proposal: forma polluter pay on · dra l 2, february 19, 2020 polluter pay federa on alberta...

Dra 2, February 19, 2020

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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

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.

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

Polluter Pay Federation (as Proposed) Draft 2, February 19, 2020 (Temp. Steering Committee)

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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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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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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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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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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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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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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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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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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


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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.


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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).


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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.


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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.


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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


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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.

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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.

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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

proposal: forma polluter pay on · dra l 2, february 19, 2020 polluter pay federa on alberta...

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