3rd edition
Authors:	Duncan Kenyon, Nikki Way, Andrew Read, Barend Dronkers, Benjamin Israel, Binnu Jeyakumar, Nina Lothian
Publisher:	Pembina Institute
Publish Date:	October 2016
PDF Download:	[Landowners' Guide]              [Landowners' Primer]
Initiation Phase                 General Advice                 Project Initiation and Consultation                 Application Development                 Negotiating and Leasing                 Disputes and Concerns                 Landowners and Media Outreach
Exploration Phase
Development Phase
Pipelines and Other Infrastructure
Environmental Impacts
Abandonment and Reclamation
Compensation, Rights, and Hearings
Appendices

Direct Negotiations With a Company (For Issues Other Than Compensation)

As a landowner or member of the affected public, it is advisable that you try and resolve issues with a company in a non-adversarial manner, even if you don’t agree with the proposed project. This is the best attitude to have when starting negotiations, and will increase your credibility with the AER should negotiations fail and dispute resolution is pursued. Entering the conversation with a more adversarial approach may make it harder for you to successfully negotiate any terms you wish to include and potentially lead to a less-than-ideal outcome for you.

Depending on the type of development proposed for your land, you should closely consult the relevant section in this guide (See Oil and Gas Wells for oil and gas wells, Pipelines for pipelines, or Oil Batteries and Gas Compressor Plants for batteries, gas compressors and other facilities) to ensure you fully understand the potential implications. Each section has a series of questions for you to ask the company. You should be careful to consider the potential worst-case impacts, and try to negotiate with companies to ensure that these are minimized or negated.

Many times the company will approach you with a standard lease agreement, but you should take the time to negotiate additional clauses to protect yourself from impacts you identify. For example, if you are concerned about the impacts of increased traffic, you can negotiate to have the company plant trees along the road of concern to act as a windbreak and protect you from dust. If the company plans to flare, you can negotiate to ensure the company gives you additional advance notice of each flaring event, or notice of flaring in the case where you otherwise may not have been notified.

When negotiating with a company, keep the following in mind:

• Keep track of all the time you have spent on the negotiation process, including researching the company or project, attending meetings, or dealing with anything related to the impacts on your property. It helps establish how you are directly affected, and the cost of your time to remain engaged. (See sample cost tracking table in Appendix D.)
• Take some time before negotiations start to outline the most critical issues for you, and your bottom-line objectives in a negotiated agreement.
• For successful negotiation, both parties must be able to obtain some of their objectives and be willing to reach an agreement. Recognize that some give and take may be necessary, especially since not cooperating may shut down conversations and be counterproductive in protecting your interests.
• Be polite. Even if you disagree with what the company is doing, or with your neighbours’ actions, it does not help to be adversarial.
• Get everything in writing. This applies both to individual landowners, who should include everything that is agreed to in the lease agreement, and to others who are not actually leasing the land. If you have a verbal agreement or telephone conversation with a company representative, ask them to confirm it in writing. At the same time, write down what you believe has been agreed to, and if the company does not send you its own written statement, ask the representative to confirm your record of what was said. The representative can endorse your record by putting their signature on it. If they will not do this, you will have to continue negotiating. You might need to give a copy of this correspondence to the AER (or, in some cases, the Surface Rights Board) if negotiations later fail or if it represents a change from what the company initially negotiated for.
• Ask the company to explain anything you do not understand. If something they have written is ambiguous, ask for written clarification. If the company does not provide it, contact the AER or other regulatory body and ask them to get clarification for you.
• Keep your own record of all telephone conversations with the company and with the regulators.
• Be persistent. If the company does not respond to your concerns the first time, keep asking.
• If, as an individual landowner or group, you find that direct negotiations with a company are not progressing, consider using the Alternative Dispute Resolution process (see Working with the Alberta Energy Regulator).
• Continue to negotiate where possible even if the Alternative Dispute Resolution process has not worked and a hearing has been called. The company may be prepared to compromise rather than incur the costs and delays of holding a hearing. Of course, it is also important to remember not to get involved in argument and not to make threats, as this may undermine your credibility and effectiveness in the negotiations.
• Avoid any deal that makes agreement on all of the issues of concern conditional upon your agreeing not to participate in a hearing. Occasionally it may not be possible to resolve all issues. However, a public hearing will be shorter and more focused if some issues have been eliminated. This benefits all the parties involved: you, the company and the AER.
• Decide if it is better to negotiate as a group. Suggestions for setting up a group are given in Forming a Group With Landowners and Concerned Citizens.
• Remember that that the land agent is only a representative of the company, and cannot bind the company unless the company agrees to terms.

Signing the Lease Agreement

If you do not object to the project plan, or all your issues have been resolved and you decide to withdraw any objection, you, as a landowner, will be ready to sign the lease agreement. You would likely benefit by seeking advice from a lawyer or surface rights consultant before you sign, if one has not already been involved during negotiations. These expenses are usually considered reasonable, and you should ensure the company compensates you for these costs.

Be sure to read the agreement carefully and study the map of the survey that outlines the area where the company wants access. Never sign a lease without first reading the lease agreement, even if you have discussed the details with the land agent. You will be committing your property to a project that may have implications on your land for decades, so it is important to ensure, to the best of your ability, that the lease agreement protects the interests of your family and your neighbours and the health of your land for as long as the project will exist. See Questions About Lease Agreements (for oil and gas wells), Questions Before Signing a Pipeline Agreement (pipelines and right-of-way) and Questions to ask regarding batteries, compressors and facilities (for batteries, gas compressors, and other facilities) to help ensure you are asking the right questions to protect your interests.

Before signing a lease, read Compensation and Surface Rights Access

A land agent is required to leave a copy of the proposed surface lease or right-of-way agreement with the owner for at least 48 hours (excluding holidays) for review before negotiations can resume. An owner is defined as anyone who has the “right to dispose of an interest in land” and includes:

• the fee simple owner
• a person who has a registered interest in the land (includes a person who has an interest in Crown land)
• anyone who is in possession or occupation of the land.

However, a company may ask if you wish to sign a waiver, so that you can sign the agreement straight away. It is highly recommended that you take the 48-hour period to review the proposed agreement. If you sign the waiver and the agreement without taking the 48 hours to review it, you should be absolutely sure about all aspects of the lease agreement and should have resolved all issues. If you need more than 48 hours to study the agreement, advise the company and take it.

At least 48 hours after the proposed agreement was given, the company could apply for a licence from the AER and then a right-of-entry order from the Surface Rights Board. Before the company applies for a right-of-entry order, according to the Land Agent Licensing Regulation, the land agent must resume or attempt to resume negotiations after the 48-hour period. However, in practice, the company may not attempt to resume negotiations with you. When applying to the Surface Rights Board, the company will refer to the last offer (not necessarily the last best offer), and the reasons why it was refused.

If there are outstanding concerns, the AER will encourage companies and landowners to use dispute resolution to try to reach an agreement before filing an application. Even if the company files an application, it will take some time for the company to get a licence or a hearing, during which time negotiations can continue.

Remember that the agreement is written by the company and has their interests in mind, so you should study it carefully to make sure it meets your needs. The company will probably use a lease based on the one issued by the Canadian Association of Petroleum Landmen. There are different versions of this lease agreement and, even if it looks similar to one you have signed before, it is important to read it completely. If you do not agree with any clause, get advice (see below), discuss it with the land agent, and decide if you need to amend it or strike it out. A lease agreement should say exactly what the company is required to do, as this will reduce problems later. It would be wise to add an addendum to your agreement with additional clauses to address actions the company will be required to do as per your negotiations.

The lease agreement may include a clause that will allow the company to reduce the annual lease rent once surface structures have been removed from the site and the site reclaimed, but before the reclamation certificate has been issued. The Surface Rights Act makes no provision for such a reduction in compensation so you are not obliged to agree to such a clause.

Some, if not most, agreements may have an additional “delay” clause that would allow the company to drill any time up to 365 days. This may mean that payment will not be paid until the company actually enters the property to drill.

Registering your agreement (Private Surface Agreement Registry)

Once a lease agreement is signed by both parties, it becomes a binding legal agreement on the current owner and all future owners of the land, if it is assigned to them. The company will register the lease agreement with the Land Titles Office. You should make sure to register your written contract with the AER as a private surface agreement (PSA) on the Private Surface Agreements Registry. Although this will require you to disclose the amount of compensation you agreed to, the AER does not review the terms or details of the agreement unless there is a request for an order to comply by an owner or occupant of the land (known as a Section 64 request). Additionally, if you enter into a new agreement with a company, you may also register it.

Confidentiality

You should not agree to a confidentiality clause with the company in your surface rights agreement. While this clause will not prevent you from registering the agreement on the PSAR (the Responsible Energy Development Act allows agreements to be registered even if a confidentiality provision exists), such a clause will prevent you from speaking out about any concerns you may have, publicly or even just with your neighbours.

Getting advice

If you, as the landowner or occupant, are uncertain about any of the terms of the lease, it is important to get advice; you can contact your lawyer, the Farmers’ Advocate Office (see Farmers’ Advocate Office), a landowner or surface rights consultant, the Alberta Surface Rights Federation (see Alberta Surface Rights Federation3), or other landowner groups or associations in your area.

If you have outstanding concerns about the well site or operation you should not sign the agreement and should contact the AER (see Alberta Energy Regulator). The company must have the landowner’s approval of the location before it can obtain a drilling licence from the AER without applying for a right-of-entry order (see The Role of the Surface Rights Board), so the AER needs to know if there are problems. Companies must operate in an environmentally and technically acceptable manner, interfering as little as possible with the use of the land, but the AER staff cannot ensure this unless they are alerted to potential problems by the landowner.

While most rights of entry are negotiated directly with the landowner, some landowners join a surface rights group in an attempt to bargain collectively. The Alberta Surface Rights Federation (see Alberta Surface Rights Federation) will tell you if there is a group in your area. Some people join synergy groups, where government, industry and landowners come together to deal with issues (see If All Dispute Resolution Fails). The AER can tell you if there is a synergy group in your area or you can check the Alberta Synergy website.

Enforcing the lease

If an issue arises from the surface agreement and you believe the company has failed to comply with a term or condition in your agreement, you can file a private surface agreement with the AER (described above), and submit a section 64 request under the Responsible Energy Development Act (REDA) (see Responsible Energy Development Act). After receiving the request, the AER will forward a copy to the company who will be asked to respond. If the Regulator determines that the company has not complied with the conditions of the agreement, the Regulator can order the company to comply. For more information see the AER’s EnerFAQs: How to Register a Private Surface Agreement.

If a company fails to comply with the terms of the lease agreement, and you do not have a registered private surface agreement, you should still inform the AER. This includes telling the AER if the company ignores a special condition that was agreed to in writing between you and the company. Even if the complaint falls outside the jurisdiction of the Regulator, they will help determine whether the company is in compliance with the regulations, and what route is best to help pursue your concerns with the company.

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