regulator considers is necessary.
Section 70(1) references the costs to be covered by a sufficient
levy:
Purpose of fund
70(1) The purposes of the orphan fund are
(a) to pay for suspension costs, abandonment costs and related
reclamation costs in respect of orphan wells, facilities, facility
sites and well sites where the work is carried out
(i) by the Regulator,
(ii) by a person authorized by the Regulator, or
(ii) by a Director or a person authorized by a Director in
accordance with the Environmental Protection and Enhancement
Act;
https://www.canlii.org/en/ab/laws/stat/rsa-2000-c-o-6/latest/rsa-2000-c-o-6.html#sec70subsec1_smoothhttps://www.canlii.org/en/ab/laws/stat/rsa-2000-c-e-12/latest/rsa-2000-c-e-12.html
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Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
6
d) Widespread Industry Insolvency and a Powerful Industry Lobby
are the Root Problems
Recent insolvencies of companies that have become household
names, such as, inter alia, Lexin, Redwater, Sequoia, Trident,
Houston, and Bellatrix, are the problem. As shown by the Slide from
the OWA’s presentation in Figure 3 below, the problem continues and
is growing:
Figure 3: Wells Not Named Orphans in Receivership Limbo
The underlying problem is that the conventional oil and gas
industry (primarily oil wells and gas wells in the southern half of
the province, not including “in-situ” or heavy oil sands mining)
has been unprofitable for over a decade. This has led to loss of
investor and lender (except AIMCO) confidence in the upstream oil
and gas industry. Reasons for low investor confidence given for
political reasons are largely inaccurate.
As many landowners and their representative know, companies such
as Ember Resources are not paying the full amount of annual
compensation to landowners, electing to pay only 50% - 70% of the
required sums. Alarmingly, Ember is said by the OWA to have
purchased a number of Trident wells. Similarly many insolvent
companies did not pay their municipal property or linear taxes to
municipalities, towns, and cities. Over half of delinquent
municipal tax is owed by companies that continue to operate. Paying
tax has become optional, at least for select members of the oil and
gas industry. The Federation can help make this a temporary
situation. Property tax payment is a condition of most surface
lease agreements
Landowners not being paid by the companies listed in the OWA
Slide in Figure 3 have the option to apply, each year, to the Board
under Section 36 of the Surface Rights Act to recover the amount of
any unpaid ongoing compensation (normally paid annually). The Board
will not act until bankruptcy proceedings are finalized.
The Farmer’s Advocate has illustrated the procedure, somewhat
inaccurately. Figure 4 below is such an illustration with added
comments.
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Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
7
Figure 4: Surface Rights Board Section 36 Process with Added
Comments
The key aspect of Figure 4 of interest to citizens and taxpayers
is that the Board orders the Minister of Environment and Parks to
pay freehold landowners from the provincial treasurer (with their
tax dollars) contrary to the polluter pays principle. These
payments continue until a reclamation certificate is issued. As
such, if the pace of OWA work slows as forecast, the related
taxpayer burden will become significant. The Orphan Fund does not
cover the cost of paying landowners until a reclamation certificate
is issued.
Contrary to expropriation principles, landowners go unpaid for
long periods of time because the Board is unable to process the
flood of landowner applications within a reasonable period of time.
As such only some $6 million per year is being recovered by
landowners, paid by taxpayers on behalf of industry. The figure
should be significantly higher and will continue to grow.
Two industry associations traditionally spend some $50 million
per year lobbying government for favours such as having the
Regulator look the other way, failures to prescribe Orphan Fund
levies, or ensure security deposits are made as required by law if
the landowner is not being compensated in advance for potential
damage to the land. The result of no effective counter lobby is
that industry and its executives in particular are unjustly
enriched at the expense of landowners and ultimately the taxpayer
at large.
The Canadian Association of Petroleum Producers has as members
the major oil and gas firms or larger companies. These companies
have made dumping liabilities to smaller companies and art
form.
EPAC represents mostly smaller or junior companies. In
government liability management sessions conducted in 2017, the
EPAC representative advised participants that its members “have no
money” to cover their end of life obligations, which is obviously a
serious problem.
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Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
8
2. THE PROPOSED POLLUTER PAY FEDERATION The proposed Polluter
Pay Federation (reference name) will lobby government for
re-balancing of rights. It will ensure that only the polluter or
industry pays for end of life obligations, and that industry pays
taxes due to municipalities as contemplated by Alberta law. The
Federation shall educate and otherwise empower landowners and other
stakeholder to help themselves and to assist their municipalities
in tax collection efforts in the process. Steering committee
members have envisioned a number of unique services, which the
Federation can provide to its membership, particularly titled
landowners with rights that must be observed.
Most funding will be raised by way of observance of
expropriation principles whereby landowners are entitled to recover
the cost of membership in a group such as the Polluter Pay
Federation from the energy developer using their lands. The
taxpayer at large is also expected to provide funding through
donations and a different class of membership than those who
possess observable rights.
a) Funding Model
The proposed Federation funding model might take a form such as
that illustrated below:
Figure 5: Possible Polluter Pay Federation Funding Model
-
Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
9
As the Board has previously found, the cost of membership in a
group that educates landowners as to their rights and compensation
issues is reasonably recoverable from the operator. Given that the
contracts that govern payment of municipal taxes are only
enforceable by landowners, landowners and municipalities must work
closely together. This constitutes compensable nuisance and
inconvenience arising from or associated with operations on the
land covered by the Surface Rights Act.
Some of the benefits of the proposed Federation are illustrated
in the action triangle below, as shown in a Landowner Self-Help
Workshop hosted by ALDP in Didsbury on January 25, 2020:
Figure 6: Action Triangle with Benefit Comments
b) Benefits to Society
The most obvious benefit to society flowing from the Polluter
Pay Federation is that the costs of industry seeking to dump its
liabilities on others will not have to be borne by citizens, or at
least such burden will be significantly reduced.
There are other benefits. Triggering the cleanup of hundreds of
thousands of sites, and forcing well and facility abandonment as
required by law, shall have significant economic and job creation
benefits, and will spur new corporations, industries, and economic
growth in general.
The Alberta Liabilities Disclosure Project (ALDP) coalition has
estimated some liabilities associated with Alberta oil and gas
production (as shaded in yellow in Figure 7 below). ALDP is a
promoter of the concept of the Polluter Pay Federation to ensure
only polluters and potential polluters cover all liabilities as
required by Alberta law.
The table below in Figure 7 indicates the staggering extent of
such liabilities.
-
Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
10
Figure 7: The Extent of Unfunded Oil & Gas Liabilities of
Many Varieties
As confirmed by the Supreme Court of Canada, if an inactive well
has not been properly suspended on time, or if a surface lease
terminates (or for several other reasons), the related well or
facility must be abandoned by law. Given that industry is unlikely
to voluntarily abandon wells when required by law (the AER does not
enforce these aspects of the law), the Federation will educated
landowners how to trigger forced abandonment in various
circumstance as required by law.
This will create business opportunities in many sectors across
the province as well as employment. The legal profession, land
reclamation professionals, equipment providers and other
contractors, cementing companies and service rig providers among
others shall be the benefactors.
The Orphan Fund legislation contemplates that a body or bodies
other than the AER may name wells or facilities as orphans, and
that numerous non-profit or for profit companies in addition to the
OWA should carry out the work being performed solely by the OWA to
date. The pace of orphan well and facility decommissioning and
related site remediation and restoration can occur at a
significantly increased pace. This reduces the risk and burden of
paying landowners now on or to fall to the taxpayer.
c) Benefits to Landowners
There are numerous benefits to landowners who join the Polluter
Pay Federation at the cost of the energy developer on their land.
As shown in the Figure 5 Funding Model illustration, it is
envisioned that the landowner can opt to have the Federation
invoice the operator directly for the cost of membership (to be
determined from time to time by the Federation Board of Directors
or a Membership Committee).
-
Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
11
The benefits of lobbying government for the members of CAPP and
EPAC are obvious. Landowners can have an equally powerful lobby,
not to abuse the rights of industry, but rather to balance their
rights with those of industry, as contemplated by the Surface
Rights Act and various activity licensing and environmental
statutes.
(i) Envisioned Services the Federation Could Provide to
Canadians
Counter Lobby: The Federation shall provide a counter lobby to
that powerful lobby of industry, which has resulted in the abuse of
landowners’ fundamental rights in many regards and by varied
tactics.
Education: Educating landowners, municipal officials and others
is one of the central, critical functions the Federation shall
undertake and carry out. Alberta’s complex system of interwoven
energy laws, related judicial guidance, and the fundamental rights
of titled landowners that must be observed are all badly
misunderstood. Industry and government myths abound, which must be
dispelled.
Citizens must be properly educated on the numerous health risks
associated with oil and gas production, which are not being
adequately mitigated, causing unnecessary disease and health care
costs.
Peace Officer Force: Because the AER so commonly refuses to
enforce Alberta law or the terms and conditions of the licenses,
permits, and other approvals it issues, creating public safety and
inadequate compensation problems across the province, the
Federation may employ and train peace officers to keep the peace.
The quasi-criminal act of industry trespass (entries on land that
do not conform to the provisions of the Surface Rights Act are
deemed trespasses) is an equally serious problem that police forces
do not or cannot understand. Charges can and must be laid.
Litigation Funding and Intervention in Key Cases: Many surface
rights matters, including public safety, have been improperly
adjudicated or have never been adjudicated at all. There is a power
imbalance because industry has access to lawyers and funding but
most landowners do not. Through a number of programmes, the
Federation shall bring about positive change in these areas.
Landowner cases can be combined and the Federation can intervene in
key cases to protect the rights of landowners.
Work with Municipal Governments or Their Associations: The
Federation shall work closely with towns, cities, counties and
municipal districts to build safer, stronger communities all across
Alberta.
d) Benefits to Taxpayers and Their Municipalities
Ensuring that health risks are mitigated and polluters pay as
required by law has significant benefit for taxpayers at all
levels. The tax burden of the ordinary citizen shall be maintained
at worst, and possibly improved by all efforts to ensure that only
the polluter pays for energy activity end of life obligations.
There are many abandoned wells in fields, towns, and cities,
location under streets and playgrounds that now leak gas or shall
leak gas. How wells are abandoned and cut off below surface,
vented, must be reviewed. Reducing explosion risks and health
risks, as well as related health care costs from breathing
hydrocarbon gases (also greenhouse gases), can only benefit local
communities.
The Polluter Pay Federation will promote the formation of funded
surface rights groups across the province, which shall in turn
create job growth for decades to come, which promotes sustainable
healthy, communities.
-
Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
12
3. STEERING COMMITTEES, LAUNCH, AND FOUNDATION MEETINGS The
formal public announcement or official launch of the federation
proposed shall occur in Warburg, Alberta on March 20, 2020 at 7:00
PM, hosted by the Warburg Pembina Surface Rights Group. The Warburg
Group has a decades-long history of informing and educating
landowners, which ALDP recognizes with gratitude. Tom Prilsky has
undertaken to film and broadcast the event over the internet.
Steering Committee Members with varied backgrounds are sought to
join an existing, informal ad hoc temporary steering committee in
finalizing the planning of the corporate structure, initial and
midterm goals, and functions of the Polluter Pays Federation
(proposed name). Articles of incorporation and by-laws for the
non-profit corporation envisioned must be drafted and
finalized.
Regan Boychuk and Mark Dorin will outline the proposals of the
temporary steering committee in Warburg.
AD HOC TEMPORARY STEERING COMMITTEE
1. Mr. Regan Boychuk. Researcher, writer, property rights
advocate and ALDP member.
2. Mr. Mark Dorin. Upstream oil and gas production industry
veteran, landowner, landowner representative, regulatory
compliance, reconsideration, and surface rights compensation
practitioner, property rights advocate and ALDP member.
3. Mr. Vern Bretin. Landowner. Director of Action Surface
Rights, property rights advocate and ALDP member.
4. Mr. Dwight Popowich. Landowner, former banker, former union
organizer, property rights advocate and ALDP member.
5. Mr. Tom Prilsky: Concerned citizen, film producer, property
rights advocate and ALDP member.
FORMAL STEERING COMMITTEE FORMATION
Those persons listed above hope to attract the following persons
or classes of persons to a formal steering committee:
6. Mr. Darryl Bennett: Landowner, landowner representative,
surface rights compensation practitioner, property rights advocate
and ALDP member and Director of Action Surface Rights and the
Alberta Landowners Federation.
7. Municipal Government Representatives.
8. First Nations Representatives.
9. Others, in particular representatives from surface rights or
other property rights groups
The final Steering Committee will focus on setting priorities
for the Federation, make arrangements for donations and membership
funds to be deposited in trust pending the legal formation of the
Federation. Below are the priorities as identified by the temporary
steering committee in a recent workshop.
A press release shall be issued giving notice of a founding
meeting to review foundation documents and to elect a qualified
Board of Directors.
-
Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
13
a) Priorities Identified by Temporary Steering Committee
PROPERTY RIGHTS PRIORITIES (ALDP Didsbury Workshop) in No
Particular Order
1. RCMP INVESTIGATIONS AND CHARGES: • Obstruction of Justice •
Public Mischief • Trespass • Fraud (of two types)
2. Adoption of Review Rules by the Alberta Energy Regulator •
Reconsideration proceedings • Regulator appeal proceedings
3. Full Orphan Fund levy to be charged each year as required by
law
4. Cooperative Proceedings • Section 18(1) of the Responsible
Energy Development Act • Section 16(1) of the Alberta Utilities
Commission Act
5. Property Rights Lobby (ultimately funded by industry) with: •
Litigation funding • Peace officers (regulatory and trespass
issues) • More authorities (in addition to AER) to name
orphans • More organizations like the Orphan Well
Association
6. End backlog of cases (years) at the Surface Rights Board •
Accomplished by proper transfer of licenses to “entitled” and
“eligible” parties (Sections 16 and 20, Oil and Gas Conservation
Act)
7. Canadian Association of Landman form agreements (surface
lease, Utility Right-of-Way) are inadequate, changes are
required
8. Annual compensation for pipelines is necessary, because
rights of way are not being certified as reclaimed
9. Deal with massive inactive well problem • Cause improperly
suspended wells to be abandoned by law as and
when required by law
Polluter Pay Federation
https://albertasurfacerights.net/wp-content/uploads/2017/03/RECOMMENDATION_Adoption-of-AER-Review-and-Variance-Rules.pdfhttp://canlii.ca/t/52zk1#sec68http://canlii.ca/t/52ddq#sec18http://canlii.ca/t/543fz#sec16http://canlii.ca/t/hx95f#par17http://canlii.ca/t/hx95f#par17
-
Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020
(Temp. Steering Committee)
14
4. ALDP – TAKING ACTION ON THE UNFUNDED LIABILITY PROBLEM
Launching the Polluter Pays Federation is the most recent action
taken by ALDP members, and one of their most ambitious undertakings
to date. Since formation of the ALDP occurred in early 2019,
members of the coalition have organized several events and made
news headlines.
-
(Reference name)
Proposed Property Rights Advocacy and Lobby Group Non-Profit
Corporation Built on a Polluter Pay Funding Model
Our fundamental rights in fee simple estate ownership of land
are regularly and systemically abused to facilitate energy
development. Abused rights include the following:
The right to be properly no
fied of planned energy developments on our lands
The right to participate in the
administrative decision making process,
including the terms and condi
ons of entry, by energy on our lands.
The right to apply for
review (reconsidera on) of flawed administra
ve decisions.
The right to apply for and obtain a review proceeding, in a
timely manner, when circumstances
materially change. Examples:
When the operator files for bankruptcy
When payments are no longer being made to a
landowner When operations are unsafe
or otherwise
regulatory non‐compliant (the right to be safe
on land not leased for energy purposes).
The right of reversion: All surface owners have the guaranteed
right to
have all portions of their land used for an energy activity
conserved, reclaimed, and certified (guaranteed by the province) as
reclaimed.
Upon reclamation certification, all rights to use the land are
to revert (from the operator) back to the registered owner.
During the period of occupation, the operator must compensate
the landowner for all associated actual losses (as opposed to es
mated losses).
The right
to be properly compensated until rights revert to the registered owner.
The reality on the ground is
that the Alberta Energy
Regulator rarely conducts participatory proceedings. Legitimate concerns of
landowners are largely ignored.
No ces are poor or
non‐existent, and par cipatory rights
to a fair and
transparent proceeding are almost always abused.
As 50 legal professors
recently noted, the Alberta
government, official opposition, and
Alberta senators would further
erode participatory rights and destroy confidence in the rule of law.
The principle that the polluter (and only the polluter) pays is
entrenched in federal energy and environmental laws, and reflected
in numerous Alberta provincial statutes.
The right of reversion explained above is
the basis for
the polluter pays principle. Safe food produc
on is also at stake.
The foregoing is explained by
the Supreme Court of Canada at para. 17 of the decision in the ma
er commonly referred to as “Redwater”, ci
ed as Orphan Well Associa on v. Grant Thornton
Ltd., 2019 SCC 5 (CanLII).
The polluter pays principle is based on other well‐established
principles related to compensa on for losses or damages.
1. Landowners losses are to be mitigated (by the operator or
regulatory bodies such as the Alberta Energy Regulator).
2. Landowners are to be compensated for any losses that cannot
be mi gated, that they can prove.
3. Landowner may not profit from hos ng energy on their land
(losses only are recoverable).
4. EXPROPRIATION PRINCIPLES APPLY.
Surface owners have op ons they
are not exercising.
For example, if the Alberta
Energy Regulator chooses not
to cause a well licensee
to post security to cover
“end of life” obliga
ons, the surface owner has the following rights:
To refuse to sign any agreement proposed by the well
licensee.
To seek compensa on for poten al damage to the land pursuant to
the provisions of Subsection 25(1)(e) of the Surface Rights
Act.
Other op
ons are to seek forced abandonment of a well, as confirmed in the Redwater
ma
er. Forced abandonment and adherence
to the polluter pays principle
have the potential
to rejuvenate and maintain Alberta’s economy.
Page 1
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The founding members of the Polluter Pay Federa on believe
that there is no likely avenue for change through industry‐captured
government and regulators.
We are not willing to further waste our time and valuable
resources begging regulators to change their stripes or asking
government ministers for favours.
The proposed Federa on shall educate Albertans on proper applica
on of the polluter pays principle.
Landowners are often out of pocket when it becomes necessary to
make mul ple applica ons to several administra ve boards and/or the
courts to ensure their rights are not abused.
The Federa on, using
funds to be recovered from
industry, will financially assist landowners who engage in worthy litigation efforts with respect to ma
ers that require adjudica on.
The proposed Federa on shall lobby government in two
regards:
For observance and enforcement of exis ng laws on the books
(enforcement currently badly lack‐ing).
For new laws to improve the statutory scheme and to thwart
circumvention of the polluter pays principle.
Industry effec
vely spends over $50 million per year lobbying government. There must be a counterbalance to ensure the fundamental rights of
landowners are no longer abused and shall never again be abused in future.
An organizing committee has been struck to consult with the
potential membership. The Commi ee is charged with seeking input as
to organiza onal structure.
A model that is similar to structure of a union is the initial
preference.
Contacts: Regan Boychuk (403) 479‐8637
[email protected]
Mark Dorin (780) 966‐0849
[email protected]
Please Participate
Members and Fees
Those who lease their minerals, or who host energy on their
land, will be en tled to
By virtue of being at risk to pay for sins of polluters,
taxpayers shall be en tled to membership at a low, nominal fee (or
perhaps free of charge).
The polluter pays principle extends to the obliga on for energy
operator to pay property and industrial taxes. Municipali es can
benefit from membership.
Invoicing and Collec on of Fees The Federation will invoice
operators, and collect fees, on behalf of property
ownership members (with the member’s wri en permission)
In addi on to individual members, Exis ng Surface Rights groups,
landowner associa ons, and others would be eligible for membership
and to receive funding from the Federa on.
Regions can be established or can be based on existing municipal
boundaries. Voting rights can be exercised by way of regional
delegates or regional directors.
Page 2
Rural Alberta in par cular was built on self‐help and collec ve
ac on. Alberta can be rebuilt using these methods.
Crea on of Polluter Pay Federa on offices across the province
will create employment.
Forced abandonment of wells, triggered by landowner applica ons,
will create many Alberta jobs for decades.
1. ABUSE OF THE POLLUTER PAYS PRINCIPLEa) The Polluter Pay
Principle is Entrenched in Alberta Lawb) Circumvention of the
Polluter Pays Principlec) Industry, the Orphan Well Association,
and the Regulator are Off the Rails and Will Crashd) Widespread
Industry Insolvency and a Powerful Industry Lobby are the Root
Problems
2. THE PROPOSED POLLUTER PAY FEDERATIONa) Funding Modelb)
Benefits to Societyc) Benefits to Landowners(i) Envisioned Services
the Federation Could Provide to Canadians
d) Benefits to Taxpayers and Their Municipalities
3. STEERING COMMITTEES, LAUNCH, AND FOUNDATION MEETINGSa)
Priorities Identified by Temporary Steering Committee
4. ALDP – TAKING ACTION ON THE UNFUNDED LIABILITY PROBLEM